<PAGE> 1
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 2
LOGO
Telephone: (800) 552-9612
Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus contains information about
one of the funds in the Overland Express Family of Funds -- the CALIFORNIA
TAX-FREE BOND FUND (the "Fund").
The CALIFORNIA TAX-FREE BOND FUND seeks to provide investors with a high
level of income exempt from federal income taxes and from California personal
income taxes, while preserving capital, by investing in medium- to long-term,
investment-grade municipal securities. Under ordinary market conditions, this
Fund's assets will consist exclusively of securities the interest on which is
exempt from federal and California personal income taxes.
This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1995, containing additional and more detailed information about the
Fund (the "SAI"), 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 the
telephone number printed above.
------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED
OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY
OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN
INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO
BANK, IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................................... ii
Summary of Expenses......................................................................... v
Financial Highlights........................................................................ vii
Investment Objective and Policies........................................................... 1
Additional Permitted Investment Activities.................................................. 2
Advisory, Administration and Distribution Arrangements...................................... 3
Determination of Net Asset Value............................................................ 6
Purchase of Shares.......................................................................... 7
Exchange Privileges......................................................................... 13
Redemption of Shares........................................................................ 14
Distribution Plans.......................................................................... 17
Servicing Plan.............................................................................. 17
Dividends and Distributions................................................................. 18
Taxes....................................................................................... 18
Custodian and Transfer and Dividend Disbursing Agent........................................ 19
Organization and Capital Stock.............................................................. 19
</TABLE>
i
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PROSPECTUS SUMMARY
The Company, as an open-end investment company, provides a convenient way
for you to invest in portfolios of securities selected and supervised by
professional management. The following provides information about the Fund and
its investment objective.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The CALIFORNIA TAX-FREE BOND FUND seeks to provide investors with a high
level of income exempt from federal income taxes and from California
personal income taxes, while preserving capital, by investing in medium-to
long-term, investment-grade municipal securities. As with all mutual
funds, there can be no assurance that the Fund will achieve its investment
objective. See "Investment Objective and Policies."
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. The Fund invests in medium- to long-term, investment-grade municipal
securities, the interest on which is exempt from federal income taxes and
from California personal income taxes. Under ordinary market conditions,
(i) 100% of the Fund's investment portfolio consists of municipal
securities, the interest on which is exempt from California personal
income taxes, and (ii) at least 80% of the Fund's investment portfolio
consists of municipal securities, the interest on which is exempt from
federal income taxes. Certain additional risks may arise due to the Fund's
concentration of investments in California municipal securities. See
"Special Factors Affecting the California Tax-Free Bond Fund" in the
Fund's SAI. Shares of the Fund may not be suitable investments for
tax-exempt institutions or tax-exempt retirement plans, since such
investors would not benefit from the exempt status of the Fund's
dividends. See "Federal Income Taxes -- Special Tax Considerations for the
California Tax-Free Bond Fund" in the SAI.
Q. WHO IS THE INVESTMENT ADVISER?
A. Wells Fargo Bank serves as the investment adviser of the Fund. Wells
Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of the Fund. See "Advisory,
Administration and Distribution Arrangements."
Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?
A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.15% of the average daily net assets of the Fund;
decreasing to 0.10% of the average daily net assets of the Fund in excess
of $200 million. See "Advisory, Administration and Distribution
Arrangements."
ii
<PAGE> 5
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 4.50% (4.71% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for shares purchased through the Systematic
Purchase Plan and $250 for shares purchased through qualified retirement
plans. The minimum subsequent purchase amount is $100 or more. You may
purchase shares of the Fund through Stephens, Wells Fargo Bank, as
transfer agent (the "Transfer Agent"), or any authorized broker/dealer or
financial institution. Purchases of shares of the Fund may be made by wire
directly to the Transfer Agent. The Fund may pay to its distributor
annually up to the greater of 0.05% of the average daily net assets
attributable to Class A Shares or $100,000, and a monthly fee at an annual
rate of up to 0.50% of the Fund's average daily net assets attributable to
Class D Shares to defray the cost of preparing and printing prospectuses
and other promotional materials and of delivering those materials to
prospective shareholders of the Fund. See "Purchase of Shares" and
"Distribution Plans." The Fund also may pay servicing agents a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class D Shares to compensate them for certain services.
See "Servicing Plan."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Fund are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund, unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at your election. All
reinvestments of dividends and/or capital gain distributions in shares of
the Fund are effected at the then current net asset value free of any
sales load. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of the same class of another fund in
the Overland Express Family of Funds 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 holders of the Fund's Class D Shares is reduced by the amount of
servicing fees payable to servicing agents under the Servicing Plan (as
defined below). See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open, shares may be redeemed upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. You may redeem shares by a request
in good form in writing or through telephone direction. Proceeds are
payable by check. Accounts of less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."
iii
<PAGE> 6
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your Fund shares. The portfolio securities of the Fund are subject to
interest rate risk. Interest rate risk is the risk that increases in
market interest rates may adversely affect the value of the long-term and
medium-term municipal securities in which the Fund invests and hence the
value of your investment in the Fund. The values of such securities
generally change inversely to changes in market interest rates. The Fund
also is subject to credit risk. Credit risk is the risk that the issuers
of the debt securities in which the Fund invests may default on the
payment of principal and/or interest. In addition, certain of the
municipal securities in which the Fund invests may be considered to have
speculative characteristics. Since the Fund invests primarily in
securities issued by California, its agencies and municipalities, events
in California are more likely to affect the Fund's investments. See
"Investment Objective and Policies." Also, the Fund is non-diversified,
which means the Fund is subject to concentration risk, which is the risk
that events impacting a single issuer may have a significant effect on the
value of the Fund's portfolio. You should be prepared to accept some risk
with the money you invest in the Fund. As with all mutual funds, there can
be no assurance that the Fund will achieve its investment objective.
Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus,
such as variable-rate instruments which have an interest rate that is
reset periodically based on an index, can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in
interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or
contract terms.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to the Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund
to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by the Fund also is subject to broadly
applicable investment policies. For example, the Fund may not invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.
iv
<PAGE> 7
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
BOND FUND
--------------------
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)... 4.50% 0.00%
Maximum Deferred Sales Load* (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1.................................................... 0.00% 1.00%
Redemption after year 1..................................................... 0.00% 0.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Management Fees............................................................... 0.50% 0.50%
12b-1 Fees.................................................................... 0.03% 0.50%
Total Other Expenses(1):
Servicing Fees(1)........................................................... 0.00% 0.25%
Other Expenses(1)........................................................... 0.17% 0.17%
------- -------
Total Fund Operating Expenses(1)**............................................ 0.70% 1.42%
</TABLE>
- ---------------
(1) After any waivers or reimbursements.
EXAMPLES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Class A Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 52 $ 66 $ 82 $ 128
You would pay the following expenses on a $1,000
investment in Class D Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 24 $ 45 $ 78 $ 170
You would pay the following expenses on the same
investment in Class D Shares of the Fund, assuming no
redemption............................................. $ 14 $ 45 $ 78 $ 170
</TABLE>
- ---------------
* See "Contingent Deferred Sales Charge."
** As further described in the Prospectus under the caption "Advisory,
Administration and Distribution Arrangements," Stephens and Wells Fargo Bank
each has agreed to waive or reimburse all or a portion of its respective fees
in circumstances where Fund expenses that are subject to limitations imposed
v
<PAGE> 8
under state securities laws and regulations exceed such limitations. In
addition, Stephens and Wells Fargo Bank each may elect, in its sole
discretion, to otherwise waive its respective fees or reimburse expenses. Any
such waivers or reimbursements with respect to the Fund reduces the total
expenses of the Fund.
The percentages shown above with respect to Class A and Class D Shares under
"Total Other Expenses" and "Total Fund Operating Expenses" are based on
amounts incurred during the most recent fiscal year, restated to reflect
voluntary fee waivers and expense reimbursements that are expected to
continue during the current fiscal year. Absent waivers and reimbursements,
"Total Other Expenses" and "Total Fund Operating Expenses" with respect to
Class A Shares would have been 0.40% and 0.95%, respectively. Absent waivers
and reimbursements, these percentages with respect to Class D Shares would
have been 0.82% and 1.82%, respectively. Long-term shareholders of the Fund
could pay more in distribution related charges than the economic equivalent
of the maximum front-end sales charges applicable to mutual funds sold by
members of the National Association of Securities Dealers, Inc. ("NASD").
There can be no assurances that the voluntary fee waivers and expense
reimbursements will continue.
------------------------
The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no other sales loads, redemption fees or exchange fees
charged by the Fund. However, the Company reserves the right to impose charges
for wiring redemption proceeds. The Examples should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown. See Prospectus sections captioned "Advisory,
Administration and Distribution Arrangements," "Distribution Plans" and
"Purchase of Shares" for more complete descriptions of the various costs and
expenses applicable to the Fund.
vi
<PAGE> 9
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Fund's 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
CALIFORNIA TAX-FREE BOND FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED PERIOD
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, ENDED DEC. 31,
1994 1993 1992 1991 1990 1989 1988*
--------- --------- --------- --------- --------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 11.47 $ 10.92 $ 10.73 $ 10.27 $ 10.35 $ 10.03 $ 10.00
Income From Investment Operations:
Net Investment Income................... 0.64 0.63 0.68 0.69 0.71 0.72 0.21
Net Realized and Unrealized Capital
Gain/(Loss) on
Investments........................... (1.13) 0.75 0.26 0.46 (0.08) 0.32 0.03
--------- --------- --------- --------- --------- ------- ---------
Total From Investment Operations........ (0.49) 1.38 0.94 1.15 0.63 1.04 0.24
Less Distributions:
Dividends From Net Investment Income.... (0.64) (0.63) (0.68) (0.69) (0.71) (0.72) (0.21)
Distributions From Net Realized Capital
Gain.................................. (0.14) (0.20) (0.07) 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- ------- ---------
Total Distributions..................... (0.78) (0.83) (0.75) (0.69) (0.71) (0.72) (0.21)
Net Asset Value, End of Period.......... $ 10.20 $ 11.47 $ 10.92 $ 10.73 $ 10.27 $ 10.35 $ 10.03
========= ========= ========= ========= ========= ======= =========
Total Return (not annualized)+.......... (4.32)% 12.98% 9.01% 11.62% 6.48% 10.73% 2.44%
Ratios/Supplemental Data:
Net Assets, End of Period (000)......... $ 273,105 $ 361,779 $ 375,376 $ 332,845 $ 201,138 $70,412 $ 10,577
Number of Shares Outstanding, End of
Period (000).......................... 26,780 31,529 34,376 31,008 19,576 6,803 1,055
Ratios To Average Net Assets
(annualized):
Ratio of Expenses To Average Net
Assets(1)............................. 0.50% 0.69% 0.50% 0.45% 0.29% 0.30% 0.08%
Ratio of net investment income to
average net
assets(2)............................. 5.87% 5.54% 6.24% 6.56% 6.97% 6.85% 6.61%
Portfolio Turnover...................... 4% 10% 24% 8% 35% 26% N/A**
- ------------
(1) Ratio of Expenses to Average Net
Assets Prior to Waived Fees and
Reimbursed Expenses................. 0.95% 0.85% 0.85% 0.87% 0.95% 1.18% 4.07%
(2) Ratio of Net Investment Income to
Average Net Assets Prior to Waived
Fees and Reimbursed Expenses........ 5.42% 5.38% 5.89% 6.14% 6.31% N/A N/A
</TABLE>
* The Fund commenced operations on October 6, 1988.
** The Fund sold no securities during this period.
+ Total returns do not include any sales charges.
vii
<PAGE> 10
CALIFORNIA TAX-FREE BOND FUND
FOR A CLASS D SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DEC. 31, DEC. 31,
1994 1993*
-------- --------
<S> <C> <C>
Net Asset Value, Beginning of Period................................................................. $14.98 $15.00
Income From Investment Operations:
Net Investment Income................................................................................ 0.73 0.34
Net Realized and Unrealized Capital Gain/(Loss) on Investments....................................... (1.47) 0.24
-------- --------
Total From Investment Operations..................................................................... (0.74) 0.58
Less Distributions:
Dividends From Net Investment Income................................................................. (0.73) (0.34)
Distributions From Net Realized Capital Gain......................................................... (0.19) (0.26)
-------- --------
Total Distributions.................................................................................. (0.92) (0.60)
Net Asset Value, End of Period....................................................................... $13.32 $14.98
======== ========
Total Return (not annualized)+....................................................................... (5.00)% 3.92%
Ratios/Supplemental Data:
Net Assets, End of Period (000)...................................................................... $7,346 $7,641
Number of Shares Outstanding, End of Period (000).................................................... 552 510
Ratios to Average Net Assets (Annualized):
Ratio of Expenses To Average Net Assets(1)........................................................... 1.20% 1.32%
Ratio of Net Investment Income To Average Net Assets(2).............................................. 5.15% 4.50%
Portfolio Turnover................................................................................... 4% 10%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and Reimbursed Expenses............. 1.82% 1.61%
(2) Ratio of Net Investment Income to Average Net Assets Prior to Waived Fees and Reimbursed
Expenses......................................................................................... 4.53% 4.21%
</TABLE>
* This class commenced operations on July 1, 1993.
+ Total returns do not include the 1% contingent deferred sales charge.
viii
<PAGE> 11
INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objective and related
policies of the Fund. As with all mutual funds, there can be no assurance that
the Fund, which is a non-diversified portfolio, will achieve its investment
objective.
INVESTMENT OBJECTIVE. The California Tax-Free Bond Fund seeks to provide
investors with a high level of income exempt from federal income taxes and from
California personal income taxes, while preserving capital, by investing in
medium- to long-term, investment-grade municipal securities.
As a matter of fundamental policy, the Fund, under normal market
conditions, invests at least 80% of its net assets in municipal securities, the
interest on which is exempt from federal income taxes and not subject to the
alternative minimum tax. Under ordinary market conditions, at least 65% of the
value of the total assets of the Fund will be invested in municipal bonds, as
opposed to municipal notes or commercial paper. In addition, under normal market
conditions, the Fund intends to invest all of its assets in securities issued by
the State of California, and its cities, municipalities and other public
authorities. As described further in the SAI, this Fund may purchase certain
securities on a when-issued basis.
The municipal securities which the California Tax-Free Bond Fund may
purchase include:
Municipal Bonds. The municipal bonds in which the Fund invests generally
have a maturity at the time of issuance of up to thirty years. The California
Tax-Free Bond Fund may invest in municipal bonds that are rated at the date of
purchase "Baa" or better by Moody's Investors Service, Inc. ("Moody's") or "BBB"
or better by Standard & Poor's Corporation ("S&P"), or bonds that are not rated
but that are considered by Wells Fargo Bank, as investment adviser, to be of
comparable quality. Bonds rated at the minimum permitted level have speculative
characteristics and are more likely than higher rated bonds to have a weakened
capacity to pay principal and interest in times of adverse economic conditions;
all are considered investment grade. A description of the ratings is contained
in the Appendix to the SAI.
Municipal Notes. The municipal notes in which the Fund invests generally
have maturities at the time of issuance of three years or less. The Fund may
invest in municipal notes that are rated at the date of purchase "MIG 3" (or
"VMIG 3" in the case of an issue having a variable rate demand feature) or
better by Moody's or "SP-2" or better by S&P, or notes that are not rated but
that are considered by Wells Fargo Bank, as investment adviser, to be of
comparable quality. Municipal notes generally are issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements or of other revenues.
The ability of an issuer to make payments is, therefore, dependent on such tax
receipts, proceeds from bond sales or other revenues, as the case may be.
Municipal Commercial Paper. Municipal commercial paper is a debt obligation
with a stated maturity of 270 days or less that is issued to finance seasonal
working capital needs or as short-term financing in anticipation of longer-term
debt. The Fund may invest in municipal commercial paper that is rated at the
date of purchase "P-1" or "P-2" by Moody's or "A-1+," "A-1" or "A-2" by S&P, or
municipal commercial paper that is not rated but is considered by Wells Fargo
Bank, as investment adviser, to be of comparable quality.
The Fund also may invest in certain "private activity" bonds or notes, such
as pollution control bonds; provided that such investments will be made only to
the extent they are consistent with the Fund's fundamental policy, described
above, of investing, under normal market conditions, at least 80% of its net
1
<PAGE> 12
assets in municipal securities the interest on which is exempt from federal
income taxes and not subject to the alternative minimum tax.
Because the Fund will "concentrate," i.e., invest at least 25% of its total
assets, in securities issued by or on behalf of the State of California, its
cities, municipalities and other public authorities, this Fund is particularly
dependent on, and may be adversely affected by, general economic conditions in
California. See "Special Factors Affecting the California Tax-Free Bond Fund" in
the SAI. California is experiencing recurring budget deficits caused by lower
than anticipated tax-revenues and increased expenditures for certain programs.
These budget deficits have depleted the state's available cash resources, and
the state has recently had to use a series of external borrowings to meet its
cash needs. In addition, since 1992 some of the credit rating agencies have
assigned their third highest rating to certain of the state's debt obligations.
On July 15, 1994, three of the ratings agencies rating California's long-term
debt lowered their ratings of the state's general obligation bonds. Moody's
lowered its rating from "Aa" to "A1," S&P lowered its rating from "A+" to "A"
and termed its outlook as "stable," and Fitch Investors Service lowered its
rating from "AA" to "A." The Fund's investment adviser continues to monitor and
evaluate the Fund's investments in light of the events in California and the
Fund's investment objective and investment policies. The rating agencies also
continue to monitor events in the state and the state and local governments'
responses to budget shortfalls.
From time to time the California Tax-Free Bond Fund also may concentrate
its investments in municipal securities that are related in such a way that an
economic, business or political development or change affecting one such
security would also affect the other securities -- for example, municipal
securities the interest on which is paid from revenues of similar type projects.
The Fund, pending the investment of proceeds from the sale of Fund shares
or proceeds from the sale of portfolio securities, in anticipation of
redemptions or to maintain a "defensive" posture when, in the opinion of Wells
Fargo Bank, as investment adviser, it is advisable to do so because of market
conditions, may elect to invest temporarily up to 20% of the current value of
its net assets in cash reserves or in taxable securities in which the U.S.
Government Income Fund, another fund in the Overland Express Family of Funds,
may invest, or in instruments the interest on which is exempt from federal
income taxes, but not from California personal income taxes.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
FLOATING- AND VARIABLE-RATE INSTRUMENTS
Certain of the debt instruments that the Fund may purchase bear interest at
rates that are not fixed, but vary with changes in specified market rates or
indices or at specified intervals. Certain of these instruments may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. The floating- and variable-rate instruments that
the Fund may purchase include certificates of participation in floating- and
variable-rate obligations purchased from banks; with respect to the tax-exempt
status of these certificates, the investment adviser may rely upon either the
opinion of counsel or Internal Revenue Service rulings issued with respect
thereto. Wells Fargo Bank, as investment adviser, monitors on an ongoing basis
the ability of an issuer of a demand instrument to pay principal and interest on
demand. Events occurring between the date the Fund elects to demand payment
2
<PAGE> 13
on a floating- or variable-rate instrument and the date payment is due may
affect the ability of the issuer of the instrument to make payment when due, and
unless such demand instruments permits same-day settlement, may affect the
Fund's right to obtain payment at par. Demand instruments whose demand feature
is not exercisable within seven days may be treated as liquid, provided that an
active secondary market exists.
------------------------
The Fund's investment objective, as set forth in the first paragraph of the
subsection describing the Fund's objective and policies, is fundamental; that
is, the investment objective may not be changed without approval by the vote of
the holders of a majority of the Fund's outstanding voting securities, as
described under "Capital Stock" in the SAI. If the Board of Directors
determines, however, that the Fund's investment objective can best be achieved
by a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will disclose any
such material changes in the then current prospectus.
In addition, as matters of fundamental policy, the Fund may: (i) borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such borrowing exists); (ii) make
loans of portfolio securities; (iii) invest up to 10% of the current value of
its net assets in repurchase agreements having maturities of more than seven
days, restricted securities and illiquid securities; and (iv) invest up to 10%
of the current value of its net assets in fixed time deposits that are subject
to withdrawal penalties and that have maturities of more than seven days.
ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.
INVESTMENT ADVISER
Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds"), and to six other
registered open-end management investment companies, each of which consist of
several separately managed investment portfolios.
The Advisory Contract provides that Wells Fargo Bank shall furnish to the
Fund investment guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory Contract, Wells Fargo
Bank furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund.
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<PAGE> 14
Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When Wells Fargo Bank determines that a particular security
should be bought or sold for the Fund and other accounts managed by Wells Fargo
Bank, Wells Fargo Bank undertakes to allocate those transactions among the
participants equitably. From time to time, the Fund, to the extent consistent
with its investment objective, policies and restrictions, may invest in
securities of companies with which Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contract, Wells Fargo Bank is entitled
to monthly advisory fees at the annual rates of 0.50% of the average daily net
assets of the Fund. From time to time Wells Fargo Bank may waive such fees in
whole or in part. Any such waiver would reduce expenses of the Fund and,
accordingly, have a favorable impact on the yield or return of the Fund. For the
year ended December 31, 1994, Wells Fargo Bank was paid 0.28% of the average
daily net assets of the Fund as compensation for its services as investment
adviser.
Mr. David Klug is responsible for the day-to-day management of the
California Tax-Free Bond Fund. Mr. Klug has managed municipal bond portfolios
for Wells Fargo Bank for over nine years. Prior to joining Wells Fargo Bank, he
managed the municipal bond portfolio for a major property and casualty insurance
company. His investment experience exceeds 20 years and includes all aspects of
tax-exempt fixed-income investments. He holds an M.B.A. from the University of
Chicago and is a member of The National Federation of Municipal Analysts and its
California Chapter. Mr. Klug has co-managed the Fund since October 1988.
Mr. David Wines is also responsible for the day-to-day management of the
California Tax-Free Bond Fund. Mr. Wines, has managed tax-exempt fixed-income
portfolios for over a decade. Prior to joining Wells Fargo Bank in 1990, he held
senior investment management positions for both Matson Navigation Company, Inc.
and The Electric Power Research Institute, a research consortium for the
electric power industry. He holds a B.S. in finance from the University of
Oregon, an M.B.A. from Golden Gate University and is a member of the Security
Analysts of San Francisco. Mr. Wines has co-managed the Fund since September
1992.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Funds. For these administrative services, Stephens is entitled to receive from
the Fund a monthly administrative fee at an annual rate of 0.15% of its average
daily net assets; decreasing to 0.10% of the average daily net assets of the
Fund in excess of $200 million. From time to time Stephens may waive fees from
the Fund in whole or in part. Any such waiver will reduce expenses of the Fund
and, accordingly, have a favorable impact on the yield or return of the Fund.
The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, general
supervision (i) of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) in connection with regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder reports for the Funds; and (iii)
relative
4
<PAGE> 15
to the compilation of data required for the preparation of periodic reports
distributed to the Company's officers and Board of Directors. Stephens also
furnishes office space and certain facilities required for conducting the
business of the Fund and pays the compensation of the Company's Directors,
officers and employees who are affiliated with Stephens.
Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available Class A Shares and Class D Shares to their respective customers.
Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to the greater of $100,000 or 0.05%
of the average daily net assets of the Class A Shares of the Fund and a monthly
fee at an annual rate of up to 0.50% of the average daily net assets of the
Class D Shares of the Fund. The actual fee payable to Stephens is determined,
within such limits, from time to time by mutual agreement between the Company
and Stephens, and may not exceed the maximum amount payable under the Rules of
Fair Practice of the NASD. With respect to the Class D Shares of the Fund,
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments to such agents based on the average daily net assets of Class D
Shares of the Fund attributable to them. Services provided by selling agents in
exchange for commissions and other payments to selling agents are the principal
sales support services provided to the Fund. Stephens may retain any portion of
the total distribution fee payable under the Distribution Agreement to
compensate it for distribution-related services provided by it or to reimburse
it for other distribution-related expenses. Since the Distribution Agreement
provides for fees that are used by Stephens to pay for distribution services, a
plan of distribution for each class of shares (individually a "Plan",
collectively the "Plans") and the Distribution Agreement are approved and
reviewed in accordance with Rule 12b-1 under the 1940 Act, which regulates the
manner in which an investment company may, directly or indirectly, bear the
expense of distributing its shares. See Prospectus section captioned
"Distribution Plans" for a more complete description of the Plans.
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
The Fund may enter into servicing agreements with one or more servicing
agents on behalf of Class D Shares of the Fund. Under such agreements, servicing
agents provide shareholder liaison services, which may include responding to
customer inquiries and providing information on shareholder investments, and
provide such other related services as the Fund or a Class D shareholder may
reasonably request. For these services, a servicing agent receives a fee which
will not exceed, on an annualized basis for the Fund's then current fiscal year,
0.25% of the average daily net assets of the Class D Shares of the Fund
represented by Class D Shares owned by investors with whom the servicing agent
maintains a servicing relationship, or an
5
<PAGE> 16
amount which equals the maximum amount payable to the servicing agent under
applicable laws, regulations or rules, whichever is less.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of the Fund is the value of total net assets attributable to each
class divided by the number of outstanding shares of that class. The value of
net assets per class is determined daily by adjusting the net assets per class
at the beginning of the day by the value of each class's shareholder activity,
net investment income and net realized and unrealized gains or losses for that
day. Net investment income is calculated each day for each class by attributing
to each class a pro rata share of daily income and common expenses, and by
assigning class-specific expenses to each class as appropriate. The net asset
value of each class is expected to fluctuate daily.
The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as the "close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt obligations with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices are not readily available, at fair value as
determined in good faith by the Board of Directors. Prices used for such
valuations may be provided by independent pricing services.
PERFORMANCE DATA
From time to time, the Company may advertise yield and total return
information with respect to a class of shares of the Fund. Total return and
yield information of a class of shares are based on the historical earnings and
performance of such class of shares and should not be considered representative
of future performance.
The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge for the class of shares) of one share of the class of
shares at the beginning of the period, from (ii) the net asset value of all
shares of the class of shares an investor would own at the end of the period for
the share held at the beginning of the period (assuming reinvestment of all
dividends and capital gain distributions), and dividing by (iii) the public
offering price per share of the class of shares at the beginning of the period.
The resulting percentage indicates the positive or negative rate of return that
an investor would have earned from reinvested dividends and capital gain
distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on net asset value per share of a class of shares (rather than the public
offering price), in which case the figures would not reflect the effect of any
sales charges that would have been paid by an investor in the class of shares or
by assuming that a sales charge other than the maximum sales charge (reflecting
the Volume Discounts set forth below) is assessed, provided that total return
data derived pursuant to the calculation described above are also presented.
The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. Tax-equivalent yield for the
Fund, which assumes that a stated income tax rate has been applied to non-exempt
income to derive the tax-
6
<PAGE> 17
exempt portion of the Fund's yield, also may be advertised. For purposes of
sales literature, these yields may also, at times, be calculated on the basis of
the net asset value per share of the class (rather than the public offering
price), in which case the figures would not reflect the effect of any sales
charges that would have been paid by an investor in the class of shares, or by
assuming that a sales charge other than the maximum sales charge (reflecting the
Volume Discounts set forth below) is assessed, provided that yield data derived
pursuant to the calculation described above are also presented.
Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
differ from the net yield on Class A Shares. Performance information will be
computed separately for Class A Shares and Class D Shares.
Additional information about the performance of each Fund is contained in
the Annual Report for each Fund. The Annual Report may be obtained free of
charge by calling the Company at 800-552-9612.
PURCHASE OF SHARES
Shares of the Fund may be purchased on any day the Exchange is open for
trading through Stephens, the Transfer Agent, or any authorized broker/dealers
or financial institutions with which Stephens has entered into agreements. Such
broker/dealers or financial institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their clients for such services, other
than services related to purchase orders, which would reduce the clients'
overall yield or return. The Exchange is closed on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day (each, a "Holiday"). When any Holiday falls on a Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is closed the following Monday.
In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for shares purchased through the
Systematic Purchase Plan and $250 for shares purchased through a retirement plan
qualified under the Internal Revenue Code of 1986, as amended (the "Code"). The
minimum subsequent purchase amount is $100. The minimum initial or subsequent
purchase amount requirements may be waived or lowered for investments effected
on a group basis by certain entities and their employees, such as pursuant to a
payroll deduction or other accumulation plan. The Company reserves the right to
reject any purchase order. All funds, net of sales loads, will be invested in
full and fractional shares. Checks will be accepted for the purchase of the
Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries may be directed to the Company at the address or telephone number on
the front cover of the Prospectus.
Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until the settlement date, currently five business days
after the order is placed. Effective June 7, 1995, the settlement date will
normally be 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.
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<PAGE> 18
------------------------
When payment for shares of the Fund through the Transfer Agent is by a
check that is drawn on any member bank of the Federal Reserve System, federal
funds normally become available to the Fund on the business day after the day
the check is deposited. Checks drawn on a non-member bank or a foreign bank may
take substantially longer to be converted into federal funds and, accordingly,
may delay the execution of an order.
When shares of the Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as the Dealer Allowance. Stephens has established a non-cash compensation
program, pursuant to which broker/dealers or financial institutions that sell
shares of the Fund may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.
Sales loads relating to the purchase of Class A Shares in the Fund are as
follows:
<TABLE>
<CAPTION>
DEALER
CLASS A SHARES SALES LOAD SALES LOAD ALLOWANCE
-------------- AS % OF AS % OF AS % OF
AMOUNT OF OFFERING NET AMOUNT OFFERING
PURCHASE PRICE INVESTED PRICE
--------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000......................................... 4.50% 4.71% 4.05%
$100,000 up to $199,999.................................... 4.00 4.17 3.60
$200,000 up to $399,999.................................... 3.50 3.63 3.15
$400,000 up to $599,999.................................... 2.50 2.56 2.25
$600,000 up to $799,999.................................... 2.00 2.04 1.80
$800,000 up to $999,999.................................... 1.00 1.01 0.90
$1,000,000 up to $2,499,999................................ 0.60 0.60 0.50
$2,500,000 up to $4,999,999................................ 0.40 0.40 0.40
$5,000,000 up to $8,999,999................................ 0.25 0.25 0.25
$9,000,000 and over........................................ 0.00 0.00 0.00
</TABLE>
Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.
A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class D Shares.
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<PAGE> 19
REDUCED SALES CHARGE -- CLASS A SHARES
The above Volume Discounts are also available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of other portfolios of the Company which assess a sales load (the "Load Funds").
Because Class D Shares are not subject to a front-end sales charge, the amount
of Class D shares you hold is not considered in determining any volume discount.
The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds already owned in accordance with the above sales load
schedule to reduce the sales load. For example, if you own Class A Shares of the
Load Funds with an aggregate net asset value of $90,000 and invest an additional
$20,000 in Class A Shares of the Fund, the sales load on the entire additional
amount would be 4.00% of the offering price. To obtain such discount, you must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales load, and confirmation of the
order is subject to such verification. The Right of Accumulation may be modified
or discontinued at any time with respect to all Class A Shares purchased
thereafter.
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 Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference. In addition, the Class A Shares of the investment portfolio
to be acquired must be registered for sale in your state of residence. The
amount that may be so reinvested may not exceed the amount of the redemption
proceeds, and a written order for the purchase of the Class A Shares must be
received by the Fund or the Transfer Agent within 120 days after the effective
date of the redemption.
If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of the loss to
be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment and 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,"
9
<PAGE> 20
as defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of the Fund at a
reduced sales load, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent of more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses 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
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) that is
maintained, managed or advised by Wells Fargo Bank or Stephens or their
affiliates. In addition, Class A Shares also may be purchased at net asset value
by pension, profit sharing or other employee benefit plans established under
Section 401 of the Code.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by the following types
of investors that place trades through an omnibus account maintained at the Fund
by a discount broker/dealer: trust companies; investment advisers and financial
planners on behalf of their clients; retirement and deferred compensation plans
and the trusts used to fund these plans.
By investing in the Fund, you appoint the Transfer Agent, as agent, to
establish an open account to which all shares purchased will be credited,
together with any dividends and capital gain distributions that are paid in
additional shares. See "Dividends and Distributions." Although most shareholders
elect not to receive stock certificates, certificates for full shares of the
Fund can be obtained on request. It is more complicated to redeem shares held in
certificated form, and the expedited redemption described below is not available
with respect to certificated shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES
Class D Shares which are redeemed within one year of receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 1.00% of an amount equal to the lesser of the net asset value at the
time of purchase for the Class D Shares being redeemed or the net asset value of
such shares at the time of redemption. Accordingly, a contingent deferred sales
charge will not be imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase. In addition a charge will not
be assessed on Class D Shares purchased through reinvestment of dividends or
capital gains distributions. In determining whether a contingent deferred sales
charge is applicable to a redemption, Class D Shares are considered redeemed on
a first-in, first-out basis so that Class D Shares held for a longer period of
time are considered redeemed prior to more recently acquired shares.
10
<PAGE> 21
The contingent deferred sales charge is waived on redemptions of Class D
Shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has reached age 70 1/2, (iii) effected pursuant to the
Company's right to liquidate a shareholder's account if the aggregate net asset
value of the shareholder's account is less than the minimum account size, or
(iv) in connection with the combination of the Company with any other registered
investment company by a merger, acquisition of assets, or by any other
reorganization transaction.
Investors who are entitled to purchase Class A Shares at net asset value
without a sales load should not purchase Class D Shares. Other investors,
including those who are entitled to purchase Class A Shares of the Fund at a
reduced sales load, should compare the fees assessed on Class A Shares against
those assessed on Class D Shares (including potential contingent deferred sales
charges and higher Rule 12b-1 fees) in light of the amount to be invested and
the anticipated time that the shares will be owned.
Shares of the Fund may be purchased by any of the methods described below.
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the class of shares to be purchased, the name(s)
in which the shares are to be registered, the address, social security or tax
identification number (where applicable) of the person or entity in whose
name(s) the shares are to be registered, dividend payment election, amount to be
wired, name of the wiring bank and name and telephone number of the person to be
contacted in connection with the order. An account number will be assigned.
2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express California Tax-Free Bond Fund (designate
Class A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
11
<PAGE> 22
3. A completed Account Application should be mailed, or sent by
telefacsimile with the original subsequently mailed, to the following address
immediately after the funds are wired and must be received and accepted by the
Transfer Agent before an account can be opened:
Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082
4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, the net asset value next determined after the Account
Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express California Tax-Free Bond Fund (designate Class A or D)" at its
mailing address set forth above.
ADDITIONAL PURCHASES
Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in your Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express California Tax-Free Bond Fund (designate Class A or D)" to
the above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.
SYSTEMATIC PURCHASE PLAN
The Company's Systematic Purchase Plan provides you with a convenient way
to establish and automatically add to your existing accounts on a monthly basis.
If you elect to participate in this plan, you must specify an amount ($100 or
more) to be withdrawn automatically by the Transfer Agent on a monthly basis
from a designated bank account (provided your bank is a participant in the
automated clearing house system). The Transfer Agent withdraws and uses this
amount to purchase shares of the designated Fund on or about the fifth business
day of each month. There are no additional fees charged for participating in
this plan.
You may change the investment amount, suspend purchases or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if the designated bank account balance is insufficient
to make a scheduled withdrawal, or if either the designated bank account or your
account is closed.
12
<PAGE> 23
PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Purchase orders for shares in the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from temporary use of payments to the
Fund during the settlement period. A broker/dealer or financial institution that
is involved in a purchase transaction may charge separate account, service or
transaction fees. Financial institutions may be required to register as dealers
pursuant to applicable state securities laws, which may differ from federal law
and any interpretations expressed herein.
EXCHANGE PRIVILEGES
You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market Fund, the Money Market Fund or the U.S. Treasury Money
Market Fund in an identically registered account at respective net asset values,
provided that, if the other investment portfolio charges a sales load on the
purchase of the class of shares being exchanged that is higher than the sales
load that you have paid in connection with the shares you are exchanging, you
pay the difference. Class D Shares of the Fund may be exchanged for Class D
Shares of one of the Company's other investment portfolios that offer Class D
Shares or for Class A Shares of the Money Market Fund in an identically
registered account at respective net asset values. You are not charged a
contingent deferred sales charge on exchanges of Class D Shares for shares of
the same class of another of the Company's investment portfolios or for Class A
Shares of the Money Market Fund. If you exchange Class D Shares for shares of
the same class of another investment portfolio, or for Class A Shares of the
Money Market Fund, the remaining period of time (if any) that the contingent
deferred sales charge is in effect will be computed from the time of the initial
purchase of the previously held shares. Accordingly, if you exchange Class D
Shares for Class A Shares of the Money Market Fund, and redeem the shares of the
Money Market Fund within one year of the receipt of the purchase order for the
exchanged Class D Shares, you will have to pay a deferred sales charge equal to
the contingent deferred sales charge applicable to the previously exchanged
Class D Shares. If you exchange Class D Shares of an investment portfolio for
Class A Shares of the Money Market Fund, you may subsequently re-exchange the
acquired Class A Shares only for Class D Shares. If you re-exchange the Class A
Shares of the Money Market Fund for Class D Shares, the remaining period of time
(if any) that the contingent deferred sales charge is in effect will be computed
from the time of your initial purchase of Class D Shares. In addition, shares of
the investment portfolio to be acquired must be registered for sale in your
state of residence. You should obtain, read and retain the Prospectus for the
investment portfolio which you desire to exchange into before submitting an
exchange order.
You may exchange shares by writing the Transfer Agent as indicated below
under Redemption by Mail, or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or servicing agent,
13
<PAGE> 24
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 exchanges is (800) 572-7797.
Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for tax purposes may be realized upon an exchange,
depending upon the cost or other basis of shares redeemed.
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you decline such privileges. These
privileges authorize the Transfer Agent to act on telephone instructions from
any person representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. The Company will require the
Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine. If the
Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a request in proper form by the Transfer Agent directly or through
any authorized broker/dealer or financial institution.
Except for any contingent deferred sales charge, which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.
14
<PAGE> 25
Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of 15
days after investment. The proceeds, of course, may be more or less than cost.
Payment of redemption proceeds may be made in securities, subject to regulation
by some state securities commissions.
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount 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 Fund 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 D Shares, will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate, and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in a designated bank account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption,
net of any contingent deferred sales charge applicable with respect to Class D
Shares, as instructed, on or about the fifth business day prior to the end of
each month. There are no additional fees charged for participating in this plan.
15
<PAGE> 26
You may change the withdrawal amount, suspend withdrawals or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to a scheduled transaction. An election will be
terminated automatically if your account balance is insufficient to make a
scheduled withdrawal or if your 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 elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.
You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.
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 D Shares,
will be wired or credited to the bank indicated in your Account Application 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. 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
16
<PAGE> 27
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 a Plan on behalf of each class
of shares of the Fund. Under the Plans and pursuant to the Distribution
Agreement, the Fund may defray all or part of the cost of preparing and printing
prospectuses and other promotional materials and of delivering prospectuses and
those materials to prospective shareholders of the Fund, by paying on an annual
basis up to the greater of $100,000 or 0.05% of the average daily net assets of
the Class A Shares of the Fund and a monthly fee at an annual rate of 0.50% of
the average daily net assets of the Class D Shares of the Fund to the
distributor. Under the Plan for the Class D Shares of the Fund, the distributor
may enter into selling agreements with one or more selling agents under which
such agents may receive compensation for distribution-related services from the
distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Class D Shares attributable
to them. The distributor may retain any portion of the total distribution fee
payable under the Plans to compensate it for distribution-related services
provided by it or to reimburse it for other distribution-related expenses. The
Plans provide only for the reimbursement of actual expenses. The Fund may
participate in joint distribution activities with any other portfolios and
classes of the Company, in which event expenses reimbursed out of the assets of
the Fund may be attributable, in part, to the distribution-related activities of
another portfolio. Generally, the expenses attributable to joint distribution
activities will be allocated among the Fund and any other portfolio of the
Company in proportion to their relative net asset sizes, although the Board of
Directors may allocate such expenses in any other manner that it deems fair and
equitable.
SERVICING PLAN
The Company's Board of Directors has adopted a servicing plan ("Servicing
Plan") on behalf of the Class D Shares of the Fund. Pursuant to the Servicing
Plan the Fund may enter into servicing agreements with one or more servicing
agents who agree to provide administrative support services to their customers
who are the record or beneficial owners of Class D Shares. Such servicing agents
will be compensated at an annual rate of up to 0.25% of the average daily net
asset value of the Class D Shares held of record or beneficially by such
customers.
17
<PAGE> 28
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare as a dividend to all shareholders of record
substantially all of its net investment income at the close of each business day
to shareholders of record at 4:00 p.m. (New York time) on the day of
declaration. Shares purchased in the Fund will begin earning dividends on the
business day following the date the purchase order settles and shares redeemed
will earn dividends through the date of redemption. Net investment income for a
Saturday, Sunday or holiday will be declared as a dividend to shareholders of
record at 4:00 p.m. (New York time) on the prior business day.
Dividends of the Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of the Fund who redeem shares
prior to a dividend payment date will be entitled to all dividends declared but
unpaid prior to redemption on such shares on the next dividend payment date.
Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).
Dividends and/or capital gain distributions paid by the Fund will be
invested in additional shares of the same class of the Fund at net asset value
(without any sales load) and credited to your account on the reinvestment date
or, at your election, paid by check. Dividend checks and Statements of Account
will be mailed within approximately three business days after the payment date.
In addition, you may elect to reinvest Fund dividends and/or capital gain
distributions in shares of another fund in the Overland Express Family of Funds
with which you have an established account that has met the applicable minimum
initial investment requirement.
The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g., transfer agent fees) between Class A
Shares and Class D Shares that would affect their relative dividends.
TAXES
By complying with the applicable provisions of the Code, the Fund will not
be subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to shareholders, and the Fund's shareholders
will not be subject to federal income taxes on any dividends of the Fund
attributable to interest from tax-exempt securities. However, dividends
attributable to interest from taxable securities, accretion of market discount
on certain bonds and capital gains (if any) will be taxable to shareholders.
Generally, dividends of taxable income 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. The Fund
intends to pay out all its net investment income and net realized capital gains
(if any) for each year. In addition, by complying with the applicable provisions
of the California Revenue and Taxation Code, dividends of the Fund also will be
exempt from California personal income tax to the extent such dividends
attributable to instruments that pay interest which would be exempt from
California personal income taxes were such instruments held directly by an
individual. The Fund does not make any representation regarding the taxation of
its
18
<PAGE> 29
corporate shareholders with respect to Fund distributions and recommends that
they consult their tax advisors.
The Fund will inform you of the amount and nature of Fund dividends and
capital gain distributions. You should keep all statements you receive to assist
in your personal recordkeeping. The Company is required by federal law to
withhold, subject to certain exemptions, at a rate of 31% on 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.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - 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.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94163 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers twelve series of shares, each representing an interest in one
of the funds in the Overland Express Family of Funds -- the Asset Allocation
Fund, the California Tax-Free Bond Fund, the California Tax-Free Money Market
Fund, the Money Market Fund, the Municipal Income Fund, the Overland Sweep Fund,
the Short-Term Government-Corporate Income Fund, the Short-Term Municipal Income
Fund, the Strategic Growth Fund, the U.S. Government Income Fund, the U.S.
Treasury Money Market Fund and the Variable Rate Government Fund. The Board of
Directors may, in the future, authorize the issuance of other series of capital
stock representing shares of additional investment portfolios or funds. All
shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required by the 1940 Act to elect Directors; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors. A more detailed statement of the
voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.
19
<PAGE> 30
<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. CALIFORNIA TAX FREE BOND FUND
C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A ACCOUNT APPLICATION
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163 PAGE 1 OF 5
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. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 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)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 31
<TABLE>
<S> <C>
CALIFORNIA TAX FREE BOND FUND
LOGO 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 D Shares (not available for purchases of $9,000,000 or more)
Note: If no choice is indicated, Class A Shares will be selected.
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express California Tax Free Bond Fund (designate Class A
or D))
/ / Funds have been wired to 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 Withdrawal Amount: $ (minimum $100)
---------------
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
- ------------------------------------------------------------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bank Name
---------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
---------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 32
<TABLE>
<S> <C>
CALIFORNIA TAX FREE BOND 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 Family of Funds.
/ / Invest capital gain distributions in Account # of Fund
--------------- ------------
of the Overland Express Family of 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)
</TABLE>
<PAGE> 33
<TABLE>
<S> <C>
CALIFORNIA TAX FREE BOND FUND
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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 34
<TABLE>
<S> <C>
CALIFORNIA TAX FREE BOND 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.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------- -----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 35
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
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
------------------------
California Tax-Free Bond Fund
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
78P 5/95
<PAGE> 36
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 37
LOGO
Telephone: (800) 552-9612
Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus contains information about
three of the funds in the Overland Express Family of Funds -- the CALIFORNIA
TAX-FREE MONEY MARKET FUND, the MONEY MARKET FUND and the U.S. TREASURY MONEY
MARKET FUND (each, a "Fund," and collectively, the "Funds").
The CALIFORNIA TAX-FREE MONEY MARKET FUND seeks to provide investors with a
high level of current income exempt from federal income taxes, a portion of
which is also exempt from California personal income taxes, while preserving
capital and liquidity, by investing in high-quality instruments, principally
municipal securities. Under normal market conditions, a substantial majority of
the Fund's total assets will consist of securities the interest on which is
exempt from California personal income taxes. In any event, at the close of each
calendar quarter at least 50% of the Fund's total assets will consist of such
securities.
The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.
The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by investing in
U.S. Treasury bonds, notes and bills with short remaining terms.
Each of the Funds seeks to maintain a net asset value of $1.00 per share.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in any of the Funds. A Statement of Additional
Information dated May 1, 1995 (the "SAI"), containing additional and more
detailed information about each of the Funds has been filed with the Securities
and Exchange Commission (the "SEC") and is hereby incorporated by reference into
this Prospectus. The SAI is available without charge and can be obtained by
writing the Company at P.O. Box 63084, San Francisco, CA 94163 or by calling the
Company at the telephone number printed above.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
CONSTANT $1.00 NET ASSET VALUE PER SHARE.
------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO
BANK") OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY.
AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
<PAGE> 38
This Prospectus describes the shares of the California Tax-Free Money
Market Fund and the Class A Shares of the Money Market Fund and the U.S.
Treasury Money Market Fund. Each of the Money Market Fund and the U.S. Treasury
Money Market Fund also offers a class of shares known as the Institutional Class
(shares of the Institutional Class are referred to hereinafter as the
"Institutional Shares"). Institutional Shares of these Funds require a minimum
initial investment of $150,000. Additional information about the Institutional
Shares and a free copy of the current Prospectus describing the Institutional
Shares is available from the Company at the telephone number printed above.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUNDS, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS
THE SPONSOR AND DISTRIBUTOR FOR THE FUNDS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary........................................................................ ii
Summary of Expenses....................................................................... iv
Financial Highlights...................................................................... vi
Investment Objectives, Policies and Activities............................................ 1
Advisory, Administration and Distribution Arrangements.................................... 8
Determination of Net Asset Value.......................................................... 10
Purchase of Shares........................................................................ 10
Exchange Privileges....................................................................... 13
Redemption of Shares...................................................................... 14
Distribution Plans........................................................................ 17
Dividends and Distributions............................................................... 17
Taxes..................................................................................... 18
Custodian and Transfer and Dividend Disbursing Agent...................................... 19
Organization and Capital Stock............................................................ 19
</TABLE>
i
<PAGE> 39
PROSPECTUS SUMMARY
The Company, as an open-end management investment company, provides a
convenient way for you to invest in portfolios of securities selected and
supervised by professional management. The following provides information about
the Funds, each of which has its own investment objective.
Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
A. The CALIFORNIA TAX-FREE MONEY MARKET FUND seeks to provide investors with
a high level of current income exempt from federal income taxes, a portion
of which is also exempt from California personal income taxes, while
preserving capital and liquidity, by investing in high-quality
instruments, principally municipal securities.
The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.
The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by
investing in U.S. Treasury bonds, notes and bills with short remaining
terms.
Each Fund seeks to maintain a net asset value of $1.00 per share; however,
there is no assurance that this will be achieved. As with all mutual
funds, there can be no assurance that the Funds will achieve their
investment objectives.
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. THE CALIFORNIA TAX-FREE MONEY MARKET FUND invests in high-quality
instruments, primarily municipal securities, the income from which is
exempt from federal income taxes, a portion of which is also exempt from
California personal income taxes. Under normal market conditions, a
substantial majority of the total assets of this Fund will consist of
securities the interest on which is exempt from California personal income
taxes. In all events, at the close of each calendar quarter, at least 50%
of the Fund's total assets will consist of such securities. Income exempt
from federal income tax may be of benefit to investors who pay federal
income taxes, whether or not they are residents of California. See
"Investment Objectives, Policies and Activities."
The MONEY MARKET FUND invests in high-quality money market instruments,
including obligations of the U.S. Government, its agencies and
instrumentalities (including government-sponsored enterprises), certain
debt obligations such as corporate debt, certain obligations of U.S. banks
and certain repurchase agreements. See "Investment Objectives, Policies
and Activities."
The U.S. TREASURY MONEY MARKET FUND invests primarily in U.S. Treasury
bonds, notes and bills with short remaining terms. See "Investment
Objectives, Policies and Activities."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, as the investment adviser of each Fund, manages your
investments. Wells Fargo Bank also provides the Funds with transfer
agency, dividend disbursing agency and custodial services. Stephens Inc.
is the sponsor, administrator and distributor for the Company. See
"Advisory, Administration and Distribution Arrangements" and "Distribution
Plan."
ii
<PAGE> 40
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Funds may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is no sales load for
purchasing shares of any of the Funds. In most cases, the minimum initial
purchase amount for shares of any of the Funds is $1,000. The minimum
initial purchase amount is $100 for shares purchased through the
Systematic Purchase Plan. The minimum subsequent purchase amount is $100
or more. However, certain exceptions may apply. You may purchase shares of
the Funds through Stephens, Wells Fargo Bank, as transfer agent (the
"Transfer Agent"), or any authorized broker/dealer or financial
institution. Purchases of Shares of the Funds may be made by wire directly
to the Transfer Agent. See "Purchase of Shares." Investors intending to
invest at least $150,000 in either the Money Market Fund or the U.S.
Treasury Money Market Fund should purchase Institutional Shares rather
than Class A Shares. A free copy of the current Prospectus for the
Institutional Shares is available from the Company at the telephone number
set forth on the cover page.
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Funds are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares, unless you
elect to receive dividends in cash. All reinvestments in shares of the
Funds are at net asset value. See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open for trading, shares may be redeemed upon
request to Stephens or the Transfer Agent directly, or through any
authorized broker/dealer or financial institution. Shares may be redeemed
by a request in good form in writing or through telephone direction.
Proceeds are payable by check or, for shareholders who make prior
arrangements, by wire. Accounts of less than the applicable minimum
initial purchase amount may be redeemed at the option of the Company. The
Company does not charge for redeeming its shares. However, the Company
reserves the right to impose charges for wiring redemption proceeds. See
"Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUNDS?
A. Shares of the Funds are not guaranteed or insured against loss of
principal or interest, although certain of the Funds' portfolio securities
may be insured or guaranteed as to repayments of principal and/or the
payment of interest. Although each of the Funds seeks to maintain a stable
net asset value of $1.00 per share, there is no assurance that it will be
able to do so. As with all mutual funds, there can be no assurance that
the Funds will achieve their investment objectives. Since the California
Tax-Free Money Market Fund will invest primarily in securities issued by
California, its agencies and municipalities, events in California are more
likely to affect this Fund's investments. Also, the California Tax-Free
Money Market Fund is non-diversified, which means that its assets may be
invested in fewer issuers and therefore the value of its assets may be
subject to greater impact by events affecting one of its investments. See
"Investment Objectives, Policies and Activities -- Municipal Securities"
in this Prospectus and "Special Factors Affecting the California Tax-Free
Money Market Fund" in the SAI.
iii
<PAGE> 41
SUMMARY OF EXPENSES
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A
SHARES OF
CALIFORNIA CLASS A U.S.
TAX-FREE SHARES OF TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
Management Fees...................................... 0.45% 0.25% 0.25%
12b-1 Fees........................................... 0.05% 0.25% 0.25%
Other Expenses(1)*................................... 0.18% 0.18% 0.15%
----- ----- -----
Total Fund Operating Expenses(1)*.................... 0.68% 0.65% 0.65%
</TABLE>
- ---------------
(1) After any waivers or reimbursements.
* The percentages shown above are based on amounts incurred during the most
recent fiscal year, and, with respect to "Other Expenses" and "Total Fund
Operating Expenses" for the California Tax-Free Money Market Fund and Class
A Shares of the Money Market Fund, reflect voluntary waivers and
reimbursements. With respect to "Other Expenses" and "Total Fund Operating
Expenses" for the Class A Shares of U.S. Treasury Money Market Fund, the
percentages have been restated to reflect voluntary waivers and
reimbursements that are expected to continue during the current fiscal year.
Absent waivers and reimbursements, the percentages shown above under "Other
Expenses" and "Total Fund Operating Expenses" would have been 0.20% and
0.70%, respectively, for the California Tax Free Money Market Fund; 0.22%
and 0.72% for the Class A Shares of Money Market Fund; and 0.30% and 0.80%
for the Class A Shares of U.S. Treasury Money Market Fund. As further
described in the Prospectus under the caption "Advisory, Administration and
Distribution Arrangements," Wells Fargo Bank and Stephens each has agreed to
waive or reimburse all or a portion of its respective fees in circumstances
where a Fund's expenses that are subject to limitations imposed under state
securities laws and regulations exceed such limitations. In addition, Wells
Fargo Bank and Stephens each may elect, in its sole discretion, to otherwise
waive its respective fees or reimburse expenses. Stephens and Wells Fargo
Bank each has agreed to waive all or a portion of its respective fees,
through at least the current fiscal year, to the extent Total Fund Operating
Expenses for Class A Shares of either the Money Market Fund or the U.S.
Treasury Money Market Fund exceed 0.70% of average net assets. Any such
waivers, limits or reimbursements of fees with respect to a Fund would
reduce the total expenses of such Fund. There can be no assurances that
voluntary fee waivers, limits and reimbursements will continue.
iv
<PAGE> 42
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2)
redemption at the end of each time period indicated:
California Tax-Free Money Market Fund............... $ 7 $ 22 $ 38 $ 85
Money Market Fund -- Class A Shares................. $ 7 $ 21 $ 36 $ 81
U.S. Treasury Money Market Fund -- Class A Shares... $ 7 $ 21 $ 36 $ 81
</TABLE>
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that investors in shares of the Funds will bear
directly or indirectly. There are no sales loads, redemption fees or exchange
fees charged by the Funds. However, the Company reserves the right to impose
charges for wiring redemption proceeds. See Prospectus sections captioned
"Advisory, Administration and Distribution Arrangements," "Purchase of Shares"
and "Distribution Plans" for more complete descriptions of the various costs and
expenses applicable to the Funds. The Example should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown.
v
<PAGE> 43
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Funds' 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Funds' 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
CALIFORNIA TAX-FREE MONEY MARKET FUND
FOR A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DEC. 31, 1994 DEC. 31, 1993 DEC. 31, 1992 DEC. 31, 1991 DEC. 31, 1990 DEC. 31, 1989 DEC. 31, 1988*
------------- ------------- ------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment
Operations:
Net Investment Income... 0.02 0.02 0.03 0.04 0.05 0.06 0.03
Less Distributions:
Dividends From Net
Investment Income..... (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.03)
--------- --------- --------- --------- --------- -------- --------
Net Asset Value, End of
Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ======== ========
Total Return (Not
Annualized)........... 2.22% 1.84% 2.54% 3.99% 5.20% 5.84% 3.29%
Ratios/Supplemental
Data:
Net Assets, End of
Period (000).......... $ 288,409 $ 397,712 $ 363,067 $ 299,234 $ 312,023 $247,777 $271,683
Number of Shares
Outstanding, End of
Period (000).......... 288,490 397,717 363,069 299,234 312,023 247,777 271,683
Ratios to Average Net
Assets (annualized):
Ratio of Expenses to
Average Net
Assets(1)............. 0.68% 0.66% 0.66% 0.66% 0.65% 0.61% 0.55%**
Ratio of Net Investment
Income to Average Net
Assets(2)............. 2.17% 1.82% 2.50% 3.92% 5.07% 5.73% 4.93%
- ------------
(1) Ratio of Expenses to
Average Net Assets
Prior to Waived Fees
and Reimbursed
Expenses............ 0.70% 0.70% 0.69% 0.70% 0.73% 0.75% 0.73%
(2) Ratio of Net
Investment Income to
Average Net Assets
Prior to Waived Fees
and Reimbursed
Expenses............ 2.15% 1.68% 2.47% 3.88% 4.99% N/A N/A
</TABLE>
- ---------------
* The Fund commenced operations on April 7, 1988.
** Annualized.
vi
<PAGE> 44
MONEY MARKET FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992 1991 1990 1989*
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net Investment Income............................................ 0.04 0.03 0.03 0.06 0.08 0.01
Less Distributions:
Dividends From Net Investment Income............................. (0.04) (0.03) (0.03) (0.06) (0.08) (0.01)
-------- -------- -------- -------- -------- ------
Net Asset Values, End of Period.................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======
Total Return (not annualized).................................... 3.70% 2.57% 3.23% 5.65% 7.88% 1.37%
Ratios/Supplemental Data:
Net Assets, End of Period (000).................................. $307,878 $228,084 $268,424 $229,863 $198,187 $40,143
Number of Shares Outstanding, End of Period (000)................ 307,915 228,085 268,434 229,866 198,192 40,143
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1)....................... 0.68% 0.74% 0.75% 0.74% 0.68% 0.53%
Ratio of Net Investment Income to Average Net Assets(2).......... 3.71% 2.54% 3.17% 5.54% 7.55% 8.11%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees
and Reimbursed Expenses...................................... 0.72% 0.74% 0.75% 0.75% 0.84% 1.82%
(2) Ratio of Net Investment Income to Average Net Assets Prior to
Waived Fees and Reimbursed Expenses.......................... 3.67% 2.54% 3.17% 5.53% 7.39% N/A
* The Fund commenced operations on November 1, 1989.
