<PAGE> 1
As filed with the Securities and Exchange Commission
on June 27, 1995
Registration No. 33-54126; 811-7332
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Post-Effective Amendment No. 8 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 12 [X]
(Check appropriate box or boxes)
________________________
STAGECOACH INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
__________________________
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-1812
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing [ ] on ___________, pursuant
pursuant to Rule 485(b), or to Rule 485(b), or
[ ] 60 days after filing [ ] on ___________, pursuant
pursuant to Rule 485(a), or to Rule 485(a), or
[ ] 75 days after filing [ ] on (date) pursuant to
pursuant to paragraph (a)(2), or paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
The Registrant has registered an indefinite number of shares of its
Common Stock, $.001 par value, under the Securities Act of 1933, pursuant to
Rule 24f-2 under the Investment Company Act of 1940, as amended. The
Registrant filed the notice required by Rule 24f-2 for its most recent fiscal
period ended February 28, 1995 on April 27, 1995.
This Post-Effective Amendment to the Registrant's Registration
Statement has been executed by Master Investment Portfolio and Managed Series
Investment Trust (each a registered investment company with separate series in
which certain of the Registrant's series invest substantially all of their
assets) and by each such company's trustees and principal officers.
<PAGE> 3
EXPLANATORY NOTE
This post-effective amendment relates only to the
following funds of Stagecoach Inc.: the Asset Allocation
Fund, Bond Index Fund, Growth Stock Fund, Money Market Fund,
Short-Intermediate Term Fund, S&P 500 Stock Fund and U.S.
Treasury Allocation Fund (the "Funds"). This post-effective
amendment includes the annual update of all audited
financial information pertaining to the Funds and each
Fund's corresponding Master Series. This post-effective
amendment does not effect the registration statement for the
California Tax-Free Intermediate Income Fund, California
Tax-Free Money Market Fund, California Tax-Free Short-Term
Income Fund, Growth and Income Fund, National Tax-Free Money
Market Mutual Fund and National Tax-Free Intermediate Income
Fund and Overland National Tax-Free Money Market Fund.
<PAGE> 4
ASSET ALLOCATION FUND
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; General Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information; General Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C General Information
- ------ -------------------
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
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[STAGECOACH FUNDS LOGO]
------------------------------
PROSPECTUS
------------------------------
ASSET ALLOCATION FUND
June 28, 1995
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<PAGE> 6
STAGECOACH INC.
ASSET ALLOCATION FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
Funds -- the ASSET ALLOCATION FUND (the "Fund"). The Fund seeks to achieve over
the long term a high level of total return, including net realized and
unrealized capital gains and net investment income, consistent with reasonable
risk.
THE FUND INVESTS ALL OF ITS ASSETS IN THE ASSET ALLOCATION MASTER SERIES
(THE "MASTER SERIES") OF MASTER INVESTMENT PORTFOLIO (THE "MASTER TRUST"), AN
OPEN-END, MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO OF
SECURITIES. THE MASTER SERIES HAS SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS
THE FUND. THEREFORE, THE FUND'S INVESTMENT EXPERIENCE CORRESPONDS DIRECTLY WITH
THE MASTER SERIES' INVESTMENT EXPERIENCE. SHARES OF THE MASTER SERIES MAY BE
PURCHASED ONLY BY OTHER INVESTMENT COMPANIES OR SIMILAR ACCREDITED INVESTORS.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund and the Master
Series that an investor should know before investing and is designed to help you
decide if the Fund's goals match your own. A Statement of Additional Information
("SAI") dated June 28, 1995 describing the Fund has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference. The
SAI is available free of charge by calling the Company at 1-800-776-0179 or by
writing the Company at the address printed on the back of the Prospectus.
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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN INVESTMENT IN THE
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 7
The Master Series seeks to achieve its investment objective, by pursuing an
"asset allocation" strategy. Using that strategy, the Master Series allocates
and reallocates its investments among three asset classes -- common stocks, U.S.
Treasury bonds, and money market instruments. The Fund is designed for investors
with investment horizons of at least five years. See "The Fund -- Investment
Objective and Policies."
As noted below under "General Information -- Description of the Company,"
investors may be able to invest indirectly in the Master Trust through other
investment companies or portfolios of the Company that invest substantially all
of their assets in the Master Trust. The Master Series is advised by Wells Fargo
Bank, N.A. ("Wells Fargo"). Wells Fargo Nikko Investment Advisors ("WFNIA")
serves as sub-adviser to the Master Series. Wells Fargo also serves as the
Fund's Custodian and as the Fund's and the Master Series' transfer agent and as
a Selling Agent and a Shareholder Servicing Agent (as defined below). Wells
Fargo Institutional Trust Company, N.A. ("WFITC") serves as the Master Series'
custodian. Stephens Inc. ("Stephens") is the sponsor, distributor and
administrator for the Company and the Master Trust.
WELLS FARGO IS THE INVESTMENT ADVISER TO THE MASTER SERIES. WFNIA SERVES AS
SUB-ADVISER TO THE MASTER SERIES, AND TOGETHER WITH THEIR AFFILIATES, WELLS
FARGO AND WFNIA PROVIDE OTHER SERVICES TO THE MASTER TRUST, FOR WHICH
THEY ARE COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS
FARGO, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE COMPANY AND THE MASTER TRUST.
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.......................................... 2
Summary of Fund Expenses.................................... 8
Explanation of the Table.................................... 9
Financial Highlights........................................ 10
The Fund.................................................... 11
Management of the Fund...................................... 15
How to Buy Shares........................................... 20
How to Redeem Shares........................................ 25
Exchange Privilege.......................................... 29
Share Value................................................. 30
Dividends and Distributions................................. 31
Federal Income Tax Information.............................. 31
General Information......................................... 33
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
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<S> <C>
Additional Investment Policies.............................. A-1
</TABLE>
1
<PAGE> 9
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefits plans, including retirement plans,
that have appointed one of the Company's Shareholder Servicing
Agents as plan trustee, plan administrator or other agent, or whose
plan trustee, plan administrator or other agent has a servicing
arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder
Servicing Agents that permits investments in Fund shares, and
persons who invest pursuant to an agreement between such an entity
and a Shareholder Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent
of the qualified employee benefit plan and a Shareholder Servicing
Agent.
See "How to Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund is a diversified portfolio that seeks to earn over the long term a
high level of total return, including net realized and unrealized capital
gains and net investment income, consistent with reasonable risk. The Fund
seeks to achieve this investment objective by investing all of its assets
in the Master Series, which has substantially the same investment objective
as the Fund. The Master Series seeks to achieve its investment objective by
pursuing an "asset allocation" strategy whereby its investments are
allocated among three asset classes -- common stocks, U.S. Treasury bonds
and money market instruments. The Fund is designed for investors with
investment horizons of at least five years. See "The Fund -- Investment
Objective and Policies" and "Appendix -- Additional Investment Policies."
2
<PAGE> 10
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund (and the Master Series) are not bank deposits or
obligations of Wells Fargo and are not insured by the Federal Deposit
Insurance Corporation ("FDIC"). Therefore, investors should be prepared to
accept some risk with the money invested in the Fund. Because the Master
Series may shift its investment allocations significantly from time to
time, its performance and that of the Fund may differ from funds which
invest in one asset class or from funds with a stable mix of assets.
Further, shifts among asset classes may result in a relatively high
portfolio turnover rate (100% or more) which will result in additional
transaction (i.e., dealer markups or brokerage commission) costs, which may
not be offset by the improved performance expected from the asset
allocation strategy. Portfolio turnover also can generate short-term
capital gains tax consequences. The Fund bears a pro rata portion of such
transaction costs. In this regard, the portfolio turnover rate generally is
not expected to exceed 350%. For additional information relating to
portfolio turnover see "Federal Income Tax Information" in this Prospectus
and "Portfolio Transactions" and "Federal Income Taxes" in the SAI.
The portfolio securities of the Master Series are subject to market risk.
Market risk is the possibility that common 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. Investments
in U.S. Treasury bonds and other debt instruments 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 U.S.
Treasury bonds and other debt instruments in which the Master Series
invests and hence the value of an investment in the Fund. The values of
such securities generally change inversely to changes in market interest
rates. The Master Series also may enter into certain futures contract
transactions which have other risks associated with them. As with all
mutual funds, there can be no assurance that the Fund will achieve its
investment objective.
Investors should be prepared to accept that risk, as well as the risk that
the Fund and the Master Series may under-perform (over the short and/or
long term) one or more of the three classes of securities in which it
invests. Finally, the Master Series was formed in 1993 and therefore has a
limited operating history. See "The Fund -- Investment Objective and
Policies" and "Appendix -- Additional Investment Policies."
3
<PAGE> 11
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") is open for regular business (a "Business
Day"). There are no sales loads.
To invest in the Fund contact a Shareholder Servicing Agent to receive
information and an Account Application. An Account Application must be
completed and signed to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors.
See "How to Buy Shares."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Trust, manages the
investments of the Master Series. The Company has not retained the services
of a separate investment adviser for the Fund because the Fund invests all
of its assets in the Master Series. WFNIA serves as the Master Series'
sub-adviser and provides allocation advice based on its proprietary model.
Wells Fargo, one of the ten largest commercial banks in the United States,
was founded in 1852 and is the oldest bank in the western United States. As
of March 31, 1995, various divisions and affiliates of Wells Fargo
(including WFNIA) provided investment advisory services for approximately
$196 billion of assets of individuals, trusts, estates and institutions.
See "Management of the Fund."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For its advisory
services to the Master Series, Wells Fargo is entitled to receive a fee at
an annual rate of 0.35% of the Master Series' average daily net assets, out
of which it pays for sub-investment advisory services. Wells Fargo also
provides transfer agency services to the Fund and the Master Series. Wells
Fargo is entitled to an annual fee of 0.10% of the Fund's average net
assets in return for providing transfer agent services to the Fund and the
Master Series.
4
<PAGE> 12
The Fund also has adopted a Shareholder Servicing Plan pursuant to which it
may enter into Shareholder Servicing Agreements with Shareholder Servicing
Agents. The Servicing Plan permits the Fund to compensate Shareholder
Servicing Agents up to 0.20% of the average daily net assets of the Fund.
For its services as administrator of the Master Series and the Fund,
Stephens is entitled to receive a daily fee at an annual rate of 0.10% of
the Fund's average daily net assets. In consideration for this fee,
Stephens has agreed to pay all third-party expenses of the Fund and the
Master Series other than those payable by the Fund and the Master Series
under their various services contracts described above.
There are no other fees or expenses charged against the Fund's or the
Master Series' assets or its shareholders except for extraordinary expenses
and brokerage commissions and other expenses connected with the execution
of portfolio transactions.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for certain
administrative services, such as recordkeeping and processing exchanges of
Fund shares for other available investment options.
See "Management of the Fund."
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the net
asset value of shares of the Master Series which in turn depends on the
total value of the portfolio securities owned by the Master Series (plus
cash and other assets net of liabilities) and the number of shares of the
Master Series outstanding. On each Business Day, Wells Fargo calculates a
new net asset value of the Fund and the Master Series. See "Share Value."
Q. DOES THE FUND PAY DIVIDENDS?
A. The Fund intends to pay monthly dividends consisting of substantially all
of its net investment income, and annual distributions consisting of
substantially all of its net realized capital gains. All dividends and
distributions are automatically reinvested in additional Fund shares at net
asset value unless payment in cash is requested and your arrangement with a
Shareholder Servicing Agent permits the processing of
5
<PAGE> 13
cash payments. Each reinvestment increases the total number of shares held
by the shareholder. See "Dividends and Distributions."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the
Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the
imposition of a sales charge or redemption fee on any Business Day by
letter, by an automatic feature called the Systematic Withdrawal Plan, or
by telephone (unless you decline telephone privileges). See "How to
Redeem Shares." For more information, contact Stephens or your
Shareholder Servicing Agent (such as Wells Fargo).
Q. WHAT ARE DERIVATIVES AND DO THE FUND AND THE MASTER SERIES USE THEM?
A. Some of the permissible investments described throughout this Prospectus
are considered "derivative" securities because their values are derived, at
least in part, from the prices of other securities or specified assets,
indices or rates. The futures contracts and options on futures contracts
that the Master Series may purchase are considered derivatives. The Master
Series may purchase or sell these contracts or options as substitutes for
comparable market positions in the underlying securities. Certain of the
floating- and variable-rate instruments in which the Master Series may
invest 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 FUND AND MASTER SERIES TAKE TO CONTROL
DERIVATIVES-RELATED RISKS?
A. Wells Fargo (as investment adviser to the Master Series) and WFNIA (as
sub-adviser to the Master Series) use a variety of internal risk management
procedures to ensure that derivatives use is consistent with both the
Master Series' and the Fund's investment objective, does not expose either
the Master Series or the Fund to undue risks and is
6
<PAGE> 14
closely monitored. These procedures include providing periodic reports to
the Boards of Trustees and Directors concerning the use of derivatives.
Also, cash maintained by the Master Series for short-term liquidity needs
(e.g., to meet anticipated redemption requests) will, as a general matter,
only be invested in U.S. Treasury bills, shares of other mutual funds and
repurchase agreements. The use of derivatives is also subject to broadly
applicable investment policies. For example, the Master Series may not
invest more than a specified percentage of its assets in "illiquid
securities," including those derivatives that do not have active secondary
markets. In addition, the Master Series may not use derivatives without
establishing adequate "cover" in compliance with SEC rules limiting the use
of leverage. For additional information, see "Appendix -- Additional
Investment Policies."
7
<PAGE> 15
SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund and the Master Series, 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. As shown below, you are not charged
redemption fees or exchange fees. You should consider this expense information
together with the important information in this Prospectus, including the Fund's
investment objective and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)*:
Management Fees**.................................. 0.35%
Other Expenses
Shareholder Servicing Fees....................... 0.20%
Miscellaneous Expenses**......................... 0.20%
Total Other Expenses**........................... 0.40%
------
Total Fund Operating Expenses**.................... 0.75%
</TABLE>
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* Other mutual funds may invest in the Master Series and such other funds'
expenses and, correspondingly, investment returns may differ from those of
the Fund.
** Annual Fund operating expenses are based on amounts incurred during the most
recent fiscal year, restated to reflect expected expenses and voluntary fee
waivers that will continue during the current fiscal year. In the absence of
waivers, reimbursements and/or expected expense levels, the percentages shown
above under the captions "Management Fees," "Miscellaneous Expenses," "Total
Other Expenses" and "Total Fund Operating Expenses" would be 0.41%, 0.15%,
0.35% and 0.76%, respectively.
EXAMPLE OF EXPENSES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
expenses on a $1,000
investment, assuming (1) a 5%
annual return and (2)
redemption at the end of each
time period.................... $8 $24 $42 $ 93
</TABLE>
8
<PAGE> 16
EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, restated to reflect expected expenses, voluntary fee
waivers and expense reimbursements that will continue during the current fiscal
year. They summarize expenses charged at the Master Trust level as well as
expenses charged at the Company level. For a further description of the fee
structure of the Master Trust and the Company, see "Management of the Fund."
Wells Fargo 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. The Fund does not anticipate Fund expenses
exceeding state limits. In addition, Wells Fargo and Stephens each, at its sole
discretion, may waive or reimburse all or a portion of its respective fees
charged to, or expenses paid by, the Fund or Master Series. Any waivers or
reimbursements would reduce the Fund's or Master Series' total expenses. For
more complete descriptions of the various costs and expenses you can expect to
incur as an investor in the Fund, please see the Prospectus section captioned
"Management of the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over stated periods,
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected Fund performance. In addition, the Example of Expenses should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown above.
With regard to the combined fees and expenses of the Fund and the Master
Series, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the Master Series
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 Master Series. Additionally, the
Board of Directors has determined that the aggregate fees assessed by the Fund
and the Master Series should be less than those expenses that the Directors
believe would be incurred had the Fund invested directly in the securities held
by the Master Series. See the Prospectus section captioned "Management of the
Fund" 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
investment strategy and no longer invest in the Master Series, these expenses
may change.
9
<PAGE> 17
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995** 1994***
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<S> <C> <C>
Net Asset Value, beginning of period......... $ 10.19 $ 10.00
Income from investment operations:
Net investment income...................... 0.44 0.23
Net realized and unrealized gain (loss) on
investments.............................. (0.14) 0.28
------------- -------------
Total from investment operations............. 0.30 0.51
Less distributions:
Dividends from net investment income....... (0.44) (0.23)
Distributions from net realized gains...... (0.12) (0.09)
------------- -------------
Total distributions.......................... (0.56) (0.32)
------------- -------------
Net Asset Value, end of period............... $ 9.93 $ 10.19
============= =============
Total return (not annualized)................ 3.28% 5.14%
Ratios/Supplemental data:
Net assets, end of period (000)............ $ 293,696 $ 217,140
Number of shares outstanding, end of
period (000)............................. 29,585 21,303
Ratios to average net assets+:
Ratio of expenses to average net
assets(1)................................ 0.75%++ 0.79%
Ratio of net investment income to average
net assets(2)............................ 4.62% 3.47%
Portfolio turnover........................... 24%* 33%
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses................................. 0.76% 0.80%
(2) Ratio of net investment income to average
net assets prior to waived fees and
reimbursed expenses...................... 4.61% 3.46%
</TABLE>
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* This rate is for the period from February 28, 1994 to May 25, 1994. As of
May 26, 1994 the Fund invests all of its assets in the corresponding Master
Series of the Master Trust. The portfolio turnover rate for the Master
Series for the period beginning May 26, 1994 and ending February 28, 1995
was 23%.
** Beginning May 26, 1994 the Fund, pursuant to shareholder approval, was
reorganized and began investing in the corresponding Master Series of the
Master Trust.
*** The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
++ This ratio includes expenses charged to the Master Series.
10
<PAGE> 18
THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to achieve over the long term a high level of total return,
including net realized and unrealized capital gains and net investment income,
consistent with reasonable risk. This investment objective is fundamental and
cannot be changed without shareholder approval. The Fund seeks to achieve its
investment objective by investing all of its assets in the Master Series, which
has substantially the same fundamental investment objective as the Fund. The
Master Series seeks to achieve its objective by pursuing an asset allocation
strategy. This strategy is based upon the premise that certain asset classes
from time to time are under- or over-valued by the market relative to each other
and that under-valued asset classes represent relatively better long-term,
risk-adjusted investment opportunities, and that timely, low-cost shifts among
common stocks, U.S. Treasury bonds and money market instruments (as determined
by their perceived relative over- or under-valuation) can produce investment
returns superior to investments in only one such class. Using this strategy,
WFNIA as sub-adviser to the Master Series, regularly determines and recommends
to Wells Fargo, the investment adviser, a recommended mix of common stocks, U.S.
Treasury bonds, and money market instruments and the Master Series' portfolio is
periodically adjusted to achieve this mix.
In determining the recommended mix, WFNIA uses an investment model
developed over the past 17 years (the "Asset Allocation Model"), which is
presently used as a basis for managing several large employee benefit trust
funds and other institutional accounts. The Asset Allocation Model, which is
proprietary to WFNIA, analyzes extensive financial data from numerous sources
and recommends a portfolio allocation among common stocks, U.S. Treasury bonds
and money market instruments. At any given time, substantially all of the Master
Series' assets may be invested in a single asset class and the relative
allocation among the asset classes may shift significantly from time to time.
The Fund is not designed for investors seeking short-term gains; it is instead
designed for investors with investment horizons of five years and greater. There
can be no assurance that the Fund or the Master Series will achieve its
respective investment objective.
The Master Series' assets are invested as follows:
Stock Investments. In making its stock investments, the Master Series
invests in substantially all of the common stocks which comprise the
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<PAGE> 19
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index")1 using, to
the extent feasible, the same weighting used by that index. The Master Series
does not individually select common stocks on the basis of traditional
investment analysis.
U.S. Treasury Bonds. The Master Series invests in U.S. Treasury bonds with
remaining maturities of at least 20 years. Under normal market conditions, the
dollar-weighted average maturity of this portion of the Master Series' portfolio
is expected to range between 22 and 28 years. The Master Series invests this
portion of its assets in an effort to replicate the total return performance of
the Lehman Brothers 20+ Year Treasury Index which is composed of U.S. Treasury
securities with 20 years or more to maturity.
Money Market Investments. The money market instrument portion of the Master
Series' portfolio generally is invested in high-quality money market
instruments, including U.S. Government obligations, obligations of domestic and
foreign banks, short-term corporate debt instruments, repurchase agreements and
time deposits.
A more complete description of the Master Series' investments and
investment activities is contained in "Appendix -- Additional Investment
Policies."
Wells Fargo and WFNIA manage other portfolios which also invest in
accordance with the Asset Allocation Model. The performance of each of those
other portfolios is likely to vary among themselves and from the performance of
the Fund. Such variation in performance is primarily due to different
equilibrium asset mix assumptions used for the various portfolios, timing
differences in the implementation of the model's recommendations and differences
in expenses and liquidity requirements.
MASTER/FEEDER STRUCTURE
As of May 26, 1994, the Fund converted to a feeder fund in a master/feeder
structure. Accordingly, the Fund invests all of its assets in the Master Series,
which has substantially the same investment objective as the Fund. See, "The
Fund -- Investment Objectives and Policies." The
- ---------------
1 S&P does not sponsor the Fund or the Master Series, nor is it affiliated in
any way with Wells Fargo, WFNIA, the Master Series or the Fund. "Standard &
Poor's(R)," "S&P(R)," "S&P 500(R)," and "Standard & Poor's 500(R)" are
trademarks of McGraw-Hill, Inc. and have been licensed for use by the Fund and
the Master Series. The Fund and the Master Series are not sponsored, endorsed,
sold, or promoted by S&P and S&P makes no representation or warranty, express
or implied, regarding the advisability of investing in the Fund and the Master
Series.
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<PAGE> 20
Master Trust is organized as a trust under the laws of the State of Delaware.
See "General Information -- Description of the Company." In addition to selling
its shares to the Fund, the Master Series may sell its shares to certain other
mutual funds or accredited investors. Information regarding additional options,
if any, for investment in shares of the Master Series is available from Stephens
and may be obtained by calling 1-800-643-9691. The expenses and,
correspondingly, the returns of other investment options in the Master Trust may
differ from those of the Fund.
The Board of Directors believes that, if other investors invest their
assets in the Master Series, certain economic efficiencies may be realized with
respect to the Master Series. For example, fixed expenses that otherwise would
have been borne solely by the Fund would be spread across a larger asset base
provided by more than one fund investing in the Master Series. The Fund and
other entities investing (if any) in the Master Series would each be liable for
all obligations of the Master Series. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and the Master Trust itself is unable to meet
its obligations. Accordingly, the Company's Board of Directors believes that
neither the Fund nor its shareholders will be adversely affected by reason of
investing the Fund's assets in the Master Series. However, if a mutual fund or
other investor withdraws its investment from the Master Series, the economic
efficiencies (e.g., spreading fixed expenses across a larger asset base) that
the Company's Board believes should be available through investment in the
Master Series may not be fully achieved. In addition, given the relatively novel
nature of the master/feeder structure, accounting and operational difficulties
could occur.
The Master Series' investment objective and other fundamental policies,
which are substantially the same as those of the Fund, cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940 (the "1940 Act")) of the Master Series' outstanding voting shares. The
Master Series seeks to maximize total return, consisting of capital appreciation
and current income, without assuming undue risk. Whenever the Fund, as a Master
Series shareholder, is requested to vote on matters pertaining to any
fundamental policy of the Master Series, the Fund will hold a meeting of its
shareholders to consider such matters and the Fund will cast its votes in
proportion to the votes received from Fund shareholders. The Fund will vote
Master Series shares for which it receives no voting instructions in the same
proportion as the votes received from Fund shareholders. In addition, certain
policies of the Master Series that are non-fundamental can be changed by vote of
a majority of the Master Trust's Trustees without a shareholder vote. If the
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<PAGE> 21
Master Series' investment objective or policies are changed, the Fund could
subsequently change its objective or policies to correspond to those of the
Master Series or the Fund could redeem its Master Series shares and either seek
a new investment company with a substantially matching objective in which to
invest or retain its own investment adviser to manage the Fund's portfolio in
accordance with its objective. In the latter case, the Fund's inability to find
a substitute investment company in which to invest or equivalent management
services could adversely affect shareholders' investments in the Fund. The
Fund's investment objective and other fundamental policies cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
the Fund's outstanding voting shares. The Fund will provide shareholders with 30
days' written notice prior to the implementation of any change in the investment
objective of the Fund or Master Series, to the extent possible.
PERFORMANCE
The Fund's performance may be advertised in terms of yield and total
return. These performance figures are based on historical results and are not
intended to indicate future performance. The Fund's yield is calculated by
dividing its net investment income per share earned during a specified period
(usually 30 days) by its public net asset value per share on the last day of
such period and annualizing the result. The Fund's total return may be
calculated on an average annual total return basis or a cumulative total return
basis. Average annual total return refers to the average annual compounded rates
of return over one-, five-, and ten-year periods (or the life of the Fund, which
periods are stated in the advertisement) and is measured by comparing the value
of an investment in the Fund at the beginning of the relevant period to the
redemption value at the end of the period and annualizing the result. Cumulative
total return is based on the overall percentage change in value of a
hypothetical investment in the Fund. Both methods assume that all Fund dividends
and capital gain distributions are reinvested. Fees charged by an institution or
shareholder servicing agent in connection with an investment in the Fund are not
included in calculations of yield or total return. The Fund's performance
corresponds directly to the investment experience of the Master Series. The
Fund's annual report contains additional performance information and is
available without charge by calling 1-800-776-0179 or by writing the Company at
the address printed on the back of the Prospectus.
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<PAGE> 22
MANAGEMENT OF THE FUND
MASTER TRUST INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER -- Wells Fargo,
a wholly owned subsidiary of Wells Fargo & Company located at 420 Montgomery
Street, San Francisco, California 94105, is the Master Series' investment
adviser. Wells Fargo, 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 March
31, 1995, various divisions and affiliates of Wells Fargo (including WFNIA)
provided investment advisory services for approximately $196 billion of assets
of individuals, trusts, estates and institutions. Pursuant to an Investment
Advisory Agreement with the Master Trust, Wells Fargo provides investment
guidance and policy direction in connection with the management of the Master
Series' assets, subject to the supervision of the Master Trust's Board of
Trustees and in conformity with Delaware law and the stated policies of the
Master Series.
Wells Fargo has engaged WFNIA, located at 45 Fremont Street, San Francisco,
California 94105, to provide sub-investment advisory services to the Master
Series. WFNIA is a general partnership owned 50% by a wholly owned subsidiary of
Wells Fargo and 50% by a subsidiary of The Nikko Securities Co., Ltd. As of
March 31, 1995, WFNIA managed or provided investment advice for assets
aggregating in excess of $171 billion. As of March 31, 1995, WFNIA managed
approximately $15 billion using the Asset Allocation Model. Pursuant to a
Sub-Investment Advisory Agreement, WFNIA, subject to the supervision and
approval of Wells Fargo, provides investment advisory assistance and the
day-to-day management of the Master Series' assets, subject to the overall
authority of the Master Trust's Board of Trustees and in conformity with
Delaware law and the stated policies of the Master Series.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in WFNIA to
Barclays PLC of the U.K. The sale, which is subject to the approval of
appropriate regulatory authorities, is expected to close in the fourth quarter
of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of
15
<PAGE> 23
Barclays and offers a full range of investment banking, capital markets and
asset management services.
Under the 1940 Act, this proposed change of control of WFNIA would result
in an assignment and termination of the current Sub-Investment Advisory
Agreement between WFNIA, Wells Fargo and the Master Series. Subject to the
approval of the Company's Board of Directors, it is contemplated that a special
meeting of shareholders of the Fund will be convened to consider a change in the
structure of the Fund, which will become effective only upon the change of
control of WFNIA. It is not anticipated that the proposed change of control or
change in structure will change the investment objective or overall investment
strategy of the Fund.
Wells Fargo deals, trades and invests for its own account in the types of
securities in which the Master Series may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by the
Master Series. Wells Fargo has informed the Master Trust that in making its
investment decisions it does not obtain or use material inside information in
its possession.
Prior to the Fund's conversion to master/feeder structure, Wells Fargo
provided investment advisory services directly to the Fund. For its services as
investment adviser Wells Fargo was entitled to receive a monthly fee at the
annual rate of 0.65% of the Fund's average daily net assets. WFNIA was entitled
to receive from Wells Fargo a monthly fee at the annual rate of 0.15% of the
Fund's average daily net assets as compensation for sub-advisory services to the
Fund prior to conversion.
Since the conversion to master/feeder structure, Wells Fargo provides
investment advisory services to the Master Series. Under the terms of the
current Investment Advisory Agreement between the Master Trust and Wells Fargo,
the Master Trust has agreed to pay Wells Fargo a monthly fee at the annual rate
of 0.35% of the Master Series' average daily net assets. Out of this fee, Wells
Fargo compensates WFNIA for sub-advisory services provided to the Master Series.
In this regard, Wells Fargo has agreed to pay WFNIA a monthly fee at the annual
rate of 0.20% of the Master Series' average daily net assets. For the fiscal
year ended February 28, 1995, Wells Fargo was paid advisory fees at the annual
rate of 0.41% of the average daily net assets of the Fund for its services as
investment adviser to the Fund and the Master Series. During the same period,
WFNIA was paid by Wells Fargo sub-advisory fees at the annual rate of 0.19% of
the average daily net assets of the Fund for its services as sub-adviser to the
Fund and the Master Series. Fund shareholders bear a pro rata portion of the
Master Series' operating expenses, including its advisory fees, to the extent
that the Fund, as a shareholder of the Master Series, bears such expenses.
16
<PAGE> 24
The overall management of the Master Series is based on the recommendation
of an investment model, and no person is primarily responsible for recommending
the mix of stocks, bonds and money market instruments in the portfolio of the
Master Series.
Morrison & Foerster, counsel to the Company and the Master Trust and
special counsel to Wells Fargo, has advised the Company, the Master Trust and
Wells Fargo that Wells Fargo may perform the services contemplated by the
Advisory Contract without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Such counsel has pointed out, however,
that there are no controlling judicial or administrative interpretations or
decisions and that future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes, including the
Glass-Steagall Act and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as future changes in such
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent Wells Fargo from continuing to perform, in whole
or in part, such services. If Wells Fargo were prohibited from performing any
such services, it is expected that the Directors of the Company would recommend
to the Fund's shareholders that they approve a new advisory agreement with
another entity or entities qualified to perform such services.
ADMINISTRATOR AND DISTRIBUTOR -- Stephens, located at 111 Center Street,
Little Rock, Arkansas 72201, serves as the Company's and the Master Trust's
administrator pursuant to separate Administration Agreements with the Company
and the Master Series. Under the Administration Agreement with the Company,
Stephens provides general supervision of the operation of the Company, other
than the provision of investment advice, subject to the overall authority of the
Board of Directors and in accordance with Maryland law. The administrative
services provided to the Fund also include coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Board of Directors and officers.
Stephens also furnishes office space and certain facilities to conduct the
Company's business, and compensates the Company's Directors, officers and
employees who are affiliated with Stephens. In addition, except as noted below,
Stephens will assume all expenses incurred by the Fund other than the fees
payable by the Fund pursuant to the Company's various service contracts. For
providing administrative services to the Fund, the Company has agreed to pay
Stephens a monthly fee at the annual rate of 0.10% of the Fund's average daily
net assets. For the fiscal year ended February 28, 1995
17
<PAGE> 25
the Company paid a fee of 0.09% of the Fund's average daily net assets to
Stephens for its services as administrator to the Fund and Master Series.
Stephens also serves as the Company's principal underwriter within the
meaning of the 1940 Act and as distributor of the Fund's shares pursuant to a
Distribution Agreement with the Company. The Distribution Agreement provides
that Stephens will act as agent for the Company for the sale of Fund shares and
may enter into Selling Agreements with selling agents that wish to make
available Fund shares to their respective customers ("Selling Agents"). Wells
Fargo presently acts as a Selling Agent, but does not receive any fee from the
Fund for such activities.
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.
CUSTODIAN AND TRANSFER AGENT -- Wells Fargo is the Company's custodian but
does not receive a fee from the Company for such services. Wells Fargo
Institutional Trust Company, N.A., 45 Fremont Street, San Francisco, California
94105, is the Master Trust's Custodian but does not receive a fee from Master
Trust for such services. WFITC is owned by WFNIA and Wells Fargo & Company.
Wells Fargo is the Company's Transfer and Dividend Disbursing Agent (the
"Transfer Agent") and provides transfer agency and custodial services at 525
Market Street, San Francisco, California 94105. The Company has agreed to pay
Wells Fargo a monthly fee at the annual rate of 0.10% of the Fund's average
daily net assets for transfer agency services.
SHAREHOLDER SERVICING AGENT -- The Fund has adopted a Shareholder Servicing
Plan pursuant to which it has entered into a Shareholder Servicing Agreement
with Wells Fargo, and may enter into similar agreements with other entities
("Shareholder Servicing Agents"). Under such agreements, Shareholder Servicing
Agents (including Wells Fargo) agree, as agent for their customers, to be
responsible for performing shareholder liaison services, which include, without
limitation, answering customer inquiries regarding account status and history
and the manner in which purchases, exchanges and redemptions of Fund shares may
be effected, assisting customers with investment plans, dividend options and
account designations and addresses, processing of purchase, redemption and
exchange transactions, providing periodic account statements showing account
balances and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by the
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<PAGE> 26
Shareholder Servicing Agent or its affiliates, arranging for bank wires,
distributing various materials for the Company, assisting in the establishment
and maintenance of accounts in the Fund and providing such other similar
services as the Company or a customer may reasonably request. For these
services, a Shareholder Servicing Agent is entitled to receive a fee, which may
be paid periodically, determined by a formula based upon the number of accounts
serviced by the Shareholder Servicing Agent during the period for which payment
is being made, the level of activity in such accounts during such period, and
the expenses incurred by the Shareholder Servicing Agent. In no event will such
fees exceed, on an annualized basis for the Fund's then-current fiscal year,
0.20% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is being made by investors with whom the
Shareholder Servicing Agent maintains a servicing relationship, or an amount
which equals the maximum amount payable to the Shareholder Servicing Agent under
applicable laws, regulations or rules, including the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., whichever is less.
A Shareholder Servicing Agent 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 higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the Fund and to notify
them in writing at least thirty days before it imposes any transaction fees.
EXPENSES -- Under the Administration Agreement, Stephens has agreed to
assume the operating expenses of the Fund and a pro rata share of the operating
expenses of the Master Series, except for extraordinary expenses and those fees
and expenses payable pursuant to the various service contracts described above
which will be borne by the Company and those expenses specifically assumed by
Wells Fargo under its contracts with the Fund.
Stephens has not assumed the following operating expenses of the Master
Series: advisory fees, interest, brokerage fees and commissions, if any, costs
of independent pricing services and any extraordinary expenses.
Stephens has not assumed the following operating expenses of the Fund:
administration fees, Shareholder Servicing Agent fees, Transfer Agent fees and
expenses and any extraordinary expenses.
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<PAGE> 27
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an IRA pursuant to arrangements
between the sponsor or other agent of the qualified employee benefit
plan and a Shareholder Servicing Agent.
Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request by an investor or the investor's
representative, the Company or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below) and $1,000 by all other methods or for all other
investors except that there is no minimum initial investment amount for Benefit
Plans or IRA investors. All subsequent investments must be at least $100, except
that there is no minimum subsequent investment amount for Benefit Plans or IRA
investors. All investments in Fund shares are subject to a determination by the
Company that the investment instructions are complete. If shares are purchased
by a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. The
Company reserves the right in its sole discretion to suspend the availability of
the Fund's shares and to reject any purchase requests. Certificates for Fund
shares are not issued.
20
<PAGE> 28
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading on the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading on the NYSE are executed on the next Business
Day. The investor's Shareholder Servicing Agent is responsible for the prompt
transmission of the investor's purchase order to the Transfer Agent on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a Shareholder Servicing Agent may not be received by the Transfer
Agent on the same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further information
concerning this requirement. Failure to furnish a social security number or TIN
to the Company could subject the investor to penalties imposed by the Internal
Revenue Service ("IRS").
BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Shareholder Servicing Agents as plan trustee, plan administrator or
other agent, or whose plan trustee, plan administrator or other agent has a
servicing arrangement with a Shareholder Servicing Agent that permits
investments in Fund Shares. Benefit Plans include 401(k) plans and plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), health and welfare plans and executive deferred compensation
plans. For additional information about Benefit Plans that may be eligible to
invest in Fund shares, prospective investors should contact a Shareholder
Servicing Agent.
Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
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<PAGE> 29
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Shareholder Servicing Agent may offer other types of
tax-deferred or tax-advantaged plans, including a Keogh retirement plan for
self-employed professional persons, sole proprietors and partnerships. Contact a
Shareholder Servicing Agent for materials describing plans available through it,
and their benefits, provisions and fees.
Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Shareholder Servicing
Agent. Completed retirement plan applications should be returned to the
investor's Shareholder Servicing Agent for approval and processing. If an
investor's retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. Certain features
described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a retirement plan. Investors should
consult their Shareholder Servicing Agent.
PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), 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. Some banks may impose wiring fees.
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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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<PAGE> 30
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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
AutoSaver Plan
The Company's AutoSaver Plan provides individual or corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an investor must specify an
amount ($100 or more) to be withdrawn automatically by the Transfer Agent on a
monthly basis from an account with a bank ("Approved Bank") that is designated
in the investor's Account Application and that is approved by the Transfer
Agent. Wells Fargo is an Approved Bank. The Transfer Agent withdraws and uses
this amount to purchase Fund shares on the investor's behalf on or about the
fifth Business Day of each month. There are no separate fees charged to an
investor by the Company for participating in the AutoSaver Plan.
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
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<PAGE> 31
Additional Purchases
An individual or corporate investor may make additional purchases of $100
or more by instructing the Fund's Transfer Agent to debit a designated Approved
Bank account, by wire by using the procedures described under "Initial Purchases
by Wire" above, or by mail with a check payable to "Stagecoach Inc./(Name of
Fund)" to the above address. An investor must write a Fund account number on the
check and include the detachable stub from a Statement of Account or a letter
providing the investor's Fund account number.
In-Kind Purchases
At the discretion of Wells Fargo, shares of the Fund may be purchased in
exchange for securities which are eligible for acquisition by the Master Series
as described in this Prospectus. Securities to be exchanged which are accepted
by the Fund are valued in accordance with the procedures referenced under "Share
Value" in this Prospectus at the time of the next determination of net asset
value after such acceptance. Shares issued by the Fund in exchange for
securities are issued at net asset value determined as of the same time. All
dividends (with the exception of dividends received on securities tendered after
the ex-dividend date), interest, subscription, or other rights pertaining to
such securities shall become the property of the Fund and must be delivered to
the Fund by the investor upon receipt from the issuer.
The Fund will only accept securities for its portfolio in exchange for
shares issued by the Fund if: (1) such securities are, at the time of the
exchange, eligible to be included in the Master Series' portfolio and current
market quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities Act
of 1933, as amended (the "1933 Act") or under the laws of the country in which
the principal market for such securities exists, or otherwise; (3) the value of
any such security (except U.S. Government obligations) being exchanged together
with other securities of the same issuer owned by the Master Series will not
exceed 5% of the net assets of the Master Series immediately after the
transaction; and (4) such securities are consistent with the Fund's and the
Master Series' investment objective and policies and otherwise acceptable to
Wells Fargo, as the Master Series' investment adviser, in its sole discretion.
The requirement for an investor representation described in item (2) will not
apply to the initial investment into the Fund by certain employee benefit plans,
as described below under "General Information -- Description of the Company."
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<PAGE> 32
A gain or loss for federal income tax purposes may be realized by taxable
investors making in-kind purchases upon the exchange depending upon the cost of
the securities exchanged.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price of the shares is the
next determined net asset value of the Fund calculated after the Company has
received a redemption request in proper form. Redemption proceeds may be more or
less than the amount invested depending on the Fund's net asset value at the
time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master Series
of securities owned by the Master Series is not reasonably practicable or (b) it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of Fund shareholders. In addition, the Company
may defer payment of a shareholder's redemption until reasonably satisfied that
such shareholder's investments made by check have been collected (which can take
up to fifteen days from the purchase date). Payment of redemption proceeds may
be made in portfolio securities, subject to regulation by some state securities
commissions. Shareholders who receive portfolio securities as payment of
redemption proceeds will generally incur brokerage costs upon the sale of such
securities.
Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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.
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<PAGE> 33
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual or corporate investor's
account and send the proceeds to such investor if the balance in the account
falls below $1,000 because of a redemption (including a redemption of Fund
shares after an investor has made only the $1,000 minimum initial investment).
However, investors will be given 30 days' notice to make an additional
investment to increase their account balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York time), will be
executed at the net asset value determined as of the close of regular trading on
the NYSE on that day. Redemption orders that are received by the Transfer Agent
after the close of regular trading on the NYSE, will be executed on the next
Business Day. The investor's Shareholder Servicing Agent is responsible for the
prompt transmission of redemption orders to the Fund on the investor's behalf.
Under certain circumstances, a Shareholder Servicing Agent may establish an
earlier deadline for receipt of orders or an investor's order transmitted to a
Shareholder Servicing Agent may not be received by the Transfer Agent on the
same day.
Unless the investor has made other arrangements with an appropriate
Shareholder Servicing Agent, and the Transfer Agent has been informed of such
arrangements, proceeds of a redemption order made by the investor through a
Shareholder Servicing Agent are credited to the account with the Approved Bank
that the investor has designated in the Account Application. If no such account
is designated, a check for the proceeds is mailed to the investor's address of
record or, if such address is no longer valid, the proceeds are credited to the
investor's account with the investor's Shareholder Servicing Agent.
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<PAGE> 34
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL
RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Shareholder Servicing Agent. The redemption procedures outlined in
the remainder of this section do not apply to investors in employee benefit
plans or retirement plans, nor do the minimum-balance requirements outlined
above. Investors in these types of plans should contact their Shareholder
Servicing Agent regarding redemption procedures applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners must sign.
3. If the shares to be redeemed have a value of $5,000 or more, or
redemption proceeds are to be paid to someone other than the investor at such
investor's address of record, the signature(s) must be guaranteed by an
"eligible guarantor institution," which includes a commercial bank that is an
FDIC member, 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 redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual or corporate investor
with a convenient way to have Fund shares redeemed from the investor's account
and the proceeds distributed to the investor on a
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<PAGE> 35
monthly basis. An investor may participate in the Systematic Withdrawal Plan
only if the investor has a Fund account valued at $10,000 or more as of the date
of an election to participate, the investor has an account at an Approved Bank,
the investor's dividends and capital gain distributions are being reinvested
automatically and the investor is not participating in the AutoSaver Plan at any
time while participating in the Systematic Withdrawal Plan. An investor may
specify an amount ($100 or more) to be distributed by check to the investor's
address of record or deposited in an Approved Bank account designated in the
investor's Account Application. The Transfer Agent redeems sufficient shares and
mails or deposits redemption proceeds as instructed on or about the fifth
Business Day prior to the end of each month. There are no separate fees charged
to investors by the Fund for participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a designated withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
Expedited Redemptions by Letter and Telephone
An individual or corporate investor may request an expedited redemption of
Fund shares by letter, in which case the investor's receipt of redemption
proceeds, but not the Fund's receipt of the investor's redemption request, would
be expedited. Telephone redemption and exchange privileges are made available to
an investor automatically upon the opening of an account unless the investor
declines such privileges. The investor also may request an expedited redemption
of Fund shares by telephone on any Business Day, in which case both the
investor's receipt of redemption proceeds and the Fund's receipt of the
investor's redemption request would be expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the
28
<PAGE> 36
Account Application. The Company reserves the right to impose a charge for
wiring redemption proceeds. When proceeds of an individual or corporate
investor's expedited redemption are to be paid to someone else, to an address
other than that of record, or to an account with an Approved Bank that the
investor has not predesignated in the investor's Account Application, the
expedited redemption request must be made by letter and the signature(s) on the
letter must be guaranteed in the manner discussed above, regardless of the
amount of the redemption. If the investor's expedited redemption request is
received by the Transfer Agent on a Business Day, the investor's redemption
proceeds are transmitted to the investor's designated account with an Approved
Bank on the next Business Day (assuming the investor's investment check has
cleared as described above), absent extraordinary circumstances. Such
extraordinary circumstances could include those described above as potentially
delaying redemptions, and also could include situations involving an unusually
heavy volume of wire transfer orders on a national or regional basis or
communication or transmittal delays that could cause a brief delay in the wiring
or crediting of funds. A check for proceeds of less than $5,000 is mailed to the
investor's address of record or, at the investor's election, credited to the
Approved Bank account designated in the investor's Account Application.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase, in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the Stagecoach
Family of Funds, to the extent such shares are offered for sale in the
investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes such action would be appropriate to protect the fund against
disruptions in portfolio manage-
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<PAGE> 37
ment 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 exchange privilege may be modified or
terminated at any time upon 60 days' written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments (i.e. the value
of its investments in the Master Series) plus cash and other assets, deducting
liabilities (including the fees payable for advisory and other services) and
then dividing the result by the number of Fund shares outstanding. The NAV is
expected to fluctuate daily.
The Fund is open for business each Business Day, which is a day on which
the NYSE is open for trading. Currently, the weekdays on which the NYSE is
closed are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Wells Fargo
calculates the Fund's NAV each Business Day as of the close of regular trading
on the NYSE (currently 4:00 p.m., New York time).
The Fund's investments in the Master Series are valued at the NAV of the
Master Series' shares. The Master Series calculates the NAV of its shares on the
same days and at the same time as the Fund. Except for debt obligations with
remaining maturities of 60 days or less, which are valued at amortized cost, the
Master Series' other assets are valued at current market prices, or if such
prices are not readily available, at fair value as determined in good faith in
accordance with guidelines approved by the Master Trust's Board of Trustees.
Prices used for such valuations may be provided by independent pricing services.
For further information regarding the methods employed in valuing the Master
Series' investments, see "Determination of Net Asset Value" in the SAI.
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<PAGE> 38
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays monthly dividends of substantially all of its
net investment income. The Fund distributes any net realized capital gains at
least annually. All dividends and distributions are reinvested automatically in
additional shares of the Fund at net asset value unless payment in cash is
requested and the investor's arrangement with a Shareholder Servicing Agent
permits the processing of cash payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. To the extent
dividends and distributions are reinvested, however, each shareholder receives
additional Fund shares equivalent in value to the reduction in NAV on shares
owned by that shareholder.
FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, 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 of the Code by
investing all of its assets in the Master Series. The Master Series intends to
qualify for federal tax purposes as a partnership. As such, the Fund will
generally be deemed to own directly its proportionate share of the assets of the
Master Series. Therefore, any interest, dividends, gains or losses of the Master
Series will be "passed through" to the Fund and other investors in the Master
Series, regardless of whether such interest, dividends or gains have been
distributed by the Master Series or losses have been realized by the Fund or
other investors. Accordingly, if the Master Series 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, or gains
without receipt of any corresponding distribution. The Master Series seeks to
minimize recognition by investors of interest, dividends or gains without a
corresponding distribution.
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Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers and TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than
exempt-interest dividends) and redemption proceeds (including proceeds from
exchanges). Non-resident aliens and other foreign shareholders may be subject to
U.S. withholding tax at rates of up to 30% on dividends and distributions paid.
TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. Corporate
shareholders of the Fund will 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.
The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains. However, such tax-exempt investors may be
subject to tax on certain unrelated taxable income which could arise, for
example, when such investors acquire shares in the Fund through the use of
leverage. Tax-exempt investors should consult their tax advisors regarding the
Unrelated Business Taxable Income Rules.
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<PAGE> 40
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained 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.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Growth Stock Fund, S&P 500 Stock Fund, Short-Intermediate
Term Fund, U.S. Treasury Allocation Fund, Bond Index Fund, Money Market Fund,
Growth and Income Fund, National Tax-Free Intermediate Income Fund, National
Tax-Free Money Market Mutual Fund, California Tax-Free Intermediate Income Fund,
California Tax-Free Short-Term Income Fund, California Tax-Free Money Market
Fund and Overland National Tax-Free Institutional Money Market Fund. As of May
26, 1994, all of the Company's then-existing series, except the Money Market
Fund, became feeder funds in a master/feeder structure. The Company's principal
office is located at 111 Center Street, Little Rock, Arkansas 72201.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and officers of the Company is included in the
Fund's SAI under "Management." The Fund may withdraw its investment in the
Master Series only if the Board of Directors of the Company determines that is
in the best interests of the Fund and its shareholders to do so. Upon any such
withdrawal, the Board of Directors of the Company would consider what action
might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
Master Series. Although the Company is not required to hold regular annual
shareholder meetings, occasional annual or special meetings may be required for
purposes such as electing or removing Directors, approving advisory contracts
and distribution plans and changing the Fund's investment objectives or
fundamental investment policies.
The Master Trust was established on October 21, 1993, as a Delaware
business trust. The Master Trust's Declaration of Trust permits the Board
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<PAGE> 41
of Trustees to issue beneficial interests in the Master Trust to investors based
on their proportionate investments in the Master Trust. The Master Trust, on
behalf of the Master Series, has retained the services of Wells Fargo as
investment adviser, WFNIA as sub-adviser, and Stephens as administrator and
placement agent. The Board of Trustees of the Master Trust is responsible for
the general management of the Master Trust and supervising the actions of Wells
Fargo, WFNIA and Stephens in these capacities.
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by fund, unless otherwise required by law (such as when a
matter affects only one fund). Shareholders of the Fund are entitled to one vote
for each share owned and fractional votes for fractional shares owned. Depending
on the terms of a particular benefit plan and the matter being submitted to a
vote, a sponsor may request direction from individual participants regarding a
shareholder vote. In addition, whenever the Fund is requested to vote on matters
pertaining to the Master Series, 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 description of the voting rights and
attributes of the shares is contained in the "Capital Stock" section of the SAI.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund, including additional information on performance. Shareholders
may obtain a copy of the Company's most recent report without charge by phoning
1-800-776-0179.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
PORTFOLIO SECURITIES
To the extent set forth in this prospectus, the Master Series may invest in
the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- The Master Series may invest in various
types of U.S. Government obligations. U.S. Government obligations include
securities issued or guaranteed by federal agencies or instrumentalities,
including government-sponsored enterprises. Some obligations of such 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 would
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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- The
Master Series, through its investment in money market instruments, may invest in
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by WFNIA to be of comparable quality to the other obligations in which the
Master Series may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Devel-
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<PAGE> 43
opment Bank. The percentage of the Master Series' assets invested in securities
issued by foreign governments will vary depending on the relative yields of such
securities, the economic and financial markets of the countries in which the
investments are made and the interest rate climate of such countries.
BANK OBLIGATIONS -- The Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, the Master Series may be subject to additional
investment risks that are different in some respects from those incurred by a
fund which invests only in debt obligations of U.S. domestic issuers. Such risks
include possible future political and economic developments, the possible
imposition of foreign withholding taxes on interest income payable on the
securities, the possible establishment of exchange controls or the adoption of
other foreign governmental restrictions which might adversely affect the payment
of principal and interest on these securities and the possible seizure or
nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations, bearing fixed, floating- or variable-interest
rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- The Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Master Series
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will consist only of direct obligations which, at the time of their purchase,
are (a) rated not lower than Prime-1 by Moody's, A-1 by S&P, F-1 by Fitch or
Duff-1 by Duff, (b) issued by companies having an outstanding unsecured debt
issue currently rated not lower than Aa3 by Moody's or AA-by S&P, Fitch or Duff,
or (c) if unrated, determined by WFNIA to be of comparable quality to those
rated obligations which may be purchased by such Fund.
REPURCHASE AGREEMENTS -- The Master Series may enter into repurchase
agreements, which involve the acquisition by the Master Series of an underlying
debt instrument, subject to the seller's obligation to repurchase, and the
Master Series' obligation to resell, the instrument at a fixed price usually not
more than one week after its purchase. The Fund's and Master Series' custodian
or sub-custodian has custody of, and holds in a segregated account, securities
acquired by the Master Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the SEC to be loans by the Master
Series. In an attempt to reduce the risk of incurring a loss on a repurchase
agreement, the Master Series enters into repurchase agreements only with
federally regulated or insured banks or primary government securities dealers
reporting to the Federal Reserve Bank of New York or, under certain
circumstances, banks with total assets in excess of $5 billion or domestic
broker/dealers with total equity capital in excess of $100 million. The Master
Series enters into repurchase agreements only with respect to securities of the
type in which the Master Series may invest, including government securities and
mortgage-related securities regardless of their remaining maturities, and
requires that additional securities be deposited with the custodian or
sub-custodian if the value of the securities purchased should decrease below the
repurchase price. WFNIA monitors on an ongoing basis the value of the collateral
to assure that it always equals or exceeds the repurchase price. Certain costs
may be incurred by the Master Series in connection with the sale of the
underlying securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Master Series may be delayed or limited. The Master Series considers on an
ongoing basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
UNREGISTERED NOTES -- The Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the 1933 Act, provided such investments are consistent with the Master
Series' investment objective. The Master Series will not invest more than 15% of
the value of its net assets in Notes and in other illiquid securities.
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<PAGE> 45
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- The Master Series may purchase
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable-rate demand notes include
master demand notes which are obligations that permit the Master Series to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there generally
is no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master Series'
right to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating
agencies and the Master Series may invest in obligations which are not so rated
only if WFNIA determines that at the time of investment the obligations are of
comparable quality to the other obligations in which the Master Series may
invest. WFNIA, on behalf of the Master Series, considers on an ongoing basis the
creditworthiness of the issuers of the floating- and variable-rate demand
obligations in the Master Series' portfolio. The Master Series does not invest
more than 15% of the value of its net assets in floating- or variable-rate
demand obligations as to which it cannot exercise the demand feature on not more
than seven days' notice if there is no secondary market available for these
obligations, and in other illiquid securities.
PARTICIPATION INTERESTS -- The Master Series may purchase from financial
institutions participation interests in securities in which the Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series' participation
interest bears to the total principal amount of the
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<PAGE> 46
security. These instruments may have fixed, floating- or variable-rates of
interest. If the participation interest is unrated, or has been given a rating
below that which is permissible for purchase by the Master Series, the
participation interest is backed by an irrevocable letter of credit or guarantee
of a bank, or the payment obligation otherwise is collateralized by U.S.
Government obligations, or, in the case of unrated participation interests,
WFNIA must have determined that the instrument is of comparable quality to those
instruments in which the Master Series may invest. Prior to the Master Series'
purchase of any such instrument backed by a letter of credit or guarantee of a
bank, WFNIA evaluates the creditworthiness of the bank, considering all factors
which it deems relevant, which generally may include review of the bank's cash
flow, level of short-term debt, leverage, capitalization, the quality and depth
of management, profitability, return on assets and economic factors relative to
the banking industry. For certain participation interests, the Master Series has
the right to demand payment, on not more than seven days' notice, for all or any
part of the Master Series' participation interest in the security, plus accrued
interest. As to these instruments, the Master Series intends to exercise its
right to demand payment only upon a default under the terms of the security, as
needed to provide liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio.
MORTGAGE-RELATED SECURITIES -- The Master Series may enter into repurchase
agreements with respect to mortgage-related securities ("MBSs"), representing
interests in a pool of loans secured by mortgages. The resulting cash flow from
these mortgages is used to pay principal and interest on the securities. MBSs
are assembled for sale to investors by various government-sponsored enterprises
such as the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") or are guaranteed by such governmental
agencies as the Government National Mortgage Association ("GNMA"). Regardless of
the type of guarantee, all MBSs are subject to interest rate risk (i.e.,
exposure to loss due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the full and timely payment of
principal and interest by GNMA and such guarantee is backed by the authority of
GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. As such, GNMA obligations are
general obligations of the United States and are backed by the full faith and
credit of the federal government. MBSs issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
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<PAGE> 47
solely the obligations of FNMA and are neither backed by nor entitled to the
full faith and credit of the United States. FNMA is a government-sponsored
enterprise which is also a private corporation whose stock trades on the NYSE.
Fannie Maes are guaranteed as to timely payment of principal and interest by
FNMA. FHLMC MBSs include FHLMC Mortgage Participation Certificates (also known
as "Freddie Macs" or "PCs"). FHLMC guarantees timely payment of interest, but
only ultimate payment of principal due under the obligations it issues. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. FHLMC may, under certain circumstances, remit the
payment of principal at any time after default, but in no event later than one
year after the guarantee becomes payable.
WARRANTS -- The Master Series may invest up to 5% of its net assets in
warrants, except that this limitation does not apply to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time, usually with a stated maturity in excess of one year.
ILLIQUID SECURITIES -- The Master Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Master Series cannot exercise the related demand feature described above on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice. However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the 1933 Act for certain of these
securities held by the Master Series, the Master Series intends to treat such
securities as liquid securities in accordance with procedures approved by the
Master Trust's Board of Trustees. Because it is not possible to predict with
assurance how the market for restricted securities pursuant to Rule 144A will
develop, the Master Trust's Board of Trustees has directed WFNIA to monitor
carefully the Master Series' investments in such securities with particular
regard to trading activity, availability of reliable price information and other
relevant information. To the extent that qualified institutional buyers may
periodically cease purchasing such restricted securities pursuant to Rule 144A,
the
A-6
<PAGE> 48
Master Series' purchase of such securities may have the effect of increasing the
level of illiquidity in the Master Series' portfolio during such period.
INVESTMENT COMPANY SECURITIES -- The Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the Master Series invests. Under the 1940 Act, the Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Master Series' net assets with respect to any one
investment company and (iii) 10% of the Master Series' net assets in the
aggregate. Investments in the securities of other investment companies generally
will involve duplication of advisory fees and certain other expenses and the
investment adviser will waive its advisory fees for that portion of the Master
Series' assets so invested, except when such purchase is part of a plan of
merger, consolidation, reorganization or acquisition.
INVESTMENT TECHNIQUES
STOCK INDEX OPTIONS -- The Master Series may purchase and write (i.e.,
sell) put and call options on stock indices as a substitute for comparable
market positions in the underlying securities. A stock index fluctuates with
changes in the market values of the stocks included in the index. The aggregate
premiums paid on all options purchased may not exceed 20% of the Master Series'
total assets and the value of options written or purchased may not exceed 10% of
the value of the Master Series' total assets.
The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in the Master Series' portfolio
correlate with price movements of the stock index selected. Because the value of
an index option depends upon movements in the level of the index rather than the
price of a particular stock, whether the Master Series will realize a gain or
loss from purchasing or writing stock index options depends upon movements in
the level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements in the
price of a particular stock.
When the Master Series writes an option on a stock index, the Master Series
will place in a segregated account with the Master Portfolio's custodian cash or
liquid securities in an amount at least equal to the market value of the
underlying stock index and will maintain the account while the option is open or
otherwise will cover the transaction.
A-7
<PAGE> 49
FUTURES TRANSACTIONS -- IN GENERAL -- The Master Series will not be a
commodity pool. To the extent permitted by applicable regulations, the Master
Series is permitted to use futures as a substitute for a comparable market
position in the underlying securities.
A futures contract is an agreement between two parties, a buyer and a
seller, to exchange a particular commodity at a specific price on a specific
date in the future. Futures contracts are traded on exchanges, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the only credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are, however, subject to market risk (i.e., exposure
to adverse price changes).
The Master Series' futures transactions must constitute permissible
transactions pursuant to regulations promulgated by the Commodity Futures
Trading Commission ("CFTC"). In addition, the Master Series may not engage in
futures transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired options on futures contracts, other than those
contracts entered into for bona fide hedging purposes, would exceed 5% of the
liquidation value of the Master Series' assets, after taking into account
unrealized profits and unrealized losses on such contracts; provided, however,
that in the case of an option on a futures contract that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
of the liquidation limit. Pursuant to regulations and/or published positions of
the SEC, the Master Series may be required to segregate cash or high quality
money market instruments in connection with its futures transactions in an
amount generally equal to the entire value of the underlying security.
