OVERLAND EXPRESS FUNDS, INC.
INDEX ALLOCATION FUND
(formerly the Asset Allocation Fund)
Supplement dated February 14, 1997
to the Prospectus dated May 1, 1996
as supplemented on September 24 and November 1, 1996
The Prospectus describing the Asset Allocation Fund (the "Fund") is hereby
amended and supplemented as follows.
1. The Fund's name has been changed to the "Index Allocation Fund."
The Fund continues to seek over the long term a high level of total
investment return consistent with reasonable risk. The Fund pursues this
objective through an asset allocation strategy whereby, under normal market
conditions, it allocates at least 65% of its portfolio to stocks
representative of the S&P 500 Index, bonds representative of the Lehman
Brothers 20+ Treasury Index (the "LBT Bond Index"), or a combination of
both indices. The LBT Bond Index is an unmanaged index comprised of U.S.
Treasury securities with remaining maturities of twenty years or more. The
portion of the Fund's portfolio allocated to bonds is invested so as to
replicate the total return performance characteristics of the LBT Bond
Index. The Fund also may allocate a portion of its portfolio to money
market instruments. Whenever more than 20% of the Fund's portfolio is
allocated to money market instruments, such instruments will consist of
U.S. Treasury bills and/or a broadly diversified range of money market
instruments. The Fund is an index allocation fund and is NOT an index fund.
To the extent the Fund's assets are allocated to replicate the S&P
500 Index or the LBT Bond Index (each, an "Index"), the Fund will attempt
to maintain under normal market conditions a correlation of at least 95%
between the total return of such assets (before fees and expenses) and the
total return of the relevant Index. The Fund's sub-adviser will monitor the
correlation of the Fund's portfolio to the relevant Index and will adjust
the Fund's portfolio to the extent necessary to maintain at least a 95%
correlation to such Index.
2. In an attempt to more closely replicate the total return of the
portfolio assets allocated to replicate an Index, the Fund may engage in
the purchase and sale of options, futures contracts and related
instruments, and may participate in interest rate and index swaps. Each of
these transactions involves risks to the Fund. The Fund does not intend to
invest more than 5% of its portfolio in the aggregate in these instruments.
See "Additional Permitted Investment Activities" in the Statement of
Additional Information for additional discussion of the risks and benefits
of investing in these instruments.