</TABLE>
vii
<PAGE> 45
U.S. TREASURY MONEY MARKET FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992*
--------- --------- ---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.................................................. $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations:
Net Investment Income................................................................. 0.03 0.03 0.02
Less Distributions:
Dividends From Net Investment Income.................................................. (0.03) (0.03) (0.02)
--------- --------- ---------
Net Asset Value, End of Period........................................................ $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return (not annualized)......................................................... 3.44% 2.56% 1.97%
Ratios/Supplemental Data:
Net Assets, End of Period (000)....................................................... $195,031 $118,169 $137,412
Number of Shares Outstanding, End of Period (000)..................................... 195,042 118,169 137,416
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1)............................................ 0.63% 0.52% 0.27%
Ratio of Net Investment Income to Average Net Assets(2)............................... 3.47% 2.55% 3.12%
- ---------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees
and Reimbursed Expenses........................................................... 0.80% 0.77% 0.79%
(2) Ratio of Net Investment Income to Average Net Assets Prior to
Waived Fees and Reimbursed Expenses............................................... 3.30% 2.30% 2.60%
* The Fund commenced operations on May 12, 1992.
</TABLE>
viii
<PAGE> 46
INVESTMENT OBJECTIVES, POLICIES AND ACTIVITIES
Set forth below is a description of the investment objectives and related
policies of each of the Funds. As with all mutual funds, there can be no
assurance that the Funds will achieve their respective investment objectives.
The Funds invest only in U.S. dollar-denominated "Eligible Securities" with
remaining maturities not exceeding thirteen months, as defined in Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"), and maintain a
dollar-weighted average portfolio maturity of 90 days or less. An Eligible
Security is a security that is determined to present minimal credit risks and is
rated in one of the two highest rating categories by the required number of
nationally recognized statistical rating organizations or, if unrated, is
determined to be of comparable quality to such rated securities. These
determinations are made by the investment adviser under guidelines adopted by
the Company's Board of Directors, although in certain instances the Board of
Directors must approve or ratify the Funds' investments. The Board of Directors
of the Company (or Wells Fargo Bank, under authority delegated to it as
investment adviser to the Funds) will determine on an ongoing basis that any
Eligible Securities purchased by the Funds presents minimal credit risks. The
Funds will endeavor to maintain a constant net asset value of $1.00 per share;
however, there is no assurance that this objective will be achieved.
CALIFORNIA TAX-FREE MONEY MARKET FUND
Investment Objective. The California Tax-Free Money Market Fund seeks to
provide investors with a high level of current income exempt from federal income
taxes, a portion of which is also exempt from California personal income taxes,
while preserving capital and liquidity, by investing in high-quality
instruments, principally municipal securities.
As a matter of fundamental policy, the Fund under normal circumstances
invests at least 80% of its net assets in municipal securities that are exempt
from federal income taxes and are not subject to the alternative minimum tax (or
in other open-end tax-free money market funds with a similar fundamental
policy). Under normal market conditions, a substantial majority of the Fund's
total assets will consist of securities, the interest on which is exempt from
both federal income taxes and California personal income taxes. Under normal
market conditions, at least 65% of the Fund's total assets will consist of such
securities. In addition, as a matter of fundamental policy, at the close of each
quarter of the Fund's taxable year, at least 50% of its total assets will
consist of such securities. Securities, the income on which is exempt from both
federal income taxes and the personal income taxes of California, include
municipal obligations issued by or on behalf of the State of California, its
cities, municipalities and other public authorities. See "Investments and
Activities -- Municipal Securities" and "Taxes."
Pending the investment of proceeds from the sale of Fund shares or proceeds
from sales of portfolio securities or in anticipation of redemptions, or to
maintain a "defensive" posture when, in the opinion of the Investment Adviser,
it is advisable to do so because of market conditions, the Fund may elect to
invest temporarily up to 20% of the current value of its net assets in cash
reserves, high-quality taxable Money Market Instruments (discussed below) and
high-quality municipal obligations, the income from which may or may not be
exempt from federal income taxes. Some portion of the income received by the
Fund shareholders may be subject to federal income taxes and California personal
income taxes. The Fund is a non-diversified portfolio, which means that its
assets may be invested in fewer issuers than a diversified portfolio and
therefore the value of its assets may be subject to greater impact by events
affecting one of its investments. Since the Fund will invest primarily in
securities issued by California, its agencies and
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municipalities, events in California are more likely to affect this Fund's
investments. For a further discussion of factors affecting investments by the
California Tax-Exempt Money Market Fund, see "Investments and
Activities -- Municipal Securities" and "Special Factors Affecting the
California Tax-Free Money Market Fund" below.
MONEY MARKET FUND
Investment Objective. The Money Market Fund seeks to provide investors with
a high level of current income, while preserving capital and liquidity, by
investing in high-quality, short-term securities.
Under normal market circumstances, this Fund invests its assets exclusively
in Money Market Instruments (discussed below). This Fund is a diversified
portfolio.
U.S. TREASURY MONEY MARKET FUND
Investment Objective. The U.S. Treasury Money Market Fund seeks to provide
investors with a high level of current income, while preserving capital and
liquidity, by investing in short-term U.S. Treasury bonds, notes and bills
("U.S. Treasury Securities").
The Fund will invest exclusively in U.S. Treasury Securities. U.S. Treasury
Securities are debt obligations issued by the U.S. Government, of which the
payment of interest and repayment of principal are secured by the full faith and
credit of the U.S. Treasury. Treasury bonds, notes and bills differ mainly in
the length of their maturities: Treasury bonds are long-term debt instruments
with original maturities of ten years or more; Treasury notes are medium-term
debt instruments with original maturities of one to ten years; and Treasury
bills are short-term debt obligations with original maturities of one year or
less and are issued on a discounted basis. The U.S. Treasury Money Market Fund
may only purchase U.S. Treasury Securities with remaining maturities of 13
months or less. This Fund is a diversified portfolio.
INVESTMENTS AND ACTIVITIES
Municipal Securities
The municipal securities in which the California Tax-Free Money Market Fund
may invest are:
Long-term municipal bonds rated at the date of purchase "Aa" or better
by Moody's Investors Service, Inc. ("Moody's") or "AA" or better by
Standard & Poor's Corporation ("S&P");
Medium-term municipal notes rated at the date of purchase "MIG 1" or
"MIG 2" (or "VMIG 1" or "VMIG 2" in the case of an issue having a variable
rate with a demand feature) by Moody's or "SP-1+" or "SP-1" by S&P; and
Short-term municipal commercial paper rated at the date of purchase
"P-1" by Moody's or "A-1+" or "A-1" by S&P.
Medium-term municipal notes are generally issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements or of other revenues.
The ability of an issuer to make payments on notes is therefore especially
dependent on such tax receipts, proceeds from bond sales or other revenues, as
the case may be. Municipal commercial paper is a debt obligation with a stated
maturity of 270 days or less that is issued to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term
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debt. From time to time, the Fund may invest 25% or more of the current value of
its total assets in municipal obligations that are related in such a way that an
economic, business or political development or change affecting one such
obligation also would affect the other obligations; for example, municipal
obligations the interest on which is paid from revenues of similar type
projects. Furthermore, from time to time, the Fund may invest 25% or more of the
current value of its total assets in certain "private activity bonds," such as
pollution control bonds; provided, however, that such investments will be made
only to the extent they are consistent with the Fund's fundamental policy,
described above, of investing, under normal circumstances, at least 80% of its
net assets in municipal obligations that are exempt from federal income taxes
and are not subject to the alternative minimum tax. In addition, because the
Fund intends to invest at least 25% of its total assets in obligations issued by
or on behalf of the State of California, its cities, municipalities and other
public authorities, the Fund is particularly dependent on, and may be adversely
affected by, general economic conditions in California. In this regard, certain
of the municipal securities in which the California Tax-Free Money Market Fund
may invest may be bonds or other types of obligations of California issuers that
rely in whole or in part, directly or indirectly, on ad valorem real property
taxes as a source of revenue. The California Constitution limits the powers of
municipalities to impose and collect ad valorem taxes on real property, which,
in turn, restricts the ability of municipalities to service their debt or lease
obligations from such taxes.
Money Market Instruments
Money Market Instruments consist of: (a) short-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) ("U.S. Government obligations") (discussed
below); (b) negotiable certificates of deposit, bankers' acceptances and fixed
time deposits and other short-term obligations of domestic banks (including
foreign branches) that have more than $1 billion in total assets at the time of
the investment and are members of the Federal Reserve System or are examined by
the Comptroller of the Currency or whose deposits are insured by the Federal
Deposit Insurance Corporation ("FDIC"); (c) commercial paper rated at the date
of purchase "P-1" by Moody's or "A-1+" or "A-1" by S&P, or, if unrated, of
comparable quality as determined by the Investment Adviser; (d) certain
repurchase agreements (discussed below); and (e) short-term U.S. dollar-
denominated obligations of foreign banks (including U.S. branches) that at the
time of investment: (i) have more than $10 billion, or the equivalent in other
currencies, in total assets; (ii) are among the 75 largest foreign banks in the
world as determined on the basis of assets; and (iii) have branches or agencies
in the United States.
U.S. Government Obligations
The U.S. Treasury Money Market Fund invests exclusively in U.S. Treasury
Securities. The California Tax-Free Money Market Fund and the Money Market Fund
may invest in various types of U.S. Government obligations. U.S. Government
obligations include securities issued or guaranteed as to principal and interest
by the U.S. Government and supported by the full faith and credit of the U.S.
Treasury. U.S. Treasury obligations differ mainly in the length of their
maturity. Treasury bills, the most frequently issued marketable government
securities, have a maturity of up to one year and are issued on a discount
basis. U.S. Government obligations also include securities issued or guaranteed
by federal agencies or instrumentalities, including government-sponsored
enterprises. Some obligations of agencies or instrumentalities of the U.S.
Government are supported by the full faith and credit of the United States or
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U.S. Treasury guarantees; others, by the right of the issuer or guarantor to
borrow from the U.S. Treasury; still others, by the discretionary authority of
the U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, only by the credit of the agency or instrumentality
issuing the obligation. In the case of obligations not backed by the full faith
and credit of the United States, the investor must look principally to the
agency or instrumentality issuing or guaranteeing the obligation for ultimate
repayment, which agency or instrumentality may be privately owned. There can be
no assurance that the U.S. Government will provide financial support to its
agencies or instrumentalities where it is not obligated to do so. In addition,
U.S. Government obligations are subject to fluctuations in market value due to
fluctuations in market interest rates. Certain types of U.S. Government
obligations are subject to fluctuations in yield or value due to their structure
or contract terms.
Floating- and Variable-Rate Instruments
Certain of the debt instruments in which the Funds may invest bear interest
at rates that are not fixed, but float or vary with, for example, changes in
specified market rates or indices or at specified intervals. Certain of these
floating- and variable-rate instruments may carry a demand feature that would
permit the holder to tender them back to the issuer at par value prior to
maturity. The floating- and variable-rate instruments that the Funds may
purchase include certificates of participation in such floating- and variable-
rate obligations. The investment adviser may rely upon either the opinion of
counsel or Internal Revenue Service rulings regarding the tax-exempt status of
these securities purchased by the California Tax-Free Money Market Fund. The
Funds may invest in floating- and variable-rate obligations even if they carry
stated maturities in excess of thirteen months, upon compliance with certain
conditions of the SEC, in which case such obligations will be treated, in
accordance with these conditions, as having maturities not exceeding thirteen
months. Wells Fargo Bank, as investment adviser to each of the Funds, monitors
on an ongoing basis the ability of an issuer of a demand instrument to pay
principal and interest on demand. Events occurring between the date a Fund
elects to demand payment on a floating- or variable-rate instrument and the time
payment is due may affect the ability of the issuer of the instrument to make
payment when due, and unless such demand instrument permits same-day settlement,
may affect a Fund's ability to obtain payment at par. Demand instruments whose
demand feature is not exercisable within seven days may be treated as liquid,
provided that an active secondary market exists.
Repurchase Agreements
The California Tax-Free Money Market Fund and the Money Market Fund may
enter into repurchase agreements wherein the seller of a security to the Fund
agrees to repurchase that security from the Fund at a mutually agreed-upon time
and price. The period of maturity is usually quite short, often overnight or a
few days, although it may extend over a number of months. These Funds may enter
into repurchase agreements only with respect to U.S. Government obligations and
other securities which are permissible investments for the Funds. All repurchase
agreements will be fully collateralized based on values that are marked to
market daily. The maturities of the underlying securities in a repurchase
agreement transaction may be greater than thirteen months. However, the term of
any repurchase agreement on behalf of the Fund will always be less than thirteen
months. If the seller defaults and the value of the underlying securities has
declined, the Fund may incur a loss. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, the Fund's disposition of
the security may be delayed or limited.
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These Funds may not enter into a repurchase agreement with a maturity of
more than seven days if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days and illiquid securities and, with respect to
the California Tax-Free Money Market Fund, restricted securities. The Funds only
will enter into repurchase agreements with registered broker/dealers and
commercial banks that meet guidelines established by the Company's Board of
Directors and are not affiliated with the investment adviser. The Funds may
participate in pooled repurchase agreement transactions with other funds advised
by Wells Fargo Bank.
Foreign Obligations
The California Tax-Free Money Market Fund and the Money Market Fund may
invest less than 25% of their assets in high-quality, short-term debt
obligations of foreign branches of U.S. banks or U.S. branches of foreign banks
that are denominated in and pay interest in U.S. dollars. Investments in foreign
obligations involve certain considerations that are not typically associated
with investing in domestic obligations. There may be less publicly available
information about a foreign issuer than about a domestic issuer. Foreign issuers
also are not subject to the same accounting, auditing and financial reporting
standards or governmental supervision as domestic issuers. In addition, with
respect to certain foreign countries, 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 development
that could adversely affect investments in, the liquidity of, and the ability to
enforce contractual obligations with respect to, securities of issuers located
in those countries.
Other Tax-Exempt Mutual Funds
The California Tax-Free Money Market Fund may invest in shares of other
open-end investment companies that invest exclusively in high-quality,
short-term securities, provided, however, that such company is a tax-free money
market fund with a fundamental policy of investing, under normal circumstances,
at least 80% of its net assets in obligations that are exempt from federal
income taxes and are not subject to the alternative minimum tax. Such investment
companies can be expected to charge management fees and other operating expenses
that would be in addition to those charged to the Fund. However, the investment
adviser has undertaken to waive its advisory fees with respect to assets so
invested. In no event may this Fund, together with any company or companies
controlled by it, own more than 3% of the total outstanding voting stock of any
such company, nor may the Fund, together with any such company or companies,
invest more than 5% of its assets in any one such company or invest more than
10% of its assets in securities of all such companies combined.
Special Factors Affecting the California Tax-Free Money Market Fund
California is experiencing recurring budget deficits caused by lower than
anticipated tax-revenues and increased expenditures for certain programs. These
budget deficits have depleted the state's available cash resources, and the
state has recently had to use a series of external borrowings to meet its cash
needs. In addition, since 1992 some of the credit rating agencies have assigned
their third highest rating to certain of the state's debt obligations. On July
15, 1994, three of the ratings agencies rating California's long-term debt
lowered their ratings of the state's general obligation bonds. Moody's lowered
its rating from "Aa" to "A1," S&P lowered its rating from "A+" to "A" and termed
its outlook as "stable," and Fitch Investors
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Service lowered its rating from "AA" to "A." The California Tax-Free Money
Market Fund may invest only in securities rated in the top two rating
categories. Any further rating downgrade of the state's debt obligations may
impact the availability of securities that meet the Funds' investment policies
and restrictions. The Fund's investment adviser will continue to monitor and
evaluate the investments of the Fund in light of the events in California and
the Fund's investment objective and investment policies. The rating agencies
will also continue to monitor events in the state and the state and local
governments' responses to budget shortfalls.
Limiting Investment Risks
Each of the Funds must comply with certain investment criteria (noted in
the first paragraph of this section) pursuant to the 1940 Act, each of which is
designed to provide liquidity, reduce risk and allow the Funds to maintain a
stable net asset value of $1.00 per share. Of course, the Funds cannot guarantee
a $1.00 share price.
Debt securities purchased by the Funds may be subject to fluctuations in
market value due to fluctuations in market interest rates; however, as noted
under "Determination of Net Asset Value," the use of amortized cost valuation
attempts to minimize the impact of such market interest rate fluctuations. In
addition, certain types of these securities are subject to fluctuations in yield
due to early prepayments on mortgages underlying such securities.
While the California Tax-Free Money Market Fund will seek to reduce risk by
investing its assets in securities of various issuers, the Fund will be
considered to be non-diversified for purposes of the 1940 Act. However, the Fund
will comply with Internal Revenue Code of 1986, as amended, (the "Code")
diversification requirements. See "Taxes" below.
Since their inception, the Funds have emphasized safety of principal and
high credit quality. In particular, the internal investment policies of the
Funds' investment adviser, Wells Fargo Bank have always prohibited the purchase
for the Funds of many types of floating-rate derivative securities that are
considered potentially volatile. The Board of Directors of the Company has
adopted the following policies on behalf of each of the Funds:
The following types of derivative securities ARE NOT permitted investments
for the Funds:
- capped floaters (on which interest is not paid when market rates move
above a certain level);
- leveraged floaters (whose interest rate reset provisions are based on a
formula that magnifies changes in interest rates);
- range floaters (which do not pay any interest if market interest rates
move outside of a specified range);
- dual index floaters (whose interest rate reset provisions are tied to
more than one index so that a change in the relationship between these
indexes may result in the value of the instrument falling below face
value); and
- inverse floaters (which reset in the opposite direction of their index).
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Additionally, the Funds may not invest in securities whose interest rate
reset provisions are tied to an index that materially lags short-term interest
rates, such as "COFI floaters." The Funds may only invest in floating rate
securities that bear interest at a rate that resets quarterly or more
frequently, and which resets based on changes in standard money market rate
indices such as U.S. Treasury bills, London Interbank Offered Rate, the prime
rate, published commercial paper rates or federal funds rates
* * * *
Each of the Funds' investment objectives, as set forth in the first
paragraph of the subsection describing each Fund above, is fundamental; that is,
the investment objective may not be changed without approval by the vote of the
holders of a majority of the Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI. If the Board of Directors determines, however,
that a Fund's investment objective can best be achieved by a substantive change
in a non-fundamental investment policy or strategy, the Company may make such
change without shareholder approval and will disclose any such material changes
in the then current prospectus.
As matters of fundamental policy, the following apply: (i) each of the
Funds may borrow from banks up to 10% of the current value of its net assets for
temporary purposes only in order to meet redemptions, and these borrowings may
be secured by the pledge of up to 10% of the current value of its net assets
(but investments may not be purchased by the California Tax-Free Money Market
Fund or the Money Market Fund while any such outstanding borrowing exists and
investments may not be purchased by the U.S. Treasury Money Market Fund while
any such outstanding borrowing in excess of 5% of its net assets exists); (ii)
only the California Tax-Free Money Market Fund may make loans of portfolio
securities in accordance with its investment policies; and (iii) none of the
Funds may purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund's investment in that industry would exceed 25% of
the current value of such Fund's total assets, provided that there is no
limitation with respect to investments in (a) U.S. Government obligations (which
includes U.S. Treasury Securities), (b) obligations of domestic banks (for
purpose of this restriction, domestic bank obligations do not include
obligations of U.S. branches of foreign banks or obligations of foreign branches
of U.S. banks), and (c) with respect to the California Tax-Free Money Market
Fund, municipal securities (for the purpose of this restriction, private
activity bonds shall not be deemed municipal securities if the payments of
principal and interest on such bonds are the ultimate responsibility of
non-governmental users). With respect to fundamental investment restriction (ii)
above, the California Tax-Free Money Market Fund does not intend to make loans
of its portfolio securities during the coming year. In addition, as a matter of
non-fundamental investment policy, the California Tax-Free Money Market Fund may
invest up to 5% of its net assets in when-issued securities. See "Investment
Restrictions" and "Additional Permitted Investment Activities" in the SAI.
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ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.
INVESTMENT ADVISER
Pursuant to Advisory Contracts, each of the Funds is advised by Wells Fargo
Bank, 420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds") and to six other
registered open-end management investment companies, each of which consist of
several separately managed investment portfolios.
The Advisory Contracts provide that Wells Fargo Bank shall furnish to the
Funds investment guidance and policy direction in connection with the daily
portfolio management of the Funds. Pursuant to the Advisory Contracts, Wells
Fargo Bank furnishes to the Board of Directors periodic reports on the
investment strategy and performance of each Fund.
Purchase and sale orders of the securities held by each of the Funds may be
combined with those of other accounts that Wells Fargo Bank manages, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold for any of the Funds and other
accounts managed by Wells Fargo Bank, Wells Fargo Bank undertakes to allocate
those transactions among the participants equitably. From time to time, each of
the Funds, to the extent consistent with its investment objective, policies and
restrictions, may invest in securities of companies with which Wells Fargo Bank
has a lending relationship.
For its services under the Advisory Contracts, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rates of 0.45% of the average
daily net assets of the California Tax-Free Money Market Fund, and 0.25% of the
average daily net assets of each of the Money Market Fund and the U.S. Treasury
Money Market Fund. From time to time, Wells Fargo Bank may waive such fees in
whole or in part. In this regard, Wells Fargo Bank has agreed to waive its fees,
through at least the current fiscal year, to the extent Total Fund Operating
Expenses for Class A Shares of the Money Market Fund or the U.S. Treasury Money
Market Fund would exceed 0.70% of average net assets. Any such waiver will
reduce expenses of the Fund involved and, accordingly, have a favorable impact
on the yield of such Fund. For the fiscal year ended December 31, 1994, Wells
Fargo Bank received 0.45%, 0.25% and 0.18% of the average daily net assets of
the California Tax-Free Money Market Fund, Money Market Fund and U.S. Treasury
Money Market Fund, respectively, as compensation for its services as investment
adviser.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with each of the Funds under which Stephens acts as administrator
for the Funds. For providing these administrative services, Stephens is entitled
to receive a monthly fee from each Fund at the annual rate of 0.10% of its
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average daily net assets. For each of the California Tax-Free Money Market Fund
and the U.S. Treasury Money Market Fund, such annual rate shall decrease to
0.05% of such average daily value of net assets of the Fund in excess of $200
million. From time to time, Stephens may waive fees from any or all of the Funds
in whole in part. Any such waiver will reduce expenses of the Fund involved and,
accordingly, have a favorable impact on the yield of such Fund.
The Administration Agreements between Stephens and the Funds state that
Stephens shall provide as administrative services, among other things, general
supervision: (i) of the operation of the Funds, including coordination of the
services performed by the Funds' investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) in connection with regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions, and
preparation of proxy statements and shareholder reports for the Funds; and (iii)
relative to the compilation of data required for the preparation of periodic
reports distributed to the Company's officers and Board of Directors. Stephens
also furnishes office space and certain facilities required for conducting the
business of the Funds and pays the compensation of the Company's Directors,
officers and employees who are affiliated with Stephens.
Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing shares of the
Funds. Stephens bears the cost of printing and mailing prospectuses to potential
investors and any advertising expenses incurred by it in connection with the
distribution of shares, subject to the terms of the distribution plans described
below. In addition, Stephens has established a non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Funds may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise.
Stephens is a full service broker/dealer and investment advisory firm.
Stephens and its predecessor have been providing securities and investment
services for more than 60 years. Additionally, they have been providing
discretionary portfolio management services since 1983. It currently manages
investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.
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DETERMINATION OF NET ASSET VALUE
Net asset value per share of each Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of the Money Market Fund and the U.S. Treasury Money Market Fund is
the value of total net assets attributable to each class divided by the number
of outstanding shares of that class. The value of net assets per class is
determined daily by adjusting the net assets per class at the beginning of the
day by the value of each class's shareholder activity, net investment income and
net realized and unrealized gains or losses for that day. Net investment income
is calculated each day for each class by attributing to each class a pro rata
share of daily income and common expenses, and by assigning class-specific
expenses to each class as appropriate. The net asset value per share of the
California Tax Free Money Market Fund is determined by dividing the value of the
total assets of the Fund less all of its liabilities by the total number of
outstanding shares of the Fund.
The net asset value per share of each Fund is determined at 12:00 noon (New
York time). Each of the Funds uses the amortized cost method to value its
portfolio securities and attempts to maintain a constant net asset value of
$1.00 per share. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.
PERFORMANCE DATA
From time to time, the Company may advertise yield information with respect
to a class of shares of the Funds. Yield information will be based on the
historical earnings and performance of a class of shares of a Fund and should
not be considered representative of future performance. From time to time, each
of the Funds may advertise its current yield and its effective yield for a class
of shares, and the California Tax-Free Money Market Fund also may advertise its
current tax-equivalent yield and its effective tax-equivalent yield. Current
yield for each class of shares of a Fund will be computed by dividing its net
investment income per share of a class of shares earned during a specified
period by its net asset value per share on the last day of such period and
annualizing the result. The current yield of each class of shares of a Fund will
show the annualized income per share generated by an investment in such a class
of shares of the Fund over a stated period. The current tax-equivalent yield of
the California Tax-Free Money Market Fund will be calculated in a similar
manner, but will assume that a stated income tax rate has been applied to non-
exempt income to derive the tax-exempt portion of this Fund's yield. The
effective yield and effective tax-equivalent yield are calculated similarly but,
when annualized, the income earned, or the tax-equivalent income assumed to have
been earned, per share of a class of shares will be assumed to have been
reinvested. The effective yield and effective tax-equivalent yield will be
slightly higher than the current yield and current tax-equivalent yield,
respectively, because of the compounding effect of this assumed reinvestment.
Additional information about the performance of each Fund is contained in the
Annual Report for each Fund. The Annual Report may be obtained free of charge by
calling the Company at 800-552-9612.
PURCHASE OF SHARES
Shares of any of the Funds may be purchased on any day the Exchange is open
for trading through Stephens, the Transfer Agent, or any authorized
broker/dealer or financial institution with which Stephens has entered into
agreements. Such broker/dealers or financial institutions are responsible for
the prompt transmission of purchase, exchange or redemption orders, and may
independently establish and charge additional fees to their clients for such
services, other than services related to purchase orders, which would
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reduce the clients' overall yield or return. The Exchange is closed on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day (each, a "Holiday"). When any Holiday
falls on a Saturday, the Exchange usually is closed the preceding Friday, and
when any Holiday falls on a Sunday, the Exchange is closed the following Monday.
In most cases, the minimum initial purchase amount for shares of any of the
Funds is $1,000. The minimum initial purchase amount is $100 for shares
purchased through the Systematic Purchase Plan. The minimum subsequent purchase
amount is $100. The minimum initial or subsequent purchase amount requirements
may be waived or lowered for investments effected on a group basis by certain
entities and their employees, such as pursuant to a payroll deduction or other
accumulation plan. In addition, the minimum initial purchase amount does not
apply to investors who purchase shares of the Money Market Fund as customers of
a financial institution which has established a cash sweep arrangement with
respect to the Money Market Fund. The Company reserves the right to reject any
purchase order. All funds will be invested in full and fractional shares. Checks
will be accepted for the purchase of any Fund's shares subject to collection at
full face value in U.S. dollars. Inquiries may be directed to the Company at the
address or telephone number on the front cover of the Prospectus.
A salesperson or any other person or entity entitled to receive
compensation for selling or servicing Shares of any of the Funds may receive
different compensation with respect to one class of Shares over another.
Shares of the Funds are offered continuously at the net asset value next
determined after a purchase order is effective. No sales load is imposed.
Account Applications for shares of any of the Funds will become effective
when an investor's bank wire order or check is converted into federal funds. If
payment is transmitted by the Federal Reserve Wire System, the Account
Application will become effective upon receipt. In addition, if investors, with
the prior approval of the Company, notify the Company at or before 12:00 noon
(New York time) on any business day that they intend to wire federal funds to
purchase shares of any of the Funds, the Account Application will be executed at
the net asset value per share determined at 12:00 noon (New York time) the same
day. Wire transmissions may, however, be subject to delays of several hours, in
which event the effectiveness of the order will be delayed. Payments transmitted
by a bank wire other than the Federal Reserve Wire System may take longer to be
converted into federal funds.
------------------------
When payment for shares of any of the Funds is by a check that is drawn on
any member bank of the Federal Reserve System, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.
By investing in shares of any of the Funds, you appoint the Transfer Agent,
as agent, to establish an open account to which all shares purchased will be
credited, together with any dividends and capital gain distributions that are
paid in additional shares. See "Dividends and Distributions." Stock certificates
for the Funds will not be issued.
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<PAGE> 57
Shares of any of the Funds may be purchased by any of the methods described
below.
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the name(s) in which the shares are to be
registered, the address, social security or tax identification number (where
applicable) of the person or entity in whose name(s) the shares will be
registered, dividend payment election, amount to be wired, name of the wiring
bank and name and telephone number of the person to be contacted in connection
with the order. An account number will be assigned.
2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express (designate Fund and Class, if any)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
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 next
determined after the Account Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and, subject to limited exceptions, a check
for $1,000 or more, payable to "Overland Express (designate Fund and Class, if
any)" at its mailing address set forth above.
ADDITIONAL PURCHASES
Additional purchases of $100 or more may be made by instructing the Funds'
Transfer Agent to debit an approved account designated in your Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express (designate Fund and Class, if any)" sent to the above
address. Write the Fund account number on the check and include the detachable
stub from a Statement of Account or a letter providing the account number.
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<PAGE> 58
SYSTEMATIC PURCHASE PLAN
The Company's Systematic Purchase Plan provides you with a convenient way
to establish and add to your existing accounts on a monthly basis. If you elect
to participate in this plan, specify an amount ($100 or more) to be withdrawn
automatically by the Transfer Agent on a monthly basis from a designated bank
account (provided your bank is a participant in the automated clearing house
system). The Transfer Agent withdraws and uses this amount to purchase shares of
the designated Fund on or about the fifth business day of each month. There are
no additional fees charged for participating in this plan.
You may change the investment amount, suspend purchases or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if the designated bank account balance is insufficient
to make a scheduled withdrawal, or if either the designated bank account or your
account is closed.
PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Purchase orders for Shares of any of the Funds placed through
broker/dealers and financial institutions by 12:00 noon (New York time) on any
business day that the Exchange is open for trading, including orders for which
payment is to be made from free cash credit balances in securities accounts,
generally will be executed on the same day the order is placed if notice is
provided to the Transfer Agent by 12:00 noon (New York time) and federal funds
are received by the Transfer Agent before the close of business. Purchase orders
that are received by a broker/dealer or financial institution after 12:00 noon
(New York time) on any business day that the Exchange is open for trading or
that are not received by the Transfer Agent before the close of business,
generally will be executed on the next business day following the day the order
is placed. The broker/dealer or financial institution is responsible for the
prompt transmission of purchase orders to the Transfer Agent. A broker/dealer or
financial institution that is involved in a purchase transaction may charge
separate account, service or transaction fees. Financial institutions may be
required to register as dealers pursuant to applicable state securities laws,
which may differ from federal law and any interpretations expressed herein.
EXCHANGE PRIVILEGES
Shares of any of the Funds may be exchanged for shares of another Fund or
for Class A Shares of any other investment portfolio of the Company in an
identically registered account (provided that shares of the investment portfolio
to be acquired are registered for sale in your state of residence) at respective
net asset values if the shares being acquired carry no sales load or the shares
being exchanged were acquired in exchange for shares on which an equivalent
sales load was paid. Otherwise, applicable sales loads or sales load
differentials will be charged on an exchange.
You may exchange shares by writing the Transfer Agent as indicated below
under Redemption by Mail, or by calling the Transfer Agent or your authorized
broker/dealer or financial institution, unless you have elected not to authorize
telephone exchanges in your Account Application (in which case you may
subsequently authorize such telephone exchanges by completing a Telephone
Exchange Authorization Form and submitting it to the Transfer Agent in advance
of the first such exchange). The Transfer Agent's number for exchanges is (800)
572-7797.
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Procedures applicable to redemption of the Funds' shares also are
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between portfolios, or to reject in whole or in part any exchange request into a
fund when management believes that such action would be in the best interest of
the fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
The exchange privilege is not an option or a right to purchase shares, but is
permitted under the current policies of the respective Funds and portfolios of
the Company. A capital gain or loss for tax purposes may be realized upon an
exchange, depending upon the cost or other basis of shares redeemed.
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.
The Company does not charge for redemption transactions. However, a
broker/dealer or financial institution that is involved in a redemption
transaction may charge separate account, service or transaction fees. Redemption
orders for shares of any of the Funds received by an authorized broker/dealer or
financial institution on any day that the Fund is open and received by the
Transfer Agent before 12:00 noon (New York time) on the same day will be
executed at the net asset value determined at 12:00 noon (New York time) on that
day. Redemption orders for any of the Funds received by authorized
broker/dealers or financial institutions on any day that the Fund is open and
received by the Transfer Agent after 12:00 noon (New York time) will be executed
at the net asset value determined at 12:00 noon (New York time) on the next day
that the Fund is open.
Redemption proceeds ordinarily will be remitted within seven days after the
order is received in proper form, except proceeds may be remitted over a longer
period to the extent permitted by the SEC under extraordinary circumstances. If
an expedited redemption is requested, redemption proceeds will be distributed
only if the check used for investment is deemed to be cleared for payment by
your bank, currently considered by the Company to be a period of 15 days after
investment. The redemption proceeds,
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<PAGE> 60
of course, may be more or less than cost. Payment of redemption proceeds may be
made in securities, subject to regulation by some state securities commissions.
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount 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 (where 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 made to someone other than yourself at your address of
record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is a member of the FDIC, a
trust company, a member firm of a domestic stock exchange, a savings
association, or a credit union that is authorized by its charter to provide a
signature guarantee. Signature guarantees by notaries public are not acceptable.
Further documentation may be requested from corporations, administrators,
executors, personal representatives, trustees or custodians.
4. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares -- Initial Purchases of Fund Shares by Wire."
Unless other instructions are given in proper form, a check for the
proceeds of redemption will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your accounts and the proceeds distributed to you on a
monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of your date of the election to
participate, and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in a designated bank account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption
as instructed on or about the fifth business day prior to the end of each month.
There are no additional fees charged for participating in this plan.
You may change the withdrawal amount, suspend withdrawals or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if your account balance is insufficient to make a
scheduled withdrawal or if your 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 elected not to
authorize telephone redemptions on your Account Application
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<PAGE> 61
or other form that is on file with the Transfer Agent) on any day the Funds are
open for business. See "Exchange Privileges" for additional information
regarding telephone redemption privileges.
To request expedited redemption by telephone call the Transfer Agent at
(800) 572-7797.
To request expedited redemption by mail, mail the expedited redemption
request to the Transfer Agent at the mailing address set forth under "Purchase
of Shares -- Initial Purchases of Fund Shares by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to your bank indicated in your Account Application or wired to
an authorized broker/dealer or financial institution designated in your Account
Application. The Company reserves the right to impose charges for wiring
redemption proceeds. When proceeds of an expedited redemption are to be paid to
someone other than yourself, to an address other than that of record, or to a
bank, broker/dealer or other financial institution that has not been
predesignated, the expedited redemption request must be made by letter and the
signature(s) on the letter must be guaranteed, regardless of the amount of the
redemption. If an expedited redemption request is received by the Transfer Agent
by 12:00 noon (New York time) on a day the Funds are open for business, the
redemption proceeds will be transmitted to your bank or predesignated
broker/dealer or financial institution on the same day (assuming the investment
check has cleared as described above), absent extraordinary circumstances. A
check for proceeds of less than $5,000 will be mailed to your address of record,
except that, in the case of investments in the Company that have been effected
through broker/dealers, banks and other institutions that have entered into
special arrangements with the Company, the full amount of the redemption
proceeds may be transmitted by wire or credited to a designated account. The
Company reserves the right to impose charges for wiring redemption proceeds.
REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Unless you have made other arrangements, and have informed the Transfer
Agent of such arrangements, proceeds of redemptions made through authorized
broker/dealers and financial institutions will be credited to your account with
such broker/dealer or institution. You may request a check from the
broker/dealer or financial institution or may elect to retain the redemption
proceeds in your account. The broker/dealer or financial institution may benefit
from the use of the redemption proceeds prior to the clearance of a check issued
to you for such proceeds or prior to disbursement or reinvestment of such
proceeds on your behalf.
------------------------
The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.
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 applicable minimum.
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DISTRIBUTION PLANS
The Company's Board of Directors has adopted a Distribution Plan on behalf
of each Fund. Under the Plan for the California Tax-Free Money Market Fund, the
Fund may defray all or part of the cost of preparing and printing prospectuses
and other promotional materials and of delivering prospectuses and those
materials to prospective shareholders of the Fund, by paying on an annual basis
up to the greater of $100,000 or 0.05% of the Fund's average daily net assets.
The Plan for the California Tax-Free Money Market Fund provides only for the
reimbursement of actual expenses. Under the Plans for the Class A Shares of the
Money Market Fund and the Class A Shares of the U.S. Treasury Money Market Fund,
Stephens is entitled to receive, as compensation for distribution-related
services, a monthly fee at an annual rate of up to 0.25% of each Fund's average
daily net assets attributable to Class A Shares. The actual fee payable to
Stephens is determined, within such limit, from time to time by mutual agreement
between the Company and Stephens, and may not exceed the maximum amount payable
under the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. Stephens may enter into selling agreements with one or more
selling agents under which such agents may receive compensation for
distribution-related services from Stephens, including, but not limited to,
commissions or other payments to such agents based on the average daily net
assets of the Class A Shares of the Money Market Fund and/or the Class A Shares
of the U.S. Treasury Money Market Fund attributable to them. Stephens may retain
any portion of the total distribution fee payable under the Plans for these
Funds to compensate it for distribution-related services provided by it or to
reimburse it for other distribution-related expenses.
Each of the Funds may participate in joint distribution activities with any
of the other Funds or portfolios of the Company, in which event, expenses
reimbursed out of the assets of one of the Funds may be attributable, in part,
to the distribution-related activities of the other Funds or another portfolio.
Generally, the expenses attributable to joint distribution activities will be
allocated among the Funds and the other portfolios of the Company in proportion
to their relative net asset sizes, although the Board of Directors may allocate
such expenses in any other manner that it deems fair and equitable.
DIVIDENDS AND DISTRIBUTIONS
Each of the Funds intends to declare as a dividend substantially all of its
net investment income for each class at the close of each business day to
shareholders of record at 12:00 noon (New York time) on the day of declaration.
Shares purchased will begin earning dividends on the day the purchase order
settles and shares redeemed will earn dividends through the day prior to the
date of redemption. Net investment income for a Saturday, Sunday or holiday will
be declared as a dividend to shareholders of record at 12:00 noon (New York
time) on the previous business day.
Dividends of each Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of any of the Funds who redeem
shares prior to a dividend payment date will be entitled to all dividends
declared but unpaid prior to redemption on such shares on the next dividend
payment date.
Net capital gains of each class of each Fund, if any, will be distributed
annually (or more frequently to the extent permitted to avoid imposition of the
4% excise tax described in the SAI or in order to maintain the net asset value
of the Fund's shares at $1.00 per share).
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Dividends and/or capital gain distributions paid by each of the Funds will
be invested in additional Shares of the same Fund at net asset value and
credited to your account on the payment date or, at your election, paid by
check. Dividend checks and Statements of Account will be mailed approximately
three business days after the payment date.
The net investment income of the Money Market Fund and the U.S. Treasury
Money Market Fund available for distribution to the holders of the Class A
Shares will be reduced by the amount of the distribution-related expenses
payable under the Plans. There may be certain other differences in fees (e.g.
transfer agent fees) between Class A Shares and Institutional Shares of the
Money Market Fund and the U.S. Treasury Money Market Fund that would affect
their relative dividends.
TAXES
By complying with the applicable provisions of the Code, the Funds will not
be subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to their shareholders. However, dividends
from taxable investment income (which includes net short-term capital gains, if
any) declared and paid by each Fund will be taxable as ordinary income to Fund
shareholders. Whether you take dividend payments in cash or have them
automatically reinvested in additional shares, they will be taxable. Generally,
dividends of taxable income are taxable to shareholders at the time they are
paid. However, dividends of taxable income 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 taxable dividend and capital gain
distributions on shares of a Fund which are held under a qualified tax-deferred
retirement plan. The Funds intend to pay out all their net investment income and
net realized capital gains (if any) for each year. The Funds' dividends will not
qualify for the dividends received deduction allowed to corporate shareholders.
By complying with the applicable provisions of the Code, that portion of
the California Tax-Free Money Market Fund's net investment income that is
attributable to interest from tax-exempt securities and that is distributed as
dividends to shareholders will be designated by the Company as an
"exempt-interest dividend," and, as such, will be exempt from federal income
taxes. However, dividends attributable to interest from taxable securities,
accretion of market discount on certain bonds and capital gains (if any) will be
taxable to shareholders. Also, as long as the California Tax-Free Money Market
Fund complies with applicable provisions of the California Revenue and Taxation
Code, it will be entitled to pay its shareholders dividends that are exempt from
California personal income tax.
The Funds may be required to pay withholding and other taxes imposed by
foreign countries generally at rates from 10% to 40%, which would reduce such
Funds' investment income. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. It is not anticipated that
shareholders will be entitled to take a foreign tax credit or deduction for such
foreign taxes.
The Funds will inform you of the amount and nature of such Fund dividends
and capital gains. You should keep all statements you receive to assist in your
personal recordkeeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on dividends paid and redemption
proceeds (including proceeds from exchanges) paid or credited to individual
shareholders of the Funds if a correct Taxpayer Identification Number, certified
when required, is not on file with the Company or the
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Transfer Agent. In connection with this withholding requirement, you will be
asked to certify on your Account Application that the social security or
taxpayer identification number you provide is correct and that you are not
subject to 31% backup withholding for previous underreporting to the IRS.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.
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 Funds.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the Funds' custodian and
transfer and dividend disbursing Agent. Wells Fargo Bank performs the custodial
services at its address above. The transfer and dividend disbursing agency
activities are performed at 525 Market Street, San Francisco, California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end, management investment company, was incorporated
in Maryland on April 27, 1987. The authorized capital stock of the Company
consists of 20,000,000,000 shares having a par value of $.001 per share. The
Company currently offers twelve series of shares, each representing an interest
in one of the funds in the Overland Express Family of Funds -- the Asset
Allocation Fund, the California Tax-Free Bond Fund, the California Tax-Free
Money Market Fund, the Money Market Fund, the Municipal Income Fund, the
Overland Sweep Fund, the Short-Term Government-Corporate Income Fund, the
Short-Term Municipal Income Fund, the Strategic Growth Fund, the U.S. Government
Income Fund, the U.S. Treasury Money Market Fund and the Variable Rate
Government Fund. The Board of Directors may, in the future, authorize the
issuance of shares of capital stock representing additional series or investment
portfolios. All shares of the Company have equal voting rights and will be voted
in the aggregate, and not by series or class, except where voting by series or
class is required by law or where the matter involved affects only one series or
class. The Company may dispense with the annual meeting of shareholders in any
fiscal year in which it is not required to elect Directors under the 1940 Act;
however, shareholders are entitled to call a meeting of shareholders for
purposes of voting on removal of a Director or Directors. A more detailed
statement of the voting rights of shareholders is contained in the SAI. All
shares of the Company, when issued, will be fully paid and nonassessable.
In addition to the Class A Shares, the Money Market Fund and the U.S.
Treasury Money Market Fund each offers an Institutional Class of Shares. The
Institutional Shares, which require a minimum initial investment of at least
$150,000, are not subject to fees imposed under the Distribution Plans (Rule
12b-1 fees) applicable to Class A Shares. For more information about this class
of shares, see a current prospectus for the Institutional Shares, available from
the Company at the telephone number set forth on the cover page.
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<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. 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
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1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT #
- ------------------------------------------------------------------------------------------------------------------------------------
/ / INDIVIDUAL 1. Individual - -
USE LINE 1 --------------------------------- ----------- ------- ------------
First Name Initial Last Name Soc. Security No.
/ / JOINT OWNERS 2. Joint Owner (Only one Soc. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 6, "Authorization for Trusts and
Organizations."
/ / ORGANIZATION* 5. Organization Name -
USE LINE 5 ---------------------------------------- --------------------- -----------------
*Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 6).
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS:
Number and Street Apartment No.
------------------------------------------------------------------------------ ------------------
City State Zip Code
------------------------------------------------------------------- ------------ ---------------------------
Telephone Numbers: (DAY) - - (EVENING) - -
----------- ----------- ------------------ ----------- ----------- ------------------
(Area Code) (Area Code)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
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<TABLE>
<S> <C>
LOGO ACCOUNT APPLICATION
PAGE 2 OF 5
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2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT AMOUNT:
/ / OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET $
---------------
/ / OVERLAND EXPRESS MONEY MARKET FUND -- CLASS A $
---------------
/ / OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- CLASS A $
---------------
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express Funds, Inc.)
/ / Funds have been wired to 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.
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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) Name of Fund
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PLAN:
/ / I hereby authorize you to systematically redeem a sufficient number of shares from my Overland Express account and to
distribute the amount specified below by check to the registration address set forth in Section 1 or the bank account
designated in Section 3. I understand and agree that the redemption of shares and mailing or depositing of proceeds will occur
on or about the fifth business day prior to the end of each month and that such monthly payments shall continue until my
written notice to cancel has been received by you at least five (5) business days prior to the next scheduled withdrawal.
Monthly Withdrawal Amount: $
-------------------------------- --------------------------------
(minimum $100) Name of Fund
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 67
<TABLE>
<S> <C>
LOGO ACCOUNT APPLICATION
PAGE 3 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Bank Name
--------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
--------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
4. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize telephone instructions.)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / If this box is checked, you are NOT authorized to honor my telephone instructions for purchase of additional Fund shares,
redemptions of Fund shares and exchanges of shares between Funds. If this box is not checked, I understand that telephone
instructions will be effected by debiting/crediting the account designated in Section 3 (if approved) and that if a designated
account has not been authorized and approved, a check or wire transfer will be required for a purchase and a check will be
sent for a redemption.
- ------------------------------------------------------------------------------------------------------------------------------------
5. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- ------------------------------------------------------------------------------------------------------------------------------------
All dividends and capital gain distributions will be automatically reinvested in shares of the Fund unless otherwise indicated:
OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET FUND:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
OVERLAND EXPRESS MONEY MARKET FUND -- CLASS A:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- CLASS A:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 68
<TABLE>
<S> <C>
LOGO ACCOUNT APPLICATION
PAGE 4 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
6. 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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 69
<TABLE>
<S> <C>
LOGO ACCOUNT APPLICATION
PAGE 5 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
7. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:
Country:
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------- ------------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 70
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT THE FUNDS,
SIMPLY CALL (800) 552-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
81P 5/95
LOGO
------------------------
PROSPECTUS
------------------------
California Tax-Free
Money Market Fund
Money Market Fund
Class A Shares
U.S. Treasury Money
Market Fund
Class A Shares
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
<PAGE> 71
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 72
LOGO
Telephone: (800) 552-9612
Overland Express Funds, Inc. (the "Company") is an open-end, series
management investment company. This Prospectus contains information about two of
the funds in the Overland Express Family of Funds -- the SHORT-TERM MUNICIPAL
INCOME FUND (formerly the 1-3 Year Duration Municipal Income Fund) and the
SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND (formerly the 1-3 Year Duration Full
Faith and Credit Government Income Fund) (each, a "Fund," and together, the
"Funds").
EACH FUND INVESTS ALL OF ITS ASSETS IN A SEPARATE PORTFOLIO (EACH, A
"MASTER PORTFOLIO") OF MASTER INVESTMENT TRUST (THE "TRUST"), AN OPEN-END,
MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO OF SECURITIES. EACH
MASTER PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE AS THE FUND BEARING THE
CORRESPONDING NAME. THEREFORE, EACH FUND'S INVESTMENT EXPERIENCE CORRESPONDS
DIRECTLY WITH THE RELEVANT MASTER PORTFOLIO'S INVESTMENT EXPERIENCE. SHARES OF
THE MASTER PORTFOLIOS MAY BE PURCHASED ONLY BY OTHER INVESTMENT COMPANIES OR
SIMILAR ACCREDITED INVESTORS.
The investment objective of the SHORT-TERM MUNICIPAL INCOME FUND is to
provide investors with a high level of income exempt from federal income taxes,
while managing principal volatility. The Fund seeks to achieve its investment
objective by investing all of its assets in the Short-Term Municipal Income
Master Portfolio of the Trust, which has the same investment objective as the
Fund.
The investment objective of the SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND
is to provide investors with current income, while managing principal
volatility. The Fund seeks to achieve its investment objective by investing all
of its assets in the Short-Term Government-Corporate Income Master Portfolio of
the Trust, which has the same investment objective as the Fund.
THE INVESTMENT POLICIES OF EACH MASTER PORTFOLIO ARE SUMMARIZED ON THE NEXT
PAGE AND IN THE "INVESTMENT OBJECTIVES AND POLICIES" SECTION OF THE PROSPECTUS.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Funds and should be read and retained for
future reference. A Statement of Additional Information dated May 1, 1995,
containing additional and more detailed information about the Funds (the "SAI"),
has been filed with the Securities and Exchange Commission (the "SEC") and is
hereby incorporated by reference into this Prospectus. It is available without
charge and can be obtained by calling the Company at the telephone number
printed above or writing the Company at P.O. Box 63084, San Francisco, CA 94163.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED
OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY
OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN
A FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THESE AUTHORITIES PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------------
PROSPECTUS DATED MAY 1, 1995
<PAGE> 73
The SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO seeks to achieve its
investment objective by investing primarily in investment-grade municipal
securities.
The SHORT-TERM GOVERNMENT-CORPORATE INCOME MASTER PORTFOLIO seeks to
achieve its investment objective by investing primarily in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) and in investment-grade corporate obligations.
Each Master Portfolio's investments include fixed-, variable- and
floating-rate instruments. Except during temporary defensive periods, the
Short-Term Municipal Income Master Portfolio and the Short-Term
Government-Corporate Income Master Portfolio each seeks to maintain a portfolio
of securities with an average weighted maturity of 90 days to 2 years. Each
Master Portfolio seeks to manage principal volatility by diversifying its assets
among permissible investments based, in part, on maturity, duration or other
characteristics that affect such securities' sensitivity to changes in market
interest rates.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUNDS AND MASTER PORTFOLIOS, FOR WHICH IT IS
COMPENSATED. STEPHENS INC., ("STEPHENS") WHICH IS NOT
AFFILIATED WITH WELLS FARGO BANK, IS THE SPONSOR AND
DISTRIBUTOR FOR THE FUNDS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................... ii
Summary of Expenses........................................................................ v
Financial Highlights....................................................................... 1
Investment Objectives and Policies......................................................... 3
Short-Term Municipal Income Master Portfolio............................................. 3
Short-Term Government-Corporate Income Master Portfolio.................................. 4
Additional Information About Permitted Investment Activities............................... 4
Management of the Funds and the Master Portfolios.......................................... 10
Determination of Net Asset Value........................................................... 15
Performance Data........................................................................... 15
Purchase of Shares......................................................................... 16
Exchange Privileges........................................................................ 21
Redemption of Shares....................................................................... 22
Distribution Plans......................................................................... 25
Dividends and Distributions................................................................ 25
Taxes...................................................................................... 26
Custodian, Transfer and Dividend Disbursing Agent.......................................... 27
Organization and Capital Stock............................................................. 27
</TABLE>
i
<PAGE> 74
PROSPECTUS SUMMARY
The Company, as an open-end management investment company, provides a
convenient way for you to invest in portfolios of securities selected and
supervised by professional management. The following provides information about
the Funds and the Master Portfolios.
Q. WHAT ARE THE INVESTMENT OBJECTIVES AND PERMISSIBLE INVESTMENTS OF THE
FUNDS AND THE MASTER PORTFOLIOS?
A. The investment objective of the SHORT-TERM MUNICIPAL INCOME FUND is to
provide investors with a high level of income exempt from federal income
taxes, while managing principal volatility. The Fund seeks to achieve its
investment objective by investing all of its assets in the Short-Term
Municipal Income Master Portfolio of the Trust, which is a professionally
managed, open-end series investment company. The Short-Term Municipal
Income Master Portfolio has the same investment objective as the Fund. The
Short-Term Municipal Income Master Portfolio, a diversified portfolio,
seeks to achieve its investment objective by investing primarily in
investment-grade municipal securities. The Short-Term Municipal Income
Master Portfolio also may invest in certain U.S. Government obligations
and money market instruments.
The investment objective of the SHORT-TERM GOVERNMENT-CORPORATE INCOME
FUND is to provide investors with current income, while managing principal
volatility. The Fund seeks to achieve its investment objective by
investing all of its assets in the Short-Term Government-Corporate Income
Master Portfolio of the Trust, which has the same investment objective as
the Fund. The Short-Term Government-Corporate Income Master Portfolio, a
diversified portfolio, seeks to achieve its investment objective by
investing primarily in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including
government-sponsored enterprises) and in investment-grade corporate
obligations. The securities that the Master Portfolio may purchase include
U.S. Treasury bonds, notes and bills; obligations of the U.S. Government,
its agencies or instrumentalities; investment-grade corporate bonds and
notes, asset-backed securities and money market instruments.
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, as the investment adviser of each Master Portfolio,
manages the investments of each Fund in the corresponding Master
Portfolio. The Company has not retained the services of a separate
investment adviser for the Funds because each Fund invests all of its
assets in the corresponding Master Portfolio. Wells Fargo Bank also
provides the Funds and the Master Portfolios with transfer agency,
dividend disbursing agency and custodial services. Stephens is the
sponsor, administrator and distributor for the Company and the Trust. See
"Management of the Funds and the Master Portfolios."
ii
<PAGE> 75
Q. HOW MAY I PURCHASE SHARES?
A. You may purchase shares of each Fund on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 3.00% (3.09% of the net amount invested) for purchasing shares of
each Fund. If you make a combined investment in any of the Funds of
$1,000,000 or more you do not pay a sales load. See "Purchase of Shares"
and "Reduced Sales Loads." Generally, the minimum initial purchase amount
for a Fund is $1,000 with minimum subsequent purchase amounts per account
of $100 or more. You may purchase shares of a Fund through Stephens, Wells
Fargo Bank as transfer agent (the "Transfer Agent"), or any authorized
broker/dealer or financial institution. Purchases of Fund shares may be
made by wire directly to the Transfer Agent. Each Fund may pay the
distributor a monthly fee at an annual rate of up to 0.25% of such Fund's
average daily net assets to compensate the distributor for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. See "Purchase of Shares" and "Distribution
Plans."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of each Fund are declared daily and are paid monthly.
Monthly dividends are automatically reinvested in additional shares of the
Fund which paid such dividends, unless you elect to receive dividends by
check. Any capital gains are distributed annually and may be reinvested in
Fund shares or paid by check at your election. All reinvestments of
dividends and/or capital gain distributions in Fund shares are effected at
the then current net asset value free of any sales load. In addition to
the above options for receiving dividends and capital gain distributions,
you may elect to reinvest Fund dividends and/or capital gain distributions
in shares of another fund in the Overland Express Family of Funds with
which you have an established account. See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open shares may be redeemed upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or by telephone direction. Proceeds are
payable by check. Accounts of less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. The Company
does not charge for redeeming your shares. However, the Company reserves
the right to impose charges for wiring your redemption proceeds. See
"Redemption of Shares."
iii
<PAGE> 76
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUNDS?
A. An investment in a Fund is not insured against loss of principal. The
market value of the securities held by each Master Portfolio is subject to
interest rate risk. Interest rate risk is the risk that increases in
market interest rates may adversely affect the value of the securities in
which each Master Portfolio invests, and hence the value of your
investment in a Fund. The values of such securities generally change
inversely to changes in market interest rates. The portfolio investments
of the Master Portfolios are also subject to credit risk. Credit risk is
the risk that the issuers of securities in which the Master Portfolio
invests may default in the payment of principal and/or interest. Any such
defaults may adversely affect the value of the securities in which the
Master Portfolio invests and, hence, the value of your investment in the
Fund. Given the relatively novel nature of the master/feeder structure,
accounting and operational difficulties could arise. The Funds and the
Master Portfolios were formed in 1994, and have a limited operating
history. As with all mutual funds, there can be no assurance that the
Funds will achieve their investment objectives. For further information
see "Additional Information About Permitted Investment Activities."
Q. WHAT ARE DERIVATIVES AND DO THE FUNDS USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus,
such as variable-rate instruments which have an interest rate that is
reset periodically based on an index, can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in
interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or
contract terms.
Q. WHAT STEPS DO THE FUNDS TAKE TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to each Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with each Fund's investment objective, does not expose the
Funds to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by each Fund also is subject to broadly
applicable investment policies. For example, the Funds may not invest more
than a specified percentage of their assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may a Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.
iv
<PAGE> 77
SUMMARY OF EXPENSES
The following table is a standard format required for all mutual funds to
help you understand the various costs and expenses you will bear directly or
indirectly as a shareholder of the Funds. The expenses and fees set forth
include each Fund's proportionate share of the expenses of the corresponding
Master Portfolio.
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
MUNICIPAL GOVERNMENT-
INCOME CORPORATE
SHAREHOLDER TRANSACTION EXPENSES FUND INCOME FUND
- ----------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).................................. 3.00% 3.00%
Sales Charge Imposed on Reinvested Dividends........................... None None
Sales Charge Imposed on Redemptions.................................... None None
Exchange Fees.......................................................... None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES*
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------------------------------------
<S> <C> <C>
Management Fees(1).................................................... 0.20% 0.20%
12b-1 Fees............................................................ 0.25% 0.25%
Other Expenses(1)..................................................... 0.05% 0.05%
------------ -------------
Total Fund Operating Expenses(1)**.................................... 0.50% 0.50%
------------ -------------
</TABLE>
- ---------------
(1) After any waivers or reimbursements.
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses on a $1,000 investment in a Fund,
assuming (1) a 5% annual return and (2) redemption at the end of each
time period indicated:
Short-Term Municipal Income Fund............................................... $36 $49
Short-Term Government-Corporate Income Fund.................................... $36 $49
</TABLE>
- ---------------
* Other mutual funds may invest in a Master Portfolio; such other funds'
expenses and, accordingly, investment returns may differ from those of the
corresponding Fund.
** The percentages shown above state the basis on which payments will be made
(except "Other Expenses," which is an estimate), and reflect waivers and
reimbursements that are expected to continue during the current fiscal year.
As further described in the Prospectus under "Management of the Funds and the
Master Portfolios," Wells Fargo Bank and Stephens each has agreed to waive or
reimburse all or a portion of its respective fees if certain Fund expenses
exceed limits set by state securities laws or regulations. In addition,
Stephens and Wells Fargo Bank at their sole discretion may waive or reimburse
all or a portion of their respective fees charged to, or expenses paid by a
Fund. Any waivers or reimbursements would reduce a Fund's total expenses.