Initially, when purchasing or selling futures contracts the Master Series
will be required to deposit with the Fund's and the Master Series' custodian in
the broker's name an amount of cash or cash equivalents up to approximately 10%
of the contract amount. This amount is subject to change by the exchange or
board of trade on which the contract is traded and members of such exchange or
board of trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Master Series upon termination
of the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from the
broker will be made daily as the price of the index or securities underlying the
futures contract fluctuates, making the long and short positions in the futures
contract more or less valuable. At any time prior to the expiration of a futures
contract, the Master Series may elect to close the position by taking
A-8
<PAGE> 50
an opposite position, at the then prevailing price, thereby terminating its
existing position in the contract.
Although the Master Series intends to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the Master
Series to substantial losses. If it is not possible, or the Master Series
determines not, to close a futures position in anticipation of adverse price
movements, it will be required to make daily cash payments of variation margin.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a long
position if the option is a put). Upon exercise of the option, the assumption of
offsetting futures positions by both the writer and the holder of the option
will be accompanied by delivery of the accumulated cash balance in the writer's
futures margin account in the amount by which the market price of the futures
contract, at exercise, exceeds (in the case of a call) or is less than (in the
case of a put) the exercise price of the option on the futures contract.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- The Master Series
may purchase and sell stock index futures contracts and options on stock index
futures contracts.
A stock index future obligates the seller to deliver (and the purchaser to
take), effectively, an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of the underlying stocks in the index is made. With respect
to stock indices that are permitted investments, the Master Series intends to
purchase and sell futures contracts on the stock index for which it can obtain
the best price with consideration also given to liquidity.
A-9
<PAGE> 51
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS -- The Master Series may invest in interest rate futures contracts and
options on interest rate futures contracts as a substitute for a comparable
market position in the underlying securities.
The Master Series also may sell options on interest rate futures contracts
as part of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions can be effected or the
degree of correlation between price movements in the options on interest rate
futures and price movements in the Master Series' portfolio securities which are
the subject of the transaction.
BORROWING MONEY -- As a fundamental policy, the Master Series is permitted
to borrow to the extent permitted under the 1940 Act. However, the Master Series
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 33 1/3% of the value of its total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exceed 5% of the Master Series' total assets, the
Master Series will not make any investments.
LOANS OF PORTFOLIO SECURITIES -- From time to time, the Master Series may
lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33 1/3% of the value of the Master Series' total assets. In
connection with such loans, the Master Series receives collateral consisting of
cash, U.S. Government obligations or irrevocable letters of credit which are
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Master Series can increase its income
through the investment of such collateral. The Master Series continues to be
entitled to receive payments in amounts equal to the dividends, interest and
other distributions payable on the loaned security and receives interest on the
amount of the loan. Such loans are terminable at any time upon specified notice.
The Master Series might experience risk of loss if the institution with which it
has engaged in a portfolio loan transaction breaches its agreement with the
Master Series.
FORWARD COMMITMENTS -- The Master Series may purchase securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment, but delivery and payment ordinarily take place a number
of days after the date of the commitment to purchase. The Master Series will
make commitments to purchase such securities only with the intention of actually
acquiring the securities, but
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<PAGE> 52
the Master Series may sell these securities before the settlement date if it is
deemed advisable. The Master Series will not accrue income in respect of a
security purchased on a forward commitment basis prior to its stated delivery
date.
Securities purchased on a when-issued or forward commitment basis and
certain other securities held in the Master Series' portfolio are subject to
changes in value (both generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise) based
upon the public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities purchased on a
when-issued or forward commitment basis may expose the Master Series to risk
because they may experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued or forward commitment basis can involve
the additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction itself.
A segregated account of the Master Series consisting of cash or U.S. Government
obligations or other high quality liquid debt securities in an amount at least
equal at all times to the amount of the when-issued or forward commitments is
established and maintained at the Master Trust's custodian bank. Purchasing
securities on a forward commitment basis when the Master Series is fully or
almost fully invested may result in greater potential fluctuation in the value
of the Master Series' net assets and its NAV per share.
INVESTMENT POLICIES -- THE FUND
The investment objective of the Fund, as set forth in the first paragraph
of the section entitled "The Fund -- Investment Objective and Policies," is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of the outstanding voting securities of the Fund as
described under "Capital Stock" in the SAI. In addition, any fundamental
investment policy may not be changed without such shareholder approval. If the
Board of Directors of the Company determines, however, that the investment
objective of the Fund can best be achieved by a substantive change in a
non-fundamental investment policy or strategy, the Board 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 Fund may: (i) not purchase securities
of any issuer (except U.S. Government obligations) if as a result, with respect
to 75% of its total assets, more than 5% of the value of the Fund's total assets
would be invested in the securities of such issuer or, with respect to 100% of
its total assets, the Fund would own more than 10%
A-11
<PAGE> 53
of the outstanding voting securities of such issuer, provided that this
restriction shall not prevent the Fund from investing all of its assets in the
Master Series; (ii) borrow from banks up to 20% 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 20% 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); (iii) make loans of
portfolio securities in accordance with its investment policies; and (iv) not
invest 25% or more of its total assets (i.e., concentrate) in any particular
industry, except that the Fund may concentrate its assets in any one industry
for the same period as does the S&P 500 Index and except that the Fund may
invest 25% or more of its assets in U.S. Government obligations, provided that
this restriction shall not prevent the Fund from investing all of its assets in
the Master Series.
The Fund reserves the right to invest up to 15% of the current value of its
net assets in repurchase agreements having maturities of more than seven days
and other illiquid securities. However, as long as the Fund's shares are
registered for sale in a state that imposes a lower limit on the percentage of a
fund's assets that may be so invested, the Fund will comply with such lower
limit. The Fund presently is limited to investing 10% of its net assets in such
securities due to limits applicable in several states. Disposing of illiquid or
restricted securities may involve additional costs and require additional time.
INVESTMENT POLICIES -- THE MASTER SERIES
CERTAIN FUNDAMENTAL POLICIES -- The Master Series may (i) borrow from banks
up to 20% 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 20% 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); (ii) invest up to 5% of its total assets in the obligations of any
single issuer, except that up to 25% of the value of the total assets of the
Master Series may be invested and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities may be purchased, without regard
to any such limitation; and (iii) not invest 25% or more of its total assets
(i.e., concentrate) in any particular industry, except that the Master Series
may concentrate its assets in any one industry for the same period as does the
S&P 500 Index and except that the Master Series may invest 25% or more of its
assets in U.S. Government obligations. This paragraph describes certain
fundamental policies that cannot be changed as to the Master
A-12
<PAGE> 54
Series without approval by the holders of a majority (as defined in the 1940
Act) of the Master Series' outstanding voting securities.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors) if such purchase does not
cause the value of its investments in all such companies to exceed 5% of the
value of its total assets; (ii) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings; and (iii) invest
up to 15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities.
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<PAGE> 55
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<PAGE> 56
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<PAGE> 57
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFAA 6/95
<PAGE> 58
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFAA 6/95
<PAGE> 59
BOND INDEX FUND
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; General Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C General Information
- ------ -------------------
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
<PAGE> 60
[STAGECOACH FUNDS LOGO]
------------------------------
PROSPECTUS
------------------------------
BOND INDEX FUND
June 28, 1995
- --------------------------------------------------------------------------------
<PAGE> 61
STAGECOACH INC.
BOND INDEX FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
funds -- the BOND INDEX FUND (the "Fund"). The Fund seeks to approximate as
closely as practicable before fees and expenses the total rate of return of the
U.S. market for issued and outstanding U.S. Government and high-grade corporate
bonds as measured by the Lehman Brothers Government/Corporate Bond Index before
fees and expenses. THE FUND INVESTS ALL OF ITS ASSETS IN THE BOND INDEX MASTER
SERIES (THE "MASTER SERIES") OF MASTER INVESTMENT PORTFOLIO (THE "MASTER
TRUST"), AN OPEN-END, MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN PORTFOLIO
SECURITIES. THE MASTER SERIES HAS SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS
THE FUND.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund and the Master
Series that an investor should know before investing. A Statement of Additional
Information ("SAI") dated June 28, 1995 describing the Fund has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference.
The SAI is available free of charge by calling the Company at 1-800-776-0179 or
by writing the Company at the address printed on the back of the Prospectus.
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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN INVESTMENT IN THE
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 62
The Fund's investment experience corresponds directly with the Master
Series' investment experience. Shares of the Master Series may be purchased only
by other investment companies or other accredited investors.
As noted below under "General Information -- Description of the Company,"
investors may be able to invest indirectly in the Master Trust through other
investment companies or portfolios of the Company that invest substantially all
of their assets in the Master Trust. The Master Series is advised by Wells Fargo
Bank, N.A. ("Wells Fargo"). Wells Fargo Nikko Investment Advisors ("WFNIA")
serves as sub-adviser to the Master Series. Wells Fargo also serves as the
Fund's custodian and as the Fund's and the Master Series' transfer agent and as
a Selling Agent and a Shareholder Servicing Agent (as defined below). Wells
Fargo Institutional Trust Company, N.A. ("WFITC") serves as the Master Series'
custodian. Stephens Inc. ("Stephens") is the sponsor, distributor and
administrator for the Company and the Master Trust.
WELLS FARGO IS THE INVESTMENT ADVISER TO THE MASTER SERIES, WFNIA SERVES AS
SUB-ADVISER TO THE MASTER SERIES, AND TOGETHER WITH THEIR AFFILIATES, WELLS
FARGO AND WFNIA PROVIDE OTHER SERVICES TO THE MASTER TRUST FOR WHICH
THEY ARE COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS
FARGO, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE COMPANY AND THE MASTER TRUST.
<PAGE> 63
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 2
Summary Of Fund Expenses.................................... 7
Explanation of the Table.................................... 8
Financial Highlights........................................ 9
The Fund.................................................... 10
Management of the Fund...................................... 14
How to Buy Shares........................................... 19
How to Redeem Shares........................................ 24
Exchange Privilege.......................................... 28
Share Value................................................. 29
Dividends And Distributions................................. 30
Federal Income Tax Information.............................. 30
General Information......................................... 32
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
--------
<S> <C>
Additional Investment Policies.............................. A-1
</TABLE>
1
<PAGE> 64
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefit plans, including retirement plans, that
have appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent of the
qualified employee benefit plan and a Shareholder Servicing Agent.
See "How To Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund seeks to approximate as closely as practicable before fees and
expenses the total rate of return of the U.S. market for issued and
outstanding U.S. Government and high grade corporate bonds as measured by
the Lehman Brothers Government/Corporate Bond Index (the "LB Bond Index").
The Fund seeks to achieve its investment objective by investing all of its
assets in the Master Series, which has substantially the same investment
objective as the Fund. The Master Series seeks to achieve this investment
objective by investing substantially all the Master Series' assets in
obligations included in the LB Bond Index. See "The Fund -- Investment
Objective and Policies" and "Appendix -- Additional Investment Policies."
2
<PAGE> 65
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund (and the Master Series) are not bank deposits or
obligations of Wells Fargo and are not insured by the Federal Deposit
Insurance Corporation ("FDIC"). Therefore, investors should be prepared to
accept some risk with the money invested in the Fund. The Master Series'
portfolio debt instruments that are not guaranteed as to principal and
interest by the U.S. Government are subject to default risk. Default risk
is the risk that the issuers of the debt instruments in which the Master
Series invests may default on the payment of principal and/or interest. The
portfolio debt instruments of the Master Series are also subject to
interest rate risk. Interest-rate risk is the risk that increases in
interest rates may adversely affect the value of the debt instruments in
which the Master Series invests and hence the value of an investment in the
Fund. The values of debt instruments generally change inversely to changes
in interest rates. The Master Series also may engage in certain futures
contract transactions which have other risks associated with them. As with
all mutual funds, there can be no assurance that the Fund will achieve its
investment objective. Finally, the Master Series was formed in 1993 and
therefore has a limited operating history. See "The Fund -- Investment
Objective and Policies" and "Appendix -- Additional Investment Policies."
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") is open for regular business (a "Business
Day"). There are no sales loads.
To invest in the Fund contact a Shareholder Servicing Agent to receive
information and an Account Application. An Account Application must be
completed and signed to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method, and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors.
See "How to Buy Shares."
3
<PAGE> 66
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Trust, manages the
investments of the Master Series. The Company has not retained the services
of a separate investment adviser for the Fund because the Fund invests all
of its assets in the Master Series. WFNIA serves as the Master Series'
sub-adviser and provides investment advice to Wells Fargo. Wells Fargo, one
of the ten largest commercial banks in the United States, was founded in
1852 and is the oldest bank in the western United States. As of March 31,
1995, various divisions and affiliates of Wells Fargo (including WFNIA)
provided investment advisory services for approximately $196 billion of
assets of individuals, trusts, estates and institutions. See "Management of
the Fund."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For its advisory
services to the Master Series, Wells Fargo is entitled to receive a fee at
an annual rate of 0.08% of the Master Series' average daily net assets, out
of which it pays for sub-investment advisory services. Wells Fargo also
provides transfer agency services to the Fund and the Master Series. Wells
Fargo is entitled to an annual fee of 0.03% of the Fund's average net
assets in return for providing transfer agency services to the Fund and the
Master Series.
For its services as administrator of the Fund and the Master Series,
Stephens is entitled to receive a fee at an annual rate of 0.05% of the
Fund's average daily net assets.
The Fund also has adopted a Shareholder Servicing Plan pursuant to which it
may enter into Shareholder Servicing Agreements with Shareholder Servicing
Agents. The Servicing Plan permits the Fund to compensate Shareholder
Servicing Agents up to 0.07% of the average daily net assets of the Fund.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for certain
administrative services, such as recordkeeping and processing exchanges of
Fund shares for other available investment options.
See "Management of the Fund."
4
<PAGE> 67
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the net
asset value of shares of the Master Series which in turn depends on the
total value of the portfolio securities owned by the Master Series (plus
cash and other assets net of liabilities) and the number of shares of the
Master Series outstanding. On each Business Day, Wells Fargo calculates a
new net asset value of the Fund and the Master Series. See "Share Value."
Q. DOES THE FUND PAY DIVIDENDS?
A. The Fund intends to declare monthly dividends consisting of substantially
all of its net investment income, and annual distributions consisting of
substantially all of its net realized capital gains. All dividends and
distributions are automatically reinvested in additional Fund shares at net
asset value unless payment in cash is requested and your arrangement with a
Shareholder Servicing Agent permits the processing of cash payments. Each
reinvestment increases the total number of shares held by the shareholder.
See "Dividends and Distributions."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the
Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the imposition
of a sales charge or redemption fee on any Business Day by letter, by an
automatic feature called the Systematic Withdrawal Plan, or by telephone
(unless you decline telephone privileges). See "How to Redeem Shares." For
more information contact Stephens or your Shareholder Servicing Agent (such
as Wells Fargo).
Q. WHAT ARE DERIVATIVES AND DO THE FUND AND THE MASTER SERIES USE THEM?
A. Some of the permissible investments described throughout this Prospectus are
considered "derivative" securities because their values are derived, at
least in part, from the prices of other securities or specified assets,
indices or rates. The futures contracts and options on futures
5
<PAGE> 68
contracts that the Master Series may purchase are considered derivatives.
The Master Series may purchase or sell these contracts or options as
substitutes for comparable market positions in the underlying securities.
Certain of the floating- and variable-rate instruments that the Master
Series may purchase can also 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 FUND AND MASTER SERIES TAKE TO CONTROL DERIVATIVES-RELATED
RISKS?
A. Wells Fargo (as investment adviser to the Master Series) and WFNIA (as
sub-adviser to the Master Series) use a variety of internal risk management
procedures to ensure that derivatives use is consistent with both the
Master Series' and the Fund's investment objective, does not expose either
the Master Series or the Fund to undue risks and is closely monitored.
These procedures include providing periodic reports to the Boards of
Trustees and Directors concerning the use of derivatives. Also, cash
maintained by the Master Series for short-term liquidity needs (e.g., to
meet anticipated redemption requests) will, as a general matter, only be
invested in U.S. Treasury bills, shares of other mutual funds and
repurchase agreements. The use of derivatives is also subject to broadly
applicable investment policies. For example, the Master Series may not
invest more than a specified percentage of its assets in "illiquid
securities," including those derivatives that do not have active secondary
markets. In addition, the Master Series may not use derivatives without
establishing adequate "cover" in compliance with SEC rules limiting the use
of leverage. For additional information, see "Appendix -- Additional
Investment Policies."
6
<PAGE> 69
SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund and the Master Series, 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. As shown below, you are not charged
redemption fees or exchange fees. You should consider this expense information
together with the important information in this Prospectus, including the Fund's
investment objective and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)*:
Management Fees**.................................. 0.04%
Other Expenses
Shareholder Servicing Fees....................... 0.07%
Miscellaneous Expenses**......................... 0.09%
Total Other Expenses**........................... 0.16%
------
Total Fund Operating Expenses**.................... 0.20%
</TABLE>
- ---------------
* Other mutual funds may invest in the Master Series and such other funds'
expenses and, correspondingly, investment returns may differ from those of
the Fund.
** Annual Fund operating expenses are based on amounts incurred during the most
recent fiscal year, restated to reflect voluntary fee waivers that will
continue during the current fiscal year. In the absence of waivers and/or
reimbursements, the percentages shown above under the captions "Management
Fees," "Miscellaneous Expenses," "Total Other Expenses" and "Total Fund
Operating Expenses" would be 0.09%, 0.55%, 0.62% and 0.71% respectively.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor 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.................... $2 $ 6 $11 $ 26
</TABLE>
7
<PAGE> 70
EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, restated to reflect voluntary fee waivers and expense
reimbursements that will continue during the current fiscal year. They summarize
expenses charged at the Master Trust level as well as expenses charged at the
Company level. For a further description of the fee structure of the Master
Trust and the Company, see "Management of the Fund." Wells Fargo 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.
The Fund does not anticipate Fund expenses exceeding state limits. In addition,
Wells Fargo and Stephens each, at its sole discretion, may waive or reimburse
all or a portion of its respective fees charged to, or expenses paid by, the
Fund or Master Series. Any waivers or reimbursements would reduce the Fund's or
Master Series' total expenses. For more complete descriptions of the various
costs and expenses you can expect to incur as an investor in the Fund, please
see the Prospectus section captioned "Management of the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over the stated
periods, based on the expenses in the table above and an assumed annual rate of
return of 5%. This rate of return should not be considered an indication of
actual or expected Fund performance. In addition, the Example of Expenses should
not be considered a representation of past or future expenses; actual expenses
may be greater or less than those shown above.
With regard to the combined fees and expenses of the Fund and the Master
Series, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the Master Series 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
Master Series. Additionally, the Board of Directors has determined that the
aggregate fees assessed by the Fund and the Master Series should be less than
those expenses that the Directors believe would be incurred had the Fund
invested directly in the securities held by the Master Series. In addition, if
the Fund were to change its investment strategy and no longer invest in the
Master Series, these expenses may change.
8
<PAGE> 71
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995** 1994***
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period............. $ 9.76 $ 10.00
Income from investment operations:
Net investment income.......................... 0.64 0.38
Net realized and unrealized gain (loss) on
investments.................................. (0.56) (0.24)
-------- --------
Total from investment operations................. 0.08 0.14
Less distributions:
Dividends from net investment income........... (0.64) (0.38)
Distributions from net realized gains.......... 0.00 0.00
-------- --------
Total distributions.............................. (0.64) (0.38)
-------- --------
Net Asset Value, end of period................... $ 9.20 $ 9.76
======== ========
Total return (not annualized).................... 1.12% 1.38%
Ratios/Supplemental data:
Net assets, end of period (000)................ $ 18,593 $ 14,899
Number of shares outstanding, end of
period (000)................................. 2,020 1,526
Ratios to average net assets+:
Ratio of expenses to average net assets(1)..... 0.23%++ 0.31%
Ratio of net investment income to average net
assets(2).................................... 7.08% 5.88%
Portfolio turnover............................... 14%* 20%
-------- --------
(1) Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses....... 0.71% 0.32%
(2) Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses..................................... 6.61% 5.87%
-------- --------
</TABLE>
- ---------------
* This rate is for the period from February 28, 1994 to May 25, 1994. As of
May 26, 1994 the Fund invests all of its assets in the corresponding Master
Series of the Master Trust. The portfolio turnover rate for the Master
Series for the period beginning May 26, 1994 and ending February 28, 1995
was 37%.
** Beginning May 26, 1994 the Fund, pursuant to shareholder approval, was
reorganized and began investing in the corresponding Master Series of the
Master Trust.
*** The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
++ This ratio includes expenses charged to the Master Series.
9
<PAGE> 72
THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to approximate as closely as practicable before fees and
expenses the total rate of return of the U.S. market for issued and outstanding
U.S. Government and high-grade corporate bonds as measured by the LB Bond Index.
This investment objective is fundamental and cannot be changed without
shareholder approval. The Fund seeks to achieve its investment objective by
investing all of its assets in the Master Series, which has substantially the
same investment objective as the Fund. The Master Series seeks to achieve its
objective by investing substantially all of its assets in securities included in
the LB Bond Index,1 which is composed of approximately 5,000 issues of
fixed-income securities, including U.S. Government securities and investment
grade corporate bonds, each with an outstanding market value of at least $25
million and remaining maturity of greater than one year. The Master Series
invests in a sample of these securities. The Master Series invests at least 65%
of its total assets in bonds and debentures. Securities are selected for
investment by the Master Series based on a mix of factors, such as the relative
proportion of such securities in the LB Bond Index, credit quality, issuer
sector, maturity structure, coupon rates and callability, as described below.
No attempt is made to manage the portfolio of the Master Series using
economic, financial and market analysis. The Master Series is managed by
determining which securities are to be purchased or sold to replicate, to the
extent feasible, the investment characteristics of the LB Bond Index. Under
normal market conditions, at least 90% of the value of the Master Series' total
assets are invested in securities representing the LB Bond Index. The Master
Series attempts to achieve, in both rising and falling markets, a correlation of
at least 95% between the total return of its net assets before expenses and the
total return of the LB Bond Index. Perfect (100%) correlation would be achieved
if the total return of the Master Series' net assets increased or decreased
exactly as the total return of the LB Bond Index increased or decreased. The
Master Series' ability to match its investment performance to the investment
performance of the LB Bond Index may be affected by: Master Series expenses; the
amount of cash and cash equivalents held in the Master Series' portfolio; the
manner in which the total return of the LB Bond Index is calculated; the size of
the Master Series' portfolio; and the timing, frequency and size of shareholder
purchases and redemptions. The Master Series uses cash flows from
- ---------------
1 Lehman Brothers, Inc. does not sponsor the Fund or the Master Series, nor is
it affiliated in any way with Wells Fargo, the Fund, the Master Series or
WFNIA.
10
<PAGE> 73
shareholder purchase and redemption activity to maintain, to the extent
feasible, the similarity of its portfolio to the securities comprising such
Index. WFNIA regularly monitors the Master Series' correlation to the LB Bond
Index and adjusts the portfolio of the Master Series to the extent necessary to
enable the Master Series to attempt to achieve a correlation of at least 95%
with the LB Bond Index. The Fund's performance corresponds directly to the
investment experience of the Master Series. Inclusion of a security in the LB
Bond Index in no way implies an opinion by the sponsor of the LB Bond Index as
to its attractiveness as an investment. In the future, subject to the approval
of the Master Series' shareholders, one or more indices for the Master Series
may be selected if such standard of comparison is deemed to be more
representative of the performance of the securities the Master Series seeks to
replicate.
The Master Series does not hold all of the issues that comprise the LB Bond
Index because of the costs involved and the illiquidity of certain of the
securities which comprise such Index. Instead, the Master Series attempts to
hold a representative sample of the securities in the LB Bond Index so that, in
the aggregate, the investment characteristics of the Master Series' portfolio
resemble those of the LB Bond Index. The Master Series uses a statistical
process known as "sampling" to construct its portfolios. This process is used
with respect to the Master Series to select issues to represent entire "classes"
or types of fixed-income securities in the Index. At the broadest level, the
Master Series seeks to hold securities reflecting the two major classes of
fixed-income securities in the LB Bond Index -- U.S. Government obligations and
investment-grade corporate debt securities. Such classes are delineated further
according to credit quality, issuer sector, term to maturity, coupon rates and
callability. The sampling techniques utilized by the Master Series are expected
to be an effective means of approximating the investment performance of the LB
Bond Index; however, the Master Series is not expected to track the LB Bond
Index with the same degree of accuracy that complete replication of such Index
would provide. Over time, the portfolio composition of the Master Series will be
altered (or "rebalanced") to reflect changes in the characteristics of the
Index.
The Board of Trustees periodically reviews the Master Series' investment
performance before fees and expenses as compared to the LB Bond Index. The Board
reviews discrepancies in performance for reasonableness, taking into account the
size of the Master Series' portfolio, and any corrective actions deemed
necessary will be taken to avert excessive discrepancies in the future. There
can be no assurance that the Fund or the Master Series will achieve its
respective investment objective.
11
<PAGE> 74
Index funds, such as the Fund and the Master Series, seek to create a
portfolio which substantially replicates the total return of the securities
comprising the applicable index. Index funds are not managed through traditional
methods of fund management, which typically involve frequent changes in a
portfolio of securities on the basis of economic, financial and market analyses.
Therefore, brokerage costs, transfer taxes and certain other transaction costs
for index funds may be lower than those incurred by non-index, traditionally
managed funds. The portfolio turnover rate of the Master Series generally is not
expected to exceed 100%.
The Master Series may invest some of its assets (no more than 10% of total
assets under normal market conditions) in high quality money market instruments,
which include U.S. Government obligations, obligations of domestic and foreign
banks, repurchase agreements, commercial paper (including variable amount master
demand notes) and short-term corporate debt obligations. Such investments are
made on an ongoing basis to provide liquidity and, to a greater extent on a
temporary basis, when there is an unexpected or abnormal level of investor
purchases or redemptions of Fund shares or when "defensive" strategies are
appropriate. In addition, the Master Series may lend its portfolio securities
and engage in interest rate futures and options transactions, each of which
involves risk. A more complete description of the Master Series' investments and
investment activities is contained in "Appendix -- Additional Investment
Policies."
MASTER/FEEDER STRUCTURE
As of May 26, 1994, the Fund converted to a feeder fund in a master/feeder
structure. Accordingly, the Fund invests all of its assets in the Master Series,
which has substantially the same investment objective as the Fund. See, "The
Fund -- Investment Objectives and Policies." The Master Trust is organized as a
trust under the laws of the State of Delaware. See "General
Information -- Description of the Company." In addition to selling its shares to
the Fund, the Master Series may sell its shares to certain other mutual funds or
other accredited investors. Information regarding additional options, if any,
for investment in shares of the Master Series is available from Stephens and may
be obtained by calling 1-800-643-9691. The expenses and, correspondingly, the
returns of other investment options in the Master Trust may differ from those of
the Fund.
The Board of Directors believes that, if other investors invest their
assets in the Master Series, certain economic efficiencies may be realized with
respect to the Master Series. For example, fixed expenses that otherwise would
have been borne solely by the Fund would be spread across a larger asset base
provided by more than one fund investing in the Master
12
<PAGE> 75
Series. The Fund and other entities (if any) investing in the Master Series
would each be liable for all obligations of the Master Series. However, the risk
of the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Master Trust
itself is unable to meet its obligations. Accordingly, the Company's Board of
Directors believes that neither the Fund nor its shareholders will be adversely
affected by reason of investing the Fund's assets in the Master Series. However,
if a mutual fund or other investor withdraws its investment from the Master
Series, the economic efficiencies (e.g., spreading fixed expenses across a
larger asset base) that the Company's Board believes should be available through
investment in the Master Series may not be fully achieved. In addition, given
the relatively novel nature of the master/feeder structure, accounting and
operational difficulties could occur.
The Master Series' investment objective and other fundamental policies,
which are substantially the same as those of the Fund, cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940 (the "1940 Act")) of the Master Series' outstanding voting shares.
Whenever the Fund, as a Master Series shareholder, is requested to vote on
matters pertaining to any fundamental policy of the Master Series, the Fund will
hold a meeting of its shareholders to consider such matters and the Fund will
cast its votes in proportion to the votes received from Fund shareholders. The
Fund will vote Master Series shares for which it receives no voting instructions
in the same proportion as the votes received from Fund shareholders. Certain
policies of the Master Series that are non-fundamental can be changed by vote of
a majority of the Master Trust's Trustees without a shareholder vote. If the
Master Series' investment objective or fundamental or non-fundamental policies
are changed, the Fund could subsequently change its objective or policies to
correspond to those of the Master Series or the Fund could redeem its Master
Series shares and either seek a new investment company with a substantially
matching objective in which to invest or retain its own investment adviser to
manage the Fund's portfolio in accordance with its objective. In the latter
case, the Fund's inability to find a substitute investment company in which to
invest or equivalent management services could adversely affect shareholders'
investments in the Fund. The Fund's investment objective and other fundamental
policies cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of the Fund's outstanding voting shares. The Fund will
provide shareholders with 30 days' written notice prior to the implementation of
any change in the investment objective of the Fund or Master Series, to the
extent possible.
13
<PAGE> 76
PERFORMANCE
The Fund's performance may be advertised in terms of yield and total
return. These performance figures are based on historical results and are not
intended to indicate future performance. The Fund's yield is calculated by
dividing its net investment income per share earned during a specified period
(usually 30 days) by its net asset value per share on the last day of such
period and annualizing the result.
The Fund's total return may be calculated on an average annual total return
basis or a cumulative total return basis. Average annual total return refers to
the average annual compounded rates of return over one-, five-, and ten-year
periods (or the life of the Fund, which periods are stated in the advertisement)
and is measured by comparing the value of an investment in the Fund at the
beginning of the relevant period to the redemption value at the end of the
period and annualizing the result. Cumulative total return is based on the
overall percentage change in value of a hypothetical investment in the Fund.
Both methods assume that all Fund dividends and capital gain distributions are
reinvested. Fees charged by an institution or shareholder servicing agent in
connection with an investment in the Fund are not included in calculations of
yield or total return. The Fund's performance corresponds directly to the
investment experience of the Master Series.
The Fund's annual report contains additional performance information and is
available without charge by calling 1-800-776-0179 or by writing the company at
the address printed on the back of the Prospectus.
MANAGEMENT OF THE FUND
MASTER TRUST INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER -- Wells Fargo,
a wholly owned subsidiary of Wells Fargo & Company located at 420 Montgomery
Street, San Francisco, California 94105, is the Master Series' investment
adviser. Wells Fargo, 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 March
31, 1995, various divisions and affiliates of Wells Fargo (including WFNIA)
provided investment advisory services for approximately $196 billion of assets
of individuals, trusts, estates and institutions. Pursuant to an Investment
Advisory Agreement with the Master Trust, Wells Fargo provides investment
guidance and policy direction in connection with the management of the Master
Series' assets, subject to the supervision of the Master Trust's Board of
Trustees and in conformity with Delaware law and the stated policies of the
Master Series.
14
<PAGE> 77
Wells Fargo has engaged WFNIA, located at 45 Fremont Street, San Francisco,
California 94105, to provide sub-investment advisory services to the Master
Series. WFNIA is a general partnership owned 50% by a wholly owned subsidiary of
Wells Fargo and 50% by a subsidiary of The Nikko Securities Co., Ltd. WFNIA is
responsible for managing or providing investment advice for assets aggregating
in excess of $171 billion as of March 31, 1995. Pursuant to a Sub-Investment
Advisory Agreement, WFNIA, subject to the supervision and approval of Wells
Fargo, provides investment advisory assistance and the day-to-day management of
the Master Series' assets, subject to the overall authority of the Master
Trust's Board of Trustees and in conformity with Delaware law and the stated
policies of the Master Series.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in WFNIA to
Barclays PLC of the U.K. The sale, which is subject to the approval of
appropriate regulatory authorities, is expected to close in the fourth quarter
of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
Under the 1940 Act, this proposed change of control of WFNIA would result
in an assignment and termination of the current Sub-Investment Advisory
Agreement between WFNIA, Wells Fargo and the Master Series. Subject to the
approval of the Company's Board of Directors, it is contemplated that a special
meeting of shareholders of the Fund will be convened to consider a change in the
structure of the Fund, which will become effective only upon the change of
control of WFNIA. It is not anticipated that the proposed change of control or
change in structure will change the investment objective or overall investment
strategy of the Fund.
Wells Fargo deals, trades and invests for its own account in the types of
securities in which the Master Series may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by the
Master Series. Wells Fargo has informed the Master Trust that in making its
investment decisions it does not obtain or use material inside information in
its possession.
15
<PAGE> 78
Prior to the Fund's conversion to master/feeder structure, Wells Fargo
provided investment advisory services directly to the Fund. For its services as
investment adviser, Wells Fargo was entitled to receive a monthly fee at the
annual rate of 0.17% of the Fund's average daily net assets. WFNIA was entitled
to receive from Wells Fargo a monthly fee at the annual rate of 0.04% of the
Fund's average daily net assets as compensation for sub-advisory services to the
Fund prior to conversion.
Since the conversion to master/feeder structure, Wells Fargo provides
investment advisory services to the Master Series. Under the terms of the
current Investment Advisory Agreement between the Master Trust and Wells Fargo,
the Master Trust has agreed to pay Wells Fargo a monthly fee at the annual rate
of 0.08% of the Master Series' average daily net assets. Out of this fee, Wells
Fargo compensates WFNIA for sub-advisory services provided to the Master Series.
In this regard, Wells Fargo has agreed to pay WFNIA a monthly fee at the annual
rate of 0.07% of the Master Series' average daily net assets. For the fiscal
year ended February 28, 1995, Wells Fargo was paid advisory fees at the annual
rate of 0.04% of the average daily net assets of the Fund for its services as
investment adviser to the Fund and the Master Series. During the same period,
WFNIA was paid by Wells Fargo sub-advisory fees at the annual rate of 0.06% of
the average daily net assets of the Fund for its services as sub-adviser to the
Fund and the Master Series. Fund shareholders bear a pro rata portion of the
Master Series' operating expenses, including its advisory fees, to the extent
that the Fund, as a shareholder of the Master Series, bears such expenses.
Morrison & Foerster, counsel to the Company and the Master Trust and
special counsel to Wells Fargo, has advised the Company, the Master Trust and
Wells Fargo that Wells Fargo may perform the services contemplated by the
Advisory Contract without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Such counsel has pointed out, however,
that there are no controlling judicial or administrative interpretations or
decisions and that future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes, including the
Glass-Steagall Act and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as future changes in such
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent Wells Fargo from continuing to perform, in whole
or in part, such services. If Wells Fargo were prohibited from performing any
such services, it is expected that the Directors of the Company would recommend
to the Fund's shareholders that they approve a new advisory agreement with
another entity or entities qualified to perform such services.
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ADMINISTRATOR AND DISTRIBUTOR -- Stephens, located at 111 Center Street,
Little Rock, Arkansas 72201, serves as the Company's and the Master Trust's
administrator pursuant to separate Administration Agreements with the Company
and the Master Trust. Under the Administration Agreement with the Company,
Stephens provides general supervision of the operation of the Company, other
than the provision of investment advice, subject to the overall authority of the
Board of Directors and in accordance with Maryland law. The administrative
services provided to the Fund also include coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Board of Directors and officers.
Stephens also furnishes office space and certain facilities to conduct the
Company's business, and compensates the Company's Directors, officers and
employees who are affiliated with Stephens. For providing administrative
services to the Fund, the Company has agreed to pay Stephens a monthly fee at
the annual rate of 0.05% of the Fund's average daily net assets. For the fiscal
year ended February 28, 1995, Stephens waived all fees owed to it by the Company
for its services as administrator to the Fund and Master Series.
Stephens also serves as the Company's principal underwriter within the
meaning of the 1940 Act and as distributor of the Fund's shares pursuant to a
Distribution Agreement with the Company. The Distribution Agreement provides
that Stephens will act as agent for the Company for the sale of Fund shares and
may enter into Selling Agreements with selling agents that wish to make
available Fund shares to their respective customers ("Selling Agents"). Wells
Fargo presently acts as a Selling Agent, but does not receive any fee from the
Fund for such activities.
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.
CUSTODIAN AND TRANSFER AGENT -- Wells Fargo is the Company's custodian but
does not receive a fee from the Company for its services. Wells Fargo
Institutional Trust Company, N.A., 45 Fremont Street, San Francisco, California
94105, is the Master Trust's Custodian but does not receive a fee from the
Master Trust for such services. WFITC is owned by WFNIA and Wells Fargo &
Company. Wells Fargo also is the Company's
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Transfer and Dividend Disbursing Agent (the "Transfer Agent") and performs its
transfer agency and custodial services at 525 Market Street, San Francisco,
California 94105. The Company has agreed to pay Wells Fargo a monthly fee at the
annual rate of 0.03% of the Fund's average daily net assets for transfer agency
services.
SHAREHOLDER SERVICING AGENT -- The Fund has adopted a Shareholder Servicing
Plan pursuant to which it has entered into a Shareholder Servicing Agreement
with Wells Fargo, and may enter into similar agreements with other entities
("Shareholder Servicing Agents"). Under such agreements, Shareholder Servicing
Agents (including Wells Fargo) agree, as agent for their customers, to be
responsible for performing shareholder liaison services, which include, without
limitation, answering customer inquiries regarding account status and history,
and the manner in which purchases, exchanges and redemptions of Fund shares may
be effected, assisting customers with investment plans, dividend options and
account designations and addresses, processing of purchase, redemption and
exchange transactions, providing periodic account statements showing account
balances and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by the Shareholder Servicing
Agent or its affiliates, arranging for bank wires, distributing various
materials for the Company, assisting in the establishment and maintenance of
accounts in the Fund and providing such other similar services as the Company or
a customer may reasonably request. For these services, a Shareholder Servicing
Agent is entitled to receive a fee, which may be paid periodically, determined
by a formula based upon the number of accounts serviced by the Shareholder
Servicing Agent during the period for which payment is being made, the level of
activity in such accounts during such period, and the expenses incurred by the
Shareholder Servicing Agent. In no event will such fees exceed, on an annualized
basis for the Fund's then-current fiscal year, 0.07% of the average daily net
assets of the Fund represented by shares owned during the period for which
payment is being made by investors with whom the Shareholder Servicing Agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the Shareholder Servicing Agent under applicable laws, regulations or
rules, including the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., whichever is less.
A Shareholder Servicing Agent 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 higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the
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Fund and to notify them in writing at least thirty days before it imposes any
transaction fees.
EXPENSES -- As noted previously, from time to time Wells Fargo and Stephens
may waive their respective fees in whole or in part. Any such waivers will
reduce the Fund's expenses and accordingly have a favorable impact on the Fund's
yield and total return. Except for the expenses borne by Wells Fargo and
Stephens, the Company and the Master Trust will bear all costs of their
respective operations allocated to the Fund and the Master Series.
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an IRA pursuant to arrangements
between the sponsor or other agent of the qualified employee benefit plan
and a Shareholder Servicing Agent.
Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request by an investor or the investor's
representative, the Company or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below) and $1,000 by all other methods or for all other
investors except that there is no minimum initial investment amount for Benefit
Plans or IRA investors. All subsequent investments
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must be at least $100, except that there is no minimum subsequent investment
amount for Benefit Plans or IRA investors. All investments in Fund shares are
subject to a determination by the Company that the investment instructions are
complete. If shares are purchased by a check that does not clear, the Company
reserves the right to cancel the purchase and hold the investor responsible for
any losses or fees incurred. The Company reserves the right in its sole
discretion to suspend the availability of the Fund's shares and to reject any
purchase requests. Certificates for Fund shares are not issued.
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading of the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading of the NYSE are executed on the next Business
Day. The investor's Shareholder Servicing Agent is responsible for the prompt
transmission of the investor's purchase order to the Transfer Agent on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a Shareholder Servicing Agent may not be received by the Transfer
Agent on the same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further information
concerning this requirement. Failure to furnish a social security number or a
TIN to the Company could subject the investor to penalties imposed by the
Internal Revenue Service ("IRS").
Certain broker dealers may charge fees in connection with purchases of Fund
shares.
BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Shareholder Servicing Agents as plan trustee, plan administrator or
other agent, or whose plan trustee, plan administrator or other agent has a
servicing arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares. Benefit Plans include 401(k) plans and plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), health and welfare plans and executive deferred compensation
plans. For additional information about Benefit Plans that may be eligible to
invest in Fund shares, prospective investors should contact a Shareholder
Servicing Agent.
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Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Shareholder Servicing Agent may offer other types of
tax-deferred or tax-advantaged plans, including a Keogh retirement plan for
self-employed professional persons, sole proprietors and partnerships. Contact a
Shareholder Servicing Agent for materials describing plans available through it,
and their benefits, provisions and fees.
Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Shareholder Servicing
Agent. Completed retirement plan applications should be returned to the
investor's Shareholder Servicing Agent for approval and processing. If an
investor's retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. Certain features
described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a retirement plan. Investors should
consult their Shareholder Servicing Agent.
PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), 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. Some banks may impose wiring fees.
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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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
AutoSaver Plan
The Company's AutoSaver Plan provides individual and corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an investor must specify an
amount ($100 or more) to be withdrawn automatically by the Transfer Agent on a
monthly basis from an account with a bank ("Approved Bank") that is designated
in the investor's Account Application and that is approved by the Transfer
Agent. Wells Fargo is an Approved Bank. The Transfer Agent withdraws and uses
this amount to purchase Fund shares on the investor's behalf on or about the
fifth Business Day of each month. There are no separate fees charged to the
investor by the Company for participating in the AutoSaver Plan.
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<PAGE> 85
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
Additional Purchases
An individual or corporate investor may make additional purchases of $100
or more by instructing the Fund's Transfer Agent to debit a designated Approved
Bank account, by wire by using the procedures described under "Initial Purchases
by Wire" above, or by mail with a check payable to "Stagecoach Inc./(Name of
Fund)" to the above address. An investor must write a Fund account number on the
check and include the detachable stub from a Statement of Account or a letter
providing the investor's Fund account number.
In-Kind Purchases
At the discretion of Wells Fargo, shares of the Fund may be purchased in
exchange for securities which are eligible for acquisition by the Master Series
as described in this Prospectus. Securities to be exchanged which are accepted
by the Fund will be valued in accordance with the procedures referenced under
"Share Value" in this Prospectus at the time of the next determination of net
asset value after such acceptance. Shares issued by the Fund in exchange for
securities are issued at net asset value determined as of the same time. All
dividends (with the exception of dividends received on securities tendered after
the ex-dividend date), interest, subscription, or other rights pertaining to
such securities shall become the property of the Fund and must be delivered to
the Fund by the investor upon receipt from the issuer.
The Fund will only accept securities for its portfolio in exchange for
shares issued by the Fund if: (1) such securities are, at the time of the
exchange, eligible to be included in the Master Series' portfolio and current
market quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities Act
of 1933 or under the laws of the country in which the principal market for such
securities exists, or otherwise; (3) the value of any such security (except U.S.
Government obligations) being exchanged together with other
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securities of the same issuer owned by the Master Series will not exceed 5% of
the net assets of the Master Series immediately after the transaction; and (4)
such securities are consistent with the Fund's and the Master Series' investment
objective and policies and otherwise acceptable to Wells Fargo, as the Master
Series' investment adviser, in its sole discretion. The requirement for an
investor representation described in item (2) will not apply to the initial
investment into the Fund by certain employee benefit plans, as described below
under "General Information -- Description of the Company."
A gain or loss for federal income tax purposes may be realized by taxable
investors making in-kind purchases upon the exchange depending upon the cost of
the securities exchanged.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price of the shares is the
next determined net asset value of the Fund calculated
after the Company has received a redemption request in proper form. Redemption
proceeds may be more or less than the amount invested depending on the Fund's
net asset value at the time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master Series
of securities owned by the Master Series is not reasonably practicable or (b) it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of Fund shareholders. In addition, the Company
may defer payment of a shareholder's redemption until reasonably satisfied that
such shareholder's investments made by check have been collected (which can take
up to fifteen days from the purchase date). Payment of redemption proceeds may
be made in portfolio securities, subject to regulation by some state securities
commissions. Shareholders who receive portfolio securities as payment of
redemption proceeds will generally incur brokerage costs upon the sale of such
securities.
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Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual and corporate investor's
account and send the proceeds to such investor if the balance falls below $1,000
because of a redemption (including a redemption of Fund shares after an investor
has made only the $1,000 minimum initial investment). However, investors will be
given 30 days' notice to make an additional investment to increase their account
balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York time), are
executed at the net asset value determined as of the close of regular trading on
the NYSE on that day. Redemption orders that are received by the Transfer Agent
after the close of regular trading on the NYSE, are executed on the next
Business Day. The investor's Shareholder Servicing Agent is responsible for the
prompt transmission of redemption orders to the Fund on the investor's behalf.
Under certain circumstances, a Shareholder Servicing Agent may establish an
earlier deadline for receipt of orders or an investor's order transmitted to a
Shareholder Servicing Agent may not be received by the Transfer Agent on the
same day.
Unless the investor has made other arrangements with an appropriate
Shareholder Servicing Agent, and the Transfer Agent has been informed of such
arrangements, proceeds of a redemption order made by the investor
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through a Shareholder Servicing Agent are credited to the account with the
Approved Bank that the investor has designated in the Account Application. If no
such account is designated, a check for the proceeds is mailed to the investor's
address of record or, if such address is no longer valid, the proceeds are
credited to the investor's account with the investor's Shareholder Servicing
Agent.
Certain broker dealers may charge fees in connection with redemptions of
Fund shares.
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL
RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Shareholder Servicing Agent. The redemption procedures outlined in
the remainder of this section do not apply to investors in employee benefit
plans or retirement plans, nor do the minimum-balance requirements outlined
above. Investors in these types of plans should contact their Shareholder
Servicing Agent regarding redemption procedures applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners must sign.
3. If the shares to be redeemed have a value of $5,000 or more, or
redemption proceeds are to be paid to someone other than the investor at such
investor's address of record, the signature(s) must be guaranteed by an
"eligible guarantor institution," which includes a commercial bank that is an
FDIC member, 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.
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<PAGE> 89
4. Mail the redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual and corporate
investor with a convenient way to have Fund shares redeemed from the investor's
account and the proceeds distributed to the investor on a monthly basis. An
investor may participate in the Systematic Withdrawal Plan only if the investor
has a Fund account valued at $10,000 or more as of the date of an election to
participate, the investor has an account at an Approved Bank, the investor's
dividends and capital gain distributions are being reinvested automatically and
the investor is not participating in the AutoSaver Plan at any time while
participating in the Systematic Withdrawal Plan. An investor may specify an
amount ($100 or more) to be distributed by check to the investor's address of
record or deposited in an Approved Bank account designated in the investor's
Account Application. The Transfer Agent redeems sufficient shares and mails or
deposits redemption proceeds as instructed on or about the fifth Business Day
prior to the end of each month. There are no separate fees charged to investors
by the Fund for participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a designated withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
Expedited Redemptions by Letter and Telephone
An individual and corporate investor may request an expedited redemption of
Fund shares by letter, in which case the investor's receipt of redemption
proceeds, but not the Fund's receipt of the investor's redemption request, would
be expedited. Telephone redemption and exchange privileges are made available to
an investor automatically upon the opening of an account unless the investor
declines such privileges. The investor also may request an expedited redemption
of Fund shares by telephone on any Business Day, in which case both the
investor's receipt of redemption
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<PAGE> 90
proceeds and the Fund's receipt of the investor's redemption request would be
expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the Account Application.
The Company reserves the right to impose a charge for wiring redemption
proceeds. When proceeds of an individual and corporate investor's expedited
redemption are to be paid to someone else, to an address other than that of
record, or to an account with an Approved Bank that the investor has not
predesignated in the investor's Account Application, the expedited redemption
request must be made by letter and the signature(s) on the letter must be
guaranteed in the manner discussed above, regardless of the amount of the
redemption. If the investor's expedited redemption request is received by the
Transfer Agent on a Business Day, the investor's redemption proceeds are
transmitted to the investor's designated account with an Approved Bank on the
next Business Day (assuming the investor's investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions, and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for proceeds of less than $5,000 is mailed to the investor's
address of record or, at the investor's election, credited to the Approved Bank
account designated in the investor's Account Application.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase, in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the Stagecoach
Family of Funds, to the extent such shares are offered for sale in the
investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained from Stephens.
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Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes such action would be appropriate to protect the 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 exchanges. The
exchange privilege may be modified or terminated at any time upon 60 days'
written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments (i.e., the
value of its investments in the Master Series) plus cash and other assets,
deducting liabilities (including the fees payable to the various service
providers) and then dividing the result by the number of Fund shares
outstanding. The NAV is expected to fluctuate daily.
The Fund is open for business each Business Day, which is a day on which
the NYSE is open for trading. Currently, the weekdays on which the NYSE is
closed are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Wells Fargo
calculates the Fund's NAV each Business Day as of the close of regular trading
on the NYSE (currently 4:00 p.m., New York time).
The Fund's investments in the Master Series are valued at the NAV of the
Master Series' shares. The Master Series calculates the NAV of its shares on the
same days and at the same time as the Fund. Except for debt obligations with
remaining maturities of 60 days or less, which are valued at amortized cost, the
Master Series' other assets are valued at current
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market prices, or if such prices are not readily available, at fair value as
determined in good faith in accordance with guidelines approved by the Master
Trust's Board of Trustees. Prices used for such valuations may be provided by
independent pricing services. For further information regarding the methods
employed in valuing the Master Series' investments, see "Determination of Net
Asset Value" in the SAI.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays monthly dividends of substantially all of its
net investment income. The Fund distributes any net realized capital gains at
least annually. All dividends and distributions are reinvested automatically in
additional shares of the Fund at net asset value, unless payment in cash is
requested and the investor's arrangement with a Shareholder Servicing Agent
permits the processing of cash payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. To the extent
dividends and distributions are reinvested, however, each shareholder receives
additional Fund shares equivalent in value to the reduction in NAV on shares
owned by that shareholder.
FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, 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 of the Code by
investing all of its assets in the Master Series. The Master Series intends to
qualify for federal tax purposes as a partnership. As such, the Fund will
generally be deemed to own directly its proportionate share of the assets of the
Master Series. Therefore, any interest, dividends, gains or losses of the Master
Series will be "passed through" to the Fund and other investors in the Master
Series, regardless of whether such interest, divi-
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dends or gains have been distributed by the Master Series or losses have been
realized by the Fund or other investors. Accordingly, if the Master Series 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, or gains without receipt of any corresponding distribution. The
Master Series seeks to minimize recognition by investors of interest, dividends
or gains without a corresponding distribution.
Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers or TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than exempt-
interest dividends) and redemption proceeds (including proceeds from exchanges).
Non-resident aliens and other foreign shareholders may be subject to U.S.
withholding tax at rates up to 30% on dividends and distributions paid.
TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. No part of the
distributions to shareholders of the Fund is expected to qualify for the
dividends-received deduction allowed to corporate shareholders.
The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains. However, such tax-
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exempt investors may be subject to tax on certain unrelated taxable income which
could arise, for example, when such investors acquire shares in the Fund through
the use of leverage. Tax-exempt investors should consult their tax advisors
regarding the Unrelated Business Taxable Income Rules.
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained 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.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Growth Stock Fund, S&P 500 Stock Fund, Short-Intermediate
Term Fund, U.S. Treasury Allocation Fund, Asset Allocation Fund, Money Market
Fund, Growth and Income Fund, National Tax-Free Intermediate Income Fund,
National Tax-Free Money Market Mutual Fund, California Tax-Free Intermediate
Income Fund, California Tax-Free Short-Term Income Fund, California Tax-Free
Money Market Fund and Overland National Tax-Free Institutional Money Market
Fund. As of May 26, 1994, all of the Company's then-existing series, except the
Money Market Fund, became feeder funds in a master/feeder structure. The
Company's principal office is located at 111 Center Street, Little Rock,
Arkansas 72201.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and officers of the Company is included in the
Fund's SAI under "Management." The Fund may withdraw its investment in the
Master Series only if the Board of Directors of the Company determines that is
in the best interests of the Fund and its shareholders to do so. Upon any such
withdrawal, the Board of Directors of the Company would consider what action
might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
Master Series. Although the Company is not required to hold regular annual
shareholder meetings, occasional annual or special meetings may be required for
purposes such as electing or removing Directors, approving
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advisory contracts and distribution plans and changing the Fund's investment
objectives or fundamental investment policies.
The Master Trust was established on October 21, 1993, as a Delaware
business trust. The Master Trust's Declaration of Trust permits the Board of
Trustees to issue beneficial interests in the Master Trust to investors based on
their proportionate investments in the Master Trust. The Master Trust, on behalf
of the Master Series, has retained the services of Wells Fargo as investment
adviser, WFNIA as sub-adviser, and Stephens as administrator and placement
agent. The Board of Trustees of the Master Trust is responsible for the general
management of the Master Trust and supervising the actions of Wells Fargo, WFNIA
and Stephens in these capacities.
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by fund, unless otherwise required by law (such as when a
matter affects only one fund). Shareholders of the Fund are entitled to one vote
for each share owned and fractional votes for fractional shares owned. Depending
on the terms of a particular benefit plan and the matter being submitted to a
vote, a sponsor may request direction from individual participants regarding a
shareholder vote. In addition, whenever the Fund is requested to vote on matters
pertaining to the Master Series, 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 description of the voting rights and
attributes of the shares is contained in the "Capital Stock" section of the SAI.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund, including additional information on performance. Shareholders
may obtain a copy of the Company's most recent report without charge by phoning
1-800-776-0179.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
PORTFOLIO SECURITIES
To the extent set forth in this Prospectus, the Master Series may invest in
the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- The Master Series 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 such 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.
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 would 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- The
Master Series, through its investment in money market instruments, may invest in
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by WFNIA to be of comparable quality to the other obligations in which the
Master Series may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or
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development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of the
Master Series' assets invested in securities issued by foreign governments will
vary depending on the relative yields of such securities, the economic and
financial markets of the countries in which the investments are made and the
interest rate climate of such countries.
BANK OBLIGATIONS -- The Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, the Master Series may be subject to additional
investment risks that are different in some respects from those incurred by a
fund which invests only in debt obligations of U.S. domestic issuers. Such risks
include possible future political and economic developments, the possible
imposition of foreign withholding taxes on interest income payable on the
securities, the possible establishment of exchange controls or the adoption of
other foreign governmental restrictions which might adversely affect the payment
of principal and interest on these securities and the possible seizure or
nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations, bearing fixed, floating- or variable-interest
rates.
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COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- The Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Master Series will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's
Investors Service, Inc. ("Moody's"), A-1 by Standard & Poor's Corporation
("S&P"), F-1 by Fitch Investors Service, Inc. ("Fitch") or Duff-1 by Duff and
Phelps Credit Rating Co. ("Duff"), (b) issued by companies having an outstanding
unsecured debt issue currently rated not lower than Aa3 by Moody's or AA-by S&P,
Fitch or Duff, or (c) if unrated, determined by WFNIA to be of comparable
quality to those rated obligations which may be purchased by such Fund.
REPURCHASE AGREEMENTS -- The Master Series may enter into repurchase
agreements, which involve the acquisition by the Master Series of an underlying
debt instrument, subject to the seller's obligation to repurchase, and the
Master Series' obligation to resell, the instrument at a fixed price usually not
more than one week after its purchase. The Funds and the Master Series'
custodian or sub-custodian has custody of, and holds in a segregated account,
securities acquired as collateral by the Master Series under a repurchase
agreement. Repurchase agreements are considered by the staff of the SEC to be
loans by the Master Series. In an attempt to reduce the risk of incurring a loss
on a repurchase agreement, the Master Series enters into repurchase agreements
only with federally regulated or insured banks or primary government securities
dealers reporting to the Federal Reserve Bank of New York or, under certain
circumstances, banks with total assets in excess of $5 billion or domestic
broker/dealers with total equity capital in excess of $100 million. The Master
Series enters into repurchase agreements only with respect to securities of the
type in which the Master Series may invest, including government securities and
mortgage-related securities, regardless of their remaining maturities, and
requires that additional securities be deposited with the custodian or sub-
custodian if the value of the securities purchased should decrease below the
repurchase price. WFNIA monitors on an ongoing basis the value of the collateral
to assure that it always equals or exceeds the repurchase price. Certain costs
may be incurred by the Master Series in connection with the sale of the
underlying securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Master Series may be delayed or limited. The Master Series considers on an
ongoing basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
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UNREGISTERED NOTES -- The Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the 1933 Act, provided such investments are consistent with the Master
Series' investment objective. The Master Series will not invest more than 15% of
the value of its net assets in Notes and in other illiquid securities.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- The Master Series may purchase
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable-rate demand notes include
master demand notes which are obligations that permit the Master Series to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there generally
is no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master Series'
right to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating
agencies and the Master Series may invest in obligations which are not so rated
only if WFNIA determines that at the time of investment the obligations are of
comparable quality to the other obligations in which the Master Series may
invest. WFNIA, on behalf of the Master Series, considers on an ongoing basis the
creditworthiness of the issuers of the floating-and variable-rate demand
obligations in the Master Series' portfolio. The Master Series does not invest
more than 15% of the value of its net assets in floating- or variable-rate
demand obligations as to which it cannot exercise the demand feature on not more
than seven days' notice if there is
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no secondary market available for these obligations, and in other illiquid
securities.
PARTICIPATION INTERESTS -- The Master Series may purchase from financial
institutions participation interests in securities in which the Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series' participation
interest bears to the total principal amount of the security. These instruments
may have fixed, floating- or variable-rates of interest. If the participation
interest is unrated, or has been given a rating below that which is permissible
for purchase by the Master Series, the participation interest is backed by an
irrevocable letter of credit or guarantee of a bank, or the payment obligation
otherwise is collateralized by U.S. Government obligations, or, in the case of
unrated participation interests, WFNIA must have determined that the instrument
is of comparable quality to those instruments in which the Master Series may
invest. Prior to the Master Series' purchase of any such instrument backed by a
letter of credit or guarantee of a bank, WFNIA evaluates the creditworthiness of
the bank, considering all factors which it deems relevant, which generally may
include review of the bank's cash flow; level of short-term debt; leverage;
capitalization; the quality and depth of management; profitability; return on
assets; and economic factors relative to the banking industry. For certain
participation interests, the Master Series has the right to demand payment, on
not more than seven days' notice, for all or any part of the Master Series'
participation interest in the security, plus accrued interest. As to these
instruments, the Master Series intends to exercise its right to demand payment
only upon a default under the terms of the security, as needed to provide
liquidity to meet redemptions, or to maintain or improve the quality of its
investment portfolio.
MORTGAGE-RELATED SECURITIES -- The Master Series may enter into repurchase
agreements with respect to mortgage-related securities ("MBSs"), representing
interests in a pool of loans secured by mortgages. The resulting cash flow from
these mortgages is used to pay principal and interest on the securities. MBSs
are assembled for sale to investors by various government-sponsored enterprises
such as the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") or are guaranteed by such governmental
agencies as the Government National Mortgage Association ("GNMA"). Regardless of
the type of guarantee, all MBSs are subject to interest rate risk (i.e.,
exposure to loss due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the full and
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timely payment of principal and interest by GNMA and such guarantee is backed by
the authority of GNMA to borrow funds from the U.S. Treasury to make payments
under its guarantee. GNMA is a wholly-owned U.S. Government corporation within
the Department of Housing and Urban Development. As such, GNMA obligations are
general obligations of the United States and are backed by the full faith and
credit of the federal government. MBSs issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are neither backed by nor entitled to the
full faith and credit of the United States. FNMA is a government-sponsored
enterprise which is also a private corporation whose stock trades on the NYSE.
Fannie Maes are guaranteed as to timely payment of principal and interest by
FNMA. FHLMC MBSs include FHLMC Mortgage Participation Certificates (also known
as "Freddie Macs" or "PCs"). FHLMC guarantees timely payment of interest, but
only ultimate payment of principal due under the obligations it issues. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. FHLMC may, under certain circumstances, remit the
payment of principal at any time after default, but in no event later than one
year after the guarantee becomes payable.
WARRANTS -- The Master Series may invest up to 5% of its net assets in
warrants, except that this limitation does not apply to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time, usually with a stated maturity in excess of one year.
ILLIQUID SECURITIES -- The Master Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Master Series cannot exercise the related demand feature described above on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice. However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the 1933 Act, for certain of these
securities held by the Master Series, the Master Series intends to treat such
securities as liquid securities in accordance with procedures approved by the
Master Trust's Board of
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Trustees. Because it is not possible to predict with assurance how the market
for restricted securities pursuant to Rule 144A will develop, the Master Trust's
Board of Trustees has directed WFNIA to monitor carefully the Master Series'
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that qualified institutional buyers may periodically cease purchasing
such restricted securities pursuant to Rule 144A, the Master Series' investing
in such securities may have the effect of increasing the level of illiquidity in
the Master Series' portfolio during such period.
INVESTMENT COMPANY SECURITIES -- The Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the Master Series invests. Under the 1940 Act, the Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Master Series' net assets with respect to any one
investment company and (iii) 10% of the Master Series' net assets in the
aggregate. Investments in the securities of other investment companies generally
will involve duplication of advisory fees and certain other expenses and the
investment adviser will waive its advisory fees for that portion of the Master
Series' assets so invested, except when such purchase is part of a plan of
merger, consolidation, reorganization or acquisition.
RATINGS -- The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, WFNIA also will evaluate such obligations
and the ability of their issuers to pay interest and principal. The Master
Series will rely on WFNIA's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, WFNIA will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, the quality of the issuer's
management and regulatory matters. It also is possible that a rating agency
might not timely change the rating on a particular issue to reflect subsequent
events.
INVESTMENT TECHNIQUES
FUTURES TRANSACTIONS -- IN GENERAL -- The Master Series will not be a
commodity pool. To the extent permitted by applicable regulations,
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the Master Series is permitted to use futures as a substitute for a comparable
market position in the underlying securities.
A futures contract is an agreement between two parties, a buyer and a
seller, to exchange a particular commodity at a specific price on a specific
date in the future. Futures contracts are traded on exchanges, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the only credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are, however, subject to market risk (i.e., exposure
to adverse price changes).
The Master Series may trade futures contracts and options on futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange.
The Master Series' futures transactions must constitute permissible
transactions pursuant to regulations promulgated by the Commodity Futures
Trading Commission ("CFTC"). In addition, the Master Series may not engage in
futures transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired options on futures contracts, other than those
contracts entered into for bona fide hedging purposes, would exceed 5% of the
liquidation value of the Master Series' assets, after taking into account
unrealized profits and unrealized losses on such contracts; provided, however,
that in the case of an option on a futures contract that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
liquidation amount. Pursuant to regulations and/or published positions of the
SEC, the Master Series may be required to segregate cash or high quality money
market instruments in connection with its futures transactions in an amount
generally equal to the entire value of the underlying security.
Initially, when purchasing or selling futures contracts the Master Series
will be required to deposit with the Fund's and the Master Series' custodian in
the broker's name an amount of cash or cash equivalents up to approximately 10%
of the contract amount. This amount is subject to change by the exchange or
board of trade on which the contract is traded and members of such exchange or
board of trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Master Series upon termination
of the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from the
broker will be made daily as the price of the index or securities underlying the
futures contract fluctuates, making the long and short positions in the futures
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contract more or less valuable. At any time prior to the expiration of a futures
contract, the Master Series may elect to close the position by taking an
opposite position, at the then prevailing price, thereby terminating its
existing position in the contract.
Although the Master Series intends to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the Master
Series to substantial losses. If it is not possible, or the Master Series
determines not, to close a futures position in anticipation of adverse price
movements, it will be required to make daily cash payments of variation margin.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a long
position if the option is a put). Upon exercise of the option, the assumption of
offsetting futures positions by both the writer and the holder of the option
will be accompanied by delivery of the accumulated cash balance in the writer's
futures margin account in the amount by which the market price of the futures
contract, at exercise, exceeds (in the case of a call) or is less than (in the
case of a put) the exercise price of the option on the futures contract.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS -- The Master Series may invest in interest rate futures contracts and
options on interest rate futures contracts as a substitute for a comparable
market position in the underlying securities.
The Master Series also may sell options on interest rate futures contracts
as part of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions can be effected or the
degree of correlation between price movements in the options on interest rate
futures and price movements in the Master Series' portfolio securities which are
the subject of the transaction.
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BORROWING MONEY -- As a fundamental policy, the Master Series is permitted
to borrow to the extent permitted under the 1940 Act. However, the Master Series
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 33 1/3% of the value of its total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exceed 5% of the Master Series' total assets, the
Master Series will not make any investments.
LOANS OF PORTFOLIO SECURITIES -- From time to time, the Master Series may
lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33 1/3% of the value of the Master Series' total assets. In
connection with such loans, the Master Series receives collateral consisting of
cash, U.S. Government obligations or irrevocable letters of credit which are
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Master Series can increase its income
through the investment of such collateral. The Master Series continues to be
entitled to receive payments in amounts equal to the dividends, interest and
other distributions payable on the loaned security and receives interest on the
amount of the loan. Such loans are terminable at any time upon specified notice.
The Master Series might experience risk of loss if the institution with which it
has engaged in a portfolio loan transaction breaches its agreement with the
Master Series.
FORWARD COMMITMENTS -- The Master Series may purchase securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment, but delivery and payment ordinarily take place a number
of days after the date of the commitment to purchase. The Master Series will
make commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Master Series may sell these securities before
the settlement date if it is deemed advisable. The Master Series will not accrue
income in respect of a security purchased on a forward commitment basis prior to
its stated delivery date.
Securities purchased on a when-issued or forward commitment basis and
certain other securities held in the Master Series' portfolio are subject to
changes in value (both generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise) based
upon the public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates.
A-10
<PAGE> 107
Securities purchased on a when-issued or forward commitment basis may expose the
Master Series to risk because they may experience such fluctuations prior to
their actual delivery. Purchasing securities on a when-issued or forward
commitment basis can involve the additional risk that the yield available in the
market when the delivery takes place actually may be higher than that obtained
in the transaction itself. A segregated account of the Master Series consisting
of cash or U.S. Government obligations or other high quality liquid debt
securities in an amount at least equal at all times to the amount of the
when-issued or forward commitments is established and maintained at the Fund's
and the Master Series' custodian bank. Purchasing securities on a forward
commitment basis when the Master Series is fully or almost fully invested may
result in greater potential fluctuation in the value of the Master Series' net
assets and its NAV per share.
INVESTMENT POLICIES -- THE FUND
The investment objective of the Fund, as set forth in the first paragraph
of the section entitled "The Fund -- Investment Objective and Policies," is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of the outstanding voting securities of the Fund as
described under "Capital Stock" in the SAI. In addition, any fundamental
investment policy may not be changed without such shareholder approval. If the
Board of Directors of the Company determines, however, that the investment
objective of the Fund can best be achieved by a substantive change in a
non-fundamental investment policy or strategy, the Board may make such change
without shareholder approval and will disclose any such material changes in the
then-current prospectus.
As a matter 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 its total assets, more than 5% of the value of the Fund's
total assets would be invested in the securities of such issuer or, with respect
to 100% of its total assets, the Fund would own more than 10% of the outstanding
voting securities of such issuer, provided that this restriction shall not
prevent the Fund from investing all of its assets in the Master Series; (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 borrowing in excess
of 5% of its net assets exists); (iii) make loans of portfolio securities in
accordance with its investment policies; and (iv) not invest 25% or more of the
current value of its total assets (i.e., concentrate) in any particular
industry, except that the Fund
A-11
<PAGE> 108
will concentrate its assets in any one industry for the same period and to the
same extent as does the LB Bond Index and except that the Fund may invest 25% or
more of its assets in U.S. Government obligations, provided that this
restriction shall not prevent the Fund from investing all of its assets in the
Master Series.
The Fund reserves the right to invest up to 15% of the current value of its
net assets in repurchase agreements having maturities of more than seven days
and other illiquid securities. However, as long as the Fund's shares are
registered for sale in a state that imposes a lower limit on the percentage of a
fund's assets that may be so invested, the Fund will comply with such lower
limit. The Fund presently is limited to investing 10% of its net assets in such
securities due to limits applicable in several states. Disposing of illiquid or
restricted securities may involve additional costs and require additional time.
INVESTMENT POLICIES -- THE MASTER SERIES
CERTAIN FUNDAMENTAL POLICIES -- The Master Series 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 outstanding borrowing in excess of 5% of its net assets
exists); (ii) invest up to 5% of its total assets in the obligations of any
single issuer, except that up to 25% of the value of the total assets of the
Master Series may be invested and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities may be purchased, without regard
to any such limitation; and (iii) not invest 25% or more of the current value of
its total assets (i.e., concentrate) in any particular industry, except that the
Master Series will concentrate its assets in any one industry for the same
period and to the same extent as does the LB Bond Index and except that the
Master Series may invest 25% or more of its assets in U.S. Government
obligations. This paragraph describes certain fundamental policies that cannot
be changed as to the Master Series without approval by the holders of a majority
(as defined in the 1940 Act) of the Master Series' outstanding voting
securities.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors) if such purchase does not
cause the value of its investments in all such companies to exceed 5% of the
value of its total assets; (ii) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure
A-12
<PAGE> 109
permitted borrowings; and (iii) invest up to 15% of the value of its net assets
in repurchase agreements providing for settlement in more than seven days after
notice and in other illiquid securities.
INVESTMENT RATINGS
The following describes how the two major rating agencies classify their
investment ratings. Ratings of debt securities represent the rating agency's
opinion regarding their quality, and are not a guarantee of quality. Credit
ratings attempt to evaluate the safety of principal and interest payments, and
do not evaluate the risks of fluctuations in market value. Furthermore, rating
agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial condition may be better
or worse than the rating indicates. Subsequent to purchase by the Master Series,
the rating of a debt security may be reduced below the minimum rating required
for initial purchase by the Master Series or the security may cease to be rated.
Wells Fargo and WFNIA will consider either such event in determining whether the
Master Series should continue to hold the security. In no event will the Master
Series hold more than 5% of its net assets in debt securities rated below "BBB"
by S&P or below "Baa" by Moody's or in unrated low quality (below investment
grade) debt securities. Wells Fargo and WFNIA do not make any representation
that the investment ratings provided by such rating agencies are accurate or
complete.
STANDARD & POOR'S RATINGS
Bond Ratings. Bonds rated "AAA" have the highest rating assigned by S&P to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree. Bonds
rated "A" have a strong capacity to pay interest and repay principal although it
is somewhat more susceptible to the adverse effects of changes in circumstances
and economic conditions than debt in higher rated categories. Bonds rated "BBB"
by S&P are regarded as having an adequate capacity to pay interest and repay
principal. Whereas such bonds normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Commercial Paper Ratings. Commercial paper with the greatest capacity for
timely payment is rated "A" by S&P. Issues within this category are further
redefined with designations "1", "2" and "3" to indicate the
A-13
<PAGE> 110
relative degree of safety; "A-1," the highest of the three, indicates the degree
of safety is very high.
MOODY'S INVESTORS SERVICE RATINGS
Bond Ratings. Bonds rated "Aaa" by Moody's are judged to be of the best
quality. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. Bonds rated "Aa" are judged to be of high
quality by all standards. They are rated lower than the best bonds because
margins of protection may not be as large or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than is the case with "Aaa"
securities. Bonds that are rated "A" possess many favorable investment
attributes and are to be considered upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future. Bonds which are rated "Baa" by Moody's are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over longer periods of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well.
Commercial Paper Ratings. Moody's employs the designations of "Prime-1,"
"Prime-2" and "Prime-3" to indicate the relative capacity of the rated issuers
to repay punctually. "Prime-1" is the highest commercial paper rating assigned
by Moody's. Issuers of "Prime-1" obligations must have a superior capacity for
repayment of short-term promissory obligations, and will normally be evidenced
by leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
FITCH INVESTORS SERVICE RATINGS
Bond Ratings. Bonds rated "BBB" by Fitch are considered to be investment
grade and of satisfactory quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to weaken this ability
than with bonds having higher ratings.
A-14
<PAGE> 111
(This page intentionally left blank)
<PAGE> 112
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFBI 6/95
<PAGE> 113
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFBI 6/95
<PAGE> 114
GROWTH STOCK FUND
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; General Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information; General Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C General Information
- ------ -------------------
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
<PAGE> 115
[STAGECOACH FUNDS(R)]
------------------------------
PROSPECTUS
------------------------------
GROWTH STOCK FUND
June 28, 1995
- --------------------------------------------------------------------------------
<PAGE> 116
STAGECOACH INC.
GROWTH STOCK FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
funds -- the GROWTH STOCK FUND (the "Fund"). The Fund seeks above-average,
long-term total return, with a primary focus on capital appreciation. Current
income is a secondary consideration. THE FUND INVESTS ALL OF ITS ASSETS IN THE
GROWTH STOCK MASTER SERIES (THE "MASTER SERIES") OF THE MANAGED SERIES
INVESTMENT TRUST (THE "MASTER TRUST"), AN OPEN-END, MANAGEMENT INVESTMENT
COMPANY, RATHER THAN IN A PORTFOLIO OF SECURITIES. THE MASTER SERIES HAS THE
SAME INVESTMENT OBJECTIVE AS THE FUND.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund and the Master
Series that an investor should know before investing. A Statement of Additional
Information ("SAI") dated June 28, 1995 describing the Fund has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference.
The SAI is available free of charge by calling the Company at 1-800-776-0179 or
by writing the Company at the address printed on the back of the Prospectus.
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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN INVESTMENT IN THE
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 117
The Master Series seeks to provide investors in the Fund and the Series
with a rate of total return that, over a three to five year time horizon,
exceeds that of the S&P Composite Index of 500 stocks ("S&P 500 Index") (before
fees and expenses) over comparable periods by investing in a diversified
portfolio consisting primarily of growth-oriented common stocks. The Fund's
investment experience corresponds directly with the Master Series' investment
experience. Shares of the Master Series may be purchased only by other
investment companies or other accredited investors.
As noted below under "General Information -- Description of the Company,"
investors may be able to invest indirectly in the Master Trust through other
investment companies or portfolios of the Company that invest substantially all
of their assets in the Master Trust. The Master Series is advised by Wells Fargo
Bank, N.A. ("Wells Fargo"). Wells Fargo also serves as the Fund's and the Master
Series' transfer agent and custodian and as a Selling Agent and a Shareholder
Servicing Agent (as defined below). Stephens Inc. ("Stephens") is the sponsor,
distributor and administrator for the Company and the Master Trust.
------------------------
WELLS FARGO IS THE INVESTMENT ADVISER TO THE MASTER SERIES AND PROVIDES
CERTAIN OTHER SERVICES TO THE COMPANY AND MASTER TRUST, FOR WHICH IT IS
COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS FARGO, IS
THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE COMPANY AND THE MASTER TRUST.
<PAGE> 118
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary........................................ 2
Summary of Fund Expenses.................................. 7
Explanation of the Table.................................. 8
Financial Highlights...................................... 9
The Fund.................................................. 10
Management of the Fund.................................... 15
How To Buy Shares......................................... 19
How to Redeem Shares...................................... 24
Exchange Privilege........................................ 28
Share Value............................................... 29
Dividends and Distributions............................... 30
Federal Income Tax Information............................ 30
General Information....................................... 32
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
--------
<S> <C>
Additional Investment Policies............................ A-1
</TABLE>
1
<PAGE> 119
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefit plans, including retirement plans, that
have appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent of the
qualified employee benefit plan and a Shareholder Servicing Agent.
See "How To Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund seeks above-average, long-term total return, with a primary focus
on capital appreciation. The Fund seeks to achieve its investment objective
by investing all of its assets in the Master Series, which has
substantially the same objective as the Fund. The Master Series seeks to
achieve this investment objective through the active management of a
portfolio consisting primarily of growth-oriented common stocks. The Fund,
through its investment in the Master Series, is designed to provide
above-average capital growth potential for investors willing to assume
above-average risk. Because the Master Series invests in a number of
different companies, its investments are diversified among issuers and
among industries. See "The Fund -- Investment Objective and Policies" and
"Appendix -- Additional Investment Policies."
2
<PAGE> 120
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund (and the Master Series) are not bank deposits or
obligations of Wells Fargo and are not insured by the Federal Deposit
Insurance Corporation ("FDIC") or any other government agency. Therefore,
investors should be prepared to accept some risk with the money invested in
the Fund. The portfolio securities held by the Master Series are subject to
market risk. Market risk is the possibility that common 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. Because the Master Series engages in active portfolio management,
the Master Series may experience relatively high turnover and transaction
(i.e., brokerage commission) costs. The Fund bears a pro rata portion of
such transaction costs. Portfolio turnover also can generate short-term
capital gains tax consequences. In this regard, the portfolio turnover rate
generally is not expected to exceed 200%. For additional information
relating to portfolio turnover see "Federal Income Tax Information" in this
Prospectus and "Portfolio Transactions" and "Federal Income Taxes" in the
SAI.
The Master Series may invest a significant portion of its assets in the
securities of smaller and newer issuers. Investments in such companies may
present greater opportunities for capital appreciation because of high
potential earnings growth, but they also may involve greater risk. Such
companies, relative to larger concerns, may have limited product lines,
markets or financial resources, or may depend on a small group of key
managers. Securities issued by smaller and newer issuers 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, these securities
generally fluctuate in value more than those of larger, more established
companies and, as a group, may suffer more severe price declines during
periods of generally declining equity prices. As with all mutual funds,
there can be no assurance that the Fund will achieve its investment
objective. Finally, the Master Series was formed in 1993 and therefore has
a limited operating history. See "The Fund -- Investment Objective and
Policies" and "Appendix -- Additional Investment Policies."
3
<PAGE> 121
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") is open for regular business (a "Business
Day"). There are no sales loads.
To invest in the Fund, contact a Shareholder Servicing Agent to receive
information and an Account Application. An Account Application must be
completed and signed to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method, and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors.
See "How to Buy Shares."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Trust, manages the
investments of the Master Series. The Company has not retained the services
of a separate investment adviser for the Fund because the Fund invests all
of its assets in the Master Series. Wells Fargo, one of the ten largest
commercial banks in the United States, was founded in 1852 and is the
oldest bank in the western United States. As of March 31, 1995, various
divisions and affiliates of Wells Fargo provided investment advisory
services for over $196 billion of assets of individuals, trusts, estates
and institutions. See "Management of the Fund."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For its advisory
services to the Master Series, Wells Fargo is entitled to receive a fee at
an annual percentage rate of 0.60% of the Master Series' average daily net
assets. Wells Fargo also provides custodial and transfer agency services to
the Fund and the Master Series. Wells Fargo is compensated for its
custodial services out of the advisory fee paid by the Master Series and is
entitled to an annual fee of 0.03% of the Fund's average net assets in
return for providing transfer agency services to the Fund and the Master
Series.
4
<PAGE> 122
For its services as administrator of the Fund and the Master Series,
Stephens is entitled to receive a fee at an annual rate of 0.05% of the
Fund's average daily net assets.
The Fund also has adopted a Shareholder Servicing Plan pursuant to which it
may enter into Shareholder Servicing Agreements with Shareholder Servicing
Agents. The Servicing Plan permits the Fund to compensate Shareholder
Servicing Agents up to 0.10% of the average daily net assets of the Fund.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for certain
administrative services, such as recordkeeping and processing exchanges of
Fund shares for other available investment options.
See "Management of the Fund."
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the net
asset value of shares of the Master Series which in turn depends on the
total value of the portfolio securities owned by the Master Series (plus
cash and other assets net of liabilities) and the number of shares of the
Master Series outstanding. On each Business Day, Wells Fargo calculates a
new net asset value of the Fund and the Master Series. See "Share Value."
Q. DOES THE FUND PAY DIVIDENDS?
A. The Fund intends to pay quarterly dividends consisting of substantially all
of its net investment income, and annual distributions consisting of
substantially all of its net realized capital gains. All dividends and
distributions are automatically reinvested in additional Fund shares at net
asset value, unless payment in cash is requested and your arrangement with
a Shareholder Servicing Agent permits the processing of cash payments. Each
reinvestment increases the total number of shares held by the shareholder.
See "Dividends and Distributions."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in
5
<PAGE> 123
the Stagecoach Family of Funds, to the extent such shares are offered for
sale in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the imposition
of a sales charge or redemption fee on any Business Day by letter, by an
automatic feature called the Systematic Withdrawal Plan, or by telephone
(unless you decline telephone privileges). See "How to Redeem Shares." For
more information contact Stephens or your Shareholder Servicing Agent (such
as Wells Fargo).
Q. WHAT ARE DERIVATIVES AND DO THE FUND AND THE MASTER SERIES USE THEM?
A. Derivatives are financial instruments whose values are derived, at least in
part, from the prices of other securities or specified assets, indices or
rates. Some of the permissible investments described in this Prospectus,
such as variable-rate instruments which have interest rates that are reset
periodically based on an index, can be considered derivatives. Certain U.S.
Government obligations can also 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 FUND AND MASTER SERIES TAKE TO CONTROL DERIVATIVES-RELATED
RISKS?
A. Wells Fargo (as investment adviser to the Master Series) uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with both the Master Series' and the Fund's investment
objective, does not expose either the Master Series or the Fund to undue
risks and is closely monitored. These procedures include providing periodic
reports to the Boards of Trustees and Directors. Derivatives use also is
subject to broadly applicable investment policies. For example, the Master
Series may not invest more than a specified percentage of its assets in
"illiquid securities," including those derivatives that do not have active
secondary markets. In addition, the Master Series may not use derivatives
without establishing adequate "cover" in compliance with SEC rules limiting
the use of leverage. For more information, see "Appendix -- Additional
Investment Policies."
6
<PAGE> 124
SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund and the aggregate annual operating
expenses of the Fund and the Master Series, 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. As shown below, you are not charged
redemption fees or exchange fees. You should consider this expense information
together with the important information in this Prospectus, including the Fund's
investment objective and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net
assets)*:
Management Fees**............................... 0.59%
Other Expenses
Shareholder Servicing Fees.................... 0.10 %
Miscellaneous Expenses**...................... 0.09 %
Total Other Expenses**........................ 0.19%
-------
Total Fund Operating Expenses**................. 0.78%
</TABLE>
- ---------------
* Other mutual funds may invest in the Master Series and such other funds'
expenses and, correspondingly, investment returns may differ from those of
the Fund.
** Annual Fund operating expenses are based on amounts incurred during the most
recent fiscal year, restated to reflect voluntary fee waivers that will
continue during the current fiscal year. In the absence of waivers and/or
reimbursements, the percentages shown above under the captions "Management
Fees," "Miscellaneous Expenses," "Total Other Expenses" and "Total Fund
Operating Expenses" would be 0.60%, 0.17%, 0.27% and 0.87%, respectively.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor 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.......................... $8 $25 $43 $ 97
</TABLE>
7
<PAGE> 125
EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, restated to reflect voluntary fee waivers and expense
reimbursements that will continue during the current fiscal year. They summarize
expenses charged at the Master Trust level as well as expenses charged at the
Company level. For a further description of the fee structure of the Master
Trust and Company, see "Management of the Fund." Wells Fargo 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.
The Fund does not anticipate Fund expenses exceeding state limits. In addition,
Wells Fargo and Stephens each, at its sole discretion, may waive or reimburse
all or a portion of its respective fees charged to, or expenses paid by, the
Fund or Master Series. Any waivers or reimbursements would reduce the Fund's or
Master Series' total expenses. For more complete descriptions of the various
costs and expenses you can expect to incur as an investor in the Fund, please
see the Prospectus section captioned "Management of the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over stated periods,
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected Fund performance. In addition, the Example of Expenses should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown above.
With regard to the combined fees and expenses of the Fund and the Master
Series, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the Master Series
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 Master Series. Additionally, the
Board of Directors has determined that the aggregate fees assessed by the Fund
and the Master Series should be less than those expenses that the Directors
believe would be incurred had the Fund invested directly in the securities held
by the Master Series. See the Prospectus section captioned "Management of the
Fund" 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
investment strategy and no longer invest in the Master Series, these expenses
may change.
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FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995** 1994***
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period.......... $ 11.52 $ 10.00
Income from investment operations:
Net investment income (loss)................ 0.00 (0.01)
Net realized and unrealized gain (loss) on
investments............................... 0.19 1.86
------------ ------------
Total from investment operations.............. 0.19 1.85
Less distributions:
Dividends from net investment income........ 0.00 0.00
Distributions from net realized gains....... (0.07) (0.33)
------------ ------------
Total distributions........................... (0.07) (0.33)
------------ ------------
Net Asset Value, end of period................ $ 11.64 $ 11.52
============== ==============
Total return (not annualized)................. 1.70% 18.65%
Ratios/supplemental data:
Net assets, end of period (000)............. $ 96,925 $ 45,443
Number of shares outstanding, end of period
(000)..................................... 8,330 3,945
Ratios to average net assets+:
Ratio of expenses to average net
assets(1)................................. 0.76%++ 0.80%
Ratio of net investment income (loss) to
average net assets(2)..................... (0.02)% (0.18)%
Portfolio turnover............................ 27%* 104%
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses.................................. 0.87% 0.80%
(2) Ratio of net investment income (loss) to
average net assets prior to waived fees
and reimbursed expenses................... (0.12)% (0.18)%
</TABLE>
- ---------------
* This rate is for the period from February 28, 1994 to May 25, 1994. As of
May 26, 1994 the Fund invests all of its assets in the corresponding Master
Series of the Master Trust. The portfolio turnover rate for the Master
Series for the period beginning May 26, 1994 and ending February 28, 1995
was 93%.
** Beginning May 26, 1994 the Fund, pursuant to shareholder approval, was
reorganized and began investing in the corresponding Master Series of the
Master Trust.
*** The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
++ This ratio includes expenses charged to the Master Series.
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<PAGE> 127
THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks above-average, long-term total return, with a primary focus
on capital appreciation. Current income is a secondary consideration. This
investment objective is fundamental and cannot be changed without shareholder
approval. The Fund seeks to achieve its investment objective by investing all of
its assets in the Master Series, which has the same fundamental investment
objective as the Fund. The investment objective of the Master Series is to
provide investors with above-average long-term total return, with a primary
focus on capital appreciation. The Master Series seeks to provide investors with
a rate of total return that, over a three to five year time horizon, exceeds
that of the S&P 500 Index(1) (before fees and expenses) over comparable periods
by investing in a diversified portfolio consisting primarily of growth-oriented
common stocks. There can be no assurance that the Fund or the Master Series will
achieve its investment objective.
Since the investment characteristics of the Fund directly correspond to
those of the Master Series, the discussion below relates to the various
investments of and techniques employed by the Master Series.
In pursuing its objective, the Master Series invests primarily in the
common stocks of those growth-oriented, small- and medium-sized corporations
that the Master Series' investment adviser believes have potential for
above-average, long-term capital appreciation. These growth-oriented stocks
typically have some or all of the following characteristics:
- Low or no dividends
- Relatively small market capitalizations
- Less market liquidity
- Relatively short operating histories
- High debt-to-equity ratios
- Involvement in rapidly growing/changing industries and/or new
technologies
- ---------------
(1) Standard & Poor's Corporation ("S&P") does not sponsor the Fund or the
Master Series nor is it affiliated in any way with Wells Fargo, the Fund or the
Master Series. "Standard & Poor's", "S&P", "S&P 500", and "Standard & Poor's
500" are trademarks of S&P.
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<PAGE> 128
The Master Series invests in a diversified portfolio of growth-oriented
common stocks and does not concentrate its investments in a particular industry.
Under normal market conditions, the Master Series' portfolio contains common
stocks of at least 20 corporations in multiple industry groups, with the
majority of these holdings consisting of stocks of established growth companies,
turnaround or acquisition candidates, or larger capitalization companies that
present one or more of the above characteristics.
Additionally, the Master Series may, from time to time, acquire securities
through initial public offerings, and may acquire and hold common stocks of
smaller and newer issuers, which are subject to the additional risks described
below. It is expected that no more than 40% of the Master Series' assets will be
invested in these more aggressive securities at one time.
As with any investment in securities, the value of, and income from, an
investment in the Fund can decrease as well as increase, depending on a variety
of factors that may affect the values and income generated by the Master Series'
portfolio securities, including general economic conditions and market factors.
Investments in smaller companies may offer greater opportunities for capital
appreciation than larger, more established companies, but they also may involve
greater risk. For example, smaller companies may have limited product lines,
markets or financial and management resources. From time to time, Wells Fargo
may determine that conditions in the securities markets make pursuing the Fund's
and Master Series' basic investment strategy inconsistent with the best
interests of the Fund's and Master Series' investors. At such times, Wells Fargo
may reduce the Master Series' exposure to the stock market in order to reduce
fluctuations in the value of the Master Series' assets. The Master Series could
invest up to 30% of its net assets in preferred stocks, government obligations
or in debt securities that are convertible into common stock; it could also
increase its investments in money market securities. At most, 5% of the Master
Series' net assets will be invested in convertible debt securities that are
either rated below the four highest rating categories by one or more nationally
recognized statistical rating organizations ("NRSROs"), such as Moody's
Investors Service, Inc. ("Moody's") or S&P, or unrated securities determined by
Wells Fargo to be of comparable quality. Securities rated in the fourth highest
rating category (i.e., rated "BBB" by S&P or "Baa" by Moody's) are regarded by
S&P as having an adequate capacity to pay interest and repay principal, but
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make such repayments. Moody's considers such securities
as having speculative characteristics. For additional information relating to
investments in below
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<PAGE> 129
investment grade securities see "Additional Permitted Investment
Activities -- Unrated, Downgraded and Below Investment Grade Investments" in the
SAI.
The Master Series pursues an active-trading investment strategy, and the
length of time the Master Series has held a particular security is not generally
a consideration in investment decisions. Accordingly, the Master Series'
portfolio turnover rate may be higher than that of other funds that do not
pursue an active-trading investment strategy. Portfolio turnover generally
involves some expense to the Master Series, including brokerage commissions or
dealer mark-ups, and other transaction costs on the sale of securities and the
reinvestment in other securities. The Fund bears a pro rata portion of such
transaction costs. Portfolio turnover also can generate short-term capital gains
tax consequences. The Master Series does not expect to have a portfolio turnover
rate exceeding 200%. For additional information relating to portfolio turnover
see "Federal Income Tax Information" in this Prospectus and "Portfolio
Transactions" and "Federal Income Taxes" in the SAI.
Although the Master Series holds a number of larger capitalization stocks,
under normal market conditions more than 50% of the Master Series' total assets
are invested in companies with smaller to medium capitalizations. The Master
Series invests 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 Master Series believes such
investments to be in the best interests of the Master Series. The majority of
the Master Series' investments are currently in companies with market
capitalizations, at the time of acquisition, of up to $750 million. As a matter
of strategy, the larger capitalized issues in the Master Series are generally
"core" positions that the Master Series holds for relatively long periods of
time.
Under ordinary market conditions, at least 65% of the value of the total
assets of the Master Series are invested in common stocks that are expected by
Wells Fargo to have better-than-average prospects for capital appreciation.
The Master Series may temporarily hold assets in cash or make short-term
investments to the extent appropriate to maintain adequate liquidity for
redemption requests or other cash management needs, or for temporary defensive
purposes. The short-term investments that the Master Series may purchase for
liquidity purposes include U.S. Treasury bills, shares of other mutual funds and
repurchase agreements (as described below).
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<PAGE> 130
A more complete description of the Master Series' investments, investment
activities, and investment restrictions is contained in "Appendix -- Additional
Investment Policies" and in the SAI.
MASTER/FEEDER STRUCTURE
As of May 26, 1994, the Fund converted to a feeder fund in a master/feeder
structure. Accordingly, the Fund invests all of its assets in the Master Series,
which has the same investment objective as the Fund. See, "The
Fund -- Investment Objectives and Policies." The Master Trust is organized as a
trust under the laws of the State of Delaware. See "General
Information -- Description of the Company." In addition to selling its shares to
the Fund, the Master Series may sell its shares to certain other mutual funds or
other accredited investors. Information regarding additional options, if any,
for investment in shares of the Master Series is available from Stephens and may
be obtained by calling 1-800-643-9691. The expenses and, correspondingly, the
returns of other investment options in the Master Trust may differ from those of
the Fund.
The Board of Directors believes that, if other investors invest their
assets in the Master Series, certain economic efficiencies may be realized with
respect to the Master Series. For example, fixed expenses that otherwise would
have been borne solely by the Fund would be spread across a larger asset base
provided by more than one fund investing in the Master Series. The Fund and
other entities (if any) investing in the Master Series would each be liable for
all obligations of the Master Series. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and the Master Trust itself is unable to meet
its obligations. Accordingly, the Company's Board of Directors believes that
neither the Fund nor its shareholders will be adversely affected by reason of
investing the Fund's assets in the Master Series. However, if a mutual fund or
other investor withdraws its investment from the Master Series, the economic
efficiencies (e.g., spreading fixed expenses among a larger asset base) that the
Company's Board believes should be available through investment in the Master
Series may not be fully achieved. In addition, given the relatively novel nature
of the master/feeder structure, accounting and operational difficulties could
occur.
The Master Series' investment objective and other fundamental policies,
which are the same as those of the Fund, cannot be changed without approval by
the holders of a majority (as defined in the Investment Company Act of 1940 (the
"1940 Act")) of the Master Series' outstanding voting shares. Whenever the Fund,
as a Master Series shareholder, is
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<PAGE> 131
requested to vote on matters pertaining to any fundamental policy of the Master
Series, the Fund will hold a meeting of its shareholders to consider such
matters and the Fund will cast its votes in proportion to the votes received
from Fund shareholders. The Fund will vote Master Series shares for which it
receives no voting instructions in the same proportion as the votes received
from Fund shareholders. In addition, certain policies of the Master Series that
are non-fundamental can be changed by vote of a majority of the Master Trust's
Trustees without a shareholder vote. If the Master Series' investment objective
or policies are changed, the Fund could subsequently change its objective or
policies to correspond to those of the Master Series or the Fund could redeem
its Master Series shares and either seek a new investment company with a
substantially matching objective in which to invest or retain its own investment
adviser to manage the Fund's portfolio in accordance with its objective. In the
latter case, the Fund's inability to find a substitute investment company in
which to invest or equivalent management services could adversely affect
shareholders' investments in the Fund. The Fund's investment objective and other
fundamental policies cannot be changed without approval by the holders of a
majority (as defined in the 1940 Act) of the Fund's outstanding voting shares.
The Fund will provide shareholders with 30 days' written notice prior to the
implementation of any change in the investment objective of the Fund or Master
Series, to the extent possible.
PERFORMANCE
The Fund's performance may be advertised in terms of total return. The
Fund's performance figures are based on historical results and are not intended
to indicate future performance. The Fund's total return may be calculated on an
average annual total return basis or a cumulative total return basis. Average
annual total return refers to the average annual compounded rates of return over
one-, five-, and ten-year periods (or the life of the Fund, which periods are
stated in the advertisement) and is measured by comparing the value of an
investment in the Fund at the beginning of the relevant period to the redemption
value at the end of the period and annualizing the result. Cumulative total
return is based on the overall percentage change in value of a hypothetical
investment in the Fund. Both methods assume that all Fund dividends and capital
gain distributions are reinvested. Fees charged by an institution or shareholder
servicing agent in connection with an investment in the Fund are not included in
calculations of yield or total return. The Fund's performance corresponds
directly to the investment experience of the Master Series. The Fund's annual
report contains additional performance information
14
<PAGE> 132
and is available without charge by calling 1-800-776-0179 or by writing the
Company at the address printed on the back of the Prospectus.
MANAGEMENT OF THE FUND
MASTER TRUST INVESTMENT ADVISER -- Wells Fargo, a wholly owned subsidiary
of Wells Fargo & Company located at 420 Montgomery Street, San Francisco,
California 94105, is the Master Series' investment adviser. Wells Fargo, 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 March 31, 1995, various
divisions and affiliates of Wells Fargo provided investment advisory services
for approximately $196 billion of assets of individuals, trusts, estates and
institutions. Pursuant to an Investment Advisory Agreement with the Master
Trust, Wells Fargo provides investment guidance and policy direction in
connection with the management of the Master Series' assets, subject to the
supervision of the Master Trust's Board of Trustees and in conformity with
Delaware law and the stated policies of the Master Series.
Wells Fargo deals, trades and invests for its own account in the types of
securities in which the Master Series may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by the
Master Series. Wells Fargo has informed the Master Trust that in making its
investment decisions it does not obtain or use material inside information in
its possession.
Prior to the Fund's conversion to master/feeder structure, Wells Fargo
provided investment advisory services directly to the Fund. For its services as
investment adviser Wells Fargo was entitled to receive a monthly fee at the
annual rate of 0.65% of the Fund's average daily net assets.
Since the conversion to master/feeder structure, Wells Fargo provides
investment advisory services to the Master Series. Under the terms of the
current Investment Advisory Agreement between Wells Fargo and the Master Trust,
the Master Trust has agreed to pay a monthly fee at the annual rate of 0.60% of
the Master Series' average daily net assets. For the fiscal year ended February
28, 1995, Wells Fargo was paid advisory fees at the annual rate of 0.57% of the
average daily net assets of the Fund for its services as investment adviser to
the Fund and the Master Series. Fund shareholders bear a pro rata portion of the
Master Series' operating expenses, including its advisory fees, to the extent
that the Fund, as a shareholder of the Master Series, bears such expenses.
Jonathan Hickman has been primarily responsible for the day-to-day
management of the portfolio of the Fund and the Master Series since their
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<PAGE> 133
respective inceptions. Mr. Hickman manages several Wells Fargo funds with the
same investment objective as that of the Fund and the Master Series, as well as
equity and balanced portfolios for individuals and employee benefit plans. He
has approximately 10 years experience in the investment management field and is
a member of Wells Fargo's Equity Strategy Committee. He has a B.A. and an M.B.A.
in finance from Brigham Young University.
Morrison & Foerster, counsel to the Company and the Master Trust and
special counsel to Wells Fargo, has advised the Company, the Master Trust and
Wells Fargo that Wells Fargo may perform the services contemplated by the
Advisory Contract without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Such counsel has pointed out, however,
that there are no controlling judicial or administrative interpretations or
decisions and that future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes, including the
Glass-Steagall Act and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as future changes in such
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent Wells Fargo from continuing to perform, in whole
or in part, such services. If Wells Fargo were prohibited from performing any
such services, it is expected that the Directors of the Company would recommend
to the Fund's shareholders that they approve a new advisory agreement with
another entity or entities qualified to perform such services.
ADMINISTRATOR AND DISTRIBUTOR -- Stephens, located at 111 Center Street,
Little Rock, Arkansas 72201, serves as the Company's and the Master Trust's
administrator pursuant to separate Administration Agreements with the Company
and the Master Trust. Under the Administration Agreement with the Company,
Stephens provides general supervision of the operation of the Company, other
than the provision of investment advice, subject to the overall authority of the
Board of Directors and in accordance with Maryland law. The administrative
services provided to the Fund also include coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Board of Directors and officers.
Stephens also furnishes office space and certain facilities to conduct the
Company's business, and compensates the Company's Directors, officers and
employees who are affiliated with Stephens. For providing administrative
services to the Fund, the Company has agreed to pay Stephens a monthly fee at
the annual rate of 0.05% of the Fund's average daily net assets. For
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<PAGE> 134
the fiscal year ended February 28, 1995, the Company paid a fee of 0.05% of the
Fund's average daily net assets to Stephens for its services as administrator of
the Fund and Master Series.
Stephens also serves as the Company's principal underwriter within the
meaning of the 1940 Act and as distributor of the Fund's shares pursuant to a
Distribution Agreement with the Company. The Distribution Agreement provides
that Stephens will act as agent for the Company for the sale of Fund shares and
may enter into Selling Agreements with selling agents that wish to make
available Fund shares to their respective customers ("Selling Agents"). Wells
Fargo presently acts as a Selling Agent, but does not receive any fee from the
Fund for such activities.
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.
CUSTODIAN AND TRANSFER AGENT -- Wells Fargo also serves as the Fund's and
the Master Series' transfer agent and custodian (the "Transfer Agent" or
"Custodian") pursuant to Agency Agreements and Custody Agreements, respectively.
Wells Fargo provides the transfer agency and custodial services at 525 Market
Street, San Francisco, California 94105. For its services as Transfer Agent,
Wells Fargo is entitled to receive an annual fee from the Fund totalling 0.03%
of the Fund's average net assets. Wells Fargo is compensated for its services as
Custodian out of the advisory fee paid by the Master Series. Under their Custody
Agreements with Wells Fargo, the Fund and the Master Series may, at times,
borrow money from Wells Fargo as needed to satisfy temporary liquidity
requirements. Wells Fargo charges interest on such overdrafts at a rate
determined pursuant to the appropriate Custody Agreement.
SHAREHOLDER SERVICING AGENT -- The Fund has adopted a Shareholder Servicing
Plan pursuant to which it has entered into a Shareholder Servicing Agreement
with Wells Fargo, and may enter into similar agreements with other entities
("Shareholder Servicing Agents"). Under such agreements, Shareholder Servicing
Agents (including Wells Fargo) agree, as agent for their customers, to be
responsible for performing shareholder liaison services, which include, without
limitation, answering customer inquiries regarding account status and history,
and the manner in which purchases, exchanges and redemptions of Fund shares may
be effected, assisting customers with investment plans, dividend options and
account designations and addresses, processing of purchase, redemption and ex-
17
<PAGE> 135
change transactions, providing periodic account statements showing account
balances and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by the Shareholder Servicing
Agent or its affiliates, arranging for bank wires, distributing various
materials for the Company, assisting in the establishment and maintenance of
accounts in the Fund and providing such other similar services as the Company or
a customer may reasonably request. For these services, a Shareholder Servicing
Agent is entitled to receive a fee, which may be paid periodically, determined
by a formula based upon the number of accounts serviced by the Shareholder
Servicing Agent during the period for which payment is being made, the level of
activity in such accounts during such period, and the expenses incurred by the
Shareholder Servicing Agent. In no event will such fees exceed, on an annualized
basis for the Fund's then-current fiscal year, 0.10% of the average daily net
assets of the Fund represented by shares owned during the period for which
payment is being made by investors with whom the Shareholder Servicing Agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the Shareholder Servicing Agent under applicable laws, regulations or
rules, including the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., whichever is less.
A Shareholder Servicing Agent 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 higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the Fund and to notify
them in writing at least thirty days before it imposes any transaction fees.
FUND EXPENSES -- As noted previously, from time to time, Wells Fargo and
Stephens may waive their respective fees in whole or in part. Any such waivers
will reduce the Fund's expenses and, accordingly, have a favorable impact on the
Fund's total yield and return. Except for the expenses borne by Wells Fargo and
Stephens, the Company and the Master Trust will bear all costs of their
respective operations allocated to the Fund and the Master Series.
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<PAGE> 136
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in the Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an IRA pursuant to arrangements between
the sponsor or other agent of the qualified employee benefit plan and a
Shareholder Servicing Agent.
Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request by an investor or the investor's
representative, the Company or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below), and $1,000 by all other methods or for all other
investors except that there is no minimum initial investment amount for Benefit
Plans or IRA investors. All subsequent investments must be at least $100, except
that there is no minimum subsequent investment amount for Benefit Plans or IRA
investors. All investments in Fund shares are subject to a determination by the
Company that the investment instructions are complete. If shares are purchased
by a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. The
Company reserves the right in its sole discretion to suspend the availability of
the Fund's shares and to reject any purchase requests. Certificates for Fund
shares are not issued.
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<PAGE> 137
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading on the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading on the NYSE are executed on the next Business
Day. The investor's Shareholder Servicing Agent is responsible for the prompt
transmission of the investor's purchase order to the Transfer Agent on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a Shareholder Servicing Agent may not be received by the Transfer
Agent on the same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further information
concerning this requirement. Failure to furnish a social security number or a
TIN to the Company could subject the investor to penalties imposed by the
Internal Revenue Service ("IRS").
BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Shareholder Servicing Agents as plan trustee, plan administrator or
other agent, or whose plan trustee, plan administrator or other agent has a
servicing arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares. Benefit Plans include 401(k) plans and plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), health and welfare plans and executive deferred compensation
plans. For additional information about Benefit Plans that may be eligible to
invest in Fund shares, prospective investors should contact a Shareholder
Servicing Agent.
Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
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<PAGE> 138
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Shareholder Servicing Agent may offer other types of
tax-deferred or tax-advantaged plans, including a Keogh retirement plan for
self-employed professional persons, sole proprietors and partnerships. Contact a
Shareholder Servicing Agent for materials describing plans available through it,
and their benefits, provisions and fees.
Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Shareholder Servicing
Agent. Completed retirement plan applications should be returned to the
investor's Shareholder Servicing Agent for approval and processing. If an
investor's retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. Certain features
described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a retirement plan. Investors should
consult their Shareholder Servicing Agent.
PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), 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. Some banks may impose wiring fees.
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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
AutoSaver Plan
The Company's AutoSaver Plan provides individual or corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an investor must specify an
amount ($100 or more) to be withdrawn automatically by the Transfer Agent on a
monthly basis from an account with a bank ("Approved Bank") that is designated
in the investor's Account Application and that is approved by the Transfer
Agent. Wells Fargo is an Approved Bank. The Transfer Agent withdraws and uses
this amount to purchase Fund shares on the investor's behalf on or about the
fifth Business Day of each month. There are no separate fees charged to an
investor by the Company for participating in the AutoSaver Plan.
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
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Additional Purchases
An individual and corporate investor may make additional purchases of $100
or more by instructing the Fund's Transfer Agent to debit a designated Approved
Bank account, by wire by using the procedures described under "Initial Purchases
by Wire" above, or by mail with a check payable to "Stagecoach Inc./(Name of
Fund)" to the above address. An investor must write a Fund account number on the
check and include the detachable stub from a Statement of Account or a letter
providing the investor's Fund account number.
In-Kind Purchases
At the discretion of Wells Fargo, shares of the Fund may be purchased in
exchange for securities which are eligible for acquisition by the Master Series
as described in this Prospectus. Securities to be exchanged which are accepted
by the Fund are valued in accordance with the procedures referenced under "Share
Value" in this Prospectus at the time of the next determination of net asset
value after such acceptance. Shares issued by the Fund in exchange for
securities are issued at net asset value determined as of the same time. All
dividends (with the exception of dividends received on securities tendered after
the ex-dividend date), interest, subscription, or other rights pertaining to
such securities shall become the property of the Fund and must be delivered to
the Fund by the investor upon receipt from the issuer.
The Fund will only accept securities for its portfolio in exchange for
shares issued by the Fund if: (1) such securities are, at the time of the
exchange, eligible to be included in the Master Series' portfolio and current
market quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities Act
of 1933 or under the laws of the country in which the principal market for such
securities exists, or otherwise; (3) the value of any such security (except U.S.
Government obligations) being exchanged together with other securities of the
same issuer owned by the Master Series will not exceed 5% of the net assets of
the Master Series immediately after the transaction; and (4) such securities are
consistent with the Fund's and the Master Series' investment objective and
policies and otherwise acceptable to Wells Fargo, as the Master Series'
investment adviser, in its sole discretion. The requirement for an investor
representation described in item (2) will not apply to the initial investment
into the Fund by certain employee benefit plans, as described below under
"General Information -- Description of the Company."
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A gain or loss for federal income tax purposes may be realized by taxable
investors making in-kind purchases upon the exchange depending upon the cost of
the securities exchanged.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price of the shares is the
next determined net asset value of the Fund calculated after the Company has
received a redemption request in proper form. Redemption proceeds may be more or
less than the amount invested depending on the Fund's net asset value at the
time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master Series
of securities owned by the Master Series is not reasonably practicable or (b) it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of Fund shareholders. In addition, the Company
may defer payment of a shareholder's redemption until reasonably satisfied that
such shareholder's investments made by check have been collected (which can take
up to fifteen days from the purchase date). Payment of redemption proceeds may
be made in portfolio securities, subject to regulation by some state securities
commissions. Shareholders who receive portfolio securities as payment of
redemption proceeds will generally incur brokerage costs upon the sale of such
securities.
Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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
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Company nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual and corporate investor's
account and send the proceeds to such investor if the balance in the account
falls below $1,000 because of a redemption (including a redemption of Fund
shares after an investor has made only the $1,000 minimum initial investment).
However, investors will be given 30 days' notice to make an additional
investment to increase their account balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York time) will be
executed at the net asset value determined as of the close of regular trading on
the NYSE on that day. Redemption orders that are received by the Transfer Agent
after the close of regular trading on the NYSE, will be executed on the next
Business Day. The investor's Shareholder Servicing Agent is responsible for the
prompt transmission of redemption orders to the Fund on the investor's behalf.
Under certain circumstances, a Shareholder Servicing Agent may establish an
earlier deadline for receipt of orders or an investor's order transmitted to a
Shareholder Servicing Agent may not be received by the Transfer Agent on the
same day.
Unless the investor has made other arrangements with an appropriate
Shareholder Servicing Agent, and the Transfer Agent has been informed of such
arrangements, proceeds of a redemption order made by the investor through a
Shareholder Servicing Agent are credited to the account with the Approved Bank
that the investor has designated in the Account Application. If no such account
is designated, a check for the proceeds is mailed to the investor's address of
record or, if such address is no longer valid, the proceeds are credited to the
investor's account with the investor's Shareholder Servicing Agent.
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BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Shareholder Servicing Agent. The redemption procedures outlined in
the remainder of this section do not apply to investors in employee benefit
plans or retirement plans, nor do the minimum-balance requirements outlined
above. Investors in these types of plans should contact their Shareholder
Servicing Agent regarding redemption procedures applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners 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 the investor at such investor's
address of record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is an FDIC member, 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 redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual and corporate
investor with a convenient way to have Fund shares redeemed from the investor's
account and the proceeds distributed to the investor on a
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monthly basis. An investor may participate in the Systematic Withdrawal Plan
only if the investor has a Fund account valued at $10,000 or more as of the date
of an election to participate, the investor has an account at an Approved Bank,
the investor's dividends and capital gain distributions are being reinvested
automatically and the investor is not participating in the AutoSaver Plan at any
time while participating in the Systematic Withdrawal Plan. An investor may
specify an amount ($100 or more) to be distributed by check to the investor's
address of record or deposited in an Approved Bank account designated in the
investor's Account Application. The Transfer Agent redeems sufficient shares and
mails or deposits redemption proceeds as instructed on or about the fifth
Business Day prior to the end of each month. There are no separate fees charged
to investors by the Fund for participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a specified withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
Expedited Redemptions by Letter and Telephone
An investor may request an expedited redemption of Fund shares by letter,
in which case the investor's receipt of redemption proceeds, but not the Fund's
receipt of the investor's redemption request, would be expedited. Telephone
redemption and exchange privileges are made available to an investor
automatically upon the opening of an account unless the investor declines such
privileges. The investor also may request an expedited redemption of Fund shares
by telephone on any Business Day, in which case both the investor's receipt of
redemption proceeds and the Fund's receipt of the investor's redemption request
would be expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the Account Application.
The Company reserves the right to impose a charge
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for wiring redemption proceeds. When proceeds of an individual and corporate
investor's expedited redemption are to be paid to someone else, to an address
other than that of record, or to an account with an Approved Bank that the
investor has not predesignated in his or her Account Application, the expedited
redemption request must be made by letter and the signature(s) on the letter
must be guaranteed in the manner discussed above, regardless of the amount of
the redemption. If the investor's expedited redemption request is received by
the Transfer Agent on a Business Day, the investor's redemption proceeds are
transmitted to the investor's designated account with an Approved Bank on the
next Business Day (assuming the investor's investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions, and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for proceeds of less than $5,000 is mailed to the investor's
address of record or, at the investor's election, credited to the Approved Bank
account designated in the investor's Account Application.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the Stagecoach
Family of Funds, to the extent such shares are offered for sale in the
investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes such action would be appropriate to protect the fund against
disruptions in portfolio management resulting from frequent transactions by
those seeking to time market
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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 exchanges. The exchange privilege may be modified or
terminated at any time upon 60 days' written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments (i.e., the
value of its investments in the Master Series) plus cash and other assets,
deducting liabilities (including the fees payable to the Fund's service
providers) and then dividing the result by the number of Fund shares
outstanding. The NAV is expected to fluctuate daily.
The Fund is open for business each Business Day, which is a day on which
the NYSE is open for trading. Currently, the weekdays on which the NYSE is
closed are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Wells Fargo
calculates the Fund's NAV each Business Day as of the close of regular trading
on the NYSE (currently 4:00 p.m., New York time).
The Fund's investments in the Master Series are valued at the NAV of the
Master Series' shares. The Master Series calculates the NAV of its shares on the
same days and at the same time as the Fund. Except for debt obligations with
remaining maturities of 60 days or less, which are valued at amortized cost, the
Master Series' other assets are valued at current market prices, or if such
prices are not readily available, at fair value as determined in good faith in
accordance with guidelines approved by the Master Trust's Board of Trustees.
Prices used for such valuations may be provided by independent pricing services.
For further information regarding the methods employed in valuing the Master
Series' investments, see "Determination of Net Asset Value" in the SAI.
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DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays quarterly dividends of substantially all of its
net investment income. The Fund distributes any net realized capital gains at
least annually. All dividends and distributions are reinvested automatically in
additional shares of the Fund at net asset value, unless payment in cash is
requested and your arrangement with a Shareholder Servicing Agent permits the
processing of cash payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. To the extent
dividends and distributions are reinvested, however, each shareholder receives
additional Fund shares equivalent in value to the reduction in NAV on shares
owned by that shareholder.
FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, 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 of the Code by
investing all of its assets in the Master Series. The Master Series intends to
qualify for federal tax purposes as a partnership. As such, the Fund will
generally be deemed to own directly its proportionate share of the assets of the
Master Series. Therefore, any interest, dividends, gains or losses of the Master
Series will be "passed through" to the Fund and other investors in the Master
Series, regardless of whether such interest, dividends or gains have been
distributed by the Master Series or losses have been realized by the Fund or
other investors. Accordingly, if the Master Series 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, or gains
without receipt of any corresponding distribution. The Master Series seeks to
minimize recognition by investors of interest, dividends or gains without a
corresponding distribution.
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Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers and TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than
exempt-interest dividends) and redemption proceeds (including proceeds from
exchanges). Non-resident aliens and other foreign shareholders may be subject to
U.S. withholding tax at rates up to 30% on dividends and distributions paid.
TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. Corporate
shareholders of the Fund will 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.
The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains. However, such tax-exempt investors may be
subject to tax on certain unrelated taxable income which could arise, for
example, when such investors acquire shares in the Fund through the use of
leverage. Tax-exempt investors should consult their tax advisors regarding the
Unrelated Business Taxable Income Rules.
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained in the SAI. All investors
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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.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Asset Allocation Fund, S&P 500 Stock Fund,
Short-Intermediate Term Fund, U.S. Treasury Allocation Fund, Bond Index Fund,
Money Market Fund, Growth and Income Fund, National Tax-Free Intermediate Income
Fund, National Tax-Free Money Market Mutual Fund, California Tax-Free
Intermediate Income Fund, California Tax-Free Short-Term Income Fund, California
Tax-Free Money Market Fund and Overland National Tax-Free Institutional Money
Market Fund. As of May 26, 1994, all of the Company's then-existing series,
except the Money Market Fund, became feeder funds in a master/feeder structure.
The Company's principal office is located at 111 Center Street, Little Rock,
Arkansas 72201.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in Wells
Fargo Nikko Investment Advisers ("WFNIA") to Barclays PLC of the U.K. As part of
the sale, Barclays also will acquire Wells Fargo's MasterWorks division, which
includes the Growth Stock Fund. The sale, which is subject to the approval of
appropriate regulatory authorities, is expected to close in the fourth quarter
of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
It is anticipated that a special meeting of shareholders of the Fund will
be convened to consider a change in the structure of the Fund, which will become
effective only upon the sale of the MasterWorks division. Subject to the
approval of the Company's Board of Directors, it is not contem-
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plated that the proposed change in structure will change the investment
objective or overall investment strategy of the Fund.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and Officers of the Company is included in the
Fund's SAI under "Management." The Fund may withdraw its investment in the
Master Series only if the Board of Directors of the Company determines that it
is in the best interests of the Fund and its shareholders to do so. Upon any
such withdrawal, the Board of Directors of the Company would consider what
action might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
Master Series. Although the Company is not required to hold annual shareholder
meetings, special meetings may be required for purposes such as electing or
removing Directors, approving advisory contracts and distribution plans, and
changing the Fund's investment objectives or fundamental investment policies.
The Master Trust was established on October 28, 1993, as a Delaware
business trust. The Master Trust's Declaration of Trust permits the Board of
Trustees to issue beneficial interests in the Master Trust to investors based on
their proportionate investments in the Master Trust. The Master Trust has
retained the services of Wells Fargo as investment adviser, and Stephens as
administrator and placement agent. The Board of Trustees of the Master Trust is
responsible for the general management of the Master Trust and supervising the
actions of Wells Fargo and Stephens in these capacities.
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by fund, unless otherwise required by law (such as when a
matter affects only one fund). Shareholders of the Fund are entitled to one vote
for each share owned and fractional votes for fractional shares owned. Depending
on the terms of a particular benefit plan and the matter being submitted to a
vote, a sponsor may request direction from individual participants regarding a
shareholder vote. In addition, whenever the Fund is requested to vote on matters
pertaining to the Master Series, 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
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proportion as the shares for which they do receive voting instructions. A more
detailed description of the voting rights and attributes of the shares is
contained in the "Capital Stock" section of the SAI.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund including additional information on performance. Shareholders may
obtain a copy of the Company's most recent report without charge by phoning
1-800-776-0179.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
The following describes certain instruments in which the Master Series may
invest. Additional information regarding investments by the Master Series is
contained in the SAI.
INVESTMENTS
The Fund seeks to provide above-average, long-term total return, with a
primary focus on capital appreciation. Current income is a secondary
consideration. UNLIKE TRADITIONAL MUTUAL FUNDS WHICH INVEST DIRECTLY IN
PORTFOLIO SECURITIES, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS ASSETS IN THE MASTER SERIES. THE MASTER SERIES HAS THE SAME
INVESTMENT OBJECTIVE AS THE FUND. AS A RESULT, THE PERFORMANCE OF THE FUND
CORRESPONDS DIRECTLY TO THE INVESTMENT EXPERIENCE OF THE MASTER SERIES. The
Master Series seeks to provide investors with a rate of total return that, over
a three to five year time horizon, exceeds that of the S&P 500 Index (before
fees and expenses) over comparable periods by investing in a diversified
portfolio consisting primarily of growth-oriented common stocks.
Under normal market conditions, at least 50% of the Master Series' total
assets are invested in companies with smaller to medium capitalizations. The
majority of the Master Series' investments are currently in companies with
market capitalizations, at time of purchase, of up to $750 million. As a matter
of strategy, the larger capitalized issues in the Master Series generally are
"core" positions that the Master Series may hold for relatively long periods of
time.
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENTS
The Master Series may have temporary cash balances on account of new
purchases, dividends, interest and reserves for redemptions, which the Master
Series may invest in the following high-quality money market instruments: (i)
short-term obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities (including government-sponsored enterprises) ("U.S.
Government obligations"); (ii) negotiable certificates of deposit ("CDs"),
bankers' acceptances, fixed time deposits and other obligations of domestic
banks (including foreign branches) that have more than $1 billion in total
assets at the time of investment and that are members of the Federal Reserve
System or are examined by the Comptroller of the Currency or whose deposits are
insured by the FDIC; (iii) commercial paper rated at the date of purchase
"Prime-1" by Moody's or "A-1+" or "A-1" by S&P, or, if unrated, of comparable
quality as determined by Wells Fargo in its sole discretion as investment
adviser;
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(iv) non-convertible corporate debt securities (e.g., bonds and debentures) with
remaining maturities at the date of purchase of not more than one year that are
rated at least "Aa" by Moody's or "AA" by S&P; (v) repurchase agreements; and
(vi) short-term, U.S. dollar-denominated obligations of foreign banks (including
U.S. branches) that, at the time of investment: (a) have more than $10 billion,
or the equivalent in other currencies, in total assets; (b) are among the 75
largest foreign banks in the world as determined on the basis of assets; and (c)
in the opinion of Wells Fargo, as investment adviser, are of comparable quality
to obligations of U.S. banks which may be purchased by the Master Series.