Stephens and Wells Fargo Bank each has agreed to waive its fees for each Fund
and the corresponding Master Portfolio, through at least the current fiscal
year, to the extent that a Fund's Total Fund Operating Expenses would exceed
0.50% of average net assets. There can be no assurance that waivers or
reimbursements will continue. Absent waivers and reimbursements, the
percentages shown above under "Management Fee," "Other Expenses" and "Total
Fund Operating Expenses" would have been 0.50%, 0.10% and 0.85%,
respectively, for each of the Short-Term Municipal
v
<PAGE> 78
Income Fund and the Short-Term Government-Corporate Income Fund. Long-term
shareholders of a Fund could pay more in distribution-related charges than
the economic equivalent of the maximum front-end sales charges applicable to
mutual funds sold by members of the National Association of Securities
Dealers, Inc. ("NASD").
------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in a Fund will bear directly or
indirectly. There are no redemption fees charged by the Funds. As noted above,
these fee and expense amounts summarize the fees and expenses of both a Fund and
its corresponding Master Portfolio. The Example should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown. With regard to the combined fees and expenses of each
Fund and the corresponding Master Portfolio, the Board of Directors of the
Company has considered whether various costs and benefits of investing all of a
Fund's assets in the corresponding Master Portfolio rather than directly in
portfolio securities would be more or less than if the Fund invested in
portfolio securities directly. The Board of Directors has determined that the
aggregate fees assessed by each Fund and its corresponding Master Portfolio
should be less than those expenses that would be incurred had the Fund invested
directly in the securities held by the Master Portfolio. See Prospectus sections
captioned "Management of the Funds and the Master Portfolios," "Custodian,
Transfer and Dividend Disbursing Agent," "Distribution Plans" and "Purchase of
Shares" for more complete descriptions of the various costs and expenses
applicable to investors in each Fund. In addition, if a Fund were to no longer
invest in the corresponding Master Portfolio, these expenses may change.
vi
<PAGE> 79
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights
included in the Funds' 1994 annual financial statements. The financial
statements are incorporated by reference into the SAI for each Fund and have
been audited by KPMG Peat Marwick LLP, independent auditors, whose report dated
February 17, 1995 also is incorporated by reference in the SAI. This information
should be read in conjunction with the Funds' 1994 annual financial statements
and notes thereto. The SAI for each Fund has been incorporated by reference into
the Prospectus.
SHORT-TERM MUNICIPAL INCOME FUND
FOR A FUND SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
PERIOD
ENDED
DECEMBER 31,
1994(1)
------------
<S> <C>
Net Asset Value, Beginning of Period.............................................. $ 5.00
Income From Investment Operations:
Net Investment Income........................................................... 0.09
Net Realized and Unrealized Gain (Loss) on Investments.......................... (0.08)
-----------
Total From Investment Operations.................................................. 0.01
Less Distributions:
Dividends From Net Investment Income............................................ (0.09)
-----------
Net Asset Value, End of Period.................................................... $ 4.92
===========
Total Return (not annualized)..................................................... 0.13%
Ratios/Supplemental Data:
Net Assets, End of Period (000)................................................. $ 11,778
Number of Shares Outstanding, End of Period (000)............................... 2,392
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(2)...................................... 0.27%
Ratio of Net Investment Income to Average Net Assets(3)......................... 3.67%
Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses(2)....................................................... 1.98%
Ratio of Net Investment Income to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses(3)....................................................... 1.96%
Portfolio Turnover(4)............................................................. 8.00%
</TABLE>
- ---------------
(1) The Fund commenced operations on June 3, 1994 as the 1-3 Year Duration
Municipal Income Fund.
(2) This ratio does not include expenses incurred by the Master Portfolio.
(3) This ratio includes expenses incurred by the Master Portfolio.
(4) The portfolio turnover rate represents investment activity by the Master
Portfolio.
1
<PAGE> 80
SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND
FOR A FUND SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
PERIOD
ENDED
DECEMBER 31,
1994(1)
------------
<S> <C>
Net Asset Value, Beginning of Period.............................................. $ 5.00
Income From Investment Operations:
Net Investment Income........................................................... 0.08
Net Realized and Unrealized Gain (Loss) on Investments.......................... (0.07)
-----------
Total From Investment Operations.................................................. 0.01
Less Distributions:
Dividends From Net Investment Income............................................ (0.08)
-----------
Net Asset Value, End of Period.................................................... $ 4.93
===========
Total Return (not annualized)..................................................... 0.28%
Ratios/Supplemental Data:
Net Assets, End of Period (000)................................................. $ 96
Number of Shares Outstanding, End of Period (000)............................... 20
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(2)...................................... 0.30%
Ratio of Net Investment Income to Average Net Assets(3)......................... 5.77%
Ratio of Expenses to Average Net Assets Prior to Waived Fees
and Reimbursed Expenses(2)................................................... 67.89%
Ratio of Net Investment Income (Loss) to Average Net Assets Prior to Waived Fees
and Reimbursed Expenses(3)................................................... (61.82)%
Portfolio Turnover(4)............................................................. 0%
</TABLE>
- ---------------
(1) The Fund commenced operations on September 19, 1994 as the 1-3 Year Duration
Full Faith and Credit Government Income Fund.
(2) This ratio does not include expenses incurred by the Master Portfolio.
(3) This ratio includes expenses incurred by the Master Portfolio.
(4) The portfolio turnover rate represents investment activity by the Master
Portfolio.
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<PAGE> 81
INVESTMENT OBJECTIVES AND POLICIES
Set forth below is a description of the investment objective and related
policies of each Fund and its corresponding Master Portfolio. As with all mutual
funds, there can be no assurance that a Fund or its corresponding Master
Portfolio will achieve its investment objective.
Each Fund seeks to achieve its investment objective by investing all of its
assets in the corresponding Master Portfolio, which has the same investment
objective as the Fund. Each Fund may withdraw its investment in the
corresponding Master Portfolio only if the Board of Directors of the Company
determines that such action is in the best interests of the Fund and its
shareholders. Upon such withdrawal, the Company's Board would consider
alternative investments, including investing all of a Fund's assets in another
investment company with the same investment objective as the Fund or hiring an
investment adviser to manage the Fund's assets in accordance with the investment
policies described below with respect to the corresponding Master Portfolio. The
investment objectives and policies of each Master Portfolio are described below
in this section. For a description of the management and expenses of each Master
Portfolio, see the Prospectus section "Management of the Funds and the Master
Portfolios."
Since the investment characteristics of each Fund correspond to those of
the respective Master Portfolio, the following is a discussion of the various
investments of and techniques employed by each Master Portfolio.
SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO
INVESTMENT OBJECTIVE -- The investment objective of the Short-Term
Municipal Income Master Portfolio is to provide investors with a high level of
income exempt from federal income taxes, while managing principal volatility.
Wells Fargo Bank, as investment adviser to the Short-Term Municipal Income
Master Portfolio, pursues the objective of the Master Portfolio by investing
(under normal market conditions) substantially all of the assets of the Master
Portfolio in the following types of municipal obligations that pay interest
which is exempt from federal income tax: bonds, notes and commercial paper
issued by or on behalf of states, territories, and possessions of the United
States, the District of Columbia, and their political subdivisions, agencies,
instrumentalities (including government-sponsored enterprises) and authorities,
the interest on which, in the opinion of counsel to the issuer or bond counsel,
is exempt from federal income tax. These municipal obligations and the taxable
investments described below may bear interest at rates that are not fixed
(floating- and variable-rate instruments). The Master Portfolio seeks to manage
principal volatility by diversifying its assets among permissible investments
based, in part, on their duration, maturity or other characteristics that affect
their sensitivity to changes in market interest rates. As with all mutual funds,
there can be no assurance that the Master Portfolio, which is a diversified
portfolio, will achieve its investment objective.
As a fundamental policy, at least 80% of the net assets of the Master
Portfolio are invested (under normal market conditions) in municipal obligations
that pay interest that is exempt from federal income taxes. However, as a matter
of general operating policy, the Master Portfolio seeks to have substantially
all of its assets invested in such municipal obligations. The Master Portfolio's
investment adviser may rely either on an opinion of counsel to the issuer of the
municipal obligations or bond counsel or on Internal Revenue Service ("IRS")
rulings regarding the tax treatment of these
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obligations. In addition, the Master Portfolio may invest 25% or more of its
assets in municipal obligations that are related in such a way that an economic,
business or political development or change affecting one such obligation could
also affect the other obligations. For example, the Master Portfolio may own
different municipal obligations which pay interest based on the revenues of
similar types of projects. The Master Portfolio may also invest in U.S.
Government obligations and money market instruments.
SHORT-TERM GOVERNMENT-CORPORATE INCOME MASTER PORTFOLIO
INVESTMENT OBJECTIVE -- The investment objective of the Short-Term
Government-Corporate Income Master Portfolio is to provide investors with
current income, while managing principal volatility. The Master Portfolio seeks
to achieve its objective by investing primarily in obligations issued by the
U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) and investment-grade corporate obligations.
The securities that the Master Portfolio may purchase include U.S. Treasury
bonds, notes and bills; obligations of the U.S. Government, its agencies or
instrumentalities; investment-grade corporate bonds and notes, asset-backed
securities and money market instruments. The Short-Term Government-Corporate
Income Master Portfolio seeks to manage principal volatility by diversifying
assets among permissible investments based, in part, on their maturity, duration
or other characteristics that affect the sensitivity of such investments to
changes in market interest rates. There can be no assurance that the Master
Portfolio, which is a diversified portfolio, will achieve its investment
objective.
Under normal market conditions, the Master Portfolio will invest
substantially all of its assets in U.S. Government obligations and corporate
securities, and at least 65% of its assets in income-producing securities. The
Master Portfolio is a flexible portfolio, in that there is no minimum level of
assets that will be invested in either category of investments. The investment
adviser intends, as a general matter, to keep at least 20% of its assets
invested in U.S. Government obligations and at least 20% of its assets invested
in corporate securities. The allocation of assets between these investment
categories will vary, depending primarily on their relative yields. Until the
Master Portfolio achieves a certain asset size (approximately $10 million), the
investment adviser intends to invest substantially all of the Master Portfolio's
assets in U.S. Treasury bonds, notes and bills, and repurchase agreements.
ADDITIONAL INFORMATION ABOUT PERMITTED INVESTMENT ACTIVITIES
U.S. GOVERNMENT OBLIGATIONS -- Certain of the debt instruments purchased by
the Master Portfolios may be U.S. Government obligations. U.S. Government
obligations include securities issued or guaranteed as to principal and interest
by the U.S. Government and supported by the full faith and credit of the U.S.
Treasury. U.S. Treasury obligations differ mainly in the length of their
maturity. Treasury bills, the most frequently issued marketable government
securities, have a maturity of up to one year and are issued on a discount
basis. U.S. Government obligations also include securities issued or guaranteed
by federal agencies or instrumentalities, including government-sponsored
enterprises. Some obligations of agencies or instrumentalities of the U.S.
Government are supported by the full faith and credit of the United States or
U.S. Treasury guarantees; others, by the right of
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<PAGE> 83
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government will provide
financial support to its agencies or instrumentalities where it is not obligated
to do so. In addition, U.S. Government obligations are subject to fluctuations
in market value due to fluctuations in market interest rates. As a general
matter, the value of debt instruments, including U.S. Government obligations,
declines when market interest rates increase, and rises when market interest
rates decrease. Certain types of U.S. Government obligations are subject to
fluctuations in yield or value due to their structure or contract terms.
BONDS -- Certain of the debt instruments purchased by the Master Portfolios
may be bonds. A bond is an interest-bearing security issued by a company or
governmental unit. The issuer of a bond has a contractual obligation to pay
interest at a stated rate on specific dates and to repay principal (the bond's
face value) periodically or on a specified maturity date. An issuer may have the
right to redeem or "call" a bond before maturity, in which case the investor may
have to reinvest the proceeds at lower market rates.
Most bonds bear interest income at a "coupon" rate that is fixed for the
life of the bond. The value of a fixed rate bond usually rises when market
interest rates fall, and falls when market interest rates rise. Accordingly, a
fixed rate bond's yield (income as a percent of the bond's current value) may
differ from its coupon rate as its value rises or falls.
Other types of bonds bear income at an interest rate that is adjusted
periodically. Because of their adjustable interest rates, the value of
"floating-rate" or "variable-rate" bonds fluctuates much less in response to
market interest rate movements than the value of fixed rate bonds. Also, the
Master Portfolios may treat some of these bonds as having a shorter maturity for
purposes of calculating the weighted average maturity of their investment
portfolios.
Bonds may be senior or subordinated obligations. Senior obligations
generally have the first claim on a corporation's earnings and assets and, in
the event of liquidation, are paid before subordinated debt. Bonds may be
unsecured (backed only by the issuer's general creditworthiness) or secured
(also backed by specified collateral).
ASSET-BACKED SECURITIES -- The Short-Term Government-Corporate Income
Master Portfolio may invest in various types of asset-backed securities.
Asset-backed securities are typically backed by an underlying pool of assets
(such as credit card or automobile trade receivables or corporate loans or
bonds) which provides the interest and principal payments to investors. Credit
quality depends primarily on the quality of the underlying assets and the level
of credit support, if any, provided by the issuer. The underlying assets may be
subject to prepayment which can shorten the life of asset-backed securities and
may lower their return. Asset-backed securities are subject to interest rate
risk, which means that this value typically declines when interest rates
increase. The value of asset-backed securities may also change because of actual
or perceived changes in the
5
<PAGE> 84
creditworthiness of the originator, servicing agent, or of the financial
institution providing any credit support.
FLOATING- AND VARIABLE-RATE INSTRUMENTS -- Certain of the debt instruments
that the Master Portfolios may purchase bear interest at rates that are not
fixed, but vary with changes in specified market rates or indices or at
specified intervals. Certain of these instruments may carry a demand feature
that permits the holder to tender them back to the issuer at par value prior to
maturity. The Master Portfolios may purchase certificates of participation in
pools of floating- and variable-rate instruments from banks or other financial
institutions. With respect to the pass-through tax status of these certificates,
Wells Fargo Bank may rely upon either an opinion of counsel to the issuer or IRS
rulings issued with respect thereto. Wells Fargo Bank, as the Master Portfolios'
investment adviser, monitors on an ongoing basis the ability of an issuer of a
demand instrument to pay principal and interest on demand. Events affecting the
ability of the issuer of a demand instrument to make payment when due may occur
between the date the Master Portfolio elects to demand payment and the date
payment is due. Such events may affect the ability of the issuer of the
instrument to make payment when due, thereby affecting the 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.
The Short-Term Municipal Income Master Portfolio may invest in
variable-rate instruments with a maximum final maturity of up to 30 years,
provided the period remaining until the next readjustment of the instrument's
interest rate, or the period remaining until the principal amount can be
recovered through demand, is less than 5 years.
REPURCHASE AGREEMENTS -- Each Master Portfolio may enter into repurchase
agreements wherein the seller of a security to such Master Portfolio agrees to
repurchase that security from the Master Portfolio at a mutually agreed-upon
time and price. The period of maturity is usually quite short, often overnight
or a few days, although it may extend over a number of months. A Master
Portfolio may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that are permissible investments for
the Master Portfolio. All repurchase agreements will be fully collateralized
based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
one year although the maximum term of a repurchase agreement will be one year or
less. If the seller defaults and the value of the underlying securities has
declined, a Master Portfolio may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, a Master
Portfolio's disposition of the security may be delayed or limited.
A Master Portfolio may not enter into a repurchase agreement with a
maturity of more than seven days, if, as a result, more than 15% of the market
value of the Master Portfolio's total net assets will be invested in repurchase
agreements with maturities of more than seven days and other securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. A Master Portfolio will only enter into
repurchase agreements with registered broker/dealers that report to the New York
Federal Reserve Bank or their affiliates and commercial banks that meet
guidelines established by the Board of Trustees and are not affiliated
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<PAGE> 85
with Wells Fargo Bank. The Master Portfolio may enter into pooled repurchase
agreement transactions with other funds advised by Wells Fargo Bank.
MUNICIPAL SECURITIES -- This section describes certain instruments in which
the Short-Term Municipal Income Master Portfolio may invest. Municipal
securities are issued by states and municipalities to raise money for various
public purposes, including general purpose financing for state and local
governments as well as financing for specific projects or public facilities.
Municipal securities may be backed by the full taxing power of a state or
municipality, by the revenues from a specific project or the credit of a private
organization. In addition, certain municipal securities may be supported by
letters of credit furnished by domestic or foreign banks. Yields on municipal
securities generally depend on a variety of factors, including: the general
conditions of the municipal note and municipal bond markets; the size and
maturity of the particular offering; the maturity of the obligations; and the
rating of the issue or issuer. Furthermore, any adverse economic conditions or
developments affecting a particular state or municipality could impact the
municipal securities issued by such entities. The two principal classifications
of municipal securities are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit, and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Short-Term Municipal
Income Master Portfolio are in most cases revenue securities and are not payable
from the unrestricted revenues of the issuer. Consequently, the credit quality
of private activity bonds is usually directly related to the credit standing of
the corporate user of the facility involved.
The highest rating assigned by Standard & Poor's Corporation ("S&P") is
"AAA" for state and municipal bonds, "SP-1" for state and municipal notes, and
"A-1" for state and municipal paper. The highest rating assigned by Moody's
Investors Service, Inc. ("Moody's") is "Aaa," "MIG 1," and "P-1" for state and
municipal bonds, notes and commercial paper, respectively. These instruments are
judged to be the best quality and present minimal risks and a strong capacity
for repayment of principal and interest. If a municipal security ceases to be
rated or is downgraded below an investment grade rating after purchase by the
Master Portfolio, the Master Portfolio may retain or dispose of such security.
In any event, the Short-Term Municipal Income Master Portfolio does not intend
to purchase or retain any municipal security that is rated below the top four
rating categories by a nationally recognized statistical rating organization
("NRSRO"), or, if unrated, is considered by the investment adviser to be of
comparable quality. Securities rated in the fourth highest category are
considered to have speculative characteristics. A description of ratings is
contained in the Appendix to the SAI.
Municipal securities may include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer. An issuer's obligation to pay principal or interest on an instrument
may be backed by an unconditional bank letter or line of credit, guarantee, or
commitment to lend.
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<PAGE> 86
Municipal securities may include variable- or floating-rate instruments
issued by industrial development authorities and other governmental entities.
While there may not be an active secondary market with respect to a particular
instrument purchased by the Short-Term Municipal Income Master Portfolio, the
Master Portfolio may demand payment of the principal and accrued interest on the
instrument or may resell it to a third party as specified in the instruments.
The absence of an active secondary market, however, could make it difficult for
the Master Portfolio to dispose of the instrument if the issuer defaulted on its
payment obligation or during periods the Master Portfolio is not entitled to
exercise its demand rights, and the Master Portfolio could, for these or other
reasons, suffer a loss.
Municipal securities also may include participations in privately arranged
loans to municipal borrowers, some of which may be referred to as "municipal
leases," and units of participation in trusts holding pools of tax-exempt
leases. Such loans in most cases are not backed by the taxing authority of the
issuers and may have limited marketability or may be marketable only by virtue
of a provision requiring repayment following demand by the lender. Any such
loans made by the Short-Term Municipal Income Master Portfolio may have a demand
provision permitting the Master Portfolio to require payment within seven days.
Participations in such loans, however, may not have such a demand provision and
may not be otherwise marketable. To the extent these securities are illiquid,
they will be subject to the Master Portfolio's limitation on investments in
illiquid securities. As it deems appropriate, Wells Fargo Bank will establish
procedures to monitor the credit standing of each such municipal borrower,
including its ability to meet contractual payment obligations. The Short-Term
Municipal Income Master Portfolio will not purchase any unrated municipal leases
unless the investment adviser, following procedures approved by the Trust's
Board of Trustees, determines that such leases are of comparable quality to
municipal securities that are rated in the top four rating categories by an
NRSRO.
Municipal participation interests, which give the purchaser an undivided
interest in one or more underlying municipal securities, may be purchased from
financial institutions. To the extent that municipal participation interests are
considered to be "illiquid securities" such instruments are subject to the
Master Portfolio's limitation on the purchase of illiquid securities.
In addition, the Short-Term Municipal Income Master Portfolio may acquire
"stand-by commitments" from banks or broker/dealers with respect to municipal
securities held in its portfolios. Under a stand-by commitment, a dealer agrees
to purchase at the Master Portfolio's option specified municipal securities at a
specified price. The Master Portfolio acquires stand-by commitments solely to
facilitate portfolio liquidity and without intending to exercise its rights
thereunder for trading purposes.
Certain of the securities in which the Short-Term Municipal Income Master
Portfolio invests will be purchased on a when-issued basis, in which case
delivery and payment normally take place within 120 days after the date of the
commitment to purchase. The Master Portfolio will make commitments to purchase
securities on a when-issued basis with the intention of actually acquiring the
securities, but may sell them before the settlement date if it is deemed
advisable. When-issued securities are subject to market fluctuation, and no
income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchases on a
when-issued basis are subject to
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<PAGE> 87
the risk that the market price at the time of delivery may be lower than the
agreed-upon purchase price, in which case there could be an unrealized loss at
the time of delivery.
The Short-Term Municipal Income Master Portfolio will establish a
segregated account in which it will maintain cash, U.S. Government obligations
or other high-grade debt securities in an amount at least equal in value to its
commitments to purchase when-issued securities. If the value of these assets
declines, the Master Portfolio will place additional liquid assets in the
account on a daily basis so that the value of the assets in the account is equal
to the amount of such commitments.
TEMPORARY INVESTMENTS OF THE SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO
The Short-Term Municipal Income Master Portfolio may elect to invest
temporarily up to 20% of its net assets in: U.S. Government obligations;
negotiable certificates of deposit, bankers' acceptance and fixed time deposits
and other obligations of domestic banks (including foreign branches) that have
more than $1 billion in total assets at the time of investment and are members
of the Federal Reserve System or are examined by the Comptroller of the Currency
or whose deposits are insured by the FDIC; commercial paper rated at the date of
purchase "P-1" by Moody's or "A-1+" or "A-1" by S&P; high quality taxable
municipal obligations; shares of taxable or tax-free money market mutual funds;
and repurchase agreements. Finally, the Short-Term Municipal Income Master
Portfolio may invest temporarily in shares of other open-end, management
investment companies, subject to the limitations of Sections 12(d)(1) of the
Investment Company Act of 1940 (the "1940 Act"). Purchases of shares of other
investment companies will be limited to temporary investments in shares of
unaffiliated investment companies, and the Master Portfolio's investment adviser
will waive its fee for that portion of the Master Portfolio's assets so
invested. Such temporary investments would most likely be made for cash
management purposes or when there is an unexpected or abnormal level of investor
purchases or redemptions of shares of the Master Portfolio or because of unusual
market conditions. The income from these temporary investments and investment
activities may be subject to federal income taxes. However, as stated above,
Wells Fargo Bank seeks to invest substantially all of the Short-Term Municipal
Income Master Portfolio's assets in securities exempt from such taxes. A more
complete description of tax-free municipal obligations, taxable money market
instruments, and other investment activities is contained in the "Additional
Information About Permitted Investment Activities" section.
PORTFOLIO TURNOVER
Portfolio turnover generally involves some expenses to the Master
Portfolio, including dealer mark-ups and other transaction costs on the sale of
securities and the reinvestment in other securities. A high portfolio turnover
rate should not result in the Master Portfolio paying substantially more
brokerage commissions, since most transactions in municipal securities are
effected on a principal basis. Portfolio turnover can also generate short-term
capital gains tax consequences.
OTHER INVESTMENT POLICIES
Each Fund's investment objective and its investment policy of investing all
of its assets in the corresponding Master Portfolio, as set forth above, are
fundamental. Accordingly, they may not be changed without approval by the vote
of the holders of a majority of a Fund's outstanding voting securities, as
described under "Capital Stock" in the SAI. However, if the Company's Board of
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<PAGE> 88
Directors determines that a Fund's investment objective can best be achieved by
a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will make
appropriate disclosure of any such material change in the Fund's prospectus.
The investment objective of a Master Portfolio may not be changed without
approval of the investors in the Master Portfolio. The classification of each
Fund and each Master Portfolio as "diversified" may not be changed, in the case
of a Fund, without the approval of the Fund's shareholders, or, in the case of a
Master Portfolio, without the approval of the Fund and any other investors in
such Master Portfolio.
In addition, as a matter of fundamental policy, each Fund and Master
Portfolio may borrow from banks up to 10% of the current value of its net assets
for temporary purposes in order to meet redemptions. These borrowings may be
secured by the pledge of up to 10% of the current value of such Fund's or Master
Portfolio's net assets (but investments may not be purchased while any such
outstanding borrowing exceeds 5% of the respective Fund's or Master Portfolio's
net assets). As a matter of fundamental policy, each Master Portfolio and its
corresponding Fund may not invest more than 25% of its assets (i.e.,
concentrate) in any particular industry, excluding U.S. Government obligations.
As a matter of non-fundamental policy, each Master Portfolio (and the
corresponding Fund) may invest up to 15% of the current value of its net assets
in securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale and fixed time deposits
that are subject to withdrawal penalties and that have maturities of more than
seven days, provided that this restriction does not affect a Fund's ability to
invest a portion or all of its assets in its corresponding Master Portfolio.
Disposing of illiquid or restricted securities may involve additional costs and
require additional time.
Except during temporary defensive periods, each Master Portfolio seeks to
maintain a portfolio of securities with an average weighted maturity of between
90 days and 2 years. The maximum final maturity of the Short-Term Municipal
Income Master Portfolio's investments will not exceed 5 years, excluding certain
variable rate instruments described above. The Short-Term Government-Corporate
Income Master Portfolio may invest in obligations of any maturity. The
Short-Term Government Corporate-Income Master Portfolio will not invest in the
shares of other open-end, management investment companies.
MANAGEMENT OF THE FUNDS AND THE MASTER PORTFOLIOS
The Company has retained the services of Stephens as administrator and
distributor for the Funds, but has not retained the services of an investment
adviser for the Funds since the Company seeks to achieve the investment
objective of each Fund by investing all of a Fund's assets in the corresponding
Master Portfolio of the Trust. The Company's Board of Directors supervises the
actions of the Funds' administrator and distributor, as set forth below, and
decides upon matters of general policy. As noted above, a Fund may withdraw its
investment in its corresponding Master Portfolio only if the Board of Directors
of the Company determines that it is in the best interests of the Fund and its
shareholders to do so. Upon any such withdrawal, the Board of Directors of the
Company would consider what action might be taken, including the investment of
all the assets of a
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Fund in another pooled investment entity having the same investment objective as
the Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
corresponding Master Portfolio.
Each Master Portfolio has retained the services of Wells Fargo Bank as
investment adviser and Stephens as administrator and distributor. The Board of
Trustees of the Trust is responsible for the general management of each Master
Portfolio and supervising the actions of Wells Fargo Bank and Stephens in these
capacities. Additional information regarding the Officers and Directors of the
Company and the Officers and Trustees of the Trust is included in the Funds' SAI
under "Management."
MASTER/FEEDER STRUCTURE
Each Fund, a series of the Company which is an open-end management
investment company, invests all of its assets in the corresponding Master
Portfolio of the Trust which has the same investment objective as the Fund. See
"Investment Objectives and Policies." The Trust is organized as a trust under
the laws of the State of Delaware. See "Organization and Capital Stock." In
addition to selling its shares to the corresponding Fund, each Master Portfolio
may sell its shares to certain other mutual funds or accredited investors. The
expenses and, correspondingly, the returns of other investment options in a
Master Portfolio may differ from those of a Fund.
The Board of Directors believes that, if other mutual funds or accredited
investors invest their assets in the Master Portfolios of the Trust, certain
economies of scale may be realized with respect to each Master Portfolio. For
example, fixed expenses that otherwise would have been borne solely by a Fund
would be spread among a larger asset base provided by more than one fund
investing in the corresponding Master Portfolio. A Fund and other entities
investing in a particular Master Portfolio are each liable for all obligations
of the Master Portfolio. However, the risk of a Fund incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself is unable to meet its obligations.
Accordingly, the Company's Board of Directors believes that the Funds and their
shareholders will not be adversely affected by investing Fund assets in the
corresponding Master Portfolio. However, if a mutual fund or institutional
investor with a larger pro rata ownership of a Master Portfolio's securities
than the corresponding Fund withdraws its investment from such Master Portfolio,
the economies of scale (e.g., spreading fixed expenses among a larger asset
base) that the Company's Board believes should 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 could arise.
The investment objective and other fundamental policies of each Master
Portfolio, which are identical to those of the corresponding Fund, cannot be
changed without approval by the holders of a majority (as defined in the 1940
Act) of such Master Portfolio's outstanding voting shares. Whenever a Fund, as a
shareholder of the corresponding Master Portfolio, is requested to vote on any
matter submitted to shareholders 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 shareholders. Shares for
which a Fund receives no voting instructions will be voted in the same
proportion as the votes received from the other Fund shareholders.
Certain policies of each Master Portfolio which are non-fundamental may be
changed by vote of a majority of the Trust's Trustees without shareholder
approval. If a Master Portfolio's investment
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objective or fundamental or non-fundamental policies are changed, the
corresponding Fund may elect to change its objective or policies to correspond
to those of the Master Portfolio. The Fund may also elect to redeem its shares
of the Master Portfolio and either seek a new investment company with a matching
objective in which to invest or retain its own investment adviser to manage the
Fund's portfolio in accordance with its objective. In the latter case, a Fund's
inability to find a substitute investment company in which to invest or
equivalent management services could adversely affect shareholders' investments
in such Fund. A Fund will provide shareholders with 30 days' written notice
prior to the implementation of any change in the investment objective of the
Fund or the Master Portfolio, to the extent possible. Information regarding
additional options, if any, for investment in shares of a Master Portfolio is
available from Stephens and may be obtained by calling (800) 643-9691.
INVESTMENT ADVISER
Pursuant to separate Advisory Contracts, each Master Portfolio is advised
by Wells Fargo Bank, 420 Montgomery Street, San Francisco, California 94163, a
wholly owned subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the
ten largest banks in the United States, was founded in 1852 and is the oldest
bank in the western United States. As of December 31, 1994, various divisions
and affiliates of Wells Fargo Bank provided investment advisory services for
approximately $200 billion of assets of individuals, trusts, estates and
institutions. Wells Fargo Bank is the investment adviser to the other separately
managed series of the Company and the Trust and to six other registered open-end
management investment companies, that consist of several separately managed
investment portfolios.
Under the Advisory Contracts with the Master Portfolios Wells Fargo Bank
has agreed to furnish to each Master Portfolio investment guidance and policy
direction in connection with the daily portfolio management of the Master
Portfolios. Pursuant to the Advisory Contracts, Wells Fargo Bank has also agreed
to furnish to the Board of Trustees of the Trust periodic reports on the
investment strategy and performance of each Master Portfolio.
Mr. Mark Kraschel, portfolio manager for the Short-Term
Government-Corporate Income Master Portfolio, has specialized in short-term bond
investment applications for over a decade. He joined Wells Fargo Bank in 1988
after five years in fixed-income management at First Boston Corporation. Mr.
Kraschel holds a B.S. in business administration from the University of Oregon
and an M.B.A. in finance from the University of San Francisco. Mr. Kraschel
assumed sole responsibility for management of the Government-Corporate Income
Master Portfolio on February 1, 1995. Prior to this time, Mr. Kraschel had
co-managed the Short-Term Government-Corporate Bond Master Portfolio since its
inception in May 1994.
Ms. Laura L. Milner, portfolio co-manager for the Short-Term Municipal
Income Master Portfolio, joined Wells Fargo Bank in 1988. Her background
includes over seven years experience specializing in short- and long-term
municipal securities with Salomon Brothers. She is a member of the National
Federation of Municipal Analysts and its California chapter. Mr. David Klug,
portfolio co-manager for the Short-Term Municipal Income Master Portfolio, has
managed municipal bond portfolios for Wells Fargo Bank for over nine years.
Prior to joining Wells Fargo Bank, he managed the municipal bond portfolio for a
major property and casualty insurance company. His investment experience
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exceeds 20 years and includes all aspects of tax-exempt fixed-income
investments. He holds an M.B.A. from the University of Chicago and is a member
of The National Federation of Municipal Analysts and its California Chapter. Mr.
Klug and Ms. Milner have co-managed the Short-Term Municipal Income Master
Portfolio since its inception in May 1994.
Purchase and sale orders of the securities held by each Master Portfolio
may be combined with those of other accounts that Wells Fargo Bank manages or
advises, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank determines
that a particular security should be bought or sold for a Master Portfolio and
other accounts managed by Wells Fargo Bank, Wells Fargo Bank has undertaken to
allocate those transactions among the participants equitably. From time to time,
each Master Portfolio, to the extent consistent with its investment objective,
policies and restrictions, may invest in securities of companies with which
Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contracts with the Master Portfolios,
Wells Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of each Master Portfolio. From
time to time, Wells Fargo Bank may waive such fees in whole or in part. Any such
waiver will reduce expenses of the corresponding Master Portfolio and,
accordingly, have a favorable impact on the yield of the Master Portfolio and,
in turn, the Fund. For the fiscal year ended December 31, 1994, Wells Fargo Bank
waived all advisory fees payable by each of the Short-Term Municipal Income
Master Portfolio and Short-Term Government-Corporate Income Master Portfolio.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
agreements with the Company and the Trust under which Stephens acts as
administrator for the Funds and the Master Portfolios. For providing
administrative services, Stephens is entitled to receive from each Fund a
monthly fee at the annual rate of 0.15% of its respective average daily net
assets. This fee decreases to 0.10% of the average daily net assets of each Fund
in excess of $200 million. From time to time, Stephens may waive its fees from a
Fund in whole or in part. Any such waivers will reduce expenses of a Fund and,
accordingly, have a favorable impact on the yield and return of the Fund.
Under the respective Administration Agreements with the Funds and the
Master Portfolios Stephens has agreed to provide as administrative services,
among other things: (i) general supervision of the operation of the Funds and
the Master Portfolios, including coordination of the services performed by the
investment adviser (in the case of the Master Portfolios), transfer agent,
shareholder servicing agents (in the case of the Funds), custodian, independent
auditors and legal counsel; regulatory compliance, including the compilation of
information for documents such as reports to, and filings with, the SEC and
state securities commissions; and preparation of proxy statements and
shareholder or investor reports for the Funds and the Master Portfolios, as
applicable; and (ii) general supervision relative to the compilation of data
required for the preparation of periodic reports distributed to the Company's
officers and Board of Directors and the Trust's officers and Board of Trustees.
Stephens also furnishes office space and certain facilities required for
conducting the business of the Funds and the Master Portfolios and pays the
compensation of the directors, officers and employees of the Company and of the
Trust who are affiliated with Stephens.
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<PAGE> 92
In addition, Stephens, as the principal underwriter of the Funds within the
meaning of the 1940 Act and in accordance with plans of distribution ("Plans"),
has entered into a Distribution Agreement with the Company pursuant to which
Stephens has the responsibility for distributing shares of the Funds. The
Distribution Agreement provides that Stephens shall act as agent for each Fund
for the sale of its shares. See "Distribution Plan" below.
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, including 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.
------------------------
The Master Portfolios' Advisory Contracts and the Administration Agreements
with the Master Portfolios and the Funds provide that if, in any fiscal year,
the total aggregate expenses of a Master Portfolio and a Fund incurred by, or
allocated to, 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 Bank and Stephens shall waive their fees
proportionately under the Advisory Contracts and the Administration Agreements,
respectively, for the fiscal year to the extent of the excess, or reimburse the
excess, but only to the extent of their respective fees. The Advisory Contracts
and the Administration Agreements further provide that the total expenses shall
be reviewed monthly so that, to the extent the annualized expenses for such
month exceed the most restrictive applicable annual expense limitation, the
monthly fees under the Advisory Contracts and the Administration Agreements
shall be reduced as necessary. Currently, the most stringent applicable state
expense ratio limitation is 2.50% of the first $30 million of a Fund's average
net assets for its current fiscal year, 2% of the next $70 million of such
assets, and 1.50% of such assets in excess of $100 million.
Except for the expenses borne by Wells Fargo Bank and Stephens, the Company
and the Trust bear all costs of their respective operations, including the
compensation of the Company's directors and the Trust's trustees who are not
officers or employees of Wells Fargo Bank or Stephens or any of their
affiliates; advisory (in the case of the Master Portfolios), shareholder
servicing (in the case of the Funds), and administration fees; payments pursuant
to any Plans (in the case of the Funds); 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
Portfolios; 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 transactions; fees and expenses of the custodian, including those for
keeping books and accounts and calculating the net asset value of the Funds and
the Master Portfolios; expenses of shareholders' or investors' meetings;
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<PAGE> 93
expenses relating to the issuance, registration and qualification of shares of
the Funds; pricing services; organizational expenses; and any extraordinary
expenses. Expenses attributable to each Fund and/or each Master Portfolio are
charged against the respective assets of the Fund and/or the Master Portfolio.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each Fund is determined by Wells Fargo Bank
on each day that the Fund is open for trading ("Business Day"). Each Fund's net
asset value per share is determined by dividing the value of the total assets of
the Fund (i.e., the value of its investments in the corresponding Master
Portfolio and any cash instruments held for liquidity needs) less all of its
liabilities by the total number of outstanding shares of the Fund. The net asset
value of each Fund is determined as of the close of business of the Exchange
(currently 4:00 p.m. New York time).
The value of the assets of each Master Portfolio (other than debt
obligations maturing in 60 days or less) is determined as of the close of
regular trading on the Exchange (referred to hereafter as "the close of the
Exchange"), which is currently 4:00 p.m. New York time. Except for debt
obligations with remaining maturities of 60 days or less, which are valued at
amortized cost, assets are valued at current market prices, or if such prices
are not readily available, at fair value as determined in good faith by the
Board of Trustees. Prices used for such valuations may be provided by
independent pricing services.
PERFORMANCE DATA
From time to time, the Company may advertise yield and total return
information of each Fund. Total return and yield information of a Fund is based
on the historical earnings and performance of the Fund and should not be
considered representative of future performance.
The total return of a Fund is calculated by subtracting (i) the public
offering price of the Fund (which includes the maximum sales charge) of one
share of the Fund at the beginning of the period, from (ii) the net asset value
of all shares an investor would own at the end of the period for the share held
at the beginning of the period (assuming reinvestment of all dividends and
capital gain distributions), and dividing by (iii) the public offering price per
share of the Fund at the beginning of the period. The resulting percentage
indicates the positive or negative rate of return that an investor would have
earned from reinvested dividends and capital gain distributions and changes in
share price during the period for a Fund. A Fund may also, at times, calculate
total return based on net asset value per share (rather than the public offering
price), in which case the figures would not reflect the effect of any sales
charges that would have been paid by an investor in the Fund, or by assuming
that a sales charge less than the maximum sales charge (reflecting the Volume
Discounts set forth below) is assessed, provided that total return data derived
pursuant to the calculation described above are also presented.
A Fund's yield is computed by dividing its net investment income per share
earned during a specified period by the Fund's public offering price per share
(which includes the maximum sales charge) on the last day of such period and
annualizing the result. For purposes of sales literature,
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<PAGE> 94
these yields may also, at times, be calculated on the basis of the net asset
value per share (rather than the public offering price), in which case the
figures would not reflect the effect of any sales charges that would have been
paid by an investor in a Fund, or by assuming that a sales charge less than the
maximum sales charge (reflecting the Volume Discounts set forth below) is
assessed, provided that yield data derived pursuant to the calculation described
above are also presented. The Funds' annual report will contain additional
performance information. Additional information about the performance of each
Fund is contained in the Annual Report for each Fund. The Annual Report may be
obtained free of charge by calling the Company at 800-552-9612.
PURCHASE OF SHARES
Shares of each Fund may be purchased on any day the Exchange is open for
trading through Stephens, any authorized broker/dealers or financial
institutions with which Stephens has entered into agreements, or through the
Transfer Agent. Such broker/dealers or financial institutions are responsible
for the prompt transmission of purchase, exchange or redemption orders, and may
independently establish and charge additional fees to their clients for such
services, other than services related to purchase orders, which would reduce
their clients' overall yield or return. The Exchange is closed on New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (each, a "Holiday"). When any Holiday falls
on a Saturday, the Exchange usually is closed the preceding Friday, and when any
Holiday falls on a Sunday, the Exchange is closed the following Monday.
In most cases, the minimum initial purchase amount for each Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for an investment by a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is $100. The minimum initial or subsequent purchase
amount requirements may be waived or lowered for investments effected on a group
basis by certain entities and their employees, such as pursuant to a payroll
deduction or other accumulation plan. The Company reserves the right to reject
any purchase order. All funds, net of sales loads, are invested in full and
fractional shares. Checks are accepted for the purchase of a Fund's shares
subject to collection at full face value in U.S. dollars. Inquiries may be
directed to the Company at the address and telephone number on the front cover
of the Prospectus or at the address set forth in the Prospectus under "Initial
Purchases of Fund Shares by Wire."
Shares of each Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer is not due from
the broker/dealer until the settlement date, currently five business days after
the order is placed. Effective June 7, 1995, the settlement date will normally
be three business days after the order is placed. It is the broker/dealer's
responsibility to forward payment for shares being purchased to a Fund promptly.
Payment for orders placed directly through the Transfer Agent must accompany the
order.
------------------------
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<PAGE> 95
When payment for shares of the Fund purchased through the Transfer Agent is
by a check that is drawn on any domestic bank, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay execution
of an order.
When shares of a Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as Dealer Allowance. Stephens has established a non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Funds may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.
Sales loads relating to orders for the purchase of shares in each Fund are
as follows:
<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
AS % OF AS % OF AS % OF
OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000............................. 3.00% 3.09% 2.75%
$100,000 up to $199,999........................ 2.00 2.04 1.75
$200,000 up to $599,999........................ 1.00 1.01 0.90
$600,000 up to $999,999........................ 0.60 0.60 0.50
$1,000,000 and over............................ 0.00 0.00 0.00
</TABLE>
REDUCED SALES CHARGE
For the sole purpose of determining the availability of a reduced sales
charge through one of the methods discussed below, the term "Funds" refers to
the Funds of the Company described in this Prospectus.
The above sales load schedule shows the Volume Discounts that are available
to you based on the combined dollar amount being invested in the Funds or in
Class A shares of one or more of the portfolios of the Company which assess a
sales load (the "Load Funds").
The Right of Accumulation allows you to combine the amount being invested
in shares of the Funds with the total net asset value of Class A Shares in any
of the Load Funds in accordance with the above sales load schedule to reduce the
sales load. For example, if you own Class A Shares of one of the Company's other
investment portfolios with an aggregate net asset value of $90,000 and invest an
additional $20,000 in the Funds, the sales load on the entire additional amount
would be 2.00%. To obtain such discount, you must provide sufficient information
at the time of purchase to permit verification that the purchase qualifies for
the reduced sales load, and confirmation of your order is subject to such
verification. The Right of Accumulation may be modified or discontinued at any
time with respect to all shares purchased thereafter.
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<PAGE> 96
A Letter of Intent allows you to purchase shares of the Funds over a
13-month period at reduced sales loads based on the total amount you intend to
purchase plus the total net asset value of Class A Shares in any of the Load
Funds you already own. Each investment made during the period receives the
reduced sales load applicable to the total amount of the intended investment. If
such amount is not invested within the period, you must pay the difference
between the sales loads applicable to the purchases when made and the charges
previously paid.
You may Reinvest proceeds from a redemption of Fund shares on which a load
was paid in shares of the Funds or in Class A Shares of another of the Company's
Load Funds at net asset value, without paying a sales load, within 120 days
after the redemption, provided that, if the investment portfolio being purchased
charges a sales load that is higher than the sales load that you paid in
connection with the Fund shares redeemed, you must pay the difference. In
addition, the Class A Shares of the other Load Funds to be acquired must be
registered for sale in your state of residence. The amount that may be so
reinvested may not exceed the amount of the redemption proceeds, and a written
order for the purchase of the Class A Shares must be received by a Fund or the
Transfer Agent within 120 days after the effective date of the redemption.
If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of such loss
to be disallowed as a tax deduction, depending on the number of shares purchased
by reinvestment and the period of time that has elapsed after the redemption,
although for tax purposes, the amount disallowed is added to the cost of the
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 Fund shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of a Fund at a
reduced sales load, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent of more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.
Shares of a Fund may be purchased at a purchase price equal to the net
asset value, without a sales load, by (i) directors, officers and employees (and
their spouses 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; (ii) present and retired directors, officers and
employees (and their spouses and children under the age of 21) of Wells Fargo
Bank and its affiliates
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<PAGE> 97
if Wells Fargo Bank and/or the respective affiliates agree; (iii) employee
benefit and thrift plans for such persons; and (iv) any investment advisory,
trust or other fiduciary account (other than an individual retirement account)
maintained, managed or advised by Wells Fargo Bank or Stephens or their
affiliates. In addition, shares of the Funds also may be purchased at net asset
value by pension, profit sharing or other employee benefit plans established
under Section 401 of the Code.
Shares of the Funds may be purchased at a purchase price equal to the net
asset value of such shares, without a sales load, by the following types of
investors that place trades through an omnibus account maintained at the Fund by
a discount broker/dealer: trust companies; investment advisers and financial
planners on behalf of their clients; retirement and deferred compensation plans
and the trusts used to fund these plans.
By investing in a Fund, you appoint the Transfer Agent, as your agent, to
establish an open account to which all shares purchased are credited, together
with any dividends and capital gain distributions that are paid in additional
shares. See "Dividends and Distributions." Although most shareholders elect not
to receive stock certificates, certificates for full shares of a Fund can be
obtained on request. If you hold share certificates, it is more complicated to
redeem shares, and the expedited redemption described below is not available.
Shares of a Fund may be purchased in accordance with procedures described
below.
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. If you wish to order Fund shares by wire, please call (800) 572-7797.
You will be asked to specify the Fund in which you wish to invest and the
name(s) in which the shares are to be registered. You will also be asked to
provide your address, social security number (or tax identification number where
applicable), dividend payment election, amount to be wired, name of the wiring
bank and name and telephone number of the person to be contacted in connection
with the order. An account number will be assigned.
2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
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
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4. Share purchases are effected at the public offering price, next
determined after the Account Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
If you wish to purchase Fund shares by mail:
1. Complete an Account Application; and
2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express (Name of Fund)" to the mailing address set forth above.
ADDITIONAL PURCHASES
Additional purchases of Fund shares in amounts of $100 or more may be made
(i) by instructing the Funds' Transfer Agent to debit an approved account
designated in your Account Application, (ii) by wire by instructing the wiring
bank to transmit the specified amount as directed above for initial purchases by
wire, or (iii) by mail with a check payable to "Overland Express (Name of Fund)"
delivered to the address above. Write your Fund account number on the check and
include the detachable stub from a Statement of Account or a letter providing
the account number.
SYSTEMATIC PURCHASE PLAN
The Company's Systematic Purchase Plan provides a convenient way for you to
add to your existing accounts on a monthly basis. You may elect to participate
in this plan by specifying an amount ($100 or more) to be withdrawn
automatically by the Transfer Agent on a monthly basis from a bank account
designated by you (provided your bank is a participant in the automated clearing
house system). The Transfer Agent withdraws and uses this amount to purchase
shares of a Fund for you on or about the fifth business day of each month. There
are no additional fees charged for participating in this plan.
You may change the investment amount, suspend purchases or terminate your
election to participate in this plan at any time by providing written notice to
the Transfer Agent at least five business days prior to any scheduled
transaction. An election will be terminated automatically if the designated bank
account balance is insufficient to make a scheduled withdrawal, or if either
your designated bank account or your Fund account is closed.
PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Purchase orders for shares of a Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, are effective on the same day the order is placed if the order is
received by the Transfer Agent before the close of business. Purchase orders
that are received by a broker/dealer or financial institution after the close of
the Exchange or by the Transfer Agent after the close of business generally are
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of purchase
orders to the Transfer Agent. Payment for Fund shares is not due until
settlement date. Broker/dealers and financial institutions may benefit from the
temporary use of payments to the Funds during the settlement
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<PAGE> 99
period. A broker/dealer or financial institution that is involved in a purchase
transaction may charge separate account, service or transaction fees. Financial
institutions may be required to register as dealers pursuant to applicable state
securities laws, which may differ from federal law and any interpretations
expressed herein.
EXCHANGE PRIVILEGES
Shares of each Fund may be exchanged for shares of any other Overland
Express Fund with a single class of shares, or for Class A Shares of any
Overland Express Fund with more than one class of shares, in an identically
registered account at respective net asset values, provided that, if the other
investment portfolio charges a sales load on the purchase of the class of shares
being exchanged that is higher than the sales load that you have paid in
connection with the shares you are exchanging, you pay the difference. In
addition, shares of the investment portfolio to be acquired must be registered
for sale in your state of residence. You should obtain, read and retain the
Prospectus for the investment portfolio which you desire to exchange into before
submitting an exchange order.
You may exchange shares by calling the Transfer Agent or your authorized
broker/dealer, financial institution or servicing agent, unless you have elected
not to authorize telephone exchanges in your Account Application (in which case
you may subsequently authorize such telephone exchanges by completing a
Telephone Exchange Authorization Form and submitting it to the Transfer Agent).
If share certificates are held, your shares may not be exchanged by telephone.
The Transfer Agent's number for exchanges is (800) 572-7797.
Procedures for redemption of shares below also apply to exchanges of
shares, except that, with exchanges between accounts registered in identical
names, no signature guarantee is required unless the amount being exchanged
exceeds $25,000. (See "Redemption by Mail" below for information on signature
guarantees.) The Company reserves the right to limit the number of times shares
may be exchanged between Funds or to reject in whole or in part any exchange
request into a fund when management believes that such action would be in the
best interest of the fund's other shareholders. For example, management believes
that such action would be appropriate to protect a fund against disruptions in
portfolio management resulting from frequent transactions by those seeking to
time market fluctuations. Any such rejection is made by management on a
prospective basis only, upon notice to the shareholder, given not later than 10
days following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days' prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for tax purposes may be realized upon an exchange,
depending upon the cost or other basis of shares redeemed.
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you elect not to authorize the
privileges. These privileges authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Transfer Agent to be genuine. The Company
requires the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine and,
if it does not follow such procedures, the Company and the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions.
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<PAGE> 100
Neither the Company nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
REDEMPTION OF SHARES
Shares of a Fund may be redeemed at their next determined net asset value
after receipt of a request in proper form by the Transfer Agent directly or
through any authorized broker/dealer or financial institution.
The Company does not charge for redemption transactions. However, a
broker/dealer or financial institution that is involved in a redemption
transaction may charge separate account, service or transaction fees. On a day
the Funds are open for business, redemption orders received by an authorized
broker/dealer or financial institution before the close of the Exchange and
received by the Transfer Agent before the close of the Exchange on the same day
are executed at the net asset value per share determined at the close of the
Exchange on that day. Redemption orders received by authorized broker/dealers or
financial institutions after the close of the Exchange, or not received by the
Transfer Agent prior to the close of the Exchange, are generally executed at the
net asset value determined at the close of the Exchange on the next business
day.
Redemption proceeds ordinarily are remitted within seven days after the
order is received in proper form, except that proceeds may be remitted over a
longer period to the extent permitted by the SEC under extraordinary
circumstances. If you request an expedited redemption, redemption proceeds are
distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of up
to 15 days after investment. The proceeds, of course, may be more or less than
your investment cost. Payment of redemption proceeds may be made in securities,
subject to regulation by some state securities commissions.
REDEMPTION BY MAIL
If you wish to redeem Fund shares by mail please do the following:
1. Write a letter of instruction naming the Fund and the dollar amount of
or number of shares to be redeemed. Refer to your Fund account number and give
either your social security or tax identification number (as applicable).
2. Sign the letter in exactly the same way your account is registered. If
there is more than one owner of the shares, all must sign.
3. If shares to be redeemed have a value of $25,000 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.
22
<PAGE> 101
4. If you hold share certificates, enclose the certificates with the
letter. Do not sign the certificates, and for your protection use registered
mail.
5. Mail the letter (and any share certificates) to the Transfer Agent at
the mailing address set forth under "Purchase of Shares -- Initial Purchases of
Fund Shares by Wire."
Unless other instructions are given in proper form, a check for the
proceeds of redemption will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds distributed to you on a
monthly basis. To elect to participate in this plan, you must have a shareholder
account valued at $10,000 or more as of the date you elect to participate, and
you must not also be a participant in the Company's Systematic Purchase Plan at
any time while participating in this plan. You may specify an amount ($100 or
more) to be distributed by check to your address of record or deposited in a
bank account designated by you. The Transfer Agent redeems sufficient shares and
mails or deposits the proceeds of the redemption as instructed on or about the
fifth business day prior to the end of each month. You are not charged a fee for
participating in this plan.
If you participate in this plan you may change the withdrawal amount,
suspend withdrawals or terminate the election at any time by providing written
notice to the Transfer Agent at least five business days prior to a scheduled
transaction. Your election will be terminated automatically if your account
balance is insufficient to make a scheduled withdrawal or if your Fund account
is closed.
EXPEDITED REDEMPTIONS
If you do not hold share certificates and you have elected to authorize
telephone redemptions on the Account Application or other form that is on file
with the Transfer Agent, you may request an expedited redemption of shares by
letter or telephone on any day the Funds are open for business. See "Exchange
Privileges" for additional information regarding telephone redemption
privileges.
To request expedited redemption:
1. Telephone the expedited redemption request to the Transfer Agent at
(800) 572-7797; or
2. Mail the expedited redemption request to the Transfer Agent at the
mailing address set forth above under "Purchase of Shares -- Initial Purchases
of Fund Shares by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to your bank indicated in the Account Application or wired to
an authorized broker/dealer or financial institution designated in the Account
Application. The Company reserves the right to impose charges for wiring
redemption proceeds. When proceeds of an expedited redemption are to be paid to
someone other than the shareholder, to an address other than that of record, or
to a bank, broker/dealer or other financial institution that has not been
predesignated, the expedited redemption request must be made by letter and the
signature(s) on the letter must be guaranteed, regardless of the amount of the
redemption. If an expedited redemption request is received by the Transfer Agent
by the close of business on any day the Funds are open for business, the
redemption proceeds will be transmitted to
23
<PAGE> 102
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.
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you elect not to authorize the
privileges. These privileges authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Transfer Agent to be genuine. The Company
requires the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine and,
if it does not follow such procedures, the Company and the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions. Neither
the Company nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day that the Funds' shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received by a dealer or financial institution after the close of the
Exchange or by the Transfer Agent after the close of business generally will be
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of redemption
requests to the Transfer Agent. Unless you have made other arrangements and have
informed the Transfer Agent of such arrangements, proceeds of redemptions made
through authorized broker/dealers and financial institutions are credited to
your account with such broker/dealer or institution. You may request a check
from the broker/dealer or financial institution or may elect to retain the
redemption proceeds in your account. The broker/dealer or financial institution
may benefit from the use of the redemption proceeds prior to the clearance of a
check issued to you for such proceeds or prior to disbursement or reinvestment
of such proceeds on your behalf.
------------------------
The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.
Due to the high cost of maintaining small accounts, the Company reserves
the right to redeem accounts that fall below $1,000 because of a shareholder
redemption. Prior to such a redemption, you will be notified in writing and
permitted 30 days to make additional investments to raise the account balance to
the specified minimum.
24
<PAGE> 103
DISTRIBUTION PLANS
The Company's Board of Directors has adopted Distribution Plans pursuant to
Rule 12b-1 under the Act on behalf of each Fund. Under the Plans and pursuant to
the Distribution Agreement, each Fund may pay Stephens, as compensation for
distribution-related services, a monthly fee at the annual rate of up to 0.25%
of the average daily net assets of such Fund or the maximum amount payable under
applicable laws, regulations and rules, whichever is less. The actual fee
payable to Stephens is determined, within the applicable limit, from time to
time by mutual agreement between the Company and Stephens. Stephens may enter
into selling agreements with one or more Selling Agents under which such agents
may receive compensation for distribution-related services from Stephens,
including, but not limited to, commissions or other payments to such agents
based on the average daily net assets of Fund shares attributable to them.
Payments under the Distribution Plans also may be used to compensate or
reimburse servicing agents for shareholder liaison services provided by entities
that are dealers of record or which have a servicing relationship with the
beneficial owners of shares. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the fee payable to Stephens under the
Distribution Agreement is not based upon the actual expenditures of Stephens,
the expenses of Stephens (which may include overhead expenses) may be more or
less than the fees received by it under the Distribution Agreement. Stephens has
entered into a Selling Agreement with Wells Fargo Bank, pursuant to which Wells
Fargo Bank receives periodic payments based on the average daily net assets of a
Fund's shares attributable to its customers.
DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to declare as a dividend to all shareholders of record as
of 4:00 p.m (New York time) substantially all of its net investment income at
the close of each business day to shareholders of record. Shares purchased in a
Fund begin earning dividends on the business day following the date the purchase
order settles, and shares redeemed earn dividends through the date of
redemption. Net investment income for a Saturday, Sunday or holiday is declared
as a dividend to shareholders of record at 4:00 p.m. (New York time) on the
prior business day.
Dividends of a Fund declared in, and attributable to, any month are paid
early in the following month. Shareholders of a Fund who redeem shares prior to
a dividend payment date are entitled to all dividends declared but unpaid prior
to their redemption of such shares on the next dividend payment date.
Any net capital gains of a Fund are distributed annually (or more
frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).
Dividends and/or capital gain distributions paid by a Fund are invested in
additional shares of the Fund at net asset value (without any sales load) and
credited to your account on the reinvestment date unless you have elected
payment by check. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of another fund in the Overland Express
Family of Funds with which you have an established account.
25
<PAGE> 104
TAXES
By complying with the applicable provisions of the Code, the Funds will not
be subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to their shareholders. Dividends from net
investment income (including net short-term capital gains, if any) declared and
paid by the Short-Term Government-Corporate Income Fund will be taxable as
ordinary income to Fund shareholders. Whether you take dividend payments in cash
or have them automatically reinvested in additional shares in the Funds, 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 are 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. The Funds
intend to pay out substantially all of their net investment income and net
realized capital gains (if any) for each year. The Funds' dividends will not
qualify for the dividends-received deduction allowed to corporate shareholders.
By complying with the applicable provisions of the Code, the Short-Term
Municipal Income Fund's shareholders will not be subject to federal income taxes
on any Fund dividends attributable to interest from tax-exempt securities.