U.S. GOVERNMENT OBLIGATIONS -- The Master Series may invest in various
types of U.S. Government Obligations with remaining maturities of up to one
year. 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 such 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 would
provide financial support to its agencies or instrumentalities (including
government-sponsored enterprises) 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.
REPURCHASE AGREEMENTS -- The Master Series may enter into repurchase
agreements wherein the seller of a security to the Master Series agrees to
repurchase that security from the Master Series at a mutually
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<PAGE> 154
agreed-upon time and price. This results in a fixed rate of return insulated
from market fluctuations during the period. The period of maturity is usually
quite short, often overnight or a few days, although it may extend over a number
of months. The Master Series may enter into repurchase agreements only with
respect to securities which it is permitted to purchase for its portfolio. All
repurchase agreements are 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 Master Series may incur
a loss. In addition, if bankruptcy proceedings are commenced with respect to the
seller of the security, the Master Series' disposition of the security may be
delayed or limited. The Master Series enters into repurchase agreements only
with registered broker/dealers and commercial banks that meet guidelines
established by the Master Trust's Board of Trustees and are not affiliated with
the Master Series' investment adviser. The Master Series may participate in
pooled repurchase agreement transactions with other funds advised by Wells
Fargo.
SHORT-TERM CORPORATE DEBT INSTRUMENTS -- The Master Series may invest in
commercial paper (including variable amount master demand notes), which is
short-term, unsecured promissory notes issued by corporations to finance
short-term credit needs. Commercial paper is usually sold on a discount basis
and has a maturity at the time of issuance not exceeding nine months. Variable
amount master demand notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a commercial bank acting as agent for the payee of such
notes whereby both parties have the right to vary the amount of the outstanding
indebtedness on the notes. Wells Fargo, as investment adviser, will monitor on
an ongoing basis the ability of an issuer of a demand instrument to pay
principal and interest on demand. Wells Fargo, pursuant to direction of the
Master Trust's Board of Trustees, will determine the liquidity of those
instruments which have a demand feature that is not exercisable within seven
days, provided an active secondary market exists.
The Master Series also may invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than one year remaining to
maturity at the date of settlement. The Master Series will invest only in such
corporate bonds and debentures that are rated at the time of purchase at least
"Aa" by Moody's or "AA" by S&P. Subsequent to its purchase by the Master Series,
an issue of securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Master Series. Wells Fargo will
consider such an event in
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<PAGE> 155
determining whether the Master Series should continue to hold the obligation. To
the extent the Master Series continues to hold such obligations, it may be
subject to additional risk of default.
FLOATING- AND VARIABLE-RATE INSTRUMENTS -- Certain of the debt instruments
that the Master Series may purchase bear interest at rates that are not fixed,
but vary with, for example, changes in specified market rates or indices at
specified intervals. These instruments will typically have a maturity of more
than one year but 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 Master Series may purchase include
certificates of participation in such obligations purchased from banks. Wells
Fargo, as investment adviser, will monitor on an ongoing basis the ability of an
issuer of a demand instrument to pay principal and interest on demand. Events
affecting the ability of the issuer of a demand instrument to make payment when
due may occur between the date the Master Series 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 Series'
ability to obtain payment at par.
FOREIGN OBLIGATIONS -- The Master Series may invest a portion (less than
25%) of its total assets in high-quality, short-term (one year or less) 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. Obligations of foreign
banks and foreign branches of U.S. banks involve somewhat different investment
risks from those affecting obligations of U.S. banks, including the
possibilities that liquidity could be impaired because of future political and
economic developments, that the obligations may be less marketable than
comparable obligations of U.S. banks, that a foreign jurisdiction might impose
withholding taxes on interest income payable on those obligations, that foreign
deposits may be seized or nationalized, that foreign governmental restrictions
(such as foreign exchange controls) may be adopted which might adversely affect
the payment of principal and interest on those obligations, and that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks, or the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to U.S. banks. In
that connection, foreign banks are not subject to examination by any U.S.
Government agency or instrumentality. To the extent such securities of foreign
issuers are not listed on recognized domestic or foreign securities exchanges
they will be deemed to be illiquid investments.
A-4
<PAGE> 156
WHEN-ISSUED SECURITIES
Certain of the securities in which the Master Series may invest will be
purchased 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
Master Series will make commitments to purchase securities on a when-issued
basis only with the intention of actually acquiring the securities, but may sell
such securities before the settlement date if it is deemed advisable.
When-issued securities are subject to market fluctuation, and no income accrues
to the purchaser during the period prior to issuance. The purchase price and the
interest rate that will be received on debt securities are fixed at the time the
purchaser enters into the commitment. Purchasing a security on a when-issued
basis can involve a risk that the market price at the time of delivery may be
lower than the agreed-upon purchase price, in which case there could be an
unrealized loss at the time of delivery. The Master Series does not currently
intend to invest more than 5% of its net assets in when-issued securities during
the coming year. The Master Series will establish a segregated account in which
it will maintain cash or liquid, high-grade debt securities in an amount at
least equal in value to the Master Series' commitments to purchase when-issued
securities. If the value of these assets declines, the Master Series 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.
LOANS OF PORTFOLIO SECURITIES
The Master Series may lend securities from its portfolio to domestic
brokers, dealers and financial institutions (but not individuals) if cash, U.S.
Government Obligations or other liquid high-quality debt obligations equal to at
least 100% of the current market value of the securities loaned (including
accrued interest thereon) plus the interest payable to the Master Series with
respect to the loan, is maintained with the Master Series. In determining
whether to lend a security to a particular broker, dealer or financial
institution, the Master Series' investment adviser considers all relevant facts
and circumstances, including the size, creditworthiness and reputation of the
broker, dealer, or financial institution. Any loans of portfolio securities are
fully collateralized and marked to market daily. Any securities that the Master
Series receives as collateral do not become part of the Master Series' portfolio
at the time of the loan and, in the event of a default by the borrower, the
Master Series, if permitted by law, disposes of such collateral except for such
part thereof that is a security in which the Master Series is permitted to
invest. During the time securities are on loan, the borrower pays the Master
Series any accrued income on those securities, and the Master Series invests the
cash collateral in high-
A-5
<PAGE> 157
quality money market instruments and earns income or receives an agreed-upon fee
from a borrower that has delivered cash-equivalent collateral. The securities
acquired with such cash collateral are segregated as discussed above. In the
event that the borrower defaults on its obligation to return borrowed
securities, because of insolvency or otherwise, the Master Series could
experience delays and costs in gaining access to the collateral and could suffer
a loss to the extent that the value of the collateral falls below the market
value of the securities borrowed. However, loans are made only to borrowers
deemed by Wells Fargo to be of good standing and when, in its judgment, the
income to be earned from the loan justifies the attendant risks. The Master
Series does not lend securities having a value that exceeds 50% of the current
value of its total assets. Loans of securities by the Master Series are subject
to termination at the Master Series' or the borrower's option. The Master Series
may pay reasonable administrative and custodial fees in connection with a
securities loan and may pay a negotiated portion of the interest or fee earned
with respect to the collateral to the borrower or the placing broker. Borrowers
and placing brokers are not affiliated, directly or indirectly, with the Master
Trust, Wells Fargo or Stephens.
INVESTMENT POLICIES
The investment objective of the Fund and the Master Series, as set forth in
the first paragraph of the section entitled "The Fund -- Investment Objective
and Policies", is fundamental; that is, it may not be changed without approval
by the vote of the holders of a majority of the outstanding voting securities of
the Fund or the Master Series, respectively, as described under "Capital Stock"
in the SAI. In addition, any fundamental investment policy may not be changed
without such shareholder approval. If the Board of Directors of the Company or
the Board of Trustees of the Master Trust determines, however, that the
investment objective of the Fund or the Master Series, respectively, can best be
achieved by a substantive change in a non-fundamental investment policy or
strategy, the appropriate Board may make such change without shareholder
approval and will disclose any such material changes in the then-current
prospectus.
As a matter of fundamental policy, the Fund and the Master Series may: (i)
not purchase securities of any issuer (except U.S. Government Obligations) if as
a result, with respect to 75% of its total assets, more than 5% of the value of
the Fund's or the Master Series' total assets would be invested in the
securities of such issuer or, with respect to 100% of its total assets, the Fund
or Master Series would own more than 10% of the outstanding voting securities of
such issuer, provided that this restriction
A-6
<PAGE> 158
shall not prevent the Fund from investing all of its assets in the Master
Series; (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 borrowing in
excess of 5% of its net assets exists); (iii) make loans of portfolio securities
in accordance with its investment policies; and (iv) not invest 25% or more of
its total assets (i.e., concentrate) in any particular industry, except that the
Fund or the Master Series may invest 25% or more of its assets in U.S.
Government Obligations, provided that this restriction shall not prevent the
Fund from investing in the Master Series.
The Fund and the Master Series each reserves the right to invest up to 15%
of the current value of its net assets in repurchase agreements having
maturities of more than seven days and other illiquid securities. However, as
long as the Fund's shares are registered for sale in a state that imposes a
lower limit on the percentage of a fund's assets that may be so invested, the
Fund and Master Series will comply with such lower limit. The Fund presently is
limited to investing 10% of its net assets in such securities due to limits
applicable in several states. Disposing of illiquid or restricted securities may
involve additional costs and require additional time.
A-7
<PAGE> 159
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFGS 6/95
<PAGE> 160
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFGS 6/95
<PAGE> 161
MONEY MARKET FUND
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Captions
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; Other Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C Other Information
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
<PAGE> 162
[STAGECOACH FUNDS LOGO]
------------------------------
PROSPECTUS
------------------------------
MONEY MARKET FUND
June 28, 1995
- --------------------------------------------------------------------------------
<PAGE> 163
STAGECOACH INC.
MONEY MARKET FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
Funds -- the MONEY MARKET FUND (the "Fund"). The Fund seeks to provide investors
with a high level of income, while preserving capital and liquidity, by
investing in high-quality, short-term securities.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY FEDERAL AGENCY OR INSTRUMENTALITY. THERE IS NO ASSURANCE THAT
THIS FUND WILL BE ABLE TO MAINTAIN A CONSTANT $1.00 NET ASSET VALUE PER SHARE.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund that an
investor should know before investing and is designed to help you decide if the
Fund's goals match your own. A Statement of Additional Information ("SAI") dated
June 28, 1995 describing the Fund has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference. The SAI is
available free of charge by calling the Company at 1-800-776-0179 or by writing
the Company at the address printed on the back of the Prospectus.
------------------------
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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN INVESTMENT IN THE
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 164
The Fund is advised by Wells Fargo Bank, N.A. ("Wells Fargo"). Wells Fargo
also serves as the Fund's transfer agent and custodian, and as a Selling Agent
(as defined below). Stephens Inc. ("Stephens") is the sponsor, distributor and
administrator for the Fund's shares.
------------------------
WELLS FARGO IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER SERVICES TO
THE FUND, FOR WHICH IT IS COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED
WITH WELLS FARGO, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR OF THE FUND'S SHARES.
<PAGE> 165
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary......................................... 2
Summary Of Fund Expenses................................... 6
Explanation Of The Table................................... 7
Financial Highlights....................................... 8
The Fund................................................... 9
Management of the Fund..................................... 10
How to Buy Shares.......................................... 14
How to Redeem Shares....................................... 18
Exchange Privilege......................................... 22
Share Value................................................ 23
Dividends And Distributions................................ 24
Federal Income Tax Information............................. 24
General Information........................................ 26
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
--------
<S> <C>
Additional Investment Policies............................. A-1
</TABLE>
1
<PAGE> 166
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefit plans, including retirement plans, that
have appointed one of the Company's Selling Agents as plan trustee, plan
administrator or other agent, or whose plan trustee, plan administrator or
other agent has an arrangement with a Selling Agent that permits
investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Selling Agents that
permits investments in Fund shares, and persons who invest pursuant to an
agreement between such an entity and a Selling Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent of the
qualified employee benefit plan and a Selling Agent.
See "How to Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund seeks to provide investors with a high level of income, while
preserving capital and liquidity, by investing in high-quality, short-term
securities. These securities include obligations of the U.S. Government,
its agencies and instrumentalities (including government-sponsored
enterprises), high-quality debt obligations, such as corporate debt,
certain obligations of U.S. banks and certain repurchase agreements. The
Fund seeks to maintain a net asset value of $1.00 per share; however, there
is no assurance that this will be achieved. See "The Fund -- Investment
Objective and Policies" and "Appendix -- Additional Investment Policies."
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund are not bank deposits or obligations of Wells Fargo
and are not insured by the Federal Deposit Insurance Corporation ("FDIC").
An investment in the Fund is not insured or guaran-
2
<PAGE> 167
teed against loss of principal. Therefore, investors should be willing to
accept some risk with the money invested in the Fund. Although the Fund
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 Fund will achieve its investment objective.
See "The Fund -- Investment Objective and Policies" and
"Appendix -- Additional Investment Policies."
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") and the Transfer Agent are open for
regular business (a "Business Day"). There are no sales loads.
To invest in the Fund, contact a Selling Agent to receive information and
an Account Application. An Account Application must be completed and signed
to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors. See "How to Buy
Shares."
Q. WHO MANAGES MY INVESTMENTS?
A. The Fund is managed by Wells Fargo. Wells Fargo, one of the ten largest
commercial banks in the United States, was founded in 1852 and is the
oldest bank in the western United States. As of March 31, 1995, various
divisions and affiliates of Wells Fargo provided investment advisory
services for approximately $196 billion of assets of individuals, trusts,
estates and institutions. See "The Company, Management and Services."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For its advisory
services to the Fund, Wells Fargo is entitled to receive a fee at an annual
percentage rate of 0.35% of the Fund's average daily net assets. Wells
Fargo also provides transfer agency and custodial services
3
<PAGE> 168
for the Fund and is entitled to receive annual fees totalling 0.10% of the
Fund's average net assets.
For its services as administrator, Stephens is entitled to receive a fee at
an annual percentage rate of 0.05% of the Fund's average daily net assets.
In consideration for this fee, Stephens has agreed to pay all third-party
expenses of the Fund other than those payable by the Fund under its various
services contracts described above.
There are no other fees or expenses charged against the Fund's assets or
its shareholders except for extraordinary expenses and brokerage
commissions and other expenses connected with the execution of portfolio
transactions.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for certain
administrative services, such as recordkeeping and processing exchanges of
Fund shares for other available investment options.
See "Management of the Fund."
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the total
value of the portfolio securities owned by the Fund (plus cash and other
assets net of liabilities) and the number of Fund shares outstanding. On
each Business Day, Wells Fargo calculates a new net asset value.
Although the Fund expects to maintain a $1.00 net asset value share price,
there can be no assurance that this will be achieved. See "Share Value."
Q. DOES THE FUND PAY DIVIDENDS?
A. Dividends from net investment income are declared daily, paid monthly and
automatically reinvested in additional Fund shares at net asset value
unless payment in cash is requested and your arrangement with a Selling
Agent permits the processing of cash payments. Each reinvestment increases
the total number of shares held by the shareholder. Any capital gains are
distributed at least annually. See "Dividends and Distributions."
4
<PAGE> 169
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the
Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the imposition
of a sales charge or redemption fee on any Business Day by letter, by an
automatic feature called the Systematic Withdrawal Plan or by telephone
(unless you decline telephone privileges). See "How to Redeem Shares." For
more information contact Stephens or your Selling Agent (such as Wells
Fargo).
5
<PAGE> 170
SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund, 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. As shown below, you are not charged redemption fees or
exchange fees. You should consider this expense information together with the
important information in this Prospectus, including the Fund's investment
objectives and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets):
Management Fees*................................ 0.30%
Other Expenses
Shareholder Servicing Fees.................... None
Miscellaneous Expenses*....................... 0.15%
Total Other Expenses*......................... 0.15%
-------
Total Fund Operating Expenses*.................. 0.45%
</TABLE>
- ---------------
* After waivers and/or reimbursements which will continue for the next fiscal
year. In the absence of such waivers and/or reimbursements, the percentages
shown above under the captions "Management Fees", "Miscellaneous Expenses",
"Total Other Expenses" and "Total Fund Operating Expenses" would have been
0.35%, 0.22%, 0.22% and 0.57%, respectively.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor 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........ $5 $14 $25 $57
</TABLE>
6
<PAGE> 171
EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, including voluntary fee waivers and expense
reimbursements. Wells Fargo 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. The Fund does not anticipate Fund
expenses exceeding state limits. In addition, Wells Fargo and Stephens each may
elect, in its sole discretion, to waive or reimburse all or a portion of its
respective fees charged to, or expenses paid by, the Fund. Any waivers or
reimbursements would reduce the Fund's total expenses. For more complete
descriptions of the various costs and expenses you can expect to incur as an
investor in the Fund, please see the Prospectus section captioned "Management of
the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over stated periods,
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected Fund performance. In addition, the Example of Expenses should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown above.
7
<PAGE> 172
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994*
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period......... $ 1.00 $ 1.00
Income from investment operations:
Net investment income (loss)............... 0.04 0.02
Net realized and unrealized gain (loss) on
investments.............................. 0.00 0.00
------------ ------------
Total from investment operations............. 0.04 0.02
Less distributions:
Dividends from net investment income....... (0.04) (0.02)
Distributions from net realized gains...... 0.00 0.00
------------ ------------
Total distributions.......................... (0.04) (0.02)
------------ ------------
Net Asset Value, end of period............... $ 1.00 $ 1.00
============== ==============
Total return (not annualized)................ 4.40% 1.81%
Ratios/supplemental data:
Net assets, end of period (000)............ $147,269 $ 81,649
Number of shares outstanding, end of
period (000)............................. 147,280 81,648
Ratios to average net assets+:
Ratio of expenses to average net
assets(1)................................ 0.45% 0.49%
Ratio of net investment income (loss) to
average net assets(2).................... 4.44% 2.77%
Portfolio turnover........................... N/A N/A
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses................................. 0.57% 0.50%
(2) Ratio of net investment income (loss) to
average net assets prior to waived fees
and reimbursed expenses.................. 4.32% 2.76%
</TABLE>
- ---------------
* The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
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<PAGE> 173
THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to provide investors with a high level of income, while
preserving capital and liquidity, by investing in high-quality, short-term
securities. The Fund, which is a diversified portfolio, invests its assets only
in U.S. dollar-denominated, high-quality money market instruments, and may
engage in certain other investment activities as described in this Prospectus.
Permitted investments include U.S. Government short-term obligations,
obligations of domestic and foreign banks, commercial paper, corporate notes and
repurchase agreements. A more complete description of these investments and
investment activities is contained in "Appendix -- Additional Investment
Policies."
LIMITING INVESTMENT RISKS
The Fund, under the Investment Company Act of 1940 (the "1940 Act") must
comply with certain investment criteria, each of which is designed to provide
liquidity, reduce risk and allow the Fund to maintain a stable net asset value
of $1.00 per share. Of course, the Fund cannot guarantee a $1.00 share price.
The Fund's dollar-weighted average portfolio maturity must not exceed 90 days.
Any security that the Fund purchases must have a remaining maturity of not more
than thirteen months. In addition, any security that the Fund purchases must
present minimal credit risks and be of eligible quality (i.e., be rated in the
top two rating categories by the required number of nationally recognized
statistical rating organizations or, if unrated, determined to be of comparable
quality to such rated securities). These determinations are made by Wells Fargo,
as the Fund's investment adviser, under guidelines adopted by the Company's
Board of Directors, although in certain cases, the 1940 Act requires the
Directors to approve or ratify purchases of the Fund's securities.
The Fund seeks to reduce risk by investing its assets in securities of
various issuers. As such, the Fund is considered to be diversified for purposes
of the 1940 Act.
Since its inception, the Fund has emphasized safety of principal and high
credit quality. In particular, the internal investment policies of the Fund's
investment adviser, Wells Fargo, have always prohibited the purchase for the
Fund of many types of floating-rate derivative securities that are considered
potentially volatile.
The following types of derivative securities ARE NOT permitted investments
for the Fund:
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<PAGE> 174
- 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 Fund 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 Fund may only invest in floating-rate
securities that bear interest at a rate that resets quarterly or more
frequently, and that resets based on changes in standard money market rate
indices such as U.S. Government Treasury bills, London Interbank Offered Rate,
the prime rate, published commercial paper rates or federal funds rates.
PERFORMANCE
The Fund's performance may be advertised in terms of current yield or
effective yield. These performance figures are based on historical results and
are not intended to indicate future performance. The Fund's current yield refers
to the income generated by an investment in the Fund over a seven- or thirty-day
period, expressed as an annual percentage rate. The effective yield is
calculated similarly, but assumes that the income earned from an investment is
reinvested. The Fund's effective yield is slightly higher than the current yield
because of the compounding effect of the assumed reinvestment of income earned.
MANAGEMENT OF THE FUND
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Short-Intermediate Term Fund, S&P 500 Stock Fund, Growth
Stock Fund, U.S. Treasury Allocation Fund, Bond
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<PAGE> 175
Index Fund, Asset Allocation Fund, California Tax-Free Intermediate Income Fund,
California Tax-Free Short-Term Income Fund, Growth and Income Fund, National
Tax-Free Intermediate Income Fund, National Tax-Free Money Market Mutual Fund,
California Tax-Free Money Market Fund and Overland National Tax-Free
Institutional Money Market Fund. As of May 26, 1994, all of the Company's
then-existing series, except the Money Market Fund, became feeder funds in a
master/feeder structure. The Company's principal office is located at 111 Center
Street, Little Rock, Arkansas 72201.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in Wells
Fargo Nikko Investment Advisers ("WFNIA") to Barclays PLC of the U.K. As part of
the sale, Barclays also will acquire Wells Fargo's MasterWorks division, which
includes the Money Market Fund. The sale, which is subject to the approval of
appropriate regulatory authorities, is expected to close in the fourth quarter
of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
It is anticipated that a special meeting of shareholders of the Fund will
be convened to consider a change in the structure of the Fund, which will become
effective only upon the sale of the MasterWorks division. Subject to the
approval of the Company's Board of Directors, it is not contemplated that the
proposed change in structure will change the investment objective or overall
investment strategy of the Fund.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and officers of the Company is included in the
Fund's SAI under "Management." Although the Company is not required to hold
regular annual shareholder meetings, occasional annual or special meetings may
be required for purposes such as electing or removing Directors, approving
advisory contracts and changing the Fund's investment objective or fundamental
investment policies. All shares of the Company have equal voting rights and will
be voted in the aggregate, rather than by Fund, unless otherwise required by law
(such as
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<PAGE> 176
when the voting matter affects any one Fund). As a shareholder of the Fund, you
are entitled to one vote for each share you own and fractional votes for
fractional shares owned. The Directors 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.
INVESTMENT ADVISER
Wells Fargo is the investment adviser to the Fund and manages the
investment and reinvestment of the Fund's assets in a manner consistent with the
investment objective and policies of the Fund. Wells Fargo also provides
investment guidance and policy direction in connection with the management of
the Fund's assets. 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 has a lending relationship. Wells Fargo's
activities as investment adviser to the Fund are subject to the overall
supervision of the Fund's Board of Directors. Wells Fargo provides the Board of
Directors with reports on the performance of the Fund as well as its investment
strategy. Wells Fargo, a wholly owned subsidiary of Wells Fargo & Company, is
located at 420 Montgomery Street, San Francisco, California 94105.
CUSTODIAN AND TRANSFER AGENT
Wells Fargo also serves as the Fund's transfer agent and custodian (the
"Transfer Agent" and/or the "Custodian") pursuant to an Agency Agreement and
Custody Agreement, respectively. Wells Fargo provides the transfer agency and
custodial services at 525 Market Street, San Francisco, California 94105. For
its services as Transfer Agent and Custodian, Wells Fargo is entitled to receive
an annual fee totalling 0.10% of the Fund's average net assets.
ADVISORY CONTRACT
Under the Advisory Contract with the Fund, Wells Fargo has agreed to
provide investment advice, as summarized above. The Advisory Contract provides
for an advisory fee, which is accrued daily and paid monthly, at the annual rate
of 0.35% of the Fund's average net assets. For the fiscal year ended February
28, 1995, after waivers, the Company paid Wells Fargo advisory fees at the
annual rate of 0.30% of the average daily net assets of the Fund for its
services as investment adviser.
Morrison & Foerster, counsel to the Company and special counsel to Wells
Fargo, has advised the Company and Wells Fargo that Wells Fargo
12
<PAGE> 177
may perform the services contemplated by the Advisory Contract without violation
of the Glass-Steagall Act or other applicable banking laws or regulations. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well as
future changes in such statutes, regulations and judicial or administrative
decisions or interpretations, could prevent Wells Fargo from continuing to
perform, in whole or in part, such services. If Wells Fargo were prohibited from
performing any such services, it is expected that the Directors of the Company
would recommend to the Fund's shareholders that they approve a new advisory
agreement with another entity or entities qualified to perform such services.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens is the Fund's sponsor and administrator, and distributes the
Fund's shares. Stephens is a full service broker/dealer and investment advisory
firm located at 111 Center Street, Little Rock, Arkansas 72201. Stephens and its
predecessor have been providing securities and investment services for more than
60 years. Additionally, it has 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.
Subject to the overall supervision of the Company's Board of Directors,
Stephens provides the Fund with administrative services, including general
supervision of the Fund's non-investment operations, coordination of the other
services provided to the Fund, compilation of information for reports to the SEC
and the state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the Company's Directors and officers.
Stephens also furnishes office space and certain facilities to conduct the
Fund's business, and compensates the Company's Directors, officers and employees
who are affiliated with Stephens. In addition, except as outlined below,
Stephens will be responsible for paying all expenses incurred by the Fund other
than the fees payable to Wells Fargo. For these services, Stephens is entitled
to a monthly fee at the annual rate of 0.05% of the Fund's average daily net
assets. For the year ended February 28, 1995, the Company paid a fee at the
annual rate of 0.05% of the Fund's average daily net assets to Stephens for its
services as administrator to the Fund.
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<PAGE> 178
Stephens, as the principal underwriter of the Fund within the meaning of
the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing Fund shares.
The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of its shares, and may enter into Selling Agreements with
selling agents that wish to make available Fund shares to their respective
customers ("Selling Agents"). Wells Fargo presently acts as a Selling Agent, but
does not receive any fee from the Fund for such activities.
FUND EXPENSES
Except for extraordinary expenses and brokerage and other expenses
connected with execution of portfolio transactions which are borne by the Fund
and the fees payable to Wells Fargo under its agreements with the Fund, Stephens
will bear all costs of the Fund's and the Company's operations.
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Selling Agents as plan trustee, plan
administrator or other agent, or whose plan trustee, plan administrator or
other agent has an arrangement with a Selling Agent that permits
investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Selling Agents that
permits investments in Fund shares, and persons who invest pursuant to an
agreement between such an entity and a Selling Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent of the
qualified employee benefit plan and a Selling Agent.
Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make this Prospectus
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<PAGE> 179
available in an electronic format. Upon receipt of a request by an investor or
the investor's representative, the Company or Stephens will transmit or cause to
be transmitted promptly, without charge, a paper copy of the electronic
Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below) and $1,000 by all other methods or for all other
investors, except that there is no minimum initial investment amount for
employee benefit plans ("Benefit Plans") or IRA investors. All subsequent
investments must be at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors. All investments in Fund
shares are subject to a determination by the Company that the investment
instructions are complete. If shares are purchased by a check that does not
clear, the Company reserves the right to cancel the purchase and hold the
investor responsible for any losses or fees incurred. The Company reserves the
right in its sole discretion to suspend the availability of the Fund's shares
and to reject any purchase requests. Certificates for Fund shares are not
issued.
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading on the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading on the NYSE are executed on the next Business
Day. The investor's Selling Agent is responsible for the prompt transmission of
the investor's purchase order to the Transfer Agent on the investor's behalf.
Under certain circumstances, a Selling Agent may establish an earlier deadline
for receipt of orders, or an investor's order transmitted to a Selling Agent may
not be received by the Transfer Agent on the same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further information
concerning this requirement. Failure to furnish a social security number or a
TIN to the Company could subject the investor to penalties imposed by the
Internal Revenue Service ("IRS").
BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Selling Agents as plan trustee, plan administrator or other agent, or
whose plan trustee, plan administrator or other agent has a servicing
arrangement with a Selling Agent that permits investments in
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<PAGE> 180
Fund shares. Benefit Plans include 401(k) plans and plans qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
health and welfare plans and executive deferred compensation plans. For
additional information about Benefit Plans that may be eligible to invest in
Fund shares, prospective investors should contact a Selling Agent.
Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Selling Agent may offer other types of tax-deferred or
tax-advantaged plans, including a Keogh retirement plan for self-employed
professional persons, sole proprietors and partnerships. Contact a Selling Agent
for materials describing plans available through it, and their benefits,
provisions and fees.
Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Selling Agent. Completed
retirement plan applications should be returned to the investor's Selling Agent
for approval and processing. If an investor's retirement plan application is
incomplete or improperly filled out, there may be a delay before the Fund
account is opened. Certain features described herein, such as the AutoSaver
Plan, may not be available to individuals or entities who invest through a
retirement plan. Investors should consult their Selling Agent.
PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), amount to
be wired, name of the wiring bank and name and
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<PAGE> 181
telephone number of the person to be contacted in connection with the order.
Some banks may impose wiring fees.
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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
AutoSaver Plan
The Company's AutoSaver Plan provides individual or corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an investor must specify an
amount ($100 or more) to be withdrawn automatically by the Transfer Agent on a
monthly basis from an account with a bank ("Approved Bank") that is designated
in the investor's Account Application and that is approved by the Transfer
Agent. Wells Fargo is an Approved Bank. The Transfer Agent withdraws and uses
this amount to purchase Fund shares on the investor's behalf on or about the
fifth
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Business Day of each month. There are no separate fees charged to an investor by
the Company for participating in the AutoSaver Plan.
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
Additional Purchases
An individual and corporate investor may make additional purchases of $100
or more by instructing the Fund's Transfer Agent to debit a designated Approved
Bank account, by wire by using the procedures described under "Initial Purchases
by Wire" above, or by mail with a check payable to "Stagecoach Inc./(Name of
Fund)" to the above address. An investor must write a Fund account number on the
check and include the detachable stub from the investor's Statement of Account
or a letter providing the investor's Fund account number.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price of the shares is the
next determined net asset value of the Fund calculated after the Company has
received a redemption request in proper form. Redemption proceeds may be more or
less than the amount invested depending on the Fund's net asset value at the
time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal of securities owned
by the Fund is not reasonably practicable or (b) it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or a
period during which the SEC by order permits deferral of redemptions for the
protection of Fund shareholders. In addition, the Company may defer payment of a
shareholder's
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redemption until reasonably satisfied that such shareholder's investments made
by check have been collected (which can take up to fifteen days from the
purchase date). Payment of redemption proceeds may be made in portfolio
securities, subject to regulation by some state securities commissions.
Shareholders who receive portfolio securities as payment of redemption proceeds
will generally incur brokerage costs upon the sale of such securities.
Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual and corporate investor's
account and send the proceeds to such investor if the balance in the account
falls below $1,000 because of a redemption (including a redemption of Fund
shares after an investor has made only the $1,000 minimum initial investment).
However, investors are given 30 days' notice to make an additional investment to
increase their account balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York time), will be
executed at the net asset value determined as of the close of regular trading on
the NYSE on that day. Redemption orders that are received by the Transfer Agent
after the close of regular trading on the floor of the NYSE will be executed on
the next Business Day. The
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<PAGE> 184
investor's Selling Agent is responsible for the prompt transmission of
redemption orders to the Fund on the investor's behalf. Under certain
circumstances, a Selling Agent may establish an earlier deadline for receipt of
orders, or an investor's order transmitted to a Selling Agent may not be
received by the Transfer Agent on the same day.
Unless the investor has made other arrangements with an appropriate Selling
Agent, and the Transfer Agent has been informed of such arrangements, proceeds
of a redemption order made by the investor through a Selling Agent are credited
to the account with the Approved Bank that the investor has designated in the
Account Application. If no such account is designated, a check for the proceeds
is mailed to the investor's address of record or, if such address is no longer
valid, the proceeds are credited to the investor's account with the investor's
Selling Agent.
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Selling Agent. The redemption procedures outlined in the remainder
of this section do not apply to investors in employee benefit plans or
retirement plans, nor do the minimum-balance requirements outlined above.
Investors in these types of plans should contact their Selling Agent regarding
redemption procedures applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners 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 the investor at such investor's
address of record, the signature(s) must be guaranteed by an "eligible guarantor
institution," which includes a commercial bank that is an FDIC member, 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
20
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public are not acceptable. Further documentation may be requested from
corporations, administrators, executors, personal representatives, trustees or
custodians.
4. Mail the redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual and corporate
investor with a convenient way to have Fund shares redeemed from the investor's
account and the proceeds distributed to the investor on a monthly basis. An
investor may participate in the Systematic Withdrawal Plan only if the investor
has a Fund account valued at $10,000 or more as of the date of an election to
participate, the investor has an account at an Approved Bank, the investor's
dividends and capital gain distributions are being reinvested automatically and
the investor is not participating in the AutoSaver Plan at any time while
participating in the Systematic Withdrawal Plan. An investor may specify an
amount ($100 or more) to be distributed by check to the investor's address of
record or deposited in an Approved Bank account designated in the investor's
Account Application. The Transfer Agent redeems sufficient shares and mails or
deposits redemption proceeds as instructed on or about the fifth Business Day
prior to the end of each month. There are no separate fees charged to investors
by the Fund for participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a specified withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
Expedited Redemptions by Letter and Telephone
An individual and corporate investor may request an expedited redemption of
Fund shares by letter, in which case the investor's receipt of redemption
proceeds, but not the Fund's receipt of the investor's redemption request, would
be expedited. Telephone redemption and exchange privileges are made available to
an investor automatically upon the opening
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<PAGE> 186
of an account unless the investor declines such privileges. The investor also
may request an expedited redemption of Fund shares by telephone on any Business
Day, in which case both the investor's receipt of redemption proceeds and the
Fund's receipt of the investor's redemption request would be expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the Account Application.
The Company reserves the right to impose a charge for wiring redemption
proceeds. When proceeds of an individual and corporate investor's expedited
redemption are to be paid to someone else, to an address other than that of
record, or to an account with an Approved Bank that the investor has not
predesignated in his or her Account Application, the expedited redemption
request must be made by letter and the signature(s) on the letter must be
guaranteed in the manner discussed above, regardless of the amount of the
redemption. If the investor's expedited redemption request is received by the
Transfer Agent on a Business Day, the investor's redemption proceeds are
transmitted to the investor's designated account with an Approved Bank on the
next Business Day (assuming the investor's investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions, and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for proceeds of less than $5,000 is mailed to the investor's
address of record or, at the investor's election, credited to the Approved Bank
account designated in the investor's Account Application.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the Stagecoach
Family of Funds, to the extent such shares are offered for sale in the
investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the
22
<PAGE> 187
current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes 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 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 exchanges. The
exchange privilege may be modified or terminated at any time upon 60 days'
written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments plus cash and
other assets, deducting liabilities, including the fees payable for advisory and
other services, and then dividing the result by the number of Fund shares
outstanding. As noted above, the Fund seeks to maintain a constant $1.00 NAV
share price, although there is no assurance that it will be able to do so.
The Fund is open for business each Business Day, which is a day on which
both the NYSE and the Transfer Agent are open for regular business. Currently,
the weekdays on which either the NYSE or the Transfer Agent are closed are: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, Christmas Day, Veterans Day, Columbus Day (observed) and
Martin Luther King, Jr. Day (each a "Holiday"). Wells Fargo calculates the
23
<PAGE> 188
Fund's NAV each Business Day as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time).
The Fund's portfolio investments are valued on the basis of amortized cost.
This valuation method is based on the receipt of a steady rate of payment from
the date of purchase until maturity rather than actual changes in market value.
The Company's Board of Directors believes that this valuation method accurately
reflects fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare dividends daily and pay dividends monthly.
Dividends and distributions are automatically reinvested in additional Fund
shares at net asset value. An investor begins earning dividends on the day after
the date such investor's purchase order for shares is effective and continues to
earn dividends through the date the investor redeems such shares. Dividends for
a Saturday, Sunday or Holiday are credited on the preceding Business Day. If an
investor redeems shares before the dividend payment date, any dividends credited
to such investor's account are paid on the following dividend payment date. The
Fund declares capital gains (if any) at least annually.
FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, 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.
Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers and TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than
24
<PAGE> 189
exempt-interest dividends) and redemption proceeds (including proceeds from
exchanges). Non-resident aliens and other foreign shareholders may be subject to
U.S. withholding tax at rates up to 30% on dividends and distributions paid.
TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. No part of the
distributions to shareholders of the Fund is expected to qualify for the
dividends-received deduction allowed to corporate shareholders.
The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains. However, such tax-exempt investors may be
subject to tax on certain unrelated taxable income which could arise, for
example, when such investors acquire shares in the Fund through the use of
leverage. Tax-exempt investors should consult their tax advisors regarding the
Unrelated Business Taxable Income Rules.
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained 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.
25
<PAGE> 190
GENERAL INFORMATION
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by series, unless otherwise required by law (such as when
a matter affects only one series). Shareholders of the Fund are entitled to one
vote for each share owned and fractional votes for fractional shares owned.
Depending on the terms of a particular benefit plan, and the matter being
submitted to a vote, a sponsor may request direction from individual
participants regarding a shareholder vote. 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
description of the voting rights and attributes of the shares is contained in
the "Capital Stock" section of the SAI.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund including additional information on performance. Shareholders may
obtain a copy of the Company's most recent annual report without charge by
phoning 1-800-776-0179.
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<PAGE> 191
APPENDIX -- ADDITIONAL INVESTMENT POLICIES
The Fund may invest in the following types of money market instruments:
U.S. GOVERNMENT OBLIGATIONS -- The 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 such 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 would
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.
BANK OBLIGATIONS -- The Fund may invest in bank obligations which include,
but are not limited to, negotiable certificates of deposit ("CDs"), bankers'
acceptances and fixed time deposits. The Fund limits its investments in U.S.
bank obligations to obligations of U.S. banks (including foreign branches) which
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. The Fund limits its
investments in foreign bank obligations to U.S. dollar-denominated obligations
of foreign banks which at the time of investment (i) have more than $10 billion,
or the equivalent in other
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<PAGE> 192
currencies, in total assets; and (ii) in the opinion of the Fund's investment
adviser, are of an investment quality comparable with obligations of U.S. banks
which may be purchased by the Fund.
Fixed time deposits are obligations of U.S. banks, foreign branches of U.S.
banks or foreign banks which are payable at a stated maturity date and bear a
fixed rate of interest. Generally fixed time deposits may be withdrawn on demand
by the investor, but they may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity of the
obligation. Although fixed time deposits do not have an established market,
there are no contractual restrictions on the Fund's right to transfer a
beneficial interest in the deposit to a third party. It is the policy of the
Fund not to invest in fixed time deposits subject to withdrawal penalties, other
than overnight deposits, or in repurchase agreements with more than seven days
to maturity or other illiquid securities, if more than 10% of the value of its
net assets would be so invested.
Obligations of foreign banks and foreign branches of U.S. banks involve
somewhat different investment risks from those affecting obligations of U.S.
banks, including the possibilities that liquidity could be impaired because of
future political and economic developments, that the obligations may be less
marketable than comparable obligations of U.S. banks, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized, that foreign
governmental restrictions (such as foreign exchange controls) may be adopted
which might adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be more difficult
because there may be less publicly available information concerning foreign
banks or the accounting, auditing and financial reporting standards, practices
and requirements applicable to foreign banks may differ from those applicable to
U.S. banks. In that connection, foreign banks are not subject to examination by
any U.S. Government agency or instrumentality.
SHORT-TERM CORPORATE DEBT INSTRUMENTS -- The Fund may invest in commercial
paper (including variable amount master demand notes), which is short-term,
unsecured promissory notes issued by corporations to finance short-term credit
needs. Commercial paper is usually sold on a discount basis and has a maturity
at the time of issuance not exceeding nine months. Variable amount master demand
notes are demand obligations that permit the investment of fluctuating amounts
at varying market rates of interest pursuant to arrangements between the issuer
and a commercial bank acting as agent for the payees of such notes whereby both
A-2
<PAGE> 193
parties have the right to vary the amount of the outstanding indebtedness on the
notes.
The Fund also may invest in non-convertible corporate debt securities
(e.g., bonds and debentures) with no more than thirteen months remaining to
maturity at the date of settlement. Corporate debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are traded as
money market securities.
The Fund may not invest in any securities issued by Wells Fargo & Company
or any of its affiliates unless applicable regulatory exemptions, approvals or
advisory opinions have been obtained.
The commercial paper investments of the Fund at the time of purchase must
be rated "A-1" by Standard & Poor's Corporation ("S&P") or "Prime-1" by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, must be of comparable
quality as determined by Wells Fargo at its discretion. The other corporate debt
securities of the Fund at the time of purchase must be obligations of issuers
whose comparable short-term debt obligations would qualify for purchase by the
Fund.
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. This results in a fixed
rate of return insulated from market fluctuations during the period. The period
of maturity will not exceed seven days. The Fund may enter into repurchase
agreements only with respect to U.S. Government or government agency securities,
high-quality money market investments, and commercial paper. All repurchase
agreements are 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 pending
court action. The Fund enters into repurchase agreements only with registered
broker/dealers and commercial banks that meet guidelines established by the
Company's Board of Directors and are not affiliated with the Fund's investment
adviser. The Fund may participate in pooled repurchase agreement transactions
with other funds advised by Wells Fargo.
INVESTMENT POLICIES -- The Fund's investment objective, as set forth in the
first paragraph of "The Fund -- Investment Objective and Policies" section, is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of the Fund's outstanding
A-3
<PAGE> 194
voting securities, as described under "Capital Stock" in the SAI. In addition,
any fundamental investment policy may not be changed without such shareholder
approval. 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's Board 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 Fund may: (i) 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);
(ii) make loans of portfolio securities or other assets, however, as a matter of
current operating policy, the Fund does not loan its portfolio securities and
loans for purposes of this restriction will not include the purchase of fixed
time deposits, repurchase agreements, commercial paper and other short-term
obligations, and other types of debt instruments commonly sold in a public or
private offering; and (iii) may not invest 25% or more of its total assets
(i.e., concentrate) in any particular industry, excluding U.S. Government
obligations and obligations of domestic banks (for purposes of this restriction,
domestic bank obligations do not include obligations of foreign branches of U.S.
banks and obligations of U.S. branches of foreign banks).
As a matter of non-fundamental policy, the Fund may: (i) not purchase
securities of any issuer (except U.S. Government obligations, for certain
temporary purposes and for certain guarantees and unconditional puts) if as a
result 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; and (ii) invest up to 10% 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. With respect to paragraph (i), it may
be possible that the Company would own more than 10% of the outstanding voting
securities of an issuer. Disposing of illiquid or restricted securities may
involve additional costs and require additional time.
A-4
<PAGE> 195
INVESTMENT RATINGS
STANDARD & POOR'S RATING
BOND RATINGS -- Bonds rated "AAA" have the highest rating assigned by S&P
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree.
COMMERCIAL PAPER AND LOAN PARTICIPATION RATINGS -- Commercial paper and
loan participations with the greatest capacity for timely payment are rated "A"
by S&P. Issues within this category are further defined with designations "1,"
"2" and "3" to indicate the relative degree of safety; "A-1," the highest of the
three, indicates the degree of safety is very high.
MOODY'S INVESTORS SERVICE RATINGS
BOND RATINGS -- Bonds rated "Aaa" by Moody's are judged to be the best
quality. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. Bonds rated "Aa" are judged to be of high
quality by all standards. They are rated lower than the best bonds because
margins of protection may not be as large or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than is the case with "Aaa"
securities.
COMMERCIAL PAPER AND LOAN PARTICIPATION RATINGS. -- Moody's employs the
designations of "Prime-1," "Prime-2" and "Prime-3" to indicate the relative
capacity of the rated issuers or borrowers to repay punctually. "Prime-1" is the
highest rating assigned by Moody's. Issuers or makers of "Prime-1" obligations
must have a superior capacity for repayment of short-term promissory
obligations, and will normally be evidenced by leading market positions in well
established industries, high rates of return on funds employed, conservative
capitalization structures with moderate reliance on debt and ample asset
protection, broad margins in earnings coverage of fixed financial charges and
high internal cash generation, and well established access to a range of
financial markets and assured sources of alternate liquidity.
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<PAGE> 196
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<PAGE> 197
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<PAGE> 198
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFMM 6/95
<PAGE> 199
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFMM 6/95
<PAGE> 200
SHORT-INTERMEDIATE TERM FUND
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; General Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information; General Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C General Information
- ------ -------------------
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
<PAGE> 201
[STAGECOACH FUNDS LOGO]
------------------------------
PROSPECTUS
------------------------------
SHORT-INTERMEDIATE TERM FUND
June 28, 1995
================================================================================
<PAGE> 202
STAGECOACH INC.
SHORT-INTERMEDIATE TERM FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
funds -- THE SHORT-INTERMEDIATE TERM FUND (the "Fund"). The Short-Intermediate
Term Fund seeks to provide total return, before fees and expenses, exceeding
that of the Lehman Brothers Intermediate Government/Corporate Bond Index. THE
FUND INVESTS ALL OF ITS ASSETS IN THE SHORT-INTERMEDIATE TERM MASTER SERIES (THE
"MASTER SERIES") OF THE MANAGED SERIES INVESTMENT TRUST (THE "MASTER TRUST"), AN
OPEN-END, MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO OF
SECURITIES. THE MASTER SERIES HAS THE SAME INVESTMENT OBJECTIVE AS THE FUND.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund and the Master
Series that an investor should know before investing. A Statement of Additional
Information ("SAI") dated June 28, 1995 describing the Fund has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference.
The SAI is available free of charge by calling the Company at 1-800-776-0179 or
by writing the Company at the address printed on the back of the Prospectus.
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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED
OR GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN
INVESTMENT IN THE FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 203
Historically, the Lehman Brothers Intermediate Government/Cor-
porate Bond Index (the "LB Intermediate Bond Index") has outperformed short-term
investments such as Treasury bills and has generally experienced a positive
return on an annual basis. The Master Series seeks to achieve its investment
objective by investing in a mix of the following types of securities: U.S.
Treasury and agency debt securities, corporate bonds, collateralized mortgage
obligations and mortgage-backed securities, other types of asset-backed
securities, and money market instruments such as commercial paper, bankers'
acceptances, certificates of deposits, fixed time deposits, repurchase
agreements, and short-term debt of the U.S. Government or its agencies. The
Fund's investment experience corresponds directly with the Master Series'
investment experience. Shares of the Master Series may be purchased only by
other investment companies or other accredited investors.
As noted below under "General Information -- Description of the Company,"
investors may be able to invest indirectly in the Master Trust through other
investment companies or portfolios of the Company that invest substantially all
of their assets in the Master Trust. The Master Series is advised by Wells Fargo
Bank, N.A. ("Wells Fargo"). Wells Fargo also serves as the Fund's and the Master
Series' transfer agent and custodian, and as a Selling Agent and a Shareholder
Servicing Agent (as defined below). Stephens Inc. ("Stephens") is the sponsor,
distributor and administrator for the Company and the Master Trust.
------------------------
WELLS FARGO IS THE INVESTMENT ADVISER TO THE MASTER SERIES AND PROVIDES CERTAIN
OTHER SERVICES TO THE COMPANY AND MASTER TRUST, FOR WHICH IT IS COMPENSATED.
STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS FARGO, IS THE SPONSOR AND
ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR THE
COMPANY AND THE MASTER TRUST.
<PAGE> 204
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary........................................ 2
Summary of Fund Expenses.................................. 7
Explanation of the Table.................................. 8
Financial Highlights...................................... 9
The Fund.................................................. 10
Management of the Fund.................................... 14
How to Buy Shares......................................... 18
How to Redeem Shares...................................... 23
Exchange Privilege........................................ 27
Share Value............................................... 28
Dividends and Distributions............................... 29
Federal Income Tax Information............................ 29
General Information....................................... 31
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
--------
<S> <C>
Additional Investment Policies............................ A-1
</TABLE>
1
<PAGE> 205
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefit plans, including retirement plans,
that have appointed one of the Company's Shareholder Servicing Agents as
plan trustee, plan administrator or other agent or whose plan trustee,
plan administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent of
the qualified employee benefit plan and a Shareholder Servicing Agent.
See "How to Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund seeks to provide a total return, before fees and expenses,
exceeding that of the LB Intermediate Bond Index. Historically, the LB
Intermediate Bond Index has outperformed short-term investments such as
Treasury bills and has generally experienced a positive return on an annual
basis. The Fund seeks to achieve its investment objective by investing all
of its assets in the Master Series, which has the same objective as the
Fund. The Master Series seeks to achieve this investment objective through
investments in a mix of U.S. Government and corporate debt obligations,
asset-backed debt securities and money market instruments. The Master
Series seeks to maintain an average weighted portfolio maturity of between
two and five years.
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See "The Fund -- Investment Objectives and Policies" and
"Appendix -- Additional Investment Policies."
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund are not bank deposits or obligations of Wells Fargo
and are not insured by the Federal Deposit Insurance Corporation ("FDIC").
Therefore, investors should be prepared to accept some risk with the money
invested in the Fund. The portfolio debt instruments held by the Master
Series are subject to default risk. Default risk is the risk that the
issuers of the debt instruments in which the Master Series invests may
default in the payment of principal and/or interest. The portfolio debt
instruments of the Master Series are also subject to interest-rate risk.
Interest-rate risk is the risk that increases in market interest rates may
adversely affect the value of certain of the debt instruments in which the
Master Series invests and hence the value of an investment in the Fund. The
values of such instruments generally change inversely to changes in market
interest rates. The Master Series may experience relatively high turnover
and transaction (i.e., brokerage commission) costs. Portfolio turnover also
can generate short-term capital gains tax consequences. The Fund bears a
pro rata portion of such transaction costs. In this regard, the portfolio
turnover rate generally is not expected to exceed 300%. As with all mutual
funds, there can be no assurance that the Fund will achieve its investment
objective. Finally, the Master Series was formed in 1993 and therefore has
a limited operating history. See "The Fund -- Investment Objectives and
Policies" and "Appendix -- Additional Investment Policies."
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") is open for regular business (a "Business
Day"). There are no sales loads.
To invest in the Fund contact a Shareholder Servicing Agent to receive
information and an Account Application. An Account Application must be
completed and signed to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that
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there is no minimum subsequent investment amount for Benefit Plans or IRA
investors.
See "How to Buy Shares."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Trust, manages the
investments of the Master Series. The Company has not retained the services
of a separate investment adviser for the Fund because the Fund invests all
of its assets in a Master Series. Wells Fargo, one of the ten largest
commercial banks in the United States, was founded in 1852 and is the
oldest bank in the western United States. As of March 31, 1995, various
divisions and affiliates of Wells Fargo provided investment advisory
services for approximately $196 billion of assets of individuals, trusts,
estates and institutions. See "Management of the Fund."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For advisory services
to the Master Series, Wells Fargo is entitled to receive a fee at an annual
rate of 0.45% of the Master Series' average daily net assets. Wells Fargo
also provides custodial and transfer agency services to the Fund and the
Master Series. Wells Fargo is compensated for its custodial services out of
the advisory fee paid by the Master Series and is entitled to an annual fee
of 0.03% of the Fund's average net assets in return for providing transfer
agency services to the Fund and the Master Series.
For its services as administrator of the Master Series and the Fund,
Stephens is entitled to receive a fee at an annual rate of 0.05% of the
Fund's average daily net assets.
The Fund also has adopted a Shareholder Servicing Plan pursuant to which it
may enter into Shareholder Servicing Agreements with Shareholder Servicing
Agents. The Servicing Plan permits the Fund to compensate Shareholder
Servicing Agents up to 0.10% of the average daily net assets of the Fund.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for
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certain administrative services, such as recordkeeping and processing
exchanges of Fund shares for other available investment options.
See "Management of the Fund."
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the net
asset value of shares of the Master Series which in turn depends on the
total value of the portfolio securities owned by the Master Series (plus
cash and other assets net of liabilities) and the number of shares of the
Master Series outstanding. On each Business Day, Wells Fargo calculates a
new net asset value of the Fund and the Master Series. See "Share Value."
Q. DOES THE FUND PAY DIVIDENDS?
A. The Fund intends to declare monthly dividends consisting of substantially
all of its net investment income, and annual distributions consisting of
substantially all of its net realized capital gains. All dividends and
distributions are automatically reinvested in additional Fund shares at net
asset value unless payment in cash is requested and your arrangement with a
Shareholder Servicing Agent permits the processing of cash payments. Each
reinvestment increases the total number of shares held by the shareholder.
See "Dividends and Distributions."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the
Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the
imposition of a sales charge or redemption fee on any Business Day by
letter, by an automatic feature called the Systematic Withdrawal Plan, or
by telephone (unless you decline telephone privileges). See "How to
Redeem Shares." For more information, contact Stephens or your
Shareholder Servicing Agent (such as Wells Fargo).
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Q. WHAT ARE DERIVATIVES AND DO THE FUND AND THE MASTER SERIES USE THEM?
A. Derivatives are financial instruments whose values are derived, at least in
part, from the prices of other securities or specified assets, indices or
rates. Some of the permissible investments described in this Prospectus,
such as asset-backed securities and mortgage-backed securities issued or
guaranteed by U.S. Government agencies or instrumentalities (including
government-sponsored enterprises) 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 FUND AND MASTER SERIES TAKE TO CONTROL
DERIVATIVES-RELATED RISKS?
A. Wells Fargo (as investment adviser to the Master Series) uses a variety of
internal risk management procedures to ensure that derivatives use is
consistent with both the Master Series' and the Fund's investment
objective, does not expose either the Master Series or the Fund to undue
risks and is closely monitored. These procedures include providing periodic
reports to the Boards of Trustees and Directors. Derivatives use also is
subject to broadly applicable investment policies. For example, the Master
Series may not invest more than a specified percentage of its assets in
"illiquid securities," including those derivatives that do not have active
secondary markets. In addition, the Master Series may not use derivatives
without establishing adequate "cover" in compliance with SEC rules limiting
the use of leverage. For more information, see "Appendix -- Additional
Investment Policies."
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SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund and the Master Series, 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. As shown below, you are not charged
redemption fees or exchange fees. You should consider this expense information
together with the important information in this Prospectus, including the Fund's
investment objective and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net
assets)*:
Management Fees**............................... 0.40%
Other Expenses
Shareholder Servicing Fees**.................. 0.05 %
Miscellaneous Expenses**...................... 0.18 %
Total Other Expenses**........................ 0.23%
-------
Total Fund Operating Expenses**................. 0.63%
</TABLE>
- ---------------
* Other mutual funds may invest in the Master Series and such other funds'
expenses and, correspondingly, investment returns may differ from those of
the Fund.
** Annual Fund operating expenses are based on amounts incurred during the most
recent fiscal year, restated to reflect voluntary fee waivers that will
continue during the current fiscal year. In the absence of such waivers
and/or reimbursements, the percentages shown above under the captions
"Management Fees," "Shareholder Servicing Fees," "Miscellaneous Expenses,"
"Total Other Expenses" and "Total Fund Operating Expenses" would be 0.47%,
0.10%, 0.84%, 0.94% and 1.41%, respectively.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor 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.................... $6 $20 $35 $79
</TABLE>
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EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, restated to reflect voluntary fee waivers and expense
reimbursements that will continue during the current fiscal year. They summarize
expenses charged at the Master Trust level as well as expenses charged at the
Company level. For a further description of the fee structure of the Master
Trust and Company, see "Management of the Fund." Wells Fargo 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.
The Fund does not anticipate Fund expenses exceeding state limits. In addition,
Wells Fargo and Stephens each, at its sole discretion, may waive or reimburse
all or a portion of its respective fees charged to, or expenses paid by, the
Fund or Master Series. Any waivers or reimbursements would reduce the Fund's or
Master Series' total expenses. For more complete descriptions of the various
costs and expenses you can expect to incur as an investor in the Fund, please
see the Prospectus section captioned "Management of the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over stated periods,
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected Fund performance. In addition, the Example of Expenses should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown above.
With regard to the combined fees and expenses of the Fund and the Master
Series, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the Master Series
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 Master Series. Additionally, the
Board of Directors has determined that the aggregate fees assessed by the Fund
and the Master Series should be less than those expenses that the Directors
believe would be incurred had the Fund invested directly in the securities held
by the Master Series. See the Prospectus section captioned "Management of the
Fund" 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
investment strategy and no longer invest in the Master Series, these expenses
may change.
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FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995** 1994***
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period........ $ 9.72 $10.00
------------ ------------
Income from investment operations:
Net investment income..................... 0.64 0.42
Net realized and unrealized gain (loss) on
investments............................. (0.57) (0.28)
------------ ------------
Total from investment operations............ 0.07 0.14
Less distributions:
Dividends from net investment income...... (0.64) (0.42)
Distributions from net realized gains..... 0.00 0.00
Distributions in excess of net realized
gains................................... 0.00 0.00
------------ ------------
Total distributions......................... (0.64) (0.42)
------------ ------------
Net Asset Value, end of period.............. $ 9.15 $ 9.72
============ ============
Total return (not annualized)............... 0.89% 1.42%
Ratios/supplemental data:
Net assets, end of period (000)........... $ 14,298 $5,258
Number of shares outstanding, end of
period (000)............................ 1,562 541
Ratios to average net assets+:
Ratio of expenses to average net
assets(1)............................... 0.65%++ 0.65%
Ratio of net investment income to average
net assets(2)........................... 7.07% 6.02%
Portfolio turnover.......................... 29%* 277%
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses................................ 1.41% 0.65%
(2) Ratio of net investment income to
average net assets prior to waived fees
and reimbursed expenses................. 6.32% 6.02%
</TABLE>
- ---------------
* This rate is for the period from February 28, 1994 to May 25, 1994. As of
May 26, 1994 the Fund invests all of its assets in the corresponding Master
Series of the Master Trust. The portfolio turnover rate for the Master
Series for the period beginning May 26, 1994 and ending February 28, 1995
was 96%.
** Beginning May 26, 1994 the Fund, pursuant to shareholder approval, was
reorganized and began investing in the corresponding Master Series of the
Master Trust.
*** The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
++ This ratio includes expenses charged to the Master Series.
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THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to provide a total return, before fees and expenses,
exceeding that of the LB Intermediate Bond Index. Historically, the LB
Intermediate Bond Index has outperformed short-term investments such as Treasury
bills and has generally experienced a positive return on an annual basis. This
investment objective is fundamental and cannot be changed without shareholder
approval. The Fund seeks to achieve its investment objective by investing all of
its assets in the Master Series, which has the same fundamental investment
objective as the Fund. The investment objective of the Master Series is to
provide investors with a total return, before fees and expenses, exceeding that
of the LB Intermediate Bond Index. The Master Series invests in a mix of the
following types of instruments: U.S. Treasury and agency debt securities,
corporate bonds, collateralized mortgage obligations and mortgage-backed
securities, other types of asset-backed securities, and money market instruments
such as commercial paper, bankers' acceptances, certificates of deposits, fixed
time deposits, repurchase agreements, and short-term debt of the U.S. Government
or its agencies. The Master Series is actively managed. Although its investment
objective is related to the performance of the LB Intermediate Bond Index, the
Master Series does not attempt to replicate the portfolio composition of that
Index. The Master Series may hold instruments with different maturities, as well
as certain investment securities -- such as collateralized mortgage obligations
and other asset-backed securities -- which are not included in the Index. A more
complete description of the securities that may be purchased by the Master
Series is contained in "Appendix -- Additional Investment Policies." As similar
types of securities are developed in the marketplace, they may be considered for
investment by the Master Series, but the Master Series may not invest in such
securities prior to adding appropriate disclosure. There can be no assurance
that the Fund or the Master Series will achieve its investment objective.