However, dividends of the Fund attributable to interest from taxable securities,
accretion of market discount on certain bonds and capital gains (if any) will be
taxable to shareholders.
Each Fund seeks to comply with the applicable provisions of the Code by
investing all of its assets in the corresponding Master Portfolio. The Trust
intends to qualify for federal income tax purposes as a partnership. As such,
each 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 corresponding Fund
and other investors in the Master Portfolio, regardless of whether such
interest, dividends or gains have been distributed by such Master Portfolio or
losses have been realized by such Fund and other investors. Accordingly, if a
Master Portfolio were to accrue but not distribute any interest, dividends or
gains, the corresponding Fund would be deemed to have realized and recognized
its proportionate share of interest, dividends, gains or losses without receipt
of any corresponding distribution. However, each Master Portfolio will seek to
minimize recognition by investors of interest, dividends, gains or losses
without a corresponding distribution.
The Funds will inform you of the amount and nature of such Fund dividends
and capital gains. You should keep all statements you receive to assist in your
personal recordkeeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on dividends paid and redemption
proceeds (including proceeds from exchanges) paid or credited to individual
shareholders of the Funds if a correct Taxpayer Identification Number, certified
when required, is not on file with the Company or the Transfer Agent. In
connection with this withholding requirement, you will be asked to certify on
your Account Application that the social security or taxpayer identification
number you provide is correct and that you are not subject to 31% backup
withholding for previous underreporting to the IRS.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.
26
<PAGE> 105
Further federal tax considerations are discussed in the SAI. All investors
should consult their individual tax advisors with respect to their particular
tax situations as well as the state and local tax status of investments in
shares of the Funds.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the custodian and transfer and
dividend disbursing agent for the Funds and the Master Portfolios. Wells Fargo
Bank's principal place of business is 420 Montgomery Street, San Francisco,
California 94163, and its transfer and dividend disbursing agency activities are
managed at 525 Market Street, San Francisco, California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company was incorporated in Maryland on April 27, 1987. The authorized
capital stock of the Company consists of 20,000,000,000 shares having a par
value of $.001 per share. Currently, the Company has twelve series of shares,
each representing an interest in one of the funds in the Overland Express Family
of Funds -- the Money Market Fund, the Asset Allocation Fund, the U.S.
Government Income Fund, the California Tax-Free Bond Fund, the California
Tax-Free Money Market Fund, the Variable Rate Government Fund, the Municipal
Income Fund, the Overland Sweep Fund, the U.S. Treasury Money Market Fund, the
Strategic Growth Fund, the Short-Term Government-Corporate Income Fund and the
Short-Term Municipal Income Fund. The Board of Directors may, in the future,
authorize the issuance of other series of capital stock. All shares of the
Company, when issued, will be fully paid and nonassessable.
The Trust was established on August 14, 1991, as a Delaware business trust.
The Trust's Declaration of Trust permits the Board of Trustees to issue
beneficial interests in the Trust to investors based on their proportionate
investments in the Trust. The Trust currently has three series of beneficial
interests -- the Cash Investment Trust Master Portfolio, the Short-Term
Government-Corporate Income Master Portfolio and the Short-Term Municipal Income
Master Portfolio. The Trust is no longer offering units of the 1-3 Year Duration
Government Income Master Portfolio.
All shares of the Company have equal voting rights and are voted in the
aggregate, and not by series, except where voting by series is required by law
or where the matter involved affects only one series. The Company may dispense
with the annual meeting of shareholders in any fiscal year in which it is not
required to elect Directors under the Act; however, at the written request of
10% or more of the holders of the Company's shares, the Board of Directors will
call a meeting of shareholders for purposes of voting on removal of a Director
or Directors of the Company. In addition, whenever a Fund is requested to vote
on matters pertaining to the corresponding Master Portfolio of the Trust, the
Company will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by Fund shareholders. The Directors of the Company will vote shares
for which they receive no voting instructions in the same proportion as the
shares for which they do receive voting instructions. A more detailed statement
of the voting rights of shareholders is contained in the SAI.
27
<PAGE> 106
As of February 23, 1995, Swedcom Corporation owned 38.75%, and Herman and
Raymond Christensen owned 28.61%, of the outstanding shares of the Short-Term
Municipal Income Fund. As of February 23, 1995, Prudential Securities held
50.55% and 49.45% of the outstanding shares of the Short-Term
Government-Corporate Income Fund for the benefit of Coben Inc. and Beatrice L.
Rosenstein, respectively.
28
<PAGE> 107
<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. 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. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 6, "Authorization for Trusts and
Organizations."
/ / ORGANIZATION* 5. Organization Name -
USE LINE 5 ---------------------------------------- --------------------- -----------------
*Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 6).
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS:
Number and Street Apartment No.
------------------------------------------------------------------------------ ------------------
City State Zip Code
------------------------------------------------------------------- ------------ ---------------------------
Telephone Numbers: (DAY) - - (EVENING) - -
----------- ----------- ------------------ ----------- ----------- ------------------
(Area Code) (Area Code)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 108
<TABLE>
<S> <C>
LOGO ACCOUNT APPLICATION
PAGE 2 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT AMOUNT:
/ / OVERLAND SHORT-TERM MUNICIPAL INCOME FUND $
---------------------
/ / OVERLAND EXPRESS SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND $
---------------------
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express Funds (designate Fund)
/ / Funds have been wired to 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 Withdrawal Amount: $ (minimum $100)
------------------
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bank Name
---------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
---------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 109
<TABLE>
<S> <C>
LOGO ACCOUNT APPLICATION
PAGE 3 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
4. REDUCED SALES CHARGES (If Applicable.)
- ------------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT
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 / / $600,000 / / $1,000,000
Existing accounts must be identified in advance. If the value of currently owned shares is to be applied towards completion of
this Letter of Intent, please list accounts below.
Account # Account #
--------------------- ---------------------
RIGHT OF ACCUMULATION
/ / 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 Funds. If this box is not checked, I understand that telephone
instructions will be effected by debiting/crediting the account designated in Section 3 (if approved) and that if a designated
account has not been authorized and approved, a check or wire transfer will be required for a purchase and a check will be
sent for a redemption.
- ------------------------------------------------------------------------------------------------------------------------------------
6. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- ------------------------------------------------------------------------------------------------------------------------------------
All dividends and capital gain distributions will be automatically reinvested in shares of the Fund unless otherwise indicated:
OVERLAND EXPRESS SHORT-TERM MUNICIPAL INCOME FUND:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
OVERLAND EXPRESS SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 110
<TABLE>
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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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 111
<TABLE>
<S> <C>
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.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------ ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------ institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------ signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------ ----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 112
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN OF THE FUNDS
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
For more information about the Funds,
simply call (800) 552-9612, or write:
Overland Express Funds, Inc.
c/o Overland Express Shareholder
Services
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NOT FDIC INSURED
LOGO
------------------------
PROSPECTUS
------------------------
Short-Term Municipal
Income Fund
Short-Term Government-
Corporate Income Fund
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
100 P 5/95
<PAGE> 113
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 114
LOGO
Telephone: (800) 552-9612
STEPHENS INC. -- SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
WELLS FARGO BANK, N.A. -- INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus contains information about
one of the funds in the Overland Express Family of Funds -- the STRATEGIC GROWTH
FUND (the "Fund").
The Strategic Growth Fund seeks to attain an above-average level of capital
appreciation. It seeks to achieve this objective through the active management
of a broadly-diversified portfolio of equity securities of companies expected to
experience strong growth in revenues, earnings and assets.
This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.
This Prospectus sets forth concisely the information should know before
investing in the Fund. A Statement of Additional Information dated May 1, 1995,
containing additional and more detailed information about the Fund (the "SAI"),
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 the telephone number printed
above.
------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN A FUND
INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK,
IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
<PAGE> 115
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................... ii
Summary of Expenses........................................................................ v
Financial Highlights....................................................................... vii
Investment Objective and Policies.......................................................... 1
Additional Permitted Investment Activities................................................. 2
Advisory, Administration and Distribution Arrangements..................................... 6
Determination of Net Asset Value........................................................... 9
Purchase of Shares......................................................................... 10
Exchange Privileges........................................................................ 16
Redemption of Shares....................................................................... 17
Distribution Plans......................................................................... 20
Servicing Plan............................................................................. 20
Dividends and Distributions................................................................ 20
Taxes...................................................................................... 21
Custodian and Transfer and Dividend Disbursing Agent....................................... 22
Organization and Capital Stock............................................................. 22
</TABLE>
i
<PAGE> 116
PROSPECTUS SUMMARY
The Company, as an open-end investment company, provides a convenient way
for you to invest in portfolios of securities selected and supervised by
professional management. The following provides information about the Fund and
its investment objective.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The STRATEGIC GROWTH FUND seeks to attain an above-average level of
capital appreciation. It seeks to achieve this objective through the
active management of a broadly-diversified portfolio of equity securities
of companies expected to experience strong growth in revenues, earnings
and assets. The Fund is 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 will achieve its investment
objective.
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. The Fund invests primarily in common stocks that are expected by Wells
Fargo Bank to have above-average prospects for appreciation. In pursuing
its investment objective, the Fund may invest in the common stocks of
companies with small or medium-sized capitalizations and in securities
acquired through initial public offerings. The Fund also may temporarily
invest in preferred stock or investment-grade debt securities. In
addition, the Fund may purchase or sell options on securities and on
indices of securities, may purchase warrants, and may purchase privately
issued securities which may be resold only in accordance with Rule 144A
under the Securities Act of 1933. See "Investment Objective and Policies"
and "Additional Permitted Investment Activities."
Q. WHO IS THE INVESTMENT ADVISER?
A. Wells Fargo Bank serves as the investment adviser of the Fund. Wells Fargo
Bank is entitled to receive a monthly advisory fee at the annual rate of
0.50% of the average daily net assets of the Fund. See "Advisory,
Administration and Distribution Arrangements."
Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?
A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.15% of the average daily net assets of the Fund;
decreasing to 0.10% of the average daily net assets of the Fund in excess
of $200 million. See "Advisory, Administration and Distribution
Arrangements."
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Fund may be purchased on any day the New York Stock Exchange
(the "Exchange") is open for trading. There is a maximum sales load of
4.50% (4.71% of the net amount invested) for purchasing Class A Shares of
the Fund. Class D Shares are subject to a maximum contingent deferred
sales charge of 1.00% of the lesser of net asset value at purchase or net
asset value at redemption. In most cases, the minimum initial purchase
amount for the Fund is $1,000. The minimum initial purchase amount is $100
for shares purchased through the Systematic Purchase Plan and $250 for
shares purchased through qualified retirement
ii
<PAGE> 117
plans. The minimum subsequent purchase amount is $100 or more. You may
purchase shares of the Fund through Stephens, Wells Fargo Bank, as
transfer agent (the "Transfer Agent"), or any authorized broker/dealer or
financial institution. Purchases of shares of the Fund may be made by wire
directly to the Transfer Agent. The Strategic Growth Fund may pay the
Distributor a monthly fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A Shares and 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 to compensate the distributor for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. See "Purchase of Shares" and "Distribution
Plans." The Fund also may pay servicing agents a fee at an annual rate of
up to 0.25% of the Fund's average daily net assets attributable to Class D
Shares to compensate them for certain services. See "Servicing Plan."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Fund are declared quarterly and 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 fund in the Overland Express Family of Funds 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 holders of the Fund's Class D Shares is reduced by the
amount of servicing fees payable to servicing agents under the Servicing
Plan (as defined below). See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open, shares may be redeemed upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check. Accounts of less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. The Fund's portfolio investments are subject to market risk. Market risk
is the possibility 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. In addition,
investments in the Fund are not bank deposits or obligations of Wells
Fargo Bank and are not insured by the Federal Deposit Insurance
Corporation ("FDIC"). 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 will achieve its investment objective.
iii
<PAGE> 118
Because the Fund engages in active portfolio management, the Fund 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.
The Fund 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. See "Investment Objective and Policies"
and "Additional Permitted Investment Activities."
Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. The Fund 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 Fund may, from time to time, hold options, warrants or
debt instruments that are convertible into (and whose value is, therefore,
"derived from") common stocks.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to the Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund
to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by the Fund also is subject to broadly
applicable investment policies. For example, the Fund may not invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.
iv
<PAGE> 119
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
STRATEGIC GROWTH
-------------------
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)......................................... 4.50% 0.00%
Maximum Deferred Sales Load* (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1.................................................... 0.00% 1.00%
Redemption after year 1..................................................... 0.00% 0.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Management Fees(1)............................................................ 0.40% 0.40%
12b-1 Fees.................................................................... 0.25% 0.75%
Total Other Expenses(1):
Servicing Fees.............................................................. 0.00% 0.25%
Other Expenses(1)........................................................... 0.55% 0.55%
------- -------
Total Fund Operating Expenses(1)**............................................ 1.20% 1.95%
</TABLE>
- ------------
(1) After any waivers or reimbursements.
EXAMPLES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
Class A Shares of the Fund, assuming (1) a 5% annual return
and (2) redemption at the end of each time period
indicated.................................................... $ 57 $ 81 $ 108 $ 184
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.................................................... $ 30 $ 61 $ 105 $ 227
You would pay the following expenses on the same investment in
Class D Shares of the Fund, assuming no redemption........... $ 20 $ 61 $ 105 $ 227
</TABLE>
- ------------
* See "Contingent Deferred Sales Charge."
** As further described in the Prospectus under the caption "Advisory,
Administration and Distribution Arrangements," Stephens and Wells Fargo Bank
each has agreed to waive or reimburse all or a portion of its respective fees
in circumstances where Fund expenses that are subject to limitations imposed
under state securities laws and regulations exceed such limitations. In
addition, Stephens and Wells Fargo Bank each may elect, in its sole
discretion, to otherwise waive its respective fees or reimburse expenses. Any
such waivers or reimbursements with respect to the Fund would reduce the
total expenses of the Fund. The percentages shown above with respect to Class
A Shares and Class D Shares under "Management Fees", "Total Other Expenses",
and "Total Fund Operating Expenses" are based on amounts incurred during the
most recent fiscal year, reflecting voluntary fee waivers and expense
reimbursements. Absent waivers and reimbursements, "Management Fees," "Total
Other Expenses" and "Total Fund Operating Expenses,"
v
<PAGE> 120
with respect to the Class A Shares would have been 0.50%, 0.80% and 1.55%,
respectively. Absent waivers and reimbursements, these percentages, with
respect to Class D Shares, would have been 0.50%, 0.98% and 2.23%,
respectively. Long-term shareholders of the Fund could pay more in
distribution related charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD"). There can be no
assurance that voluntary fee waivers and reimbursements will continue.
------------------------
The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no other sales loads, redemption fees or exchange fees
charged by the Fund. However, the Company reserves the right to impose charges
for wiring redemption proceeds. The Examples should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown. See Prospectus sections captioned "Advisory,
Administration and Distribution Arrangements," "Distribution Plan" and "Purchase
of Shares" for more complete descriptions of the various costs and expenses
applicable to the Fund.
vi
<PAGE> 121
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Fund's 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
STRATEGIC GROWTH FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1994 1993*
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................................ $ 13.20 $ 10.00
Income from Investment Operations:
Net Investment Income/(Loss)................................................ (0.11) (0.03)
Net Realized and Unrealized Gain/(Loss) on Investments...................... 0.67 3.68
------------ ------------
Total from Investment Operations............................................ 0.56 3.65
Less Distributions:
Dividends from Net Investment Income........................................ 0.00 (0.03)
Distributions from Net Realized Capital Gain................................ (0.33) (0.41)
------------ ------------
Tax Return of Capital....................................................... (0.14) (0.01)
Total Distributions......................................................... (0.47) (0.45)
Net Asset Value, End of Period.............................................. $ 13.29 $ 13.20
============ ============
Total Return (not annualized)+.............................................. 4.23% 36.56%
Ratios/Supplemental Data:
Net Assets, End of Period (000)............................................. $ 26,744 $ 25,413
Number of Shares Outstanding, End of Period (000)........................... 2,013 1,926
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1).................................. 1.20% 0.66%
Ratio of Net Investment Loss to Average Net Assets(2)....................... (0.81)% (0.01)%
Portfolio Turnover.......................................................... 149% 182%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses..................................................... 1.55% 1.64%
(2) Ratio of Net Investment Income (Loss) to Average Net Assets Prior to
Waived Fees and Reimbursed Expenses..................................... (1.16)% (0.99)%
+ Total returns do not include any sales charges or the 1% contingent
deferred sales charge.
* The Fund commenced operations on January 20, 1993.
</TABLE>
vii
<PAGE> 122
STRATEGIC GROWTH FUND
FOR A CLASS D SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1994 1993*
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................................ $ 16.55 $ 15.00
Income from Investment Operations:
Net Investment Income/(Loss)................................................ (0.24) (0.43)
Net Realized and Unrealized Capital Gain/(Loss) on Investments.............. 0.81 2.51
------------ ------------
Total from Investment Operations............................................ 0.57 2.08
Less Distributions:
Dividends from Net Investment Income........................................ 0.00 0.00
Distributions from Net Realized Capital Gain................................ (0.40) (0.53)
------------ ------------
Tax Return of Capital....................................................... (0.18) 0.00
Total Distributions......................................................... (0.58) (0.53)
Net Asset Value, End of Period.............................................. $ 16.54 $ 16.55
============ ============
Total Return (not annualized)+.............................................. 3.46% 13.84%
Ratios/Supplemental Data:
Net Assets, End of Period (000)............................................. $ 15,335 $ 11,932
Number of Shares Outstanding, End of Period (000)........................... 927 721
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1).................................. 1.95% 0.61%
Ratio of Net Investment Loss to Average Net Assets(2)....................... (1.56)% (1.00)%
Portfolio Turnover.......................................................... 149% 182%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses..................................................... 2.23% 2.14%
(2) Ratio of Net Investment Income (Loss) to Average Net Assets Prior to
Waived Fees and Reimbursed Expenses..................................... (1.84)% (2.53)%
+ Total returns do not include any sales charges or the 1% contingent
deferred sales charge.
* This class commenced operations on July 1, 1993.
</TABLE>
viii
<PAGE> 123
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Strategic Growth Fund seeks to attain an above-average level of capital
appreciation. It seeks to achieve this objective through the active management
of a broadly-diversified portfolio of equity securities of companies expected to
experience strong growth in revenues, earnings and assets. The Fund is 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, which is a diversified portfolio, will achieve its investment objective.
EQUITY SECURITIES
The Fund invests primarily in common stocks that Wells Fargo Bank, as the
Fund's investment adviser, believes have better-than-average prospects for
appreciation. These stocks may have some of the following characteristics:
- Low or no dividends
- Smaller market capitalizations
- Less market liquidity
- Relatively short operating histories
- Aggressive capitalization structures (including high debt levels)
- Involvement in rapidly growing/changing industries and/or new
technologies
Under normal market conditions, the Fund will hold at least 20 common stock
issues spread across multiple industry groups, with the majority of these
holdings consisting of established growth companies, turnaround or acquisition
candidates, or attractive larger capitalization companies.
Additionally, it is expected that the Fund will from time to time acquire
securities through initial public offerings, and will acquire and hold common
stocks of smaller and newer issuers. It is expected that no more than 40% of the
Fund's assets will be invested in these highly aggressive issues at one time.
There may be some additional risks associated with investments in smaller and/or
newer companies because their shares tend to be less liquid than securities of
larger companies. Further, shares of small and new companies are generally more
sensitive to purchase and sale transactions and changes in the issuer's
financial condition and, therefore, the prices of such stocks may be more
volatile than those of larger company stocks.
From time to time Wells Fargo Bank may determine that conditions in the
securities markets make pursuing the Fund's basic investment strategy
inconsistent with the best interests of the Fund's investors. At such times,
Wells Fargo Bank may use temporary alternative strategies, primarily designed to
reduce fluctuations in the value of the Fund's assets. In implementing these
temporary "defensive" strategies, the Fund may invest in preferred stock or
investment-grade debt securities
1
<PAGE> 124
that are convertible into common stock and in money market securities. It is
expected that these temporary "defensive" investments will not exceed 30% of the
Fund's total assets.
The Fund pursues an active trading investment strategy, and the length of
time the Fund has held a particular security is not generally a consideration in
investment decisions. Accordingly, the Fund'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 Fund,
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 short-term capital gains tax consequences.
Though the Fund will hold a number of larger capitalization stocks, under
normal market conditions, and subject to the additional risks described above,
more than 50% of the Fund's total assets will be invested in companies with
smaller to medium capitalizations. The Fund will invest primarily in companies
with a market capitalization of $50 million or greater, but may invest in
companies with a market capitalization under $50 million if the investment
adviser to the Fund believes such investments to be in the best interests of the
Fund. It is currently expected that the majority of the Fund's investments will
be in companies with market capitalizations, at the time of acquisition, of up
to $750 million.
Under ordinary market conditions, at least 65% of the value of the total
assets of the Fund will be invested in common stocks and in securities which are
convertible into common stocks that Wells Fargo Bank, as investment adviser,
believes have better-than-average prospects for appreciation. The Fund also may
invest in convertible debt securities. At most, 5% of the Fund'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 Bank to be of comparable quality. Securities rated in
the fourth lowest 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.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
PRIVATELY ISSUED SECURITIES (RULE 144A)
The Fund may invest in privately issued securities which may be resold in
accordance with Rule 144A under the Securities Act of 1933 ("Rule 144A
Securities"). Rule 144A Securities are restricted securities which are not
publicly traded. Accordingly, the liquidity of the market for specific Rule 144A
Securities may vary. Wells Fargo Bank, using guidelines approved by the Board of
Directors of the Company, will evaluate the liquidity characteristics of each
Rule 144A Security proposed for purchase by the Fund 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
2
<PAGE> 125
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).
CORPORATE REORGANIZATIONS
The Fund 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 Bank, 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 Fund may
sustain a loss.
OPTIONS
The Fund 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 Fund's portfolio. If the Fund has sold an option, it may
terminate its obligation by effecting a closing purchase transaction. This is
accomplished by purchasing an option of the same series as the option previously
sold. There can be no assurance that a closing purchase transaction can be
effected when the Fund so desires.
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
foregoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations. All investments by the Fund
in off-exchange options will be treated as "illiquid" and will therefore be
subject to the Fund's policy of not investing more than 15% of its net assets in
illiquid securities and the Fund will establish a segregated account with its
Custodian in which it will maintain liquid assets in an amount at least equal in
value to the Fund's commitments under off-exchange options.
WARRANTS
The Fund 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 Fund may only purchase warrants on
securities in which the Fund may invest directly.
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<PAGE> 126
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (including government-sponsored enterprises) ("U.S. Government
obligations") and other securities that could otherwise be purchased by the
Fund. 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 Fund may incur a loss. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
the Fund's disposition of the security may be delayed or limited. The Fund will
only enter into repurchase agreements with registered broker/dealers and
commercial banks that meet guidelines established by the Board of Directors and
are not affiliated with the investment adviser. The Fund may also participate in
pooled repurchase agreement transactions with other funds advised by Wells Fargo
Bank.
INVESTMENT IN FOREIGN SECURITIES
The Fund may invest in securities of foreign governmental and private
issuers that are denominated in and pay interest in U.S. dollars. 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 which 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.
MONEY MARKET INSTRUMENTS
The Fund 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
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<PAGE> 127
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 Fund also may invest in short-term U.S. dollar-denominated obligations of
foreign banks (including U.S. branches) that at the time of investment: (i) have
more than $10 billion, or the equivalent in other currencies, in total assets;
(ii) are among the 75 largest foreign banks in the world as determined on the
basis of assets; and (iii) have branches or agencies in the United States.
OTHER INVESTMENT COMPANIES
The Fund 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 Fund'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 Act, the Fund may purchase shares of exchange-listed
closed-end funds consistent with pursuing its investment objective. The Fund
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 Fund's investment objective, as set forth in the first paragraph of the
section describing the Fund's objective and policies, is fundamental; that is,
the investment objective may not be changed without approval by the vote of the
holders of a majority of the Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI. If the Board of Directors determines, however,
that the Fund's investment objective can best be achieved by a substantive
change in a non-fundamental investment policy or strategy, the Company may make
such change without shareholder approval and will disclose any such material
changes in the then current prospectus.
In addition, as matters of fundamental policy, the Fund may: (i) not
purchase securities of any issuer (except U.S. Government obligations) if as a
result, with respect to 75% of the Fund's assets, more than 5% of the value of
the Fund's total assets would be invested in the securities of such issuer or
the Fund 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) make loans of portfolio securities in
accordance with its investment policies; and (iv) not invest 25% or more of its
assets (i.e., concentrate) in any particular industry, except that the Fund may
invest 25% or more of its assets in U.S. Government obligations.
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<PAGE> 128
With respect to fundamental investment policy (iii) above, the Fund does not
intend to make loans of its portfolio securities during the coming year.
As a matter of non-fundamental policy, the Fund may invest up to 15% of the
current value of its 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. Disposing of illiquid or restricted
securities may involve additional costs and require additional time.
ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.
INVESTMENT ADVISER
Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds"), and to six other
registered open-end management investment companies, each of which consist of
several separately managed investment portfolios.
The Advisory Contract provides that Wells Fargo Bank shall furnish to the
Fund investment guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory Contract, Wells Fargo
Bank furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund.
Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When Wells Fargo Bank determines that a particular security
should be bought or sold for the Fund and other accounts managed by Wells Fargo
Bank, Wells Fargo Bank undertakes to allocate those transactions among the
participants equitably. From time to time, the Fund, to the extent consistent
with its investment objective, policies and restrictions, may invest in
securities of companies with which Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contract, Wells Fargo Bank is entitled
to a monthly advisory fee at the annual rate of 0.50% of the average daily net
assets of the Fund. From time to time Wells Fargo Bank may waive such fee in
whole or in part. Any waiver would reduce expenses of the Fund involved and,
accordingly, have a favorable impact on the yield or return of the Fund. For the
year
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ended December 31, 1994, Wells Fargo Bank was paid 0.40% of the average daily
net assets of the Fund as compensation for its services as investment adviser.
Mr. Jon Hickman is responsible for the day-to-day management of the
Strategic Growth Fund. In addition to managing equity and balanced portfolios
for individuals and employee benefit plans, Mr. Hickman has responsibility for
the Wells Fargo Strategic Growth Fund. He has approximately ten years of
experience in the investment management field and is a member of Wells Fargo's
Equity Strategy Committee. Mr. Hickman has a B.A. and an M.B.A. in finance from
Brigham Young University and has been with Wells Fargo Bank since the merger
with Crocker National Bank in 1986.
Mr. Robert Bissell is also responsible for the day-to-day management of the
Strategic Growth Fund. Mr. Bissell joined Wells Fargo Bank at the time of the
merger with Crocker Bank and has been with the combined organization for over 20
years. Prior to joining Wells Fargo Bank, he was a vice president and investment
counselor with M.H. Edie Investment Counseling, where he managed institutional
and high-net-worth portfolios. Mr. Bissell holds a finance degree from the
University of Virginia. He is a chartered financial analyst and a member of the
Los Angeles Society of Financial Analysts.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.15% of its average daily net
assets; decreasing to 0.10% of the average daily net assets of the Fund in
excess of $200 million. From time to time Stephens may waive fees from the Fund
in whole or in part. Any such waiver will reduce expenses of the Fund and,
accordingly, have a favorable impact on the yield or return of the Fund.
The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, general
supervision (i) of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) in connection with regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions, and the
preparation of proxy statements and shareholder reports for the Fund; and (iii)
relative to the compilation of data required for the preparation of periodic
reports distributed to the Company's officers and Board of Directors. Stephens
also furnishes office space and certain facilities required for conducting the
business of the Fund and pays the compensation of the Company's directors,
officers and employees who are affiliated with Stephens.
Stephens, as the principal underwriter of the Fund within the meaning of
the 1940 Act, has also entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing Class A
Shares and Class D Shares of the Fund. The Distribution Agreement provides that
Stephens shall act as agent for the Fund for the sale of its Class A Shares and
Class D Shares and may enter into selling agreements with broker/dealers or
financial institutions to market and make available Class A Shares and Class D
Shares to their respective customers.
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<PAGE> 130
Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to 0.25% of the average daily net
assets of the Class A Shares of the Fund and a monthly fee at an annual rate of
up to 0.75% of the average daily net assets of the Class D Shares of the Fund.
The actual fee payable to Stephens is determined, within such limits, from time
to time by mutual agreement between the Company and Stephens, and may not exceed
the maximum amount payable under the Rules of Fair Practice of the NASD.
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. Services provided by selling agents in exchange for
commissions and other payments to selling agents are the principal sales support
services provided to the Fund. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the Distribution Agreement provides for
fees that are used by Stephens to pay for distribution services, a plan of
distribution for each class of shares (individually a "Plan," collectively the
"Plans") and the Distribution Agreement are approved and reviewed in accordance
with Rule 12b-1 under the 1940 Act, which regulates the manner in which an
investment company may, directly or indirectly, bear the expense of distributing
its shares. See Prospectus section captioned "Distribution Plans" for a more
complete description of the Plans.
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
The Fund may enter into servicing agreements with one or more servicing
agents on behalf of Class D Shares of the Fund. Under such agreements, servicing
agents provide shareholder liaison services, which may include responding to
customer inquiries and providing information on shareholder investments, and
provide such other related services as the Fund or a Class D Shareholder may
reasonably request. For these services, a servicing agent receives a fee which
will not exceed, on an annualized basis for the Fund's then current fiscal year,
0.25% of the average daily net assets of the Class D Shares of the Fund
represented by Class D Shares owned by investors with whom the servicing agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the servicing agent under applicable laws, regulations or rules,
whichever is less.
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<PAGE> 131
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading 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 a Fund is the value of total net assets attributable to each 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. Except for debt obligations
with remaining maturities of 60 days or less, which are valued at amortized
cost, assets are valued at current market prices, or if such prices are not
readily available, at fair value as determined in good faith by the Board of
Directors. Prices used for such valuations may be provided by independent
pricing services.
PERFORMANCE DATA
From time to time, the Company may advertise various total return
information with respect to a class of shares of the Fund. Total return
information is based on the historical earnings and performance of such class of
shares of the Fund and should not be considered representative of future
performance.
The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge for the class of shares) of one share at the beginning
of the period, from (ii) the net asset value of all shares of a class of shares
an investor would own at the end of the period for the share held at the
beginning of the period (assuming reinvestment of all dividends and capital gain
distributions), and dividing by (iii) the public offering price per share of a
class of shares at the beginning of the period. The resulting percentage
indicates the positive or negative rate of return that an investor would have
earned from reinvested dividends and capital gain distributions and changes in
share price during the period for the class of shares. The Fund may also, at
times, calculate total return of a class of shares based on net asset value per
share of a class of shares (rather than the public offering price), in which
case the figures would not reflect the effect of any sales charges that would
have been paid by an investor in the class of shares, or by assuming that a
sales charge other than the maximum sales charge (reflecting the Volume
Discounts set forth below) is assessed, provided that total return data derived
pursuant to the calculation described above are also presented.
Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the total return on such shares can be expected, at any given time,
to differ from the total return on Class A Shares. Performance information will
be computed separately for Class A Shares and Class D Shares. Additional
information about the performance of the Fund is contained in the Annual Report
for the Fund. The Annual Report may be obtained free of charge by calling the
Company at 800-552-9612.
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<PAGE> 132
PURCHASE OF SHARES
Shares of the Fund may be purchased on any day the Exchange is open for
trading through Stephens, the Transfer Agent, or any authorized broker/dealers
or financial institutions with which Stephens has entered into agreements. Such
broker/dealers or financial institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their clients for such services, other
than services related to purchase orders, which would reduce the clients'
overall yield or return. The Exchange is closed on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day (each, a "Holiday"). When any Holiday falls on a Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is closed the following Monday.
In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for purchases through a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is $100. The minimum initial or subsequent purchase
amount requirements may be waived or lowered for investments effected on a group
basis by certain entities and their employees, such as pursuant to a payroll
deduction or other accumulation plan. The Company reserves the right to reject
any purchase order. All funds, net of sales loads, will be invested in full and
fractional shares. Checks will be accepted for the purchase of the Fund's
shares, subject to collection at full face value in U.S. dollars. Inquiries may
be directed to the Company at the telephone number on the front cover of the
Prospectus.
Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until the settlement date, currently five business days
after the order is placed. Effective June 7, 1995, the settlement date normally
will be 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
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<PAGE> 133
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.
Sales loads relating to 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 NET AS % OF
-------------- OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
------------------ ---------- ----------- ---------
<S> <C> <C> <C>
Less than $100,000.......................................... 4.50% 4.71% 4.05%
$100,000 up to $199,999..................................... 4.00 4.17 3.60
$200,000 up to $399,999..................................... 3.50 3.63 3.15
$400,000 up to $599,999..................................... 2.50 2.56 2.25
$600,000 up to $799,999..................................... 2.00 2.04 1.80
$800,000 up to $999,999..................................... 1.00 1.01 0.90
$1,000,000 up to $2,499,999................................. 0.60 0.60 0.50
$2,500,000 up to $4,999,999................................. 0.40 0.40 0.40
$5,000,000 up to $8,999,999................................. 0.25 0.25 0.25
$9,000,000 and over......................................... 0.00 0.00 0.00
</TABLE>
Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.
A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class D Shares.
REDUCED SALES CHARGE -- CLASS A SHARES
The above Volume Discounts are 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 D Shares are not subject to a front-end sales
charge, the amount of Class D Shares you hold is not considered in determining
any volume discount.
The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds already owned in accordance with the above sales load
schedule to reduce the sales load. For example, if you own Class A Shares of the
Load Funds with an aggregate net asset value of $90,000 and invest an additional
$20,000 in the Class A Shares of the Fund, the sales load on the entire
additional amount would be 4.00% of the offering price. To obtain such discount,
you must provide sufficient information at the time of purchase to permit
verification that the purchase qualifies for the reduced sales load,
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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 and 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, 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.
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<PAGE> 135
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses 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
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) that is
maintained, managed or advised by Wells Fargo Bank or Stephens or their
affiliates. In addition, Class A Shares may be purchased at net asset value by
pension, profit sharing or other employee benefit plans established under
Section 401 of the Code.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by the following types
of investors that place trades through an omnibus account maintained at the Fund
by a discount broker/dealer: trust companies; investment advisers and financial
planners on behalf of their clients; retirement and deferred compensation plans
and the trusts used to fund these plans.
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.
CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES
Class D Shares which are redeemed within one year of the receipt of a
purchase order for such shares will be subject to a contingent deferred sales
charge equal to 1.00% of an amount equal to the lesser of the net asset value at
the time of purchase for the Class D Shares being redeemed or the net asset
value of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
net asset value above the net asset value at the time of purchase. In addition a
charge will not be assessed on Class D Shares purchased through reinvestment of
dividends or capital gains distributions. In determining whether a contingent
deferred sales charge is applicable to a redemption, Class D Shares are
considered redeemed on a first-in, first-out basis so that Class D Shares held
for a longer period of time are considered redeemed prior to more recently
acquired shares.
The contingent deferred sales charge is waived on redemptions of Class D
Shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has reached age 70 1/2, (iii) effected pursuant to the
Company's right to liquidate a shareholder's account if the aggregate net asset
value of the shareholder's account is less than the minimum account size, or
(iv) in connection with the
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combination of the Company with any other registered investment company by a
merger, acquisition of assets, or by any other reorganization transaction.
Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors, including those who are entitled to purchase Class A Shares of the
Fund at a reduced sales load, should compare the fees assessed on Class A Shares
against those assessed on Class D Shares (including potential contingent
deferred sales charges and higher Rule 12b-1 Fees) in light of the amount to be
invested and the anticipated time that the shares will be owned.
Shares of the Fund may be purchased by any of the methods described below.
INITIAL 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, social security 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 Strategic Growth Fund (designate Class A
or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
3. A completed Account Application should be mailed, or sent by
telefacsimile with the original subsequently mailed, to the following address
immediately after the funds are wired and must be received and accepted by the
Transfer Agent before an account can be opened:
Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082
4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, at the net asset value, next determined after the
Account Application is received and accepted.
INITIAL 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 Strategic Growth Fund (designate Class A or D)" to its mailing
address set forth above.
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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 Strategic Growth Fund (designate Class A or D)" to the
above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.
SYSTEMATIC PURCHASE PLAN
The Company's Systematic Purchase Plan provides you with a convenient way
to establish and automatically add to your existing accounts on a monthly basis.
If you elect to participate in this plan you must specify an amount ($100 or
more) to be withdrawn automatically by the Transfer Agent on a monthly basis
from a designated bank account (provided your bank is a participant in the
automated clearing house system). The Transfer Agent withdraws and uses this
amount to purchase shares of the Fund on or about the fifth business day of each
month. There are no additional fees charged for participating in this plan.
You may change the investment amount, suspend purchases or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if the designated bank account balance is insufficient
to make a scheduled withdrawal, or if either the designated bank account or your
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.
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EXCHANGE PRIVILEGES
You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market Fund, the Money Market Fund or the U.S. Treasury Money
Market Fund in an identically registered account at respective net asset values,
provided that, if the other investment portfolio changes 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. Class D Shares of the Fund may be exchanged for Class D
Shares of one of the Company's other investment portfolios that offer Class D
Shares or for Class A Shares of the Money Market Fund in an identically
registered account at respective net asset values. You are not charged a
contingent deferred sales charge on exchanges of Class D Shares for shares of
the same class of another of the Company's investment portfolios or for Class A
Shares of the Money Market Fund. If you exchange Class D Shares for shares of
the same class of another investment portfolio, or for Class A Shares of the
Money Market Fund, the remaining period of time (if any) that the contingent
deferred sales charge is in effect will be computed from the time of the initial
purchase of the previously held shares. Accordingly, if you exchange Class D
Shares for Class A Shares of the Money Market Fund, and redeem the shares of the
Money Market Fund within one year of the receipt of the purchase order for the
exchanged Class D Shares, you will have to pay a deferred sales charge equal to
the contingent deferred sales charge applicable to the previously exchanged
Class D Shares. If you exchange Class D Shares of an investment portfolio for
Class A Shares of the Money Market Fund, you may subsequently re-exchange the
acquired Class A Shares only for Class D Shares. If you re-exchange the Class A
Shares of the Money Market Fund for Class D Shares, the remaining period of time
(if any) that the contingent deferred sales charge is in effect will be computed
from the time of your initial purchase of Class D Shares. In addition, shares of
the 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.
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 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 those seeking to
time market fluctuations. Any such rejection will be made by management on a
prospective basis
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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 tax purposes may be realized upon an exchange, depending upon the
cost or other basis of shares redeemed.
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you decline such privileges. These
privileges authorize the Transfer Agent to act on telephone instructions from
any person representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. The Company will require the
Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine. If the
Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a request in proper form by the Transfer Agent directly or through
any authorized broker/dealer or financial institution.
Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange, and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.
Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by the your bank, currently considered by the Company to be a period of
15 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.
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<PAGE> 140
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."
Unless other instructions are given in proper form, a check for the
proceeds of redemption, net of any contingent deferred sales charge applicable
with respect to Class D Shares, will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your accounts and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate, and are not 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 a designated bank account. The Transfer Agent redeems
sufficient shares and mails or deposits the proceeds of the redemption, net of
any contingent deferred sales charge applicable with respect to Class D Shares,
as instructed on or about the fifth business day prior to the end of each month.
There are no additional fees charged for participating in this plan.
You may change the withdrawal amount, suspend withdrawals or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to a scheduled transaction. An election will be
terminated automatically if your account balance is insufficient to make a
scheduled withdrawal or if your account is closed.
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<PAGE> 141
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 elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.
You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.
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 D Shares,
will be wired or credited to the bank indicated in your Account Application 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. 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
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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 a Plan on behalf of each class
of shares of the Fund. Under the Plans and pursuant to the Distribution
Agreement, the Fund may pay certain distribution-related expenses. As discussed
above, under the Distribution Agreement, Stephens is entitled to receive from
the Fund, as compensation for distribution-related services, a monthly fee at
the annual rate of up to 0.25% of the average daily net assets of the Class A
Shares of the Fund and a monthly fee at the annual rate of up to 0.75% of the
average daily net assets of the Class D Shares of the Fund. Since the fee
payable to Stephens under the Distribution Agreement is based upon a percentage
of the average daily net assets of a class of shares of the Fund and not upon
the actual expenditures of Stephens, the expenses of Stephens (which may include
overhead expenses) may be more or less than the fees received by it under the
Distribution Agreement. All or a portion of these fees may be paid by Stephens
to broker-dealers or financial institutions who have entered into selling agent
agreements with Stephens, as compensation for sales support services.
SERVICING PLAN
The Company's Board of Directors has adopted a servicing plan ("Servicing
Plan") on behalf of the Class D Shares of the Fund. Pursuant to the Servicing
Plan the Fund may enter into servicing agreements with one or more servicing
agents who agree to provide administrative support services to their customers
who are the record or beneficial owners of Class D Shares. Such servicing agents
will be compensated at an annual rate of up to 0.25% of the average daily net
asset value of the Class D Shares held of record or beneficially by such
customers.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare 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
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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 fund in the Overland Express Family of Funds
with which you have an established account that has met the applicable minimum
initial investment requirement.
The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g., transfer agent fees) between Class A
Shares and Class B Shares that would affect their relative dividends.
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 their 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.
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
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<PAGE> 144
number you provide is correct and that you are not subject to 31% backup
withholding for previous underreporting to the IRS.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - Foreign Shareholders" in the SAI.
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.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94163 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers twelve series of shares, each representing an interest in one
of the funds in the Overland Express Family of Funds -- the Asset Allocation
Fund, the California Tax-Free Bond Fund, the California Tax-Free Money Market
Fund, the Money Market Fund, the Municipal Income Fund, the Overland Sweep Fund,
the Short-Term Government-Corporate Income Fund, the Short-Term Municipal Income
Fund, the Strategic Growth Fund, the U.S. Government Income Fund, the U.S.
Treasury Money Market Fund and the Variable Rate Government Fund. 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. 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.
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<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. STRATEGIC GROWTH FUND
C/O OVERLAND EXPRESS SHAREHOLDER SERVICES, WELLS FARGO BANK, N.A ACCOUNT APPLICATION
POST OFFICE BOX 63084, SAN FRANCISCO, CALIFORNIA 94163 PAGE 1 OF 5
FOR PERSONAL SERVICE PLEASE CALL
YOUR INVESTMENT SPECIALIST OR 1-800-572-7797
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1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / ADDITIONAL INVESTMENT OR CHANGE TO ACCOUNT #
- ------------------------------------------------------------------------------------------------------------------------------------
/ / INDIVIDUAL 1. Individual - -
USE LINE 1 --------------------------------- ----------- ------- ------------
First Name Initial Last Name Soc. Security No.
/ / JOINT OWNERS 2. Joint Owner (Only one Soc. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 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)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 146
<TABLE>
<S> <C>
STRATEGIC GROWTH FUND
LOGO ACCOUNT APPLICATION
PAGE 2 OF 5
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2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT AMOUNT: $
------------------------
TYPE OF ACCOUNT (CHOOSE ONE ONLY):
/ / Class A Shares, or
/ / Class D Shares (not available for purchases of $9,000,000 or more)
Note: If no choice is indicated, Class A Shares will be selected.
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express Strategic Growth Fund (designate Class A or D)).
/ / Funds have been wired to my Overland Express Account #
------------------------
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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.
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SYSTEMATIC PURCHASE PLAN:
/ / I hereby authorize you to systematically withdraw from the bank account designated in Section 3 the following amount to
purchase shares of the Fund. I understand and agree that the designated account will be debited on or about the fifth business
day of each month to effect the Fund purchase and that such monthly investments shall continue until my written notice to
cancel has been received by you at least five (5) business days prior to the next scheduled Fund purchase.
Monthly Investment Amount: $ (minimum $100)
------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PLAN:
/ / I hereby authorize you to systematically redeem a sufficient number of shares from my Overland Express account and to
distribute the amount specified below by check to the registration address set forth in Section 1 or the bank account
designated in Section 3. I understand and agree that the redemption of shares and mailing or depositing of proceeds will occur
on or about the fifth business day prior to the end of each month and that such monthly payments shall continue until my
written notice to cancel has been received by you at least five (5) business days prior to the next scheduled withdrawal.
Monthly Withdrawal Amount: $ (minimum $100)
------------------
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
- ------------------------------------------------------------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bank Name
---------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
---------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 147
<TABLE>
<S> <C>
STRATEGIC GROWTH 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 Family of Funds.
/ / Invest capital gain distributions in Account # of Fund
------------- -------------
of the Overland Express Family of 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)
</TABLE>
<PAGE> 148
<TABLE>
<S> <C>
STRATEGIC GROWTH FUND
(OVERLAND EXPRESS LOGO) ACCOUNT APPLICATION
PAGE 4 OF 5
</TABLE>
7. AUTHORIZATION FOR TRUSTS AND ORGANIZATIONS (If Applicable.)
- --------------------------------------------------------------------------------
CORPORATIONS, TRUSTS, PARTNERSHIPS OR OTHER ORGANIZATIONS MUST COMPLETE
THIS SECTION.
<TABLE>
<S> <C> <C> <C> <C>
Registered Owner is a: / / Trust / / Corporation, Incorporated Association
/ / Partnership / / Other: (such as Non-Profit Organization, Religious Organization,
Sole Proprietorship, Investment Club, Non-incorporated
Association, etc.)
</TABLE>
The following named persons are currently officers/trustees/general
partners/other authorized signatories of the Registered Owner; this(these)
Authorized Person(s) is(are) currently authorized under the applicable
governing document to act with full power to sell, assign or transfer
securities of Overland Express Funds, Inc. for the Registered Owner and to
execute and deliver any instrument necessary to effectuate the authority
hereby conferred:
<TABLE>
<S> <C> <C>
Name Title Specimen Signature
---------------------------------- ---------------------------------- ----------------------------------
---------------------------------- ---------------------------------- ----------------------------------
---------------------------------- ---------------------------------- ----------------------------------
</TABLE>
Overland Express Funds, Inc., Stephens Inc. and Wells Fargo Bank, N.A.
may, without inquiry, act upon the instruction of ANY PERSON(S) purporting
to be (an) Authorized Person(s) as named in the Authorization Form last
received by you, and shall not be liable for any claims, expenses
(including legal fees) or losses resulting from acting upon any
instructions reasonably believed to be genuine.
FOR CORPORATIONS AND INCORPORATED ASSOCIATIONS:
I, , Secretary of the
above-named Registered Owner, do hereby certify that at a meeting on
at which a quorum was present throughout, the Board of
Directors of the corporation/the officers of the association duly adopted
a resolution, which is in full force and effect and in accordance with the
Registered Owner's charter and by-laws, which resolution: (1) empowered
the above-named Authorized Person(s) to effect securities transactions for
the Registered Owner on the terms described above; (2) authorized the
Secretary to certify, from time to time, the names and titles of the
officers of the Registered Owner and to notify you when changes in the
office occur; and (3) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until you receive a duly executed amendment to the Authorization Form.
Witness my hand on behalf of the corporation/association on this
day of ,19
<TABLE>
<S> <C>
------------------------------------------------
Secretary (Signature Guarantee or
Corporate Seal is Required)
FOR ALL OTHER ORGANIZATIONS: ------------------------------------------------
Certifying Trustee, General Partner, or Other
</TABLE>
(CONTINUED)
<PAGE> 149
<TABLE>
<S> <C>
STRATEGIC GROWTH 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.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------- -----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 150
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER
AND DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
LOGO
------------------------
PROSPECTUS
------------------------
Strategic Growth Fund
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
83P 5/95
<PAGE> 151
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 152
LOGO
Telephone: (800) 552-9612
Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus describes the Institutional
Class of two of the funds in the Overland Express Family of Funds -- the MONEY
MARKET FUND and the U.S. TREASURY MONEY MARKET FUND (each, a "Fund," and
collectively, the "Funds").
The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.
The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by investing in
U.S. Treasury bonds, notes and bills with short remaining terms.
Each of the Funds seeks to maintain a net asset value of $1.00 per share.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in any of the Funds. A Statement of Additional
Information (the "SAI") dated May 1, 1995, containing additional and more
detailed information about each of the Funds, has been filed with the Securities
and Exchange Commission (the "SEC") and is hereby incorporated by reference into
this Prospectus. The SAI is available without charge and can be obtained by
writing the Company at P.O. Box 63084, San Francisco, CA 94163 or by calling the
Company at the telephone number printed above.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
CONSTANT $1.00 NET ASSET VALUE PER SHARE.
------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO
BANK") OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY.
AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
<PAGE> 153
This Prospectus describes one class of shares of the Funds -- the
Institutional Class (shares of the Institutional Class are also referred to
hereinafter as the "Institutional Shares" or the "Shares"). The Funds also offer
a class of shares known as the Class A Shares. Investors who are not eligible to
invest in the Institutional Class may be eligible to invest in the Class A
Shares. Additional information about Class A Shares, and a free copy of the
current prospectus describing the Class A shares, is available from the Company
at the telephone number printed above.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUNDS, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS
THE SPONSOR AND DISTRIBUTOR FOR THE FUNDS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary........................................................................ ii
Summary of Expenses....................................................................... iv
Financial Highlights...................................................................... vi
Investment Objectives, Policies and Activities............................................ 1
Advisory, Administration and Distribution Arrangements.................................... 5
Determination of Net Asset Value.......................................................... 7
Purchase of Shares........................................................................ 7
Exchange Privileges....................................................................... 10
Redemption of Shares...................................................................... 11
Dividends and Distributions............................................................... 13
Taxes..................................................................................... 14
Custodian and Transfer and Dividend Disbursing Agent...................................... 14
Organization and Capital Stock............................................................ 15
</TABLE>
i
<PAGE> 154
PROSPECTUS SUMMARY
The Company, as an open-end management investment company, provides a
convenient way for you to invest in portfolios of securities selected and
supervised by professional management. The following provides information about
the Funds, each of which has its own investment objective.
Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
A. The MONEY MARKET FUND seeks to provide investors with a high level of
current income, while preserving capital and liquidity, by investing in
high-quality, short-term securities.
The U.S. TREASURY MONEY MARKET FUND seeks to provide investors with a high
level of current income, while preserving capital and liquidity, by
investing in U.S. Treasury bonds, notes and bills ("U.S. Treasury
Securities") with short remaining terms.
Each Fund seeks to maintain a net asset value of $1.00 per Share; however,
as with all mutual funds, there is no assurance that this objective will
be achieved.
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. The MONEY MARKET FUND invests in high-quality money market instruments,
including obligations of the U.S. Government, its agencies and
instrumentalities (including government-sponsored enterprises), certain
debt obligations, including corporate debt, certain obligations of U.S.
banks and certain repurchase agreements. See "Investment Objectives,
Policies and Activities."
The U.S. TREASURY MONEY MARKET FUND invests in short-term U.S. Treasury
bonds, notes and bills. See "Investment Objectives, Policies and
Activities."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, as the investment adviser of each Fund, manages your
investments. Wells Fargo Bank also provides the Funds with transfer
agency, dividend disbursing agency and custodial services. Stephens is the
sponsor, administrator and distributor for the Company. See "Advisory,
Administration and Distribution Arrangements" and "Distribution Plan."
Q. HOW MAY I PURCHASE SHARES?
A. Institutional Shares of the Funds may be purchased on any day the New
York Stock Exchange (the "Exchange") is open for trading. There is no
sales load for purchasing Shares of either of the Funds. The minimum
initial purchase amount for Shares of either of the Funds is $150,000 with
minimum subsequent purchase amounts of $25,000 or more in each account.
You may purchase Institutional Shares of the Funds through Stephens, Wells
Fargo Bank, as transfer agent (the "Transfer Agent"), or any authorized
broker/dealer or financial institution. Purchases of Shares of the Funds
may be made by wire directly to the Transfer Agent. See "Purchase of
Shares."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on Shares of the Funds are declared daily and paid monthly.
Dividends are automatically reinvested in additional Shares, unless you
elect to receive dividends in cash. All reinvestments in Shares of the
Funds are at net asset value. See "Dividends and Distributions."
ii
<PAGE> 155
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open for trading, Shares may be redeemed upon
request to Stephens or the Transfer Agent directly, or through any
authorized broker/dealer or financial institution. Shares may be redeemed
by a request in good form in writing or, by prior arrangement, through
telephone direction. Proceeds are payable by check or, for shareholders
who make prior arrangements, by wire. Accounts of less than the applicable
minimum initial purchase amount may be redeemed at the option of the
Company. The Company does not charge for redeeming its Shares. However,
the Company reserves the right to impose charges for wiring redemption
proceeds. See "Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. Shares of the Funds are not guaranteed or insured against loss of
principal or interest, although certain of the Funds' portfolio securities
may be insured or guaranteed as to repayments of principal and/or the
payment of interest. Although each of the Funds seeks to maintain a stable
net asset value of $1.00 per Share, there is no assurance that it will be
able to do so. As with all mutual funds, there can be no assurance that
the Funds will achieve their investment objectives.
iii
<PAGE> 156
SUMMARY OF EXPENSES
ANNUAL FUND OPERATING EXPENSES
AS A PERCENTAGE OF AVERAGE NET ASSETS
<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES OF
INSTITUTIONAL U.S.
SHARES OF TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
Management Fees..................................................... 0.25% 0.25%
Other Expenses(1)................................................... 0.15% 0.15%
----- -----
Total Fund Operating Expenses(1)*................................... 0.40% 0.40%
</TABLE>
- ---------------
(1) After any waivers or reimbursements.
* The percentages shown above state the basis on which payments will be made
(except "Other Expenses," which is an estimate), and reflect fee waivers and
reimbursements that are expected to continue during the current fiscal year.
Absent waivers and reimbursements, "Other Expenses" and "Total Fund
Operating Expenses" with respect to the Money Market Fund would have been
0.30% and 0.55%, respectively. Absent waivers and reimbursements, these
percentages with respect to the U.S. Treasury Money Market Fund would have
been 0.32% and 0.57%, respectively. As further described in the Prospectus
under the caption "Advisory, Administration and Distribution Arrangements,"
Wells Fargo Bank and Stephens each has agreed to waive or reimburse all or a
portion of its respective fees in circumstances where a Fund's expenses that
are subject to limitations imposed under state securities laws and
regulations exceed such limitations. In addition, Wells Fargo Bank and
Stephens each may elect, in its sole discretion, to otherwise waive all or a
portion of its respective fees or reimburse expenses. Wells Fargo Bank and
Stephens each has agreed to waive its fees, through at least the current
fiscal year, to the extent Total Fund Operating Expenses for Institutional
Shares of either Fund would exceed 0.45% of average net assets. Any such
waivers, limits or reimbursements of fees with respect to a Fund would
reduce the total expenses of such Fund. Of course, there can be no
assurances that voluntary fee waivers, limits and reimbursements will
continue.
iv
<PAGE> 157
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Institutional Shares of each Fund,
assuming (1) a 5% annual return and (2) redemption at
the end of each time period indicated:
Money Market Fund................................... $ 4 $ 13 $ 22 $ 51
U.S. Treasury Money Market Fund..................... $ 4 $ 13 $ 22 $ 51
</TABLE>
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that investors in Institutional
Shares of the Funds will bear directly or indirectly. There are no sales loads,
redemption fees or exchange fees charged by the Funds. However, the Company
reserves the right to impose charges for wiring redemption proceeds.
See Prospectus sections captioned "Advisory, Administration and
Distribution Arrangements" and "Purchase of Shares" for more complete
descriptions of the various costs and expenses applicable to the Funds. The
Example should not be considered a representation of past or future expenses;
actual expenses may be greater or lesser than those shown. See Prospectus
Sections captioned "Advisory, Administration and Distribution Arrangements,"
"Distribution Plans" and "Purchase of Shares" for more complete descriptions of
the various costs and expenses applicable to the Fund.
v
<PAGE> 158
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Funds' 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Funds' 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
MONEY MARKET FUND
FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
PERIOD*
ENDED
DEC. 31, 1994
-------------
<S> <C>
Net Asset Value, Beginning of Period............................................... $ 1.00
Income From Investment Operations:
Net Investment Income.............................................................. 0.02
Less Distributions:
Dividends From Net Investment Income............................................... (0.02)
------------
Net Asset Value, End of Period..................................................... $ 1.00
============
Total Return (not annualized)...................................................... 4.46%
Ratios/Supplemental Data:
Net Assets, End of Period (000).................................................... $ 11,237
Number of Shares Outstanding, End of Period (000).................................. 11,238
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1)......................................... 0.38%
Ratio of Net Investment Income to Average Net Assets(2)............................ 5.05%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and Reimbursed
Expenses....................................................................... 0.55%
(2) Ratio of Net Investment Income to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses............................................................ 4.88%
* This class commenced operations on August 18, 1994.
</TABLE>
vi
<PAGE> 159
U.S. TREASURY MONEY MARKET FUND
FOR AN INSTITUTIONAL CLASS SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
PERIOD*
ENDED
DEC. 31, 1994
-------------
<S> <C>
Net Asset Value, Beginning of Period............................................... $ 1.00
Income From Investment Operations:
Net Investment Income.............................................................. 0.16
Less Distributions:
Dividends From Net Investment Income............................................... (0.16)
-----------
Net Asset Value, End of Period..................................................... $ 1.00
===========
Total Return (not annualized)...................................................... 4.05%
Ratios/Supplemental Data:
Net Assets, End of Period (000).................................................... $ 3,898
Number of Shares Outstanding, End of Period (000).................................. 3,900
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1)......................................... 0.23%
Ratio of Net Investment Income to Average Net Assets(2)............................ 4.42%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses........................................................... 0.57%
(2) Ratio of Net Investment Income to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses............................................................ 4.08%
* This class commenced operations on June 20, 1994.
</TABLE>
vii
<PAGE> 160
INVESTMENT OBJECTIVES, POLICIES AND ACTIVITIES
Set forth below is a description of the investment objectives and related
policies of each of the Funds. As with all mutual funds, there can be no
assurance that the Funds, each of which is a diversified portfolio, will achieve
their respective investment objectives. The Funds invest only in U.S.
dollar-denominated "Eligible Securities" with remaining maturities not exceeding
thirteen months, as defined in Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act"), and maintain a dollar-weighted average portfolio maturity
of 90 days or less. An Eligible Security is a security that is determined to
present minimal credit risks and is rated in one of the two highest rating
categories by the required number of nationally recognized statistical rating
organizations or, if unrated, is determined to be of comparable quality to such
rated securities. These determinations are made by the investment adviser under
guidelines adopted by the Company's Board of Directors, although in certain
instances the Board of Directors must approve or ratify the Funds' investments.