Since the investment characteristics of the Fund directly correspond to
those of the Master Series, the discussion below relates to the various
investments of and techniques employed by the Master Series.
Under normal market conditions, the Master Series seeks to maintain an
average weighted portfolio maturity generally in the 2-to-5 year range. Under
unusual market conditions, the Master Series may shorten or lengthen its average
weighted portfolio maturity beyond the 2-to-5 year range.
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<PAGE> 214
The LB Intermediate Bond Index consists of government (Treasury and agency)
and corporate debt obligations with remaining maturities between one and ten
years. Each issue is represented in the LB Intermediate Bond Index in proportion
to its outstanding market value. The exact composition of the LB Intermediate
Bond Index varies according to the characteristics of the securities outstanding
in the marketplace.
Only investment-grade securities are considered for investment. These
securities will be identified by their ratings according to one of two major
rating services, Standard & Poor's Corporation ("S&P") and Moody's Investors
Service, Inc. ("Moody's"). The rating systems employed by each service are
described in the Appendix to this Prospectus. Each service classifies securities
into broad categories starting with "investment grade" at the top and ranging
downward through more speculative classes, including so-called "junk bonds," to
securities that are virtually worthless. The "investment grade" category is
subdivided into four rating groups by both services. The four rating groups are
called "AAA"/"Aaa," "AA"/"Aa," "A"/"A," and "BBB"/"Baa" by S&P and Moody's,
respectively. Obligations with the lowest investment grade rating have
speculative characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than in the case of higher grade debt obligations. The
Master Series may invest in securities of all four rating groups; however, most
of the Master Series' assets will be invested in securities that, at the time of
purchase, are rated in the third group or higher, denoted "A" or better by both
rating services. Asset-backed securities are further restricted to the top two
rating groups at time of purchase. Mortgage-related securities, which are issued
or guaranteed by U.S. Government agencies, are all currently considered to be in
the highest rating category. Subsequent to its purchase by the Master Series, an
issue of securities may cease to be rated or its rating may be reduced below the
minimum rating required for purchase by the Master Series. Wells Fargo will
consider such an event in determining whether the Master Series should continue
to hold the obligation. To the extent the Master Series continues to hold such
obligations, it may be subject to additional risk of default.
In the marketplace it is generally the case that higher-risk securities
carry higher yields-to-maturity. That is, investors tend to demand higher
returns for securities with longer maturities or lower credit quality ratings
than for similar securities of shorter maturities or higher credit quality
ratings. The amount of increased return for increased risk, however, changes
from time to time. The Master Series seeks to emphasize those maturity segments
or rating groups that appear to offer the most favorable
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<PAGE> 215
returns to their risks, within the maturity and quality ranges described above.
The Master Series may invest some of its assets (no more than 10% of total
assets under normal market conditions) in high quality money market instruments,
which include U.S. Government obligations, obligations of domestic and foreign
banks, repurchase agreements, commercial paper (including variable amount master
demand notes) and short-term corporate debt obligations. Such investments are
made on an ongoing basis to provide liquidity and, to a greater extent on a
temporary basis, when there is an unexpected or abnormal level of investor
purchases or redemptions of Master Series shares or when "defensive" strategies
are appropriate.
The portfolio turnover rate for the Master Series is not expected to exceed
300%. Portfolio turnover generally involves some expense to the Master Series,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and the reinvestment in other securities. The Fund
bears a pro rata portion of such transaction costs. Portfolio turnover also can
generate short-term capital gains tax consequences. For additional information
relating to portfolio turnover see "Federal Income Tax Information" in this
Prospectus and "Portfolio Transactions" and "Federal Income Taxes" in the SAI.
MASTER/FEEDER STRUCTURE
As of May 26, 1994, the Fund converted to a feeder fund in a master/feeder
structure. Accordingly, the Fund invests all of its assets in the Master Series,
which has the same investment objective as the Fund. See, "The
Fund -- Investment Objectives and Policies." The Master Trust is organized as a
trust under the laws of the State of Delaware. See "General
Information -- Description of the Company." In addition to selling its shares to
the Fund, the Master Series may sell its shares to certain other mutual funds or
institutional investors. Information regarding additional options, if any, for
investment in shares of the Master Series is available from Stephens and may be
obtained by calling 1-800-643-9691. The expenses and, correspondingly, the
returns of other investment options in the Master Trust may differ from those of
the Fund.
The Board of Directors believes that, if other investors invest their
assets in the Master Series, certain economic efficiencies may be realized with
respect to the Master Series. For example, fixed expenses that otherwise would
have been borne solely by the Fund would be spread among a larger asset base
provided by more than one fund investing in the Master Series. The Fund and
other entities (if any) investing in the Master Series, would each be liable for
all obligations of the Master Series.
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<PAGE> 216
However, the risk of the Fund incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance exists
and the Master Trust itself is unable to meet its obligations. Accordingly, the
Company's Board of Directors believes that neither the Fund nor its shareholders
will be adversely affected by reason of investing the Fund's assets in the
Master Series. However, if a mutual fund or other investor withdraws its
investment from the Master Series, the economic efficiencies (e.g., spreading
fixed expenses across a larger asset base) that the Company's Board believes
should be available through investment in the Master Series may not be fully
achieved. In addition, given the relatively novel nature of the master/feeder
structure, accounting and operational difficulties could occur.
The Master Series' investment objective and other fundamental policies,
which are the same as those of the Fund, cannot be changed without approval by
the holders of a majority (as defined in the Investment Company Act of 1940 (the
"1940 Act")) of the Master Series' outstanding voting shares. Whenever the Fund,
as a Master Series shareholder, is requested to vote on matters pertaining to
any fundamental policy of the Master Series, the Fund will hold a meeting of its
shareholders to consider such matters and the Fund will cast its votes in
proportion to the votes received from Fund shareholders. The Fund will vote
Master Series shares for which it receives no voting instructions in the same
proportion as the votes received from Fund shareholders. In addition, certain
policies of the Master Series that are non-fundamental can be changed by vote of
a majority of the Master Trust's Trustees without a shareholder vote. If the
Master Series' investment objective or policies are changed, the Fund could
subsequently change its objective or policies to correspond to those of the
Master Series or the Fund could redeem its Master Series shares and either seek
a new investment company with a substantially matching objective in which to
invest or retain its own investment adviser to manage the Fund's portfolio in
accordance with its objective. In the latter case, the Fund's inability to find
a substitute investment company in which to invest or equivalent management
services could adversely affect shareholders' investments in the Fund. The
Fund's investment objective and other fundamental policies cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
the Fund's outstanding voting shares. The Fund will provide shareholders with 30
days' written notice prior to the implementation of any change in the investment
objective of the Fund or Master Series, to the extent possible.
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<PAGE> 217
PERFORMANCE
The Fund's performance may be advertised in terms of yield and total
return. These performance figures are based on historical results and are not
intended to indicate future performance. The Fund's yield is calculated by
dividing its net investment income per share earned during a specified period
(usually 30 days) by its net asset value per share on the last day of such
period and annualizing the results. The Fund's total return may be calculated on
an average annual total return basis or a cumulative total return basis. Average
annual total return refers to the average annual compounded rates of return over
one-, five-, and ten-year periods (or the life of the Fund, which periods are
stated in the advertisement) and is measured by comparing the value of an
investment in the Fund at the beginning of the relevant period to the redemption
value at the end of the period and annualizing the result. Cumulative total
return is based on the overall percentage change in value of a hypothetical
investment in the Fund. Both methods assume that all Fund dividends and capital
gain distributions are reinvested. Fees charged by an institution or shareholder
servicing agent in connection with an investment in the Fund are not included in
calculations of yield or total return. The Fund's performance corresponds
directly to the investment experience of the Master Series. The Fund's annual
report contains additional performance information and is available without
charge by calling 1-800-776-0179 or by writing the Company at the address
printed on the back of the Prospectus.
MANAGEMENT OF THE FUND
MASTER TRUST INVESTMENT ADVISER -- Wells Fargo, a wholly owned subsidiary
of Wells Fargo & Company located at 420 Montgomery Street, San Francisco,
California 94105, is the Master Series' investment adviser. Wells Fargo, 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 March 31, 1995, various
divisions and affiliates of Wells Fargo provided investment advisory services
for approximately $196 billion of assets of individuals, trusts, estates and
institutions. Pursuant to an Investment Advisory Agreement with the Master
Trust, Wells Fargo provides investment guidance and policy direction in
connection with the management of the Master Series' assets, subject to the
supervision of the Master Trust's Board of Trustees and in conformity with
Delaware law and the stated policies of the Master Series.
Wells Fargo deals, trades and invests for its own account in the types of
securities in which the Master Series may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities
14
<PAGE> 218
purchased by the Master Series. Wells Fargo has informed the Master Trust that
in making its investment decisions it does not obtain or use material inside
information in its possession.
Prior to the Fund's conversion to master/feeder structure, Wells Fargo
provided investment advisory services directly to the Fund. For its services as
investment adviser Wells Fargo was entitled to receive a monthly fee at the
annual rate of 0.50% of the Fund's average daily net assets.
Since the conversion to master/feeder structure, Wells Fargo provides
investment advisory services to the Master Series. Under the terms of the
current Investment Advisory Agreement between Wells Fargo and the Master Trust,
the Master Trust has agreed to pay a monthly fee at the annual rate of 0.45% of
the Master Series' average daily net assets. For the fiscal year ended February
28, 1995, Wells Fargo was paid advisory fees at the annual rate of 0.14% of the
average daily net assets of the Fund for its services as investment adviser to
the Fund and the Master Series. Fund shareholders bear a pro rata portion of the
Master Series' operating expenses, including its advisory fees, to the extent
that the Fund, as a shareholder of the Master Series, bears such expenses.
Mr. Scott Smith has co-managed the portfolio of the Fund and the Master
Series since June 28, 1995. He joined Wells Fargo 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 and is a chartered financial
analyst.
Ms. Tamyra Thomas, who co-manages the Fund and Master Series with Mr.
Smith, has been both manager and co-manager of the portfolio of the Fund and the
Master Series since their respective inceptions. Before joining Wells Fargo in
1988, Ms. Thomas was Vice President and manager of the Investment Department of
Valley Bank & Master Trust in Utah. She holds a B.S. from the University of
Utah.
Morrison & Foerster, counsel to the Company and the Master Trust and
special counsel to Wells Fargo, has advised the Company, the Master Trust and
Wells Fargo that Wells Fargo may perform the services contemplated by the
Advisory Contract without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Such counsel has pointed out, however,
that there are no controlling judicial or administrative interpretations or
decisions and that future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes, including the
Glass-Steagall Act and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as future
15
<PAGE> 219
changes in such statutes, regulations and judicial or administrative decisions
or interpretations, could prevent Wells Fargo from continuing to perform, in
whole or in part, such services. If Wells Fargo were prohibited from performing
any such services, it is expected that the Directors of the Company would
recommend to the Fund's shareholders that they approve a new advisory agreement
with another entity or entities qualified to perform such services.
ADMINISTRATOR AND DISTRIBUTOR -- Stephens, located at 111 Center Street,
Little Rock, Arkansas 72201, serves as the Company's and the Master Trust's
administrator pursuant to separate Administration Agreements with the Company
and the Master Trust. Under the Administration Agreement with the Company,
Stephens provides general supervision of the operation of the Company, other
than the provision of investment advice, subject to the overall authority of the
Board of Directors and in accordance with Maryland law. The administrative
services provided to the Fund also include coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Board of Directors and officers.
Stephens also furnishes office space and certain facilities to conduct the
Company's business, and compensates the Company's Directors, officers and
employees who are affiliated with Stephens. For providing administrative
services to the Fund, the Company has agreed to pay Stephens a monthly fee at
the annual rate of 0.05% of the Fund's average daily net assets. For the fiscal
year ended February 28, 1995, Stephens waived all fees owed to it by the Company
for its services as administrator to the Fund and Master Series.
Stephens also serves as the Company's principal underwriter within the
meaning of the 1940 Act and as distributor of the Fund's shares pursuant to a
Distribution Agreement with the Company. The Distribution Agreement provides
that Stephens will act as agent for the Company for the sale of Fund shares, and
may enter into Selling Agreements with selling agents that wish to make
available Fund shares to their respective customers ("Selling Agents"). Wells
Fargo presently acts as a Selling Agent, but does not receive any fee from the
Fund for such activities.
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.
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CUSTODIAN AND TRANSFER AGENT -- Wells Fargo also serves as the Fund's and
the Master Series' transfer agent and Custodian (the "Transfer Agent" or
"Custodian") pursuant to Agency Agreements and Custody Agreements, respectively.
Wells Fargo provides the transfer agency and custodial services at 525 Market
Street, San Francisco, California 94105. For its services as Transfer Agent,
Wells Fargo is entitled to receive an annual fee from the Fund totalling 0.03%
of the Fund's average net assets. Wells Fargo is compensated for its services as
Custodian out of the advisory fee paid by the Master Series. Under their Custody
Agreements with Wells Fargo, the Fund and the Master Series may, at times,
borrow money from Wells Fargo as needed to satisfy temporary liquidity
requirements. Wells Fargo charges interest on such overdrafts at a rate
determined pursuant to the appropriate Custody Agreement.
SHAREHOLDER SERVICING AGENT -- The Fund has adopted a Shareholder Servicing
Plan pursuant to which it has entered into a Shareholder Servicing Agreement
with Wells Fargo, and may enter into similar agreements with other entities
("Shareholder Servicing Agents"). Under such agreements, Shareholder Servicing
Agents (including Wells Fargo) agree, as agent for their customers, to be
responsible for performing shareholder liaison services, which include, without
limitation, answering customer inquiries regarding account status and history,
and the manner in which purchases, exchanges and redemptions of Fund shares may
be effected, assisting customers with investment plans, dividend options and
account designations and addresses, processing of purchase, redemption and
exchange transactions, providing periodic account statements showing account
balances and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by the Shareholder Servicing
Agent or its affiliates, arranging for bank wires, distributing various
materials for the Company, assisting in the establishment and maintenance of
accounts in the Fund and providing such other similar services as the Company or
a customer may reasonably request. For these services, a Shareholder Servicing
Agent is entitled to receive a fee, which may be paid periodically, determined
by a formula based upon the number of accounts serviced by the Shareholder
Servicing Agent during the period for which payment is being made, the level of
activity in such accounts during such period, and the expenses incurred by the
Shareholder Servicing Agent. In no event will such fees exceed, on an annualized
basis for the Fund's then-current fiscal year, 0.10% of the average daily net
assets of the Fund represented by shares owned during the period for which
payment is being made by investors with whom the Shareholder Servicing Agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the Shareholder Servicing Agent under
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applicable laws, regulations or rules, including the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., whichever is less.
A Shareholder Servicing Agent 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 higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the Fund and to notify
them in writing at least thirty days before it imposes any transaction fees.
FUND EXPENSES -- As noted previously, from time to time Wells Fargo and
Stephens may waive their respective fees in whole or in part. Any such waivers
will reduce the Fund's expenses and accordingly have a favorable impact on the
Fund's yield and total return. Except for the expenses borne by Wells Fargo and
Stephens, the Company and the Master Trust will bear all costs of their
respective operations allocated to the Fund and Master Series.
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in the Fund shares, and persons who
invest pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an IRA pursuant to arrangements
between the sponsor or other agent of the qualified employee benefit
plan and a Shareholder Servicing Agent.
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Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request by an investor or the investor's
representative, the Company or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below) and $1,000 by all other methods or for all other
investors, except that there is no minimum initial investment amount for Benefit
Plans or IRA investors. All subsequent investments must be at least $100, except
that there is no minimum subsequent investment amount for Benefit Plans or IRA
investors. All investments in Fund shares are subject to a determination by the
Company that the investment instructions are complete. If shares are purchased
by a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. The
Company reserves the right in its sole discretion to suspend the availability of
the Fund's shares and to reject any purchase requests. Certificates for Fund
shares are not issued.
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading on the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading on the NYSE are executed on the next Business
Day. The investor's Shareholder Servicing Agent is responsible for the prompt
transmission of the investor's purchase order to the Transfer Agent on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a Shareholder Servicing Agent may not be received by the Transfer
Agent on the same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further information
concerning this requirement. Failure to furnish a social security number or a
TIN to the Company could subject the investor to penalties imposed by the
Internal Revenue Service ("IRS").
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BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Shareholder Servicing Agents as plan trustee, plan administrator or
other agent, or whose plan trustee, plan administrator or other agent has a
servicing arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares. Benefit Plans include 401(k) plans and plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), health and welfare plans and executive deferred compensation
plans. For additional information about Benefit Plans that may be eligible to
invest in Fund shares, prospective investors should contact a Shareholder
Servicing Agent.
Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Shareholder Servicing Agent may offer other types of
tax-deferred or tax-advantaged plans, including a Keogh retirement plan for
self-employed professional persons, sole proprietors and partnerships. Contact a
Shareholder Servicing Agent for materials describing plans available through it,
and their benefits, provisions and fees.
Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Shareholder Servicing
Agent. Completed retirement plan applications should be returned to the
investor's Shareholder Servicing Agent for approval and processing. If an
investor's retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. Certain features
described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a retirement plan. Investors should
consult their Shareholder Servicing Agent.
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PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), 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. Some banks may impose wiring fees.
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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
AutoSaver Plan
The Company's AutoSaver Plan provides individual or corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an
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investor must specify an amount ($100 or more) to be withdrawn automatically by
the Transfer Agent on a monthly basis from an account with a bank ("Approved
Bank") that is designated in the investor's Account Application and that is
approved by the Transfer Agent. Wells Fargo is an Approved Bank. The Transfer
Agent withdraws and uses this amount to purchase Fund shares on the investor's
behalf on or about the fifth Business Day of each month. There are no separate
fees charged to an investor by the Company for participating in the AutoSaver
Plan.
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
Additional Purchases
An investor may make additional purchases of $100 or more by instructing
the Fund's Transfer Agent to debit a designated Approved Bank account, by wire
by using the procedures described under "Initial Purchases by Wire" above, or by
mail with a check payable to "Stagecoach Inc./(Name of Fund)" to the above
address. An investor must write a Fund account number on the check and include
the detachable stub from a Statement of Account or a letter providing the
investor's Fund account number.
In-Kind Purchases
At the discretion of Wells Fargo, shares of the Fund may be purchased in
exchange for securities which are eligible for acquisition by the Master Series
as described in this Prospectus. Securities to be exchanged which are accepted
by the Fund are valued in accordance with the procedures referenced under "Share
Value" in this Prospectus at the time of the next determination of net asset
value after such acceptance. Shares issued by the Fund in exchange for
securities are issued at net asset value determined as of the same time. All
dividends (with the exception of dividends received on securities tendered after
the ex-dividend date), interest, subscription, or other rights pertaining to
such securities shall become the property of the Fund and must be delivered to
the Fund by the investor upon receipt from the issuer.
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The Fund will only accept securities for its portfolio in exchange for
shares issued by the Fund if: (1) such securities are, at the time of the
exchange, eligible to be included in the Master Series' portfolio and current
market quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities Act
of 1933 or under the laws of the country in which the principal market for such
securities exists, or otherwise; (3) the value of any such security (except U.S.
Government obligations) being exchanged together with other securities of the
same issuer owned by the Master Series will not exceed 5% of the net assets of
the Master Series immediately after the transaction; and (4) such securities are
consistent with the Fund's and the Master Series' investment objective and
policies and otherwise acceptable to Wells Fargo, as the Master Series'
investment adviser, in its sole discretion. The requirement for an investor
representation described in item (2) will not apply to the initial investment
into the Fund by certain employee benefit plans, as described below under
"General Information -- Description of the Company."
A gain or loss for federal income tax purposes may be realized by taxable
investors making in-kind purchases upon the exchange depending upon the cost of
the securities exchanged.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price of the shares is the
next determined net asset value of the Fund calculated after the Company has
received a redemption request in proper form. Redemption proceeds may be more or
less than the amount invested depending on the Fund's net asset value at the
time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master Series
in which the Fund invests of securities owned by the Master Series is not
reasonably practicable or (b) it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or a period during which the
SEC by order permits deferral of redemptions for the protection of Fund
shareholders. In addi-
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tion, the Company may defer payment of a shareholder's redemption until
reasonably satisfied that such shareholder's investments made by check have been
collected (which can take up to fifteen days from the purchase date). Payment of
redemption proceeds may be made in portfolio securities, subject to regulation
by some state securities commissions. Shareholders who receive portfolio
securities as payment of redemption proceeds will generally incur brokerage
costs upon the sale of such securities.
Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual and corporate investor's
account and send the proceeds to such investor if the balance in the account
falls below $1,000 because of a redemption (including a redemption of Fund
shares after an investor has made only the $1,000 minimum initial investment).
However, investors will be given 30 days' notice to make an additional
investment to increase their account balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York time), will be
executed at the net asset value determined as of the close of regular trading on
the NYSE on that day. Redemption orders that are received by the Transfer Agent
after the close of regular trading on the floor of the NYSE, will be executed on
the next Business Day. The
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investor's Shareholder Servicing Agent is responsible for the prompt
transmission of redemption orders to the Fund on the investor's behalf. Under
certain circumstances, a Shareholder Servicing Agent may establish an earlier
deadline for receipt of orders or an investor's order transmitted to a
Shareholder Servicing Agent may not be received by the Transfer Agent on the
same day.
Unless the investor has made other arrangements with an appropriate
Shareholder Servicing Agent, and the Transfer Agent has been informed of such
arrangements, proceeds of a redemption order made by the investor through a
Shareholder Servicing Agent are credited to the account with the Approved Bank
that the investor has designated in the Account Application. If no such account
is designated, a check for the proceeds is mailed to the investor's address of
record or, if such address is no longer valid, the proceeds are credited to the
investor's account with the investor's Shareholder Servicing Agent.
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Shareholder Servicing Agent. The redemption procedures outlined in
the remainder of this section do not apply to investors in employee benefit
plans or retirement plans, nor do the minimum-balance requirements outlined
above. Investors in these types of plans should contact their Shareholder
Servicing Agent regarding redemption procedures applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners must sign.
3. If the shares to be redeemed have a value of $5,000 or more, or
redemption proceeds are to be paid to someone other than the investor at such
investor's address of record, the signature(s) must be guaranteed by an
"eligible guarantor institution," which includes a commercial bank that
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is an FDIC member, 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 redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual and corporate
investor with a convenient way to have Fund shares redeemed from the investor's
account and the proceeds distributed to the investor on a monthly basis. An
investor may participate in the Systematic Withdrawal Plan only if the investor
has a Fund account valued at $10,000 or more as of the date of an election to
participate, the investor has an account at an Approved Bank, the investor's
dividends and capital gain distributions are being reinvested automatically and
the investor is not participating in the AutoSaver Plan at any time while
participating in the Systematic Withdrawal Plan. An investor may specify an
amount ($100 or more) to be distributed by check to the investor's address of
record or deposited in an Approved Bank account designated in the investor's
Account Application. The Transfer Agent redeems sufficient shares and mails or
deposits redemption proceeds as instructed on or about the fifth Business Day
prior to the end of each month. There are no separate fees charged to investors
by the Fund for participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a specified withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
Expedited Redemptions by Letter and Telephone
An individual and corporate investor may request an expedited redemption of
Fund shares by letter, in which case the investor's receipt of
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redemption proceeds, but not the Fund's receipt of the investor's
redemption request, would be expedited. Telephone redemption and exchange
privileges are made available to an investor automatically upon the opening of
an account unless the investor declines such privileges. The investor also may
request an expedited redemption of Fund shares by telephone on any Business Day,
in which case both the investor's receipt of redemption proceeds and the Fund's
receipt of the investor's redemption request would be expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the Account Application.
The Company reserves the right to impose a charge for wiring redemption
proceeds. When proceeds of an individual and corporate investor's expedited
redemption are to be paid to someone else, to an address other than that of
record, or to an account with an Approved Bank that the investor has not
predesignated in the investor's Account Application, the expedited redemption
request must be made by letter and the signature(s) on the letter must be
guaranteed in the manner discussed above, regardless of the amount of the
redemption. If the investor's expedited redemption request is received by the
Transfer Agent on a Business Day, the investor's redemption proceeds are
transmitted to the investor's designated account with an Approved Bank on the
next Business Day (assuming the investor's investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions, and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for proceeds of less than $5,000 is mailed to the investor's
address of record or, at the investor's election, credited to the Approved Bank
account designated in the investor's Account Application.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase, in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in
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the Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes such action would be appropriate to protect the 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 exchanges. The
exchange privilege may be modified or terminated at any time upon 60 days'
written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments (i.e., the
value of its investments in the Master Series) plus cash and other assets,
deducting liabilities (including the fees payable for advisory and other
services) and then dividing the result by the number of Fund shares outstanding.
The NAV is expected to fluctuate daily.
The Fund is open for business each Business Day, which is a day on which
the NYSE is open for trading. Currently, the weekdays on which the NYSE is
closed are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Wells Fargo
calculates the Fund's NAV each Business Day
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as of the close of regular trading on the NYSE (currently 4:00 p.m., New York
time).
The Fund's investments in the Master Series are valued at the NAV of the
Master Series' shares. The Master Series calculates the NAV of its shares on the
same days and at the same time as the Fund. Except for debt obligations with
remaining maturities of 60 days or less, which are valued at amortized cost, the
Master Series' other assets are valued at current market prices, or if such
prices are not readily available, at fair value as determined in good faith in
accordance with guidelines approved by the Master Trust's Board of Trustees.
Prices used for such valuations may be provided by independent pricing services.
For further information regarding the methods employed in valuing the Master
Series' investments, see "Determination of Net Asset Value" in the SAI.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays monthly dividends of substantially all of its
net investment income. The Fund distributes any net realized capital gains at
least annually. All dividends and distributions are reinvested automatically in
additional shares of the Fund at net asset value unless payment in cash is
requested and the investor's arrangement with a Shareholder Servicing Agent
permits the processing of cash payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. To the extent
dividends and distributions are reinvested, however, each shareholder receives
additional Fund shares equivalent in value to the reduction in NAV on shares
owned by that shareholder.
FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, 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.
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The Fund seeks to comply with the applicable provisions of the Code by
investing all of its assets in the Master Series. The Master Series intends to
qualify for federal tax purposes as a partnership. As such, the Fund will
generally be deemed to own directly its proportionate share of the assets of the
Master Series. Therefore, any interest, dividends, gains or losses of the Master
Series will be "passed through" to the Fund and other investors in the Master
Series, regardless of whether such interest, dividends or gains have been
distributed by the Master Series or losses have been realized by the Fund or
other investors. Accordingly, if the Master Series 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, or gains
without receipt of any corresponding distribution. The Master Series seeks to
minimize recognition by investors of interest, dividends or gains without a
corresponding distribution.
Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers and TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than
exempt-interest dividends) and redemption proceeds (including proceeds from
exchanges). Non-resident aliens and other foreign shareholders may be subject to
U.S. withholding tax at rates up to 30% on dividends and distributions paid.
TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. No part of the
distributions to shareholders of the Fund is expected to qualify for the
dividends-received deduction allowed to corporate shareholders.
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The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains. However, such tax-exempt investors may be
subject to tax on certain unrelated taxable income which could arise, for
example, when such investors acquire shares in the Fund through the use of
leverage. Tax-exempt investors should consult their tax advisors regarding the
Unrelated Business Taxable Income Rules.
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained 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.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Asset Allocation Fund, S&P 500 Stock Fund, Growth Stock
Fund, U.S. Treasury Allocation Fund, Bond Index Fund, Money Market Fund, Growth
and Income Fund, National Tax-Free Intermediate Income Fund, National Tax-Free
Money Market Mutual Fund, California Tax-Free Intermediate Income Fund,
California Tax-Free Short-Term Income Fund, California Tax-Free Money Market
Fund and Overland National Tax-Free Institutional Money Market Fund. As of May
26, 1994, all of the Company's then-existing series, except the Money Market
Fund, became feeder funds in a master/feeder structure. The Company's principal
office is located at 111 Center Street, Little Rock, Arkansas 72201.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in Wells
Fargo Nikko Investment Advisers ("WFNIA") to Barclays PLC of the U.K. As part of
the sale, Barclays also will acquire Wells Fargo's MasterWorks division, which
includes the Short-Intermediate Term Fund.
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The sale, which is subject to the approval of appropriate regulatory
authorities, is expected to close in the fourth quarter of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
It is anticipated that a special meeting of shareholders of the Fund will
be convened to consider a change in the structure of the Fund, which will become
effective only upon the sale of the Masterworks division. Subject to the
approval of the Company's Board of Directors, it is not contemplated that the
proposed change in structure will change the investment objective or overall
investment strategy of the Fund.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and officers of the Company is included in the
Fund's SAI under "Management." The Fund may withdraw its investment in the
Master Series only if the Board of Directors of the Company determines that it
is in the best interests of the Fund and its shareholders to do so. Upon any
such withdrawal, the Board of Directors of the Company would consider what
action might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
Master Series. Although the Company is not required to hold regular annual
shareholder meetings, occasional annual or special meetings may be required for
purposes such as electing or removing Directors, approving advisory contracts
and changing the Fund's investment objective or fundamental investment policies.
The Master Trust was established on October 28, 1993, as a Delaware
business trust. The Master Trust's Declaration of Trust permits the Board of
Trustees to issue beneficial interests in the Master Trust to investors based on
their proportionate investments in the Master Trust. The Master Trust has
retained the services of Wells Fargo as investment adviser, and Stephens as
administrator and placement agent. The Board of Trustees of the Master Trust is
responsible for the general management of the Master
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Trust and supervising the actions of Wells Fargo and Stephens in these
capacities.
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by fund, unless otherwise required by law (such as when a
matter affects only one fund). Shareholders of the Fund are entitled to one vote
for each share owned and fractional votes for fractional shares owned. Depending
on the terms of a particular benefit plan and the matter being submitted to a
vote, a sponsor may request direction from individual participants regarding a
shareholder vote. In addition, whenever the Fund is requested to vote on matters
pertaining to the Master Series, the Company will hold a meeting of the Fund's
shareholders and will cast its vote as instructed by the Fund's 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 description of the voting rights and
attributes of the shares is contained above under the caption "The Fund --
Master/Feeder Structure" and in the "Capital Stock" section of the SAI.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund, including additional information on performance. Shareholders
may obtain a copy of the Company's most recent report without charge by phoning
1-800-776-0179.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
The following describes certain instruments in which the Master Series may
invest. UNLIKE TRADITIONAL MUTUAL FUNDS WHICH INVEST DIRECTLY IN PORTFOLIO
SECURITIES, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING ALL
OF ITS ASSETS IN THE MASTER SERIES. THE MASTER SERIES HAS THE SAME INVESTMENT
OBJECTIVE AS THE FUND. AS A RESULT, THE PERFORMANCE OF THE FUND CORRESPONDS
DIRECTLY TO THE INVESTMENT EXPERIENCE OF THE MASTER SERIES. Additional
information regarding investments by the Master Series is contained in the SAI.
INVESTMENTS
U.S. GOVERNMENT OBLIGATIONS -- The Master Series 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 such 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 would provide financial support to its agencies or instrumentalities
(including government-sponsored agencies) 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.
OBLIGATIONS OF CORPORATIONS AND FOREIGN ENTITIES -- The Master Series may
invest in debt securities issued by domestic corporations, U.S.
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dollar-denominated debt securities issued by Canadian corporations, Yankee bonds
and supra-national obligations. Yankee bonds are U.S. dollar-denominated
obligations issued by foreign governments or companies. Supra-national
obligations are U.S. dollar-denominated obligations issued by international
entities such as the World Bank and the Inter-American Development Bank.
SECURITIES BACKED BY MORTGAGES -- The Master Series may purchase
Mortgage-Backed Securities ("MBSs"), which are pass-through certificates
representing interests in a pool of loans secured by mortgages. The resulting
cash flow from those mortgages is used to pay principal and interest on the
certificates. The MBSs in which the Master Series may invest are issued or
guaranteed by the Government National Mortgage Association ("GNMA"), the Federal
National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage
Corporation ("FHLMC"). MBS investors receive monthly payments based on a pro-
rata share of interest and principal payments (and prepayments) on the
underlying mortgage pool, less GNMA's, FNMA's or FHLMC's fees and any applicable
loan servicing fees.
GNMA guarantees the full and timely payment of principal and interest on
GNMA certificates. The GNMA guarantee is backed by the authority of GNMA to
borrow funds from the U.S. Treasury to meet payment obligations arising from its
guarantee. Since GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development, GNMA guarantees are also general
obligations of the United States and, as such, are backed by the full faith and
credit of the federal government. In contrast, MBSs issued by FNMA include FNMA
Guaranteed Mortgage Pass-Through Certificates ("Fannie Maes") which are solely
the obligations of FNMA and are neither backed by, nor entitled to, the full
faith and credit of the United States. FHLMC also is a government-sponsored
enterprise whose MBSs are solely obligations of FHLMC. Therefore, FHLMC MBSs are
not guaranteed by the United States or by a Federal Home Loan Bank and do not
constitute a general obligation of the United States or any Federal Home Loan
Bank. FHLMC guarantees timely payment of interest and ultimate payment of
principal due under the obligations it issues. However, because FNMA and FHLMC
are government-sponsored enterprises, their securities are considered to be high
quality investments that present minimal credit risks.
The mortgages underlying MBSs guaranteed by GNMA are fully insured or
guaranteed by the Federal Housing Administration, the Veterans Administration or
the Farmers Home Administration. Mortgages underlying MBSs issued by FNMA or
FHLMC are typically conventional
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residential mortgages which are not so insured or guaranteed, but which conform
to specific underwriting, size and maturity standards.
The Master Series also may invest up to 25% of its total assets in
collateralized mortgage obligations ("CMOs") issued or guaranteed by U.S.
Government instrumentalities (including government-sponsored enterprises) or
collateralized by U.S. Government obligations. In a CMO, a series of bonds or
certificates is issued in multiple classes. Each class is issued at a specified
coupon rate, with a stated maturity or final distribution date. The principal
and interest payments on the underlying mortgages in the collateral pool may be
allocated among the classes of CMOs in several ways. Typically, payments of
principal on the underlying mortgages, including any prepayments, are applied to
the classes in the order of their respective stated maturities or final
distribution dates, so that no payment of principal will be made on CMOs of one
class until all other classes having earlier stated maturities or final
distribution dates have been paid in full.
The Master Series may purchase CMOs that are:
(1) collateralized by fixed rate or adjustable rate mortgages that are
guaranteed, as to payment of principal and interest, by a U.S. Government
agency or instrumentality (including a government-sponsored enterprise);
(2) directly guaranteed, as to payment of principal and interest by
the issuer, which guarantee is collateralized by U.S. Government
securities; or
(3) collateralized by MBSs which are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including
government-sponsored enterprises).
The coupon rate of one or more CMO classes may reset periodically based on
an index, such as the London Interbank Offered Rate ("LIBOR"). The interest
rates on the mortgages underlying the MBSs and the CMOs in which the Master
Series may invest also may be adjustable. In this case, they 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 based on certain financial
aggregates, 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
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rate, or commercial paper rates. Certain of these indices follow overall market
interest rates more closely than others.
The range of fluctuation of interest rates on certain adjustable rate
mortgages ("ARMs") may be limited by "caps" or "floors." A "cap" is a ceiling or
maximum interest rate over a mortgage note. A "floor" is a minimum interest rate
under a mortgage note. To the extent that the interest rates on the ARMs
underlying MBSs or CMOs cannot be adjusted in response to interest rate changes
due to the existence of such "caps" or "floors" on interest rate movements, the
MBSs 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 the caps
can be expected to cause the CMOs or MBSs 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 the floors can
be expected to cause the CMOs or MBSs 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 value of MBSs, CMOs and ARMs will fluctuate to the extent
interest rates on the underlying ARMs differ from prevailing market interest
rates during interim periods between interest rate reset dates. Accordingly,
holders of MBSs, CMOs or ARMs could experience some loss (or less gain than
otherwise might be achieved) if they sell these investments before the interest
rates on the underlying mortgages are adjusted to reflect prevailing market
interest rates.
Holders of CMOs and MBSs not only receive scheduled payments of principal
and interest, but also receive additional principal payments representing
prepayments on the underlying mortgages. A certain level of prepayments is
factored into the price of most CMOs, since historical experience shows that a
certain percentage of mortgages will be repaid or refinanced before maturity.
When market interest rates change, however, prepayment behavior changes. When
market interest rates are high, homeowners tend to refinance less, which slows
the rate of prepayments. When market interest rates are low, the rate of
prepayments tends to accelerate. Lower market interest rates are a positive
influence on the value of a CMO, as they are on most fixed-rate investments. At
the same time, however, the risk that an investor will receive more prepayments
than anticipated and must therefore reinvest at lower prevailing market rates is
a negative influence on the CMO's value. The net effect of falling interest
rates on a CMO's price depends on the relationship between interest rates and
CMO prices which, in turn, depends on a number of factors including whether or
not the CMO was trading at a discount or a premium before rates fell. Thus, it
is possible for a move in interest rates to impact different classes of
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the same CMO series differently. (See the discussion of multiple classes,
above.)
As a non-fundamental policy, the Master Series will not invest in "interest
only" or "principal only" securities.
OTHER ASSET-BACKED SECURITIES -- The Master Series may invest in
Asset-Backed Securities ("ABSs"), which are pass-through securities representing
ownership interests in a pool of loans, leases, or installment contracts on
personal property such as computers and automobiles (but not real estate). They
are similar to MBSs in that they represent an undivided interest in a trust
established to hold the assets. Investors receive their pro rata share of
payments of interest and principal on the assets of the trust, less any
servicing fees or interest margin paid to the sponsor of the trust. ABS issuers
include finance companies, equipment leasing companies and banks. The life span
of an ABS depends on the rate at which the underlying obligations are paid down
by the borrowers. Faster prepayments of the underlying obligations will shorten
the life of an ABS.
All ABSs in which the Master Series may invest contain one or more forms of
credit enhancement, such as overcollateralization, recourse to the issuer, third
party guaranty, a reserve fund, or a senior/subordinated security structure. The
Master Series will be protected against default risk, but not market risk, to
the extent of such credit enhancements.
The Master Series will invest only in ABSs rated "AA" or higher at time of
purchase by Moody's or S&P. The Master Series will not purchase subordinated
ABSs.
The corporations issuing ABSs include finance companies, equipment leasing
companies and banks.
BANK OBLIGATIONS -- The Master Series may invest in bank obligations,
including, but not limited to, negotiable certificates of deposits ("CDs"),
bankers' acceptances and fixed time deposits, subject to its fundamental policy
of not investing 25% or more of its total assets in any particular industry. The
Master Series limits its investments in U.S. bank obligations to obligations of
U.S. banks (including foreign branches) which 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 ("FDIC"). The Master Series limits
its investments in foreign bank obligations to U.S. dollar denominated
obligations of foreign banks which at the time of investment (i) have more than
$10 billion, or the equivalent in other currencies, in total assets and (ii) in
the opinion of the Master Series' investment manager, are of an investment
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quality comparable with obligations of U.S. banks which may be purchased by the
Master Series.
Fixed time deposits are obligations of foreign branches of U.S. banks or
foreign banks which are payable at a stated maturity date and bear a fixed rate
of interest. Generally fixed time deposits may be withdrawn on demand by the
investor, but they may be subject to early withdrawal penalties which vary
depending upon market conditions and the remaining maturity of the obligation.
Although fixed time deposits do not have a market, there are no contractual
restrictions on the Master Series' right to transfer a beneficial interest in
the deposit to a third party.
Obligations of foreign banks and foreign branches of U.S. banks involve
somewhat different investment risks from those affecting obligations of U.S.
banks, including the possibilities that liquidity could be impaired because of
future political and economic developments, that the obligations may be less
marketable than comparable obligations of U.S. banks, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized, that foreign
governmental restrictions (such as foreign exchange controls) may be adopted
which might adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be more difficult
because there may be less publicly available information concerning foreign
banks or the accounting, auditing and financial reporting standards, practices
and requirements applicable to foreign banks may differ from those applicable to
U.S. banks. In that connection, foreign banks are not subject to examination by
any U.S. Government agency or instrumentality.
SHORT-TERM CORPORATE DEBT INSTRUMENTS -- The Master Series may invest in
commercial paper (including variable amount master demand notes), which is
short-term, unsecured promissory notes issued by corporations to finance
short-term credit needs. Commercial paper is usually sold on a discount basis
and has a maturity at the time of issuance not exceeding nine months. Variable
amount master demand notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a commercial bank acting as agent for the payees of such
notes whereby both parties have the right to vary the amount of the outstanding
indebtedness on the notes.
The Master Series may also invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than one year remaining to
maturity at the date of settlement. Corporate debt securities
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with a remaining maturity of less than one year tend to become extremely liquid
and are traded as money market securities.
The commercial paper investments of the Master Series at the time of the
purchase must be rated "A-1" by S&P or "Prime-1" by Moody's or, if not rated,
must be of comparable quality as determined by Wells Fargo at its discretion.
Subsequent to its purchase by the Master Series, an issue of securities may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by the Master Series. Wells Fargo will consider such an event in
determining whether the Master Series should continue to hold the obligation. To
the extent the Master Series continues to hold such obligations, it may be
subject to additional risk of default.
REPURCHASE AGREEMENTS -- The Master Series may enter into repurchase
agreements wherein the seller of a security to the Master Series agrees to
repurchase that security from the Master Series at a mutually agreed-upon time
and price. This results in a fixed rate of return insulated from market
fluctuations during the period. The period of maturity is usually quite short,
often overnight or a few days, although it may extend over a number of months.
The Master Series may enter into repurchase agreements only with respect to
securities which it is permitted to purchase for its portfolio. All repurchase
agreements are 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 Master Series may incur a loss.
In addition, if bankruptcy proceedings are commenced with respect to the seller
of the security, the Master Series' disposition of the security may be delayed
or limited. The Master Series enters into repurchase agreements only with
registered broker/dealers and commercial banks that meet guidelines established
by the Master Trust's Board of Trustees and are not affiliated with the Master
Series' investment adviser. The Master Series may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo.
WHEN-ISSUED SECURITIES -- Certain of the securities in which the Master
Series may invest will be purchased 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 Master Series will make commitments to purchase
securities on a when-issued basis only with the intention of actually acquiring
the securities, but may sell such securities before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser
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during the period prior to issuance. The purchase price and the interest rate
that will be received on debt securities are fixed at the time the purchaser
enters into the commitment. Purchasing a security on a when-issued basis can
involve a risk that the market price at the time of delivery may be lower than
the agreed-upon purchase price, in which case there could be an unrealized loss
at the time of delivery. The Master Series does not currently intend to invest
more than 5% of its net assets in when-issued securities during the coming year.
The Master Series will establish a segregated account in which it will maintain
cash or liquid, high-grade debt securities in an amount at least equal in value
to the Master Series' commitments to purchase when-issued securities. If the
value of these assets declines, the Master Series' 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.
LOANS OF PORTFOLIO SECURITIES -- The Master Series may lend securities from
its portfolio to domestic brokers, dealers and financial institutions (but not
individuals) if cash, U.S. Government obligations or other liquid, high-quality
debt obligations equal to at least 100% of the current market value of the
securities loaned (including accrued interest thereon) plus the interest payable
to the Master Series with respect to the loan, is maintained with the Master
Series. In determining whether to lend a security to a particular broker, dealer
or financial institution, the Master Series' investment adviser consider all
relevant facts and circumstances, including the size, creditworthiness and
reputation of the broker, dealer, or financial institution. Any loans of
portfolio securities are fully collateralized and marked to market daily. Any
securities that the Master Series receives as collateral do not become part of
the Master Series' portfolio at the time of the loan and, in the event of a
default by the borrower, the Master Series, if permitted by law, disposes of
such collateral except for such part thereof that is a security in which the
Master Series is permitted to invest. During the time securities are on loan,
the borrower pays the Master Series any accrued income on those securities, and
the Master Series invests the cash collateral in high-quality money market
instruments and earns income or receives an agreed-upon fee from a borrower that
has delivered cash-equivalent collateral. The securities acquired with such cash
collateral are segregated as discussed above. In the event that the borrower
defaults on its obligation to return borrowed securities, because of insolvency
or otherwise, the Master Series could experience delays and costs in gaining
access to the collateral and could suffer a loss to the extent that the value of
the collateral falls below the market value of the securities borrowed. However,
loans are made only to borrowers deemed by Wells Fargo to be of good standing
and when, in its judgment, the income to be earned from the
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loan justifies the attendant risks. The Master Series does not lend securities
having a value that exceeds 50% of the current value of its total assets. Loans
of securities by the Master Series are subject to termination at the Master
Series or the borrower's option. The Master Series may pay reasonable
administrative and custodial fees in connection with a securities loan and may
pay a negotiated portion of the interest or fee earned with respect to the
collateral to the borrower or the placing broker. Borrowers and placing brokers
are not affiliated, directly or indirectly, with the Master Trust, Wells Fargo
or Stephens.
INVESTMENT POLICIES
The investment objective of the Fund and the Master Series, as set forth in
the first paragraph of the section entitled "The Fund -- Objectives and
Policies" is fundamental; that is, it may not be changed without approval by the
vote of the holders of a majority of the outstanding voting securities of the
Fund or the Master Series, respectively, as described under "Capital Stock" in
the SAI. In addition, any fundamental investment policy may not be changed
without such shareholder approval. If the Board of Directors of the Company or
the Board of Trustees of the Master Trust determines, however, that the
investment objective of the Fund or the Master Series, respectively, can best be
achieved by a substantive change in a non-fundamental investment policy or
strategy, the appropriate Board may make such change without shareholder
approval and will disclose any such material changes in the then-current
prospectus.
As a matter of fundamental policy, the Fund and the Master Series may: (i)
not purchase securities of any issuer (except U.S. Government Obligations) if as
a result, with respect to 75% of its total assets, more than 5% of the value of
the Fund's or the Master Series' total assets would be invested in the
securities of such issuer or, with respect to 100% of its total assets, the Fund
or the Master Series would own more than 10% of the outstanding voting
securities of such issuer, provided that this restriction shall not prevent the
Fund from investing all of its assets in the Master Series; (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 borrowing in excess of 5% of its net
assets exists); (iii) make loans of portfolio securities in accordance with its
investment policies; and (iv) not invest 25% or more of its total assets (i.e.,
concentrate) in any particular industry, except that the Fund or the Master
Series may invest 25% or more of its assets in U.S. Government Obligations,
provided that
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this restriction shall not prevent the Fund from investing all of its assets in
the Master Series.
The Fund and the Master Series each reserves the right to invest up to 15%
of the current value of its net assets in repurchase agreements having
maturities of more than seven days and other illiquid securities. However, as
long as the Fund's shares are registered for sale in a state that imposes a
lower limit on the percentage of a fund's assets that may be so invested, the
Fund and the Master Series will comply with such lower limit. The Fund presently
is limited to investing 10% of its net assets in such securities due to limits
applicable in several states. Disposing of illiquid or restricted securities may
involve additional costs and require additional time.
INVESTMENT RATINGS
The following describes how the two major rating agencies classify their
investment ratings. Ratings of debt securities represent the rating agency's
opinion regarding their quality, and are not a guarantee of quality. Credit
ratings attempt to evaluate the safety of principal and interest payments, and
do not evaluate the risks of fluctuations in market value. Furthermore, rating
agencies may fail to make timely changes in credit ratings in response to
subsequent events, so that an issuer's current financial condition may be better
or worse than the rating indicates. Subsequent to purchase by the Master Series,
the rating of a debt security may be reduced below the minimum rating required
for initial purchase by the Master Series or the security may cease to be rated.
Wells Fargo will consider either such event in determining whether the Master
Series should continue to hold the security. In no event will the Master Series
hold more than 5% of its net assets in debt securities rated below "BBB" by S&P
or "Baa" by Moody's or in unrated low quality (below investment grade) debt
securities.
STANDARD & POOR'S CORPORATION RATINGS (INVESTMENT-GRADE SECURITIES)
Bond Ratings. Bonds rated "AAA" have the highest rating assigned by S&P to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree. Bonds
rated "A" have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic condition than bonds in higher rated categories.
Bonds rated "BBB" by S&P are regarded as having an adequate capacity to pay
interest and repay principal.
A-10
<PAGE> 248
Whereas such bonds normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
Commercial Paper. Commercial paper is rated "A" by S&P. Issues within this
category are further defined with designations "1", "2" and "3") to indicate the
relative degree of safety; "A-1," the highest of the three, indicates the degree
of safety is very high.
MOODY'S INVESTORS SERVICE RATINGS (INVESTMENT-GRADE SECURITIES)
Bond Ratings. Bonds rated "Aaa" by Moody's are judged to be of the best
quality. Interest payments are protected by a large or exceptionally stable
margin and principal is secure. Bonds rated "Aa" are judged to be of high
quality by all standards. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
the case with "Aaa" securities. Bonds rated "A" possess many favorable
investment attributes and are considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate, but
elements may be present which suggests a susceptibility to impairment sometime
in the future. Bonds rated "Baa" are considered medium grade obligations, (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over longer
periods of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Commercial Paper. Moody's employs the designations of "Prime-1", "Prime-2"
and "Prime-3," to indicate the relative capacity of the rated issuers or
borrowers to repay punctually. "Prime-1" is the highest rating assigned by
Moody's. Issuers or makers of "Prime-1" obligations must have a superior
capacity for repayment of short-term promissory obligations, and will normally
be evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earning
coverage of fixed financial charges and high internal cash generation, and well
established access to a range of financial markets and assured sources of
alternate liquidity.
A-11
<PAGE> 249
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFSI 6/95
<PAGE> 250
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFSI 6/95
<PAGE> 251
S&P 500 STOCK FUND
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; General Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information; General Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C General Information
- ------ -------------------
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
<PAGE> 252
[STAGECOACH FUNDS LOGO]
------------------------------
PROSPECTUS
------------------------------
S&P 500 STOCK FUND
June 28, 1995
- --------------------------------------------------------------------------------
<PAGE> 253
STAGECOACH INC.
S&P 500 STOCK FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
funds -- the S&P 500 STOCK FUND (the "Fund"). The Fund seeks to approximate as
closely as practicable (before fees and expenses) the capitalization-weighted
total rate of return of that portion of the U.S. market for publicly traded
common stocks composed of the larger capitalized companies. THE FUND INVESTS ALL
OF ITS ASSETS IN THE S&P 500 INDEX MASTER SERIES (THE "MASTER SERIES") OF MASTER
INVESTMENT PORTFOLIO (THE "MASTER TRUST"), AN OPEN-END, MANAGEMENT INVESTMENT
COMPANY, RATHER THAN IN A PORTFOLIO OF SECURITIES. THE MASTER SERIES HAS
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AS THE FUND.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund and the Master
Series that an investor should know before investing. A Statement of Additional
Information ("SAI") dated June 28, 1995 describing the Fund has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference.
The SAI is available free of charge by calling the Company at 1-800-776-0179 or
by writing the Company at the address printed on the back of the Prospectus.
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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN INVESTMENT IN THE
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 254
The Master Series seeks to achieve its investment objective by investing in
substantially the same stocks in substantially the same percentages as the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"). The Fund's
investment experience corresponds directly with the Master Series' investment
experience. Shares of the Master Series may be purchased only by other
investment companies or other accredited investors.
As noted below under "General Information -- Description of the Company,"
investors may be able to invest indirectly in the Master Trust through other
investment companies or portfolios of the Company that invest substantially all
of their assets in the Master Trust. The Master Series is advised by Wells Fargo
Bank, N.A. ("Wells Fargo"). Wells Fargo Nikko Investment Advisors ("WFNIA")
serves as sub-adviser to the Master Series. Wells Fargo also serves as the
Fund's Custodian and as the Fund's and the Master Series' transfer agent and as
a Selling Agent and a Shareholder Servicing Agent (as defined below). Wells
Fargo Institutional Trust Company, N.A. ("WFITC") serves as the Master Series'
custodian. Stephens Inc. ("Stephens") is the sponsor, distributor and
administrator for the Company and the Master Trust.
------------------------
WELLS FARGO IS THE INVESTMENT ADVISER TO THE MASTER SERIES, WFNIA SERVES AS
SUB-ADVISER TO THE MASTER SERIES, AND TOGETHER WITH THEIR AFFILIATES,
WELLS FARGO AND WFNIA PROVIDE OTHER SERVICES TO THE MASTER TRUST,
FOR WHICH THEY ARE COMPENSATED. STEPHENS, WHICH IS NOT
AFFILIATED WITH WELLS FARGO, IS THE SPONSOR AND
ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR
FOR THE COMPANY AND THE MASTER TRUST.
<PAGE> 255
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 2
Summary of Fund Expenses.................................... 7
Explanation of the Table.................................... 8
Financial Highlights........................................ 10
The Fund.................................................... 11
Management of the Fund...................................... 15
How to Buy Shares........................................... 19
How to Redeem Shares........................................ 24
Exchange Privilege.......................................... 29
Share Value................................................. 30
Dividends And Distributions................................. 30
Federal Income Tax Information.............................. 31
General Information......................................... 33
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
--------
<S> <C>
Additional Investment Policies.............................. A-1
</TABLE>
1
<PAGE> 256
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefit plans, including retirement plans, that
have appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent of the
qualified employee benefit plan and a Shareholder Servicing Agent.
See "How To Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund seeks to approximate as closely as practicable (before fees and
expenses) the capitalization-weighted total rate of return of that portion
of the U.S. market for publicly traded common stocks composed of the larger
capitalized companies. The Fund seeks to achieve this investment objective
by investing all of its assets in the Master Series, which has
substantially the same investment objective as the Fund. The Master Series
seeks to achieve its investment objective by investing its assets in
substantially the same stocks and in substantially the same percentages as
the S&P 500 Index. See "The Fund -- Investment Objective and Policies" and
"Appendix -- Additional Investment Policies."
2
<PAGE> 257
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund (and the Master Series) are not bank deposits or
obligations of Wells Fargo and are not insured by the Federal Deposit
Insurance Corporation ("FDIC"). Therefore, investors should be prepared to
accept some risk with the money invested in the Fund. The Master Series'
portfolio investments are subject to market risk. Market risk is the
possibility that common stock prices will decline over short or even
extended periods. The U.S. stock market will experience periods when stock
prices rise and periods when stock prices decline. The Master Series also
may engage in certain futures contract transactions which have other risks
associated with them. As with all mutual funds, there can be no assurance
that the Fund will achieve its investment objective. Investors should be
prepared to accept that risk, as well as the risk that the Fund may under-
perform (over the short and/or long term) the S&P 500 Index. The Master
Series was formed in 1993 and has a limited operating history. See "The
Fund -- Investment Objective and Policies" and "Appendix -- Additional
Investment Policies."
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") is open for regular business (a "Business
Day"). There are no sales loads.
To invest in the Fund contact a Shareholder Servicing Agent to receive
information and an Account Application. An Account Application must be
completed and signed to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors.
See "How to Buy Shares."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Trust, manages the
investments of the Master Series. The Company has not retained the services
of a separate investment adviser for the Fund because the
3
<PAGE> 258
Fund invests all of its assets in the Master Series. WFNIA serves as the
Master Series' sub-adviser and provides investment advice to Wells Fargo.
Wells Fargo, one of the largest commercial banks in the United States, was
founded in 1852 and is the oldest bank in the western United States. As of
March 31, 1995, various divisions and affiliates of Wells Fargo (including
WFNIA) provided investment advisory services for approximately $196 billion
of assets of individuals, trusts, estates and institutions. See "Management
of the Fund."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For its advisory
services to the Master Series, Wells Fargo is entitled to receive a fee at
an annual rate of 0.05% of the Master Series' average daily net assets, out
of which it pays for sub-investment advisory services. Wells Fargo also
provides transfer agency services to the Fund and Master Series. Wells
Fargo is entitled to an annual fee of 0.03% of the Fund's average net
assets in return for providing transfer agency services to the Fund and the
Master Series.
For its services as administrator of the Master Series and the Fund,
Stephens is entitled to receive a fee at an annual rate of 0.05% of the
Fund's average daily net assets.
The Fund also has adopted a Shareholder Servicing Plan pursuant to which it
may enter into Shareholder Servicing Agreements with Shareholder Servicing
Agents. The Servicing Plan permits the Fund to compensate Shareholder
Servicing Agents up to 0.07% of the average daily net assets of the Fund.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for certain
administrative services, such as recordkeeping and processing exchanges of
Fund shares for other available investment options.
See "Management of the Fund."
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the net
asset value of shares of the Master Series which in turn depends on the
total value of the portfolio securities owned by the Master Series
4
<PAGE> 259
(plus cash and other assets net of liabilities) and the number of shares of
the Master Series outstanding. On each Business Day, Wells Fargo calculates
a new net asset value of the Fund and the Master Series. See "Share Value."
Q. DOES THE FUND PAY DIVIDENDS?
A. The Fund intends to pay quarterly dividends consisting of substantially all
of its net investment income, and annual distributions consisting of
substantially all of its net realized capital gains. All dividends and
distributions are automatically reinvested in additional Fund shares at net
asset value, unless payment in cash is requested and your arrangement with
a Shareholder Servicing Agent permits the processing of cash payments. Each
reinvestment increases the total number of shares held by the shareholder.
See "Dividends and Distributions."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another Fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the
Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the imposition
of a sales charge or redemption fee on any Business Day by letter, by an
automatic feature called the Systematic Withdrawal Plan, or by telephone
(unless you decline telephone privileges). See "How to Redeem Shares." For
more information contact Stephens or your Shareholder Servicing Agent (such
as Wells Fargo).
Q. WHAT ARE DERIVATIVES AND DO THE FUND AND THE MASTER SERIES USE THEM?
A. Some of the permissible investments described throughout this Prospectus are
considered "derivative" securities because their values are derived, at
least in part, from the prices of other securities or specified assets,
indices or rates. The futures contracts and options on futures contracts
that the Master Series may purchase are considered derivatives. The Master
Series may purchase or sell these contracts or options as substitutes for
comparable market positions in the underlying securities. Certain of the
floating- and variable-rate instruments that the Master Series may purchase
can also be considered derivatives. Some derivatives may be more sensitive
than direct securities to
5
<PAGE> 260
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 FUND AND MASTER SERIES TAKE TO CONTROL DERIVATIVES-RELATED
RISKS?
A. Wells Fargo (as investment adviser to the Master Series) and WFNIA (as
sub-adviser to the Master Series) use a variety of internal risk management
procedures to ensure that derivatives use is consistent with both the
Master Series' and the Fund's investment objective, does not expose either
the Master Series or the Fund to undue risks and is closely monitored.
These procedures include providing periodic reports to the Boards of
Trustees and Directors concerning the use of derivatives. Also, cash
maintained by the Master Series for short-term liquidity needs (e.g., to
meet anticipated redemption requests) will, as a general matter, only be
invested in U.S. Treasury bills, shares of other mutual funds and
repurchase agreements. The use of derivatives is also subject to broadly
applicable investment policies. For example, the Master Series may not
invest more than a specified percentage of its assets in "illiquid
securities," including those derivatives that do not have active secondary
markets. In addition, the Master Series may not use derivatives without
establishing adequate "cover" in compliance with SEC rules limiting the use
of leverage. For additional information, see "Appendix -- Additional
Investment Policies."
6
<PAGE> 261
SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund and the Master Series, 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. As shown below, you are not charged
redemption fees or exchange fees. You should consider this expense information
together with the important information in this Prospectus, including the Fund's
investment objective and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)*:
Management Fees**.................................. 0.04%
Other Expenses
Shareholder Servicing Fees....................... 0.07%
Miscellaneous Expenses**......................... 0.09%
Total Other Expenses**........................... 0.16%
------
Total Fund Operating Expenses**.................... 0.20%
</TABLE>
- ---------------
* Other mutual funds may invest in the Master Series and such other funds'
expenses and, correspondingly, investment returns may differ from those of the
Fund.
**Annual Fund operating expenses are based on amounts incurred during the most
recent fiscal year, restated to reflect voluntary fee waivers that will
continue during the current fiscal year. In the absence of waivers and/or
reimbursements, the percentages shown above under the captions "Master Series
Management Fees," "Miscellaneous Expenses," "Total Other Expenses" and "Total
Fund Operating Expenses" would be 0.06%, 0.12%, 0.19% and 0.25%, respectively.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor 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.......................... $2 $ 6 $11 $ 26
</TABLE>
7
<PAGE> 262
EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, restated to reflect voluntary fee waivers and expense
reimbursements that will continue during the current fiscal year. They summarize
expenses charged at the Master Trust level as well as expenses charged at the
Company level. For a further description of the fee structure of the Master
Trust and the Company, see "Management of the Fund." Wells Fargo 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.
The Fund does not anticipate Fund expenses exceeding state limits. In addition,
Wells Fargo and Stephens each, in its sole discretion, may waive or reimburse
all or a portion of its respective fees charged to, or expenses paid by, the
Fund or Master Series. Any waivers or reimbursements would reduce the Fund's or
Master Series' total expenses. For more complete descriptions of the various
costs and expenses you can expect to incur as an investor in the Fund, please
see the Prospectus section captioned "Management of the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over stated periods,
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected Fund performance. In addition, the Example of Expenses should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown above.
With regard to the combined fees and expenses of the Fund and the Master
Series, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the Master Series
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 Master Series. Additionally, the
Board of Directors has determined that the aggregate fees assessed by the Fund
and the Master Series should be less than those expenses that the Directors
believe would be incurred had the Fund invested directly in the securities held
by the Master Series. See the Prospectus section captioned "Management of the
Fund" for more complete descriptions of the various costs and expenses
applicable to investors
8
<PAGE> 263
in the Fund. In addition, if the Fund were to change its investment strategy and
no longer invest in the Master Series, these expenses may change.
* * *
Neither the Fund nor the Master Series is sponsored, endorsed, sold or
promoted by Standard & Poor's ("S&P"). S&P makes no representation or warranty,
express or implied, to the Fund, the Master Series or any member of the public
regarding the advisability of investing in securities generally or in the Fund
particularly or the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to the Fund is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which is determined,
composed and calculated by S&P without regard to the Fund. S&P has no obligation
to take the needs of the Fund into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the prices and amount of the Fund's shares
or the timing of the issuance or sale of the Fund's shares or in the
determination or calculation of the equation by which the Fund's shares are to
be converted into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of the Fund's shares.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.
9
<PAGE> 264
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference to this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995** 1994***
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period........ $ 10.50 $ 10.00
Income from investment operations:
Net investment income..................... 0.27 0.16
Net realized and unrealized gain (loss) on
investments............................. 0.41 0.47
-------- --------
Total from investment operations............ 0.68 0.63
Less distributions:
Dividends from net investment income...... (0.27) (0.12)
Distributions from net realized gains..... (0.08) (0.01)
Distributions in excess of net realized
gains................................... 0.00 0.00
-------- --------
Total distributions......................... (0.35) (0.13)
-------- --------
Net Asset Value, end of period.............. $ 10.83 $ 10.50
======== ========
Total return (not annualized)............... 6.71% 6.30%
Ratios/supplemental data:
Net assets, end of period (000)........... $448,776 $122,391
Number of shares outstanding, end of
period (000)............................ 41,427 11,653
Ratios to average net assets+:
Ratio of expenses to average net
assets(1)............................... 0.21%++ 0.27%
Ratio of net investment income to average
net assets(2)........................... 2.93% 2.46%
Portfolio turnover.......................... 8%* 4%
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses................................ 0.25% 0.28%
(2) Ratio of net investment income to
average net assets prior to waived fees
and reimbursed expenses................. 2.88% 2.45%
</TABLE>
- ---------------
* This rate is for the period from February 28, 1994 to May 25, 1994. As of
May 26, 1994 the Fund invests all of its assets in the corresponding Master
Series of the Master Trust. The portfolio turnover rate for the Master
Series for the period beginning May 26, 1994 and ending February 28, 1995
was 5%.
** Beginning May 26, 1994 the Fund, pursuant to shareholder approval, was
reorganized and began investing in the corresponding Master Series of the
Master Trust.
*** The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
++ This ratio includes expenses charged to the Master Series.
10
<PAGE> 265
THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to approximate as closely as practicable (before fees and
expenses) the capitalization-weighted total rate of return of that portion of
the U.S. market for publicly traded common stocks composed of the larger
capitalized companies. This investment objective is fundamental and cannot be
changed without shareholder approval. The Fund seeks to achieve its investment
objective by investing all of its assets in the S&P 500 Index Master Series,
which has substantially the same fundamental investment objective as the Fund.
The Master Series seeks to achieve its objective by investing substantially all
its assets in the same stocks and in substantially the same percentages as the
S&P 500 Index.1 The weightings of stocks in the S&P 500 Index are based on each
stock's relative total market capitalization; that is, its market price per
share times the number of shares outstanding.
No attempt is made to manage the portfolio of the Master Series using
economic, financial and market analysis. The Master Series is managed by
determining which securities are to be purchased or sold to replicate, to the
extent feasible, the investment characteristics of the S&P 500 Index. Under
normal market conditions, at least 90% of the value of the Master Series' total
assets is invested in securities comprising the S&P 500 Index. The Master Series
attempts to achieve, in both rising and falling markets, a correlation of at
least 95% between the total return of its net assets before expenses and the
total return of the S&P 500 Index. Perfect (100%) correlation would be achieved
if the total return of the Master Series' net assets increased or decreased
exactly as the total return of the S&P 500 Index increased or decreased. The
Master Series' ability to match its investment performance to the investment
performance of the S&P 500 Index may be affected by: Master Series expenses; the
amount of cash and cash equivalents held in the Master Series' portfolio; the
manner in which the total return of the S&P 500 Index is calculated; the size of
the Master Series' portfolio; and the timing, frequency and size of shareholder
- ---------------
1 S&P does not sponsor the Fund or the Master Series, nor is it affiliated in
any way with Wells Fargo, WFNIA, the Master Series or the Fund. "Standard &
Poor's(R)," "S&P(R)," "S&P 500(R)," and "Standard & Poor's 500(R)" are
trademarks of McGraw-Hill, Inc. and have been licensed for use by the Fund and
the Master Series. The Fund and the Master Series are not sponsored, endorsed,
sold, or promoted by S&P and S&P makes no representation or warranty, express
or implied, regarding the advisability of investing in the Fund and the Master
Series.
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purchases and redemptions. The Master Series uses cash flows from shareholder
purchase and redemption activity to maintain, to the extent feasible, the
similarity of its portfolio to the securities comprising the S&P 500 Index.
WFNIA regularly monitors the Master Series' correlation to the S&P 500 Index and
adjusts the portfolio of the Master Series to the extent necessary to enable the
Master Series to achieve a correlation of at least 95% with the S&P 500 Index.
The Fund's performance will correspond directly to the experience of the Master
Series. In the future, subject to the approval of the Master Series'
shareholders, one or more indices for the Master Series may be selected if such
standard of comparison is deemed to be more representative of the performance of
the securities the Master Series seeks to replicate.
In seeking to replicate the performance of the S&P 500 Index, the Master
Series also may engage in futures and options transactions and other derivative
securities transactions, and may lend its portfolio securities, each of which
involves risk. See "Appendix -- Additional Investment Policies." The Master
Series attempts to be fully invested at all times in securities comprising the
S&P 500 Index and in futures and options.
The Master Series may invest some of its assets (no more than 10% of total
assets under normal market conditions) in high-quality money market instruments,
which include U.S. Government obligations, obligations of domestic and foreign
banks, repurchase agreements, commercial paper (including variable amount master
demand notes) and short-term corporate debt obligations. Such investments will
be made on an ongoing basis to provide liquidity and, to a greater extent, on a
temporary basis, when there is an unexpected or abnormal level of investor
purchases or redemptions of Fund shares or when "defensive" strategies are
appropriate. In addition, the Master Series may engage in securities lending to
increase its income. A more complete description of the Master Series'
investments and investment activities is contained in "Appendix -- Additional
Investment Policies."
MASTER/FEEDER STRUCTURE
As of May 26, 1994, the Fund converted to a feeder fund in a master/feeder
structure. Accordingly, the Fund invests all of its assets in the Master Series,
which has substantially the same investment objective as the Fund. The Master
Trust is organized as a trust under the laws of the State of Delaware. See
"General Information -- Description of the Company." In addition to selling its
shares to the Fund, the Master Series may sell its shares to certain other
mutual funds or other accredited investors. Information regarding additional
options, if any, for investment in shares of the Master Series is available from
Stephens and may be obtained by
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calling 1-800-643-9691. The expenses and, correspondingly, the returns of other
investment options in the Master Trust may differ from those of the Fund.
The Board of Directors believes that, if other investors invest their
assets in the Master Series, certain economic efficiencies may be realized with
respect to the Master Series. For example, fixed expenses that otherwise would
have been borne solely by the Fund would be spread across a larger asset base
provided by more than one fund investing in the Master Series. The Fund and
other entities (if any) investing in the Master Series would each be liable for
all obligations of the Master Series. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and the Master Trust itself is unable to meet
its obligations. Accordingly, the Company's Board of Directors believes that
neither the Fund nor its shareholders will be adversely affected by reason of
investing the Fund's assets in the Master Series. However, if a mutual fund or
other investor withdraws its investment from the Master Series, the economic
efficiencies (e.g., spreading fixed expenses across a larger asset base) that
the Company's Board believes should be available through investment in the
Master Series may not be fully achieved. In addition, given the relatively novel
nature of the master/feeder structure, accounting and operational difficulties
could occur.
The Master Series' investment objective and other fundamental policies,
which are substantially the same as those of the Fund, cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940 (the "1940 Act")) of the Master Series' outstanding voting shares. The
Master Series seeks to provide investment results that correspond to the total
return performance of publicly traded common stocks in the aggregate, as
represented by the S&P 500 Index. Whenever the Fund, as a Master Series
shareholder, is requested to vote on matters pertaining to any fundamental
policy of the Master Series, the Fund will hold a meeting of its shareholders to
consider such matters and the Fund will cast its votes in proportion to the
votes received from Fund shareholders. The Fund will vote Master Series shares
for which it receives no voting instructions in the same proportion as the votes
received from Fund shareholders. In addition, certain policies of the Master
Series that are non-fundamental can be changed by vote of a majority of the
Master Trust's Trustees without a shareholder vote. If the Master Series'
investment objective or policies are changed, the Fund could subsequently change
its objective or policies to correspond to those of the Master Series or the
Fund could redeem its Master Series shares and either seek a new investment
company with a substantially matching objective in which to invest or
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retain its own investment adviser to manage the Fund's portfolio in accordance
with its objective. In the latter case, the Fund's inability to find a
substitute investment company in which to invest or equivalent management
services could adversely affect shareholders' investments in the Fund. The
Fund's investment objective and other fundamental policies cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
the Fund's outstanding voting shares. The Fund will provide shareholders with 30
days' written notice prior to the implementation of any change in the investment
objective of the Fund or Master Series, to the extent possible.
PERFORMANCE
The Fund's performance may be advertised in terms of total return. These
performance figures are based on historical results and are not intended to
indicate future performance. The Fund's total return may be calculated on an
average annual total return basis or a cumulative total return basis. Average
annual total return refers to the average annual compounded rates of return over
one-, five-, and ten-year periods (or the life of the Fund, which periods are
stated in the advertisement) and is measured by comparing the value of an
investment in the Fund at the beginning of the relevant period to the redemption
value at the end of the period and annualizing the result. Cumulative total
return is based on the overall percentage change in value of a hypothetical
investment in the Fund. Both methods assume that all Fund dividends and capital
gain distributions are reinvested. Fees charged by an institution or shareholder
servicing agent in connection with an investment in the Fund are not included in
calculations of yield or total return. The Fund's performance corresponds
directly to the investment experience of the Master Series. The Fund's annual
report contains additional performance information and is available without
charge by calling 1-800-776-0179 or by writing the Company at the address
printed on the back of the Prospectus.
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MANAGEMENT OF THE FUND
MASTER TRUST INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER -- Wells Fargo,
a wholly owned subsidiary of Wells Fargo & Company, located at 420 Montgomery
Street, San Francisco, California 94105, is the Master Series' investment
adviser. Wells Fargo, 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 March
31, 1995, various divisions and affiliates of Wells Fargo (including WFNIA)
provided investment advisory services for approximately $196 billion of assets
of individuals, trusts, estates and institutions. Pursuant to an Investment
Advisory Agreement with the Master Trust, Wells Fargo provides investment
guidance and policy direction in connection with the management of the Master
Series' assets, subject to the supervision of the Master Trust's Board of
Trustees and in conformity with Delaware law and the stated policies of the
Master Series.
Wells Fargo has engaged WFNIA, located at 45 Fremont Street, San Francisco,
California 94105, to provide sub-investment advisory services to the Master
Series. WFNIA is a general partnership owned 50% by a wholly owned subsidiary of
Wells Fargo and 50% by a subsidiary of The Nikko Securities Co., Ltd. As of
March 31, 1995, WFNIA managed or provided investment advice for assets
aggregating in excess of $171 billion. Pursuant to a Sub-Investment Advisory
Agreement, WFNIA, subject to the supervision and approval of Wells Fargo,
provides investment advisory assistance and the day-to-day management of the
Master Series' assets, subject to the overall authority of the Master Trust's
Board of Trustees and in conformity with Delaware law and the stated policies of
the Master Series.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in WFNIA to
Barclays PLC of the U.K. The sale, which is subject to the approval of
appropriate regulatory authorities, is expected to close in the fourth quarter
of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
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Under the 1940 Act, this proposed change of control of WFNIA would result
in an assignment and termination of the current Sub-Investment Advisory
Agreement between WFNIA, Wells Fargo and the Master Series. Subject to the
approval of the Company's Board of Directors, it is contemplated that a special
meeting of shareholders of the Fund will be convened to consider a change in the
structure of the Fund, which will become effective only upon the change of
control of WFNIA. It is not anticipated that the proposed change of control or
change in structure will change the investment objective or overall investment
strategy of the Fund.
Wells Fargo deals, trades and invests for its own account in the types of
securities in which the Master Series may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by the
Master Series. Wells Fargo has informed the Master Trust that in making its
investment decisions it does not obtain or use material inside information in
its possession.
Prior to the Fund's conversion to master/feeder structure, Wells Fargo
provided investment advisory services directly to the Fund. For its services as
investment adviser Wells Fargo was entitled to receive a monthly fee at the
annual rate of 0.13% of the Fund's average daily net assets. WFNIA was entitled
to receive from Wells Fargo a monthly fee at the annual rate of 0.04% of the
Fund's average daily net assets as compensation for sub-advisory services to the
Fund prior to conversion.
Since the conversion to master/feeder structure, Wells Fargo provides
investment advisory services to the Master Series. Under the terms of the
current Investment Advisory Agreement between the Master Trust and Wells Fargo,
the Master Trust has agreed to pay Wells Fargo a monthly fee at the annual rate
of 0.05% of the Master Series' average daily net assets. Out of this fee, Wells
Fargo compensates WFNIA for sub-advisory services provided to the Master Series.
In this regard, Wells Fargo has agreed to pay WFNIA a monthly fee at the annual
rate of 0.04% of the Master Series' average daily net assets. For the fiscal
year ended February 28, 1995, Wells Fargo was paid advisory fees at the annual
rate of 0.05% of the average daily net assets of the Fund for its services as
investment adviser to the Fund and the Master Series. During the same period,
WFNIA was paid by Wells Fargo sub-advisory fees at the annual rate of 0.04% of
the average daily net assets of the Fund for its services as sub-adviser to the
Fund and the Master Series. Fund shareholders bear a pro rata portion of the
Master Series' operating expenses, including its advisory fees, to the extent
that the Fund, as a shareholder of the Master Series, bears such expenses.
The S&P 500 Stock Master Series is an index fund. This means that no person
makes investment decisions for the Master Series; rather, the
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Master Series' portfolio is maintained in accord with the mix of stocks
represented by the Standard & Poor's 500 Stock Index.
Morrison & Foerster, counsel to the Company and the Master Trust and
special counsel to Wells Fargo, has advised the Company, the Master Trust and
Wells Fargo that Wells Fargo may perform the services contemplated by the
Advisory Contract without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Such counsel has pointed out, however,
that there are no controlling judicial or administrative interpretations or
decisions and that future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes, including the
Glass-Steagall Act and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as future changes in such
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent Wells Fargo from continuing to perform, in whole
or in part, such services. If Wells Fargo were prohibited from performing any
such services, it is expected that the Directors of the Company would recommend
to the Fund's shareholders that they approve a new advisory agreement with
another entity or entities qualified to perform such services.
ADMINISTRATOR AND DISTRIBUTOR -- Stephens, located at 111 Center Street,
Little Rock, Arkansas 72201, serves as the Company's and the Master Trust's
administrator pursuant to separate Administration Agreements with the Company
and Master Trust. Under the Administration Agreement with the Company, Stephens
provides general supervision of the operation of the Company, other than the
provision of investment advice, subject to the overall authority of the Board of
Directors and in accordance with Maryland law. The administrative services
provided to the Fund also include coordination of the other services provided to
the Fund, compilation of information for reports to the SEC and state securities
commissions, preparation of proxy statements and shareholder reports, and
general supervision of data compilation in connection with preparing periodic
reports to the Company's Board of Directors and officers. Stephens also
furnishes office space and certain facilities to conduct the Company's business,
and compensates the Company's Directors, officers and employees who are
affiliated with Stephens. For providing administrative services to the Fund, the
Company has agreed to pay Stephens a monthly fee at the annual rate of 0.05% of
the Fund's average daily net assets. For the fiscal year ended February 28,
1995, the Company paid a fee of 0.05% of the Fund's average daily net assets to
Stephens for its services as administrator to the Fund and Master Series.
Stephens also serves as the Company's principal underwriter within the
meaning of the 1940 Act and as distributor of the Fund's shares
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pursuant to a Distribution Agreement with the Company. The Distribution
Agreement provides that Stephens will act as agent for the Company for the sale
of Fund shares and may enter into Selling Agreements with selling agents that
wish to make available Fund shares to their respective customers ("Selling
Agents"). Wells Fargo presently acts as a Selling Agent, but does not receive
any fee from the Fund for such activities.
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.
CUSTODIAN AND TRANSFER AGENT -- Wells Fargo is the Fund's custodian but
does not receive a fee from the Company for such services. Wells Fargo
Institutional Trust Company, N.A., 45 Fremont Street, San Francisco, California
94105, is the Master Trust's Custodian but does not receive a fee from the
Master Trust for such services. WFITC is owned by WFNIA and Wells Fargo &
Company. Wells Fargo also is the Company's Transfer and Dividend Disbursing
Agent (the "Transfer Agent"). The Company has agreed to pay Wells Fargo, which
provides custodian and transfer agency services at 525 Market Street, San
Francisco, California 94105, a monthly fee at the annual rate of 0.03% of the
Fund's average daily net assets for transfer agency services.
SHAREHOLDER SERVICING AGENT -- The Fund has adopted a Shareholder Servicing
Plan pursuant to which it has entered into a Shareholder Servicing Agreement
with Wells Fargo, and may enter into similar agreements with other entities
("Shareholder Servicing Agents"). Under such agreements, Shareholder Servicing
Agents (including Wells Fargo) agree, as agent for their customers, to be
responsible for performing shareholder liaison services, which include, without
limitation, answering customer inquiries regarding account status and history,
and the manner in which purchases, exchanges and redemptions of Fund shares may
be effected, assisting customers with investment plans, dividend options and
account designations and addresses, processing of purchase, redemption and
exchange transactions, providing periodic account statements showing account
balances and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by the Shareholder Servicing
Agent or its affiliates, arranging for bank wires, distributing various
materials for the Company, assisting in the establishment and maintenance of
accounts in the Fund and providing such other similar services as the Company or
a customer may reasonably request. For
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these services, a Shareholder Servicing Agent is entitled to receive a fee,
which may be paid periodically, determined by a formula based upon the number of
accounts serviced by the Shareholder Servicing Agent during the period for which
payment is being made, the level of activity in such accounts during such
period, and the expenses incurred by the Shareholder Servicing Agent. In no
event will such fees exceed, on an annualized basis for the Fund's then-current
fiscal year, 0.07% of the average daily net assets of the Fund represented by
shares owned during the period for which payment is being made by investors with
whom the Shareholder Servicing Agent maintains a servicing relationship, or an
amount which equals the maximum amount payable to the Shareholder Servicing
Agent under applicable laws, regulations or rules, including the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., whichever is
less.
A Shareholder Servicing Agent 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 higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the Fund and to notify
them in writing at least thirty days before it imposes any transaction fees.
EXPENSES -- As noted previously, from time to time Wells Fargo and Stephens
may waive their respective fees in whole or in part. Any such waivers will
reduce the Fund's expenses and accordingly have a favorable impact on the Fund's
yield and total return. Except for the expenses borne by Wells Fargo and
Stephens, the Company and the Master Trust will bear all costs of their
respective operations allocated to the Fund and the Master Series.
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
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- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified Benefit Plan to an IRA pursuant to arrangements between the
sponsor or other agent of the qualified employee benefit plan and a
Shareholder Servicing Agent.
Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request by an investor or the investor's
representative, the Company or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below) and $1,000 by all other methods or for all other
investors except that there is no minimum initial investment amount for Benefit
Plans or IRA investors. All subsequent investments must be at least $100, except
that there is no minimum subsequent investment amount for Benefit Plans or IRA
investors. All investments in Fund shares are subject to a determination by the
Company that the investment instructions are complete. If shares are purchased
by a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. The
Company reserves the right in its sole discretion to suspend the availability of
the Fund's shares and to reject any purchase requests. Certificates for Fund
shares are not issued.
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading on the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading on the NYSE are executed on the next Business
Day. The investor's Shareholder Servicing Agent is responsible for the prompt
transmission of the investor's purchase order to the Transfer Agent on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a
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Shareholder Servicing Agent may not be received by the Transfer Agent on the
same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further information
concerning this requirement. Failure to furnish a social security number or a
TIN to the Company could subject the investor to penalties imposed by the
Internal Revenue Service ("IRS").
Certain broker dealers may charge fees in connection with purchases of Fund
shares.
BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Shareholder Servicing Agents as plan trustee, plan administrator or
other agent, or whose plan trustee, plan administrator or other agent has a
servicing arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares. Benefit Plans include 401(k) plans and plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), health and welfare plans and executive deferred compensation
plans. For additional information about Benefit Plans that may be eligible to
invest in Fund shares, prospective investors should contact a Shareholder
Servicing Agent.
Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Shareholder Servicing Agent may offer other types of
tax-deferred or tax-advantaged plans, including a Keogh retirement plan for
self-employed professional persons, sole proprietors and partnerships. Contact a
Shareholder Servicing Agent for materials describing plans available through it,
and their benefits, provisions and fees.
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Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Shareholder Servicing
Agent. Completed retirement plan applications should be returned to the
investor's Shareholder Servicing Agent for approval and processing. If an
investor's retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. Certain features
described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a retirement plan. Investors should
consult their Shareholder Servicing Agent.
PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), 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. Some banks may impose wiring fees.
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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
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4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
AutoSaver Plan
The Company's AutoSaver Plan provides individual or corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an investor must specify an
amount ($100 or more) to be withdrawn automatically by the Transfer Agent on a
monthly basis from an account with a bank ("Approved Bank") that is designated
in the investor's Account Application and that is approved by the Transfer
Agent. Wells Fargo is an Approved Bank. The Transfer Agent withdraws and uses
this amount to purchase Fund shares on the investor's behalf on or about the
fifth Business Day of each month. There are no separate fees charged to the
investor by the Company for participating in the AutoSaver Plan.
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
Additional Purchases
An individual or corporate investor may make additional purchases of $100
or more by instructing the Fund's Transfer Agent to debit a designated Approved
Bank account, by wire by using the procedures described under "Initial Purchases
by Wire" above, or by mail with a check payable to "Stagecoach Inc./(Name of
Fund)" to the above address. An investor must write a Fund account number on the
check and include the detachable stub from a Statement of Account or a letter
providing the investor's Fund account number.
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In-Kind Purchases
At the discretion of Wells Fargo, shares of the Fund may be purchased in
exchange for securities which are eligible for acquisition by the Master Series
as described in this Prospectus. Securities to be exchanged which are accepted
by the Fund are valued in accordance with the procedures referenced under "Share
Value" in this Prospectus at the time of the next determination of net asset
value after such acceptance. Shares issued by the Fund in exchange for
securities are issued at net asset value determined as of the same time. All
dividends (with the exception of dividends received on securities tendered after
the ex-dividend date), interest, subscription, or other rights pertaining to
such securities shall become the property of the Fund and must be delivered to
the Fund by the investor upon receipt from the issuer.
The Fund will only accept securities for its portfolio in exchange for
shares issued by the Fund if: (1) such securities are, at the time of the
exchange, eligible to be included in the Master Series' portfolio and current
market quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities Act
of 1933 or under the laws of the country in which the principal market for such
securities exists, or otherwise; (3) the value of any such security (except U.S.
Government obligations) being exchanged together with other securities of the
same issuer owned by the Master Series will not exceed 5% of the net assets of
the Master Series immediately after the transaction; and (4) such securities are
consistent with the Fund's and the Master Series' investment objective and
policies and otherwise acceptable to Wells Fargo, as the Master Series'
investment adviser, in its sole discretion. The requirement for an investor
representation described in item (2) will not apply to the initial investment
into the Fund by certain employee benefit plans, as described below under
"General Information -- Description of the Company."
A gain or loss for federal income tax purposes may be realized by taxable
investors making in-kind purchases upon the exchange depending upon the cost of
the securities exchanged.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price
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of the shares is the next determined net asset value of the Fund calculated
after the Company has received a redemption request in proper form. Redemption
proceeds may be more or less than the amount invested depending on the Fund's
net asset value at the time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master Series
of securities owned by the Master Series is not reasonably practicable or (b) it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of Fund shareholders. In addition, the Company
may defer payment of a shareholder's redemption until reasonably satisfied that
such shareholder's investments made by check have been collected (which can take
up to fifteen days from the purchase date). Payment of redemption proceeds may
be made in portfolio securities, subject to regulation by some state securities
commissions. Shareholders who receive portfolio securities as payment of
redemption proceeds will generally incur brokerage costs upon the sale of such
securities.
Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
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Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual or corporate investor's
account and send the proceeds to such investor if the balance falls below $1,000
because of a redemption (including a redemption of Fund shares after an investor
has made only the $1,000 minimum initial investment). However, investors will be
given 30 days' notice to make an additional investment to increase their account
balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York time), will be
executed at the net asset value determined as of the close of regular trading on
the NYSE on that day. Redemption orders that are received by the Transfer Agent
after the close of regular trading on the NYSE, will be executed on the next
Business Day. The investor's Shareholder Servicing Agent is responsible for the
prompt transmission of redemption orders to the Fund on the investor's behalf.
Under certain circumstances, a Shareholder Servicing Agent may establish an
earlier deadline for receipt of orders or an investor's order transmitted to a
Shareholder Servicing Agent may not be received by the Transfer Agent on the
same day.
Unless the investor has made other arrangements with an appropriate
Shareholder Servicing Agent, and the Transfer Agent has been informed of such
arrangements, proceeds of a redemption order made by the investor through a
Shareholder Servicing Agent are credited to the account with the Approved Bank
that the investor has designated in the Account Application. If no such account
is designated, a check for the proceeds is mailed to the investor's address of
record or, if such address is no longer valid, the proceeds are credited to the
investor's account with the investor's Shareholder Servicing Agent.
Certain broker dealers may charge fees in connection with redemptions of
Fund shares.
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Shareholder Servicing Agent. The redemption procedures outlined in
the remainder of this section do not apply to investors in employee benefit
plans or retirement plans, nor do the minimum-balance requirements outlined
above. Investors in these types of plans should
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contact their Shareholder Servicing Agent regarding redemption procedures
applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners must sign.
3. If the shares to be redeemed have a value of $5,000 or more, or
redemption proceeds are to be paid to someone other than the investor at such
investor's address of record, the signature(s) must be guaranteed by an
"eligible guarantor institution," which includes a commercial bank that is an
FDIC member, 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 redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual or corporate investor
with a convenient way to have Fund shares redeemed from the investor's account
and the proceeds distributed to the investor on a monthly basis. An investor may
participate in the Systematic Withdrawal Plan only if the investor has a Fund
account valued at $10,000 or more as of the date of an election to participate,
the investor has an account at an Approved Bank, the investor's dividends and
capital gain distributions are being reinvested automatically and the investor
is not participating in the AutoSaver Plan at any time while participating in
the Systematic Withdrawal Plan. An investor may specify an amount ($100 or more)
to be distributed by check to the investor's address of record or deposited in
an Approved Bank account designated in the investor's Account Application. The
Transfer Agent redeems sufficient shares and mails or deposits re-
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demption proceeds as instructed on or about the fifth Business Day prior to the
end of each month. There are no separate fees charged to investors by the Fund
for participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a designated withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
Expedited Redemptions by Letter and Telephone
An individual or corporate investor may request an expedited redemption of
Fund shares by letter, in which case the investor's receipt of redemption
proceeds, but not the Fund's receipt of the investor's redemption request, would
be expedited. Telephone redemption and exchange privileges are made available to
an investor automatically upon the opening of an account unless the investor
declines the privilege. The investor also may request an expedited redemption of
Fund shares by telephone on any Business Day, in which case both the investor's
receipt of redemption proceeds and the Fund's receipt of the investor's
redemption request would be expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the Account Application.
The Company reserves the right to impose a charge for wiring redemption
proceeds. When proceeds of an individual or corporate investor's expedited
redemption are to be paid to someone else, to an address other than that of
record, or to an account with an Approved Bank that the investor has not
predesignated in his or her Account Application, the expedited redemption
request must be made by letter and the signature(s) on the letter must be
guaranteed in the manner discussed above, regardless of the amount of the
redemption. If the investor's expedited redemption request is received by the
Transfer Agent on a Business Day, the investor's redemption proceeds are
transmitted to the investor's desig-
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nated account with an Approved Bank on the next Business Day (assuming the
investor's investment check has cleared as described above), absent
extraordinary circumstances. Such extraordinary circumstances could include
those described above as potentially delaying redemptions, and also could
include situations involving an unusually heavy volume of wire transfer orders
on a national or regional basis or communication or transmittal delays that
could cause a brief delay in the wiring or crediting of funds. A check for
proceeds of less than $5,000 is mailed to the investor's address of record or,
at the investor's election, credited to the Approved Bank account designated in
the investor's Account Application.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase, in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the Stagecoach
Family of Funds, to the extent such shares are offered for sale in the
investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes such action would be appropriate to protect the 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
exchange privilege may be modified or terminated at any time upon 60 days'
written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
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SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments (i.e., the
value of its investments in the Master Series) plus cash and other assets,
deducting liabilities (including the fees payable to the various service
providers) and then dividing the result by the number of Fund shares
outstanding. The NAV is expected to fluctuate daily.
The Fund is open for business each Business Day, which is a day on which
the NYSE is open for trading. Currently, the weekdays on which the NYSE is
closed are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Wells Fargo
calculates the Fund's NAV each Business Day as of the close of regular trading
on the NYSE (currently 4:00 p.m., New York time).
The Fund's investments in the Master Series are valued at the NAV of the
Master Series' shares. The Master Series calculates the NAV of its shares on the
same days and at the same time as the Fund. Except for debt obligations with
remaining maturities of 60 days or less, which are valued at amortized cost, the
Master Series' other assets are valued at current market prices, or if such
prices are not readily available, at fair value as determined in good faith in
accordance with guidelines approved by the Master Trust's Board of Trustees.
Prices used for such valuations may be provided by independent pricing services.
For further information regarding the methods employed in valuing the Master
Series' investments, see "Determination of Net Asset Value" in the SAI.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays quarterly dividends of substantially all of its
net investment income. The Fund distributes any net realized capital gains at
least annually. All dividends and distributions are reinvested automatically in
additional shares of the Fund at net asset value unless payment in cash is
requested and your arrangement with a Shareholder Servicing Agent permits the
processing of cash payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. To the extent
dividends and distributions are reinvested, however, each shareholder receives
additional Fund shares equivalent in value to the reduction in NAV on shares
owned by that shareholder.
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FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, 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 of the Code by
investing all of its assets in the Master Series. The Master Series intends to
qualify for federal tax purposes as a partnership. As such, the Fund will
generally be deemed to own directly its proportionate share of the assets of the
Master Series. Therefore, any interest, dividends, gains or losses of the Master
Series will be "passed through" to the Fund and other investors in the Master
Series, regardless of whether such interest, dividends or gains have been
distributed by the Master Series or losses have been realized by the Fund or
other investors. Accordingly, if the Master Series 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, or gains
without receipt of any corresponding distribution. The Master Series seeks to
minimize recognition by investors of interest, dividends or gains without a
corresponding distribution.
Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers and TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than
exempt-interest dividends) and redemption proceeds (including proceeds from
exchanges). Non-resident aliens and other foreign shareholders may be subject to
U.S. withholding tax at rates up to 30% on dividends and distributions paid.
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TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. Corporate
shareholders of the Fund will 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.
The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains.
However, such tax-exempt investors may be subject to tax on certain
unrelated taxable income which could arise, for example, when such investors
acquire shares in the Fund through the use of leverage. Tax-exempt investors
should consult their tax advisors regarding the Unrelated Business Taxable
Income Rules.
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained 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.
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GENERAL INFORMATION
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Growth Stock Fund, Asset Allocation Fund,
Short-Intermediate Term Fund, U.S. Treasury Allocation Fund, Bond Index Fund,
Money Market Fund, Growth and Income Fund, National Tax-Free Intermediate Income
Fund, National Tax-Free Money Market Mutual Fund, California Tax-Free
Intermediate Income Fund, California Tax-Free Short-Term Income Fund, California
Tax-Free Money Market Fund, and Overland National Tax-Free Institutional Money
Market Fund. As of May 26, 1994, all of the Company's then-existing series,
except the Money Market Fund, became feeder funds in a master/feeder structure.
The Company's principal office is located at 111 Center Street, Little Rock,
Arkansas 72201.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and officers of the Company is included in the
Fund's SAI under "Management." The Fund may withdraw its investment in the
Master Series only if the Board of Directors of the Company determines that is
in the best interests of the Fund and its shareholders to do so. Upon any such
withdrawal, the Board of Directors of the Company would consider what action
might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
Master Series. Although the Company is not required to hold regular annual
shareholder meetings, occasional annual or special meetings may be required for
purposes such as electing or removing Directors, approving advisory contracts
and distribution plans and changing the Fund's investment objectives or
fundamental investment policies.
The Master Trust was established on October 21, 1993, as a Delaware
business trust. The Master Trust's Declaration of Trust permits the Board of
Trustees to issue beneficial interests in the Master Trust to investors based on
their proportionate investments in the Master Trust. The Master Trust, on behalf
of the Master Series, has retained the services of Wells Fargo as investment
adviser, WFNIA as sub-adviser, and Stephens as administrator and placement
agent. The Board of Trustees of the Master Trust is responsible for the general
management of the Master Trust and
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supervising the actions of Wells Fargo, WFNIA and Stephens in these capacities.
As of June 8, 1995, Bankers Trust, as trustee for the Bechtel Master Trust
Qualified Employee Benefit Plan, P.O. Box 1742, New York, NY 10008, possessed
power to dispose or vote with respect to more than 25% of the outstanding shares
of the Fund and therefore could be considered to be a controlling person of the
Fund for purposes of the 1940 Act.
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by fund, unless otherwise required by law (such as when a
matter affects only one fund). Shareholders of the Fund are entitled to one vote
for each share owned and fractional votes for fractional shares owned. Depending
on the terms of a particular benefit plan and the matter being submitted to a
vote, a sponsor may request direction from individual participants regarding a
shareholder vote. In addition, whenever the Fund is requested to vote on matters
pertaining to the Master Series, 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 description of the voting rights and
attributes of the shares is contained in the "Capital Stock" section of the SAI.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund including additional information on performance. Shareholders may
obtain a copy of the Company's most recent report without charge by phoning
1-800-776-0179.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
PORTFOLIO SECURITIES
To the extent set forth in this Prospectus, the Master Series may invest in
the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- The Master Series 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 such 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 would 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- The
Master Series, through its investment in money market instruments, may invest in
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by WFNIA to be of comparable quality to the other obligations in which the
Master Series may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or
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supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of the
Master Series' assets invested in securities issued by foreign governments will
vary depending on the relative yields of such securities, the economic and
financial markets of the countries in which the investments are made and the
interest rate climate of such countries.
BANK OBLIGATIONS -- The Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, the Master Series may be subject to additional
investment risks that are different in some respects from those incurred by a
fund which invests only in debt obligations of U.S. domestic issuers. Such risks
include possible future political and economic developments, the possible
imposition of foreign withholding taxes on interest income payable on the
securities, the possible establishment of exchange controls or the adoption of
other foreign governmental restrictions which might adversely affect the payment
of principal and interest on these securities and the possible seizure or
nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations
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may include uninsured, direct obligations, bearing fixed, floating- or
variable-interest rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- The Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Master Series will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's, A-1
by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated not lower than Aa3 by Moody's
or AA-by S&P, Fitch or Duff, or (c) if unrated, determined by WFNIA to be of
comparable quality to those rated obligations which may be purchased by such
Fund.
REPURCHASE AGREEMENTS -- The Master Series may enter into repurchase
agreements, which involve the acquisition by the Master Series of an underlying
debt instrument, subject to the seller's obligation to repurchase, and the
Master Series' obligation to resell, the instrument at a fixed price usually not
more than one week after its purchase. The Fund's and the Master Series'
custodian or sub-custodian has custody of, and holds in a segregated account,
securities acquired as collateral by the Master Series under a repurchase
agreement. Repurchase agreements are considered by the staff of the SEC to be
loans by the Master Series. In an attempt to reduce the risk of incurring a loss
on a repurchase agreement, the Master Series enters into repurchase agreements
only with federally regulated or insured banks or primary government securities
dealers reporting to the Federal Reserve Bank of New York or, under certain
circumstances, banks with total assets in excess of $5 billion or domestic
broker/dealers with total equity capital in excess of $100 million. The Master
Series enters into repurchase agreements only with respect to securities of the
type in which the Master Series may invest, including government securities and
mortgage-related securities, regardless of their remaining maturities, and
requires that additional securities be deposited with the custodian or sub-
custodian if the value of the securities purchased should decrease below the
repurchase price. WFNIA monitors on an ongoing basis the value of the collateral
to assure that it always equals or exceeds the repurchase price. Certain costs
may be incurred by the Master Series in connection with the sale of the
underlying securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Master Series may be delayed or limited. The Master Series considers on an
ongoing basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
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UNREGISTERED NOTES -- The Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the 1933 Act, provided such investments are consistent with the Master
Series' investment objective. The Master Series will not invest more than 15% of
the value of its net assets in Notes and in other illiquid securities.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- The Master Series may purchase
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable-rate demand notes include
master demand notes which are obligations that permit the Master Series to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there generally
is no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master Series'
right to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating
agencies and the Master Series may invest in obligations which are not so rated
only if WFNIA determines that at the time of investment the obligations are of
comparable quality to the other obligations in which the Master Series may
invest. WFNIA, on behalf of the Master Series, considers on an ongoing basis the
creditworthiness of the issuers of the floating-and variable-rate demand
obligations in the Master Series' portfolio. The Master Series does not invest
more than 15% of the value of its net assets in floating- or variable-rate
demand obligations as to which it cannot
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exercise the demand feature on not more than seven days' notice if there is no
secondary market available for these obligations, and in other illiquid
securities.
PARTICIPATION INTERESTS -- The Master Series may purchase from financial
institutions participation interests in securities in which the Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series' participation
interest bears to the total principal amount of the security. These instruments
may have fixed, floating- or variable-rates of interest. If the participation
interest is unrated, or has been given a rating below that which is permissible
for purchase by the Master Series, the participation interest is backed by an
irrevocable letter of credit or guarantee of a bank, or the payment obligation
otherwise is collateralized by U.S. Government securities, or, in the case of
unrated participation interests, WFNIA must have determined that the instrument
is of comparable quality to those instruments in which the Master Series may
invest. Prior to the Master Series' purchase of any such instrument backed by a
letter of credit or guarantee of a bank, WFNIA evaluates the creditworthiness of
the bank, considering all factors which it deems relevant, which generally may
include review of the bank's cash flow; level of short-term debt; leverage;
capitalization; the quality and depth of management; profitability; return on
assets; and economic factors relative to the banking industry. For certain
participation interests, the Master Series has the right to demand payment, on
not more than seven days' notice, for all or any part of the Master Series'
participation interest in the security, plus accrued interest. As to these
instruments, the Master Series intends to exercise its right to demand payment
only upon a default under the terms of the security, as needed to provide
liquidity to meet redemptions, or to maintain or improve the quality of its
investment portfolio.
MORTGAGE-RELATED SECURITIES -- The Master Series may enter into repurchase
agreements with respect to mortgage-related securities ("MBSs"), representing
interests in a pool of loans secured by mortgages. The resulting cash flow from
these mortgages is used to pay principal and interest on the securities. MBSs
are assembled for sale to investors by various government-sponsored enterprises
such as the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") or are guaranteed by such governmental
agencies as the Government National Mortgage Association ("GNMA"). Regardless of
the type of guarantee, all MBSs are subject to interest rate risk (i.e.,
exposure to loss due to changes in interest rates).
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GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the full and timely payment of
principal and interest by GNMA and such guarantee is backed by the authority of
GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. As such, GNMA obligations are
general obligations of the United States and are backed by the full faith and
credit of the federal government. MBSs issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are neither backed by nor entitled to the
full faith and credit of the United States. FNMA is a government-sponsored
enterprise which is also a private corporation whose stock trades on the NYSE.
Fannie Maes are guaranteed as to timely payment of principal and interest by
FNMA. FHLMC MBSs include FHLMC Mortgage Participation Certificates (also known
as "Freddie Macs" or "PCs"). FHLMC guarantees timely payment of interest, but
only ultimate payment of principal due under the obligations it issues. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. FHLMC may, under certain circumstances, remit the
payment of principal at any time after default, but in no event later than one
year after the guarantee becomes payable.
WARRANTS -- The Master Series may invest up to 5% of its net assets in
warrants, except that this limitation does not apply to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time, usually with a stated maturity in excess of one year.
ILLIQUID SECURITIES -- The Master Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Master Series cannot exercise the related demand feature described above on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice. However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the 1933 Act, for certain of these
securities held by the Master
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Series, the Master Series intends to treat such securities as liquid securities
in accordance with procedures approved by the Master Trust's Board of Trustees.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Master Trust's
Board of Trustees has directed WFNIA to monitor carefully the Master Series'
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that qualified institutional buyers may periodically cease purchasing
such restricted securities pursuant to Rule 144A, the Master Series' investing
in such securities may have the effect of increasing the level of illiquidity in
the Master Series' portfolio during such period.
INVESTMENT COMPANY SECURITIES -- The Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the Master Series invests. Under the 1940 Act, the Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Master Series' net assets with respect to any one
investment company and (iii) 10% of the Master Series' net assets in the
aggregate. Investments in the securities of other investment companies generally
will involve duplication of advisory fees and certain other expenses and Wells
Fargo will waive its advisory fees for that portion of the Master Series assets
so invested, except when such purchase is part of a plan of merger,
consolidation, reorganization or acquisition.
RATINGS -- The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, WFNIA also will evaluate such obligations
and the ability of their issuers to pay interest and principal. The Master
Series will rely on WFNIA's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, WFNIA will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, the quality of the issuer's
management and regulatory matters. It also is possible that a rating agency
might not timely change the rating on a particular issue to reflect subsequent
events.
A-7
<PAGE> 296
INVESTMENT TECHNIQUES
STOCK INDEX OPTIONS -- The Master Series may purchase and write (i.e.,
sell) put and call options on stock indices as a substitute for comparable
market positions in the underlying securities. A stock index fluctuates with
changes in the market values of the stocks included in the index. The aggregate
premiums paid on all options purchased may not exceed 20% of the Master Series'
total assets and the value of options written or purchased may not exceed 10% of
the value of the Master Series' total assets.
The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in the Master Series' portfolio
correlate with price movements of the stock index selected. Because the value of
an index option depends upon movements in the level of the index rather than the
price of a particular stock, whether the Master Series will realize a gain or
loss from purchasing or writing stock index options depends upon movements in
the level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements in the
price of a particular stock.
When the Master Series writes an option on a stock index, the Master Series
will place in a segregated account with the Master Portfolio's custodian cash or
liquid securities in an amount at least equal to the market value of the
underlying stock index and will maintain the account while the option is open or
otherwise will cover the transaction.
FUTURES TRANSACTIONS -- IN GENERAL -- The Master Series will not be a
commodity pool. To the extent permitted by applicable regulations, the Master
Series is permitted to use futures as a substitute for a comparable market
position in the underlying securities.
A futures contract is an agreement between two parties, a buyer and a
seller, to exchange a particular commodity at a specific price on a specific
date in the future. Futures contracts are traded on exchanges, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the only credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are, however, subject to market risk (i.e., exposure
to adverse price changes).
The Master Series may trade futures contracts and options on futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange.
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The Master Series' futures transactions must constitute permissible
transactions pursuant to regulations promulgated by the CFTC. In addition, the
Master Series may not engage in futures transactions if the sum of the amount of
initial margin deposits and premiums paid for unexpired options on futures
contracts, other than those contracts entered into for bona fide hedging
purposes would exceed 5% of the liquidation value of the Master Series' assets,
after taking into account unrealized profits and unrealized losses on such
contracts; provided, however, that in the case of an option on a futures
contract that is in-the-money at the time of purchase, the in-the-money amount
may be excluded in calculating the 5% liquidation limit. Pursuant to regulations
and/or published positions of the SEC, the Master Series may be required to
segregate cash or high quality money market instruments in connection with its
futures transactions in an amount generally equal to the entire value of the
underlying security.
Initially, when purchasing or selling futures contracts the Master Series
will be required to deposit with the Fund's and the Master Series' custodian in
the broker's name an amount of cash or cash equivalents up to approximately 10%
of the contract amount. This amount is subject to change by the exchange or
board of trade on which the contract is traded, and members of such exchange or
board of trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Master Series upon termination
of the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from the
broker will be made daily as the price of the index or securities underlying the
futures contract fluctuates, making the long and short positions in the futures
contract more or less valuable. At any time prior to the expiration of a futures
contract, the Master Series may elect to close the position by taking an
opposite position, at the then prevailing price, thereby terminating its
existing position in the contract.
Although the Master Series intends to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures
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<PAGE> 298
positions and potentially subjecting the Master Series to substantial losses. If
it is not possible, or the Master Series determines not, to close a futures
position in anticipation of adverse price movements, it will be required to make
daily cash payments of variation margin.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a long
position if the option is a put). Upon exercise of the option, the assumption of
offsetting futures positions by both the writer and the holder of the option
will be accompanied by delivery of the accumulated cash balance in the writer's
futures margin account in the amount by which the market price of the futures
contract, at exercise, exceeds (in the case of a call) or is less than (in the
case of a put) the exercise price of the option on the futures contract.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- The Master Series
may purchase and sell stock index futures contracts and options on stock index
futures contracts.
A stock index future obligates the seller to deliver (and the purchaser to
take), effectively, an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of the underlying stocks in the index is made. With respect
to stock indices that are permitted investments, the Master Series intends to
purchase and sell futures contracts on the stock index for which it can obtain
the best price with consideration also given to liquidity.
BORROWING MONEY -- As a fundamental policy, the Master Series is permitted
to borrow to the extent permitted under the 1940 Act. However, the Master Series
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 33 1/3% of the value of its total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exceed 5% of the Master Series' total assets, the
Master Series will not make any investments.
LOANS OF PORTFOLIO SECURITIES -- From time to time, the Master Series may
lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain
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transactions. Such loans may not exceed 33 1/3% of the value of the Master
Series' total assets. In connection with such loans, the Master Series receives
collateral consisting of cash, U.S. Government securities or irrevocable letters
of credit which are maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities. The Master Series can
increase its income through the investment of such collateral. The Master Series
continues to be entitled to receive payments in amounts equal to the dividends,
interest and other distributions payable on the loaned security and receives
interest on the amount of the loan. Such loans are terminable at any time upon
specified notice. The Master Series might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction breaches
its agreement with the Master Series.
FORWARD COMMITMENTS -- The Master Series may purchase securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment, but delivery and payment ordinarily take place a number
of days after the date of the commitment to purchase. The Master Series will
make commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Master Series may sell these securities before
the settlement date if it is deemed advisable. The Master Series will not accrue
income in respect of a security purchased on a forward commitment basis prior to
its stated delivery date.
Securities purchased on a when-issued or forward commitment basis and
certain other securities held in the Master Series' portfolio are subject to
changes in value (both generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise) based
upon the public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities purchased on a
when-issued or forward commitment basis may expose the Master Series to risk
because they may experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued or forward commitment basis can involve
the additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction itself.
A segregated account of the Master Series consisting of cash or U.S. Government
securities or other high quality liquid debt securities in an amount at least
equal at all times to the amount of the when-issued or forward commitments is
established and maintained at the Fund's and the Master Series' custodian bank.
Purchasing securities on a forward commitment basis when the Master Series is
fully or almost fully invested may result in greater potential fluctuation in
the value of the Master Series' net assets and its NAV per share.
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<PAGE> 300
INVESTMENT POLICIES -- THE FUND
The investment objective of the Fund as set forth in the first paragraph of
the section entitled "The Fund -- Investment Objective and Policies", is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of the outstanding voting securities of the Fund as
described under "Capital Stock" in the SAI. In addition, any fundamental
investment policy may not be changed without such shareholder approval. If the
Board of Directors of the Company determines, however, that the investment
objective of the Fund can best be achieved by a substantive change in a
non-fundamental investment policy or strategy, the Board 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 Fund may: (i) not purchase securities
of any issuer (except U.S. Government obligations) if as a result, with respect
to 75% of its total assets, more than 5% of the value of the Fund's total assets
would be invested in the securities of such issuer or, with respect to 100% of
its total assets, the Fund would own more than 10% of the outstanding voting
securities of such issuer provided that this restriction shall not prevent the
Fund from investing all of its assets in the Master Series; (ii) borrow from
banks up to 20% 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 20% 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); (iii) make loans of portfolio securities in accordance with its
investment policies; and (iv) not invest 25% or more of its total assets (i.e.,
concentrate) in any particular industry, except that the Fund will concentrate
its assets in any one industry for the same period as does the S&P 500 Index and
except that the Fund may invest 25% or more of their assets in U.S. Government
obligations, provided that this restriction shall not prevent the Fund from
investing all of its assets in the Master Series.
The Fund reserves the right to invest up to 15% of the current value of its
net assets in repurchase agreements having maturities of more than seven days
and other illiquid securities. However, as long as the Fund's shares are
registered for sale in a state that imposes a lower limit on the percentage of a
fund's assets that may be so invested, the Fund will comply with such lower
limit. The Fund presently is limited to investing 10% of its net assets in such
securities due to limits applicable in several states. Disposing of illiquid or
restricted securities may involve additional costs and require additional time.
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<PAGE> 301
INVESTMENT POLICIES -- THE MASTER SERIES
CERTAIN FUNDAMENTAL POLICIES -- The Master Series may (i) borrow from banks
up to 20% 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 20% 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); (ii) invest up to 5% of its total assets in the obligations of any
single issuer, except that up to 25% of the value of the total assets of the
Master Series may be invested and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities may be purchased, without regard
to any such limitation; and (iii) not invest 25% or more of its total assets
(i.e., concentrate) in any particular industry, except that the Master Series
will concentrate its assets in any one industry for the same period as does the
S&P 500 Index and except that the Master Series may invest 25% or more of their
assets in U.S. Government Obligations. This paragraph describes certain
fundamental policies that cannot be changed as to the Master Series without
approval by the holders of a majority (as defined in the 1940 Act) of the Master
Series' outstanding voting securities.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors) if such purchase does not
cause the value of its investments in all such companies to exceed 5% of the
value of its total assets; (ii) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings; and (iii) invest
up to 15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities.
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<PAGE> 303
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<PAGE> 304
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFSP 6/95
<PAGE> 305
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFSP 6/95
<PAGE> 306
U.S. TREASURY ALLOCATION FUND
Cross Reference Sheet
Form N-1A Item Number
[/R]
<TABLE>
<S> <C>
Part A Prospectus Captions
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 Management of the Fund; General Information;
The Fund; Appendix -- Additional Investment
Policies
5 Management of the Fund; General Information
6 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege;
Dividends and Distributions; Federal Income
Tax Information
7 Management of the Fund; How to Buy Shares; How
to Redeem Shares; Exchange Privilege; Share
Value
8 How to Buy Shares; How to Redeem Shares;
Exchange Privilege
9 Not Applicable
Part B Statement of Additional Information Captions
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Custodian and Transfer and
Dividend Disbursing Agent; Independent
Auditors
17 Portfolio Transactions
18 Capital Stock
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Calculation of Yield and Total Return
23 Financial Statements
Part C General Information
24-32 Information required to be included in Part C
is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
[/R]
<PAGE> 307
[STAGECOACH FUNDS LOGO]
------------------------------
PROSPECTUS
------------------------------
U.S. TREASURY ALLOCATION FUND
June 28, 1995
- --------------------------------------------------------------------------------
<PAGE> 308
STAGECOACH INC.
U.S. TREASURY ALLOCATION FUND
Stagecoach Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about one of the Company's
Funds -- the U.S. TREASURY ALLOCATION FUND (the "Fund"). The Fund seeks to
achieve over the long term a high level of total return, including net realized
and unrealized capital gains and net investment income, consistent with
reasonable risk.
THE FUND INVESTS ALL OF ITS ASSETS IN THE U.S. TREASURY ALLOCATION MASTER
SERIES (THE "MASTER SERIES") OF MASTER INVESTMENT PORTFOLIO (THE "MASTER
TRUST"), AN OPEN-END, MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO
OF SECURITIES. THE MASTER SERIES HAS SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE
AS THE FUND. THEREFORE, THE FUND'S INVESTMENT EXPERIENCE CORRESPONDS DIRECTLY
WITH THE MASTER SERIES' INVESTMENT EXPERIENCE. SHARES OF THE MASTER SERIES MAY
BE PURCHASED ONLY BY OTHER INVESTMENT COMPANIES OR SIMILAR ACCREDITED INVESTORS.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely the information about the Fund and the Master
Series that an investor should know before investing and is designed to help you
decide if the Fund's goals match your own. A Statement of Additional Information
("SAI") dated June 28, 1995 describing the Fund has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference. The
SAI is available free of charge by calling the Company at 1-800-776-2179 or by
writing the Company at the address printed on the back of the Prospectus.
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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. 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 GOVERNMENT AGENCY. AN INVESTMENT IN THE
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED JUNE 28, 1995
<PAGE> 309
The Master Series seeks to achieve its investment objective by pursuing a
strategy of allocating and reallocating its investments among three maturity
classes of U.S. Treasury debt securities -- long-term U.S. Treasury bonds,
intermediate-term U.S. Treasury notes, and short-term U.S. Treasury bills. The
Fund is designed for investors with investment horizons of at least five years.
As noted below under "General Information -- Description of the Company,"
investors may be able to invest indirectly in the Master Trust through other
investment companies or portfolios of the Company that invest substantially all
of their assets in the Master Trust. The Master Series is advised by Wells Fargo
Bank, N.A. ("Wells Fargo"). Wells Fargo Nikko Investment Advisors ("WFNIA")
serves as sub-adviser to the Master Series. Wells Fargo also serves as the
Fund's custodian, as the Fund's and the Master Series' transfer agent and as a
Selling Agent and a Shareholder Servicing Agent (as defined below). Wells Fargo
Institutional Trust Company, N.A. ("WFITC") serves as the Master Series'
custodian. Stephens Inc. ("Stephens") is the sponsor, distributor and
administrator for the Company and the Master Trust.
------------------------
WELLS FARGO IS THE INVESTMENT ADVISER TO THE MASTER SERIES, WFNIA SERVES AS
SUB-ADVISER TO THE MASTER SERIES, AND TOGETHER WITH THEIR AFFILIATES, WELLS
FARGO AND WFNIA PROVIDE OTHER SERVICES TO THE MASTER TRUST, FOR WHICH
THEY ARE COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED WITH WELLS
FARGO, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE COMPANY AND THE MASTER TRUST.
<PAGE> 310
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary....................................... 2
Summary Of Fund Expenses................................. 8
Explanation of the Table................................. 9
Financial Highlights..................................... 10
The Fund................................................. 11
Management of the Fund................................... 15
How to Buy Shares........................................ 20
How to Redeem Shares..................................... 25
Exchange Privilege....................................... 30
Share Value.............................................. 30
Dividends And Distributions.............................. 31
Federal Income Tax Information........................... 31
General Information...................................... 33
</TABLE>
<TABLE>
<CAPTION>
APPENDIX
--------
<S> <C>
Additional Investment Policies........................... A-1
</TABLE>
1
<PAGE> 311
PROSPECTUS SUMMARY
The following summary provides investors with basic information about the
Fund. For more information, please refer specifically to the identified
Prospectus sections and generally to the Prospectus and SAI.
Q. WHO CAN INVEST IN THE FUND?
A. Shares of the Fund are offered primarily to a select group of investors.
These include:
- Participants in employee benefit plans, including retirement plans,
that have appointed one of the Company's Shareholder Servicing
Agents as plan trustee, plan administrator or other agent, or whose
plan trustee, plan administrator or other agent has a servicing
arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder
Servicing Agents that permits investments in Fund shares, and
persons who invest pursuant to an agreement between such an entity
and a Shareholder Servicing Agent.
- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an Individual Retirement Account
("IRA") pursuant to arrangements between the sponsor or other agent
of the qualified employee benefit plan and a Shareholder Servicing
Agent.
See "How to Buy Shares."
Q. WHAT ARE SOME OF THE KEY FEATURES OF THE FUND?
A. The Fund is a diversified portfolio that seeks to achieve over the long term
a high level of total return, including net realized and unrealized capital
gains and net investment income, consistent with reasonable risk. The Fund
seeks to achieve this investment objective by investing all of its assets
in the Master Series, which has substantially the same investment objective
as the Fund. The Master Series seeks to achieve its investment objective by
pursuing a strategy of allocating and reallocating its investments among
three maturity classes of U.S. Treasury debt securities: long-term U.S.
Treasury bonds, intermediate term U.S. Treasury notes and short-term U.S.
Treasury bills. The Fund is designed for investors with investment horizons
of at least five years. See "The Fund --
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Investment Objective and Policies" and "Appendix -- Additional Investment
Policies."
Q. WHAT ARE SOME OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUND?
A. Investments in the Fund (and the Master Series) are not bank deposits or
obligations of Wells Fargo and are not insured by the Federal Deposit
Insurance Corporation ("FDIC"). An investment in the Fund is not insured
against loss of principal. When prices of the securities that the Master
Series owns decline, so does the value of your Fund shares. Therefore,
investors should be prepared to accept some risk with the money they invest
in the Fund. Because the Master Series may shift its investment allocations
significantly from time to time, its performance and that of the Fund may
differ from funds which invest in one maturity class or from funds with a
stable mix of assets. Further, shifts among maturity classes may result in
a relatively high portfolio turnover rate (100% or more) which will result
in additional transaction (i.e., dealer markups or brokerage commission)
costs, which may not be offset by the improved performance expected from
the asset allocation strategy. Portfolio turnover also can generate
short-term capital gains tax consequences. The Fund bears a pro rata
portion of any transaction costs. In this regard, the portfolio turnover
rate generally is not expected to exceed 350%. For additional information
relating to portfolio turnover see "Federal Income Tax Information" in this
Prospectus and "Portfolio Transactions" and "Federal Income Taxes" in the
SAI.