The Board of Directors of the Company (or Wells Fargo Bank, under authority
delegated to it as investment adviser to the Funds) will determine on an ongoing
basis that any Eligible Securities purchased by the Funds present minimal credit
risks. The Funds will endeavor to maintain a constant net asset value of $1.00
per Share; however, there is no assurance that this objective will be achieved.
MONEY MARKET FUND
Investment Objective. The Money Market Fund seeks to provide investors with
a high level of current income, while preserving capital and liquidity, by
investing in high-quality, short-term securities.
Under normal market circumstances, this Fund invests its assets exclusively
in Money Market Instruments (discussed below).
U.S. TREASURY MONEY MARKET FUND
Investment Objective. The U.S. Treasury Money Market Fund seeks to provide
investors with a high level of current income, while preserving capital and
liquidity, by investing in short-term U.S. Treasury bonds, notes and bills
("U.S. Treasury Securities").
The Fund will invest exclusively in U.S. Treasury Securities. U.S. Treasury
Securities are debt obligations issued by the U.S. Government, of which the
payment of interest and repayment of principal are secured by the full faith and
credit of the U.S. Treasury. Treasury bonds, notes and bills differ mainly in
the length of their maturities. Treasury bonds are long-term debt instruments
with original maturities of ten years or more. Treasury notes are medium-term
debt instruments with original maturities of one to ten years. Treasury bills
are short-term debt obligations with original maturities of one year or less and
are issued on a discounted basis. The U.S. Treasury Money Market Fund may only
purchase U.S. Treasury Securities with remaining maturities of 13 months or
less.
INVESTMENTS AND ACTIVITIES
Money Market Instruments
Money Market Instruments consist of: (a) short-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) ("U.S. Gov-
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ernment obligations") (discussed below); (b) negotiable certificates of deposit,
bankers' acceptances and fixed time deposits and other short-term obligations of
domestic banks (including foreign branches) that have more than $1 billion in
total assets at the time of the investment and are members of the Federal
Reserve System or are examined by the Comptroller of the Currency or whose
deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"); (c)
commercial paper rated at the date of purchase "P-1" by Moody's Investors
Service, Inc. ("Moody's") or "A-1+" or "A-1" by Standard & Poor's Corporation
("S&P"), or, if unrated, of comparable quality as determined by the investment
adviser; (d) certain repurchase agreements (discussed below); and (e) short-term
U.S. dollar-denominated obligations of foreign banks (including U.S. branches)
that at the time of investment: (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) are among the 75 largest
foreign banks in the world as determined on the basis of assets; and (iii) have
branches or agencies in the United States.
U.S. Government Obligations
The U.S. Treasury Money Market Fund invests exclusively in U.S. Treasury
Securities. The Money Market Fund may invest in various types of U.S. Government
obligations. U.S. Government obligations include securities issued or guaranteed
as to principal and interest by the U.S. Government and supported by the full
faith and credit of the U.S. Treasury. U.S. Treasury obligations differ mainly
in the length of their maturity. Treasury bills, the most frequently issued
marketable government securities, have a maturity of up to one year and are
issued on a discount basis. U.S. Government obligations also include securities
issued or guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees; others, by the right of
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government will provide
financial support to its agencies or instrumentalities where it is not obligated
to do so. In addition, U.S. Government obligations are subject to fluctuations
in market value due to fluctuations in market interest rates. Certain types of
U.S. Government obligations are subject to fluctuations in yield or value due to
their structure or contract terms.
Floating- and Variable-Rate Instruments
Certain of the debt instruments in which the Funds may invest bear interest
at rates that are not fixed, but float or vary with, for example, changes in
specified market rates or indices or at specified intervals. Certain of these
floating- and variable-rate instruments may carry a demand feature that would
permit the holder to tender them back to the issuer at par value prior to
maturity. The floating- and variable-rate instruments that the Funds may
purchase include certificates of participation in floating- and variable-rate
obligations. The Funds may invest in floating- and variable-rate obligations
even if they carry stated maturities in excess of thirteen months, upon
compliance with certain conditions of the SEC, in which case such obligations
will be treated, in accordance with these conditions, as having maturities not
exceeding thirteen months. Wells Fargo Bank, as investment adviser to each of
the Funds, will monitor on an ongoing basis the ability of an issuer of a demand
instrument to pay principal and interest on demand. Events
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affecting the ability of the issuer of the demand instrument to make payment
when due may occur between the time a Fund elects to demand payment and the time
payment is due. Such events may affect the ability of the issuer of the
instrument to make payment when due, and unless such demand instrument permits
same-day settlement, may affect a Fund's ability to obtain payment at par.
Demand instruments whose demand feature is not exercisable within seven days may
be treated as liquid, provided that an active secondary market exists.
Repurchase Agreements
The Money Market Fund may enter into repurchase agreements wherein the
seller of a security to the Fund agrees to repurchase that security from the
Fund at a mutually agreed-upon time and price. The period of maturity is usually
quite short, often overnight or a few days, although it may extend over a number
of months. The Money Market Fund may enter into repurchase agreements only with
respect to U.S. Government obligations and other securities that are permissible
investments for the Fund. All repurchase agreements will be fully collateralized
based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
thirteen months. However, the term of any repurchase agreement on behalf of the
Fund will always be less than thirteen months. If the seller defaults and the
value of the underlying securities has declined, the Fund may incur a loss. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the security, the Fund's disposition of the security may be delayed or limited.
The Money Market Fund may not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the market
value of the Fund's total net assets would be invested in repurchase agreements
with maturities of more than seven days and illiquid securities. The Fund only
will enter into repurchase agreements with registered broker/dealers and
commercial banks that meet guidelines established by the Company's Board of
Directors and are not affiliated with the investment adviser. The Fund may
participate in pooled repurchase agreement transactions with other funds advised
by Wells Fargo Bank.
Foreign Obligations
The Money Market Fund may invest up to 25% of its assets in high-quality,
short-term debt obligations of foreign branches of U.S. banks or U.S. branches
of foreign banks that are denominated in and pay interest in U.S. dollars.
Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic obligations. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not subject to the same accounting, auditing
and financial reporting standards or governmental supervision as domestic
issuers. In addition, with respect to certain foreign countries, 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 development that could adversely affect investments in, the liquidity
of, and the ability to enforce contractual obligations with respect to,
securities of issuers located in those countries.
Limiting Investment Risks
Each of the Funds must comply with certain investment criteria (noted in
the first paragraph of this section) pursuant to the 1940 Act, each of which is
designed to provide liquidity, reduce risk and allow the
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Funds to maintain a stable net asset value of $1.00 per Share. Of course, the
Funds cannot guarantee a $1.00 Share price.
Debt securities purchased by the Funds may be subject to fluctuations in
market value due to fluctuations in market interest rates; however, as noted
under "Determination of Net Asset Value," the use of amortized cost valuation
attempts to minimize the impact of such market interest rate fluctuations. In
addition, certain types of these securities are subject to fluctuations in yield
due to early prepayments on mortgages underlying such securities.
Since its inception, the Funds have emphasized safety of principal and high
credit quality. In particular, the internal investment policies of the Funds'
investment adviser, Wells Fargo Bank have always prohibited the purchase for the
Funds of many types of floating-rate derivative securities that are considered
potentially volatile. The Board of Directors of the Company has formally adopted
the following policies on behalf of the Funds.
The following types of derivative securities ARE NOT permitted
investments for the Funds:
- capped floaters (on which interest is not paid when market rates move
above a certain level);
- leveraged floaters (whose interest rate reset provisions are based on
a formula that magnifies changes in interest rates);
- range floaters (which do not pay any interest if market interest rates
move outside of a specified range);
- dual index floaters (whose interest rate reset provisions are tied to
more than one index so that a change in the relationship between these
indexes may result in the value of the instrument falling below face
value); and
- inverse floaters (which reset in the opposite direction of their
index).
Additionally, the Funds may not invest in securities whose interest rate
reset provisions are tied to an index that materially lags short-term interest
rates, such as "COFI floaters." The Funds may only invest in floating rate
securities that bear interest at a rate that resets quarterly or more
frequently, and which resets based on changes in standard money market rate
indices such as U.S. Treasury bills, London Interbank Offered Rate, the prime
rate, published commercial paper rates or federal funds rates.
* * * *
Each of the Funds' investment objectives, as set forth in the first
paragraph of the relevant section describing each Fund's objective and policies,
is fundamental; that is, the investment objective may not be changed without
approval by the vote of the holders of a majority of the Fund's outstanding
voting securities, as described under "Capital Stock" in the SAI. If the Board
of Directors determines, however, that a Fund's investment objective can best be
achieved by a substantive change in a non-fundamental investment policy or
strategy, the Company may make such change without shareholder approval and will
disclose any such material changes in the then current prospectus.
As matters of fundamental policy, the following apply: (i) each of the
Funds may borrow from banks up to 10% of the current value of its net assets for
temporary purposes only in order to meet redemptions,
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and these borrowings may be secured by the pledge of up to 10% of the current
value of its net assets (but investments may not be purchased by the Money
Market Fund while any such outstanding borrowing exists and investments may not
be purchased by the U.S. Treasury Money Market Fund while any such outstanding
borrowing in excess of 5% of its net assets exists); (ii) the Money Market Fund
may invest up to 10% of the current value of its net assets in repurchase
agreements having maturities of more than seven days and illiquid securities;
(iii) none of the Funds may purchase the securities of issuers conducting their
principal business activity in the same industry if, immediately after the
purchase and as a result thereof, the value of the Fund's investment in that
industry would exceed 25% of the current value of such Fund's total assets,
provided that there is no limitation with respect to investments in (a) U.S.
Government obligations (which includes U.S. Treasury Securities), and (b)
obligations of domestic banks (for purpose of this restriction, domestic bank
obligations do not include obligations of U.S. branches of foreign banks or
obligations of foreign branches of U.S. banks). See "Investment Restrictions"
and "Additional Permitted Investment Activities" in the SAI.
ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.
INVESTMENT ADVISER
Pursuant to Advisory Contracts, each of the Funds is advised by Wells Fargo
Bank, 420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds") and to six other
registered investment companies, each of which consist of several separately
managed investment portfolios.
The Advisory Contracts provide that Wells Fargo Bank shall furnish to the
Funds investment guidance and policy direction in connection with the daily
portfolio management of the Funds. Pursuant to the Advisory Contracts, Wells
Fargo Bank furnishes to the Board of Directors periodic reports on the
investment strategy and performance of each Fund.
Purchase and sale orders of the securities held by each of the Funds may be
combined with those of other accounts that Wells Fargo Bank manages, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold for any of the Funds and other
accounts managed by Wells Fargo Bank, Wells Fargo Bank undertakes to allocate
those transactions among the participants equitably. From time to time, each of
the Funds, to the extent consistent with its investment objective, policies and
restrictions, may invest in securities of companies with which Wells Fargo Bank
has a lending relationship.
For its services under the Advisory Contracts, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rate of 0.25% of the average
daily net assets of each of the Money Market Fund
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and the U.S. Treasury Money Market Fund. From time to time, Wells Fargo Bank may
waive such fees in whole or in part. In this regard, Wells Fargo Bank has agreed
to waive its fees, through at least the current fiscal year, to the extent Total
Fund Operating Expenses for the Institutional Class of either Fund would exceed
0.45% of average net assets. Any such waiver will reduce expenses of the Fund
involved and, accordingly, have a favorable impact on the yield of such Fund.
For the year ended December 31, 1994, Wells Fargo Bank received 0.25% of the
Money Market Fund's average daily net assets and 0.18% of the U.S. Treasury
Money Market Fund's average daily net assets as compensation for its advisory
services.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with each of the Funds under which Stephens acts as administrator
for the Funds. For providing these administrative services, Stephens is entitled
to receive a monthly fee from each Fund at the annual rate of 0.10% of its
average daily net assets. From time to time, Stephens may waive fees from any or
all of the Funds in whole or in part. Any such waiver will reduce expenses of
the Fund involved and, accordingly, have a favorable impact on the yield of such
Fund.
The Administration Agreements between Stephens and the Funds state that
Stephens shall provide as administrative services, among other things, general
supervision: (i) of the operation of the Funds, including coordination of the
services performed by the Funds' investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) in connection with regulatory
compliance, the compilation of information for documents such as reports to, and
filings with, the SEC and state securities commissions, and preparation of proxy
statements and shareholder reports for the Funds; and (iii) relative to the
compilation of data required for the preparation of periodic reports distributed
to the Company's officers and Board of Directors. Stephens also furnishes office
space and certain facilities required for conducting the business of the Funds
and pays the compensation of the Company's Directors, officers and employees who
are affiliated with Stephens.
Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing shares of the
Funds. Stephens bears the cost of printing and mailing prospectuses to potential
investors and any advertising expenses incurred by it in connection with the
distribution of shares. In addition, Stephens has established a non-cash
compensation program, pursuant to which broker/dealers or financial institutions
that sell shares of the Funds may earn additional compensation in the form of
trips to sales seminars or vacation destinations, tickets to sporting events,
theater or other entertainment, opportunities to participate in golf or other
outings and gift certificates for meals or merchandise.
Stephens is a full service broker/dealer and investment advisory firm.
Stephens and its predecessor have been providing securities and investment
services for more than 60 years. Additionally, they have been providing
discretionary portfolio management services since 1983. It currently manages
investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.
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DETERMINATION OF NET ASSET VALUE
Net asset value per class of Shares of each Fund is determined by Wells
Fargo Bank on each day that the Exchange is open for trading. The net asset
value of a Share of a class of a Fund is the value of total net assets
attributable to each class divided by the number of outstanding shares of that
class. The value of net assets per class is determined daily by adjusting the
net assets per class at the beginning of the day by the value of each class's
shareholder activity, net investment income and net realized and unrealized
gains or losses for that day. Net investment income is calculated each day for
each class by attributing to each class a pro rata share of daily income and
common expenses, and by assigning class-specific expenses to each class as
appropriate.
The net asset value per class of Shares of each Fund is determined at 12:00
noon (New York time). Each of the Funds uses the amortized cost method to value
its portfolio securities and attempts to maintain a constant net asset value of
$1.00 per share. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.
PERFORMANCE DATA
From time to time, the Company may advertise yield information with respect
to a class of Shares of the Funds. Yield information is based on the historical
earnings and performance of a class of Shares of a Fund and should not be
considered representative of future performance. From time to time, each of the
Funds may advertise its current yield and its effective yield for a class of
Shares. Current yield for each class of Shares of a Fund is computed by dividing
its net investment income per Share of a class of Shares earned during a
specified period by its net asset value per share on the last day of such period
and annualizing the result. The current yield of each class of Shares of a Fund
shows the annualized income per Share generated by an investment in such a class
of Shares of the Fund over a stated period. In calculating the annualized
effective yield, the income earned per Share of a class of Shares is assumed to
have been reinvested. The effective yield is slightly higher than the current
yield because of the compounding effect of this assumed reinvestment. Additional
information about the performance of each Fund is contained in the Annual Report
for each Fund. The Annual Report may be obtained free of charge by calling the
Company at 800-552-9612.
PURCHASE OF SHARES
Investors may purchase Institutional Shares of either of the Funds on any
day the Exchange is open for trading through Stephens, the Transfer Agent, or
any authorized broker/dealer or financial institution with which Stephens has
entered into agreements. Such broker/dealers or financial institutions are
responsible for the prompt transmission of purchase, exchange or redemption
orders, and may independently establish and charge additional fees to their
clients for such services, other than services related to purchase orders, which
would reduce the clients' overall yield or return. The Exchange is closed on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day (each, a "Holiday"). When any Holiday
falls on a Saturday, the Exchange usually is closed the preceding Friday, and
when any Holiday falls on a Sunday, the Exchange is closed the following Monday.
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Institutional Shares of each Fund are only offered to investors that meet
certain minimum purchase requirements. The initial minimum investment by a
single investor in Institutional Shares of a Fund is $150,000. Once an account
balance of $150,000 in Institutional Shares of a single Fund is established, an
investor may only make subsequent additional purchases of Institutional Shares
of such Fund in increments of $25,000. There is no minimum purchase requirement
for reinvestment of dividends or capital gains. Investments in Institutional
Shares of more than one Fund, or Institutional Shares held in more than one
account, may not be aggregated for purposes of determining whether a particular
investor meets the minimum purchase requirements.
There is no limitation on the amount that can be redeemed at one time,
although a Fund may limit new purchases of Institutional Shares if an investor
attempts to avoid the minimum initial purchase requirements by making partial
redemptions shortly following an initial purchase of $150,000.
The Company reserves the right to reject any purchase order. All funds will
be invested in full and fractional Shares. Checks will be accepted for the
purchase of either Fund's Shares subject to collection at full face value in
U.S. dollars. Inquiries may be directed to the Company at the address or
telephone number on the front cover of the Prospectus.
A salesperson or any other person or entity entitled to receive
compensation for selling or servicing shares of any of the Funds may receive
different compensation with respect to one class of Shares over another.
Shares of the Funds are offered continuously at the net asset value next
determined after a purchase order is effective. No sales load is imposed.
Account Applications for Shares of either of the Funds will become
effective when an investor's bank wire order or check is converted into federal
funds. If payment is transmitted by the Federal Reserve Wire System, the Account
Application will become effective upon receipt. In addition, if investors, with
the prior approval of the Company, notify the Company at or before 12:00 noon
(New York time) on any business day that they intend to wire federal funds to
purchase Shares of either of the Funds, the Account Application will be executed
at the net asset value per Share determined at 12:00 noon (New York time) the
same day. Wire transmissions may, however, be subject to delays of several
hours, in which event the effectiveness of the order will be delayed. Payments
transmitted by a bank wire other than the Federal Reserve Wire System may take
longer to be converted into federal funds.
------------------------
When payment for Shares of either of the Funds is by a check that is drawn
on any member bank of the Federal Reserve System, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.
By investing in Institutional Shares of either of the Funds, a shareholder
appoints the Transfer Agent, as agent, to establish an open account to which all
Shares purchased will be credited, together with any dividends and capital gain
distributions that are paid in additional Shares. See "Dividends and
Distributions." Stock certificates for the Funds will not be issued.
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Shares of either of the Funds may be purchased in accordance with the
following procedures:
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made and the name(s) in which the Shares are to be
registered, the address, social security or tax identification number (where
applicable) of the person or entity in whose name(s) the Shares are to be
registered, dividend payment election, amount to be wired, name of the wiring
bank and name and telephone number of the person to be contacted in connection
with the order. An account number will be assigned.
2. Instruct the wiring bank, which may charge a separate fee, to transmit
the specified amount in federal funds ($150,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express (Name of Fund -- Institutional Shares)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
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 next
determined after the Account Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $150,000 or more, payable
to "Overland Express (Name of Fund -- Institutional Shares)" at its mailing
address set forth above.
ADDITIONAL PURCHASES
Additional purchases of $25,000 or more may be made by instructing the
Funds' Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail by mailing a check
payable to "Overland Express (Name of Fund -- Institutional Shares)" to the
above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.
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PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Purchase orders for Institutional Shares of either of the Funds placed
through broker/dealers and financial institutions by 12:00 noon (New York time)
on any business day that the Exchange is open for trading, including orders for
which payment is to be made from free cash credit balances in securities
accounts held by a dealer, will be effective on the same day the order is placed
if notice is provided to the Transfer Agent by 12:00 noon (New York time) and
federal funds are received by the Transfer Agent before the close of business.
Purchase orders that are received by a broker/dealer or financial institution
after 12:00 noon (New York time) on any business day that the Exchange is open
for trading or that are not received by the Transfer Agent before the close of
business, generally will be effective on the next business day following the day
the order is placed. The broker/dealer or financial institution is responsible
for the prompt transmission of purchase orders to the Transfer Agent. A
broker/dealer or financial institution that is involved in a purchase
transaction may charge separate account, service or transaction fees. Financial
institutions may be required to register as dealers pursuant to applicable state
securities laws, which may differ from federal law and any interpretations
expressed herein.
EXCHANGE PRIVILEGES
Institutional Shares of either of the Funds may be exchanged for
Institutional Shares of the other Fund (as well as Class A Shares of any other
investment portfolio of the Company) in an identically registered account
(provided that shares of the investment portfolio to be acquired are registered
for sale in your state of residence) at respective net asset values if the
shares being acquired carry no sales load or the shares being exchanged were
acquired in exchange for shares on which an equivalent sales load was paid.
Otherwise, applicable sales loads or sales load differentials will be charged on
an exchange.
A shareholder may exchange Shares by writing the Transfer Agent as
indicated below under Redemption by Mail, or by calling the Transfer Agent or
the shareholder's authorized broker/dealer or financial institution, unless the
shareholder has elected not to authorize telephone exchanges in the Account
Application (in which case the shareholder may subsequently authorize such
telephone exchanges by completing a Telephone Exchange Authorization Form and
submitting it to the Transfer Agent in advance of the first such exchange). The
Transfer Agent's number for exchanges is (800) 572-7797.
Procedures applicable to redemption of the Funds' Shares also are
applicable to exchanging Shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times Shares may be exchanged
between portfolios, or to reject in whole or in part any exchange request into a
fund when management believes that such action would be in the best interest of
the fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
The exchange privilege is not an option or a right to purchase shares, but is
permitted under the current policies
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of the respective Funds and portfolios of the Company. A capital gain or loss
for tax purposes may be realized upon an exchange, depending upon the cost or
other basis of shares redeemed.
Telephone redemption or exchange privileges are made available to the
shareholder automatically upon opening an account, unless the shareholder
declines 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
Institutional Shares of a Fund may be redeemed at their next determined net
asset value after receipt of a request in proper form by the Transfer Agent
directly or through any authorized broker/dealer or financial institution.
The Company does not charge for redemption transactions. However, a
broker/dealer or financial institution that is involved in a redemption
transaction may charge separate account, service or transaction fees. Redemption
orders for Institutional Shares of any of the Funds received by an authorized
broker/dealer or financial institution on any day that the Fund is open and
received by the Transfer Agent before 12:00 noon (New York time) on the same day
will be executed at the net asset value determined at 12:00 noon (New York time)
on that day. Redemption orders for any of the Funds received by authorized
broker/dealers or financial institutions on any day that the Fund is open and
received by the Transfer Agent after 12:00 noon (New York time) will be executed
at the net asset value determined at 12:00 noon (New York time) on the next day
that the Fund is open.
Redemption proceeds ordinarily will be remitted within seven days after the
order is received in proper form, except proceeds may be remitted over a longer
period to the extent permitted by the SEC under extraordinary circumstances. If
an expedited redemption is requested, redemption proceeds will be distributed
only if the check used for investment is deemed to be cleared for payment by the
shareholder's bank, currently considered by the Company to be a period of 15
days after investment. The redemption proceeds, of course, may be more or less
than cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount of or number
of Shares to be redeemed. Refer to the shareholder's Fund account number and
provide either a social security or a tax identification number (where
applicable) of the person or entity in whose name(s) the Shares are registered.
2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the Shares, all must sign.
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3. If Shares to be redeemed have a value of $5,000 or more, or redemption
proceeds are to be made to someone other than the shareholder at its address of
record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is a member of the FDIC, a
trust company, a member firm of a domestic stock exchange, a savings
association, or a credit union that is authorized by its charter to provide a
signature guarantee. Signature guarantees by notaries public are not acceptable.
Further documentation may be requested from corporations, administrators,
executors, personal representatives, trustees or custodians.
4. Mail the letter to the Transfer Agent at the mailing address set forth
under "Purchase of Shares."
Unless other instructions are given in proper form, a check for the
proceeds of redemption will be sent to the shareholder's address of record.
EXPEDITED REDEMPTIONS
A shareholder may request an expedited redemption of Shares by letter or
telephone (unless the shareholder has elected not to authorize telephone
redemptions on the Account Application or other form that is on file with the
Transfer Agent) on any day the Funds are open for business. See "Exchange
Privileges" for additional information regarding telephone redemption
privileges.
To request expedited redemption by telephone, please call the Transfer
Agent at (800) 572-7797.
To request expedited redemption by mail, mail your request for expedited
redemption to the Transfer Agent at the mailing address set forth under
"Purchase of Shares -- Initial Purchases of Fund Shares by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to the shareholder's bank indicated in the Account Application
or wired to an authorized broker/dealer or financial institution designated in
the Account Application. The Company reserves the right to impose charges for
wiring redemption proceeds. When proceeds of an expedited redemption are to be
paid to someone other than the shareholder, to an address other than that of
record, or to a bank, broker/dealer or other financial institution that has not
been predesignated, the expedited redemption request must be made by letter and
the signature(s) on the letter must be guaranteed, regardless of the amount of
the redemption. If an expedited redemption request is received by the Transfer
Agent by 12:00 noon (New York time) on a day the Funds are open for business,
the redemption proceeds will be transmitted to the shareholder's bank or
predesignated broker/dealer or financial institution on the same day (assuming
the investment check has cleared as described above), absent extraordinary
circumstances. A check for proceeds of less than $5,000 will be mailed to the
shareholder's address of record, except that, in the case of investments in the
Company that have been effected through broker/dealers, banks and other
institutions that have entered into special arrangements with the Company, the
full amount of the redemption proceeds may be transmitted by wire or credited to
a designated account. The Company reserves the right to impose charges for
wiring redemption proceeds.
REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Unless an investor has made other arrangements, and informed the Transfer
Agent of such arrangements, proceeds of redemptions made through authorized
broker/dealers and financial institutions will be
12
<PAGE> 172
credited to the shareholder's account with such broker/dealer or institution. A
redeeming shareholder may request a check from the broker/dealer or financial
institution or may elect to retain the redemption proceeds in such shareholder's
account. The broker/dealer or financial institution may benefit from the use of
the redemption proceeds prior to the clearance of a check issued to a redeeming
shareholder for such proceeds or prior to disbursement or reinvestment of such
proceeds on behalf of the shareholder.
------------------------
The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.
Due to the high cost of maintaining small accounts, the Company reserves
the right to redeem accounts that fall below $1,000. Prior to such a redemption,
a shareholder will be notified in writing and permitted 30 days to make
additional investments to raise the account balance to the specified minimum.
DIVIDENDS AND DISTRIBUTIONS
Each of the Funds intends to declare as a dividend substantially all of its
net investment income for each class at the close of each business day to
shareholders of record at 12:00 noon (New York time) on the day of declaration.
Shares purchased will begin earning dividends on the day the purchase order
settles and shares redeemed will earn dividends through the day prior to the
date of redemption. Net investment income for a Saturday, Sunday or holiday will
be declared as a dividend to shareholders of record at 12:00 noon (New York
time) on the previous business day.
Dividends of each Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of any of the Funds who redeem
Shares prior to a dividend payment date will be entitled to all dividends
declared but unpaid prior to redemption on such Shares on the next dividend
payment date.
Net capital gains of each Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI or in order to maintain the net asset value of the Fund's
Shares at $1.00 per Share).
Dividends and capital gain distributions paid by each of the Funds will be
invested in additional Shares of the same Fund at net asset value and credited
to the shareholder's account on the payment date or, at the shareholder's
election, paid by check. Dividend checks and Statements of Account will be
mailed approximately three business days after the payment date.
There may be certain differences in fees (e.g. transfer agent fees) between
Class A Shares and Institutional Shares of the Funds that would affect their
relative dividends.
13
<PAGE> 173
TAXES
By complying with the applicable provisions of the Code, the Funds will not
be subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to their shareholders. Dividends from the
investment income (which includes net short-term capital gains, if any) declared
and paid by the Funds will be taxable as ordinary income to their 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 the Fund which are held under a
qualified tax-deferred retirement plan. The Funds intend to pay out all their
net investment income and net realized capital gains (if any) for each year. The
Funds' dividends will not qualify for the dividends-received deduction allowed
to corporate shareholders.
The Funds may be required to pay withholding and other taxes imposed by
foreign countries generally at rates from 10% to 40%, which would reduce such
Funds' investment income. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. It is not anticipated that
shareholders will be entitled to take a foreign tax credit or deduction for such
foreign taxes.
The Funds will inform you of the amount and nature of Fund dividends and
capital gain distributions. You should keep all statements you receive to assist
in your personal recordkeeping. The Company is required by federal law to
withhold, subject to certain exemptions, at a rate of 31% on 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.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - Foreign Shareholders" in the SAI.
Further federal tax considerations are discussed in the SAI. All investors
should consult their individual tax advisors with respect to their particular
tax situations as well as the state and local tax status of investments in
Shares of the Funds.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the Funds' custodian and
transfer and dividend disbursing agent. Wells Fargo Bank performs the custodial
services at its address above. The transfer and dividend disbursing agency
activities are performed at 525 Market Street, San Francisco, California 94105.
14
<PAGE> 174
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end, management investment company, was incorporated
in Maryland on April 27, 1987. The authorized capital stock of the Company
consists of 20,000,000,000 shares having a par value of $.001 per share. The
Company's Board of Directors currently offers twelve series of shares, each
representing an interest in one of the funds in the Overland Express Family of
Funds -- the Asset Allocation Fund, the California Tax-Free Bond Fund, the
California Tax-Free Money Market Fund, the Money Market Fund, the Municipal
Income Fund, the Overland Sweep Fund, the Short-Term Government-Corporate Income
Fund, the Short-Term Municipal Income Fund, the Strategic Growth Fund, the U.S.
Treasury Money Market Fund, and the Variable Rate Government Fund. The Board of
Directors may, in the future, authorize the issuance of shares of capital stock
representing additional series or investment portfolios. All shares of the
Company have equal voting rights and will be voted in the aggregate, and not by
series or class, except where voting by series or class is required by law or
where the matter involved affects only one series or class. The Company may
dispense with the annual meeting of shareholders in any fiscal year in which it
is not required to elect Directors under the 1940 Act; however, shareholders are
entitled to call a meeting of shareholders for purposes of voting on removal of
a Director or Directors. A more detailed statement of the voting rights of
shareholders is contained in the SAI. All shares of the Company, when issued,
will be fully paid and nonassessable.
In addition to the Institutional Class of Shares, each Fund also offers a
second class of shares -- the Class A Shares -- to retail investors. Unlike the
Institutional Shares, the Class A Shares are subject to a Distribution Plan
(Rule 12b-1 fees). For more information about this class of shares, see a
current prospectus for the Class A Shares, available from the Company at the
telephone number set forth on the cover page.
15
<PAGE> 175
<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. 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. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 6, "Authorization for Trusts and
Organizations."
/ / ORGANIZATION* 5. Organization Name -
USE LINE 5 ---------------------------------------- --------------------- -----------------
*Complete "Authorization for Trusts and Tax I.D. No.
Organizations" (Section 6).
- ----------------------------------------------------------------------------------------------------------------------------------
ADDRESS:
Number and Street Apartment No.
------------------------------------------------------------------------------ ------------------
City State Zip Code
------------------------------------------------------------------- ------------ ---------------------------
Telephone Numbers: (DAY) - - (EVENING) - -
----------- ----------- ------------------ ----------- ----------- ------------------
(Area Code) (Area Code)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 176
<TABLE>
<S> <C>
ACCOUNT APPLICATION
PAGE 2 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $150,000.)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT AMOUNT:
/ / OVERLAND EXPRESS MONEY MARKET FUND -- INSTITUTIONAL CLASS $
----------------
/ / OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- INSTITUTIONAL CLASS $
----------------
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express (Name of Fund -- Institutional Shares))
/ / Funds have been wired to 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.
- ------------------------------------------------------------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bank Name
---------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
---------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
4. TELEPHONE INSTRUCTIONS (Do NOT check this box if you wish to authorize telephone instructions.)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / If this box is checked, you are NOT authorized to honor my telephone instructions for purchase of additional Fund shares,
redemptions of Fund shares and exchanges of shares between Funds. If this box is not checked, I understand that telephone
instructions will be effected by debiting/crediting the account designated in Section 3 (if approved) and that if a
designated account has not been authorized and approved, a check or wire transfer will be required for a purchase and a
check will be sent for a redemption.
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 177
<TABLE>
<S> <C>
ACCOUNT APPLICATION
PAGE 3 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
5. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- ------------------------------------------------------------------------------------------------------------------------------------
All dividends and capital gain distributions will be automatically reinvested in shares of the Fund unless otherwise indicated:
OVERLAND EXPRESS MONEY MARKET FUND -- INSTITUTIONAL CLASS:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- INSTITUTIONAL CLASS:
Pay dividends and capital gains distributions by / / mailing check to the registration address set forth in Section 1
or by / / crediting amounts to the bank account designated in Section 3
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 178
<TABLE>
<S> <C>
ACCOUNT APPLICATION
PAGE 4 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
6. 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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 179
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ACCOUNT APPLICATION
PAGE 5 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
7. SIGNATURE, TAX INFORMATION & CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------------------------
/ / U.S. CITIZEN OR RESIDENT
I understand that the Federal Government requires Overland Express Funds, Inc. to withhold and pay to
the Internal Revenue Service 31% from all interest, dividends, capital gains distributions and
proceeds from redemptions UNLESS I have provided a certified taxpayer identification (Social Security
or Employer Identification) number and certify in the Withholding Status below that I am NOT subject
to backup withholding. The taxpayer identification number I provided in Section 1 will be the number
under which any taxable earnings will be reported to the IRS.
WITHHOLDING STATUS: Unless I indicate that I am subject to backup withholding by checking the box
below, I certify that 1) I have NOT been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, OR 2) I have been notified by the IRS
that I am no longer subject to backup withholding: / / I am currently subject to backup withholding.
/ / NON-RESIDENT ALIEN (In order to claim this exemption, ALL owners on the account must be non-resident
aliens and sign below.)
I am not a U.S. citizen or resident (nor is this account held by a foreign corporation, partnership,
estate or trust) and my permanent address is:
Country:
------------------------------------------------------------------ ---------------------------
By signing below, I (we) certify, under penalties of perjury, that I (we) have full authority and legal
capacity to purchase shares of the Fund and affirm that I (we) have received a current prospectus and agree
to be bound by its terms and further certify that 1) the correct taxpayer identification number has been
provided in Section 1 of this Application and that the Withholding Status information, above, is correct OR
2) all owners are entitled to claim non-resident alien status. Investors should be aware that the failure to
check the box under "Telephone Instructions" above means that the telephone exchange and redemption
privileges will be provided. A shareholder would bear the risk of loss in the event of the fraudulent use of
the pre-authorized redemption or exchange privileges. Please see "Exchange Privileges" and "Redemption of
Shares" in the Prospectus for more information on these privileges.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------- institution," which includes a commercial bank
Joint Owner (if any) date trust company, member firm of a domestic stock,
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------- ----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
----------------------------------------- ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 180
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
LOGO
------------------------
PROSPECTUS
------------------------
Money Market Fund
U.S. Treasury Money
Market Fund
Institutional Shares
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
91P 5/95
<PAGE> 181
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 182
LOGO
Telephone: (800) 552-9612
Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus contains information about
one of the funds in the Overland Express Family of Funds -- the MUNICIPAL INCOME
FUND (THE "FUND").
The Fund seeks to provide investors with a high level of income, consistent
with the preservation of capital, by investing primarily in a diversified
portfolio of high quality, medium- to long-term municipal securities issued by
or on behalf of states, territories and possessions or commonwealths of the
United States and District of Columbia or their political subdivisions,
authorities, agencies and instrumentalities, the income of which is exempt from
federal income tax, but subject to the federal alternative minimum tax.
This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1995, containing additional and more detailed information about the
Fund (the "SAI"), 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 the
telephone number printed above.
------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO
BANK") OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY.
AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK
IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
<PAGE> 183
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary......................................................................... ii
Summary of Expenses........................................................................ iv
Financial Highlights....................................................................... vi
Investment Objective and Policies.......................................................... 1
Additional Permitted Investment Activities................................................. 2
Advisory, Administration and Distribution Arrangements..................................... 5
Determination of Net Asset Value........................................................... 7
Purchase of Shares......................................................................... 8
Exchange Privileges........................................................................ 14
Redemption of Shares....................................................................... 16
Distribution Plans......................................................................... 18
Servicing Plan............................................................................. 19
Dividends and Distributions................................................................ 19
Taxes...................................................................................... 20
Custodian and Transfer and Dividend Disbursing Agent....................................... 21
Organization and Capital Stock............................................................. 21
</TABLE>
i
<PAGE> 184
PROSPECTUS SUMMARY
The Company, as an open-end investment company, provides a convenient way
for you to invest in portfolios of securities selected and supervised by
professional management. The following provides information about the Fund and
its investment objective.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The MUNICIPAL INCOME FUND seeks to provide investors with a high-level of
income, consistent with the preservation of capital, by investing
primarily in a diversified portfolio of high-quality, medium- to long-term
municipal securities issued by or on behalf of states, territories, and
possessions or commonwealths of the United States and the District of
Columbia or their political subdivisions, authorities, agencies and
instrumentalities, the income of which is exempt from federal income tax,
but subject to the federal alternative minimum tax ("tax-advantaged"). As
with all mutual funds, there can be no assurance that the Fund will
achieve its investment objective.
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. Under normal market conditions, the Fund invests at least 80% of its net
assets in tax-advantaged municipal securities that at the time of purchase
are assigned the highest rating by a nationally recognized statistical
rating organization ("NRSRO") or, if unrated, are of comparable quality as
determined by Wells Fargo Bank, the Fund's investment adviser. The Fund
may invest in mortgage revenue bonds. The Fund also may invest in
shorter-term municipal notes and municipal commercial paper. In addition,
pending investment of funds, in anticipation of redemption or to maintain
a "defensive" posture when determined appropriate, the Fund may invest
temporarily in cash or taxable securities. See "Investment Objectives and
Policies" and "Additional Permitted Investment Activities."
Q. WHO IS THE INVESTMENT ADVISER?
A. Wells Fargo Bank serves as the investment adviser of the Fund. Wells
Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of the Fund. See "Advisory,
Administration and Distribution Arrangements."
Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?
A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.10% of the average daily net assets of the Fund. See
"Advisory, Administration and Distribution Arrangements."
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 3.00% (3.09% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for shares purchased through the Systematic
Purchase Plan and $250 for shares purchased through qualified retirement
plans. The minimum subsequent purchase amounts is $100 or more. You may
purchase shares of the Fund through Stephens, Wells Fargo Bank, as
transfer agent (the "Transfer Agent"), or any authorized broker/dealer or
financial institution. Purchases of shares of the Fund may be made by wire
directly to the Transfer Agent. The Fund may pay to the distributor a
monthly fee at an annual rate of up to 0.25% of the Fund's average
ii
<PAGE> 185
daily net assets attributable to Class A Shares and a monthly fee at an
annual rate of up to 0.50% of the Fund's average daily net assets
attributable to Class D Shares to compensate the Distributor for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. See "Purchase of Shares" and "Distribution
Plans." The Fund also may pay servicing agents a fee at an annual rate of
up to 0.25% of the Fund's average daily net assets attributable to Class D
Shares to compensate them for certain services. See "Servicing Plan."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Fund are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at the shareholder's 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 fund in
the Overland Express Family of Funds 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 holders of the Fund's Class D Shares is reduced by the amount of
servicing fees payable to servicing agents under the Servicing Plan (as
defined below). See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open, shares may be redeemed upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check. Accounts of less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your Fund shares. The portfolio securities of the Fund are subject to
interest rate risk. Interest rate risk is the risk that increases in
market interest rates may adversely affect the value of the municipal
securities in which the Fund invests and hence the value of your
investment in the Fund. The values of such securities generally change
inversely to changes in market interest rates. The Fund, although it
invests primarily in high-quality municipal securities, is subject to
credit risk. Credit risk is the risk that the issuers of the debt
securities in which the Fund invests may default on the payment of
principal and/or interest. The mortgage-revenue bonds in which the Fund
invests may be redeemed prior to maturity. Such redemptions tend to
increase when interest rates decline, and may present the Fund with more
principal to invest at lower rates. You should be prepared to accept some
risk with the money you invest in the Fund. As with all mutual funds,
there can be no assurance that the Fund will achieve its investment
objective.
iii
<PAGE> 186
Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus,
such as variable-rate instruments which have an interest rate that is
reset periodically based on an index, can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in
interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or
contract terms.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to the Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund
to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by the Fund also is subject to broadly
applicable investment policies. For example, the Fund may not invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)... 3.00% 0.00%
Maximum Deferred Sales Load* (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1.................................................... 0.00% 1.00%
Redemption after year 1..................................................... 0.00% 0.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Management Fees............................................................... 0.50% 0.50%
12b-1 Fees(1)................................................................. 0.15% 0.50%
Total Other Expenses(1):
Servicing Fees.............................................................. 0.00% 0.25%
Other Expenses(1)........................................................... 0.15% 0.15%
------- -------
Total Fund Operating Expenses(1)**............................................ 0.80% 1.40%
</TABLE>
- ---------------
(1) After any waivers and reimbursements
iv
<PAGE> 187
EXAMPLES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
in Class A Shares of the Fund, assuming (1) a 5% annual
return and (2) redemption at the end of each time period
indicated.................................................. $ 38 $ 55 $73 $126
You would pay the following expenses on a $1,000 investment
in Class D Shares of the Fund, assuming (1) a 5% annual
return and (2) redemption at the end of each time period
indicated.................................................. $ 24 $ 44 $77 $168
You would pay the following expenses on the same investment
in Class D Shares of the Fund, assuming no redemption...... $ 14 $ 44 $77 $168
</TABLE>
- ------------
* See "Contingent Deferred Sales Charge."
** As further described in the Prospectus under the caption "Advisory,
Administration and Distribution Arrangements," Stephens and Wells Fargo Bank
each has agreed to waive or reimburse all or a portion of its respective fees
in circumstances where Fund expenses that are subject to limitations imposed
under state securities laws and regulations exceed such limitations. In
addition, Stephens and Wells Fargo Bank each may elect, in its sole
discretion, to waive its respective fees or reimburse expenses. Also, the
Company and its Distributor have agreed to limit the Fund's payment of 12b-1
fees relating to Class A Shares, at least through the end of the current
fiscal year, to a maximum of 0.15% of the average daily net assets
attributable to Class A Shares. The maximum permissible 12b-1 fee relating to
Class A Shares is 0.25% of such assets. Any such waivers, limits or
reimbursements would reduce the total expenses of the Fund. There can be no
assurance that waivers and reimbursements will continue. The percentages
shown above with respect to Class A Shares and Class D Shares under "Total
Other Expenses" and "Total Fund Operating Expenses" are based on amounts
incurred during the most recent fiscal year, restated to reflect voluntary
fee waivers and expense reimbursements that are expected to continue during
the current fiscal year. Absent waivers and reimbursements, "Total Other
Expenses" and "Total Fund Operating Expenses" with respect to the Class A
Shares would have been 0.23% and 0.98%, respectively. Absent waivers and
reimbursements, these percentages, with respect to Class D Shares, would have
been 0.74% and 1.74%, respectively. Long-term shareholders of the Fund could
pay more in distribution related charges than the economic equivalent of the
maximum front-end sales charges applicable to mutual funds sold by members of
the National Association of Securities Dealers, Inc. ("NASD"). There can be
no assurances that the waivers, limits and reimbursements will continue.
------------------------
The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no other sales loads, redemption fees or exchange fees
charged by the Fund. However, the Company reserves the right to impose charges
for wiring redemption proceeds. The Examples should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown. See Prospectus sections captioned "Advisory,
Administration and Distribution Arrangements," "Distribution Plan" and "Purchase
of Shares" for more complete descriptions of the various costs and expenses
applicable to the Fund.
v
<PAGE> 188
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Fund's 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
MUNICIPAL INCOME FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $ 11.27 $ 10.56 $ 10.25 $ 10.00
Income From Investment Operations:
Net Investment Income....................................... 0.60 0.64 0.66 0.28
Net Realized and Unrealized Capital Gain/(Loss) on
Investments............................................... (1.36) 0.71 0.32 0.25
----------- ----------- ----------- -----------
Total From Investment Operations............................ (0.76) 1.35 0.98 0.53
Less Distributions:
Dividends From Net Investment Income........................ (0.60) (0.64) (0.66) (0.28)
Distributions From Net Realized Capital Gain................ 0.00 0.00 (0.01) 0.00
----------- ----------- ----------- -----------
Total Distributions......................................... (0.60) (0.64) (0.67) (0.28)
Net Asset Value, End of Period.............................. $ 9.91 $ 11.27 $ 10.56 $ 10.25
=========== =========== =========== ===========
Total Return (not annualized)+.............................. (6.82)% 13.11% 9.94% 5.81%
Ratios/Supplemental Data:
Net Assets, End of Period (000)............................. $ 73,791 $ 104,701 $ 52,553 $ 16,585
Number of Shares Outstanding, End of Period (000)........... 7,446 9,294 4,976 1,618
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net
Assets(1)................................................. 0.43% 0.39% 0.23% 0.00%
Ratio of Net Investment Income to Average Net Assets(2)..... 5.77% 5.56% 6.05% 6.38%
Portfolio Turnover.......................................... 32% 15% 67% 5%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived
Fees and Reimbursed Expenses............................ 0.98% 1.09% 1.20% 3.02%
(2) Ratio of Net Investment Income to Average Net Assets
Prior to Waived Fees and Reimbursed Expenses............ 5.22% 4.86% 5.08% 3.36%
* The Fund commenced operations on July 15, 1991.
+ Total returns do not include any sales charges.
</TABLE>
vi
<PAGE> 189
MUNICIPAL INCOME FUND
FOR A CLASS D SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1994 1993*
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period.................................... $ 15.26 $ 15.00
Income From Investment Operations:
Net Investment Income................................................... 0.73 0.36
Net Realized and Unrealized Capital Gain/(Loss) on Investments.......... (1.84) 0.26
---------- ----------
Total From Investment Operations........................................ (1.11) 0.62
Less Distributions:
Dividends From Net Investment Income.................................... (0.73) (0.36)
Distributions From Net Realized Capital Gain............................ 0.00 0.00
---------- ----------
Total Distributions..................................................... (0.73) (0.36)
Net Asset Value, End of Period.......................................... $ 13.42 $ 15.26
========== ==========
Total Return (not annualized)+.......................................... (7.37)% 4.19%
Ratios/Supplemental Data:
Net Assets, End of Period (000)......................................... $ 15,545 $ 14,771
Number of Shares Outstanding, End of Period (000)....................... 1,158 968
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1).............................. 1.02% 1.13%
Ratio of Net Investment Income to Average Net Assets(2)................. 5.17% 4.14%
Portfolio Turnover...................................................... 32% 15%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses................................................. 1.74% 1.84%
(2) Ratio of Net Investment Income to Average Net Assets Prior to Waived
Fees and Reimbursed Expenses........................................ 4.45% 3.43%
* This Class commenced operations on July 1, 1993.
+ Total returns do not include the 1% contingent deferred sales charge.
</TABLE>
vii
<PAGE> 190
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE -- The Fund seeks to provide investors with a high
level of income, consistent with the preservation of capital, by investing
primarily in a diversified portfolio of high quality, medium- to long-term
municipal securities issued by or on behalf of states, territories, and
possessions or commonwealths of the United States and the District of Columbia
or their political subdivisions, authorities, agencies and instrumentalities,
the income of which is exempt from federal income tax, but subject to the
federal alternative minimum tax ("tax-advantaged"). The investment adviser may
rely either on the opinion of counsel to the issuer of the municipal securities
or on Internal Revenue Service rulings regarding the tax treatment of the
securities. Since a significant portion of the Fund's income is expected to be
subject to the alternative minimum tax, investors who may be subject to such tax
should consult their tax advisors prior to investing in the Fund. As with all
mutual funds, there can no assurance that the Fund, which is a diversified
portfolio, will achieve its investment objective.
As a matter of fundamental policy, the Fund will, under normal market
conditions, invest at least 80% of its net assets in tax-advantaged municipal
securities that, at the time of purchase, are assigned the highest rating by an
NRSRO or, if unrated, are considered by Wells Fargo Bank, as the Fund's
investment adviser and under the supervision of the Board of Directors, to be of
comparable quality. In addition, under normal market conditions, the Fund will
seek to invest substantially all of its net assets in the highest rated, medium-
to long-term, tax-advantaged municipal securities, except that it will maintain
that portion of its net assets in short-term, high quality investments
reasonably considered necessary to meet redemption requests and liquidity needs
and may maintain a higher portion in such investments for temporary defensive
purposes.
The highest rating assigned by Standard & Poor's Corporation ("S&P") is
"AAA" for state and municipal bonds, "SP-1" for state and municipal notes, and
"A-1" for state and municipal commercial paper. The highest rating assigned by
Moody's Investors Service, Inc. ("Moody's") is "Aaa," "MIG 1," and "P-1" for
state and municipal bonds, notes and commercial paper, respectively. Instruments
assigned these ratings by S&P or Moody's are judged by such organizations to be
high quality instruments which present minimal risks and offer a strong capacity
for repayment of principal and interest. If a municipal security ceases to be
rated or is downgraded below the highest quality rating after purchase by the
Fund, the Fund may retain or dispose of such security. In any event, the Fund
does not intend to purchase or retain any municipal security that is rated below
the top two ratings assigned by an NRSRO, or, if unrated, is considered by the
investment adviser to be of comparable quality. A description of ratings is
contained in the Appendix to the SAI.
Under normal market conditions, the Fund may not invest more than 25% of
its assets in securities of any one industry or in municipal securities of any
single state, territory, possession, commonwealth, or the District of Columbia.
MUNICIPAL BONDS -- Municipal bonds generally have a maturity at the time of
issuance of up to thirty years. They are principally classified either as
"general obligation" bonds or "revenue" bonds. General Obligation bonds are
secured by the pledge of the municipality's full faith, credit and taxing power
for the payment of principal and interest. Revenue bonds are payable only from
the revenues derived from a particular project or facility, or in some cases,
from the proceeds of special excise tax, and generally are dependent solely on a
specific revenue source.
1
<PAGE> 191
The Fund may invest in Mortgage Revenue Bonds ("MRBs"), a specific type of
municipal bond. MRBs are usually limited obligations issued by a municipality,
its instrumentality or its special purpose authority. MRBs do not represent
indebtedness of these issuers, but are payable from and secured by certain
revenues and assets pledged as collateral. MRBs may be collateralized by a pool
of mortgage-backed securities ("MBSs") that are either: (i) guaranteed as to
timely payment of principal and interest by the Government National Mortgage
Association ("GNMA"), a wholly owned corporate instrumentality of the United
States; (ii) guaranteed as to timely payment of principal and interest by the
Federal National Mortgage Association ("FNMA"), a publicly owned, government
sponsored corporation; or (iii) guaranteed as to full and timely payment of
interest and ultimate payment of principal by the Federal Home Loan Mortgage
Corporation ("FHLMC"), a publicly chartered corporation. GNMA guarantees are
backed by the full faith and credit of the United States. FNMA and FHLMC
guarantees are not backed by the full faith and credit of the United States.
However, because FNMA and FHLMC are instrumentalities of the U.S. Government,
the MBSs backed by their guarantees are high quality instruments that present
minimal credit risks. The MBSs, in turn, are collateralized by pools of
first-lien mortgage loans ("Mortgage Loans") made to persons of low-to-moderate
income to purchase new and existing one- to four-family residences located in
the applicable municipality or state or to developers for the acquisition and
construction of multi-family housing for low-to-moderate income residents or
senior citizens. The Mortgage Loans underlying the MBSs may themselves be
insured or guaranteed by the Federal Housing Administration or the Veterans
Administration. MRBs purchased by the Fund generally have an initial scheduled
maturity of between 30 and 40 years.
MRBs are subject to the risk of redemption prior to maturity. Such
redemption is more likely to occur during periods of declining interest rates.
If an MRB is redeemed prior to maturity, the Fund may have to reinvest the
proceeds at a rate of interest which is lower than the rate on the MRB that was
redeemed.
The Fund may also invest in municipal bonds which are covered by insurance
guaranteeing the scheduled payment of principal and interest until their
maturity ("Insured Municipal Bonds"). This insurance feature minimizes the risks
to the Fund and its shareholders associated with payment delays or defaults in
these portfolio securities, but does not guarantee the market value of these
portfolio securities or the value of the shares of the Fund. The price paid or
received for an Insured Municipal Bond may be higher than the price that would
otherwise be paid or received for the municipal bond absent the insurance. In
addition, an Insured Municipal Bond is likely to receive a higher rating by an
NRSRO than it would receive without the insurance.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
OTHER MUNICIPAL SECURITIES
Pending the investment of proceeds from the sale of Fund shares or
portfolio securities, in anticipation of redemptions, to maintain liquidity or
for temporary defensive purposes, the Fund will invest in other municipal
securities, which include:
MUNICIPAL NOTES -- Municipal notes purchased by the Fund generally have
maturities at the time of issuance of three years or less. Subject to its
investment objective and policies, the Fund may invest in municipal notes that
are rated at the date of purchase "MIG 2" (or "VMIG 2" in the case of an issue
having
2
<PAGE> 192
a variable rate demand feature) or better by Moody's, or "SP-2" or better by
S&P, or notes that are not rated but that are considered by the investment
adviser to be of comparable quality. Municipal notes generally are issued in
anticipation of the receipt of tax funds, of the proceeds of bond placements or
of other revenues. The ability of an issuer to make payments is, therefore,
dependent on such tax receipts, proceeds from bond sales or other revenues, as
the case may be.
The Fund also may invest in certain "private activity" bonds or notes, such
as pollution control bonds, the interest on which also may be subject to the
alternative minimum tax. See discussion in "Taxes" below.
MUNICIPAL COMMERCIAL PAPER -- Municipal commercial paper is a debt
obligation with a stated maturity of 270 days or less that is issued to finance
seasonal working capital needs or as short-term financing in anticipation of
longer-term debt. Subject to its investment objective and policies, the Fund may
invest in municipal commercial paper that is rated at the date of purchase "P-1"
or "P-2" by Moody's or "A-1+," "A-1" or "A-2" by S&P, or municipal commercial
paper that is not rated but is considered by the Investment Adviser to be of
comparable quality.
The value of the Fund's portfolio of municipal securities will vary as a
result of interest changes and the issuer's ability, or the market's perception
of the issuer's ability, to meet its principal and interest obligations.
TAXABLE AND OTHER INVESTMENTS
Pending the investment of proceeds from the sale of Fund shares or proceeds
from the sale of portfolio securities, in anticipation of redemptions or to
maintain a "defensive" posture when, in the opinion of Wells Fargo Bank, as
investment adviser, it is advisable to do so because of market conditions, the
Fund may elect to invest temporarily up to 20% of the current value of its net
assets in cash reserves or in taxable securities, including (i) direct
obligations of the U.S. Treasury; (ii) commercial paper rated at the date of
purchase "P-1" by Moody's or "A-1" or "A-1+" by S&P; and (iii) shares of
unaffiliated open-end, management investment companies that invest primarily in
high-quality, short-term securities, and that have a fundamental policy of
investing, under normal market circumstances, at least 80% of their net assets
in obligations that are exempt from federal income taxes and are not subject to
the alternative minimum tax. Such investment companies can be expected to charge
management fees and other operating expenses that would be in addition to those
charged by the Fund. However, the investment adviser has undertaken to waive its
advisory fees with respect to Fund assets so invested (except when such purchase
is part of a plan of merger, consolidation, reorganization or acquisition). In
no event may the Fund, together with any company or companies controlled by it,
own more than 3% of the total outstanding voting stock of any such investment
company, nor may the Fund, together with any controlled company or companies,
invest more than 5% of its assets in any one such investment company or invest
more than 10% of its assets in securities of all such investment companies
combined.
WHEN-ISSUED SECURITIES
The Fund may purchase portfolio securities on a when-issued basis, in which
case delivery and payment normally take place within 45 days after the date of
the commitment to purchase. The Fund will only make commitments to purchase
securities on a when-issued basis with the intention of actually acquiring the
securities, but may sell them before the settlement date if it is deemed
advisable. When-issued
3
<PAGE> 193
securities are subject to market fluctuation, and no income accrues to the
purchaser during the period prior to issuance.
FLOATING- AND VARIABLE-RATE INSTRUMENTS
Certain of the debt instruments that the Fund may purchase bear interest at
rates that are not fixed, but vary with changes in specified market rates or
indices or at specified intervals. Certain of these instruments may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. The floating- and variable-rate instruments that
the Fund may purchase include certificates of participation in floating- and
variable-rate obligations purchased from banks. With respect to the tax-exempt
status of these certificates, the investment adviser may rely upon either the
opinion of counsel or Internal Revenue Service rulings issued with respect
thereto. Wells Fargo Bank, as investment adviser, monitors on an ongoing basis
the ability of an issuer of a demand instrument to pay principal and interest on
demand. Events occurring between the date the Fund elects to demand payment on a
floating- or variable-rate instrument and the date payment is due may affect the
ability of the issuer of the instrument to make payment when due, and unless
such demand instrument permits same-day settlement, may affect the Fund's right
to obtain payment at par. Demand instruments whose demand feature is not
exercisable within seven days may be treated as liquid, provided an active
secondary market exists.
LETTERS OF CREDIT
The Fund may purchase debt obligations, including municipal securities,
certificates of participation, commercial paper and other short-term
obligations, backed by an irrevocable letter of credit of a bank, savings and
loan association or insurance company which assumes the obligation for payment
of principal and interest in the event of default by the issuer. Letter of
credit-backed investments must, in the opinion of Wells Fargo Bank, as
investment adviser, be of investment quality comparable to other permitted
investments of the Fund.
------------------------
The Fund's investment objective, as set forth in the first paragraph of the
section describing the Fund's investment objective and policies, is fundamental;
that is, the investment objective may not be changed without approval by the
vote of the holders of a majority of the Fund's outstanding voting securities,
as described under "Capital Stock" in the SAI. If the Board of Directors
determines, however, that the Fund's investment objective can best be achieved
by a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will disclose any
such material changes in the then current prospectus.
In addition, as a matter of fundamental policy, the Fund may borrow from
banks up to 10% of the current value of its net assets for temporary purposes
only in order to meet redemptions, and these borrowings may be secured by the
pledge of up to 10% of the current value of its net assets (but investments may
not be purchased while any such outstanding borrowing exceeds 5% of the Fund's
net assets). As a matter of non-fundamental policy, the Fund may invest up to
10% of the current value of its net assets in restricted securities and other
illiquid securities.
4
<PAGE> 194
ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decide
upon matters of general policy.
INVESTMENT ADVISER
Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets for individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds"), and to six other
registered open-end management investment companies, which consist of several
separately managed investment portfolios.