The portfolio securities held by the Master Series are subject to interest
rate risk. Interest-rate risk is the risk that increases in market interest
rates may adversely affect the value of certain of the debt instruments in
which the Master Series invests and hence the value of an investment in the
Fund. The values of such debt instruments generally change inversely to
changes in market interest rates. During those periods in which a high
percentage of the portfolio of the Master Series is invested in long-term
bonds, its exposure to interest rate risk will be greater because the
longer maturity of those instruments means they generally are more
sensitive to interest rate fluctuations than shorter-term debt securities.
The Master Series also may engage in certain futures contract transactions
which have other risks associated with them. As with all mutual funds,
there can be no assurance that the Fund will achieve its investment
objective. Investors should be prepared to accept that risk, as well as the
risk that the Fund may under-perform (over the short and/or long term) one
or more of the
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three maturity classes of securities in which the Master Series invests.
Finally, the Master Series was formed in 1993 and therefore has a limited
operating history. See "The Fund -- Investment Objective and Policies" and
"Appendix -- Additional Investment Policies."
Q. HOW DO I INVEST IN THE FUND?
A. Shares of the Fund can be purchased at their net asset value on any day the
New York Stock Exchange ("NYSE") is open for regular business (a "Business
Day"). There are no sales loads.
To invest in the Fund contact a Shareholder Servicing Agent to receive
information and an Account Application. An Account Application must be
completed and signed to open an account.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method and $1,000 by all other methods or for all other investors, except
that there is no minimum investment amount for employee benefit plans
("Benefit Plans") or IRA investors. All subsequent investments must be in
amounts of at least $100, except that there is no minimum subsequent
investment amount for Benefit Plans or IRA investors.
See "How to Buy Shares."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo, as the investment adviser of the Master Trust, manages the
investments of the Master Series. The Company has not retained the services
of a separate investment adviser for the Fund because the Fund invests all
of its assets in the Master Series. WFNIA serves as the Master Series'
sub-adviser and provides allocation advice based on its proprietary model.
Wells Fargo, one of the largest commercial banks in the United States, was
founded in 1852 and is the oldest bank in the western United States. As of
March 31, 1995, various divisions and affiliates of Wells Fargo (including
WFNIA) provided investment advisory services for approximately $196 billion
of assets of individuals, trusts, estates and institutions. See "Management
of the Fund."
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds which charge sales loads or other
transaction fees, the Fund does not impose shareholder transaction fees on
the purchase, redemption or exchange of its shares. For its advisory
services to the Master Series, Wells Fargo is entitled to receive a fee at
an annual rate of 0.30% of the Master Series' average
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daily net assets, out of which it pays for sub-investment advisory
services. Wells Fargo also provides transfer agency services to the Fund
and the Master Series. Wells Fargo is entitled to an annual fee of 0.10% of
the Fund's average net assets in return for providing transfer agency
services to the Fund and the Master Series.
The Fund also has adopted a Shareholder Servicing Plan pursuant to which it
may enter into Shareholder Servicing Agreements with Shareholder Servicing
Agents. The Servicing Plan permits the Fund to compensate Shareholder
Servicing Agents up to 0.20% of the average daily net assets of the Fund.
For its services as administrator of the Fund and the Master Series,
Stephens is entitled to receive a fee at an annual rate of 0.10% of the
Fund's average daily net assets. In consideration for this fee, Stephens
has agreed to pay all third-party expenses of the Fund and the Master
Series other than those payable by the Fund and the Master Series under
their various services contracts described above.
There are no other fees or expenses charged against the Fund's or the
Master Series' assets or its shareholders except for extraordinary expenses
and brokerage commissions and other expenses connected with the execution
of portfolio transactions.
The trustee, administrator or investment manager of a Benefit Plan, IRA or
other retirement plan ("Plan Trustee"), which may be Wells Fargo, typically
charges additional fees for additional services provided to such plans,
including fees for serving as Plan Trustee and fees for certain
administrative services, such as recordkeeping and processing exchanges of
Fund shares for other available investment options.
See "Management of the Fund."
Q. HOW ARE FUND INVESTMENTS VALUED?
A. The price per share or "net asset value" of the Fund depends on the net
asset value of shares of the Master Series which in turn depends on the
total value of the portfolio securities owned by the Master Series (plus
cash and other assets net of liabilities) and the number of shares of the
Master Series outstanding. On each Business Day, Wells Fargo calculates a
new net asset value of the Fund and the Master Series. See "Share Value."
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Q. DOES THE FUND PAY DIVIDENDS?
A. The Fund intends to declare monthly dividends consisting of substantially
all of its net investment income, and annual distributions consisting of
substantially all of its net realized capital gains. All dividends and
distributions are automatically reinvested in additional Fund shares at net
asset value unless payment in cash is requested and your arrangement with a
Shareholder Servicing Agent permits the processing of cash payments. Each
reinvestment increases the total number of shares held by the shareholder.
See "Dividends and Distributions."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables an investor to exchange Fund shares for
shares of another fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the
Stagecoach Family of Funds, to the extent such shares are offered for sale
in the investor's state of residence. See "Exchange Privilege."
Q. HOW DO I REDEEM MY SHARES?
A. Shares of the Fund may be redeemed at net asset value without the imposition
of a sales charge or redemption fee on any Business Day by letter, by an
automatic feature called the Systematic Withdrawal Plan, or by telephone
(unless you decline telephone privileges). See "How to Redeem Shares." For
more information, contact Stephens or your Shareholder Servicing Agent
(such as Wells Fargo).
Q. WHAT ARE DERIVATIVES AND DO THE FUND AND THE MASTER SERIES USE THEM?
A. Some of the permissible investments described throughout this Prospectus are
considered "derivative" securities because their values are derived, at
least in part, from the prices of other securities or specified assets,
indices or rates. The futures contracts and options on futures contracts
that the Master Series may purchase are considered derivatives. The Master
Series may purchase or sell these contracts or options as substitutes for
comparable market positions in the underlying securities. Certain of the
floating- and variable-rate instruments that the Master Series may purchase
can also 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.
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Q. WHAT STEPS DO THE FUND AND MASTER SERIES TAKE TO CONTROL DERIVATIVES-RELATED
RISKS?
A. Wells Fargo (as investment adviser to the Master Series) and WFNIA (as
sub-adviser to the Master Series) use a variety of internal risk management
procedures to ensure that derivatives use is consistent with both the
Master Series' and the Fund's investment objective, does not expose either
the Master Series or the Fund to undue risks and is closely monitored.
These procedures include providing periodic reports to the Boards of
Trustees and Directors concerning the use of derivatives. Also, cash
maintained by the Master Series for short-term liquidity needs (e.g., to
meet anticipated redemption requests) will, as a general matter, only be
invested in U.S. Treasury bills, shares of other mutual funds and
repurchase agreements. The use of derivatives is also subject to broadly
applicable investment policies. For example, the Master Series may not
invest more than a specified percentage of its assets in "illiquid
securities," including those derivatives that do not have active secondary
markets. In addition, the Master Series may not use derivatives without
establishing adequate "cover" in compliance with SEC rules limiting the use
of leverage. For additional information, see "Appendix -- Additional
Investment Policies."
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SUMMARY OF FUND EXPENSES
The following table provides: (i) a summary of expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund and the Master Series, as a percentage of average net
assets of the Fund, and (ii) an example illustrating the dollar cost of such
estimated expenses on a $1,000 investment in the Fund. As shown below, you are
not charged redemption fees or exchange fees. You should consider this expense
information together with the important information in this Prospectus,
including the Fund's investment objective and policies.
FEE TABLE
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)*:
Management Fees**.................................. 0.30%
Other Expenses
Shareholder Servicing Fees....................... 0.20%
Miscellaneous Expenses**......................... 0.20%
Total Other Expenses**........................... 0.40%
Total Fund Operating Expenses**.................... 0.70%
</TABLE>
- ---------------
* Other mutual funds may invest in the Master Series and such other funds'
expenses and, correspondingly, investment returns may differ from those of
the Fund.
** Annual Fund operating expenses are based on amounts incurred during the most
recent fiscal year, restated to reflect expected expenses and voluntary fee
waivers that will continue during the current fiscal year. In the absence of
waivers, reimbursements and/or expected expense levels, the percentages
shown above under the captions "Management Fees," "Miscellaneous Expenses,"
"Total Other Expenses" and "Total Fund Operating Expenses" would be 0.38%,
0.14%, 0.34% and 0.72%, respectively.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor 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.................... $7 $22 $39 $87
</TABLE>
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EXPLANATION OF THE TABLE
The purpose of the foregoing table is to assist an investor in
understanding the various fees and expenses that an investor in the Fund will
bear directly or indirectly. The following provides a general explanation of the
information provided in the table.
ANNUAL FUND OPERATING EXPENSES are based on amounts incurred during the
most recent fiscal year, restated to reflect expected expenses, voluntary fee
waivers and expense reimbursements that will continue during the current fiscal
year. They summarize expenses charged at the Master Trust level as well as
expenses charged at the Company level. For a further description of the fee
structure of the Master Trust and the Company, see "Management of the Fund."
Wells Fargo 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. The Fund does not anticipate Fund expenses
exceeding state limits. In addition, Wells Fargo and Stephens each, at its sole
discretion, may waive or reimburse all or a portion of its respective fees
charged to, or expenses paid by, the Fund or Master Series. Any waivers or
reimbursements would reduce the Fund's or Master Series' total expenses. For
more complete descriptions of the various costs and expenses you can expect to
incur as an investor in the Fund, please see the Prospectus section captioned
"Management of the Fund."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the
expenses associated with a $1,000 investment in the Fund over stated periods,
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected Fund performance. In addition, the Example of Expenses should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown above.
With regard to the combined fees and expenses of the Fund and the Master
Series, the Board of Directors of the Company has considered whether various
costs and benefits of investing all the Fund's assets in the Master Series
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 Master Series. Additionally, the
Board of Directors has determined that the aggregate fees assessed by the Fund
and the Master Series should be less than those expenses that the Directors
believe would be incurred had the Fund invested directly in the securities held
by the Master Series. See the Prospectus section captioned "Management of the
Fund" 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
investment strategy and no longer invest in the Master Series, these expenses
may change.
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FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING AS SHOWN)
The following information has been derived from the Financial Highlights
included in the Fund's financial statements for the fiscal year ended February
28, 1995. The financial statements are attached to the Fund's SAI and have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
also is attached to the SAI. This information should be read in conjunction with
the financial statements and the notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28,
1995** 1994***
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period......... $ 9.67 $ 10.00
------------ ------------
Income from investment operations:
Net investment income...................... 0.59 0.39
Net realized and unrealized gain (loss) on
investments.............................. (0.68) (0.05)
------------ ------------
Total from investment operations............. (0.09) 0.34
Less distributions:
Dividends from net investment income....... (0.59) (0.39)
Distributions from net realized gains...... 0.00 (0.20)
Distributions in excess of net realized
gains.................................... 0.00 (0.08)
------------ ------------
Total distributions.......................... (0.59) (0.67)
Net Asset Value, end of period............... $ 8.99 $ 9.67
============== ==============
Total return (not annualized)................ (0.76)% 3.33%
Ratios/supplemental data:
Net assets, end of period (000)............ $ 56,852 $ 58,216
Number of shares outstanding, end of
period (000)............................. 6,324 6,019
Ratios to average net assets+:
Ratio of expenses to average net
assets(1)................................ 0.70%++ 0.78%
Ratio of net investment income to average
net assets(2)............................ 6.52% 5.79%
Portfolio turnover........................... 43%* 210%
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses(1).............................. 0.72% 0.80%
(2) Ratio of net investment income to average
net assets prior to waived fees and
reimbursed expenses(1)................... 6.50% 5.77%
</TABLE>
- ---------------
* This rate is for the period from February 28, 1994, to May 25, 1994. As of
May 26, 1994 the Fund invests all of its assets in the corresponding Master
Series of the Master Trust. The portfolio turnover rate for the Master
Series for the period beginning May 26, 1994 and ending February 28, 1995
was 87%.
** Beginning May 26, 1994 the Fund, pursuant to shareholder approval, was
reorganized and began investing in the corresponding Master Series of the
Master Trust.
*** The Fund commenced operations on July 2, 1993.
+ Annualized for periods of less than one year.
++ This ratio includes expenses charged to the Master Series.
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THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to achieve over the long term a high level of total return,
including net realized and unrealized capital gains and net investment income,
consistent with reasonable risk. This investment objective is fundamental and
cannot be changed without shareholder approval. The Fund seeks to achieve its
investment objective by investing all of its assets in the Master Series, which
has substantially the same fundamental investment objective as the Fund. The
Master Series seeks to achieve its objective by pursuing a strategy of
allocating and reallocating its investments among the following three maturity
classes of U.S. Treasury debt securities: long-term bonds, intermediate-term
notes, and short-term bills. That strategy is based upon the premise that those
maturity classes of debt securities from time to time are over- or under-valued
relative to each other by the market and that under-valued maturity classes
represent relatively better long-term investment opportunities, and that timely
low transaction cost shifts among such maturity classes (as determined by their
perceived relative over- or under-valuation) can produce superior long-term
investment returns. Using this strategy, WFNIA, as sub-adviser to the Master
Series, regularly determines and recommends to Wells Fargo, the investment
adviser, a recommended mix of maturity classes, and Wells Fargo adjusts the
Master Series' portfolio periodically to achieve that mix. As a fundamental
policy, under normal market conditions, the Master Series will have at least 65%
of the value of its total assets invested in U.S. Treasury bonds, notes and
bills.
In determining the recommended portfolio mix, WFNIA uses an investment
model (the "U.S. Treasury Allocation Model") which is presently used as a basis
for managing several large employee benefit trust funds and other institutional
accounts. The U.S. Treasury Allocation Model, which is proprietary to WFNIA,
analyzes risk, correlation and expected return data and recommends a portfolio
allocation among long-term U.S. Treasury bonds, intermediate-term U.S. Treasury
notes, and short-term U.S. Treasury bills. As further described in "Appendix --
Additional Investment Policies," debt securities are subject to fluctuations in
market value due to fluctuations in market interest rates; the values of such
securities generally change inversely to changes in market interest rates.
Securities with longer maturities are generally more sensitive to changes in
interest rates than shorter-term debt securities. WFNIA bases its investment
recommendations on the model's results. At any given time, substantially all of
the Master Series' assets may be invested in a single maturity class and the
relative allocation among the maturity classes may
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shift significantly from time to time. The Fund is not designed for investors
seeking short-term gains; it instead is designed for investors with investment
horizons of five years and greater. There can be no assurance that the Fund or
the Master Series will achieve its respective investment objective.
The Master Series' assets are invested and reinvested in the following
types of debt instruments:
Long-Term U.S. Treasury Bonds. The Master Series invests in U.S. Treasury
bonds with remaining maturities of at least 20 years. Under normal market
conditions, the dollar-weighted average maturity of this portion of the Master
Series' portfolio is expected to range between 22 and 28 years.
Intermediate-Term U.S. Treasury Notes. The Master Series invests in U.S.
Treasury notes and other U.S. Treasury securities with remaining maturities
ranging from one to 20 years. Under normal market conditions, the
dollar-weighted average maturity of this portion of the Master Series' portfolio
is expected to range between three and seven years.
Short-Term U.S. Treasury Bills. The Master Series invests in U.S. Treasury
bills with remaining maturities of one year or less. Under normal market
conditions, the dollar-weighted average maturity of this portion of the Master
Series' portfolio is expected to range between 30 and 90 days.
In addition, the Master Series may hold money market instruments for
liquidity purposes, as described in "Appendix -- Additional Investment
Policies."
The U.S. Treasury Allocation Model is an optimization model involving
statistical techniques that WFNIA uses to determine the relative allocation of
the Master Series' assets among U.S. Treasury bonds, U.S. Treasury notes, and
U.S. Treasury bills. A key component of the U.S. Treasury Allocation Model is a
set of assumptions concerning expected risk and return and investor attitudes
toward risk, which are incorporated into the allocation decision. The principal
inputs of financial data to the model currently are (i) the current yields on
91-day U.S. Treasury bills, 5-year U.S. Treasury notes, and 30-year U.S.
Treasury bonds; (ii) the expected statistical standard deviation in investment
return for each maturity class of fixed income security; and (iii) the expected
statistical correlation of investment return among the three maturity classes of
U.S. Treasury securities. Using this and other data, the U.S. Treasury
Allocation Model is run daily to determine the recommended allocation. Because
the Master Series may shift its investment allocations among maturity classes
significantly from time to time, the performance of
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the Master Series and the Fund may differ from funds which invest in one
maturity class or from funds with a constant mix of maturity classes.
Although the basic premises of the U.S. Treasury Allocation Model have not
changed in any substantial respect, various inputs to the U.S. Treasury
Allocation Model and the manner in which its recommendations are implemented
have changed over time, and the U.S. Treasury Allocation Model is subject to
such further changes as WFNIA may from time to time implement in its discretion.
A more complete description of the Master Series' investments and investment
activities is contained in "Appendix -- Additional Investment Policies."
Wells Fargo and WFNIA manage other portfolios which also invest in
accordance with the U.S. Treasury Allocation Model. The performance of each of
those other portfolios is likely to vary among themselves and from the
performance of the Fund. Such variation in performance is primarily due to
different equilibrium asset mix assumptions used for the various portfolios,
timing differences in the implementation of the model's recommendations and
differences in expenses and liquidity requirements.
MASTER/FEEDER STRUCTURE
As of May 26, 1994, the Fund converted to a feeder fund in a master/feeder
structure. Accordingly, the Fund invests all of its assets in the Master Series,
which has substantially the same investment objective as the Fund. See, "The
Fund -- Investment Objectives and Policies." The Master Trust is organized as a
trust under the laws of the State of Delaware. See "General
Information -- Description of the Company." In addition to selling its shares to
the Fund, the Master Series may sell its shares to certain other mutual funds or
other accredited investors. Information regarding additional options, if any,
for investment in shares of the Master Series is available from Stephens and may
be obtained by calling 1-800-643-9691. The expenses and, correspondingly, the
returns of other investment options in the Master Trust are expected to differ
from those of the Fund.
The Board of Directors believes that, if other investors invest their
assets in the Master Series, certain economic efficiencies may be realized with
respect to the Master Series. For example, fixed expenses that otherwise would
have been borne solely by the Fund would be spread across a larger asset base
provided by more than one fund investing in the Master Series. The Fund and
other entities (if any) investing in the Master Series would each be liable for
all obligations of the Master Series. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and the
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<PAGE> 323
Master Trust itself is unable to meet its obligations. Accordingly, the
Company's Board of Directors believes that neither the Fund nor its shareholders
will be adversely affected by reason of investing the Fund's assets in the
Master Series. However, if a mutual fund or other investor withdraws its
investment from the Master Series, the economic efficiencies (e.g., spreading
fixed expenses across a larger asset base) that the Company's Board believes
should be available through investment in the Master Series may not be fully
achieved. In addition, given the relatively novel nature of the master/feeder
structure, accounting and operational difficulties could occur.
The Master Series' investment objective and other fundamental policies,
which are substantially the same as those of the Fund, cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940 (the "1940 Act")) of the Master Series' outstanding voting shares. The
Master Series seeks to maximize total return, consisting of capital appreciation
and current income, without assuming undue risk. Whenever the Fund, as a Master
Series shareholder, is requested to vote on matters pertaining to any
fundamental policy of the Master Series, the Fund will hold a meeting of its
shareholders to consider such matters and the Fund will cast its votes in
proportion to the votes received from Fund shareholders. The Fund will vote
Master Series shares for which it receives no voting instructions in the same
proportion as the votes received from Fund shareholders. In addition, certain
policies of the Master Series that are non-fundamental can be changed by vote of
a majority of the Master Trust's Trustees without a shareholder vote. If the
Master Series' investment objective or policies are changed, the Fund could
subsequently change its objective or policies to correspond to those of the
Master Series or the Fund could redeem its Master Series shares and either seek
a new investment company with a substantially matching objective in which to
invest or retain its own investment adviser to manage the Fund's portfolio in
accordance with its objective. In the latter case, the Fund's inability to find
a substitute investment company in which to invest or equivalent management
services could adversely affect shareholders' investments in the Fund. The
Fund's investment objective and other fundamental policies cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
the Fund's outstanding voting shares. The Fund will provide shareholders with
thirty days' written notice prior to the implementation of any change in the
investment objective of the Fund or Master Series, to the extent possible.
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PERFORMANCE
The Fund's performance may be advertised in terms of yield and total
return. These performance figures are based on historical results and are not
intended to indicate future performance. The Fund's yield is calculated by
dividing its net investment income per share earned during a specified period
(usually 30 days) by its public net asset value per share on the last day of
such period and annualizing the result. The Fund's total return may be
calculated on an average annual total return basis or a cumulative total return
basis. Average annual total return refers to the average annual compounded rates
of return over one-, five-, and ten-year periods (or the life of the Fund, which
periods are stated in the advertisement) and is measured by comparing the value
of an investment in the Fund at the beginning of the relevant period to the
redemption value at the end of the period and annualizing the result. Cumulative
total return is based on the overall percentage change in value of a
hypothetical investment in the Fund. Both methods assume that all Fund dividends
and capital gain distributions are reinvested. Fees charged by an institution or
shareholder servicing agent in connection with an investment in the Fund are not
included in calculations of yield or total return. The Fund's performance
corresponds directly to the investment experience of the Master Series. The
Fund's annual report contains additional performance information and is
available without charge by calling 1-800-776-0179 or by writing the Company at
the address printed on the back of the Prospectus.
MANAGEMENT OF THE FUND
MASTER TRUST INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER -- Wells Fargo,
a wholly owned subsidiary of Wells Fargo & Company located at 420 Montgomery
Street, San Francisco, California 94105, is the Master Series' investment
adviser. Wells Fargo, 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 March
31, 1995, various divisions and affiliates of Wells Fargo (including WFNIA)
provided investment advisory services for approximately $196 billion of assets
of individuals, trusts, estates and institutions. Pursuant to an Investment
Advisory Agreement with the Master Trust, Wells Fargo provides investment
guidance and policy direction in connection with the management of the Master
Series' assets, subject to the supervision of the Master Trust's Board of
Trustees and in conformity with Delaware law and the stated policies of the
Master Series.
Wells Fargo has engaged WFNIA, located at 45 Fremont Street, San Francisco,
California 94105, to provide sub-investment advisory services to
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the Master Series. WFNIA is a general partnership owned 50% by a wholly owned
subsidiary of Wells Fargo and 50% by a subsidiary of The Nikko Securities Co.,
Ltd. As of March 31, 1995 WFNIA managed or provided investment advice for assets
aggregating in excess of $171 billion. Pursuant to a Sub-Investment Advisory
Agreement, WFNIA, subject to the supervision and approval of Wells Fargo,
provides investment advisory assistance and the day-to-day management of the
Master Series' assets, subject to the overall authority of the Master Trust's
Board of Trustees and in conformity with Delaware law and the stated policies of
the Master Series.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their joint venture interest in WFNIA to
Barclays PLC of the U.K. The sale, which is subject to the approval of
appropriate regulatory authorities, is expected to close in the fourth quarter
of 1995.
Barclays is the largest clearing bank in the U.K., with $259 billion in
total assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
Under the 1940 Act, this proposed change of control of WFNIA would result
in an assignment and termination of the current Sub-Investment Advisory
Agreement between WFNIA, Wells Fargo and the Master Series. Subject to the
approval of the Company's Board of Directors, it is contemplated that a special
meeting of shareholders of the Fund will be convened to consider a change in the
structure of the Fund, which will become effective only upon the change of
control of WFNIA. It is not anticipated that the proposed change of control or
change in structure will change the investment objective or overall investment
strategy of the Fund.
Wells Fargo deals, trades and invests for its own account in the types of
securities in which the Master Series may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by the
Master Series. Wells Fargo has informed the Master Trust that in making its
investment decisions it does not obtain or use material inside information in
its possession.
Prior to the Fund's conversion to master/feeder structure, Wells Fargo
provided investment advisory services directly to the Fund and WFNIA
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acted as sub-adviser to the Fund. For its services as investment adviser Wells
Fargo was entitled to receive a monthly fee at the annual rate of 0.65% of the
Fund's average daily net assets. WFNIA was entitled to receive from Wells Fargo
a monthly fee at the annual rate of 0.075% of the Fund's average daily net
assets as compensation for sub-advisory services to the Fund prior to
conversion.
Since the conversion to master/feeder structure, Wells Fargo provides
investment advisory services to the Master Series. Under the terms of the
current Investment Advisory Agreement between the Master Trust and Wells Fargo,
the Master Trust has agreed to pay Wells Fargo a monthly fee at the annual rate
of 0.30% of the Master Series' average daily net assets. Out of this fee, Wells
Fargo compensates WFNIA for sub-advisory services provided to the Master Series.
Wells Fargo has agreed to pay WFNIA a monthly fee at the annual rate of 0.15% of
the Master Series' average daily net assets. For the fiscal year ended February
28, 1995, Wells Fargo was paid advisory fees at the annual rate of 0.38% of the
average daily net assets of the Fund for its services as investment adviser to
the Fund and the Master Series. During the same period, WFNIA was paid by Wells
Fargo sub-advisory fees at the annual rate of 0.14% of the average daily net
assets of the Fund for its services as sub-adviser to the Fund and the Master
Series. Fund shareholders bear a pro rata portion of the Master Series'
operating expenses, including its advisory fees, to the extent that the Fund, as
a shareholder of the Master Series, bears such expenses.
The overall management of the Master Series is based on the recommendation
of an investment model, and no person is primarily responsible for recommending
the mix of maturity classes in the portfolio of the Master Series.
Morrison & Foerster, counsel to the Company and the Master Trust and
special counsel to Wells Fargo, has advised the Company, the Master Trust and
Wells Fargo that Wells Fargo may perform the services contemplated by the
Advisory Contract without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. Such counsel has pointed out, however,
that there are no controlling judicial or administrative interpretations or
decisions and that future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes, including the
Glass-Steagall Act and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as future changes in such
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent Wells Fargo from continuing to perform, in whole
or in part, such services. If Wells Fargo were prohibited from performing any
such services, it is expected that the Directors of the
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Company would recommend to the Fund's shareholders that they approve a new
advisory agreement with another entity or entities qualified to perform such
services.
ADMINISTRATOR AND DISTRIBUTOR -- Stephens, located at 111 Center Street,
Little Rock, Arkansas 72201, serves as the Company's and the Master Trust's
administrator pursuant to separate Administration Agreements with the Company
and the Master Series. Under the Administration Agreement with the Company,
Stephens provides general supervision of the operation of the Company, other
than the provision of investment advice, subject to the overall authority of the
Board of Directors and in accordance with Maryland law. The administrative
services provided to the Fund also include coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Board of Directors and officers.
Stephens also furnishes office space and certain facilities to conduct the
Company's business, and compensates the Company's Directors, officers and
employees who are affiliated with Stephens. In addition, except as noted below,
Stephens will assume all expenses incurred by the Fund other than the fees
payable by the Fund pursuant to the Company's various service contracts. For
providing administrative services to the Fund, the Company has agreed to pay
Stephens a monthly fee at the annual rate of 0.10% of the Fund's average daily
net assets. For the fiscal year ended February 28, 1995, the Company paid a fee
of 0.09% of the Fund's average daily net assets to Stephens for its services as
administrator to the Fund and Master Series.
Stephens also serves as the Company's principal underwriter within the
meaning of the 1940 Act and as distributor of the Fund's shares pursuant to a
Distribution Agreement with the Company. The Distribution Agreement provides
that Stephens will act as agent for the Company for the sale of Fund shares and
may enter into Selling Agreements with selling agents that wish to make
available Fund shares to their respective customers ("Selling Agents"). Wells
Fargo presently acts as a Selling Agent, but does not receive any fee from the
Fund for such activities.
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.
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CUSTODIAN AND TRANSFER AGENT -- Wells Fargo is the Company's custodian but
does not receive a fee for such services. Wells Fargo Institutional Trust
Company, N.A., 45 Fremont Street, San Francisco, California 94105, is the Master
Trust's Custodian but does not receive a fee from the Master Trust for such
services. WFITC is owned by WFNIA and Wells Fargo & Company. Wells Fargo also is
the Company's Transfer and Dividend Disbursing Agent (the "Transfer Agent") and
performs its transfer agency and custodial services at 525 Market Street, San
Francisco, California 94105. The Company has agreed to pay Wells Fargo a monthly
fee at the annual rate of 0.10% of the Fund's average daily net assets for
transfer agency services.
SHAREHOLDER SERVICING AGENT -- The Fund has adopted a Shareholder Servicing
Plan pursuant to which it has entered into a Shareholder Servicing Agreement
with Wells Fargo, and may enter into similar agreements with other entities
("Shareholder Servicing Agents"). Under such agreements, Shareholder Servicing
Agents (including Wells Fargo) agree, as agent for their customers, to be
responsible for performing shareholder liaison services, which include, without
limitation, answering customer inquiries regarding account status and history,
and the manner in which purchases, exchanges and redemptions of Fund shares may
be effected, assisting customers with investment plans, dividend options and
account designations and addresses, processing of purchase, redemption and
exchange transactions, providing periodic account statements showing account
balances and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by the Shareholder Servicing
Agent or its affiliates, arranging for bank wires, distributing various
materials for the Company, assisting in the establishment and maintenance of
accounts in the Fund and providing such other similar services as the Company or
a customer may reasonably request. For these services, a Shareholder Servicing
Agent is entitled to receive a fee, which may be paid periodically, determined
by a formula based upon the number of accounts serviced by the Shareholder
Servicing Agent during the period for which payment is being made, the level of
activity in such accounts during such period, and the expenses incurred by the
Shareholder Servicing Agent. In no event will such fees exceed, on an annualized
basis for the Fund's then-current fiscal year, 0.20% of the average daily net
assets of the Fund represented by shares owned during the period for which
payment is being made by investors with whom the Shareholder Servicing Agent
maintains a servicing relationship, or an amount which equals the maximum amount
payable to the Shareholder Servicing Agent under applicable laws, regulations or
rules, including the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., whichever is less.
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A Shareholder Servicing Agent 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 higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the Fund and to notify
them in writing at least thirty days before it imposes any transaction fees.
EXPENSES -- Under the Administration Agreement, Stephens has agreed to
assume the operating expenses of the Fund and a pro rata share of the operating
expenses of the Master Series, except for extraordinary expenses and those fees
and expenses payable pursuant to the various service contracts described above
which will be borne by the Company and those expenses specifically assumed by
Wells Fargo under its contracts with the Fund.
Stephens has not assumed the following operating expenses of the Master
Series: advisory fees, interest, brokerage fees and commissions, if any, costs
of independent pricing services and any extraordinary expenses.
Stephens has not assumed the following operating expenses of the Fund:
administration fees, Shareholder Servicing Agent fees, Transfer Agent fees and
expenses and any extraordinary expenses.
HOW TO BUY SHARES
GENERAL
Only the following types of investors are eligible to invest in Fund
shares:
- Participants in Benefit Plans, including retirement plans, that have
appointed one of the Company's Shareholder Servicing Agents as plan
trustee, plan administrator or other agent, or whose plan trustee, plan
administrator or other agent has a servicing arrangement with a
Shareholder Servicing Agent that permits investments in Fund shares.
- Foundations, corporations and other business entities that have a
servicing arrangement with one of the Company's Shareholder Servicing
Agents that permits investments in Fund shares, and persons who invest
pursuant to an agreement between such an entity and a Shareholder
Servicing Agent.
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- Individuals using proceeds that are being rolled over directly from a
qualified employee benefit plan to an IRA pursuant to arrangements
between the sponsor or other agent of the qualified employee benefit plan
and a Shareholder Servicing Agent.
Eligible investors may purchase Fund shares in one of the several ways
described below. For more information or additional forms, call 1-800-776-0179.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request by an investor or the investor's
representative, the Company or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
The minimum initial investment is $100 by the AutoSaver Plan purchase
method (described below) and $1,000 by all other methods or for all other
investors except that there is no minimum initial investment amount for Benefit
Plans or IRA investors. All subsequent investments must be at least $100, except
that there is no minimum subsequent investment amount for Benefit Plans or IRA
investors. All investments in Fund shares are subject to a determination by the
Company that the investment instructions are complete. If shares are purchased
by a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. The
Company reserves the right in its sole discretion to suspend the availability of
the Fund's shares and to reject any purchase requests. Certificates for Fund
shares are not issued.
Shares of the Fund may be purchased on any Business Day at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent. Purchase orders that are received by the Transfer Agent before
the close of regular trading on the NYSE (currently 4:00 p.m., New York time)
generally are executed on the same day. Orders received by the Transfer Agent
after the close of regular trading on the NYSE are executed on the next Business
Day. The investor's Shareholder Servicing Agent is responsible for the prompt
transmission of the investor's purchase order to the Transfer Agent on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a Shareholder Servicing Agent may not be received by the Transfer
Agent on the same day.
Federal regulations require that an investor provide a social security
number or a certified taxpayer identification number ("TIN") upon opening or
reopening an account. See "Dividends and Distributions" for further
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information concerning this requirement. Failure to furnish a social security
number or a TIN to the Company could subject the investor to penalties imposed
by the Internal Revenue Service ("IRS").
BENEFIT PLANS
Shares of the Fund are offered to Benefit Plans that have appointed one of
the Fund's Shareholder Servicing Agents as plan trustee, plan administrator or
other agent, or whose plan trustee, plan administrator or other agent has a
servicing arrangement with a Shareholder Servicing Agent that permits
investments in Fund shares. Benefit Plans include 401(k) plans and plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), health and welfare plans and executive deferred compensation
plans. For additional information about Benefit Plans that may be eligible to
invest in Fund shares, prospective investors should contact a Shareholder
Servicing Agent.
Fund investments by participants in 401(k) plans are typically made by
payroll deductions arranged between participants and their employers.
Participants in the Wells Fargo MasterWorks program are included in this group.
Participants also may make direct contributions to their accounts in special
circumstances such as the transfer of a rollover amount from another 401(k) plan
or from a rollover IRA. Investors should contact their employer's benefits
department for more information about contribution methods.
IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
An investor may be entitled to invest in shares of the Fund through a
tax-deferred retirement plan. In addition to offering investments in Fund shares
through IRA rollovers, a Shareholder Servicing Agent may offer other types of
tax-deferred or tax-advantaged plans, including a Keogh retirement plan for
self-employed professional persons, sole proprietors and partnerships. Contact a
Shareholder Servicing Agent for materials describing plans available through it,
and their benefits, provisions and fees.
Application materials for opening an IRA rollover, Keogh retirement plan or
other individual retirement plan can be obtained from a Shareholder Servicing
Agent. Completed retirement plan applications should be returned to the
investor's Shareholder Servicing Agent for approval and processing. If an
investor's retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. Certain features
described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a
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retirement plan. Investors should consult their Shareholder Servicing
Agent.
PURCHASES BY INDIVIDUAL AND CORPORATE INVESTORS
Initial Purchases by Wire
1. Telephone toll free 1-800-776-0179. Give the name of the Fund in which
an investment is being made, and the name(s) in which the shares are to be
registered, address, social security number or TIN (where applicable), 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. Some banks may impose wiring fees.
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: 4068-000587
Attention: Stagecoach Inc. (Name of Fund)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
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.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the net asset value next determined
after the Account Application is received and accepted.
Initial Purchases 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
"Stagecoach Inc./(Name of Fund)," to the address above.
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AutoSaver Plan
The Company's AutoSaver Plan provides individual or corporate investors
with a convenient way to establish and automatically add to a Fund account on a
monthly basis. To participate in the AutoSaver Plan, an investor must specify an
amount ($100 or more) to be withdrawn automatically by the Transfer Agent on a
monthly basis from an account with a bank ("Approved Bank") that is designated
in the investor's Account Application and that is approved by the Transfer
Agent. Wells Fargo is an Approved Bank. The Transfer Agent withdraws and uses
this amount to purchase Fund shares on the investor's behalf on or about the
fifth Business Day of each month. There are no separate fees charged to an
investor by the Company for participating in the AutoSaver Plan.
An individual or corporate investor may change a specified investment
amount, suspend purchases or terminate an election to participate in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five Business Days prior to any scheduled transaction. An investor's
participation in the AutoSaver Plan is terminated automatically if the
investor's Approved Bank account balance is insufficient to make a scheduled
withdrawal, or if either the investor's Approved Bank account or Fund account is
closed.
Additional Purchases
An individual or corporate investor may make additional purchases of $100
or more by instructing the Fund's Transfer Agent to debit a designated Approved
Bank account, by wire by using the procedures described under "Initial Purchases
by Wire" above, or by mail with a check payable to "Stagecoach Inc./(Name of
Fund)" to the above address. An investor must write a Fund account number on the
check and include the detachable stub from a Statement of Account or a letter
providing the investor's Fund account number.
In-Kind Purchases
At the discretion of Wells Fargo, shares of the Fund may be purchased in
exchange for securities which are eligible for acquisition by the Master Series
as described in this Prospectus. Securities to be exchanged which are accepted
by the Fund will be valued in accordance with the procedures referenced under
"Share Value" in this Prospectus at the time of the next determination of net
asset value after such acceptance. Shares issued by the Fund in exchange for
securities are issued at net asset value determined as of the same time. All
dividends (with the exception of dividends received on securities tendered after
the ex-dividend date), interest, subscription, or
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other rights pertaining to such securities shall become the property of the Fund
and must be delivered to the Fund by the investor upon receipt from the issuer.
The Fund will only accept securities for its portfolio in exchange for
shares issued by the Fund if: (1) such securities are, at the time of the
exchange, eligible to be included in the Master Series' portfolio and current
market quotations are readily available for such securities; (2) the investor
represents and agrees that all securities offered to be exchanged are not
subject to any restrictions upon their sale by the Fund under the Securities Act
of 1933, as amended (the "1933 Act") or under the laws of the country in which
the principal market for such securities exists, or otherwise; (3) the value of
any such security (except U.S. Government obligations) being exchanged together
with other securities of the same issuer owned by the Master Series will not
exceed 5% of the net assets of the Master Series immediately after the
transaction; and (4) such securities are consistent with the Fund's and the
Master Series' investment objective and policies and otherwise acceptable to
Wells Fargo, as the Master Series' investment adviser, in its sole discretion.
The requirement for an investor representation described in item (2) will not
apply to the initial investment into the Fund by certain employee benefit plans,
as described below under "General Information -- Description of the Company."
A gain or loss for federal income tax purposes may be realized by taxable
investors making in-kind purchases upon the exchange depending upon the cost of
the securities exchanged.
HOW TO REDEEM SHARES
GENERAL
Investors may redeem all or a portion of their Fund shares on any Business
Day without any charge by the Company. The redemption price of the shares is the
next determined net asset value of the Fund calculated after the Company has
received a redemption request in proper form. Redemption proceeds may be more or
less than the amount invested depending on the Fund's net asset value at the
time of purchase and redemption.
The Company generally remits redemption proceeds from the Fund within seven
days after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master Series
of securities owned by the Master
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Series is not reasonably practicable or (b) it is not reasonably practicable for
the Fund fairly to determine the value of its net assets, or a period during
which the SEC by order permits deferral of redemptions for the protection of
Fund shareholders. In addition, the Company may defer payment of a shareholder's
redemption until reasonably satisfied that such shareholder's investments made
by check have been collected (which can take up to fifteen days from the
purchase date). Payment of redemption proceeds may be made in portfolio
securities, subject to regulation by some state securities commissions.
Shareholders who receive portfolio securities as payment of redemption proceeds
will generally incur brokerage costs upon the sale of such securities.
Telephone redemption or exchange privileges are made available to
shareholders automatically upon opening an account, unless the shareholder
declines 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.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, investors should consider
using the other redemption procedures made available to such investors. Use of
these other redemption procedures may result in the investor's redemption
request being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close an individual or corporate investor's
account and send the proceeds to such investor if the balance in the account
falls below $1,000 because of a redemption (including a redemption of Fund
shares after an investor has made only the $1,000 minimum initial investment).
However, investors will be given 30 days' notice to make an additional
investment to increase their account balance to $1,000 or more.
Redemption orders that are received by the Transfer Agent before the close
of regular trading on the NYSE (currently 4:00 p.m., New York
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time), will be executed at the net asset value determined as of the close of
regular trading on the NYSE on that day. Redemption orders that are received by
the Transfer Agent after the close of regular trading on the NYSE, will be
executed on the next Business Day. The investor's Shareholder Servicing Agent is
responsible for the prompt transmission of redemption orders to the Fund on the
investor's behalf. Under certain circumstances, a Shareholder Servicing Agent
may establish an earlier deadline for receipt of orders or an investor's order
transmitted to a Shareholder Servicing Agent may not be received by the Transfer
Agent on the same day.
Unless the investor has made other arrangements with an appropriate
Shareholder Servicing Agent, and the Transfer Agent has been informed of such
arrangements, proceeds of a redemption order made by the investor through a
Shareholder Servicing Agent are credited to the account with the Approved Bank
that the investor has designated in the Account Application. If no such account
is designated, a check for the proceeds is mailed to the investor's address of
record or, if such address is no longer valid, the proceeds are credited to the
investor's account with the investor's Shareholder Servicing Agent.
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on
withdrawing their money under the Code. Each type of plan has established
procedures for withdrawals, which are disclosed to investors at the time of
purchase. Investors may obtain more information by contacting their employer
and/or their Shareholder Servicing Agent. The redemption procedures outlined in
the remainder of this section do not apply to investors in employee benefit
plans or retirement plans, nor do the minimum-balance requirements outlined
above. Investors in these types of plans should contact their Shareholder
Servicing Agent regarding redemption procedures applicable to them.
REDEMPTIONS BY INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the dollar amount or number of
Fund shares to be redeemed, the Fund account number and social security number
or TIN (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 owners must sign.
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3. If the shares to be redeemed have a value of $5,000 or more, or
redemption proceeds are to be paid to someone other than the investor at such
investor's address of record, the signature(s) must be guaranteed by an
"eligible guarantor institution," which includes a commercial bank that is an
FDIC member, 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 redemption letter to the Transfer Agent at the mailing address
set forth under "How to Buy Shares -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the
redemption proceeds is sent to the investor's address of record.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan provides an individual or corporate investor
with a convenient way to have Fund shares redeemed from the investor's account
and the proceeds distributed to the investor on a monthly basis. An investor may
participate in the Systematic Withdrawal Plan only if the investor has a Fund
account valued at $10,000 or more as of the date of an election to participate,
the investor has an account at an Approved Bank, the investor's dividends and
capital gain distributions are being reinvested automatically and the investor
is not participating in the AutoSaver Plan at any time while participating in
the Systematic Withdrawal Plan. An investor may specify an amount ($100 or more)
to be distributed by check to the investor's address of record or deposited in
an Approved Bank account designated in the investor's Account Application. The
Transfer Agent redeems sufficient shares and mails or deposits redemption
proceeds as instructed on or about the fifth Business Day prior to the end of
each month. There are no separate fees charged to investors by the Fund for
participating in the Systematic Withdrawal Plan.
An individual or corporate investor may change a designated withdrawal
amount, suspend withdrawals or terminate an election to participate in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five Business Days prior to any scheduled transaction.
An investor's participation in the Systematic Withdrawal Plan is terminated
automatically if the investor's Fund account balance is insufficient to make a
scheduled withdrawal or if the investor's Fund account or Approved Bank account
is closed.
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Expedited Redemptions by Letter and Telephone
An individual or corporate investor may request an expedited redemption of
Fund shares by letter, in which case the investor's receipt of redemption
proceeds, but not the Fund's receipt of the investor's redemption request, would
be expedited. Telephone redemption and exchange privileges are made available to
an investor automatically upon the opening of an account unless the investor
declines such privileges. The investor also may request an expedited redemption
of Fund shares by telephone on any Business Day, in which case both the
investor's receipt of redemption proceeds and the Fund's receipt of the
investor's redemption request would be expedited.
Investors may request expedited redemption by telephone by calling the
Transfer Agent at 1-800-776-0179.
Investors may request expedited redemption by mail by mailing an expedited
redemption request to the Transfer Agent at the mailing address set forth under
"How to Buy Shares -- Initial Purchases by Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more are wired
or credited to the Approved Bank account designated in the Account Application.
The Company reserves the right to impose a charge for wiring redemption
proceeds. When proceeds of an individual or corporate investor's expedited
redemption are to be paid to someone else, to an address other than that of
record, or to an account with an Approved Bank that the investor has not
predesignated in the investor's Account Application, the expedited redemption
request must be made by letter and the signature(s) on the letter must be
guaranteed in the manner discussed above, regardless of the amount of the
redemption. If the investor's expedited redemption request is received by the
Transfer Agent on a Business Day, the investor's redemption proceeds are
transmitted to the investor's designated account with an Approved Bank on the
next Business Day (assuming the investor's investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions, and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for proceeds of less than $5,000 is mailed to the investor's
address of record or, at the investor's election, credited to the Approved Bank
account designated in the investor's Account Application.
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EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase, in exchange for
shares of the Fund, shares of a fund offered by the Company pursuant to another
prospectus, or shares of certain other investment companies in the Stagecoach
Family of Funds, to the extent such shares are offered for sale in the
investor's state of residence. Before any exchange into a fund offered by
another prospectus, the investor should obtain and review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a fund sold with a
sales load. No fees currently are charged shareholders directly in connection
with exchanges although the Company reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal exchange fee in
accordance with rules promulgated by the SEC. The Company reserves the right to
limit the number of times shares may be exchanged and to reject in whole or in
part any exchange request into a fund when management believes that such action
would be in the best interests of such fund's other shareholders, such as when
management believes such action would be appropriate to protect the 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
exchange privilege may be modified or terminated at any time upon 60 days'
written notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
SHARE VALUE
The value of each Fund share is its "net asset value," or NAV. NAV is
computed by adding the value of the Fund's portfolio investments (i.e., the
value of its investments in the Master Series) plus cash and other assets,
deducting liabilities (including the fees payable for services) and then
dividing the result by the number of Fund shares outstanding. The NAV is
expected to fluctuate daily.
The Fund is open for business each Business Day, which is a day on which
the NYSE is open for trading. Currently, the weekdays on which the
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NYSE is closed are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Wells Fargo
calculates the Fund's NAV each Business Day as of the close of regular trading
on the NYSE (currently 4:00 p.m., New York time).
The Fund's investments in the Master Series are valued at the NAV of the
Master Series' shares. The Master Series calculates the NAV of its shares on the
same days and at the same time as the Fund. Except for debt obligations with
remaining maturities of 60 days or less, which are valued at amortized cost, the
Master Series' other assets are valued at current market prices, or if such
prices are not readily available, at fair value as determined in good faith in
accordance with guidelines approved by the Master Trust's Board of Trustees.
Prices used for such valuations may be provided by independent pricing services.
For further information regarding the methods employed in valuing the Master
Series' investments, see "Determination of Net Asset Value" in the SAI.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays monthly dividends of substantially all of its
net investment income. The Fund distributes any net realized capital gains at
least annually. All dividends and distributions are reinvested automatically in
additional shares of the Fund at net asset value, unless payment in cash is
requested and the investor's arrangement with a Shareholder Servicing Agent
permits the processing of cash payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. To the extent
dividends and distributions are reinvested, however, each shareholder receives
additional Fund shares equivalent in value to the reduction in NAV on shares
owned by that shareholder.
FEDERAL INCOME TAX INFORMATION
GENERAL
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. The Fund will be treated as a separate entity for tax
purposes and thus the provisions of the Code applicable to regulated investment
companies generally will be applied to the Fund and every other fund separately,
rather than to the Company as a whole. In addition, net capital gains, net
investment income, and operating expenses will be determined separately for the
Fund. By complying with the applicable
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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 of the Code by
investing all of its assets in the Master Series. The Master Series intends to
qualify for federal tax purposes as a partnership. As such, the Fund will
generally be deemed to own directly its proportionate share of the assets of the
Master Series. Therefore, any interest, dividends, gains or losses of the Master
Series will be "passed through" to the Fund and other investors in the Master
Series, regardless of whether such interest, dividends or gains have been
distributed by the Master Series or losses have been realized by the Fund or
other investors. Accordingly, if the Master Series 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, or gains
without receipt of any corresponding distribution. The Master Series seeks to
minimize recognition by investors of interest, dividends or gains without a
corresponding distribution.
Taxes are not withheld from dividends or other distributions to a U.S.
investor if IRS requirements regarding social security numbers and TINs are met.
An investor who fails to furnish a valid social security number or TIN
(certified when required) to the Fund, or for whom the Fund receives an IRS
notice that the social security number or TIN which has been supplied is
incorrect or that the investor is subject to withholding, is subject to
withholding at a rate of 31% on dividend distributions (other than
exempt-interest dividends) and redemption proceeds (including proceeds from
exchanges). Non-resident aliens and other foreign shareholders may be subject to
U.S. withholding tax at rates up to 30% on dividends and distributions paid.
TAXABLE INVESTORS
The Fund intends to distribute all of its investment company taxable income
and net tax-exempt income (if any) each taxable year. Distributions from net
investment income (including net short-term capital gains) will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
taxes, whether such income is received in cash or reinvested in additional
shares. Generally, dividends and distributions are taxable at the time they are
paid. However, dividends and distributions declared payable in October, November
and December and made payable to shareholders of record in such a month are
treated as paid and are thereby taxable as of December 31, provided that they
are actually paid no later than January 31 of the following year. No part of the
distributions to
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shareholders of the Fund is expected to qualify for the dividends-received
deduction allowed to corporate shareholders.
The Fund, or the Transfer Agent on its behalf, will inform shareholders of
the amount and nature of the Fund's dividends and capital gains. Investors
should keep all statements they receive to assist in recordkeeping.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and net realized capital gains. However, such tax-exempt investors may be
subject to tax on certain unrelated taxable income which could arise, for
example, when such investors acquire shares in the Fund through the use of
leverage. Tax-exempt investors should consult their tax advisors regarding the
Unrelated Business Taxable Income Rules.
The foregoing is a brief discussion of certain federal income tax
considerations. Further information is contained 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.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY
The Fund is a series of the Company. The Company was organized as a
Maryland corporation on October 15, 1992, and currently includes the following
thirteen other series: Growth Stock Fund, S&P 500 Stock Fund, Short-Intermediate
Term Fund, Asset Allocation Fund, Bond Index Fund, Money Market Fund, Growth and
Income Fund, National Tax-Free Intermediate Income Fund, National Tax-Free Money
Market Mutual Fund, California Tax-Free Intermediate Income Fund, California
Tax-Free Short-Term Income Fund, California Tax-Free Money Market Fund and
Overland National Tax-Free Institutional Money Market Fund. As of May 26, 1994,
all of the Company's then-existing series, except the Money Market Fund, became
feeder funds in a master/feeder structure. The Company's principal office is
located at 111 Center Street, Little Rock, Arkansas 72201.
The Board of Directors of the Company supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Additional
information about the Directors and officers of the Company is included in the
Fund's SAI under "Management." The Fund
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may withdraw its investment in the Master Series only if the Board of Directors
of the Company determines that is in the best interests of the Fund and its
shareholders to do so. Upon any such withdrawal, the Board of Directors of the
Company would consider what action might be taken, including the investment of
all the assets of the Fund in another pooled investment entity having the same
investment objective as the Fund or the hiring of an investment adviser to
manage the Fund's assets in accordance with the investment policies described
above with respect to the Master Series. Although the Company is not required to
hold regular annual shareholder meetings, occasional annual or special meetings
may be required for purposes such as electing or removing Directors, approving
advisory contracts and distribution plans, and changing the Fund's investment
objective or fundamental investment policies.
The Master Trust was established on October 21, 1993, as a Delaware
business trust. The Master Trust's Declaration of Trust permits the Board of
Trustees to issue beneficial interests in the Master Trust to investors based on
their proportionate investments in the Master Trust. The Master Trust, on behalf
of the Master Series, has retained the services of Wells Fargo as investment
adviser, WFNIA as sub-adviser, and Stephens as administrator and placement
agent. The Board of Trustees of the Master Trust is responsible for the general
management of the Master Trust and supervising the actions of Wells Fargo, WFNIA
and Stephens in these capacities.
VOTING
All shares of the Company have equal voting rights and will be voted in the
aggregate, rather than by fund, unless otherwise required by law (such as when a
matter affects only one fund). Shareholders of the Fund are entitled to one vote
for each share owned and fractional votes for fractional shares owned. Depending
on the terms of a particular benefit plan and the matter being submitted to a
vote, a sponsor may request direction from individual participants regarding a
shareholder vote. In addition, whenever the Fund is requested to vote on matters
pertaining to the Master Series, 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 description of the voting rights and
attributes of the shares is contained in the "Capital Stock" section of the SAI.
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INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serve as independent auditors for the Company. Their
address is Three Embarcadero Center, San Francisco, California 94111.
LEGAL COUNSEL
Morrison & Foerster, 2000 Pennsylvania Avenue, N.W., Washington, D.C.
20006, serves as counsel to the Company.
INFORMATION ON THE FUND
The Company provides annual and semi-annual reports to all shareholders.
The annual reports contain audited financial statements and other information
about the Fund, including additional information on performance. Shareholders
may obtain a copy of the Company's most recent report without charge by phoning
1-800-776-0179.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
PORTFOLIO SECURITIES
To the extent set forth in this prospectus, the Master Series may invest in
the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- The Master Series 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 such 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 would 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- The
Master Series, through its investment in money market instruments, may invest in
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by WFNIA to be of comparable quality to the other obligations in which the
Master Series may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or
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supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of the
Master Series' assets invested in securities issued by foreign governments will
vary depending on the relative yields of such securities, the economic and
financial markets of the countries in which the investments are made and the
interest rate climate of such countries.
BANK OBLIGATIONS -- The Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, the Master Series may be subject to additional
investment risks that are different in some respects from those incurred by a
fund which invests only in debt obligations of U.S. domestic issuers. Such risks
include possible future political and economic developments, the possible
imposition of foreign withholding taxes on interest income payable on the
securities, the possible establishment of exchange controls or the adoption of
other foreign governmental restrictions which might adversely affect the payment
of principal and interest on these securities and the possible seizure or
nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations, bearing fixed, floating- or variable-interest
rates.
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COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- The Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Master Series will consist only of direct obligations which, at
the time of their purchase, are (a) rated not lower than Prime-1 by Moody's, A-1
by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated not lower than Aa3 by Moody's
or AA-by S&P, Fitch or Duff, or (c) if unrated, determined by WFNIA to be of
comparable quality to those rated obligations which may be purchased by such
Fund.
REPURCHASE AGREEMENTS -- The Master Series may enter into repurchase
agreements, which involve the acquisition by the Master Series of an underlying
debt instrument, subject to the seller's obligation to repurchase, and the
Master Series' obligation to resell, the instrument at a fixed price usually not
more than one week after its purchase. The Fund's and Master Series' custodian
or sub-custodian has custody of, and holds in a segregated account, securities
acquired by the Master Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the SEC to be loans by the Master
Series. In an attempt to reduce the risk of incurring a loss on a repurchase
agreement, the Master Series enters into repurchase agreements only with
federally regulated or insured banks or primary government securities dealers
reporting to the Federal Reserve Bank of New York or, under certain
circumstances, banks with total assets in excess of $5 billion or domestic
broker/dealers with total equity capital in excess of $100 million. The Master
Series enters into repurchase agreements only with respect to securities of the
type in which the Master Series may invest, including government securities and
mortgage-related securities regardless of their remaining maturities, and
requires that additional securities be deposited with the custodian or
sub-custodian if the value of the securities purchased should decrease below the
repurchase price. WFNIA monitors on an ongoing basis the value of the collateral
to assure that it always equals or exceeds the repurchase price. Certain costs
may be incurred by the Master Series in connection with the sale of the
underlying securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Master Series may be delayed or limited. The Master Series considers on an
ongoing basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
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UNREGISTERED NOTES -- The Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the 1933 Act, provided such investments are consistent with the Master
Series' investment objective. The Master Series will not invest more than 15% of
the value of its net assets in Notes and in other illiquid securities.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- The Master Series may purchase
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable-rate demand notes include
master demand notes which are obligations that permit the Master Series to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there generally
is no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master Series'
right to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating
agencies and the Master Series may invest in obligations which are not so rated
only if WFNIA determines that at the time of investment the obligations are of
comparable quality to the other obligations in which the Master Series may
invest. WFNIA, on behalf of the Master Series, considers on an ongoing basis the
creditworthiness of the issuers of the floating-and variable-rate demand
obligations in the Master Series' portfolio. The Master Series does not invest
more than 15% of the value of its net assets in floating- or variable-rate
demand obligations as to which it cannot exercise the demand feature on not more
than seven days' notice if there is
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no secondary market available for these obligations, and in other illiquid
securities.
PARTICIPATION INTERESTS -- The Master Series may purchase from financial
institutions participation interests in securities in which the Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series' participation
interest bears to the total principal amount of the security. These instruments
may have fixed, floating- or variable-rates of interest. If the participation
interest is unrated, or has been given a rating below that which is permissible
for purchase by the Master Series, the participation interest is backed by an
irrevocable letter of credit or guarantee of a bank, or the payment obligation
otherwise is collateralized by U.S. Government obligations or, in the case of
unrated participation interests, WFNIA must have determined that the instrument
is of comparable quality to those instruments in which the Master Series may
invest. Prior to the Master Series' purchase of any such instrument backed by a
letter of credit or guarantee of a bank, WFNIA evaluates the creditworthiness of
the bank, considering all factors which it deems relevant, which generally may
include review of the bank's cash flow; level of short-term debt; leverage;
capitalization; the quality and depth of management; profitability; return on
assets; and economic factors relative to the banking industry. For certain
participation interests, the Master Series has the right to demand payment, on
not more than seven days' notice, for all or any part of the Master Series'
participation interest in the security, plus accrued interest. As to these
instruments, the Master Series intends to exercise its right to demand payment
only upon a default under the terms of the security, as needed to provide
liquidity to meet redemptions, or to maintain or improve the quality of its
investment portfolio.
MORTGAGE-RELATED SECURITIES -- The Master Series may enter into repurchase
agreements with respect to mortgage-related securities ("MBSs"), representing
interests in a pool of loans secured by mortgages. The resulting cash flow from
these mortgages is used to pay principal and interest on the securities. MBSs
are assembled for sale to investors by various government-sponsored enterprises
such as the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") or are guaranteed by such governmental
agencies as the Government National Mortgage Association ("GNMA"). Regardless of
the type of guarantee, all MBSs are subject to interest rate risk (i.e.,
exposure to loss due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the full and
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timely payment of principal and interest by GNMA and such guarantee is backed by
the authority of GNMA to borrow funds from the U.S. Treasury to make payments
under its guarantee. GNMA is a wholly-owned U.S. Government corporation within
the Department of Housing and Urban Development. As such, GNMA obligations are
general obligations of the United States and are backed by the full faith and
credit of the federal government. MBSs issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are neither backed by nor entitled to the
full faith and credit of the United States. FNMA is a government-sponsored
enterprise which is also a private corporation whose stock trades on the NYSE.
Fannie Maes are guaranteed as to timely payment of principal and interest by
FNMA. FHLMC MBSs include FHLMC Mortgage Participation Certificates (also known
as "Freddie Macs" or "PCs"). FHLMC guarantees timely payment of interest, but
only ultimate payment of principal due under the obligations it issues. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. FHLMC may, under certain circumstances, remit the
payment of principal at any time after default, but in no event later than one
year after the guarantee becomes payable.
WARRANTS -- The Master Series may invest up to 5% of its net assets in
warrants, except that this limitation does not apply to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time, usually with a stated maturity in excess of one year.
ILLIQUID SECURITIES -- The Master Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Master Series cannot exercise the related demand feature described above on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice. However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the 1933 Act for certain of these
securities held by the Master Series, the Master Series intends to treat such
securities as liquid securities in accordance with procedures approved by the
Master Trust's Board of
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Trustees. Because it is not possible to predict with assurance how the market
for restricted securities pursuant to Rule 144A will develop, the Master Trust's
Board of Trustees has directed WFNIA to monitor carefully the Master Series'
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that qualified institutional buyers may periodically cease purchasing
such restricted securities pursuant to Rule 144A, the Master Series' investing
in such securities may have the effect of increasing the level of illiquidity in
the Master Series' portfolio during such period.