The Advisory Contract provides that Wells Fargo Bank shall furnish to the
Fund investment guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory Contract, Wells Fargo
Bank furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund.
Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When Wells Fargo Bank determines that a particular security
should be bought or sold for the Fund and other accounts managed by Wells Fargo
Bank, Wells Fargo Bank undertakes to allocate those transactions among the
participants equitably. From time to time, the Fund, to the extent consistent
with its investment objective, policies and restrictions, may invest in
securities of companies with which Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contract, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rate of 0.50% of the average
daily net assets of the Fund. From time to time, Wells Fargo Bank may waive such
fee in whole or in part. Any waiver would reduce expenses of the Fund and,
accordingly, have a favorable impact on the yield or return of the Fund. For the
year ended December 31, 1994, Wells Fargo Bank was paid 0.40% of the average
daily net assets of the Fund as compensation for its services as investment
adviser.
Mr. David Wines is responsible for the day-to-day management of the
Municipal Income Fund. Mr. Wines has managed tax-exempt fixed-income portfolios
for over a decade. Prior to joining Wells Fargo Bank in 1990, he held senior
investment management positions for both Matson Navigation Company, Inc. and The
Electric Power Research Institute, a research consortium for the electric power
industry. He holds a B.S. in finance from the University of Oregon, an M.B.A.
from Golden Gate University and is a member of the Security Analysts of San
Francisco. Mr. Wines has co-managed the Fund since July 1991.
Ms. Mary Sebrell is also responsible for the day-to-day management of the
Municipal Income Fund. Ms. Sebrell has managed municipal bond portfolios at
Wells Fargo Bank for 13 years; her total municipal investment experience exceeds
20 years. Prior to joining Wells Fargo Bank, she worked at John Nuveen and
Company, a firm specializing in municipal investments. She holds a B.A. from
Washburn University and is
5
<PAGE> 195
a member of the National Federation of Municipal Analysts and has served as the
program chairperson for the California Chapter's meeting presentations. Ms.
Sebrell has co-managed the Fund since July 1991.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as Administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.10% of its average daily net
assets. From time to time, Stephens may waive fees from the Fund in whole or in
part. Any such waiver will reduce expenses of the Fund and, accordingly, have a
favorable impact on the yield and total return of the Fund.
The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, general
supervision (i) of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) in connection with regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions, and
preparation of proxy statements and shareholder reports for the Fund; and (iii)
relative to the compilation of data required for the preparation of periodic
reports distributed to the Company's officers and Board of Directors. Stephens
also furnishes office space and certain facilities required for conducting the
business of the Fund and pays the compensation of the Company's directors,
officers and employees who are affiliated with Stephens.
Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of its Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available Class A Shares and Class D Shares to their respective customers.
Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to 0.25% of the average daily net
assets of the Class A Shares Fund and a monthly fee at an annual rate of up to
0.50% of the daily net assets of the Class D Shares of the Fund. The actual fee
payable to Stephens is determined, within such limits, from time to time by
mutual agreement between the Company and Stephens, and may not exceed the
maximum amount payable under the Rules of Fair Practice of the NASD. With
respect to Class A Shares, the Company and Stephens have mutually agreed to
limit the fee to 0.15% of the Fund's average daily net assets attributable to
Class A Shares. Stephens may enter into selling agreements with one or more
selling agents under which such agents may receive from Stephens compensation
for sales support services. Such compensation may include, but is not limited
to, commissions or other payments to such agents based on the average daily net
assets of Fund shares attributable to them. Services provided by selling agents
in exchange for commissions and other payments to selling agents are the
principal sales support services provided to the Fund. Stephens may retain any
portion of the total distribution fee payable under the Distribution Agreement
to compensate it for distribution-related services provided by it or to
reimburse it for other distribution-related expenses. Since the Distribution
Agreement provides for fees that are used by Stephens to pay for distribution
services, a plan of distribution for each class of shares (individually a
"Plan", collectively the "Plans") and the
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Distribution Agreement are approved and reviewed in accordance with Rule 12b-1
under the 1940 Act, which regulates the manner in which an investment company
may, directly or indirectly, bear the expense of distributing its shares. See
Prospectus section captioned "Distribution Plans" for a more complete
description of the Plans.
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
The Fund may enter into servicing agreements with one or more servicing
agents on behalf of Class D Shares of the Fund. Under such agreements, servicing
agents provide shareholder liaison services, which may include responding to
customer inquiries and providing information on shareholder investments, and
provide such other related services as the Fund or a Class D Shareholder may
reasonably request. For these services, a servicing agent receives a fee which
will not exceed, on an annualized basis for the Fund's then current fiscal year,
0.25% of the average daily net assets of the Class D Shares of the Fund
represented by Class D Shares owned by investors with whom the servicing agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the servicing agent under applicable laws, regulations or rules,
whichever is less.
------------------------
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of a Fund is the value of total net assets attributable to each class
divided by the number of outstanding shares of that class. The value of net
assets per class is determined daily by adjusting the net assets per class at
the beginning of the day by the value of each class's shareholder activity, net
investment income and net realized and unrealized gains or losses for that day.
Net investment income is calculated each day for each class by attributing to
each class a pro rata share of daily income and common expenses, and by
assigning class-specific expenses to each class as appropriate. The net asset
value of each class is expected to fluctuate daily.
The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as "the close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt obligations with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices are not readily available, at fair value as
determined in good faith by the Board of Directors. Prices used for such
valuations may be provided by independent pricing services.
PERFORMANCE DATA
From time to time, the Company may advertise various yield and total return
information with respect to a class of shares of the Fund. Total return and
yield information of a class of shares are based on the
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historical earnings and performance of such class of shares and should not be
considered representative of future performance.
The total return of a class of shares of the Fund is calculated by
comparing the value of a hypothetical investment made at the public offering
price of the class of shares (which includes the maximum sales charge for the
class of shares) at the beginning of a specified period with the net asset value
of such investment in a class of shares at the end of the specified period
(assuming reinvestment of all dividends and capital gain distributions). The
resulting percentage will be used to determine the positive or negative rate of
return that an investor would have earned from reinvested dividends and capital
gain distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on the net asset value per share of a class of shares (rather than the
public offering price), in which case the figures would not reflect the
applicability of any sales charges that would have been paid by an investor in
the class of shares, or by assuming that a sales charge other than the maximum
sales charge (reflecting the Volume Discounts set forth below) is assessed,
provided that total return data derived pursuant to the calculation described
above are also presented.
The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. The Fund also may advertise
tax-equivalent yield, which assumes that a stated income tax rate has been
applied to non-exempt income to derive the same yield as that of the Fund (which
may not reflect the applicability of the alternative minimum tax). For purposes
of sales literature, these yields may also, at times, be calculated on the basis
of the net asset value per share of the class (rather than the public offering
price), in which case the figures would not reflect the effect of any sales
charges that would have been paid by an investor in the class of shares, or by
assuming that a sales charge other than the maximum sales charge (reflecting the
Volume Discounts set forth below) is assessed, provided that yield data derived
pursuant to the calculation described above also are presented.
Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
differ from the net yield on Class A Shares. Performance information will be
computed separately for Class A Shares and Class D Shares.
Additional information about the performance of the Fund is contained in
the Annual Report for the Fund. The Annual Report may be obtained free of charge
by calling the Company at 800-552-9612.
PURCHASE OF SHARES
Shares of the Fund may be purchased on any day the Exchange is open for
trading through Stephens, the Transfer Agent, or any authorized broker/dealers
or financial institutions with which Stephens has entered into agreements. Such
broker/dealers or financial institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their clients for such services, other
than services related to purchase orders, which would reduce the clients'
overall yield or return. The Exchange is closed on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day (each, a "Holiday"). When any Holiday falls on a Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is closed the following Monday.
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<PAGE> 198
In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for shares purchased through the
Systematic Purchase Plan and $250 for shares purchased through a retirement plan
qualified under the Internal Revenue Code of 1986, as amended (the "Code"). The
minimum subsequent purchase amount is $100. The minimum initial or subsequent
purchase amount requirements may be waived or lowered for investments effected
on a group basis by certain entities and their employees, such as pursuant to a
payroll deduction or other accumulation plan. The Company reserves the right to
reject any purchase order. All funds, net of sales loads, will be invested in
full and fractional Shares. Checks will be accepted for the purchase of the
Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries may be directed to the Company at the address and telephone number on
the front cover of the Prospectus.
Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until the settlement date, currently five business days
after the order is placed. Effective June 7, 1995, the settlement date normally
will be 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.
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Sales loads relating to the purchase of Class A Shares of the Fund are as
follows:
<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
AS % OF AS % OF AS % OF
CLASS A SHARES OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000............................. 3.00% 3.09% 2.75%
$100,000 up to $199,999........................ 2.00 2.04 1.75
$200,000 up to $599,999........................ 1.00 1.01 0.90
$600,000 up to $999,999........................ 0.60 0.60 0.50
$1,000,000 and over............................ 0.00 0.00 0.00
</TABLE>
Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.
A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class D Shares.
REDUCED SALES CHARGE -- CLASS A SHARES
The above Volume Discounts are available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of one or more of the portfolios of the Company which assess a sales load (the
"Load Funds"). Because Class D Shares are not subject to a front-end sales
charge, the amount of Class D Shares you hold is not considered in determining
any volume discount.
The Right of Accumulation allows you to combine the amount being invested
in Class A Shares of the Fund with the total net asset value of Class A Shares
in any of the Load Funds already owned in accordance with the above sales load
schedule to reduce the sales load. For example, if you own Class A Shares of the
Company's other investment portfolios with an aggregate net asset value of
$90,000 and invest an additional $20,000 in Class A Shares of the Fund, the
sales load on the entire additional amount would be 2.00% of the offering price.
To obtain such discount, you must provide sufficient information at the time of
purchase to permit verification that the purchase qualifies for the reduced
sales load, and confirmation of the order is subject to such verification. The
Right of Accumulation may be modified or discontinued at any time with respect
to all Class A Shares purchased thereafter.
A Letter of Intent allows you to purchase Class A Shares of the Fund over a
13-month period at reduced sales loads based on the total amount intended to be
purchased plus the total net asset value of Class A Shares in any of the Load
Funds already owned. Each investment made during the period receives the reduced
sales load applicable to the total amount of the intended investment. If such
amount is not invested within the period, you must pay the difference between
the sales loads applicable to the purchases made and the charges previously
paid.
You may Reinvest proceeds from a redemption of Class A Shares of the Fund
in Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at
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<PAGE> 200
net asset value, without a sales load, within 120 days after such redemption.
However, if the other investment portfolio charges a sales load that is higher
than the sales load that you have paid in connection with the Class A Shares you
have redeemed, you pay the difference. In addition, the Class A Shares of the
other investment portfolio to be acquired must be registered for sale in your
state of residence. The amount that may be so reinvested may not exceed the
amount of the redemption proceeds, and a written order for the purchase of the
Class A Shares must be received by the Fund or the Transfer Agent within 120
days after the effective date of the redemption.
If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of such loss
to be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment and 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, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent or more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses 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
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and to any investment advisory, trust or other
fiduciary account (other than an individual retirement account) maintained,
managed or advised by Wells Fargo Bank or Stephens or their affiliates. In
addition, Class A Shares also may be purchased at net asset value by pension,
profit sharing or other employee benefit plans established under Section 401 of
the Code.
Class A Shares of the Fund may be purchased at a price equal to the net
asset value of such shares, without a sales load, by the following types of
investors that place trades through an omnibus account
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maintained at the Fund by a discount broker/dealer: trust companies; investment
advisers and financial planners on behalf of their clients; retirement and
deferred compensation plans and the trusts used to fund these plans.
By investing in the Fund, you appoint the Transfer Agent, as agent, to
establish an open account to which all shares purchased will be credited,
together with any dividends and capital gain distributions that are paid in
additional shares. See "Dividends and Distributions." Although most shareholders
elect not to receive stock certificates, certificates for full shares of the
Fund can be obtained on request. It is more complicated to redeem shares held in
certificated form, and the expedited redemption described below is not available
with respect to certificated shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES
Class D Shares which are redeemed within one year of the receipt of a
purchase order for such shares will be subject to a contingent deferred sales
charge equal to 1.00% of an amount equal to the lesser of the net asset value at
the time of purchase for the Class D Shares being redeemed or the net asset
value of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
net asset value above the net asset value at the time of purchase. In addition a
charge will not be assessed on Class D Shares purchased through reinvestment of
dividends or capital gains distributions. In determining whether a contingent
deferred sales charge is applicable to a redemption, Class D Shares are
considered redeemed on a first-in, first-out basis so that Class D Shares held
for a longer period of time are considered redeemed prior to more recently
acquired shares.
The contingent deferred sales charge is waived on redemptions of Class D
Shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has reached age 70 1/2, (iii) effected pursuant to the
Company's right to liquidate a shareholder's account if the aggregate net asset
value of the shareholder's account is less than the minimum account size, or
(iv) in connection with the combination of the Company with any other registered
investment company by a merger, acquisition of assets, or by any other
reorganization transaction.
Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors, including those who are entitled to purchase Class A Shares of the
Fund at a reduced sales load, should compare the fees assessed on Class A Shares
against those assessed on Class D Shares (including potential contingent
deferred sales charges and higher Rule 12b-1 fees) in light of the amount to be
invested and the anticipated time that the shares will be owned.
Shares of the Fund may be purchased by any of the methods described below.
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the class of shares to be purchased, the name(s)
in which the shares are to be registered, the address, social security 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
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<PAGE> 202
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 Municipal Income Fund (designate Class A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
3. A completed Account Application should be mailed, or sent by
telefacsimile with the original subsequently mailed, to the following address
immediately after the funds are wired and must be received and accepted by the
Transfer Agent before an account can be opened:
Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082
4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, at the net asset value, next determined after the
Account Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express Municipal Income Fund (designate Class A or D)" to its mailing
address set forth above.
ADDITIONAL PURCHASES
Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express Municipal Income Fund (designate Class A or D)" to the
above address. Write the Fund 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
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<PAGE> 203
basis from a designated bank account (provided your bank is a participant in the
automated clearing house system). The Transfer Agent withdraws and uses this
amount to purchase shares of the Fund on or about the fifth business day of each
month. There are no additional fees charged for participating in this plan.
You may change the investment amount, suspend purchases or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if the designated bank account balance is insufficient
to make a scheduled withdrawal, or if either the designated bank account or your
account is closed.
PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Purchase orders for shares of the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from the temporary use of payments to the
Fund during the settlement period. A broker/dealer or financial institution that
is involved in a purchase transaction may charge separate account, service or
transaction fees. Financial institutions may be required to register as dealers
pursuant to applicable state securities laws, which may differ from federal law
and any interpretations expressed herein.
EXCHANGE PRIVILEGES
You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market Fund, the Money Market Fund or the U.S. Treasury Money
Market Fund in an identically registered account at respective net asset values,
provided that, if the other investment portfolio charges a sales load on the
purchase of the class of shares being exchanged that is higher than the sales
load that you have paid in connection with the shares you are exchanging, you
pay the difference. Class D Shares of the Fund may be exchanged for Class D
Shares of one of the Company's other investment portfolios that offer Class D
Shares or for Class A Shares of the Money Market Fund in an identically
registered account at respective net asset values. You are not charged a
contingent deferred sales charge on exchanges of Class D Shares for shares of
the same class of another of the Company's investment portfolios or for Class A
Shares of the Money Market Fund. If you exchange Class D Shares for shares of
the same class of another investment portfolio, or for Class A Shares of the
Money Market Fund, the remaining period of time (if any) that the contingent
deferred sales charge is in effect will be computed from the time of the initial
purchase of the previously held shares. Accordingly, if you exchange Class D
Shares for Class A Shares of the Money Market Fund, and redeem the shares of the
Money Market Fund within one year of the receipt of the purchase order for the
exchanged Class D Shares, you will have to pay a deferred sales charge equal to
the contingent deferred sales charge applicable to the previously exchanged
Class D Shares. If you exchange Class D Shares of an investment portfolio for
Class A
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<PAGE> 204
Shares of the Money Market Fund, you may subsequently re-exchange the acquired
Class A Shares only for Class D Shares. If you re-exchange the Class A Shares of
the Money Market Fund for Class D Shares, the remaining period of time (if any)
that the contingent deferred sales charge is in effect will be computed from the
time of your initial purchase of Class D Shares. In addition, shares of the
investment portfolio to be acquired must be registered for sale in your state of
residence. You should obtain, read and retain the Prospectus for the investment
portfolio which you desire to exchange into before submitting an exchange order.
You may exchange shares by writing the Transfer Agent as indicated below
under Redemption by Mail, or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or servicing agent, unless you have
elected not to authorize telephone exchanges in your Account Application (in
which case you may subsequently authorize such telephone exchanges by completing
a Telephone Exchange Authorization Form and submitting it to the Transfer Agent
in advance of the first such exchange). Shares held in certificated form may not
be exchanged by telephone. The Transfer Agent's number for exchanges is (800)
572-7797.
Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
Fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for tax purposes may be realized upon an exchange,
depending upon the cost or other basis of shares redeemed.
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.
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<PAGE> 205
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a request in proper form by the Transfer Agent directly or through
any authorized broker/dealer or financial institution.
Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.
Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of up
to 15 days after investment. The proceeds, of course, may be more or less than
cost. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount 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 Fund Shares by Wire."
16
<PAGE> 206
Unless other instructions are given in proper form, a check for the
proceeds of redemption, net of any contingent deferred sales charge applicable
with respect to Class D Shares, will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate, and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in a designated bank account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption,
net of any contingent deferred sales charge applicable with respect to Class D
Shares, as instructed on or about the fifth business day prior to the end of
each month. There are no additional fees charged for participating in this plan.
You may change the withdrawal amount, suspend withdrawals or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to a scheduled transaction. An election will be
terminated automatically if your account balance is insufficient to make a
scheduled withdrawal or if your 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 elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.
You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.
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 D Shares,
will be wired or credited to the bank indicated in your Account Application or
wired to an authorized broker/dealer or financial institution designated in your
Account Application. The Company reserves the right to impose charges for wiring
redemption proceeds. When proceeds of an expedited redemption are to be paid to
someone other than yourself, to an address other than that of record, or to a
bank, broker/dealer or financial institution that has not been predesignated,
the expedited redemption must be made by letter and the signature(s) on the
letter must be guaranteed, regardless of the amount of the redemption. If an
expedited redemption request is received by the Transfer Agent by the close of
business on any day the Fund is open for business, the redemption proceeds will
be transmitted to your bank or predesignated broker/dealer or financial
institution on the next business day (assuming the investment check has cleared
as described above), absent extraordinary circumstances. A check for proceeds of
less than $5,000 will be mailed to your address of record, except that,
17
<PAGE> 207
in the case of investments in the Company that have been effected through
broker/dealers, banks and other institutions that have entered into special
arrangements with the Company, the full amount of the redemption proceeds may be
transmitted by wire or credited to a designated account.
REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day that the Fund's shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received by a dealer or financial institution after the close of the
Exchange or by the Transfer Agent after the close of business generally will be
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of redemption
requests to the Transfer Agent. Unless you have made other arrangements, and
have informed the Transfer Agent of such arrangements, proceeds of redemptions
made through authorized broker/dealers and financial institutions will be
credited to your account with such broker/dealer or institution. You may request
a check from the broker/dealer or financial institution or may elect to retain
the redemption proceeds in your account. The broker/dealer or financial
institution may benefit from the use of the redemption proceeds prior to the
clearance of a check issued to you for such proceeds or prior to disbursement or
reinvestment of such proceeds on your behalf.
------------------------
The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.
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 a Plan on behalf of each class
of shares of the Fund. Under the Plans and pursuant to the Distribution
Agreement, the Fund may pay certain distribution-related expenses. As discussed
above, under the Distribution Agreement, the Fund may pay Stephens, as
compensation for distribution-related services, a monthly fee at the annual rate
of up to 0.25% of the average daily net assets of the Class A Shares of the Fund
and a monthly fee at the annual rate of up to 0.50% of the average daily net
assets of the Class D Shares of the Fund. Since the fee payable to Stephens
under the Distribution Agreement is based upon a percentage of the average daily
net assets of a class of shares of the Fund and not upon the actual expenditures
of Stephens, the expenses of Stephens (which may include overhead expenses) may
be more or less than the fees received by it under the Distribution Agreement.
All or a portion of the fees may be paid by Stephens to broker-dealers or
financial institutions who have entered into selling agent agreements with
Stephens, as compensation for sales support services.
18
<PAGE> 208
SERVICING PLAN
The Company's Board of Directors has adopted a servicing plan ("Servicing
Plan") on behalf of the Class D Shares of the Fund. Pursuant to the Servicing
Plan the Fund may enter into servicing agreements with one or more servicing
agents who agree to provide administrative support services to their customers
who are the record or beneficial owners of Class D Shares. Such servicing agents
will be compensated at an annual rate of up to 0.25% of the average daily net
asset value of the Class D Shares held of record or beneficially by such
customers.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare as a dividend to all shareholders of record
substantially all of its net investment income at the close of each business day
to shareholders of record at 4:00 p.m. (New York time) on the day of
declaration. Shares purchased in the Fund will begin earning dividends on the
business day following the date the purchase order settles and shares redeemed
will earn dividends through the date of redemption. Net investment income for a
Saturday, Sunday or holiday will be declared as a dividend to shareholders of
record at 4:00 p.m. (New York time) on the prior business day.
Dividends of the Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of the Fund who redeem shares
prior to a dividend payment date will be entitled to all dividends declared but
unpaid prior to redemption on such shares on the next dividend payment date.
Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).
Dividends and/or capital gain distributions paid by the Fund may be
invested in additional shares of the same class of shares of the Fund at net
asset value (without any sales load) and credited to your account on the
reinvestment date or, at your election, paid by check. Dividend checks and
Statements of Account will be mailed within approximately three business days
after the payment date. In addition, you may elect to reinvest Fund dividends
and/or capital gain distributions in shares of another fund in the Overland
Express Family of Funds with which you have an established account that has met
the applicable minimum initial investment requirement.
The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g. transfer agent fees) between Class A
Shares and Class D Shares that would affect their relative dividends.
19
<PAGE> 209
TAXES
By complying with the applicable provisions of the Code, the Fund will not
be subject to Federal income taxes with respect to net investment income and net
realized capital gains distributed to its shareholders, and its shareholders
will not be subject to Federal income taxes on any dividends of the Fund
attributable to interest from tax-exempt securities. However, dividends
attributable to interest from taxable securities, accretion of market discount
on certain bonds and capital gains (if any) will be taxable to shareholders.
Generally, dividends of taxable income 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. The Fund
intends to pay out all its net investment income and net realized capital gains
(if any) for each year. The Fund's dividends will not qualify for the
dividends-received deduction allowed to corporate shareholders.
Interest on indebtedness incurred or continued to purchase or carry shares
of the Fund will not be deductible to the extent that the Fund's distributions
are exempt from federal income tax. In addition, the portion of the Fund's
exempt-interest dividend that is attributable to investments in MRBs and certain
other municipal bond investments is expected to be treated as a preference item
for purposes of the federal alternative minimum tax imposed on both individuals
and corporations. Persons who may be subject to the federal alternative minimum
tax or who may be "substantial users" (or "related persons" of substantial
users) of facilities financed by private activity bonds should consult their tax
advisors before purchasing shares of the Fund.
The Fund will inform you of the amount and nature of Fund dividends and
capital gain distributions. You should keep all statements you receive to assist
in your personal recordkeeping. The Company is required by federal law to
withhold, subject to certain exemptions, at a rate of 31% on 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.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - 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.
20
<PAGE> 210
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94163 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers twelve series of shares, each representing an interest in one
of the funds in the Overland Express Family of Funds -- the Asset Allocation
Fund, the California Tax-Free Bond Fund, the California Tax-Free Money Market
Fund, the Money Market Fund, the Municipal Income Fund, the Overland Sweep Fund,
the Short-Term Government-Corporate Income Fund, the Short-Term Municipal Income
Fund, the Strategic Growth Fund, the U.S. Government Income Fund, the U.S.
Treasury Money Market Fund and the Variable Rate Government Fund. The Board of
Directors may, in the future, authorize the issuance of other series of capital
stock representing shares of additional investment portfolios or funds. All
shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required by the 1940 Act to elect Directors; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors. A more detailed statement of the
voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.
21
<PAGE> 211
<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. MUNICIPAL INCOME 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. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 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)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 212
<TABLE>
<S> <C>
LOGO MUNICIPAL INCOME 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 D Shares (not available for purchases of $1,000,000 or more)
Note: If no choice is indicated, Class A Shares will be selected.
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express Municipal Income Fund (designate Class A or D)
/ / Funds have been wired to 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 Withdrawal Amount: $ (minimum $100)
------------------
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
- ------------------------------------------------------------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bank Name
---------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
---------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 213
<TABLE>
<S> <C>
LOGO MUNICIPAL INCOME FUND
ACCOUNT APPLICATION
PAGE 3 OF 5
- ------------------------------------------------------------------------------------------------------------------------------------
4. REDUCED SALES CHARGES (If Applicable.)
- ------------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT -- CLASS A SHARES ONLY
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 / / $600,000 / / $1,000,000
Existing accounts must be identified in advance. If the value of currently owned shares is to be applied towards completion of
this Letter of Intent, please list accounts below.
Account # Account #
-------------------- --------------------
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / 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 Family of Funds.
/ / Invest capital gain distributions in Account # of Fund
--------------- ---------------
of the Overland Express Family of 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)
</TABLE>
<PAGE> 214
<TABLE>
<S> <C>
LOGO MUNICIPAL INCOME FUND
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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 215
<TABLE>
<S> <C>
LOGO MUNICIPAL INCOME FUND
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.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
------------------------------------------------------- ------------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 216
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT THE FUND, SIMPLY CALL (800) 572-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
------------------------
PROSPECTUS
------------------------
Municipal Income Fund
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May 1, 1995
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NOT FDIC INSURED
79P 5/95
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OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
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[OVERLAND SWEEP FUND LOGO]
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Prospectus
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May 1, 1995
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LOGO
Telephone: (800) 552-9612
Overland Express Funds, Inc. (the "Company") is an open-end, series
management investment company. This Prospectus contains information about one of
the funds in the Overland Express Family of Funds -- the OVERLAND SWEEP FUND
(the "Fund").
The Fund's investment objective is to provide investors with a high level of
current income, while preserving capital and liquidity. The Fund seeks to
achieve its investment objective by investing all of its assets in the Cash
Investment Trust Master Portfolio (the "CIT Master Portfolio") a professionally
managed diversified portfolio having the same investment objective as the Fund
and offered by Master Investment Trust (formerly Cash Investment Trust) (the
"Trust"), a professionally managed, open-end investment company. As a result,
the performance of the Fund will correspond with the investment experience of
the CIT Master Portfolio. The CIT Master Portfolio seeks to achieve this
investment objective by investing in high-quality, short-term instruments.
Wells Fargo Bank, N.A. ("Wells Fargo Bank") serves as the investment adviser
of the CIT Master Portfolio, and serves as the transfer and dividend disbursing
agent and custodian for the Fund and the CIT Master Portfolio. Stephens Inc.
("Stephens") serves as the sponsor and administrator of the Fund and the CIT
Master Portfolio and serves as the distributor of Fund shares and of CIT Master
Portfolio interests.
Shares of the Fund are offered only to customers of certain financial
institutions which have entered into Shareholder Servicing Agreements with the
Company on behalf of the Fund ("Servicing Agents"). Servicing Agents will
automatically invest, or "sweep," customer funds into shares of the Fund. As
further described below, Wells Fargo Bank will serve as a Servicing Agent, and
will receive certain fees pursuant to a Shareholder Servicing Agreement. Wells
Fargo Bank also has entered into a Selling Agreement with Stephens pursuant to
which it will receive certain fees.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1995, containing additional and more detailed information about the
Fund (the "SAI"), 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 the
telephone number printed above.
The Fund and the CIT Master Portfolio seek to maintain a net asset value of
$1.00 per share; however, there is no assurance that this objective will be
achieved.
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INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
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FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, OR ANY OF ITS AFFILIATES. SUCH SHARES
ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK, N.A. IS THE INVESTMENT ADVISER TO THE CIT MASTER
PORTFOLIO. STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS FARGO
BANK IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary......................................................................... ii
Summary of Expenses........................................................................ iv
Financial Highlights....................................................................... vi
Investment Objective and Policies.......................................................... 1
Management of the Fund and the CIT Master Portfolio........................................ 5
Determination of Net Asset Value, Dividends and Distributions.............................. 8
Purchase and Redemption of Shares.......................................................... 10
Distribution Plan.......................................................................... 10
Custodian, Transfer and Dividend Disbursing Agent, Servicing Agents........................ 11
Taxes...................................................................................... 12
Organization and Capital Stock............................................................. 14
</TABLE>
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PROSPECTUS SUMMARY
The Company, as an open-end management investment company, provides a
convenient way for you to invest in portfolios of securities selected and
supervised by professional management. The following provides information about
the Fund and the CIT Master Portfolio.
Q. WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND AND THE CIT MASTER
PORTFOLIO?
A. The Fund's seeks to provide investors with a high level of current income,
while preserving capital and liquidity. The Fund seeks to achieve its
investment objective by investing all of its assets in the CIT Master
Portfolio, which has the same investment objective as the Fund. Both the
Fund and the CIT Master Portfolio seek to maintain a stable net asset
value of $1.00 per share. As with all mutual funds, there is no assurance
that the Fund will achieve its investment objective. See "Investment
Objective and Policies."
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. The Fund invests all of its assets in the CIT Master Portfolio, a
professionally managed portfolio of the Trust, an open-end investment
company. The CIT Master Portfolio invests in high-quality, short-term
instruments including obligations of the U.S. Government, its agencies, or
instrumentalities (including government-sponsored enterprises), certain
short-term debt obligations of U.S. banks and the U.S. branches of foreign
banks, high-quality commercial paper, and certain repurchase agreements
and floating- and variable-rate instruments. See "Investment Objective and
Policies."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, N.A. ("Wells Fargo Bank"), as investment adviser of the
CIT Master Portfolio, manages the investments of the Fund in the CIT
Master Portfolio. The Company has not retained the services of a separate
investment adviser for the Fund because the Fund invests all of its assets
in the CIT Master Portfolio. Wells Fargo Bank also provides the Fund and
the CIT Master Portfolio with transfer agency, dividend disbursing agency
and custodial services. In addition, Wells Fargo Bank is a Selling Agent
and a Servicing Agent with respect to the Fund. Stephens is the Sponsor,
Administrator and Distributor for the Company and the Trust. See
"Management of the Fund and the CIT Master Portfolio."
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Fund may be purchased on any day the Fund is open through a
Servicing Agent that has entered into a Shareholder Servicing Agreement
with the Company. There is no sales load for purchasing shares of the
Fund. There is no minimum initial purchase or subsequent purchase amount.
See "Purchase and Redemption of Shares."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Fund are declared daily once each Business Day
(as defined below) and are paid in cash monthly. See "Determination of Net
Asset Value, Dividends and Distributions."
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Q. HOW MAY I REDEEM SHARES?
A. Shares may be redeemed on any day the Fund is open for trading upon
request to a Servicing Agent. Proceeds of redemptions are credited to the
Servicing Agent's shareholder account with the Fund. The Fund imposes no
charge for redeeming its shares. See "Purchase and Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. Shares of the Fund and the CIT Master Portfolio are not guaranteed or
insured against loss of principal or interest, although certain of the CIT
Master Portfolio's debt instruments may be insured or guaranteed a to
repayments of principal and/or the payment of interest. Although both the
Fund and the CIT Master Portfolio seek to maintain a stable net asset
value of $1.00 per share, there is no assurance that they will be able to
do so. As with all mutual funds, there can be no assurance that the Fund
and the CIT Master Portfolio will achieve their respective investment
objectives.
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SUMMARY OF EXPENSES
The following table provides: (i) the aggregate annual operating expenses
of the Fund and the CIT Master Portfolio, after waivers and reimbursements, as a
percentage of average net assets of the Fund, and (ii) an example illustrating
the dollar cost of such expenses on a $1,000 investment in the Fund.
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management Fees.......................................................................... 0.25%
12b-1 Fees............................................................................... 0.55%
Total Other Expenses(1).................................................................. 0.45%
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Total Operating Expenses(1)*............................................................. 1.25%
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</TABLE>
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(1) After any waivers or reimbursements.
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
the Fund, assuming (1) a 5% annual return and (2) redemption
at the end of each time period indicated...................... $ 13 $ 40 $69 $151
</TABLE>
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* As further described in the Prospectus under the caption "Management of the
Fund and the CIT Master Portfolio," Wells Fargo Bank and Stephens each has
agreed to waive or reimburse all or a portion of its respective fees in
circumstances where Fund expenses that are subject to limitations imposed
under state securities laws and regulations exceed such limitations. In
addition, Stephens and Wells Fargo Bank each may elect, in its sole
discretion, to otherwise waive its respective fees or reimburse such expenses.
In this regard, Wells Fargo Bank has undertaken to waive a portion or all of
its fees and/or reimburse the Fund or the CIT Master Portfolio, to the extent
the total operating expenses exceed 1.25%, but only to the extent of its fees.
Any waivers or reimbursements of fees with respect to the Fund would reduce
the total expenses of the Fund. There can be no assurance waivers and
reimbursements will continue. The percentages shown above under "Total Other
Expenses" and "Total Operating Expenses" are based on amounts incurred during
the most recent fiscal year, restated to include voluntary fee waivers and
expense reimbursements that are expected to continue during the current fiscal
year. Absent waivers and reimbursements, the percentages shown above under
"Total Other Expenses" and "Total Operating Expenses" would have been 0.52%
and 1.32%, respectively. Long-term shareholders of the Fund could pay more in
distribution related charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD").
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The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no sales loads or redemption fees charged by the Fund. You
may, however, be separately charged other fees by
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Servicing Agents for services related to those provided under Shareholder
Servicing Agreements. The Example should not be considered a representation of
past or future expenses; actual expenses may be greater or lesser than those
shown. With regard to the combined fees and expenses of the Fund and CIT Master
Portfolio, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the CIT Master
Portfolio rather than directly in portfolio securities would be more or less
than if the Fund invested in portfolio securities directly and believes that the
Fund should achieve economies of scale by investing in the CIT Master Portfolio.
Additionally, the Board of Directors has determined that the aggregate fees
assessed by the Fund and the CIT Master Portfolio should be less than those
expenses that the Directors believe would be incurred had the Fund invested
directly in the securities held by the CIT Master Portfolio. See Prospectus
sections captioned "Management of the Fund and the CIT Master Portfolio,"
"Custodian, Transfer and Dividend Disbursing Agent, Servicing Agent,"
"Distribution Plan" and "Purchase and Redemption of Shares" for more complete
descriptions of the various costs and expenses applicable to investors in the
Fund. In addition, if the Fund were to change its fundamental investment
strategy and no longer invest in the CIT Master Portfolio, these expenses may
change.
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FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Fund's 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
OVERLAND SWEEP FUND
FOR A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991*
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<S> <C> <C> <C> <C>
Net asset value, Beginning of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income..................................... 0.03 0.02 0.03 0.01
Less Distributions:
Dividends from net investment income...................... (0.03) (0.02) (0.03) (0.01)
---------- ---------- ---------- ----------
Net asset value, End of period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ==========
Total return (not annualized):............................ 3.11% 1.97% 2.31% 0.93%
Ratios/supplemental data:
Net assets, end of period (000)........................... $812,559 $528,072 $253,617 $ 14,010
Number of shares outstanding, end of period (000)......... 812,559 528,072 253,628 14,010
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)................ 0.95% 0.95% 1.14% 0.97%
Ratio of net investment income to average net assets(2)... 3.20% 1.97% 2.31% 3.72%
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(1) Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses................... 0.99% 0.97% 1.17% 2.23%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses.......... 3.16% 1.95% 2.28% 2.46%
</TABLE>
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* The Fund commenced operations on October 1, 1991.
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INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objective and related
policies of the Fund and the CIT Master Portfolio. As with all mutual funds,
there can be no assurance that the Fund or the CIT Master Portfolio, which is a
diversified portfolio, will achieve their investment objectives.
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide investors with a high level
of current income, while preserving capital and liquidity. The Fund seeks to
achieve its investment objective by investing all of its assets in the CIT
Master Portfolio, which has the same investment objective as the Fund. The Fund
may withdraw its investment in the CIT Master Portfolio only if the Board of
Directors of the Company determines that such action is in the best interests of
the Fund and its shareholders, and the Fund shareholders approve such
withdrawal. 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 CIT Master Portfolio.
Since the investment characteristics of the Fund will correspond to those
of the CIT Master Portfolio, the following is a discussion of the various
investments of and techniques employed by the CIT Master Portfolio, including
the investment objective and policies of the CIT Master Portfolio. For a
description of the management and expenses of the CIT Master Portfolio, see the
Prospectus section "Management of the Fund and the CIT Master Portfolio."
The CIT Master Portfolio seeks to achieve its investment objective by
investing only in U.S. dollar-denominated "Eligible Securities" with remaining
maturities not exceeding thirteen months, as defined in Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), and maintains a dollar-weighted
average portfolio maturity of 90 days or less. An Eligible Security is a
security that is determined to present minimal credit risks and is rated in one
of the two highest rating categories by the required number of nationally
recognized statistical rating organizations or, if unrated, is determined to be
of comparable quality to such rated securities. These determinations are made by
the investment adviser, under guidelines adopted by the Trust's Board of
Trustees, although in certain instances, the Board of Trustees must approve or
ratify the CIT Master Portfolio's investments. The Board of Trustees of the
Trust (or Wells Fargo Bank, under authority delegated to it as investment
adviser to the CIT Master Portfolio) will determine on an ongoing basis that any
Eligible Securities purchased present minimal credit risks. The CIT Master
Portfolio and the Fund will endeavor to maintain a constant net asset value of
$1.00 per share of the Fund. As with all mutual funds, there can be no assurance
that this investment objective will be achieved.
The Eligible Securities in which the CIT Master Portfolio may invest are:
(i) obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities (including government-sponsored enterprises)
("U.S. Government obligations");
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(ii) negotiable certificates of deposit, fixed time deposits, bankers'
acceptances or other short-term obligations of U.S. banks (including
foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System
or are examined by the Comptroller of the Currency or whose deposits
are insured by the Federal Deposit Insurance Corporation;
(iii) commercial paper rated at the date of purchase P-1 by Moody's
Investors Service, Inc. ("Moody's") or "A-1+" or "A-1" by Standard
& Poor's Corporation ("S&P");
(iv) commercial paper unrated at the date of purchase but secured by a
letter of credit from a U.S. bank that meets the above criteria for
investment;
(v) certain floating- and variable-rate instruments (discussed below);
(vi) certain repurchase agreements (discussed below); and
(vii) short-term, U.S. dollar-denominated obligations of U.S. branches of
foreign banks that at the time of investment have more than $10
billion, or the equivalent in other currencies, in total assets.
Under the 1940 Act, the Fund and the CIT Master Portfolio are each
classified as "diversified," even though, in the case of the Fund, all of its
assets are invested in the CIT Master Portfolio.
U.S. GOVERNMENT OBLIGATIONS
U.S. Government obligations include securities issued or guaranteed as to
principal and interest by the U.S. Government and supported by the full faith
and credit of the U.S. Treasury. U.S. Treasury obligations differ mainly in the
length of their maturity. Treasury bills, the most frequently issued marketable
government securities, have a maturity of up to one year and are issued on a
discount basis. U.S. Government obligations also include securities issued or
guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees; others, by the right of
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government will provide
financial support to its agencies or instrumentalities where it is not obligated
to do so. In addition, U.S. Government obligations are subject to fluctuations
in market value due to fluctuations in market interest rates. As a general
matter, the value of debt instruments, including U.S. Government obligations,
declines when market interest rates increase, and rises when market interest
rates decrease. Certain types of U.S. Government obligations are subject to
fluctuations in yield or value due to their structure or contract terms.
FLOATING- AND VARIABLE-RATE INSTRUMENTS
Certain of the debt instruments in which the CIT Master Portfolio may
invest may bear interest at rates that are not fixed, but float or vary with,
for example, changes in specified market rates or
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indices or at specified intervals. Such changes in interest rates tend to reduce
fluctuations that would normally occur in the market value of the securities as
market rates change. Certain of these floating-and variable-rate instruments may
carry a demand feature that would permit the holder to tender them back to the
issuer at par value prior to maturity. The CIT Master Portfolio 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 CIT Master Portfolio
may tender the instrument back to the issuer, whichever is later. The floating-
and variable-rate instruments that the CIT Master Portfolio may purchase include
certificates of participation in floating- and variable-rate obligations
purchased from banks.
Wells Fargo Bank, as investment adviser to the CIT Master Portfolio,
monitors on an ongoing basis the ability of an issuer of a demand instrument to
pay principal and interest on demand. Events occurring between the time the CIT
Master Portfolio elects to demand payment on a floating- or variable-rate
instrument and the time payment is due may affect the ability of the issuer to
make payment when due, and unless such demand instrument permits same-day
settlement, may affect the CIT Master Portfolio's ability to obtain payment at
par. Demand instruments whose demand feature is not exercisable within seven
days may be treated as liquid, provided that an active secondary market exists.
REPURCHASE AGREEMENTS
The CIT Master Portfolio may enter into repurchase agreements wherein the
seller of a security to the CIT Master Portfolio agrees to repurchase that
security from the CIT Master Portfolio at a mutually agreed-upon time and price.
The period of maturity is usually quite short, often overnight or a few days,
although it may extend over a number of months. The CIT Master Portfolio may
enter into repurchase agreements only with respect to U.S. Government
obligations and other securities that are permissible investments for the CIT
Master Portfolio. All repurchase agreements will be fully collateralized based
on values that are marked to market daily. The maturities of the underlying
securities in a repurchase agreement transaction may be greater than thirteen
months. However, the term of any repurchase agreement on behalf of the CIT
Master Portfolio will always be less than thirteen months. If the seller
defaults and the value of the underlying securities has declined, the CIT Master
Portfolio may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, the CIT Master Portfolio's
disposition of the security may be delayed or limited.
The CIT Master Portfolio may not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the market
value of the CIT Master Portfolio's total net assets would be invested in
repurchase agreements with maturities of more than seven days, restricted
securities and illiquid securities. The CIT Master Portfolio only will enter
into repurchase agreements with registered broker/dealers and commercial banks
that meet guidelines established by the Board of Trustees of the Trust and that
are not affiliated with Wells Fargo Bank. The CIT Master Portfolio, subject to
the conditions described above, may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank.
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LETTERS OF CREDIT
Certain of the debt obligations, certificates of participation, commercial
paper and other short-term obligations which the CIT Master Portfolio is
permitted to purchase may be backed by an unconditional and irrevocable letter
of credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Letter of credit-backed investments must, in the opinion
of Wells Fargo Bank, be of investment quality comparable to other permitted
high-quality investments of the CIT Master Portfolio.
------------------------
The Fund's investment objective and its investment policy of investing all
of its assets in the CIT Master Portfolio, as set forth above, are fundamental.
Accordingly, they may not be changed without approval by the vote of the holders
of a majority of the Fund's outstanding voting securities, as described under
"Capital Stock" in the SAI. If the Company's Board of Directors determines,
however, that the Fund's investment objective can best be achieved by a
substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will make
appropriate disclosure of any such material change in the Fund's prospectus.
The investment objective of the CIT Master Portfolio may not be changed
without approval of a majority vote of the investors in the CIT Master
Portfolio. The classification of the Fund and the CIT Master Portfolio as
"diversified" may not be changed, in the case of the Fund, without the approval
of the Fund's shareholders, or, in the case of the CIT Master Portfolio, without
the approval of a majority vote of the investors in the CIT Master Portfolio.
In addition, as a matter of fundamental policy, the CIT Master Portfolio
(and the Fund) may borrow from banks up to 10% of the current value of its net
assets only for temporary purposes in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the current value of its
net assets (but investments may not be purchased while any such outstanding
borrowing in excess of 5% of its net assets exists). As a matter of fundamental
policy, neither the CIT Master Portfolio nor the Fund may invest more than 25%
of its assets (i.e., concentrate) in any particular industry, excluding U.S.
Government obligations and obligations of domestic banks. (Foreign branches of
U.S. banks and U.S. branches of foreign banks are not domestic banks for
purposes of this exclusion.) As a matter of non-fundamental policy, the CIT
Master Portfolio (and the Fund) may invest up to 10% of the current value of its
net assets in repurchase agreements having maturities of more than seven days,
illiquid securities, and fixed time deposits that are subject to withdrawal
penalties and that have maturities of more than seven days, provided that this
restriction does not affect the Fund's ability to invest a portion or all of its
assets in the CIT Master Portfolio.
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MANAGEMENT OF THE FUND AND THE CIT MASTER PORTFOLIO
The Company has retained the services of Stephens as administrator and
distributor for the Fund, but has not retained the services of an investment
adviser for the Fund since the Company seeks to achieve the investment objective
of the Fund by investing all of the Fund's assets in the CIT Master Portfolio.
The Company's Board of Directors supervises the actions of the Fund's
administrator and distributor, as set forth below, and decides upon matters of
general policy. As noted above, the Fund may withdraw its investment in the CIT
Master Portfolio only if the Board of Directors of the Company determines that
it is in the best interests of the Fund and its shareholders to do so, and the
Fund shareholders approve such withdrawal. Upon any such withdrawal, the Board
of Directors of the Company would consider what action might be taken, including
the investment of all the assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the hiring of an investment
adviser to manage the Fund's assets in accordance with the investment policies
described above with respect to the CIT Master Portfolio.
The Trust, on behalf of the CIT Master Portfolio, has retained the services
of Wells Fargo Bank as investment adviser to the CIT Master Portfolio, and
Stephens as administrator and distributor of the CIT Master Portfolio. The Board
of Trustees of the Trust is responsible for the general management of the Trust
and supervising the actions of Wells Fargo Bank and Stephens in these
capacities.
STRUCTURE OF THE FUND AND THE CIT MASTER PORTFOLIO
The investment objective of the Fund, and its policy of investing all of
its assets in the CIT Master Portfolio, may not be changed without approval of a
majority of the Fund's outstanding securities. Similarly, the investment
objective of the CIT Master Portfolio may not be changed without the approval of
the investors in the CIT Master Portfolio. The investment objectives, policies
and restrictions of the CIT Master Portfolio and the Fund are described in the
Prospectus section "Investment Objective and Policies". Additionally, a
description of the management and expenses of the CIT Master Portfolio is
located below under subsections "Investment Adviser" and "Sponsor, Administrator
and Distributor".
In addition, other investment companies may in the future also invest a
portion of their assets in the CIT Master Portfolio. Such other investment
companies may have different expenses and, accordingly, may experience different
investment returns and yields compared to the Fund. The Fund's investment policy
and the fact that other funds may invest in the CIT Master Portfolio may entail
greater risks than those incurred by a fund which holds portfolio securities
directly. Such risks may include the risk that another investment company that
invests in the CIT Master Portfolio may make a large scale redemption. Such a
redemption could negatively impact on the operating expenses of the CIT Master
Portfolio and/or its ability to hold a diverse portfolio of investments.
Furthermore, should the CIT Master Portfolio's unitholders vote to change the
investment objective of the CIT Master Portfolio, the Fund would either have to
change its investment objective in response thereto or seek to find another
investment company with the same investment objective in which to invest.
For information on whether it may be possible to invest in the CIT Master
Portfolio through another investment company, an investor should contact the
Fund's Transfer Agent by writing to the address on the back of the Prospectus or
by calling (800) 552-9612. Additional information
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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 Advisory Contract, the CIT Master Portfolio is advised by
Wells Fargo Bank, 420 Montgomery Street, San Francisco, California 94163, a
wholly owned subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the
ten largest banks in the United States, was founded in 1852 and is the oldest
bank in the western United States. As of December 31, 1994, various divisions
and affiliates of Wells Fargo Bank provided investment advisory services for
approximately $200 billion of assets of individuals, trusts, estates and
institutions. Wells Fargo Bank is the investment adviser to the other separately
managed series of the Company and the Trust and to five other registered
open-end management investment companies, that consist of several separately
managed investment portfolios.
The Advisory Contract with the Trust on behalf of the CIT Master Portfolio,
provides that Wells Fargo Bank shall furnish to the CIT Master Portfolio
investment guidance and policy direction in connection with the daily portfolio
management of the CIT Master Portfolio. Pursuant to the Advisory Contract, Wells
Fargo Bank furnishes to the Board of Trustees of the Trust periodic reports on
the investment strategy and performance of the CIT Master Portfolio.
Purchase and sale orders of the securities held by the CIT Master Portfolio
may be combined with those of other accounts that Wells Fargo Bank manages or
advises, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank determines
that a particular security should be bought or sold for the CIT Master Portfolio
and other accounts managed by Wells Fargo Bank, Wells Fargo Bank undertakes to
allocate those transactions among the participants equitably. From time to time,
the CIT Master Portfolio, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of companies with
which Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contract with the Trust, Wells Fargo
Bank is entitled to receive a monthly advisory fee at the annual rate of 0.25%
of the average daily net assets of the CIT Master Portfolio. For the year ended
December 31, 1994 Wells Fargo Bank was paid 0.25% of the average daily net
assets of the Fund as compensation for its services as investment adviser. From
time to time, Wells Fargo Bank may waive such fees in whole or in part. In this
regard, Wells Fargo Bank has undertaken to waive a portion or all of its fees
and/or reimburse the Fund or the CIT Master Portfolio, to the extent the Fund's
total operating expenses exceed 1.25%, but only to the extent of its fees. Any
such waiver will reduce expenses of the CIT Master Portfolio and, accordingly,
have a favorable impact on the yield of the CIT Master Portfolio and, in turn,
the Fund.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
agreements with the Company and the Trust, on behalf of the CIT Master
Portfolio, under which Stephens acts as administrator for the Fund and the CIT
Master Portfolio, respectively. For providing administrative services, Stephens
is entitled to receive from each of the Fund and the CIT Master Portfolio a
monthly
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fee at the annual rate of 0.025% of its respective average daily net assets.
From time to time, Stephens may waive its fees from the Fund or the CIT Master
Portfolio in whole or in part. Any such waivers will reduce expenses of the Fund
and/or of the CIT Master Portfolio and, accordingly, have a favorable impact on
the yield or return of the Fund and/or the CIT Master Portfolio.
The respective Administration Agreements with the Fund and the CIT Master
Portfolio state that Stephens shall provide as administrative services, among
other things general supervision: (i) of the operation of the Fund and the CIT
Master Portfolio, including coordination of the services performed by the
investment adviser (in the case of the CIT Master Portfolio), transfer agent,
shareholder servicing agents (in the case of the Fund), custodian, independent
accountants and legal counsel; (ii) in connection with regulatory compliance,
including the compilation of information for documents such as reports to, and
filings with, the SEC and state securities commissions; and preparation of proxy
statements and shareholder or investor reports for the Fund and the CIT Master
Portfolio, as applicable; and (iii) relative to the compilation of data required
for the preparation of periodic reports distributed to the Company's officers
and Board of Directors and the Trust's officers and Board of Trustees. Stephens
also furnishes office space and certain facilities required for conducting the
business of the Fund and the CIT Master Portfolio and pays the compensation of
the directors, officers and employees of the Company and of the Trust who are
affiliated with Stephens.
In addition, Stephens, as the principal underwriter of the Fund within the
meaning of the Act and in accordance with a plan of distribution ("Plan"), has
entered into a Distribution Agreement with the Company pursuant to which
Stephens has the responsibility for distributing shares of the Fund. The
Distribution Agreement provides that Stephens shall act as agent for the Fund
for the sale of its shares. See "Distribution Plan" below.
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, including 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.
------------------------
The Advisory Contract and the Administration Agreements with the CIT Master
Portfolio and the Fund provide that if, in any fiscal year, the total aggregate
expenses of the CIT Master Portfolio and the Fund incurred by, or allocated to,
the CIT Master Portfolio and the Fund (excluding taxes, interest, brokerage
commissions and other portfolio transaction expenses, expenditures that are
capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Plan) exceed the most
restrictive expense limitation applicable to the Fund imposed by the securities
laws or regulations of the states in which the Fund's shares are registered for
sale, Wells Fargo Bank and Stephens shall waive their fees and reimburse
expenses proportionately under the Advisory Contract and the Administration
Agreements, respectively, for the fiscal year to the extent of the excess, or
reimburse the excess, but only to the extent of their respective fees. In this
regard, Wells Fargo Bank has undertaken to waive a portion or all of its fees
and/or reimburse expenses to the Fund and the CIT Master Portfolio, to the
extent the total operating expenses exceed 1.25%, but only to the extent of its
fees. The Advisory Contract and the Administration Agreements further provide
that the total expenses shall be reviewed monthly so that, to the
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<PAGE> 233
extent the annualized expenses for such month exceed the most restrictive
applicable annual expense limitation, the monthly fees under the Advisory
Contract and the Administration Agreements shall be reduced as necessary.
Currently, the most stringent applicable state expense ratio limitation is 2.50%
of the first $30 million of the Fund's average net assets for its current fiscal
year, 2% of the next $70 million of such assets, and 1.50% of such assets in
excess of $100 million.
Except for the expenses borne by Wells Fargo Bank and Stephens, the Company
and the Trust bear all costs of their respective operations, including the
compensation of the Company's directors and the Trust's trustees who are not
officers or employees of Wells Fargo Bank or Stephens or any of their
affiliates; advisory (in the case of the CIT Master Portfolio), shareholder
servicing (in the case of the Fund), and administration fees; payments pursuant
to any Plan (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 CIT
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 transactions; fees and expenses of the custodian, including those for
keeping books and accounts and calculating the net asset value of the Fund and
the CIT 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 CIT Master Portfolio are
charged against the respective assets of the Fund and/or the CIT Master
Portfolio.
DETERMINATION OF NET ASSET VALUE,
DIVIDENDS AND DISTRIBUTIONS
Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Fund is open for trading ("Business Day"). The net asset value
per share of the Fund is determined by dividing the value of the total assets of
the Fund (i.e., the value of its investments in the CIT Master Portfolio and
other assets) less all of its liabilities by the total number of outstanding
shares of the Fund. The net asset value of the Fund is determined as of 12:00
noon (New York time). It is anticipated that the net asset value of each share
of the Fund will remain constant at $1.00, although no assurance can be given
that the Fund will maintain a stable net asset value on a continuing basis.
The CIT Master Portfolio uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period until maturity,
generally without regard to the impact of fluctuating interest rates on the
market value of the security. The Net Income of the CIT Master Portfolio, as
defined below, is determined, declared and paid as a dividend once each Business
Day as of 12:00 noon (New York time). All the Net Income of the CIT Master
Portfolio so determined is allocated pro rata among the Fund and the other
investors in the CIT Master Portfolio at the time of such determination.
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<PAGE> 234
For this purpose, the Net Income of the CIT Master Portfolio (from the time
of the immediately preceding determination thereof) consists of (i) all income
accrued, less the amortization of any premium, on the assets of the CIT Master
Portfolio, less (ii) all actual and accrued expenses of the CIT Master Portfolio
determined in accordance with generally accepted accounting principles. Interest
income includes discount earned (including both original issue and market
discount) on discount paper accrued ratably to the date of maturity and any net
realized gains or losses on the assets of the CIT Master Portfolio.
The Net Income of the Fund, as defined below, is determined at the same
time and on the same days as the Net Income of the CIT Master Portfolio is
determined. All the Net Income of the Fund so determined is declared as a
dividend to shareholders of record at the time of such determination. Net Income
for a Saturday, Sunday or Holiday (as defined below) will be declared as a
dividend to shareholders of record as of 12:00 noon (New York time) on the
previous Business Day.
Dividends of the Fund declared in, and attributable to, any month will be
paid in cash once a month, early in the following month. Shareholders of the
Fund who redeem shares prior to a dividend payment date will be entitled to all
dividends declared but unpaid prior to redemption on such shares on the next
dividend payment date.
For this purpose, the Net Income of the Fund (from the time of the
immediately preceding determination thereof) consists of (i) all income accrued
on the assets of the Fund (i.e., the Fund's share of the Net Income of the CIT
Master Portfolio), less (ii) all actual and accrued expenses of the Fund
determined in accordance with generally accepted accounting principles.
Since the Net Income of the Fund is declared as a dividend each time the
Net Income of the Fund is determined, the net asset value per share of the Fund
is expected to remain constant at $1.00 per share immediately after each such
determination and dividend declaration.
PERFORMANCE DATA
From time to time, the Company may advertise yield information with respect
to shares of the Fund. Yield information is based on the historical earnings and
performance of the Fund and should not be considered representative of future
performance. From time to time, the Fund may advertise its current yield and/or
its effective yield. Current yield for the Fund is computed by dividing its net
investment income per share earned during a specified period by its net asset
value per share on the last day of such period and annualizing the result. The
current yield of the Fund will show the annualized income per share generated by
an investment in the Fund over a stated period. The effective yield is
calculated similarly but, when annualized, the income earned per share will be
assumed to have been reinvested. The effective yield will be slightly higher
than the current yield because of the compounding effect of this assumed
reinvestment. Additional information about the performance of the Fund is
contained in the Annual Report for the Fund. The Annual Report may be obtained
free of charge by calling the Company at 800-552-9612.
9
<PAGE> 235
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are offered exclusively to customers of Servicing Agents
who have entered into a Shareholder Servicing Agreement with the Company on
behalf of the Fund. However, other open-end investment companies that offer
their shares to the public, including other series of the Company, also may
invest all or substantially all of their assets in the CIT Master Portfolio.
Accordingly, there may be other investment companies through which public
investors can invest indirectly in the CIT Master Portfolio. The fees charged by
such other investment companies may be higher or lower than those charged by the
Fund, which may reflect, among other things, differences in the nature and level
of the services and features offered by such companies to their shareholders.
The Shareholder Servicing Agreements contemplate that customers of a
Servicing Agent will have entered into agency agreements with such Servicing
Agent whereby the Servicing Agent is authorized to invest certain amounts
maintained by the customer in an account with the Servicing Agent in shares of
the Fund through a single account in the name of the Servicing Agent on behalf
of its customers. Fund shares are offered continuously at the net asset value
next determined after a purchase order is received by the Servicing Agent. The
Servicing Agent is responsible for the prompt transmission of the purchase order
to the Fund. The net asset value is expected to remain constant at $1.00. No
sales load is imposed.
Shares of the Fund may be purchased on any day the Fund is open. The Fund
is open on the same days as the New York Stock Exchange (the "Exchange").
Currently, the Exchange is closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day (each, a "Holiday"). When any Holiday falls on a Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is closed the following Monday.
There is no minimum initial or subsequent purchase amount applicable to
Fund shares. The Company reserves the right to reject any purchase order for
shares of the Funds. All amounts accepted will be invested in full and
fractional shares. Inquiries may be directed to the Company at the address or
telephone number on the front cover of the Prospectus.
Shares may be redeemed at their next determined net asset value after the
Servicing Agent has received a redemption order. The Servicing Agent is
responsible for the prompt transmission of the redemption order to the Fund. The
Company makes no charge for redemption transactions. Proceeds of redemptions
will be credited to the Servicing Agent's shareholder account with the Fund.
DISTRIBUTION PLAN
The Company's Board of Directors has adopted a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act on behalf of the Fund, and shareholder approval
has been obtained with respect to the Plan. Under the Plan and pursuant to the
Distribution Agreement, the Fund pays Stephens, as compensation for
distribution-related services, a monthly fee at the annual rate of up to 0.55%
of the average daily net assets of the Fund or the maximum amount payable under
applicable laws, regulations and rules, whichever is less. The actual fee
payable to Stephens is determined, within the applicable limit, from time to
time by mutual agreement between the Company and Stephens.
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<PAGE> 236
Stephens may enter into selling agreements with one or more Selling Agents under
which such agents may receive compensation for distribution-related services
from Stephens, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Fund shares attributable to
them. Stephens may retain any portion of the total distribution fee payable
under the Distribution Agreement to compensate it for distribution-related
services provided by it or to reimburse it for other distribution-related
expenses. Since the fee payable to Stephens under the Distribution Agreement is
not based upon the actual expenditures of Stephens, the expenses of Stephens
(which may include overhead expenses) may be more or less than the fees received
by it under the Distribution Agreement. The Plan contemplates further that, to
the extent any fees payable pursuant to a Shareholder Servicing Agreement
(discussed below) are deemed to be for distribution-related services, rather
than shareholder services, such payments are approved and payable pursuant to
the Plan. Stephens has entered into a Selling Agreement with Wells Fargo Bank,
pursuant to which Wells Fargo Bank will receive periodic payments based on the
average daily net assets of Fund shares attributable to its customers.
CUSTODIAN, TRANSFER AND DIVIDEND
DISBURSING AGENT, SERVICING AGENTS
Wells Fargo Bank has been retained to act as the custodian and transfer and
dividend disbursing agent for the Fund and the CIT Master Portfolio. Wells Fargo
Bank's principal place of business is 420 Montgomery Street, San Francisco,
California 94163, and its transfer and dividend disbursing agency activities are
managed at 525 Market Street, San Francisco, California 94105.
The Company has entered into a Shareholder Servicing Agreement on behalf of
the Fund with Wells Fargo Bank, and may enter into such Shareholder Servicing
Agreements with one or more other financial institutions which desire to act as
Servicing Agents. Pursuant to each such Shareholder Servicing Agreement, the
Servicing Agent, as agent for its customers, will, among other things:
automatically invest cash balances maintained in customer accounts with the
Servicing Agent into the Fund, and redeem shares out of the Fund, in the amounts
specified pursuant to agency agreements between the Servicing Agent and its
customers; maintain a single shareholder account for the benefit of its
customers with the Fund; provide subaccounting services to monitor and account
for its customers' beneficial ownership of shares of the Fund held in the
Servicing Agent's shareholder account; answer customer inquiries regarding
account status and history, purchases and redemptions of shares of the Fund,
Fund yield and certain other matters pertaining to the Fund or the CIT Master
Portfolio; assist its customers in designating and changing account designations
and addresses; process Fund purchase and redemption transactions; forward and
receive funds in connection with purchases or redemptions of shares of the Fund;
provide periodic statements showing a customer's subaccount balance; furnish
(either separately or on an integrated basis with other reports sent to a
customer by the Servicing Agent) monthly statements and confirmations of
purchases and redemptions of Fund shares in the Servicing Agent's shareholder
account on behalf of the customer; forward to its customers proxy statements,
annual reports, updated prospectuses and other communications from the Fund or
the CIT Master Portfolio to shareholders of the Fund as required; receive,
tabulate and forward to the Company proxies executed by or on behalf of its
customers with respect to meetings of shareholders of the Fund; and provide such
other related services, and necessary
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<PAGE> 237
personnel and facilities to provide all of the shareholder services contemplated
by the Shareholder Servicing Agreement, in each case, as the Company or a
customer of the Servicing Agent may reasonably request. All purchases and
redemptions are effected through Stephens as the Fund's Distributor. For
providing these services, each Servicing Agent is entitled to receive a fee from
the Fund, which may be paid periodically, of up to 0.35%, on an annualized
basis, of the average daily net assets of the Fund represented by shares owned
of record by the Servicing Agent on behalf of its customers, or an amount which,
when considered in conjunction with amounts payable pursuant to the Fund's
Distribution Agreement, equals the maximum amount payable to the Servicing Agent
under applicable laws, regulations or rules, whichever is less.
A Servicing Agent also may impose certain conditions on its customers,
subject to the terms of this Prospectus, in addition to or different from those
imposed by the Fund, such as requiring a minimum initial investment or the
payment of additional fees for additional services offered to the customer. The
exercise of voting rights and the delivery to customers of shareholder
communications will be governed by the customers' agency agreements with the
Servicing Agent. The Servicing Agent has agreed to forward to its customers who
are shareholders of the Fund appropriate prior written disclosure of any fees
that it may charge them directly and to provide written notice at least 30 days
prior to imposition of any transaction fees.
TAXES
The Company intends to continue to qualify the Fund as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund will be treated as a separate entity from the
other portfolios of the Company for tax purposes and thus the provisions of the
Code applicable to regulated investment companies generally will be applied to
the Fund separately, rather than to the Company as a whole. In addition, net
capital gains, if any, net investment income and operating expenses will be
determined separately for the Fund. By complying with the applicable provisions
of the Code, the Fund will not be subject to federal income taxes with respect
to net investment income and net realized capital gains distributed to its
shareholders. The Fund seeks to comply with the applicable provisions by
investing all of its assets in the CIT Master Portfolio. The CIT Master
Portfolio 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
CIT Master Portfolio assets. Therefore, any interest, dividends and gains or
losses of the CIT Master Portfolio will be deemed to have been "passed through"
to the Fund and other investors in the CIT Master Portfolio, regardless of
whether such interest, dividends or gains have been distributed by the CIT
Master Portfolio. Accordingly, if the CIT Master Portfolio were to accrue but
not distribute any interest, dividends or gains, the Fund would be deemed to
have realized and recognized its proportionate share of interest, dividends,
gains or losses without receipt of any corresponding distribution. However, the
CIT Master Portfolio will seek to minimize recognition by investors of interest,
dividends, gains or losses without a corresponding distribution. Dividends from
net investment income (including net short-term capital gains, if any) declared
and paid by the Fund will be taxable as ordinary income to Fund shareholders.
Shareholders of record will receive information for tax purposes following the
end of each calendar year.
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No part of the distributions to shareholders of the Fund is expected to
qualify for the dividends-received deduction allowed to corporate shareholders.
The Company will be required to withhold, subject to certain exemptions, at a
rate of 31% on dividends paid and redemption proceeds paid or credited to
individual shareholders of the Fund if a correct taxpayer identification number,
certified when required, is not on file with the Company or the Transfer Agent.
Under the Code, dividends and distributions paid to a non-resident alien or
other foreign shareholder may be subject to U.S. withholding tax (at a rate of
up to 30%). See "Federal Income Taxes -- Foreign Shareholders" in the SAI.
Further federal tax considerations are discussed in the SAI. You should
consult your tax advisor with respect to your particular tax situation as well
as the state and local tax status of investments in shares of the Fund.
13
<PAGE> 239
ORGANIZATION AND CAPITAL STOCK
The Company was incorporated in Maryland on April 27, 1987. The authorized
capital stock of the Company consists of 20,000,000,000 shares having a par
value of $.001 per share. Currently, the Company offers twelve series of shares,
each representing an interest in one of the funds in the Overland Express Family
of Funds -- the Asset Allocation Fund, the California Tax-Free Bond Fund, the
California Tax-Free Money Market Fund, the Money Market Fund, the Municipal
Income Fund, the Overland Sweep Fund, the Short-Term Government-Corporate Income
Fund, the Short-Term Municipal Income Fund, the Strategic Growth Fund, the U.S.
Government Income Fund, the U.S. Treasury Money Market Fund and the Variable
Rate Government Fund. The Board of Directors may, in the future, authorize the
issuance of other series of capital stock. All shares of the Company, when
issued, will be fully paid and nonassessable.
The Trust was established on August 14, 1991, as a Delaware business trust
and was formerly known as the Cash Investment Trust. The Trust is a "series
fund", which is a mutual fund divided into separate portfolios, offering three
diversified portfolios, including the CIT Master Portfolio. The Trust's
Declaration of Trust permits the Board of Trustees to issue beneficial interests
in its separate series to investors based on their proportionate investments in
such series.
All shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required to elect Directors under the 1940 Act; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors of the Company. In addition,
whenever the Fund is requested to vote on matters pertaining to the CIT Master
Portfolio, the Company will hold a meeting of the Fund's shareholders and will
cast its vote as instructed by Fund shareholders. The Directors of the Company
will vote shares for which they receive no voting instructions in the same
proportion as the shares for which they do receive voting instructions. A more
detailed statement of the voting rights of shareholders is contained in the SAI.
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<PAGE> 240
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
OF THE FUND AND THE CIT MASTER PORTFOLIO
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
TRANSFER AND DIVIDEND DISBURSING
AGENT AND CUSTODIAN OF THE FUND AND
THE CIT MASTER PORTFOLIO; INVESTMENT
ADVISER OF THE CIT MASTER PORTFOLIO
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS SHAREHOLDER
SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
80P 5/95
<PAGE> 241
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 242
LOGO
Telephone: (800) 552-9612
Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus contains information about
one of the funds in the Overland Express Family of Funds -- the U.S. GOVERNMENT
INCOME FUND (the "Fund").
The U.S. GOVERNMENT INCOME FUND primarily seeks to provide investors with
current income, while preserving capital, by investing in a portfolio consisting
of securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities.
This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1995, containing additional and more detailed information about the
Fund (the "SAI"), 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 or by calling the Company at the telephone
number printed above.
------------------------
INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
------------------------
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO
BANK") OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY.
AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO
BANK, IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
<PAGE> 243
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................................... ii
Summary of Expenses......................................................................... v
Financial Highlights........................................................................ vii
Investment Objective and Policies........................................................... 1
Additional Permitted Investment Activities.................................................. 1
Advisory, Administration and Distribution Arrangements...................................... 3
Determination of Net Asset Value............................................................ 5
Purchase of Shares.......................................................................... 6
Exchange Privileges......................................................................... 12
Redemption of Shares........................................................................ 14
Distribution Plans.......................................................................... 17
Servicing Plan.............................................................................. 17
Dividends and Distributions................................................................. 17
Taxes....................................................................................... 18
Custodian and Transfer and Dividend Disbursing Agent........................................ 19
Organization and Capital Stock.............................................................. 19
</TABLE>
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<PAGE> 244
PROSPECTUS SUMMARY
The Company, as an open-end investment company, provides a convenient way
for you to invest in portfolios of securities selected and supervised by
professional management. The following provides information about the Fund and
its investment objective.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The U.S. GOVERNMENT INCOME FUND primarily seeks to provide investors with
current income, while preserving capital, by investing in a portfolio
consisting of securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities (U.S. Government obligations). As with all
mutual funds, there can be no assurance that the Fund will achieve its
investment objective. See "Investment Objective and Policies."
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. The Fund invests in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, including
government-sponsored enterprises ("U.S. Government obligations"). The Fund
may, subject to the restrictions described herein and in the SAI, employ
interest rate futures contracts and options thereon, and may invest in
certain put and call options. Transactions in futures contracts and put
and call options bear the risk that commodity exchange limitations or
market conditions may adversely affect the Fund's ability to liquidate its
positions. See "Additional Permitted Investment Activities."
Q. WHO IS THE INVESTMENT ADVISER?
A. Wells Fargo Bank serves as the investment adviser to the Fund. Wells
Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of the Fund. See "Advisory,
Administration and Distribution Arrangements."
Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?
A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.10% of the average daily net assets of the Fund;
decreasing to 0.05% of the average daily net assets of the Fund in excess
of $200 million. See "Advisory, Administration and Distribution
Arrangements."
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 4.50% (4.71% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum initial
purchase amount is $100 for shares purchased through the Systematic
Purchase Plan and $250 for shares purchased through qualified retirement
plans. The minimum subsequent purchase amount is $100 or more. You may
purchase shares of the Fund through Stephens, Wells Fargo Bank, as
transfer agent (the "Transfer Agent"), or any authorized broker/dealer or
financial institution. Purchases of shares of the Fund may be made by wire
directly to the Transfer Agent. The Fund may pay to its distributor
annually up to the greater of 0.05% of its average daily net assets
attributable to Class A Shares or $100,000, and a monthly fee at an annual
rate of up to 0.50% of the
ii
<PAGE> 245
Fund's average daily net assets attributable to Class D Shares to defray
the cost of preparing and printing prospectuses and other promotional
materials and of delivering those materials to prospective shareholders of
the Fund. See "Purchase of Shares" and "Distribution Plans." The Fund also
may pay servicing agents a fee at an annual rate of up to 0.25% of the
Fund's average daily net assets attributable to Class D Shares to
compensate them for certain services. See "Servicing Plan."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Fund are declared daily and paid monthly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund, unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at your election. All
reinvestments of dividends and/or capital gain distributions in shares of
the Fund are effected at the then current net asset value free of any
sales load. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of the same class of another fund in
the Overland Express Family of Funds with which you have an established
account that has met the applicable minimum initial investment
requirement. The net investment income available for distribution to
holders of the Fund's Class D Shares is reduced by the amount of servicing
fees payable to servicing agents under the Servicing Plan (as defined
below). See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open, shares may be redeemed upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check. Accounts of less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
your shares. However, the Company reserves the right to impose charges for
wiring your redemption proceeds. See "Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. An investment in the Fund is not insured against loss of principal. When
the value of the securities that the Fund owns declines, so does the value
of your Fund shares. Therefore, you should be prepared to accept some risk
with the money you invest in the Fund. As with all mutual funds, there can
be no assurance that the Fund will achieve its investment objective. The
Fund invests primarily in U.S. Government obligations. U.S. Government
obligations include securities issued or guaranteed as to principal and
interest by the U.S. Government and supported by the full faith and credit
of the U.S. Treasury. U.S. Government obligations also include securities
issued or guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith
and credit of the United States or U.S. Treasury guarantees; others, by
the right of the issuer or guarantor to borrow from the U.S. Treasury;
still others, by the discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others,
only by the credit of the agency or instrumentality issuing the
obligation. In the case of obligations not backed by the full faith and
credit of the United States, the investor must look principally to the
agency or instrumentality issuing or guaranteeing the obligation for
ultimate repayment, which agency or instrumentality
iii
<PAGE> 246
may be privately owned. There can be no assurance that the U.S. Government
will provide financial support to its agencies or instrumentalities where
it is not obligated to do so.
In addition, U.S. Government obligations are subject to fluctuations in
market value due to fluctuations in market interest rates. As a general
matter, the value of debt instruments, including U.S. Government
obligations, declines when market interest rates increase and rises when
market interest rates decrease. Certain types of U.S. Government
obligations are subject to fluctuations in yield or value due to their
structure or contract terms.
Moreover, principal on the mortgages underlying certain of the securities
in which the Fund may invest may be prepaid in advance of maturity; these
prepayments tend to increase when interest rates decline, presenting the
Fund with more principal to invest at lower rates.
Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus,
such as adjustable rate mortgage-backed securities which have an interest
rate that is reset periodically based on an index, are considered
derivatives. Some derivatives may be more sensitive than direct securities
to changes in interest rates or sudden market moves. Some derivatives also
may be susceptible to fluctuations in yield or value due to their
structure or contract terms.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to the Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund
to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by the Fund also is subject to broadly
applicable investment policies. For example, the Fund may not invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.
iv
<PAGE> 247
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)..... 4.50% 0.00%
Maximum Deferred Sales Load* (as a percentage of the lesser of net asset value
at purchase or net asset value at redemption)
Redemption during year 1...................................................... 0.00% 1.00%
Redemption after year 1....................................................... 0.00% 0.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------- -------
<S> <C> <C>
Management Fees................................................................. 0.50% 0.50%
12b-1 Fees...................................................................... 0.05% 0.50%
Total Other Expenses:
Servicing Fees(1)............................................................. 0.00% 0.25%
Other Expenses(1)............................................................. 0.53% 0.53%
------- -------
Total Fund Operating Expenses(1)**.............................................. 1.08% 1.78%
</TABLE>
- ---------------
(1) After any waivers or reimbursements.
EXAMPLES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Class A Shares of the Fund, assuming (1)
a 5% annual return and (2) redemption at the end of
each time period indicated............................. $ 56 $ 78 $ 102 $ 171
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............................. $ 28 $ 56 $ 96 $ 209
You would pay the following expenses on the same
investment in Class D Shares of the Fund, assuming no
redemption............................................. $ 18 $ 56 $ 96 $ 209
</TABLE>
- ---------------
* See "Contingent Deferred Sales Charge -- Class D Shares."
** As further described in the Prospectus under the caption "Advisory,
Administration and Distribution Arrangements," Stephens and Wells Fargo Bank
each has agreed to waive or reimburse all or a portion
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<PAGE> 248
of their respective fees in circumstances where Fund expenses that are
subject to limitations imposed under state securities laws and regulations
exceed such limitations. In addition, Stephens and Wells Fargo Bank each may
elect, in its sole discretion, to otherwise waive all or a portion of its
respective fees or reimburse expenses. Any such waivers or reimbursements
with respect to the Fund would reduce the total expenses of the Fund. The
percentages shown above with respect to the Class A and Class D Shares under
"Total Other Expenses" and "Total Fund Operating Expenses" are based on
amounts incurred during the most recent fiscal year, restated to reflect
voluntary fee waivers and reimbursements that are expected to continue during
the current fiscal year. Absent waivers and reimbursements, "Total Other
Expenses" and "Total Operating Expenses" with respect to Class D Shares,
would have been 0.87% and 1.87%. Long-term shareholders of the Fund could pay
more in distribution related charges than the economic equivalent of the
maximum front-end sales charges applicable to mutual funds sold by members of
the National Association of Securities Dealers, Inc. ("NASD"). There can be
no assurances that the voluntary fee waivers and expense reimbursements will
continue.
------------------------
The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no other sales loads, redemption fees or exchange fees
charged by the Fund. However, the Company reserves the right to impose charges
for wiring redemption proceeds. The Examples should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown. See Prospectus sections captioned "Advisory,
Administration and Distribution Arrangements," "Distribution Plans" and
"Purchase of Shares" for more complete descriptions of the various costs and
expenses applicable to the Fund.
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<PAGE> 249
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Fund's 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
U.S. GOVERNMENT INCOME FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992 1991 1990 1989 1988*
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $ 10.87 $ 10.56 $ 10.97 $ 10.30 $ 10.22 $ 9.78 $10.00
Income From Investment Operations:
Net Investment Income................................. 0.70 0.74 0.79 0.86 0.87 0.90 0.54
Net Realized and Unrealized Gain/(Loss) on
Investments......................................... (1.21) 0.36 (0.14) 0.90 0.10 0.50 (0.21)
-------- -------- -------- -------- -------- -------- --------
Total From Investment Operations...................... (0.51) 1.10 0.65 1.76 0.97 1.40 0.33
Less Distributions:
Dividends From Net Investment Income.................. (0.70) (0.74) (0.79) (0.86) (0.89) (0.90) (0.54)
Distributions From Net Realized Gain.................. 0.00 (0.05) (0.27) (0.23) 0.00 (0.06) (0.01)
-------- -------- -------- -------- -------- -------- --------
Total Distributions................................... (0.70) (0.79) (1.06) (1.09) (0.89) (0.96) (0.55)
Net Asset Value, End of Period........................ $ 9.66 $ 10.87 $ 10.56 $ 10.97 $ 10.30 $10.22 $ 9.78
======== ======== ======== ======== ======== ======== ========
Total Return (not annualized)+........................ (4.81)% 10.67% 6.27% 18.08% 10.17% 14.82% 3.24%
Ratios/Supplemental Data:
Net Assets, End of Period (000)....................... $35,838 $50,301 $40,883 $20,457 $11,116 $4,238 $3,264
Number of Shares Outstanding, End of Period (000)..... 3,711 4,628 3,871 1,865 1,079 415 334
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1)............ 0.76% 0.53% 0.47% 0.00% 0.07% 0.54% 0.29%
Ratio of Net Investment Income to Average Net
Assets(2)........................................... 6.84% 6.79% 6.26% 8.30% 8.65% 8.89% 7.88%
Portfolio Turnover.................................... 50% 115% 128% 100% 4% 11% N/A
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to
Waived Fees and Reimbursed Expenses............... 1.08% 1.01% 1.13% 1.87% 2.72% 4.45% 7.31%
(2) Ratio of Net Investment Income to Average Net
Assets Prior to Waived Fees and Reimbursed
Expenses.............................................. 6.52% 6.31% 5.60% 6.43% 6.00% N/A N/A
* The Fund commenced operations on April 7, 1988.
</TABLE>
+ Total returns do not include the one-time sales charge.
vii
<PAGE> 250
U.S. GOVERNMENT INCOME FUND
FOR A CLASS D SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DEC. 31, DEC. 31,
1994 1993*
------ ------
<S> <C> <C>
Net Asset Values, Beginning of Period........................................... $14.85 $15.00
Income From Investment Operations:
Net Investment Income......................................................... 0.76 0.42
Net Realized and Unrealized Capital Gain/(Loss) on I nvestments............... (1.65) (0.08)
------ ------
Total From Investment Operations................................................ (0.89) 0.34
Less Distributions:
Dividends From Net Investment Income.......................................... (0.76) (0.42)
Distributions From Net Realized Capital Gain.................................. 0.00 (0.07)
------ ------
Total Distributions............................................................. (0.76) (0.49)
Net Asset Value, End of Period.................................................. $13.20 $14.85
====== ======
Total Return (not annualized)+.................................................. (5.45)% 2.25%
Ratios/Supplemental Data:
Net Assets, End of Period (000)...............................................$3,722 $9,594
Number of Shares Outstanding, End of Period (000)............................. 282 646
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1).................................... 1.37% 0.90%
Ratio of Net Investment Income to Average Net A ssets(2)...................... 6.14% 5.90%
Portfolio Turnover.............................................................. 50% 115%
- ------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses........................................................ 1.87% 2.03%
(2) Ratio of Net Investment Income to Average Net Assets Prior to
Waived Fees and Reimbursed Expenses........................................ 5.64% 4.77%
</TABLE>
* This class commenced operations on July 1, 1993.
+ Total returns do not include the 1% contingent deferred sales charge.
viii
<PAGE> 251
INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objective and related
policies of the Fund. As with all mutual funds, there can be no assurance that
the Fund, which is a diversified portfolio, will achieve its investment
objective.
INVESTMENT OBJECTIVE. The U.S. Government Income Fund primarily seeks to
provide investors with current income, while preserving capital, by investing in
a portfolio consisting of securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities ("U.S. Government obligations").
As with all mutual funds, there can be no assurance that the Fund, which is a
diversified portfolio, will achieve its investment objective.
The Fund may invest in obligations of any maturity. Under ordinary
circumstances, the weighted average maturity of the portfolio is generally
expected to be between 20 and 30 years. However, under unusual market
circumstances, it may be shorter than 20 years. Wells Fargo Bank will seek to
preserve the stability of the net asset value of Fund shares during periods when
it believes that the bond markets are vulnerable to decline by reducing the
weighted average maturity of the Fund's portfolio, by purchasing or retaining
securities with a lower expected volatility and/or by engaging in hedging
activities as more fully described below. Substantially all, and, in any event,
at least 65%, of the total assets of the Fund will under normal circumstances be
invested in income-producing U.S. Government obligations.
Not all U.S. Government obligations are direct obligations of the U.S.
Treasury. Payment of their principal and interest may be backed by the full
faith and credit of the United States (e.g., U.S. Treasury bills and Government
National Mortgage Association certificates) or solely by the issuing or
guaranteeing agency or instrumentality itself (including government-sponsored
enterprises) (e.g., Federal National Mortgage Association notes). In the latter
case, investors must look to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment. In addition, the Fund may
invest cash balances temporarily in money market instruments rated at the date
of purchase "P-1" or "P-2" by Moody's Investors Service, Inc. ("Moody's") or
"A-1+," "A-1" or "A-2" by Standard & Poor's Corporation ("S&P"), or if not
rated, which are of comparable quality in the opinion of Wells Fargo Bank, under
the Direction of the Board of Directors.
Certificates of the Government National Mortgage Association represent
ownership interests in pools of mortgages and the resulting cash flow from those
mortgages. The stated maturities of these obligations may be shortened by
unscheduled prepayments of principal and interest on the underlying mortgages,
thereby affecting the Fund's yield. The Fund may also purchase securities which
represent the interest portion or the principal portion (sometimes referred to
as "STRIPs") of securities in which the Fund may otherwise invest. STRIPs may
have different investment characteristics than the instruments from which they
derive.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
FLOATING- AND VARIABLE-RATE INSTRUMENTS
Certain of the debt instruments that the Fund may purchase bear interest at
rates that are not fixed, but vary with changes in specified market rates or
indices or at specified intervals. Certain of these instruments may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. The floating- and variable-rate instruments that
the Fund may purchase include certificates of participation in floating- and
variable-rate obligations purchased from banks; with respect to the tax-exempt
status of these certificates, the investment adviser may rely upon either the
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<PAGE> 252
opinion of counsel or Internal Revenue Service rulings issued with respect
thereto. Wells Fargo Bank, as investment adviser, monitors on an ongoing basis
the ability of an issuer of a demand instrument to pay principal and interest on
demand. Events occurring between the date the Fund elects to demand payment on a
floating- or variable-rate instrument and the date payment is due may affect the
ability of the issuer of the instrument to make payment when due, and unless
such demand instrument permits same-day settlement, may affect the Fund's right
to obtain payment at par. Demand instruments whose demand feature is not
exercisable within seven days may be treated as liquid, provided an active
secondary market exists.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that are permissible investments for
the Fund. All repurchase agreements will be fully collateralized based on values
that are marked to market daily. The maturities of the underlying securities in
a repurchase agreement transaction may be greater than one year. If the seller
defaults and the value of the underlying securities has declined, the Fund may
incur a loss. In addition, if bankruptcy proceedings are commenced with respect
to the seller of the security, the Fund's disposition of the security may be
delayed or limited.
The Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with registered
broker/dealers and commercial banks that meet guidelines established by the
Board of Directors and are not affiliated with the investment adviser. The Fund
may participate in pooled repurchase agreement transactions with other funds
advised by Wells Fargo Bank.
---------------------
The Fund's investment objective, as set forth in the first paragraph of the
subsection discussing the Fund's objective and policies, is fundamental; that
is, the investment objective may not be changed without approval by the vote of
the holders of a majority of the Fund's outstanding voting securities, as
described under "Capital Stock" in the SAI. If the Board of Directors
determines, however, that the Fund's investment objective can best be achieved
by a substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will disclose any
such material changes in the then current prospectus.
In addition, as matters of fundamental policy, the Fund may: (i) borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such borrowing exists); (ii) make
loans of portfolio securities; (iii) invest up to 10% of the current value of
its net assets in repurchase agreements having maturities of more than seven
days, restricted securities and illiquid securities; and (iv) invest up to 10%
of the current value of its net assets in fixed time deposits that are subject
to withdrawal penalties and that have maturities of more than seven days.
2
<PAGE> 253
ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, administrator and distributor, as set forth below, decides
upon matters of general policy.
INVESTMENT ADVISER
Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds"), and to six other
registered open-end management investment companies, each of which consist of
several separately managed investment portfolios.
The Advisory Contract provides that Wells Fargo Bank shall furnish to the
Fund investment guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory Contract, Wells Fargo
Bank furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund.
Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When Wells Fargo Bank determines that a particular security
should be bought or sold for the Fund and other accounts managed by Wells Fargo
Bank, Wells Fargo Bank undertakes to allocate those transactions among the
participants equitably. From time to time, the Fund, to the extent consistent
with its investment objective, policies and restrictions, may invest in
securities of companies with which Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contract, Wells Fargo Bank is entitled
to monthly advisory fees at the annual rates of 0.50% of the average daily net
assets of the Fund. From time to time Wells Fargo Bank may waive such fees in
whole or in part. Any such waiver would reduce expenses of the Fund and,
accordingly, have a favorable impact on the yield or return of the Fund. For the
year ended December 31, 1994, Wells Fargo Bank was paid .50% of the average
daily net assets of the Fund as compensation for its services as investment
adviser.
Mr. Michael Niedermeyer is responsible for the day-to-day management of the
U.S. Government Income Fund. Mr. Niedermeyer, executive vice president, is the
chief fixed-income investment officer for the Asset Management Division and
chairman of the Fixed-Income Strategy Committee. He joined Wells Fargo Bank's
Asset Management Division in 1987. Prior to joining Wells Fargo Bank, he was a
portfolio manager at U.S. National Bank of Oregon responsible for the bank's
bond portfolio and was manager of the municipal trading and underwriting
department. He received a B.A. in business administration from Carroll College
in 1975 and an M.B.A. in finance from the University of Oregon in 1977. Mr.
Neidermeyer has co-managed the Fund since April 1988.
3
<PAGE> 254
Mr. Paul Single has been responsible for the day-to-day management of the
U.S. Government Income Fund portfolio since May 1, 1995. Mr. Single has managed
taxable bond portfolios for over a decade, and has specific expertise in
mortgage-backed securities. Prior to joining Wells Fargo Bank, in early 1988, he
was a senior portfolio manager for Benham Capital Management Group. Mr. Single
received his B.S. from Springfield College.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.10% of its average daily net
assets; decreasing to 0.05% of the average daily net assets of the Fund in
excess of $200 million. From time to time Stephens may waive fees from the Fund
in whole or in part. Any such waiver will reduce expenses of the Fund and,
accordingly, have a favorable impact on the yield or return of the Fund.
The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, general
supervision (i) of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel, (ii) in connection with regulatory
compliance, including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities commissions and the
preparation of proxy statements and shareholder reports for the Fund; and (iii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Company's officers and Board
of Directors. Stephens also furnishes office space and certain facilities
required for conducting the business of the Fund and pays the compensation of
the Company's directors, officers and employees who are affiliated with
Stephens.
Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of its Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available Class A Shares and Class D Shares to their respective customers.
Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to the greater of $100,000 or 0.05%
of the average daily net assets of the Class A Shares of the Fund and a monthly
fee at an annual rate of up to 0.50% of the average daily net assets of the
Class D Shares of the Fund. The actual fee payable to Stephens is determined,
within such limits, from time to time by mutual agreement between the Company
and Stephens, and may not exceed the maximum amount payable under the Rules of
Fair Practice of the NASD. With respect to the Class D Shares of the Fund,
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments based on the average daily net assets of Class D Shares of the
Fund attributable to such agents. The principal sales support services provided
to the Fund are services provided by selling agents in exchange for commissions
and other payments to selling agents. Stephens may retain any portion of the
total distribution fee payable under the Distribution Agreement to compensate it
for distribution-related services provided by Stephens or to reimburse it for
other distribution-related
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<PAGE> 255
expenses. Since the Distribution Agreement provides for fees that are used by
Stephens to pay for distribution services, a plan of distribution for each class
of shares (individually a "Plan", collectively the "Plans") and the Distribution
Agreement are approved and reviewed in accordance with Rule 12b-1 under the 1940
Act, which regulates the manner in which an investment company may, directly or
indirectly, bear the expense of distributing its shares. See Prospectus section
captioned "Distribution Plans" for a more complete description of the Plans.
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. The
Company will not purchase securities from Stephens, Wells Fargo Bank, or their
respective affiliates, as principal, without an exemptive order from the SEC.
SERVICING AGENTS
The Fund may enter into servicing agreements with one or more servicing
agents on behalf of Class D Shares of the Fund. Under such agreements, servicing
agents provide shareholder liaison services, which may include responding to
customer inquiries and providing information on shareholder investments, and
provide such related services as the Fund or a Class D Shareholder may
reasonably request. For these services, a servicing agent receives a fee which
will not exceed, on an annualized basis for the Fund's then current fiscal year,
0.25% of the average daily net assets of the Class D Shares of the Fund
represented by Class D Shares owned by investors with whom the servicing agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the servicing agent under applicable laws, regulations or rules,
whichever is less.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a class
of the Fund is the value of total net assets attributable to each class divided
by the number of outstanding shares of that class. The value of net assets per
class is determined daily by adjusting the net assets per class at the beginning
of the day by the value of each class's shareholder activity, net investment
income and net realized and unrealized gains or losses for that day. Net
investment income is calculated each day for each class by attributing to each
class a pro rata share of daily income and common expenses, and by assigning
class-specific expenses to each class as appropriate. The net asset value of
each class is expected to fluctuate daily.
The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as the "close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt obligations with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices are not readily available, at fair value as
determined in good faith by the Board of Directors. Prices used for such
valuations may be provided by independent pricing services.
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<PAGE> 256
PERFORMANCE DATA
From time to time, the Company may advertise yield and total return
information with respect to a class of shares of the Fund. Total return and
yield information of a class of shares are based on the historical earnings and
performance of such class of shares and should not be considered representative
of future performance.
The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge of the class of shares) of one share of the class of
shares at the beginning of the period, from (ii) the net asset value of all
shares for the class of shares an investor would own at the end of the period
for the share held at the beginning of the period (assuming reinvestment of all
dividends and capital gain distributions), and dividing by (iii) the public
offering price per share of the class of shares at the beginning of the period.
The resulting percentage indicates the positive or negative rate of return that
an investor would have earned from reinvested dividends and capital gain
distributions and changes in share price during the period for the class of
shares. The Fund may also, at times, calculate total return of a class of shares
based on net asset value per share of a class of shares (rather than the public
offering price), in which case the figures would not reflect the effect of any
sales charges that would have been paid by an investor in the class of shares,
or by assuming that a sales charge other than the maximum sales charge
(reflecting the Volume Discounts set forth below) is assessed, provided that
total return data derived pursuant to the calculation described above are also
presented.
The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. For purposes of sales
literature, these yields may also, at times, be calculated on the basis of the
net asset value per share of the class (rather than the public offering price),
in which case the figures would not reflect the effect of any sales charges that
would have been paid by an investor in the class of shares, or by assuming that
a sales charge other than the maximum sales charge (reflecting the Volume
Discounts set forth below) is assessed, provided that yield data derived
pursuant to the calculation described above are also presented. The Fund's
Annual Report contains additional performance information and is available upon
request without charge from the Fund.
Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
differ from the net yield on Class A Shares. Performance information quotations
will be computed separately for Class A Shares and Class D Shares.
Additional information about the performance of the Fund is contained in
the Annual Report for the Fund. The Annual Report may be obtained free of charge
by calling the Company at 800-552-9612.
PURCHASE OF SHARES
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,
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a "Holiday"). When any Holiday falls on a Saturday, the Exchange usually is
closed the preceding Friday, and when any Holiday falls on a Sunday, the
Exchange is closed the following Monday.
In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for an investment by a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is $100. The minimum initial or subsequent purchase
amount requirements may be waived or lowered for investments effected on a group
basis by certain entities and their employees, such as pursuant to a payroll
deduction or other accumulation plan. The Company reserves the right to reject
any purchase order. All funds, net of sales loads, will be invested in full and
fractional shares. Checks will be accepted for the purchase of the Fund's shares
subject to collection at full face value in U.S. dollars. Inquiries may be
directed to the Company at the address or telephone number on the front cover of
the Prospectus.
Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until settlement date, currently five business days after
the order is placed. Effective June 7, 1995, the settlement date will normally
be three 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 purchased through the Transfer Agent is
by a check that is drawn on any domestic bank, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.
When shares of the Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as the Dealer Allowance. Stephens has established a non-cash compensation
program, pursuant to which broker/dealers or financial institutions that sell
shares of the Fund may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.
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Sales loads relating to the purchase of Class A Shares in the Fund are as
follows:
<TABLE>
<CAPTION>
DEALER
CLASS A SHARES SALES LOAD SALES LOAD ALLOWANCE
-------------- AS % OF AS % OF AS % OF
AMOUNT OF OFFERING NET AMOUNT OFFERING
PURCHASE PRICE INVESTED PRICE
--------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000......................................... 4.50% 4.71% 4.05%
$100,000 up to $199,999.................................... 4.00 4.17 3.60
$200,000 up to $399,999.................................... 3.50 3.63 3.15
$400,000 up to $599,999.................................... 2.50 2.56 2.25
$600,000 up to $799,999.................................... 2.00 2.04 1.80
$800,000 up to $999,999.................................... 1.00 1.01 0.90
$1,000,000 up to $2,499,999................................ 0.60 0.60 0.50
$2,500,000 up to $4,999,999................................ 0.40 0.40 0.40
$5,000,000 up to $8,999,999................................ 0.25 0.25 0.25
$9,000,000 and over........................................ 0.00 0.00 0.00
</TABLE>
Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.
A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class D Shares.
REDUCED SALES CHARGE -- CLASS A SHARES
The above Volume Discounts are also available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of other portfolios of the Company which assess a sales load (the "Load Funds").
Because Class D Shares are not subject to a front-end sales charge, the amount
of Class D Shares you hold is not considered in determining any volume discount.
The Right of Accumulation allows you to combine the amount being invested
in Class A Shares in the Fund with the total net asset value of Class A Shares
in any of the Load Funds to determine reduced sales loads in accordance with the
above sales load schedule. For example, if you own Class A Shares of the Load
Funds with an aggregate net asset value of $90,000 and invest an additional
$20,000 in Class A Shares of the Fund, the sales load on the entire additional
amount would be 4.00% of the offering price. To obtain such discount, you must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales load, and confirmation of the
order is subject to such 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
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<PAGE> 259
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 Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference. In addition, the Class A Shares of the investment portfolio
to be acquired must be registered for sale in your state of residence. The
amount that may be so reinvested may not exceed the amount of the redemption
proceeds, and a written order for the purchase of the Class A Shares must be
received by the Fund or the Transfer Agent within 120 days after the effective
date of the redemption.
If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of the loss to
be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment and 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, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent of more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses 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
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) maintained,
managed or advised by Wells Fargo Bank or Stephens or their affiliates. In
addition, Class A Shares also
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<PAGE> 260
may be purchased at net asset value by pension, profit sharing or other employee
benefit plans established under Section 401 of the Code.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by the following types
of investors that place trades through an omnibus account maintained at the Fund
by a discount broker/dealer: trust companies; investment advisers and financial
planners on behalf of their clients; retirement and deferred compensation plans
and the trusts used to fund these plans.
By investing in the Fund, you appoint the Transfer Agent, as agent, to
establish an open account to which all shares purchased will be credited,
together with any dividends and capital gain distributions that are paid in
additional shares. See "Dividends and Distributions." Although most shareholders
elect not to receive stock certificates, certificates for full shares of the
Fund can be obtained on request. It is more complicated to redeem shares held in
certificated form, and the expedited redemption described below is not available
with respect to certificated shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES
Class D Shares which are redeemed within one year of receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 1.00% of an amount equal to the lesser of the net asset value at the
time of purchase for the Class D Shares being redeemed or the net asset value of
such shares at the time of redemption. Accordingly, a contingent deferred sales
charge will not be imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase. In addition a charge will not
be assessed on Class D Shares purchased through reinvestment of dividends or
capital gains distributions. In determining whether a contingent deferred sales
charge is applicable to a redemption, Class D Shares are considered to be
redeemed on a first-in, first-out basis so that Class D Shares held for a longer
period of time are considered redeemed prior to more recently acquired shares.
The contingent deferred sales charge is waived on redemptions of Class D
Shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has reached age 70 1/2, (iii) effected pursuant to the
Company's right to liquidate a shareholder's account if the aggregate net asset
value of the shareholder's account is less than the minimum account size, or
(iv) in connection with the combination of the Company with any other registered
investment company by a merger, acquisition of assets, or by any other
reorganization transaction.
Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors, including those who are entitled to purchase Class A Shares of the
Fund at a reduced sales load, should compare the fees assessed on Class A Shares
against those assessed on Class D Shares (including potential contingent
deferred sales charges and higher Rule 12b-1 fees) in light of the amount to be
invested and the anticipated time that the shares will be owned.
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<PAGE> 261
Shares of the Fund may be purchased by any of the methods described below.
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the class of shares to be purchased, the name(s)
in which the shares are to be registered, the address and social security 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 to transmit the specified amount in federal
funds ($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000462
Attention: Overland Express U.S. Government Income Fund (designate Class
A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
3. A completed Account Application should be mailed, or sent by
telefacsimile with the original subsequently mailed, to the following address
immediately after the funds are wired and must be received and accepted by the
Transfer Agent before an account can be opened:
Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082
4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, the net asset value, next determined after the Account
Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express U.S. Government Income Fund (designate Class A or D)" at its
mailing address set forth above.
ADDITIONAL PURCHASES
Additional purchases of $100 or more may be made by instructing the Funds'
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express U.S. Government Income Fund (designate Class A or D)" to
the above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.
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<PAGE> 262
SYSTEMATIC PURCHASE PLAN
The Company's Systematic Purchase Plan provides you with a convenient way
to establish and add to your existing accounts on a monthly basis. If you elect
to participate in this plan, you must specify an amount ($100 or more) to be
withdrawn automatically by the Transfer Agent on a monthly basis from a
designated bank account (provided your bank is a participant in the automated
clearing house system). The Transfer Agent withdraws and uses this amount to
purchase shares of the Fund on or about the fifth business day of each month.
There are no additional fees charged for participating in this plan.
You may change the investment amount, suspend purchases or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if the designated bank account balance is insufficient
to make a scheduled withdrawal, or if either the designated bank account or your
account is closed.
PURCHASES THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Purchase orders for shares in the Fund placed through authorized
broker/dealers and financial institutions by the close of the Exchange on any
day that the Fund's shares are offered for sale, including orders for which
payment is to be made from free cash credit balances in securities accounts held
by a dealer, will be effective on the same day the order is placed if received
by the Transfer Agent before the close of business. Purchase orders that are
received by a dealer or financial institution after the close of the Exchange or
by the Transfer Agent after the close of business generally will be effective on
the next day that shares are offered. The broker/dealer or financial institution
is responsible for the prompt transmission of purchase orders to the Transfer
Agent. Payment for Fund shares is not due until settlement date. Broker/dealers
and financial institutions may benefit from the temporary use of payments to the
Fund during the settlement period. A broker/dealer or financial institution that
is involved in a purchase transaction may charge separate account, service or
transaction fees. Financial institutions may be required to register as dealers
pursuant to applicable state securities laws, which may differ from federal law
and any interpretations expressed herein.
EXCHANGE PRIVILEGES
You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market Fund, the Money Market Fund or the U.S. Treasury Money
Market Fund in an identically registered account at respective net asset values,
provided that, if the other investment portfolio charges a sales load on the
purchase of the class of shares being exchanged that is higher than the sales
load that you have paid in connection with the shares you are exchanging, you
pay the difference. Class D Shares of the Fund may be exchanged for Class D
Shares of one of the Company's other investment portfolios that offer Class D
Shares or for Class A Shares of the Money Market Fund in an identically
registered account at respective net asset values. You are not charged a
contingent deferred sales charge on exchanges of Class D Shares for shares of
the same class of another of the Company's investment portfolios or for Class A
Shares of the Money Market Fund. If you exchange Class D Shares of an investment
portfolio for shares of the same class of another investment portfolio, or for
Class A Shares of the Money Market Fund, the remaining period of time (if any)
that the
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<PAGE> 263
contingent deferred sales charge is in effect will be computed from the time of
the initial purchase of the previously held shares. Accordingly, if you exchange
Class D Shares of an investment portfolio for Class A Shares of the Money Market
Fund, and redeem the shares of the Money Market Fund within one year of the
receipt of the purchase order for the exchanged Class D Shares, you will have to
pay a deferred sales charge equal to the contingent deferred sales charge
applicable to the previously exchanged Class D Shares. If you exchange Class D
Shares of an investment portfolio for Class A Shares of the Money Market Fund,
you may subsequently re-exchange the Class A Shares of the Money Market Fund
only for Class D Shares. If you re-exchange the Class A Shares of the Money
Market Fund for Class D Shares of an investment portfolio, the remaining period
of time (if any) that the contingent deferred sales charge is in effect will be
computed from the time of your initial purchase of Class D Shares. In addition,
shares of the investment portfolio to be acquired must be registered for sale in
your state of residence. You should obtain, read and retain the Prospectus for
the investment portfolio which you desire to exchange into before submitting an
exchange order.
You may exchange shares by writing the Transfer Agent as indicated below
under Redemption by Mail, or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or Servicing Agent, unless you have
elected not to authorize telephone exchanges in the Account Application (in
which case you may subsequently authorize such telephone exchanges by completing
a Telephone Exchange Authorization Form and submitting it to the Transfer Agent
in advance of the first such exchange). Shares held in certificated form may not
be exchanged by telephone. The Transfer Agent's number for exchanges is (800)
572-7797.
Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to reject any telephone exchange order or otherwise to modify or
discontinue exchange privileges at any time. Under SEC rules, 60 days prior
notice of any amendments or termination of exchange privileges will be given to
shareholders, except under certain extraordinary circumstances. A capital gain
or loss for tax purposes may be realized upon an exchange, depending upon the
cost or other basis of shares redeemed.
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.
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<PAGE> 264
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a request in proper form by the Transfer Agent directly or through
any authorized broker/dealer or financial institution.
Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on that day will be executed at the net asset value
per share determined at the close of the Exchange on that day. Redemption orders
received by authorized broker/dealers or financial institutions after the close
of the Exchange, or not received by the Transfer Agent prior to the close of
business, will be executed at the net asset value determined at the close of the
Exchange on the next business day.
Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the Company to be a period of 15
days after investment. The proceeds, of course, may be more or less than cost.
Payment of redemption proceeds may be made in securities, subject to regulation
by some state securities commissions.
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount 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."
14
<PAGE> 265
Unless other instructions are given in proper form, a check for the
proceeds of redemption, net of any contingent deferred sales charge applicable
with respect to Class D Shares, will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate, and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan,
specify an amount ($100 or more) to be distributed by check to your address of
record or deposited in a designated bank account. The Transfer Agent redeems
sufficient shares and mails or deposits the proceeds of the redemption, net of
any contingent deferred sales charge applicable with respect to Class D Shares,
as instructed, on or about the fifth business day prior to the end of each
month. There are no additional fees charged for participating in this plan.
You may change the withdrawal amount, suspend withdrawals or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to a scheduled transaction. An election will be
terminated automatically if your account balance is insufficient to make a
scheduled withdrawal or if your 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 elected not to
authorize telephone redemptions on your Account Application or another form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.
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 Purchases of Fund Shares by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more, net of
any contingent deferred sales charge applicable with respect to Class D Shares,
will be wired or credited to the bank indicated in your Account Application 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
15
<PAGE> 266
record, except that, in the case of investments in the Company that have been
effected through broker/dealers, banks and other institutions that have entered
into special arrangements with the Company, the full amount of the redemption
proceeds may be transmitted by wire or credited to a designated account.
REDEMPTIONS THROUGH AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS
Redemption requests placed through authorized broker/dealers and financial
institutions by the close of the Exchange on any day that the Fund's shares are
offered for sale will be effective on the same day the request is placed if
received by the Transfer Agent before the close of business. Redemption requests
that are received by a dealer or financial institution after the close of the
Exchange or by the Transfer Agent after the close of business generally will be
effective on the next day that shares are offered. The broker/dealer or
financial institution is responsible for the prompt transmission of redemption
requests to the Transfer Agent. Unless you have made other arrangements, and
have informed the Transfer Agent of such arrangements, proceeds of redemptions
made through authorized broker/dealers and financial institutions will be
credited to your account with such broker/dealer or institution. You may request
a check from your broker/dealer or financial institution or may elect to retain
the redemption proceeds in your account. The broker/dealer or financial
institution may benefit from the use of the redemption proceeds prior to the
clearance of a check issued to you for such proceeds or prior to disbursement or
reinvestment of such proceeds on your behalf.
------------------------
The proceeds of 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.
16
<PAGE> 267
DISTRIBUTION PLANS
The Company's Board of Directors has adopted a Plan on behalf of each class
of shares of the Fund. Under the Plans and pursuant to the Distribution
Agreement, the Fund may defray all or part of the cost of preparing and printing
prospectuses and other promotional materials, and of delivering prospectuses and
those materials to prospective shareholders of the Fund, by paying on an annual
basis up to the greater of $100,000 or 0.05% of the average daily net assets of
the Class A Shares of the Fund and a monthly fee at an annual rate of 0.50% of
the average daily net assets of the Class D Shares of the Fund to the
distributor. Under the Plan for the Class D Shares of the Fund, the distributor
may enter into selling agreements with one or more selling agents under which
such agents may receive compensation for distribution-related services from the
distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Class D Shares attributable
to them. The distributor may retain any portion of the total distribution fee
payable under the Plans to compensate it for distribution-related services
provided by it or to reimburse it for other distribution-related expenses. The
Plans provide only for the reimbursement of actual expenses. The Fund may
participate in joint distribution activities with any other class or portfolio
of the Company, in which event expenses reimbursed out of the assets of the Fund
may be attributable, in part, to the distribution-related activities of another
portfolio. Generally, the expenses attributable to joint distribution activities
will be allocated among the Fund, and any other portfolio of the Company in
proportion to their relative net asset sizes, although the Board of Directors
may allocate such expenses in any other manner that it deems fair and equitable.
SERVICING PLAN
The Company's Board of Directors has adopted a servicing plan ("Servicing
Plan") on behalf of the Class D Shares of the Fund. Pursuant to the Servicing
Plan the Fund may enter into servicing agreements with one or more servicing
agents who agree to provide administrative support services to their customers
who are the record or beneficial owners of Class D Shares. Such servicing agents
will be compensated at an annual rate of up to 0.25% of the average daily net
asset value of the Class D Shares held of record or beneficially by such
customers.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare as a dividend to all shareholders of record
substantially all of its net investment income at the close of each business day
to shareholders of record at 4:00 p.m. (New York time) on the day of
declaration. Shares purchased in the Fund will begin earning dividends on the
business day following the date the purchase order settles and shares redeemed
will earn dividends through the date of redemption. Net investment income for a
Saturday, Sunday or holiday will be declared as a dividend to shareholders of
record at 4:00 p.m. (New York time) on the prior business day.
Dividends of the Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of the Fund who redeem shares
prior to a dividend payment date will be entitled to all dividends declared but
unpaid prior to redemption on such shares on the next dividend payment date.
Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).
17
<PAGE> 268
Dividends and/or capital gain distributions paid by the Fund will be
invested in additional shares of the same class of the Fund at net asset value
(without any sales load) and credited to your account on the reinvestment date
or, at your election, paid by check. Dividend checks and Statements of Account
will be mailed within approximately three business days after the payment date.
In addition, you may elect to reinvest Fund dividends and/or capital gain
distributions in shares of another fund in the Overland Express Family of Funds
with which you have an established account that has met the applicable minimum
initial investment requirement.
The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of shareholder servicing fees
payable to shareholder servicing agents under the Servicing Plan and by the
incremental distribution fees payable under the Distribution Plan. There may be
certain other differences in fees (e.g. audit fees, transfer agent fees) between
Class A Shares and Class D Shares that would affect their relative dividends.
TAXES
By complying with the applicable provisions of the Code, the Fund will not
be subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to its shareholders. However, 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 Fund
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 the Fund which
are held under a qualified tax-deferred retirement plan. The Fund intends to pay
out substantially all of its net investment income and net realized capital
gains (if any) for each year. The Fund's dividends will not qualify for the
dividends-received deduction allowed to corporate shareholders.
The Fund, or your Shareholder Servicing Agent on its behalf, will inform
you of the amount and nature of Fund dividends and capital gains. You should
keep all statements you receive to assist in your personal recordkeeping. The
Company is required by federal law to withhold, subject to certain exemptions,
at a rate of 31% on 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.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAI.
Further federal tax considerations are discussed in the SAI. All investors
should consult their individual tax advisors with respect to their particular
tax situations as well as the state and local tax status of investments in
shares of the Fund.
18
<PAGE> 269
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank, N.A. has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94163 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers twelve series of shares, each representing an interest in one
of the funds in the Overland Express Family of Funds -- the Asset Allocation
Fund, the California Tax-Free Bond Fund, the California Tax-Free Money Market
Fund, the Money Market Fund, the Municipal Income Fund, the Overland Sweep Fund,
the Short-Term Government-Corporate Income Fund, the Short-Term Municipal Income
Fund, the Strategic Growth Fund, the U.S. Government Income Fund, the U.S.
Treasury Money Market Fund and the Variable Rate Government Fund. The Board of
Directors may, in the future, authorize the issuance of other series of capital
stock representing shares of additional investment portfolios or funds. All
shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required by the 1940 Act to elect Directors; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors. A more detailed statement of the
voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.
19
<PAGE> 270
<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. U.S. GOVERNMENT INCOME 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. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 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)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 271
<TABLE>
<S> <C>
U.S. GOVERNMENT INCOME FUND
LOGO 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 D Shares (not available for purchases of $9,000,000 or more)
Note: If no choice is indicated, Class A Shares will be selected.
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express U.S. Government Income Fund (designate Class A
or D))
/ / Funds have been wired to 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 Withdrawal Amount: $ (minimum $100)
----------------
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
- ------------------------------------------------------------------------------------------------------------------------------------
3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bank Name
---------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
---------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 272
<TABLE>
<S> <C>
U.S. GOVERNMENT INCOME 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 Family of Funds.
/ / Invest capital gain distributions in Account # of Fund
----------------- -----------------
of the Overland Express Family of 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)
</TABLE>
<PAGE> 273
<TABLE>
<S> <C>
U.S. GOVERNMENT INCOME FUND
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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 274
<TABLE>
<S> <C>
U.S. GOVERNMENT INCOME 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.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
--------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
--------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
--------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
--------------------------------------------------------- -----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 275
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT FUNDS,
SIMPLY CALL (800) 552-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
LOGO
------------------------
PROSPECTUS
------------------------
U.S. Government Income Fund
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
76P 5/95
<PAGE> 276
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND
STATEMENT OF ADDITIONAL INFORMATION OF EACH FUND OF
OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
(OEX SUPP 1/96)
<PAGE> 277
LOGO
Telephone: (800) 552-9612
Stephens Inc. -- Sponsor, Administrator and Distributor
Wells Fargo Bank, N.A. -- Investment Adviser, Transfer and Dividend Disbursing
Agent and Custodian
Overland Express Funds, Inc. (the "Company") is a professionally managed,
open-end, series investment company. This Prospectus contains information about
one of the funds in the Overland Express Family of Funds -- the VARIABLE RATE
GOVERNMENT FUND (the "Fund").
The Fund seeks to earn a high level of current income, while reducing
principal volatility, by investing primarily in adjustable rate mortgage
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities.
This Prospectus describes two classes of shares of the Fund -- Class A
Shares and Class D Shares.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1995, containing additional and more detailed information about the
Fund (the "SAI"), 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 the
telephone number printed above.
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INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
AND RETAIN IT FOR FUTURE REFERENCE.
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FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO
BANK") OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY.
AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER
SERVICES TO THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS INC.
V("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO
BANK, IS THE SPONSOR AND DISTRIBUTOR FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 1, 1995
<PAGE> 278
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................... ii
Summary of Expenses........................................................................ v
Financial Highlights....................................................................... vii
Investment Objective and Policies.......................................................... 1
Additional Permitted Investment Activities................................................. 3
Advisory, Administration and Distribution Arrangements..................................... 4
Determination of Net Asset Value........................................................... 6
Purchase of Shares......................................................................... 7
Exchange Privileges........................................................................ 13
Redemption of Shares....................................................................... 14
Distribution Plans......................................................................... 17
Servicing Plan............................................................................. 17
Dividends and Distributions................................................................ 17
Taxes...................................................................................... 18
Custodian and Transfer and Dividend Disbursing Agent....................................... 19
Organization and Capital Stock............................................................. 19
</TABLE>
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PROSPECTUS SUMMARY
The Company, as an open-end investment company, provides a convenient way
for you to invest in portfolios of securities selected and supervised by
professional management. The following provides information about the Fund and
its investment objective.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The VARIABLE RATE GOVERNMENT FUND seeks to earn a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities ("ARMS") issued or guaranteed by the
U.S. Government, its agencies and instrumentalities. As with all mutual
funds, there can be no assurance that the Fund will achieve its investment
objective. See "Investment Objective and Policies."
Q. WHAT ARE PERMISSIBLE INVESTMENTS?
A. This Fund invests primarily in adjustable rate mortgage securities
("ARMS") issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (including government-sponsored enterprises), including
the Government National Mortgage Association ("GNMA"), the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). The Fund also may invest in the adjustable rate
portions of collateralized mortgage obligations ("CMOs") issued by
government agencies or instrumentalities, including primarily FNMA and
FHLMC, and collateralized by pools of mortgage loans.
Q. WHO IS THE INVESTMENT ADVISER?
A. Wells Fargo Bank serves as the investment adviser of the Fund. Wells
Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.50% of the average daily net assets of the Fund. See "Advisory,
Administration and Distribution Arrangements."
Q. WHO IS THE SPONSOR, ADMINISTRATOR AND DISTRIBUTOR?
A. Stephens serves as the sponsor, administrator and distributor for the
Company. Stephens is entitled to receive a monthly administration fee at
the annual rate of 0.15% of the first $200 million of the average daily
net assets of the Fund and 0.10% of the average daily net assets of the
Fund in excess of $200 million. See "Advisory, Administration and
Distribution Arrangements."
Q. HOW MAY I PURCHASE SHARES?
A. Shares of the Fund may be purchased on any day the New York Stock
Exchange (the "Exchange") is open for trading. There is a maximum sales
load of 3.00% (3.09% of the net amount invested) for purchasing Class A
Shares of the Fund. Class D Shares are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at
purchase or net asset value at redemption. In most cases, the minimum
initial purchase amount for the Fund is $1,000. The minimum purchase
amount is $100 for shares purchased through the Systematic Purchase Plan
and $250 for shares purchased through qualified retirement plans. The
minimum subsequent purchase amount is $100 or more. You may purchase
shares of the Fund through Stephens, Wells Fargo Bank, as transfer agent
(the "Transfer Agent"), or any authorized broker/dealer or financial
institution. Purchases of shares of the Fund may be made by wire directly
to the Transfer Agent. The Fund pays the distributor a monthly fee at an
annual rate of up to 0.25% of the Fund's average daily net assets
attributable to Class A Shares and a monthly fee at an annual rate of up
to 0.50% of the Fund's average daily net assets attributable to Class D
Shares to compensate the distributor for distribution-
ii
<PAGE> 280
related services provided by it or to reimburse it for other
distribution-related expenses. See "Purchase of Shares" and "Distribution
Plans." The Fund may also pay servicing agents a fee at an annual rate of
up to 0.25% of the Fund's average daily net assets attributable to Class D
Shares to compensate them for certain services. See "Servicing Plan."
Q. HOW WILL I RECEIVE DIVIDENDS?
A. Dividends on shares of the Fund are declared daily and paid quarterly.
Dividends are automatically reinvested in additional shares of the same
class of the Fund unless you elect to receive dividends by check. Any
capital gains will be distributed annually and may be reinvested in Fund
shares of the same class or paid by check at your election. All
reinvestments of dividends and/or capital gain distributions in shares of
the Fund are effected at the then current net asset value free of any
sales load. In addition, you may elect to reinvest Fund dividends and/or
capital gain distributions in shares of the same class of another fund in
the Overland Express Family of Funds with which you have an established
account that has met the applicable minimum initial investment
requirement. The net investment income available for distribution to
holders of the Fund's Class D Shares is reduced by the amount of
servicing fees payable to servicing agents under the Servicing Plan (as
defined below). See "Dividends and Distributions."
Q. HOW MAY I REDEEM SHARES?
A. On any day the Exchange is open, shares may be redeemed upon request to
Stephens or the Transfer Agent directly or through any authorized
broker/dealer or financial institution. Shares may be redeemed by a
request in good form in writing or through telephone direction. Proceeds
are payable by check. Accounts of less than the applicable minimum initial
purchase amount may be redeemed at the option of the Company. Except for
any contingent deferred sales charge which may be applicable upon
redemption of Class D Shares, the Company does not charge for redeeming
its shares. However, the Company reserves the right to impose charges for
wiring redemption proceeds. See "Redemption of Shares."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE
FUND?
A. An investment in the Fund is not insured against loss of principal.
Although the ARMS in the Fund's portfolio are guaranteed by the U.S.
Government, its agencies or instrumentalities (including
government-sponsored enterprises), the market value of these securities,
upon which the Fund's daily net asset value is based, will fluctuate,
because the Fund is subject to interest rate risk. Interest rate risk is
the risk that increases in market interest rates may adversely affect the
value of the securities in which the Fund invests, and hence the value of
your investment in the Fund. The values of such securities generally
change inversely to changes in market interest rates. However, the
adjustable rate feature of the mortgages underlying the ARMS and the CMOs
in which the Fund invests should reduce, but not eliminate, price
fluctuations in such securities. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
enterprises such as FNMA and FHLMC in the event of a default in payment on
the underlying mortgages which such entity is unable to satisfy. Some of
the Fund's investments may be subject to credit risks, which is the risk
that an issuer may default on the payment of principal and/or interest. As
with all mutual funds, there can be no assurance that the Fund will
achieve its investment objective. You should be prepared to accept some
risk with the money you invest in the Fund.
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Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Many of the permissible investments described in this Prospectus,
such as ARMS which have an interest rate that is reset periodically based
on an index, are considered derivatives. Some derivatives may be more
sensitive than direct securities to changes in interest rates or sudden
market moves. Some derivatives also may be susceptible to fluctuations in
yield or value due to their structure or contract terms.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to the Fund, uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund
to undue risks and is closely monitored. These procedures include
providing periodic reports to the Board of Directors concerning the use of
derivatives. Derivatives use by the Fund also is subject to broadly
applicable investment policies. For example, the Fund may not invest more
than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor
may the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage.
iv
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SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS D SHARES
-------------- --------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)................................................. 3.00% 0.00%
Maximum Deferred Sales Load* (as a percentage of the lesser of net
asset value at purchase or net asset value at redemption)
Redemption during year 1........................................ 0.00% 1.00%
Redemption after year 1......................................... 0.00% 0.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A SHARES CLASS D SHARES
-------------- --------------
<S> <C> <C>
Management Fees(1)................................................ 0.49% 0.49%
12b-1 Fees........................................................ 0.25% 0.50%
Total Other Expenses(1):
Servicing Fees.................................................. 0.00% 0.25%
Other Expenses(1)............................................... 0.11% 0.11%
----- -----
Total Fund Operating Expenses(1)**................................ 0.85% 1.35%
</TABLE>
- ---------------
(1) After any waivers or reimbursements.
EXAMPLES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
Class A Shares of the Fund, assuming (1) a 5% annual return
and (2) redemption at the end of each time period
indicated.................................................... $ 38 $ 56 $ 76 $ 132
You would pay the following expenses on a $1,000 investment in
Class D Shares of the Fund, assuming (1) a 5% annual return
and (2) redemption at the end of each time period
indicated.................................................... $ 24 $ 43 $ 74 $ 162
You would pay the following expenses on the same investment in
Class D Shares of the Fund, assuming no redemption........... $ 14 $ 43 $ 74 $ 162
</TABLE>
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<PAGE> 283
- ------------
* See "Contingent Deferred Sales Charge."
** As further described in the Prospectus under the caption "Advisory,
Administration and Distribution Arrangements," Stephens and Wells Fargo Bank
each has agreed to waive all or a portion of its respective fees in
circumstances where Fund expenses that are subject to limitations imposed
under state securities laws and regulations exceed such limitations. In
addition, Stephens and Wells Fargo Bank each may elect, in its sole
discretion, to otherwise waive all or a portion of its respective fees or
reimburse expenses. Any such waivers or reimbursements would reduce the total
expenses of the Fund. The percentages shown above with respect to Class A and
Class D Shares under "Management Fees," "Total Other Expenses" and "Total
Fund Operating Expenses" are based on amounts incurred during the most recent
fiscal year, restated to reflect voluntary fee waivers and expense
reimbursements that are expected to continue during the current fiscal year.
Absent waivers and reimbursements, "Management Fees", "Total Other Expenses"
and "Total Fund Operating Expenses" with respect to Class A Shares would have
been 0.50%, 0.19% and 0.94%, respectively. Absent waivers and reimbursements,
these percentages, with respect to Class D Shares, would have been 0.50%,
0.55% and 1.55% respectively. Long-term Class A or Class D Shareholders of
the Fund could pay more in distribution related charges than the economic
equivalent of the maximum front-end sales charges applicable to mutual funds
sold by members of the National Association of Securities Dealers, Inc.
("NASD"). There can be no assurances that waivers and reimbursements will
continue.
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The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. There are no other sales loads, redemption fees or exchange fees
charged by the Fund. However, the Company reserves the right to impose charges
for wiring redemption proceeds. The Examples should not be considered a
representation of past or future expenses; actual expenses may be greater or
lesser than those shown. See Prospectus sections captioned "Advisory,
Administration and Distribution Arrangements," "Distribution Plan" and "Purchase
of Shares" for more complete descriptions of the various costs and expenses
applicable to the Fund.
vi
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FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Fund's 1994 annual financial statements. The financial statements are
incorporated by reference into the SAI and have been audited by KPMG Peat
Marwick LLP, independent auditors, whose report dated February 17, 1995 also is
incorporated by reference in the SAI. This information should be read in
conjunction with the Fund's 1994 annual financial statements and the notes
thereto. The SAI has been incorporated by reference into this Prospectus.
VARIABLE RATE GOVERNMENT FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992 1991 1990*
---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 9.99 $ 9.95 $10.13 $10.12 $10.00
Income From Investment Operations:
Net Investment Income/(Loss)....... 0.43 0.44 0.59 0.78 0.08
Net Realized and Unrealized
Gain/(Loss) on Investments....... (0.80) 0.04 (0.18) 0.01 0.12
---------- ---------- ---------- --------- --------
Total From Investment Operations... (0.37) 0.48 0.41 0.79 0.20
Less Distributions:
Dividends From Net Investment
Income........................... (0.43) (0.44) (0.59) (0.78) (0.08)
Distributions From Net Realized
Capital Gain..................... 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- --------- --------
Total Distributions................ (0.43) (0.44) (0.59) (0.78) (0.08)
Net Asset Value, End of Period..... $ 9.19 $ 9.99 $ 9.95 $10.13 $10.12
========== ========== ========== ========= ========
Total Return (not annualized)+..... (3.81)% 4.87% 4.23% 8.60% 2.75%
Ratios/Supplemental Data:
Net Assets, End of Period (000).... $1,215,546 $1,949,013 $2,559,363 $566,840 $6,858
Number of Shares Outstanding, End
of Period (000).................. 132,256 195,132 257,238 55,933 678
Ratios to Average Net Assets
(annualized):
Ratio of Expenses to Average Net
Assets(1)........................ 0.79% 0.76% 0.75% 0.50% 0.00%
Ratio of Net Investment Income to
Average Net Assets(2)............ 4.40% 4.37% 5.62% 7.36% 4.93%
Portfolio Turnover................. 164% 201% 197% 250% N/A**
- ---------------
(1) Ratio of Expenses to Average
Net Assets Prior to Waived Fees
and Reimbursed Expenses........ 0.94% 0.95% 0.94% 1.08% 5.48%
(2) Ratio of Net Investment Income
to Average Net Assets Prior to
Waived Fees and Reimbursed
Expenses....................... 4.25% 4.18% 5.43% 6.78% (0.55)%
</TABLE>
+ Total Returns do not include any sales charges.
* The Fund commenced operations on November 1, 1990.
** The Fund sold no securities during the period.
vii
<PAGE> 285
VARIABLE RATE GOVERNMENT FUND
FOR CLASS D SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DEC. 31, DEC. 31,
1994 1993*
-------- --------
<S> <C> <C>
Net Asset Value, Beginning of Period...................................... $ 14.93 $ 15.00
Income From Investment Operations:
Net Investment Income/(Loss).............................................. 0.57 0.27
Net Realized and Unrealized Capital Gain/(Loss) on Investments............ (1.19) (0.07)
-------- --------
Total From Investment Operations.......................................... (0.62) 0.20
Less Distributions:
Dividends From Net Investment Income...................................... (0.57) (0.27)
Distributions From Net Realized Capital Gain.............................. 0.00 0.00
-------- --------
Total Distributions....................................................... (0.57) (0.27)
Net Asset Value, End of Period............................................ $ 13.75 $ 14.93
======== ========
Total Return (not annualized)+............................................ (4.25%) 1.32%
Ratios/Supplemental Data:
Net Assets, End of Period (000)........................................... $ 12,220 $ 11,319
Number of Shares Outstanding, End of Period (000)......................... 889 758
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(1)................................ 1.29% 1.26%
Ratio of Net Investment Income to Average Net Assets(2)................... 3.94% 3.41%
Portfolio Turnover........................................................ 164% 201%
- ---------------
(1) Ratio of Expenses to Average Net Assets Prior to Waived Fees and
Reimbursed Expenses................................................... 1.55% 1.75%
(2) Ratio of Net Investment Income to Average Net Assets Prior to Waived
Fees and Reimbursed Expenses.......................................... 3.68% 2.92%
</TABLE>
* The Class commenced operations on July 1, 1993.
+ Total Returns do not include the 1% contingent deferred sales charge.
viii
<PAGE> 286
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE -- The Fund seeks to earn a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities ("ARMS") issued or guaranteed by the U.S.
Government, its agencies and instrumentalities. As with all mutual funds, there
can be no assurance that the Fund, which is a diversified portfolio, will
achieve its investment objective.
The Fund may invest in obligations of any maturity. Under ordinary
circumstances, the dollar weighted average maturity of the Fund's portfolio is
expected to be between 20 and 30 years. However, under unusual circumstances,
the weighted average maturity of the portfolio may be shorter than 20 years. At
least 65% of the value of the total assets of the Fund will, under normal
circumstances, be invested in ARMS issued or guaranteed by the U.S. Government,
its agencies or instrumentalities (including government-sponsored enterprises).
The annual portfolio turnover rate for the Fund is not expected to exceed 250%.
Portfolio turnover generally involves some expenses to the Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and the reinvestment in other securities. Portfolio turnover also
can generate short-term capital gains tax consequences.
ARMS are pass-through certificates representing ownership interests in a
pool of adjustable rate mortgages and the resulting cash flow from those
mortgages. The ARMS in which the Fund may invest are issued and guaranteed by
GNMA, FNMA or FHLMC. Unlike conventional debt securities, which provide for
periodic (usually semi-annual) payments of interest and payments of principal at
maturity or on specified call dates, ARMS provide for monthly payments based on
a pro-rata share of both periodic interest and principal payments and
prepayments of principal on the underlying mortgage pool (less GNMA's, FNMA's or
FHLMC's fees and applicable loan servicing fees).
The full and timely payment of principal and interest on GNMA ARMS is
guaranteed by GNMA and backed by the full faith and credit of the U.S.
Government. FNMA also guarantees full and timely payment of both interest and
principal, while FHLMC guarantees full and timely payment of interest and
ultimate payment of principal. FNMA and FHLMC ARMS are not backed by the full
faith and credit of the United States. However, because FNMA and FHLMC are
government-sponsored enterprises, these securities are high quality investments
that present minimal credit risks. The yields provided by these ARMS have
historically exceeded the yields on other types of U.S. Government securities
with comparable maturities, although there can be no assurance that this
historical performance will continue.
The mortgages underlying ARMS guaranteed by GNMA are fully insured or
guaranteed by the Federal Housing Administration, the Veterans Administration or
the Farmers Home Administration, while those underlying ARMS issued by FNMA or
FHLMC are typically conventional residential mortgages which are not so insured
or guaranteed, but which conform to specific underwriting, size and maturity
standards.
The Fund also may invest in the adjustable rate portions of CMOs issued by
government agencies, instrumentalities or government-sponsored enterprises
including, primarily, FNMA and FHLMC, and collateralized by pools of mortgage
loans. Payments of principal and interest on the collateral mortgages are used
to pay debt service on the CMO. In a CMO, a series of bonds or certificates is
issued in multiple classes. Each class of CMOs, often referred to as a
"tranche," is issued at a specified coupon rate and has a stated maturity or
final distribution date. The principal and interest payment on the underlying
mortgages may be allocated among the classes of CMOs in several ways. Typically,
payments of principal, including any prepayments, on the underlying mortgages
would be applied to the classes in the order of their
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<PAGE> 287
respective stated maturities or final distribution dates, so that no payment of
principal will be made on CMOs of a class until all CMOs of other classes having
earlier stated maturities or final distribution dates have been paid in full.
One or more classes of CMOs may have coupon rates that reset periodically based
on an index, such as the London Interbank Offered Rate ("LIBOR"). All CMOs
purchased by the Fund will be rated, at the time of purchase, AAA by Standard &
Poor's Corporation ("S&P") or Aaa by Moody's Investors Service, Inc.
("Moody's"). The Fund will not invest in CMOs that, at the time of purchase, are
"high-risk mortgage securities" as defined in the then current Federal Financial
Institutions Examination Council ("FFIEC") Supervisory Policy Statement on
Securities Activities.
The interest rates on the mortgages underlying the ARMS and the CMOs in
which the Fund may invest generally are readjusted at intervals of one year or
less in response to changes in a predetermined interest rate index. There are
two main categories of indices: those based on U.S. Treasury securities and
those derived from a calculated measure, such as a cost-of-funds index or a
moving average of mortgage rates. Commonly utilized indices include the one-year
and five-year constant maturity Treasury note rates, the three-month Treasury
bill rate, the 180-day Treasury bill rate, rates on longer-term Treasury
securities, the National Median Cost of Funds, the one-month, three-month,
six-month or one-year LIBOR, a published prime rate, or commercial paper rates.
Certain of these indices follow overall market interest rates more closely than
others.
Adjustable rate mortgages, an increasingly common form of residential
financing, generally are originated by banks, mortgage banks and thrift
institutions and have a specified maturity date. Most provide for amortization
of principal in a manner similar to fixed-rate mortgages, but have interest
payment amounts that change in response to changes in a specified interest rate
index. The rate of interest due on such a mortgage is calculated by adding an
agreed-upon "margin" to the specified index, although there generally are
limitations or "caps" on interest rate movements in any given period or over the
life of the mortgage. To the extent that the interest rates on adjustable rate
mortgages that back the ARMS or the CMOs in which the Fund may invest cannot be
adjusted in response to interest rate changes because of such caps, the ARMS or
CMOs are likely to respond to changes in market rates more like fixed rate
securities. In other words, interest rate increases in excess of such caps can
be expected to cause the CMOs or ARMS backed by mortgages that have such caps to
decline in value to a greater extent than would be the case in the absence of
such caps. Conversely, interest rate decreases below such floors can be expected
to cause the CMOs or ARMS backed by mortgages that have such floors to increase
in value to a greater extent than would be the case in the absence of such
floors.
The adjustable rate feature of the mortgages underlying the ARMS and the
CMOs in which the Fund may invest should reduce, but will not eliminate, price
fluctuations in such securities, particularly during periods of extreme
fluctuations in market interest rates. Since the interest rates on many
mortgages underlying ARMS and CMOs are reset on an annual basis and generally
are subject to caps, it can be expected that the prices of such ARMS and CMOs
will fluctuate to the extent prevailing market interest rates are not reflected
in the interest rates payable on the underlying adjustable rate mortgages or the
CMO. In this regard, the net asset value of the Fund's shares could fluctuate to
the extent interest rates on underlying mortgages differ from prevailing market
interest rates during interim periods between interest rate reset dates.
Accordingly, investors could experience some principal loss or less gain than
might otherwise be achieved if they redeem their shares of the Fund before the
interest rates on the mortgages underlying the Fund's portfolio securities are
adjusted to reflect prevailing market interest rate.
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<PAGE> 288
The holder of ARMS and certain CMOs receives not only monthly scheduled
payments of principal and interest, but also may receive unscheduled principal
payments representing prepayments on the underlying mortgages. An investor,
therefore, may have to reinvest the periodic payments and any unscheduled
prepayments of principal it receives at a rate of interest which is lower than
the rate on the ARMS and CMOs held by it.
The Fund also may invest cash balances in U.S. Treasury securities with
remaining maturities of two years or less. As described further in the SAI,
certain securities in which the Fund may otherwise invest may be purchased on a
when-issued basis, but the Fund does not presently intend to invest more than 5%
of its net assets in when-issued securities during the coming year. The Fund
will not invest in the shares of other open-end, management investment
companies.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements wherein the seller of a
security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to U.S.
Government obligations and other securities that could otherwise be purchased by
the Fund. All repurchase agreements will be fully collateralized based on values
that are marked to market daily. If the seller defaults and the value of the
underlying securities has declined, the Fund may incur a loss. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
the Fund's disposition of the security may be delayed or limited. The Fund will
only enter into repurchase agreements with registered broker/dealers and
commercial banks that meet guidelines established by the Board of Directors and
are not affiliated with the investment adviser. The Fund may participate in
pooled repurchase agreement transactions with other funds advised by Wells Fargo
Bank.
------------------------
The Fund's investment objective, as set forth in the first paragraph of the
section describing the Fund's objective and policies, is fundamental; that is,
the investment objective may not be changed without approval by the vote of the
holders of a majority of the Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI. If the Board of Directors determines, however,
that the Fund's investment objective can best be achieved by a substantive
change in a non-fundamental investment policy or strategy, the Company may make
such change without shareholder approval and will disclose any such material
changes in the then current prospectus.
In addition, as matters of fundamental policy, the Fund may: (i) borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such borrowing exists); (ii) make
loans of portfolio securities; and (iii) invest up to 10% of the current value
of its net assets in repurchase agreements having maturities of more than seven
days, restricted securities and illiquid securities. With respect to fundamental
investment policy (ii), the Fund does not intend to make loans of its portfolio
securities during the coming year.
Additionally, the Fund does not intend to invest in repurchase agreements
having maturities of more than seven days or illiquid securities during the
coming year.
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ADVISORY, ADMINISTRATION AND DISTRIBUTION ARRANGEMENTS
The Board of Directors, in addition to supervising the actions of the
investment adviser, sponsor, administrator and distributor, as set forth below,
decides upon matters of general policy.
INVESTMENT ADVISER
Pursuant to an Advisory Contract, the Fund is advised by Wells Fargo Bank,
420 Montgomery Street, San Francisco, California 94163, a wholly owned
subsidiary of Wells Fargo & Company. Wells Fargo Bank, one of the ten largest
banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1994, various divisions and affiliates
of Wells Fargo Bank provided investment advisory services for approximately $200
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to the other separately managed series of the
Company (other than those structured as "feeder funds"), and to six other
registered open-end management investment companies, each of which consist of
several separately managed investment portfolios.
The Advisory Contract provides that Wells Fargo Bank shall furnish to the
Fund investment guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory Contract, Wells Fargo
Bank furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund.
Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When Wells Fargo Bank determines that a particular security
should be bought or sold for the Fund and other accounts managed by Wells Fargo
Bank, Wells Fargo Bank undertakes to allocate those transactions among the
participants equitably. From time to time, the Fund, to the extent consistent
with its investment objective, policies and restrictions, may invest in
securities of companies with which Wells Fargo Bank has a lending relationship.
For its services under the Advisory Contract, Wells Fargo Bank is entitled
to receive a monthly advisory fee at the annual rate of 0.50% of the average
daily net assets of the Fund. From time to time Wells Fargo Bank may waive such
fee in whole or in part. Any waiver would reduce expenses of the Fund involved
and, accordingly, have a favorable impact on the yield or return of the Fund.
For the year ended December 31, 1994, Wells Fargo Bank was paid 0.41% of the
average daily net assets of the Fund as compensation for its services as
investment adviser.
Mr. Paul Single is responsible for the day-to-day management of the
Variable Rate Government Fund. Mr. Single has managed taxable bond portfolios
for over a decade with specific expertise in mortgage-backed securities. Prior
to joining Wells Fargo Bank in early 1988, he was a senior portfolio manager for
Benham Capital Management Group. Mr. Single received his B.S. from Springfield
College.
Mr. Scott Smith also is responsible for the day-to-day management of the
portfolio of the Variable Rate Government Fund. He joined Wells Fargo Bank in
1988 as a taxable money market portfolio specialist. His experience includes a
position with a private money management firm with mutual fund investment
operations. Mr. Smith holds a B.A. degree from the University of San Diego.
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SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
an agreement with the Fund under which Stephens acts as administrator for the
Fund. For these administrative services, Stephens is entitled to receive from
the Fund a monthly fee at the annual rate of 0.15% of its average daily net
assets; decreasing to 0.10% of the average daily net assets of the Fund in
excess of $200 million. From time to time Stephens may waive fees from the Fund
in whole or in part. Any such waiver will reduce expenses of the Fund and,
accordingly, have a favorable impact on the yield or return of the Fund.
The Administration Agreement between Stephens and the Fund states that
Stephens shall provide as administrative services, among other things, general
supervision of (i) the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
independent auditors and legal counsel; (ii) regulatory compliance, including
the compilation of information for documents such as reports to, and filings
with, the SEC and state securities commissions; and the preparation of proxy
statements and shareholder reports for the Fund; and (iii) general supervision
relative to the compilation of data required for the preparation of periodic
reports distributed to the Company's officers and Board of Directors. Stephens
also furnishes office space and certain facilities required for conducting the
business of the Fund and pays the compensation of the Company's Directors,
officers and employees who are affiliated with Stephens.
Stephens, as the principal underwriter of the Fund within the meaning of
the Investment Company Act of 1940 (the "1940 Act"), has also entered into a
Distribution Agreement with the Company pursuant to which Stephens has the
responsibility for distributing Class A Shares and Class D Shares of the Fund.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of its Class A Shares and Class D Shares and may enter into
selling agreements with broker/dealers or financial institutions to market and
make available Class A Shares and Class D Shares to their respective customers.
Under the Distribution Agreement, Stephens is entitled to receive from the
Fund a monthly fee at an annual rate of up to 0.25% of the average daily net
assets of the Class A Shares of the Fund and a monthly fee at an annual rate of
up to 0.50% of the average daily net assets of the Class D Shares of the Fund.
The actual fee payable to Stephens is determined, within such limits, from time
to time by mutual agreement between the Company and Stephens, and may not exceed
the maximum amount payable under the Rules of Fair Practice of the NASD.
Stephens may enter into selling agreements with one or more selling agents under
which such agents may receive from Stephens compensation for sales support
services. Such compensation may include, but is not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. Services provided by selling agents in exchange for
commissions and other payments to selling agents are the principal sales support
services provided to the Fund. Stephens may retain any portion of the total
distribution fee payable under the Distribution Agreement to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the Distribution Agreement provides for
fees that are used by Stephens to pay for distribution services, a plan of
distribution for each class of shares (individually a "Plan," collectively the
"Plans") and the Distribution Agreement are approved and reviewed in accordance
with Rule 12b-1 under the 1940 Act, which regulates the manner in which an
investment company may, directly or indirectly, bear the expense of distributing
its shares. See Prospectus section captioned "Distribution Plans" for a more
complete description of the Plans.
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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
The Fund may enter into servicing agreements with one or more servicing
agents on behalf of Class D Shares of the Fund. Under such agreements, servicing
agents provide shareholder liaison services, which may include responding to
customer inquiries and providing information on their investments, and provide
such other related services as the Fund or a Class D Shareholder may reasonably
request. For these services, a servicing agent receives a fee which will not
exceed, on an annualized basis for the Fund's then current fiscal year, 0.25% of
the average daily net assets of the Class D Shares of the Fund represented by
Class D Shares owned by investors with whom the servicing agent maintains a
servicing relationship, or an amount which equals the maximum amount payable to
the servicing agent under applicable laws, regulations or rules, whichever is
less.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined by Wells Fargo Bank on
each day that the Exchange is open for trading. The net asset value of a share
of a class of a Fund is the value of total net assets attributable to each class
divided by the number of outstanding shares of that class. The value of net
assets per class is determined daily by adjusting the net assets per class at
the beginning of the day by the value of each class's shareholder activity, net
investment income and net realized and unrealized gains or losses for that day.
Net investment income is calculated each day for each class by attributing to
each class a pro rata share of daily income and common expenses, and by
assigning class-specific expenses to each class as appropriate. The net asset
value of each class is expected to fluctuate daily.
The value of assets of the Fund (other than debt obligations maturing in 60
days or less) is determined as of the close of regular trading on the Exchange
(referred to hereafter as "the close of the Exchange"), which is currently 4:00
p.m. New York time. Except for debt instruments with remaining maturities of 60
days or less, which are valued at amortized cost, assets are valued at current
market prices, or if such prices are not readily available, at fair value as
determined in good faith by the Board of Directors. Prices used for such
valuations may be provided by independent pricing services.
PERFORMANCE DATA
From time to time, the Company may advertise yield and total return
information with respect to a class of shares of the Fund. Total return and
yield information of a class of shares are based on the historical earnings and
performance of such class of shares and should not be considered representative
of future performance.
The total return of a class of shares of the Fund is calculated by
subtracting (i) the public offering price of the class of shares (which includes
the maximum sales charge for the class of shares) of one share of the class of
shares at the beginning of the period, from (ii) the net asset value of all
shares of the class of shares
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an investor would own at the end of the period for the share held at the
beginning of the period (assuming reinvestment of all dividends and capital gain
distributions), and dividing by (iii) the public offering price per share of the
class of shares at the beginning of the period. The resulting percentage
indicates the positive or negative rate of return that an investor would have
earned from reinvested dividends and capital gain distributions and changes in
share price during the period for the class of shares. The Fund may also, at
times, calculate total return of a class of shares based on net asset value per
share of a class of shares (rather than the public offering price), in which
case the figures would not reflect the effect of any sales charges that would
have been paid by an investor in the class of shares, or by assuming that a
sales charge other than the maximum sales charge (reflecting the Volume
Discounts set forth below) is assessed, provided that total return data derived
pursuant to the calculation described above are also presented.
The yield of a class of shares will be computed by dividing its net
investment income per share of the class earned during a specified period by its
public offering price per share (which includes the maximum sales charge) on the
last day of such period and annualizing the result. For purposes of sales
literature, these yields may also, at times, be calculated on the basis of the
net asset value per share of the class (rather than the public offering price),
in which case the figures would not reflect the effect of any sales charges that
would have been paid by an investor in the class of shares, or by assuming that
a sales charge other than the maximum sales charge (reflecting the Volume
Discounts set forth below) is assessed, provided that yield data derived
pursuant to the calculation described above are also presented.
Because of differences in the fees and/or expenses borne by Class D Shares
of the Fund, the net yield on such shares can be expected, at any given time, to
be lower than the net yield on Class A Shares. Performance information
quotations will be computed separately for Class A Shares and Class D Shares.
Additional information about the performance of the Fund is contained in
the Annual Report for the Fund. The Annual Report may be obtained free of charge
by calling the Company at 800-552-9612.
PURCHASE OF SHARES
Shares of the Fund may be purchased on any day the Exchange is open for
trading through Stephens, the Transfer Agent, any authorized broker/dealers or
financial institutions with which Stephens has entered into agreements. Such
broker/dealers or financial institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their clients for such services, other
than services related to purchase orders, which would reduce the clients'
overall yield or return. The Exchange is closed on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day (each, a "Holiday"). When any Holiday falls on a Saturday, the
Exchange usually is closed the preceding Friday, and when any Holiday falls on a
Sunday, the Exchange is closed the following Monday.
In most cases, the minimum initial purchase amount for the Fund is $1,000.
The minimum initial purchase amount is $100 for purchases through the Systematic
Purchase Plan and $250 for an investment by a retirement plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The minimum
subsequent purchase amount is $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
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the right to reject any purchase order. All funds, net of sales loads, will be
invested in full and fractional shares. Checks will be accepted for the purchase
of the Fund's shares subject to collection at full face value in U.S. dollars.
Inquiries may be directed to the Company at the address and telephone number on
the front cover of the Prospectus.
Shares of the Fund are offered continuously at the applicable offering
price (including any sales load) next determined after a purchase order is
received. Payment for shares purchased through a broker/dealer will not be due
from the broker/dealer until the settlement date, currently five business days
after the order is placed. Effective June 7, 1995, the settlement date will
normally be 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 purchased through the Transfer Agent is
by a check that is drawn on any domestic bank, federal funds normally become
available to the Fund on the business day after the day the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay execution
of an order.
When shares of the Fund are purchased through a broker/dealer or financial
institution, Stephens reallows that portion of the sales load designated below
as the Dealer Allowance. Stephens has established a non-cash compensation
program, pursuant to which broker/dealers or financial institutions that sell
shares of the Fund may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. If all sales charges are paid or
reallowed to a broker/dealer or financial institution, it may be deemed an
"underwriter" under the Securities Act of 1933. When shares are purchased
directly through the Transfer Agent and no broker/dealer or financial
institution is involved with the purchase, the entire sales load is paid to
Stephens.
Sales loads relating to orders for the purchase of Class A Shares in the
Fund are as follows:
<TABLE>
<CAPTION>
DEALER
SALES LOAD SALES LOAD ALLOWANCE
AS % OF AS % OF AS % OF
CLASS A SHARES OFFERING NET AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
----------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Less than $100,000............................. 3.00% 3.09% 2.75%
$100,000 up to $199,999........................ 2.00 2.04 1.75
$200,000 up to $599,999........................ 1.00 1.01 0.90
$600,000 up to $999,999........................ 0.60 0.60 0.50
$1,000,000 and over............................ 0.00 0.00 0.00
</TABLE>
Class D Shares are not subject to a front-end sales load. However, Class D
Shares which are redeemed within one year from the receipt of a purchase order
will be subject to a contingent deferred sales charge equal to 1% of the dollar
amount equal to the lesser of the net asset value at the time of purchase of the
shares being redeemed or the net asset value of such shares at the time of
redemption.
A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class D Shares.
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REDUCED SALES CHARGE -- CLASS A SHARES
The above Volume Discounts are available to you based on the combined
dollar amount being invested in Class A Shares of the Fund or of Class A Shares
of one or more of the portfolios of the Company which assess a sales load (the
"Load Funds"). Because Class D Shares are not subject to a front-end sales
charge, the amount of Class D Shares you hold is not considered in determining
any volume discount.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A Shares of the Fund with the total net asset value of Class A
Shares in any of the Load Funds in accordance with the above sales load schedule
to reduce the sales load. For example, if you own Class A Shares of the
Company's other investment portfolios with an aggregate net asset value of
$90,000 and invest an additional $20,000 in Class A Shares of the Fund, the
sales load on the entire additional amount would be 2.00% of the offering price.
To obtain such discount, you must provide sufficient information at the time of
purchase to permit verification that the purchase qualifies for the reduced
sales load, and confirmation of the order is subject to such verification. The
Right of Accumulation may be modified or discontinued at any time with respect
to all Class A Shares purchased thereafter.
A Letter of Intent allows you to purchase Class A Shares of the Fund over a
13-month period at reduced sales loads based on the total amount intended to be
purchased plus the total net asset value of Class A Shares in any of the Load
Funds already owned. Each investment made during the period receives the reduced
sales load applicable to the total amount of the intended investment. If such
amount is not invested within the period, you must pay the difference between
the sales loads applicable to the purchases when made and the charges previously
paid. The reductions in sales loads effected by the Fund's adoption of the
revised sales load schedule shown above are available with respect to
investments made on or after July 15, 1991, even if they are made pursuant to a
Letter of Intent entered into prior to such date.
You may Reinvest proceeds from a redemption of Class A Shares of the Fund
in Class A Shares of the Fund or in Class A Shares of another of the Company's
investment portfolios that offers Class A Shares at net asset value, without a
sales load, within 120 days after such redemption. However, if the other
investment portfolio charges a sales load that is higher than the sales load
that you have paid in connection with the Class A Shares you have redeemed, you
pay the difference. In addition, the Class A Shares of the other investment
portfolio to be acquired must be registered for sale in your state of residence.
The amount that may be so reinvested may not exceed the amount of the redemption
proceeds, and a written order for the purchase of the Class A Shares must be
received by the Fund or the Transfer Agent within 120 days after the effective
date of the redemption.
If you realized a gain on your redemption, the reinvestment will not alter
the amount of any federal capital gains tax payable on the gain. If you realized
a loss on your redemption, the reinvestment may cause some or all of such loss
to be disallowed as a tax deduction, depending on the number of Class A Shares
purchased by reinvestment and 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.
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Reductions in front-end sales loads also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate dollar
amount of Class A Shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of the Fund at a
reduced sales load, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote five
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or has
the power to vote five percent of more of its outstanding voting securities;
(iii) any other company under common control with such company; (iv) any
executive officer, director or partner of such company or of a related party;
and (v) any partnership of which such company is a partner.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by Directors, officers
and employees (and their spouses 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
Bank and its affiliates if Wells Fargo Bank and/or the respective affiliates
agree. Such shares also may be purchased at such price by employee benefit and
thrift plans for such persons and by any investment advisory, trust or other
fiduciary account (other than an individual retirement account) maintained,
managed or advised by Wells Fargo Bank or Stephens or their affiliates. In
addition, Class A Shares also may be purchased at net asset value by pension,
profit sharing or other employee benefit plans established under Section 401 of
the Code.
Class A Shares of the Fund may be purchased at a purchase price equal to
the net asset value of such shares, without a sales load, by the following types
of investors that place trades through an omnibus account maintained at the Fund
by a discount broker/dealer: trust companies; investment advisers and financial
planners on behalf of their clients; retirement and deferred compensation plans
and the trusts used to fund these plans.
By investing in the Fund, you appoint the Transfer Agent, as agent, to
establish an open account to which all shares purchased will be credited,
together with any dividends and capital gain distributions that are paid in
additional shares. See "Dividends and Distributions." Although most shareholders
elect not to receive stock certificates, certificates for full shares of the
Fund can be obtained on request. It is more complicated to redeem shares held in
certificated form, and the expedited redemption described below is not available
with respect to certificated shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS D SHARES
Class D Shares which are redeemed within one year of receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 1.00% of an amount equal to the lesser of the net asset value at the
time of purchase for the Class D Shares being redeemed or the net asset value of
such shares at the time of redemption. Accordingly, a contingent deferred sales
charge will not be imposed on amounts representing increases in net asset value
above the net asset value at the time of purchase. In addition a charge will not
be assessed on Class D Shares purchased through reinvestment of dividends or
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capital gains distributions. In determining whether a contingent deferred sales
charge is applicable to a redemption, Class D Shares are considered redeemed on
a first-in, first-out basis so that Class D Shares held for a longer period of
time are considered redeemed prior to more recently acquired shares.
The contingent deferred sales charge is waived on redemptions of Class D
Shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an individual retirement account or other retirement
plan to a shareholder who has reached age 70 1/2, (iii) effected pursuant to the
Company's right to liquidate a shareholder's account if the aggregate net asset
value of the shareholder's account is less than the minimum account size, or
(iv) in connection with the combination of the Company with any other registered
investment company by a merger, acquisition of assets, or by any other
reorganization transaction.
Investors who are entitled to purchase Class A Shares of the Fund at net
asset value without a sales load should not purchase Class D Shares. Other
investors, including those who are entitled to purchase Class A shares of the
Fund at a reduced sales load, should compare the fees assessed on Class A Shares
against those assessed on Class D Shares (including potential contingent
deferred sales charges and higher Rule 12b-1 fees) in light of the amount to be
invested and the anticipated time that the shares will be owned.
Shares of the Fund may be purchased by any of the methods described below.
INITIAL PURCHASES OF FUND SHARES BY WIRE
1. Telephone toll free (800) 572-7797. Give the name of the Fund in which
the investment is to be made, the class of shares to be purchased, the name(s)
in which the shares are to be registered, the address, social security 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 Variable Rate Government Fund (designate
Class A or D)
Account Name(s): (name(s) in which to be registered)
Account Number: (as assigned by telephone)
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3. A completed Account Application should be mailed, or sent by
telefacsimile with the original subsequently mailed, to the following address
immediately after the funds are wired and must be received and accepted by the
Transfer Agent before an account can be opened:
Wells Fargo Bank, N.A.
Overland Express Shareholder Services
P.O. Box 63084
San Francisco, California 94163
Telefacsimile: 1-415-781-4082
4. Share purchases are effected at the public offering price, or, in the
case of Class D Shares, at the net asset value, next determined after the
Account Application is received and accepted.
INITIAL PURCHASES OF FUND SHARES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $1,000 or more, payable to
"Overland Express Variable Rate Government Fund (designate Class A or D)" to its
mailing address set forth above.
ADDITIONAL PURCHASES
Additional purchases of $100 or more may be made by instructing the Fund's
Transfer Agent to debit an approved account designated in the Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Overland Express Variable Rate Government Fund (designate Class A or D)" to
the above address. Write the Fund account number on the check and include the
detachable stub from a Statement of Account or a letter providing the account
number.
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 a designated bank account (provided your bank is a participant in the
automated clearing house system). The Transfer Agent withdraws and uses this
amount to purchase shares of the Fund on or about the fifth business day of each
month. There are no additional fees charged for participating in this plan.
You may change the investment amount, suspend purchases or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to any scheduled transaction. An election will be
terminated automatically if the designated bank account balance is insufficient
to make a scheduled withdrawal, or if either the designated bank account or your
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
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<PAGE> 298
of business. Purchase orders that are received by a dealer or financial
institution after the close of the Exchange or by the Transfer Agent after the
close of business generally will be effective on the next day that shares are
offered. The broker/dealer or financial institution is responsible for the
prompt transmission of purchase orders to the Transfer Agent. Payment for Fund
shares is not due until settlement date. Broker/dealers and financial
institutions may benefit from the temporary use of payments to the Fund during
the settlement period. A broker/dealer or financial institution that is involved
in a purchase transaction may charge separate account, service or transaction
fees. Financial institutions may be required to register as dealers pursuant to
applicable state securities laws, which may differ from federal law and any
interpretations expressed herein.
EXCHANGE PRIVILEGES
You may exchange Class A Shares of the Fund for shares of the same class of
the Company's other investment portfolios or for shares of the California
Tax-Free Money Market Fund, the Money Market Fund or the U.S. Treasury Money
Market Fund in an identically registered account at respective net asset values,
provided that, if the other investment portfolio charges a sales load on the
purchase of the class of shares being exchanged that is higher than the sales
load that you have paid in connection with the shares you are exchanging, you
pay the difference. Class D Shares of the Fund may be exchanged for Class D
Shares of one of the Company's other investment portfolios that offer Class D
Shares or for Class A Shares of the Money Market Fund in an identically
registered account at respective net asset values. You are not charged a
contingent deferred sales charge on exchanges of Class D Shares for shares of
the same class of another of the Company's investment portfolios or for Class A
Shares of the Money Market Fund. If you exchange Class D Shares for shares of
the same class of another investment portfolio, or for Class A Shares of the
Money Market Fund, the remaining period of time (if any) that the contingent
deferred sales charge is in effect will be computed from the time of the initial
purchase of the previously held shares. Accordingly, if you exchange Class D
Shares for Class A Shares of the Money Market Fund, and redeem the shares of the
Money Market Fund within one year of the receipt of the purchase order for the
exchanged Class D Shares, you will have to pay a deferred sales charge equal to
the contingent deferred sales charge applicable to the previously exchanged
Class D Shares. If you exchange Class D Shares of an investment portfolio for
Class A Shares of the Money Market Fund you may subsequently re-exchange the
acquired Class A Shares only for Class D Shares. If you re-exchange the Class A
Shares of the Money Market Fund for Class D Shares, the remaining period of time
(if any) that the contingent deferred sales charge is in effect will be computed
from the time of your initial purchase of Class D Shares. In addition, shares of
the investment portfolio to be acquired must be registered for sale in your
state of residence. You should obtain, read and retain the Prospectus for the
investment portfolio which you desire to exchange into before submitting an
exchange order.
You may exchange shares by writing the Transfer Agent as indicated below
under Redemption by Mail, or by calling the Transfer Agent or your authorized
broker/dealer or financial institution or Servicing Agent, unless you have
elected not to authorize telephone exchanges in your Account Application (in
which case you may subsequently authorize such telephone exchanges by completing
a Telephone Exchange Authorization Form and submitting it to the Transfer Agent
in advance of the first such exchange). Shares held in certificated form may not
be exchanged by telephone. The Transfer Agent's number for exchanges is (800)
572-7797.
13
<PAGE> 299
Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares, except that, with respect to an exchange
transaction between accounts registered in identical names, no signature
guarantee is required unless the amount being exchanged exceeds $25,000. The
Company reserves the right to limit the number of times shares may be exchanged
between Funds, or to reject in whole or in part any exchange request into a fund
when management believes that such action would be in the best interest of the
fund's other shareholders, such as when management believes that such action
would be appropriate to protect such fund against disruptions in portfolio
management resulting from frequent transactions by those seeking to time market
fluctuations. Any such rejection will be made by management on a prospective
basis only, upon notice to the shareholder given not later than 10 days
following such shareholder's most recent exchange. The Company reserves the
right to modify or discontinue exchange privileges at any time. Under SEC rules,
60 days prior notice of any amendments or termination of exchange privileges
will be given to shareholders, except under certain extraordinary circumstances.
A capital gain or loss for tax purposes may be realized upon an exchange,
depending upon the cost or other basis of shares redeemed.
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you decline such privileges. These
privileges authorize the Transfer Agent to act on telephone instructions from
any person representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. The Company will require the
Transfer Agent to employ reasonable procedures, such as requiring a form of
personal identification, to confirm that instructions are genuine. If the
Transfer Agent does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses attributable to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a request in proper form by the Transfer Agent directly or through
any authorized broker/dealer or financial institution.
Except for any contingent deferred sales charge which may be applicable
upon redemption of Class D Shares, as described under "Purchase of Shares," the
Company does not charge for redemption transactions. However, a broker/dealer or
financial institution that is involved in a redemption transaction may charge
separate account, service or transaction fees. On a day the Fund is open for
business, redemption orders received by an authorized broker/dealer or financial
institution before the close of the Exchange and received by the Transfer Agent
before the close of business on the same day will be executed at the net asset
value per share determined at the close of the Exchange on that day. Redemption
orders received by authorized broker/dealers or financial institutions after the
close of the Exchange, or not received by the Transfer Agent prior to the close
of business, will be executed at the net asset value determined at the close of
the Exchange on the next business day.
Redemption proceeds, net of any contingent deferred sales charge applicable
with respect to Class D Shares, ordinarily will be remitted within seven days
after the order is received in proper form, except proceeds may be remitted over
a longer period to the extent permitted by the SEC under extraordinary
circumstances. If an expedited redemption is requested, redemption proceeds will
be distributed only if the check used for investment is deemed to be cleared for
payment by your bank, currently considered by the
14
<PAGE> 300
Company to be a period of up to 15 days after investment. The proceeds, of
course, may be more or less than cost. Payment of redemption proceeds may be
made in securities, subject to regulation by some state securities commissions.
REDEMPTION BY MAIL
1. Write a letter of instruction. Indicate the dollar amount 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 Fund 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 D Shares, will be sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides a way for you to have
shares redeemed from your account and the proceeds, net of any contingent
deferred sales charge applicable with respect to Class D Shares, distributed to
you on a monthly basis. You may elect to participate in this plan if you have a
shareholder account valued at $10,000 or more as of the date of your election to
participate, and are not also a participant in the Company's Systematic Purchase
Plan at any time while participating in this plan. To participate in the plan
you must specify an amount ($100 or more) to be distributed by check to your
address of record or deposited in a designated bank account. The Transfer Agent
redeems sufficient shares and mails or deposits the proceeds of the redemption,
net of any contingent deferred sales charge applicable with respect to Class D
Shares, as instructed, on or about the fifth business day prior to the end of
each month. There are no additional fees charged for participating in this
plan.
You may change the withdrawal amount, suspend withdrawals or terminate the
election at any time by providing written notice to the Transfer Agent at least
five business days prior to a scheduled transaction.
15
<PAGE> 301
An election will be terminated automatically if your account balance is
insufficient to make a scheduled withdrawal or if your 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 elected not to
authorize telephone redemptions on your Account Application or other form that
is on file with the Transfer Agent) on any day the Fund is open for business.
See "Exchange Privileges" for additional information regarding telephone
redemption privileges.
You may request expedited redemption by telephone by calling the Transfer
Agent at (800) 572-7797.
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 D Shares,
will be wired or credited to the bank indicated in your Account Application 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. 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
16
<PAGE> 302
prior to the clearance of a check issued to you for such proceeds or prior to
disbursement or reinvestment of such proceeds on your behalf.
------------------------
The proceeds of redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal and state
income tax purposes.
Due to the high cost of maintaining small accounts, the Company reserves
the right to redeem accounts that fall below $1,000 because of a shareholder
redemption. Prior to such a redemption, you will be notified in writing and
permitted 30 days to make additional investments to raise the account balance to
the specified minimum.
DISTRIBUTION PLANS
The Company's Board of Directors has adopted a Plan on behalf of each class
of shares of the Fund. Under the Plans, the Fund may defray all or part of the
cost of preparing and printing prospectuses and other promotional materials and
of delivering prospectuses and those materials to prospective shareholders of
the Fund, by paying a monthly fee at the annual rate of up to 0.25% of the
average daily net assets of the Class A Shares of the Fund and a monthly fee at
the annual rate of up to 0.50% of the average daily net assets of the Class D
Shares of the Fund. Since the fee payable to Stephens under the Distribution
Agreement is based upon a percentage of the average daily net assets of a class
of shares of the Fund and not upon the actual expenditures of Stephens, the
expenses of Stephens (which may include overhead expenses) may be more or less
than the fees received by it under the Distribution Agreement. All or a portion
of these fees may be paid by Stephens to broker-dealers or financial
institutions who have entered into selling agent agreements with Stephens, as
compensation for sales support services.
SERVICING PLAN
The Company's Board of Directors has adopted a servicing plan ("Servicing
Plan") on behalf of the Class D Shares of the Fund. Pursuant to the Servicing
Plan the Fund may enter into servicing agreements with one or more servicing
agents who agree to provide administrative support services to their customers
who are the record or beneficial owners of Class D Shares. Such servicing agents
will be compensated at an annual rate of up to 0.25% of the average daily net
asset value of the Class D Shares held of record or beneficially by such
customers.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare as a dividend to all shareholders of record
substantially all of its net investment income at the close of each business day
to shareholders of record at 4:00 p.m. (New York time) on the day of
declaration. Shares purchased in the Fund will begin earning dividends on the
business day following the date the purchase order settles and shares redeemed
will earn dividends through the date of redemption. Net investment income for a
Saturday, Sunday or holiday will be declared as a dividend to shareholders of
record at 4:00 p.m. (New York time) on the prior business day.
Dividends of the Fund declared in, and attributable to, any month will be
paid early in the following month. Shareholders of the Fund who redeem shares
prior to a dividend payment date will be entitled to all dividends declared but
unpaid prior to redemption on such shares on the next dividend payment date.
17
<PAGE> 303
Net capital gains of the Fund, if any, will be distributed annually (or
more frequently to the extent permitted to avoid imposition of the 4% excise tax
described in the SAI).
Dividends and/or capital gain distributions paid by the Fund will be
invested in additional shares of the same class of the Fund at net asset value
(without any sales load) and credited to your account on the reinvestment date
or, at your election, paid by check. In addition, you may elect to reinvest Fund
dividends and/or capital gain distributions in shares of another fund in the
Overland Express Family of Funds with which you have an established account that
has met the applicable minimum initial investment requirement.
The Fund's net investment income available for distribution to the holders
of Class D Shares will be reduced by the amount of servicing fees payable to
servicing agents under the Servicing Plan and by the incremental distribution
fees payable under the Distribution Plan. There may be certain other differences
in fees (e.g. audit fees, transfer agent fees) between Class A Shares and Class
D Shares that would affect their relative dividends.
TAXES
By complying with the applicable provisions of the Code, the Fund will not
be subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to its shareholders. However, dividends
attributable to investment income (which includes net short-term capital gains,
if any) declared and paid by the Fund will be taxable as ordinary income to Fund
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 the Fund which
are held under a qualified tax-deferred retirement plan. The Fund intends to pay
out all its net investment income and net realized capital gains (if any) for
each year. The Fund's dividends will not qualify for the dividends-received
deduction allowed to corporate shareholders.
The Fund will inform you of the amount and nature of Fund dividends and
capital gains. You should keep all statements you receive to assist in your
personal recordkeeping. The Company is required by federal law to withhold,
subject to certain exemptions, at a rate of 31% on 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.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - Foreign Shareholders" in the SAI.
Further federal tax considerations are discussed in the SAI. All investors
should consult their individual tax advisors with respect to their particular
tax situations as well as the state and local tax status of investments in
shares of the Fund.
18
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CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as the Fund's custodian and
transfer and dividend disbursing agent. Its principal place of business is 420
Montgomery Street, San Francisco, California 94163 and its transfer and dividend
disbursing agency activities are managed at 525 Market Street, San Francisco,
California 94105.
ORGANIZATION AND CAPITAL STOCK
The Company, an open-end investment company, was incorporated in Maryland
on April 27, 1987. The authorized capital stock of the Company consists of
20,000,000,000 shares having a par value of $.001 per share. The Company
currently offers twelve series of shares, each representing an interest in one
of the funds in the Overland Express Family of Funds -- the Asset Allocation
Fund, the California Tax-Free Bond Fund, the California Tax-Free Money Market
Fund, the Money Market Fund, the Municipal Income Fund, the Overland Sweep Fund,
the Short-Term Government-Corporate Income Fund, the Short-Term Municipal Income
Fund, the Strategic Growth Fund, the U.S. Government Income Fund, the U.S.
Treasury Money Market Fund and the Variable Rate Government Fund. The Board of
Directors may, in the future, authorize the issuance of other series of capital
stock representing shares of additional investment portfolios or funds. All
shares of the Company have equal voting rights and will be voted in the
aggregate, and not by series or class, except where voting by series or class is
required by law or where the matter involved affects only one series or class.
The Company may dispense with the annual meeting of shareholders in any fiscal
year in which it is not required by the 1940 Act to elect Directors; however,
shareholders are entitled to call a meeting of shareholders for purposes of
voting on removal of a Director or Directors. A more detailed statement of the
voting rights of shareholders is contained in the SAI. All shares of the
Company, when issued, will be fully paid and nonassessable.
A purported class action lawsuit was filed on March 14, 1995 in the United
States District Court for the Southern District of California by Conrad D.
Schaefer and Diane L. Schaefer, Trustees for the Schaefer Family Trust of 1992
against the Overland Express Family of Funds "Variable Rate Government Fund,"
Wells Fargo Bank and Wells Fargo & Company. The plaintiffs seek to sue on behalf
of persons who bought the fund between January 1, 1991 and March 10, 1995, and
allege that defendants violated the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940 and common law by,
among other things, failing to disclose adequately the objectives and risks of
the Fund, specifically, the risks involved in investing in Support Class Bonds,
and that the Fund's prospectuses, annual reports and other documents filed with
the Securities and Exchange Commission contained false and misleading statements
relating thereto. The named plaintiffs allege that the Class as a whole suffered
substantial, but unspecified, damages, including interest, in connection with
the purchase of securities covered by the Fund's offering documents over the
course of the specified period. Management of the Company believes that the case
is without merit and intends to vigorously defend against the action.
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<TABLE>
<C> <S>
OVERLAND EXPRESS FUNDS, INC. VARIABLE RATE GOVERNMENT 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. Security No. is
USE LINES 1 & 2 --------------------------------- required for Joint Owners)
First Name Initial Last Name
Joint Tenancy with right of survivorship is presumed unless Tenancy in Common is indicated:
/ / Tenants in Common
/ / TRANSFER TO 3. Uniform
MINORS Transfer ------------------------------------------------------------------------------
USE LINE 3 to Minors Custodian's Name (only one) Minor's State of Residence
- -
----------------------------------------- ----------- ------- ------------
Minor's Name (only one) Minor's Soc. Security No.
/ / TRUST* 4. Trust Name
------------------------------------------------------------------------------
USE LINE 4 Trustee(s)
------------------------------------------------------------------------------
(If you would like Trustee's name included in registration.)
Trust ID Number
------------------------------------------------------------------------------------
Please attach title page, the page(s) allowing investment in a mutual fund ("powers
page") and signature page, and complete Section 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)
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
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<PAGE> 306
<TABLE>
<S> <C>
VARIABLE RATE GOVERNMENT FUND
ACCOUNT APPLICATION
PAGE 2 OF 5
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2. INVESTMENT INSTRUCTIONS (Minimum initial investment: $1,000.)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT AMOUNT: $
---------------------------
TYPE OF ACCOUNT (CHOOSE ONE ONLY):
/ / Class A Shares, or
/ / Class D Shares (not available for purchases of $1,000,000 or more)
Note: If no choice is indicated, Class A Shares will be selected.
METHOD OF PAYMENT: / / Debit bank account designated in Section 3.
/ / Check attached (payable to Overland Express Variable Rate Government Fund (designate Class A
or D))
/ / Funds have been wired to 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 Withdrawal Amount: $ (minimum $100)
------------------
/ / Mail check to registration set forth in Section 1.
/ / Distribute funds to bank account designated in Section 3.
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3. BANK ACCOUNT INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Bank Name
--------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
--------------------------------------------------------------------------------------------------------------------------------
Bank Account Number Bank Routing Number
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(CONTINUED)
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<PAGE> 307
<TABLE>
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VARIABLE RATE GOVERNMENT FUND
ACCOUNT APPLICATION
PAGE 3 OF 5
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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 / / $600,000 / / $1,000,000
Existing accounts must be identified in advance. If the value of currently owned shares is to be applied towards completion of
this Letter of Intent, please list accounts below.
Account # Account #
----------------------------- -----------------------------
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / 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 #
----------------------------- -----------------------------
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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.
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6. DISTRIBUTIONS (Do NOT check boxes if you want reinvestment.)
- ------------------------------------------------------------------------------------------------------------------------------------
All dividends and capital distributions will be automatically reinvested in of the same class of the Fund unless otherwise
indicated:
/ / Invest dividends in Account # of Fund
--------------- ------------
of the Overland Express Family of Funds.
/ / Invest capital gain distributions in Account # of Fund
--------------- ------------
of the Overland Express Family of 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)
</TABLE>
<PAGE> 308
<TABLE>
<S> <C>
VARIABLE RATE GOVERNMENT FUND
ACCOUNT APPLICATION
PAGE 4 OF 5
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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
- ------------------------------------------------------------------------------------------------------------------------------------
(CONTINUED)
</TABLE>
<PAGE> 309
<TABLE>
<S> <C>
VARIABLE RATE GOVERNMENT FUND
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.
X SIGNATURE GUARANTEE: NOT REQUIRED WHEN
-------------------------------------------------------- ESTABLISHING NEW ACCOUNTS. Required only if
Individual (or Custodian) date establishing privileges in Block 2 on an
existing account. Signature Guarantee may be
X provided by an "eligible guarantor
-------------------------------------------------------- institution," which includes a commercial bank,
Joint Owner (if any) date trust company, member firm of a domestic stock
exchange, savings association, or credit union
X that is authorized by its charter to provide a
-------------------------------------------------------- signature guarantee.
Corporate Officer or Trustee date
AFFIX SIGNATURE GUARANTEE STAMP
-------------------------------------------------------- -----------------------------------------------
Title of Corporate Officer or Trustee Signature Guaranteed By
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER INFORMATION
- ------------------------------------------ -------------------------
Dealer Name Branch ID #
- ------------------------------------------ ------------------------- --------------------------
Representative's Last Name Rep ID # Rep Phone #
X
-------------------------------------------------------------------------------------------------------------
Authorized signature of Broker/Dealer Title date
</TABLE>
<PAGE> 310
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
NOT FDIC INSURED
FOR MORE INFORMATION ABOUT THE FUND,
SIMPLY CALL (800) 552-9612,
OR WRITE:
OVERLAND EXPRESS FUNDS, INC.
C/O OVERLAND EXPRESS
SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 63084
SAN FRANCISCO, CALIFORNIA 94163
------------------------
PROSPECTUS
------------------------
Variable Rate Government Fund
------------------------
May 1, 1995
------------------------
NOT FDIC INSURED
72P 5/95