INVESTMENT COMPANY SECURITIES -- The Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the Master Series invests. Under the 1940 Act, the Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Master Series' net assets with respect to any one
investment company and (iii) 10% of the Master Series' net assets in the
aggregate. Investments in the securities of other investment companies generally
involve duplication of advisory fees and certain other expenses and Wells Fargo
will waive its advisory fees for that portion of the Master Series assets so
invested, except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
INVESTMENT TECHNIQUES
FUTURES TRANSACTIONS -- IN GENERAL -- The Master Series will not be a
commodity pool. To the extent permitted by applicable regulations, the Master
Series is permitted to use futures as a substitute for a comparable market
position in the underlying securities.
A futures contract is an agreement between two parties, a buyer and a
seller, to exchange a particular commodity at a specific price on a specific
date in the future. Futures contracts are traded on exchanges, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the only credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are, however, subject to market risk (i.e., exposure
to adverse price changes).
The Master Series' futures transactions must constitute permissible
transactions pursuant to regulations promulgated by the Commodity Futures
Trading Commission ("CFTC"). In addition, the Master Series may not engage in
futures transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired options on futures contracts, other than those
contracts entered into for bona fide hedging purposes, would exceed 5% of the
liquidation value of the Master Series'
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assets, after taking into account unrealized profits and unrealized losses on
such contracts; provided, however, that in the case of an option on a futures
contract that is in-the-money at the time of purchase, the in-the-money amount
may be excluded in calculating the 5% liquidation limit. Pursuant to regulations
and/or published positions of the SEC, the Master Series may be required to
segregate cash or high quality money market instruments in connection with its
futures transactions in an amount generally equal to the entire value of the
underlying security.
Initially, when purchasing or selling futures contracts the Master Series
will be required to deposit with the Fund's and the Master Series' custodian in
the broker's name an amount of cash or cash equivalents up to approximately 10%
of the contract amount. This amount is subject to change by the exchange or
board of trade on which the contract is traded, and members of such exchange or
board of trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Master Series upon termination
of the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from the
broker will be made daily as the price of the index or securities underlying the
futures contract fluctuates, making the long and short positions in the futures
contract more or less valuable. At any time prior to the expiration of a futures
contract, the Master Series may elect to close the position by taking an
opposite position, at the then prevailing price, thereby terminating its
existing position in the contract.
Although the Master Series intends to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the Master
Series to substantial losses. If it is not possible, or the Master Series
determines not, to close a futures position in anticipation of adverse price
movements, it will be required to make daily cash payments of variation margin.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
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position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a long
position if the option is a put). Upon exercise of the option, the assumption of
offsetting futures positions by both the writer and the holder of the option
will be accompanied by delivery of the accumulated cash balance in the writer's
futures margin account in the amount by which the market price of the futures
contract, at exercise, exceeds (in the case of a call) or is less than (in the
case of a put) the exercise price of the option on the futures contract.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS -- The Master Series may invest in interest rate futures contracts and
options on interest rate futures contracts as a substitute for a comparable
market position in the underlying securities.
The Master Series also may sell options on interest rate futures contracts
as part of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions can be effected or the
degree of correlation between price movements in the options on interest rate
futures and price movements in the Master Series' portfolio securities which are
the subject of the transaction.
BORROWING MONEY -- As a fundamental policy, the Master Series is permitted
to borrow to the extent permitted under the 1940 Act. However, the Master Series
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 33 1/3% of the value of its total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exceed 5% of the Master Series' total assets, the
Master Series will not make any investments.
LOANS OF PORTFOLIO SECURITIES -- From time to time, the Master Series may
lend securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33 1/3% of the value of the Master Series' total assets. In
connection with such loans, the Master Series receives collateral consisting of
cash, U.S. Government obligations or irrevocable letters of credit which are
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Master Series can increase its income
through the investment of such collateral. The Master Series continues to be
entitled to receive payments in amounts equal to the dividends, interest and
other distributions payable
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on the loaned security and receives interest on the amount of the loan. Such
loans are terminable at any time upon specified notice. The Master Series might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Master Series.
FORWARD COMMITMENTS -- The Master Series may purchase securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment, but delivery and payment ordinarily take place a number
of days after the date of the commitment to purchase. The Master Series will
make commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Master Series may sell these securities before
the settlement date if it is deemed advisable. The Master Series will not accrue
income in respect of a security purchased on a forward commitment basis prior to
its stated delivery date.
Securities purchased on a when-issued or forward commitment basis and
certain other securities held in the Master Series' portfolio are subject to
changes in value (both generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise) based
upon the public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities purchased on a
when-issued or forward commitment basis may expose the Master Series to risk
because they may experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued or forward commitment basis can involve
the additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction itself.
A segregated account of the Master Series consisting of cash or U.S. Government
obligations or other high quality liquid debt securities at least equal at all
times to the amount of the when-issued or forward commitments is established and
maintained at the Master Trust's custodian bank. Purchasing securities on a
forward commitment basis when the Master Series is fully or almost fully
invested may result in greater potential fluctuation in the value of the Master
Series' net assets and its NAV per share.
INVESTMENT POLICIES -- THE FUND
The investment objective of the Fund, as set forth in the first paragraph
of the section entitled "The Fund -- Investment Objective and Policies" is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of the outstanding voting securities of the Fund as
described under "Capital Stock" in the SAI. In addition, any
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<PAGE> 356
fundamental investment policy may not be changed without such shareholder
approval. If the Board of Directors of the Company determines, however, that the
investment objective of the Fund can best be achieved by a substantive change in
a non-fundamental investment policy or strategy, the Board 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 Fund may: (i) not purchase securities
of any issuer (except U.S. Government obligations, which for purposes of this
exception will not include mortgage-backed securities) if as a result, with
respect to 75% of its total assets, more than 5% of the value of the Fund's
total assets would be invested in the securities of such issuer or, with respect
to 100% of its total assets, the Fund would own more than 10% of the outstanding
voting securities of such issuer, provided that this restriction shall not
prevent the Fund from investing all of its assets in the Master Series; (ii)
borrow from banks up to 20% 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 20% 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); (iii) make loans of portfolio securities in
accordance with its investment policies; and (iv) not invest 25% or more of its
total assets (i.e., concentrate) in any particular industry, except that the
Fund is permitted to invest 25% or more of its assets in U.S. Government
obligations, provided that this restriction shall not prevent the Fund from
investing all of its assets in the Master Series.
The Fund reserves the right to invest up to 15% of the current value of its
net assets in repurchase agreements having maturities of more than seven days
and other illiquid securities. However, as long as the Fund's shares are
registered for sale in a state that imposes a lower limit on the percentage of a
fund's assets that may be invested, the Fund will comply with such lower limit.
The Fund presently is limited to investing 10% of its net assets in such
securities due to limits applicable in several states. Disposing of illiquid or
restricted securities may involve additional costs and require additional time.
INVESTMENT POLICIES -- THE MASTER SERIES
CERTAIN FUNDAMENTAL POLICIES -- The Master Series may (i) borrow from banks
up to 20% 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 20% of the current value of its net assets (but investments may not be
purchased while any such out-
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standing borrowing in excess of 5% of its net assets exists); (ii) invest up to
5% of its total assets in the obligations of any single issuer, except that up
to 25% of the value of the total assets of the Master Series may be invested and
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities may be purchased, without regard to any such limitation; and
(iii) not invest 25% or more of its total assets (i.e., concentrate) in any
particular industry, except that the Master Series is permitted to invest 25% or
more of its assets in U.S. Government Obligations. This paragraph describes
certain fundamental policies that cannot be changed as to the Master Series
without approval by the holders of a majority (as defined in the 1940 Act) of
the Master Series' outstanding voting securities.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors) if such purchase does not
cause the value of its investments in all such companies to exceed 5% of the
value of its total assets; (ii) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings; and (iii) invest
up to 15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities.
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<PAGE> 359
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
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
For more information about the Fund write or call:
Stagecoach Inc.
c/o Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94105
1-800-776-0179
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.
WFTA 6/95
<PAGE> 360
STAGECOACH INC.
c/o Wells Fargo Bank, N.A.
Transfer Agent
525 Market Street
San Francisco, CA 94105
WFTR 6/95
<PAGE> 361
STAGECOACH INC.
Telephone: 1-800-776-0179
STATEMENT OF ADDITIONAL INFORMATION
Dated June 28, 1995
ASSET ALLOCATION FUND
BOND INDEX FUND
GROWTH STOCK FUND
SHORT-INTERMEDIATE TERM FUND
S&P 500 STOCK FUND
U.S. TREASURY ALLOCATION FUND
_______________________________
Stagecoach Inc. (the "Company") is a professionally
managed, open-end, series investment company. This SAI contains
information about six funds of the Company -- ASSET ALLOCATION
FUND, BOND INDEX FUND, GROWTH STOCK FUND, SHORT-INTERMEDIATE TERM
FUND, S&P 500 STOCK FUND AND U.S. TREASURY ALLOCATION FUND (each,
a "Fund" and collectively, the "Funds"). Each of the Short-
Intermediate Term Fund and the Growth Stock Fund seeks to achieve
its investment objective by investing all of its assets in the
Short-Intermediate Term Master Series and the Growth Stock Master
Series, (collectively, the "MSI Master Series") respectively, of
Managed Series Investment Trust ("MSI Trust"). Each of the Asset
Allocation Fund, Bond Index Fund, S&P 500 Stock Fund and U.S.
Treasury Allocation Fund seeks to achieve its investment
objective by investing substantially all of its assets in the
Asset Allocation Master Series, Bond Index Master Series, S&P 500
Index Master Series and the U.S. Treasury Allocation Master
Series (collectively, the "MIP Master Series" collectively, with
the MSI Master Series, the "Master Series"), respectively, of
Master Investment Portfolio ("MIP Trust" and collectively with
MSI Trust, the "Trusts"). Each MIP Master Series has
substantially the same investment objective as its related Fund.
Each MSI Master Series has the same investment objective as its
related Fund. Each Fund may withdraw its investment in the
corresponding Master Series at any time, if the Board of
Directors of the Company determines that such action is in the
best interests of the Fund and its shareholders. Upon such
withdrawal, the Company's Board of Directors would consider
alternative investments, including investing all of the Fund's
assets in another investment company with the same investment
objective as the Fund or hiring an investment adviser to manage
the Fund's assets in accordance with the investment policies and
restrictions described in the Fund's Prospectus and this
Statement of Additional Information ("SAI").
This SAI is not a prospectus and should be read in
conjunction with each Fund's Prospectus. All terms used in this
SAI that are defined in the Prospectuses will have the meanings
assigned in the Prospectuses. A copy of the Prospectus for each
Fund may be obtained without charge by writing Stephens Inc., the
Company's sponsor, administrator and distributor, at 111 Center
Street, Little Rock, Arkansas 72201 or by calling the Transfer
Agent at the telephone number indicated above.
__________________________________
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<PAGE> 362
TABLE OF CONTENTS
<TABLE>
<S> <C>
Introduction............................................... 3
Investment Restrictions.................................... 3
Additional Permitted Investment Activities ................ 11
Management................................................. 18
Calculation of Yield and Total Return...................... 27
Determination of Net Asset Value........................... 32
Portfolio Transactions..................................... 33
Federal Income Taxes....................................... 35
Capital Stock.............................................. 39
Other...................................................... 44
Custodian and Transfer and Dividend Disbursing Agent....... 44
Independent Auditors....................................... 45
Financial Information...................................... 45
SAI Appendix............................................... A-1
Financial Statements....................................... F-1
</TABLE>
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<PAGE> 363
INTRODUCTION
MSI Trust is a registered investment company consisting
of eight series including the Growth Stock Master Series and the
Short-Intermediate Term Master Series. MIP Trust is a registered
investment company consisting of fourteen series including the
S&P 500 Index Master Series, Asset Allocation Master Series, Bond
Index Master Series and U.S. Treasury Allocation Master Series.
Each Fund invests all of its assets in the corresponding Master
Series of the Trusts (as illustrated below), which has the same
or substantially the same investment objective as the related
Fund.
<TABLE>
<CAPTION>
FUND CORRESPONDING SERIES TRUST
---- -------------------- -----
<S> <C> <C>
Asset Allocation Fund Asset Allocation Master Series MIP Trust
Bond Index Fund Bond Index Master Series MIP Trust
S&P 500 Stock Fund S&P 500 Index Master Series MIP Trust
U.S. Treasury Allocation Fund U.S. Treasury Allocation MIP Trust
Master Series
Growth Stock Fund Growth Stock Master Series MSI Trust
Short-Intermediate Term Fund Short-Intermediate Term MSI Trust
Master Series
</TABLE>
INVESTMENT RESTRICTIONS
The Funds are subject to the following investment
restrictions, all of which are fundamental policies.
The Funds may not:
(1) purchase the securities of issuers conducting their
principal business activity in the same industry if, immediately
after the purchase and as a result thereof, the value of any
Fund's investments in that industry would be 25% or more of the
current value of such Fund's total assets, provided that there is
no limitation with respect to investments in (i) obligations of
the U.S. Government, its agencies or instrumentalities; (ii) in
the case of the S&P 500 Stock Fund, and the stock portion of the
Asset Allocation Fund, any industry in which the S&P 500 Index
becomes concentrated to the same degree during the same period
(provided that, with respect to the stock and money market
portions of the Asset Allocation Fund, the Fund will be
concentrated as specified above only to the extent the percentage
of its assets invested in those categories of investments is
sufficiently large that 25% or more of its total assets would be
invested in a single industry); (iii) in the case of the Bond
Index Fund, any industry in which the Lehman Brothers
Government/Corporate Bond Index (the "LB Bond Index") becomes
concentrated to the same degree during the same period; and
(iv) in the case of the money market portion of the Asset
Allocation Fund, its money market instruments may be concentrated
in the banking industry (but will not do so unless the SEC staff
confirms that it does not object to the Fund reserving freedom of
action to concentrate investments in the banking industry); and
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<PAGE> 364
provided further, that a Fund may invest all its assets in a
diversified open-end mangement investment company, or series
thereof, with substantially the same investment objective,
policies and restrictions as such Fund, without regard for the
limitations set forth in this paragraph (1);
(2) purchase or sell real estate or real estate limited
partnerships (other than securities secured by real estate or
interests therein or securities issued by companies that invest
in real estate or interests therein);
(3) purchase commodities or commodity contracts
(including futures contracts), except that a Fund may purchase
securities of an issuer which invests or deals in commodities or
commodity contracts, and except that the U.S. Treasury Allocation
Fund, S&P 500 Stock Fund, Asset Allocation Fund and Bond Index
Fund may enter into futures and options contracts in accordance
with their respective investment policies;
(4) purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or
development programs;
(5) purchase securities on margin (except for short-
term credits necessary for the clearance of transactions and
except for margin payments in connection with options, futures
and options on futures) or make short sales of securities;
(6) underwrite securities of other issuers, except to
the extent that the purchase of permitted investments directly
from the issuer thereof or from an underwriter for an issuer and
the later disposition of such securities in accordance with a
Fund's investment program may be deemed to be an underwriting and
provided further, that the purchase by a Fund of securities
issued by a diversified, open-end management investment company,
or a series thereof, with substantially the same investment
objective, policies and restrictions as such Fund shall not
constitute an underwriter for purposes of this paragraph (6);
(7) make investments for the purpose of exercising
control or management; provided that a Fund may invest all its
assets in a diversified, open-end management investment company,
or a series thereof, with substantially the same investment
objective, policies and restrictions as such Fund, without regard
to the limitations set forth in this paragraph (7);
(8) borrow money or issue senior securities as defined
in the 1940 Act, except that each of the Short-Intermediate Term
Fund, Growth Stock Fund and Bond Index Fund may borrow from banks
up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings
may be secured by the pledge of up to 10% of the current value of
its net assets (but investments may not be purchased while any
such outstanding borrowing in excess of 5% of its net assets
exists), and except that each of the Asset Allocation Fund, U.S.
Treasury Allocation Fund and S&P 500 Stock Fund may borrow up to
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<PAGE> 365
20% 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 20% 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);
(9) write, purchase or sell puts, calls, straddles,
spreads, warrants, options or any combination thereof, except
that the U.S. Treasury Allocation Fund, S&P 500 Stock Fund, Asset
Allocation Fund and Bond Index Fund may enter into futures and
options contracts in accordance with their respective investment
policies, and except that the Asset Allocation Fund and Growth
Stock Fund may purchase securities with put rights in order to
maintain liquidity, and except that the Short-Intermediate Term
Fund, S&P 500 Stock Fund and Growth Stock Fund may invest up to
5% of their net assets in warrants in accordance with their
investment policies stated below;
(10) purchase securities of any issuer (except
securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities) if, as a result, with respect to
75% of its total assets, more than 5% of the value of a Fund's,
total assets would be invested in the securities of any one
issuer or, with respect to 100% of its total assets a Fund's
ownership would be more than 10% of the outstanding voting
securities of such issuer; provided that a Fund may invest all
its assets in a diversified, open-end management investment
company, or a series thereof, with substantially the same
investment objective, policies and restrictions as such Fund,
without regard to the limitations set forth in this paragraph
(10); or
(11) make loans, except that each Fund may purchase or
hold debt instruments or lend their portfolio securities in
accordance with their investment policies, and may enter into
repurchase agreements.
The Funds are subject to the following non-fundamental
policies.
(1) None of the Funds may, unless required by their
investment strategy of replicating the composition of a published
market index:
(a) purchase or retain securities of any issuer if
the officers or Directors of the Company or the investment
adviser owning beneficially more than one-half of one percent
(0.5%) of the securities of the issuer together owned
beneficially more than 5% of such securities;
(b) purchase securities of issuers who, with their
predecessors, have been in existence less than three years,
unless the securities are fully guaranteed or insured by the U.S.
Government, a state, commonwealth, possession, territory, the
District of Columbia or by an entity in existence at least three
years, or the securities are backed by the assets and revenues of
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<PAGE> 366
any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its
total assets, provided that this restriction does not affect the
Fund's ability to invest all or a portion of their assets in the
corresponding Master Series of the Trusts.
(2) The Funds reserve the right to invest up to 15% of
the current value of their net assets in fixed time deposits that
are subject to withdrawal penalties and that have maturities of
more than seven days, repurchase agreements maturing in more than
seven days or other illiquid securities. However, as long as a
Fund's shares are registered for sale in a state that imposes a
lower limit on the percentage of a fund's assets that may be so
invested, the Funds will comply with such lower limit. The Funds
presently are limited to investing 10% of their net asset in such
securities due to limits applicable in several states. However,
these limits should not prevent a Fund from investing all of its
assets in the corresponding Master Series of the Trusts.
(3) The Funds may invest in shares of other open-end,
management investment companies, subject to the limitations of
Section 12(d)(1) of the 1940 Act, provided that any such
purchases will be limited to temporary investments in shares of
unaffiliated investment companies and the Investment Adviser will
waive its advisory fees for that portion of the Series' assets so
invested, except when such purchase is part of a plan of merger,
consolidation, reorganization or acquisition.
The MSI Master Series are subject to the following
investment restrictions, all of which are fundamental policies.
The MSI Master Series may not:
(1) purchase the securities of issuers conducting their
principal business activity in the same industry if, immediately
after the purchase and as a result thereof, the value of any MSI
Master Series' investments in that industry would be 25% or more
of the current value of such MSI Master Series' total assets,
provided that there is no limitation with respect to investments
in (i) obligations of the U.S. Government, its agencies or
instrumentalities;
(2) purchase or sell real estate or real estate limited
partnerships (other than securities secured by real estate or
interests therein or securities issued by companies that invest
in real estate or interests therein);
(3) purchase commodities or commodity contracts
(including futures contracts), except that a MSI Master Series
may purchase securities of an issuer which invests or deals in
commodities or commodity contracts;
(4) purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or
development programs;
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<PAGE> 367
(5) purchase securities on margin (except for short-
term credits necessary for the clearance of transactions and
except for margin payments in connection with options, futures
and options on futures) or make short sales of securities;
(6) underwrite securities of other issuers, except to
the extent that the purchase of permitted investments directly
from the issuer thereof or from an underwriter for an issuer and
the later disposition of such securities in accordance with a MSI
Master Series' investment program may be deemed to be an
underwriting;
(7) make investments for the purpose of exercising
control or management;
(8) borrow money or issue senior securities as defined
in the 1940 Act, except that each of MSI Master Series may borrow
from banks up to 10% of the current value of its net assets for
temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the
current value of its net assets (but investments may not be
purchased while any such outstanding borrowing in excess of 5% of
its net assets exists);
(9) write, purchase or sell puts, calls, straddles,
spreads, warrants, options or any combination thereof, except
that the Growth Stock Master Series may purchase securities with
put rights in order to maintain liquidity, and except that the
MSI Master Series may invest up to 5% of their net assets in
warrants in accordance with their investment policies stated
below;
(10) purchase securities of any issuer (except
securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities) if, as a result, with respect to
75% of its total assets, more than 5% of the value of a MSI
Master Series' total assets would be invested in the securities
of any one issuer or, with respect to 100% of its total assets
such MSI Master Series' ownership would be more than 10% of the
outstanding voting securities of such issuer; or
(11) make loans, except that the MSI Master Series may
purchase or hold debt instruments or lend their portfolio
securities in accordance with their investment policies, and may
enter into repurchase agreements.
The MSI Master Series are subject to the following non-
fundamental policies.
(1) Neither of the MSI Master Series may:
(a) purchase or retain securities of any issuer if
the officers or Trustees of the Trust or the investment adviser
owning beneficially more than one-half of one percent (0.5%) of
the securities of the issuer together owned beneficially more
than 5% of such securities;
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<PAGE> 368
(b) purchase securities of issuers who, with their
predecessors, have been in existence less than three years,
unless the securities are fully guaranteed or insured by the U.S.
Government, a state, commonwealth, possession, territory, the
District of Columbia or by an entity in existence at least three
years, or the securities are backed by the assets and revenues of
any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its
total assets;
(2) The MSI Master Series reserve the right to invest
up to 15% of the current value of their net assets in fixed time
deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, repurchase agreements
maturing in more than seven days or other illiquid securities.
However, as long as a Fund's shares are registered for sale in a
state that imposes a lower limit on the percentage of a fund's
assets that may be so invested, each of the MSI Master Series
will comply with such lower limit. The MSI Master Series
presently are limited to investing 10% of their net asset in such
securities due to limits applicable in several states.
(3) The MSI Master Series may invest in shares of other
open-end, management investment companies, subject to the
limitations of Section 12(d)(1) of the 1940 Act, provided that
any such purchases will be limited to temporary investments in
shares of unaffiliated investment companies and the Investment
Adviser will waive its advisory fees for that portion of the MSI
Master Series' assets so invested, except when such purchase is
part of a plan of merger, consolidation, reorganization or
acquisition.
The MIP Master Series are subject to the following
investment restrictions, all of which are fundamental policies.
None of the MIP Master Series may:
(1) invest more than 5% of its assets in the
obligations of any single issuer, except that up to 25% of the
value of its total assets may be invested, and securities issued
or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
(2) hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of its total assets.
(3) invest in commodities, except that each MIP Master
Series may purchase and sell (i.e., write) options, forward
contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
(4) purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but each MIP Master Series may purchase and sell securities that
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<PAGE> 369
are secured by real estate or issued by companies that invest or
deal in real estate.
(5) borrow money, except that the Bond Index Master
Series may borrow from banks up to 10% of the current value of
its net assets for temporary purposes only in order to meet
redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of its net assets (but investments
may not be purchased while any such outstanding borrowing in
excess of 5% of its net assets exists), and except that each of
the Asset Allocation Master Series, U.S. Treasury Allocation
Master Series and S&P 500 Index Master Series may borrow up to
20% 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 20% 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).
For purposes of this investment restriction, a MIP Master Series'
entry into options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes shall not constitute borrowing to the extent
certain segregated accounts are established and maintained by
such MIP Master Series.
(6) make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
However, each MIP Master Series may lend its portfolio securities
in an amount not to exceed 33-1/3% of the value of its total
assets. Any loans of portfolio securities will be made according
to guidelines established by the SEC and the Master Investment
Portfolios Board of Trustees.
(7) act as an underwriter of securities of other
issuers, except to the extent the MIP Master Series may be deemed
an underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
(8) invest 25% or more of its total assets in the
securities of issuers in any particular industry or group of
closely related industries except that, in the case of each MIP
Master Series, there shall be no limitation with respect to
investments in (i) obligations of the U.S. Government, its
agencies or instrumentalities; (ii) in the case of the S&P 500
Index Master Series, and the stock portion of the Asset
Allocation Master Series, any industry in which the S&P 500 Index
becomes concentrated to the same degree during the same period
(provided that, with respect to the stock and money market
portions of the Asset Allocation Master Series, the Master Series
will be concentrated as specified above only to the extent the
percentage of its assets invested in those categories of
investments is sufficiently large that 25% or more of its total
assets would be invested in a single industry); (iii) in the case
of the Bond Index Master Series, any industry in which the Lehman
Brothers Government/Corporate Bond Index (the "LB Bond Index")
becomes concentrated to the same degree during the same period;
and (iv) in the case of the money market portion of the Asset
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Allocation Master Series, its money market instruments may be
concentrated in the banking industry (but will not do so unless
the SEC staff confirms that it does not object to the Master
Series reserving freedom of action to concentrate investments in
the banking industry).
(9) issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act), except to the extent the
activities permitted in MIP Master Series' fundamental policies
(3) and (5) and non-fundamental policies (2) and (3), may be
deemed to give rise to a senior security.
(10) purchase securities on margin, but each MIP Master
Series may make margin deposits in connection with transactions
in options, forward contracts, futures contracts, including those
related to indexes, and options on futures contracts or indexes.
The MIP Master Series are subject to the following non-
fundamental policies.
The MIP Master Series may not:
(1) invest in the securities of a company for the
purpose of exercising management or control, but each MIP Master
Series will vote the securities it owns in its portfolio as a
shareholder in accordance with its views.
(2) pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to the
extent related to the purchase of securities on a when-issued or
forward commitment basis and the deposit of assets in escrow in
connection with writing covered put and call options and
collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes.
(3) purchase, sell or write puts, calls or combinations
thereof, except as may be described in the MIP Master Series'
offering documents.
(4) purchase securities of any company having less than
three years' continuous operations (including operations of any
predecessors) unless the securities are fully guaranteed or
insured by the U.S. Government, a state, commonwealth,
possession, territory, the District of Columbia or by an entity
in existence at least three years, or the securities are backed
by the assets and revenues of any of the foregoing if such
purchase would cause the value of its investments in all such
companies to exceed 5% of the value of its total assets.
(5) enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than
15% of the value of a MIP Master Series' net assets would be so
invested.
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(6) purchase securities of other investment companies,
except to the extent permitted under the 1940 Act.
(7) purchase or retain securities of any issuer if the
officers or Directors of the Company, the Trusts or the
investment adviser owning beneficially more than one-half of one
percent (0.5%) of the securities of the issuer together owned
beneficially more than 5% of such securities.
If a percentage restriction is adhered to at the time of
investment, a later change in percentage resulting from a change
in values or assets will not constitute a violation of such
restriction.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
THE ASSET ALLOCATION MASTER SERIES AND THE U.S. TREASURY
ALLOCATION MASTER SERIES ONLY:
Asset Allocation Model. A key component of the Asset
Allocation Model is a set of assumptions concerning expected risk
and return and investor attitudes toward risk which are
incorporated into the asset allocation decision. The principal
inputs of financial data to the Asset Allocation Model for the
Asset Allocation Master Series currently are (i) consensus
estimates of the earnings, dividends and payout ratios on a broad
cross-section of common stocks as reported by independent
financial reporting services which survey a broad cross-section
of Wall Street analysts; (ii) the estimated current yield to
maturity on new long-term corporate bonds rated "AA" by S&P;
(iii) the present yield on money market instruments; (iv) the
historical statistical standard deviation in investment return
for each class of asset; and (v) the historical statistical
correlation of investment returns among the various asset classes
in which the Asset Allocation Master Series invests.
U.S. Treasury Allocation Model. The principal inputs of
the U.S. Treasury Allocation Model for the U.S. Treasury
Allocation Master Series currently are (i) the current yields on
91-day U.S. Treasury bills, 5-year U.S. Treasury notes, and
30-year U.S. Treasury bonds; (ii) the expected statistical
standard deviation in investment return for each maturity class
of fixed income security; and (iii) the expected statistical
correlation of investment return among the three maturity classes
of U.S. Treasury securities. Using this data, the Asset
Allocation Model is run daily by the sub-adviser to determine the
recommended asset allocation. The model's recommendations are
presently made in 10% increments.
ALL MASTER SERIES:
Unrated, Downgraded and Below Investment Grade
Investments. The Master Series may purchase instruments that are
not rated if, in the opinion of Wells Fargo, such obligations are
of investment quality comparable to other rated investments that
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are permitted to be purchased by such Master Series. After
purchase by a Master Series, a security may cease to be rated or
its rating may be reduced below the minimum required for purchase
by such Master Series. Neither event will require a sale of such
security by such Master Series. However, in no event will such
securities exceed 5% of the Master Series' net assets. To the
extent the ratings given by Moody's or S&P may change as a result
of changes in such organizations or their rating systems, each
Master Series will attempt to use comparable ratings as standards
for investments in accordance with the investment policies
contained in its Prospectus and in this SAI. The ratings of
Moody's and S&P are more fully described in the SAI Appendix.
Because the Master Series are not required to sell
downgraded securities, and because the Growth Stock Master Series
is permitted to purchase securities that are rated below
investment grade or if unrated are of comparable quality, the
Master Series could hold up to 5% of their net assets in debt
securities rated below "Baa" by Moody's or below "BBB" by S&P or
if unrated, low quality (below investment grade) securities. The
Master Series may hold such securities even though none of the
Master Series except the Growth Stock Master Series are permitted
to purchase such securities.
Although they may offer higher yields than do higher
rated securities, low rated and unrated low quality debt
securities generally involve greater volatility of price and risk
of principal and income, including the possibility of default by,
or bankruptcy of, the issuers of the securities. In addition,
the markets in which low rated and unrated low quality debt are
traded are more limited than those in which higher rated
securities are traded. The existence of limited markets for
particular securities may diminish a Master Series' ability to
sell the securities at fair value either to meet redemption
requests or to respond to changes in the economy or in the
financial markets and could adversely affect and cause
fluctuations in the daily net asset value of a Master Series'
Shares.
Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the values and
liquidity of low rated or unrated low quality debt securities,
especially in a thinly traded market. Analysis of the
creditworthiness of issuers of low rated or unrated low quality
debt securities may be more complex than for issuers of higher
rated securities, and the ability of a Master Series to achieve
its investment objective may, to the extent it holds low rated or
unrated low quality debt securities, be more dependent upon such
creditworthiness analysis than would be the case if the Master
Series held exclusively higher rated or higher quality
securities.
Low rated or unrated low quality debt securities may be
more susceptible to real or perceived adverse economic and
competitive industry conditions than investment grade securities.
The prices of such debt securities have been found to be less
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sensitive to interest rate changes than higher rated or higher
quality investments, but more sensitive to adverse economic
downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for
example, could cause a decline in low rated or unrated low
quality debt securities prices because the advent of a recession
could dramatically lessen the ability of a highly leveraged
company to make principal and interest payments on its debt
securities. If the issuer of the debt securities defaults, the
Master Series may incur additional expenses to seek recovery.
Letters of Credit. Certain of the debt obligations
(including certificates of participation, commercial paper and
other short-term obligations) which the Master Series may
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. Only banks,
savings and loan associations and insurance companies which, in
the opinion of Wells Fargo, are of comparable quality to issuers
of other permitted investments of such Master Series may be used
for letter of credit-backed investments.
Pass-Through Obligations. Certain of the debt
obligations in which the Short-Intermediate Term Master Series
may invest may be pass-through obligations that represent an
ownership interest in a pool of mortgages and the resultant cash
flow from those mortgages. Payments by homeowners on the loans
in the pool flow through to certificate holders in amounts
sufficient to repay principal and to pay interest at the pass-
through rate. The stated maturities of pass-through obligations
may be shortened by unscheduled prepayments of principal on the
underlying mortgages. Therefore, it is not possible to predict
accurately the average maturity of a particular pass-through
obligation. Variations in the maturities of pass-through
obligations will affect the yield of any Master Series investing
in such obligations. Furthermore, as with any debt obligation,
fluctuations in interest rates will inversely affect the market
value of pass-through obligations. The Short-Intermediate Term
Master Series may invest in pass-through obligations that are
supported by the full faith and credit of the U.S. Government
(such as those issued by the Government National Mortgage
Association) or those that are guaranteed by an agency or
instrumentality of the U.S. Government or government-sponsored
enterprise (such as the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation) or bonds
collateralized by any of the foregoing.
When-Issued Securities. Certain of the securities in
which the U.S. Treasury Allocation Master Series, Short-
Intermediate Term Master Series, Bond Index Master Series, Growth
Stock Master Series and the Asset Allocation Master Series may
invest will be purchased 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. These Master Series only
will make commitments to purchase securities on a when-issued
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basis with the intention of actually acquiring the securities,
but may sell them before the settlement date if it is deemed
advisable. When-issued securities are subject to market
fluctuation, and no income accrues to the purchaser during the
period prior to issuance. The purchase price and the interest
rate that will be received on debt securities are fixed at the
time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the
market price at the time of delivery may be lower than the
agreed-upon purchase price, in which case there could be an
unrealized loss at the time of delivery. None of the Master
Series currently intends to invest more than 5% of its assets in
when-issued securities during the coming year. Each Master
Series will establish a segregated account in which it will
maintain cash or liquid, high-grade debt securities in an amount
at least equal in value to the Master Series' commitments to
purchase when-issued securities. If the value of these assets
declines, the Master Series 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.
Loans of Portfolio Securities. All Master Series may
lend securities from their portfolios to brokers, dealers and
financial institutions (but not individuals) if cash, U.S.
Government securities or other high-quality debt obligations
equal to at least 100% of the current market value of the
securities loan (including accrued interest thereon) plus the
interest payable to such Master Series with respect to the loan
is maintained with the Master Series. In determining whether to
lend a security to a particular broker, dealer or financial
institution, the Master Series' Investment Adviser will consider
all relevant facts and circumstances, including the
creditworthiness of the broker, dealer, or financial institution.
Any loans of portfolio securities will be fully collateralized
based on values that are marked to market daily. The Master
Series will not enter into any portfolio security lending
arrangement having a duration of longer than one year. Any
securities that a Master Series may receive as collateral will
not become part of the Master Series' portfolio at the time of
the loan and, in the event of a default by the borrower, the
Master Series will, if permitted by law, dispose of such
collateral except for such part thereof that is a security in
which the Master Series is permitted to invest. During the time
securities are on loan, the borrower will pay the Master Series
any accrued income on those securities, and the Master Series may
invest the cash collateral and earn income or receive an agreed-
upon fee from a borrower that has delivered cash-equivalent
collateral. None of the Master Series will lend securities
having a value that exceeds 33 1/3% of the current value of its
total assets. Loans of securities by any of the Master Series
will be subject to termination at the Master Series' or the
borrower's option. The Master Series may pay reasonable
administrative and custodial fees in connection with a securities
loan and may pay a negotiated portion of the interest or fee
earned with respect to the collateral to the borrower or the
placing broker. Borrowers and placing brokers may not be
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affiliated, directly or indirectly, with the Trusts, the
Investment Adviser, Wells Fargo Nikko Investment Advisors
("WFNIA") or the Distributor.
Foreign Obligations. 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 generally
subject to uniform accounting, auditing and financial reporting
standards or governmental supervision comparable to those
applicable to 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. None of the Master Series
may invest 25% or more of its assets in foreign obligations.
Obligations of foreign banks and foreign branches of
U.S. banks involve somewhat different investment risks from those
affecting obligations of U.S. banks, including the possibilities
that liquidity could be impaired because of future political and
economic developments, that the obligations may be less
marketable than comparable obligations of U.S. banks, that a
foreign jurisdiction might impose withholding taxes on interest
income payable on those obligations, that foreign deposits may be
seized or nationalized, that foreign governmental restrictions
(such as foreign exchange controls) may be adopted which might
adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be
more difficult because there may be less publicly available
information concerning foreign banks or the accounting, auditing
and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to
U.S. banks. In that connection, foreign banks are not subject to
examination by any U.S. Government agency or instrumentality.
Privately Issued Securities (Rule 144A). The Growth
Stock Master Series may invest in privately issued securities
which may be resold only in accordance with Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). Rule 144A
Securities are restricted securities and will not be publicly
traded. Accordingly, the liquidity of the market for specific
Rule 144A Securities may vary. Wells Fargo, pursuant to
guidelines established by the Trust's Board of Trustees, will
evaluate the liquidity characteristics of each Rule 144A Security
proposed for purchase by the Growth Stock Master Series on a
case-by-case basis and will consider the following factors, among
others, in its evaluation: (1) the frequency of trades and
quotes for the Rule 144A Security; (2) the number of dealers
willing to purchase or sell the Rule 144A Security and the number
of other potential purchasers; (3) dealer undertakings to make a
market in the Rule 144A Security; and (4) the nature of the
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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). The
Growth Stock Master Series does not intend to invest more than 5%
of its net assets in Rule 144A Securities during the coming year.
Futures Contracts. The S&P 500 Index Master Series,
Bond Index Master Series, Asset Allocation Master Series and the
U.S. Treasury Allocation Master Series may use futures contracts
as a hedge against the effects of interest rate changes or
changes in the market value of the stocks comprising the index in
which such Master Series invests. In managing their cash flows,
these Master Series also may use futures contracts as a
substitute for holding the designated securities underlying the
futures contract. A futures contract is an agreement between two
parties, a buyer and a seller, to exchange a particular commodity
at a specific price on a specific date in the future. At the
time it enters into a futures transaction, a Master Series is
required to make a performance deposit (initial margin) of cash
or liquid securities in a segregated account in the name of the
futures broker. Subsequent payments of "variation margin" are
then made on a daily basis, depending on the value of the futures
position which is continually "marked to market."
A Master Series may engage only in futures contract
transactions involving (i) the sale of a futures contract (i.e.,
short positions) to hedge the value of securities held by such
Master Series; (ii) the purchase of a futures contract when such
Master Series hold a short position having the same delivery
month (i.e., a long position offsetting a short position); or
(iii) the purchase of a futures contract to permit the Master
Series to, in effect, participate in the market for the
designated securities underlying the futures contract without
actually owning such designated securities. When a Master Series
purchases a futures contract, it will create a segregated account
consisting of cash or other liquid assets in an amount equal to
the total market value of such futures contract, less the amount
of initial margin for the contract.
If a Master Series enters into a short position in a
futures contract as a hedge against anticipated adverse market
movements and the market then rises, the increase in the value of
the hedged securities will be offset, in whole or in part, by a
loss on the futures contract. If instead a Master Series
purchases a futures contract as a substitute for investing in the
designated underlying securities, a Master Series experiences
gains or losses that correspond generally to gains or losses in
the underlying securities. The latter type of futures contract
transactions permit a Master Series to experience the results of
being fully invested in a particular asset class, while
maintaining the liquidity needed to manage cash flows into or out
of the Master Series (e.g., from purchases and redemptions of
Master Series shares). Under normal market conditions, futures
contract positions may be closed out on a daily basis. The
Master Series identified above expect to apply a portion of their
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cash or cash equivalents maintained for liquidity needs to such
activities.
Transactions by a Master Series in futures contracts
involve certain risks. One risk in employing futures contracts
as a hedge against cash market price volatility is the
possibility that futures prices will correlate imperfectly with
the behavior of the prices of the securities in the Master
Series' portfolio (the portfolio securities of the Bond Index
Master Series, U.S. Treasury Allocation Master Series and the
bond portion of the Asset Allocation Master Series will not be
identical to the securities underlying the futures contracts).
Similarly, in employing futures contracts as a substitute for
purchasing the designated underlying securities, there is a risk
that the performance of the futures contract may correlate
imperfectly with the performance of the direct investments for
which the futures contract is a substitute. In addition,
commodity exchanges generally limit the amount of fluctuation
permitted in futures contract prices during a single trading day,
and the existence of such limits may prevent the prompt
liquidation of futures positions in certain cases. Limits on
price fluctuations are designed to stabilize prices for the
benefit of market participants; however, there could be cases
where the Master Series could incur a larger loss due to the
delay in trading than it would have if no limit rules had been in
effect.
In order to comply with undertakings made by the Master
Series pursuant to Commodity Futures Trading Commission ("CFTC")
Regulation 4.5, the Master Series will use futures and option
contracts solely for bona fide hedging purposes within the
meaning and intent of CFTC Reg. 1.3(z); provided, however, that
in addition, with respect to positions in commodity futures or
commodity option contracts which do not come within the meaning
and intent of CFTC Reg. 1.3(z), the aggregate initial margin and
premiums required to establish such positions will not exceed
five percent of the liquidation value of the Master Series'
portfolio, after taking into account unrealized profits and
unrealized losses on any such contract it has entered into; and
provided further, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount as
defined in CFTC Reg. 190.01(x) may be excluded in computing such
five percent.
Investment in Warrants. The Short-Intermediate Term
Master Series, S&P 500 Index Master Series and the Growth Stock
Master Series may invest no more than 5% of each of their net
assets at the time of purchase in warrants (other than those that
have been acquired in units or attached to other securities),
including not more than 2% of each of their 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 Short-Intermediate Term Master
Series, S&P 500 Index Master Series and the Growth Stock Master
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Series each may only purchase warrants on securities in which the
respective Master Series may invest directly.
MANAGEMENT
Directors and Officers. The principal occupations
during the past five years of the Directors and executive
officers of the Company are listed below. Each of the Officers
and Directors of the Company serve in the identical capacity as
Officers and Trustees of the Trust. The address of each, unless
otherwise indicated, is 111 Center Street, Little Rock, Arkansas
72201. Directors deemed to be "interested persons" of the
Company for purposes of the 1940 Act are indicated by an
asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Address and Age Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 73 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 44 Trustee, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens Insurance
Services Inc.; Senior
Vice President of
Stephens Sports
Management Inc.; and
President of
Investors Brokerage
Insurance Inc.
Thomas S. Goho, 53 Trustee Associate Professor
321 Beechcliff Court of Finance of the
Winston-Salem, NC 27104 School of Business
and Accounting at
Wake Forest
University since
1983. Financial
Planner and President
of Piedmont Financial
Planning since 1983.
*Zoe Ann Hines, 46 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.
</TABLE>
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<PAGE> 379
<TABLE>
<S> <C> <C>
*W. Rodney Hughes, 69 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 51 Trustee Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
Larry W. Bowden, 41 Vice President Vice President of
Stephens and
Assistant Manager of
Financial Services
Group; Senior Vice
President of Stephens
Insurance Services
Inc.
Ellen M. Gray, 65 Vice President Senior Vice President
of Stephens and
Director of Investors
Brokerage Insurance
Inc. Prior thereto,
Senior Vice President
of Eppler, Guerin &
Turner, Inc.
E. Curtis Jeffries, 38 Vice President Associate of
-- Marketing Financial Services
Group of Stephens.
Prior thereto,
Account Supervisor of
Brooks-Pollard Co.
Jane G. Johnson, 41 Vice President Associate of
Financial Services
Group of Stephens.
</TABLE>
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<PAGE> 380
<TABLE>
<S> <C> <C>
Michael W. Nolte, 34 Assistant Associate of
Secretary Financial Services
Group of Stephens.
Ann Bonsteel, 32 Assistant Associate of
Secretary Financial Services
Group of Stephens.
</TABLE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $8,688 $34,188
Director
*R. Greg Feltus 0 0
Director
Thomas S. Goho 8,688 34,188
Director
*Zoe Ann Hines 0 0
Director
*W. Rodney Hughes 8,188 32,188
Director
Robert M. Joses 8,188 34,188
Director
*J. Tucker Morse 8,188 32,188
Director
</TABLE>
Directors of the Company are compensated by the Company
for their services as indicated above and also are reimbursed for
all out-of-pocket expenses relating to attendance at board
meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as officers and Directors of
Overland Express Funds, Inc. and Stagecoach Funds, Inc., and as
Trustees and/or Officers of Stagecoach Trust, Master Investment
Portfolio, Life & Annuity Trust, Master Investment Trust and
Managed Series Investment Trust, each of which are registered
open-end management investment companies and each of which is
considered to be in the same "fund complex", as such term is
defined in Form N-1A under the 1940 Act, as the Company. The
Directors are compensated by other Companies and Trusts within
the fund complex for their services as Directors/Trustees to such
Companies and Trusts. Currently the Directors do not receive any
retirement benefits or deferred compensation from the Company or
any other member of the fund complex.
As of the date of this SAI, Directors and officers of
the Company as a group beneficially owned less than 1% of the
outstanding shares of the Company.
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<PAGE> 381
Investment Adviser. The Funds have not engaged an
investment adviser. Each of the Master Series is advised by
Wells Fargo pursuant to an Advisory Contract. In the case of the
U.S. Treasury Allocation Master Series, Bond Index Master Series,
Asset Allocation Master Series and the S&P 500 Index Master
Series, WFNIA serves as a sub-adviser. The Advisory Contracts
and Sub-Advisory Contracts were approved by the Trusts' Boards of
Trustees on February 1, 1995. The Advisory Contract for each
Master Series provides that Wells Fargo shall furnish investment
guidance and policy direction in connection with the daily
portfolio management of each Master Series. Pursuant to the
Advisory Contracts, Wells Fargo furnishes to the Trusts' Boards
of Trustees periodic reports on the investment strategy and
performance of each Master Series.
Wells Fargo has agreed to provide to the Master Series,
among other things, money market security and fixed-income
research, analysis and statistical and economic data and
information concerning interest rate and security market trends,
portfolio composition, credit conditions and average maturities
of each Master Series' portfolio.
Each Advisory Contract will continue in effect for more
than two years provided the continuance is approved annually
(i) by the holders of a majority of the respective Master Series'
outstanding voting securities or by the Trusts' Boards of
Trustees and (ii) by a majority of the Trustees of the Trusts who
are not parties to the Advisory Contract or "interested persons"
(as defined in the 1940 Act) of any such party. Each Advisory
Contract may be terminated on 60 days' written notice by either
party and will terminate automatically if assigned.
WFNIA has entered into an agreement with Wells Fargo and
the Company pursuant to which Wells Fargo has employed WFNIA to
provide certain advisory services in connection with the
investment of the assets of the U.S. Treasury Allocation Master
Series, Bond Index Master Series, Asset Allocation Master Series
and the S&P 500 Index Master Series. Subject to the direction of
the Trusts' Boards of Trustees and the overall supervision and
control of Wells Fargo and the Trusts, WFNIA shall be responsible
for investing and reinvesting these Master Series' assets. In
this regard, WFNIA shall be responsible for implementing and
monitoring the performance of the investment model employed with
respect to each Master Series, in accordance with the investment
objective, policies and restrictions set forth in the
Prospectuses, and shall furnish to Wells Fargo periodic reports
on the investment activity and performance of the Master Series,
and such additional reports and information as Wells Fargo and
the Trusts' Boards of Trustees and officers shall reasonably
request.
For its advisory services to the Master Series, Wells
Fargo is entitled to receive a fee at an annual rate of (1) 0.08%
of the Bond Index Master Series' net assets, (2) 0.60% of the
Growth Stock Master Series' net assets, (3) 0.45% of the Short-
Intermediate Term Master Series' net assets, (4) 0.05% of the S&P
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<PAGE> 382
500 Index Master Series' net assets, (5) 0.35% of the Asset
Allocation Master Series' net assets and (6) 0.30% of the U.S.
Treasury Allocation Master Series' net assets. The Advisory
Contract provides that the advisory fee is accrued daily and paid
monthly. Out of the fees that Wells Fargo receives from the U.S.
Treasury Allocation Master Series, Bond Index Master Series, S&P
500 Index Master Series and Asset Allocation Master Series, it
pays WFNIA, for its sub-advisory services a percentage of each of
these Master Series' average daily net assets as agreed by Wells
Fargo and WFNIA. Wells Fargo is compensated for its custodial
services to the Master Series and the Funds out of the advisory
fee from each Master Series.
For the fiscal period from July 2, 1993 (commencement of
operations) to February 28, 1994 and for the period from March 1,
1994 to May 25, 1994, the Funds paid to Wells Fargo the advisory
fees indicated below and Wells Fargo waived the indicated
amounts:
<TABLE>
<CAPTION>
Period Ended Period Ended
2/28/94 5/25/94
Fees Fees
Fees Waived/ Fees Waived/
Fund Paid Reimbursed Paid Reimbursed
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Allocation Fund $814,238 $8,531 $329,064 $ -0-
Bond Index Fund $ 14,477 $1,020 $ -0- $ 6,449
Growth Stock Fund $130,899 $ 128 $ 70,792 $ -0-
Short-Intermediate Term Fund $ 17,513 $ 97 $ -0- $ 7,590
S&P 500 Stock Fund $ 84,082 $7,219 $ 33,202 $ -0-
U.S. Treasury Allocation Fund $248,613 $4,432 $ 82,068 $ -0-
</TABLE>
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<PAGE> 383
For the period from May 26, 1994 (commencement of
master/feeder structure), to February 28, 1995, the corresponding
Master Series of each Fund paid to Wells Fargo the advisory fees
indicated below and Wells Fargo waived the indicated amounts:
<TABLE>
<CAPTION>
Period Ended
2/28/95
Fees
Fees Waived/
Fund Paid Reimbursed
- -------------------------------------------------------
<S> <C> <C>
Asset Allocation Master Series $666,053 $ -0-
Bond Index Master Series $ 34,581 $ 8,713
Growth Stock Master Series $283,463 $16,451
Short-Intermediate Term
Master Series $ 10,673 $16,510
S&P 500 Index Master Series $138,830 $17,864
U.S. Treasury Allocation
Master Series $128,994 $ -0-
</TABLE>
For the fiscal period from July 2, 1993 (commencement of
operations) to February 28, 1994 and for the period from March 1,
1994 to May 25, 1994, Wells Fargo paid to WFNIA the following fees
for sub-advisory services provided to each Fund and WFNIA waived
the indicated amounts:
<TABLE>
<CAPTION>
Period Ended Period Ended
2/28/94 5/25/94
Fees Fees
Fees Waived/ Fees Waived/
Fund Paid Reimbursed Paid Reimbursed
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Allocation Fund $205,478 $ -0- $ 86,119 $ -0-
Bond Index Fund $ 3,659 $ -0- $ 1,264 $ -0-
S&P 500 Stock Fund $ 28,227 $ -0- $ 13,586 $ -0-
U.S. Treasury Allocation Fund $ 39,495 $ -0- $ 13,257 $ -0-
</TABLE>
For the period from May 26, 1994 (commencement of
master/feeder structure) to February 28, 1995, Wells Fargo paid to
WFNIA the following sub-advisory fees for services provided to the
corresponding Master Series of each Fund and WFNIA waived the
indicated amounts:
<TABLE>
<CAPTION>
Period Ended
2/28/95
Fees
Fees Waived/
Fund Paid Reimbursed
- -------------------------------------------------------
<S> <C> <C>
Asset Allocation Master Series $375,907 $ -0-
Bond Index Master Series $ 39,197 $ -0-
S&P 500 Index Master Series $117,651 $ -0-
U.S. Treasury Allocation $ 64,439 $ -0-
Master Series
</TABLE>
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<PAGE> 384
Morrison & Foerster, counsel to the Company and special
counsel to Wells Fargo, have advised Wells Fargo, the Trusts and
the Company that Wells Fargo should be able to perform the
services contemplated by the Advisory Contracts, the Servicing
Plans, the Selling Agent Agreements, the Agency Agreements, the
Custodian Agreements and the Prospectuses, without violation of
the Glass-Steagall Act. Such counsel have pointed out, however,
that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to,
present federal or state statutes and regulations relating to the
permissible activities of banks and their subsidiaries or
affiliates, as well as future changes in federal or state
statutes and regulations and judicial or administrative decisions
or interpretations thereof, could prevent Wells Fargo from
continuing to perform, in whole or in part, such services. If
Wells Fargo were prohibited from performing any of such services,
it is expected that new agreements would be proposed or entered
into with another entity or entities qualified to perform such
services.
Administrator and Distributor. The Company has retained
Stephens as administrator and distributor on behalf of the Funds.
In addition, the Trusts have retained Stephens as administrator
on behalf of the Master Series. Under the respective
Administration Agreements between Stephens, the Company and the
Trusts, Stephens shall provide as administrative services, among
other things: (i) general supervision of the operation of the
Funds and the Master Series, including coordination of the
services performed by the investment adviser and/or sub-adviser
(in the case of the Master Series), transfer and dividend
disbursing agent, custodians, shareholder servicing agent(s),
independent public accountants 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 reports for the Fund and the Master Series; and
(ii) general supervision relative to the compilation of data
required for the preparation of periodic reports distributed to
the Company's and Trusts' officers and Boards. Stephens also
furnishes office space and certain facilities required for
conducting the business of the Funds and the Master Series
together with those ordinary clerical and bookkeeping services
that are not being furnished by Wells Fargo. Stephens also pays
the compensation of the Trusts' and the Company's
Directors/Trustees, officers and employees who are affiliated
with Stephens. Furthermore, except as provided in each of the
Company's and Trusts' Advisory Contracts, Custodian Contracts and
Transfer Agency Contracts, the Administrator shall bear
substantially all costs of the Company's/Trusts' and the
Funds'/Master Series' operations. However, the Administrator
shall not be required to bear any cost or expense which a
majority of the disinterested Directors/Trustees of the
Company/Trusts deem to be an extraordinary expense.
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<PAGE> 385
For its services as administrator of the Bond Index
Fund, Growth Stock Fund, Short-Intermediate Term Fund and S&P 500
Stock Fund and their corresponding Master Series, Stephens is
entitled to receive a daily fee at the annual percentage rate of
0.05% of each Fund's average net assets. However, for its
services as administrator of the Asset Allocation Fund and U.S.
Treasury Allocation Fund and their corresponding Master Series,
Stephens is entitled to receive a daily fee at the annual
percentage rate of 0.10% of each Fund's average net assets. In
consideration for this fee from each Allocation Fund, Stephens
agrees to pay all third-party expenses of the Asset Allocation
Fund and the U.S. Treasury Allocation Fund and their
corresponding Master Series under the various contracts
specifically outlined in the Asset Allocation Fund and U.S.
Treasury Allocation Fund Prospectuses and in this SAI.
The Advisory Contracts and Administration Agreements for
the Bond Index Fund, Growth Stock Fund, Short-Intermediate Term
Fund and S&P 500 Stock Fund and their corresponding Master Series
respectively, provide that if, in any fiscal year, the total
expenses of a Fund (including the Master Series in which it
invests) incurred by, or allocated to, the Fund and Master Series
(excluding taxes, interest, brokerage commissions and other
portfolio transaction expenses, expenditures that are capitalized
in accordance with generally accepted accounting principles,
extraordinary expenses and the fees provided for in the Advisory
Contract and the Administration Agreement) 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 and Stephens
shall waive their fees proportionately under the Advisory
Contract and the Administration Agreement, 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
Contract and the Administration Agreement for each Fund and
Master Series, respectively, further provide that the Fund's and
Master Series' 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 contract and the agreement shall be
reduced as necessary. The most stringent applicable restriction
limits these expenses for any fiscal year to 2.5% of the first
$30 million of the Fund's average net assets, 2% of the next
$70 million of average net assets, and 1.5% of the average net
assets in excess of $100 million.
With regard to the Asset Allocation Fund and Master
Series and the U.S. Treasury Allocation Fund and Master Series,
Stephens will bear all costs of those Funds' and Master Series'
operations and those costs of the Company allocated to those two
Funds and those assets of the MIP Trust allocated to those two
Master Series. However, Stephens will not bear extraordinary
expenses and brokerage and other expenses connected with the
execution of portfolio transactions by the Asset Allocation
Master Series and U.S. Treasury Allocation Master Series, those
fees payable under the various service contracts described in the
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<PAGE> 386
two Prospectuses and in this SAI and those expenses borne by
Wells Fargo under its respective agreements with the Asset
Allocation Fund and U.S. Treasury Allocation Fund and their
corresponding Master Series. Further, extraordinary expenses of
the Company or the Trusts are allocated among all the Funds of
the Company or Master Series of the Trusts in a manner
proportionate to the net assets of each Fund or Master Series on
a transactional basis, or on such basis as the Company's Board of
Directors or Trusts' Board of Trustees deem fair and equitable.
For the fiscal period from July 2, 1993 (commencement of
operations) to February 28, 1994 and for the fiscal year ended
February 28, 1995, the Funds paid administrative fees to Stephens
as follows:
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Asset Allocation Fund $63,288 $215,978
Bond Index Fund $ 4,558 $0
Growth Stock Fund $10,079 $ 30,409
Short-Intermediate Term Fund $ 1,761 $0
S&P 500 Stock Fund $35,111 $158,245
U.S. Treasury Allocation Fund $19,465 $ 49,418
</TABLE>
Servicing Plan. As indicated in the Funds'
Prospectuses, each of the Funds has adopted a Shareholder
Servicing Plan (each a "Servicing Plan" and collectively the
"Servicing Plans"). The Servicing Plans were adopted by the
Board of Directors on November 18, 1993, including a majority of
the Directors who were not "interested persons" (as defined in
the 1940 Act) of any of the Funds and who had no direct or
indirect financial interest in the operations of the Servicing
Plan or any agreement related to the Servicing Plan (the
"Servicing Plan Qualified Directors").
Under each Servicing Plan and pursuant to each Servicing
Agreement, a Fund may pay one or more servicing agents, as
compensation for performing certain services, monthly fees at the
annual rate of up to (1) 0.07% of the average daily net assets of
the S&P 500 Stock Fund and the Bond Index Fund, (2) 0.10% of the
average daily net assets of the Short-Intermediate Term Fund and
the Growth Stock Fund and (3) 0.20% of the average daily net
assets of the Asset Allocation Fund and the U.S. Treasury
Allocation Fund. Payments to a servicing agent by a Fund will be
based upon the average daily net assets of the shares of the Fund
owned of record by the servicing agent on behalf of customers, or
by its customers directly, during the period for which payment is
made.
The Servicing Plans will continue in effect from year to
year if such continuance is approved by a majority vote of both
the Directors of the Company and the Servicing Plan Qualified
Directors. The Servicing Agreement may be terminated
automatically if assigned, or may be terminated at any time not
more than 60 days' nor less than 30 day's after notice, by a vote
of a majority of the Disinterested Directors or by a vote of the
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<PAGE> 387
majority of the outstanding voting securities of the Shares of a
Fund of the Company or the affected Fund(s). The Servicing Plans
may not be amended to increase materially the amount payable
thereunder without the approval of a majority of the Company's
Board of Directors, including a majority of the Disinterested
Directors cast at a meeting called for that specific purpose.
The Servicing Plans require that the servicing agent
shall provide to the Treasurer of the Company, at least
quarterly, a written report of the amounts expended by the
servicing agent (and purposes therefor) under each Servicing
Plan, and shall provide to the Company's Board of Directors such
information as may reasonably be necessary to an informed
determination of whether the Agreement shall be implemented or
continued.
For the fiscal year ended February 28, 1995 the Funds
paid shareholder servicing fees as follows and the indicated
amounts were waived:
<TABLE>
<CAPTION>
Fees Paid Fees Waived
--------- -----------
<S> <C> <C>
Asset Allocation Fund $381,287 $ -0-
Bond Index Fund $ -0- $ 8,677
Growth Stock Fund $ 9,182 $ 40,860
Short-Intermediate Term Fund $ -0- $ 6,059
S&P 500 Stock Fund $175,021 $ 40,006
U.S. Treasury Allocation Fund $ 86,209 $ -0-
</TABLE>
CALCULATION OF YIELD AND TOTAL RETURN
As indicated in their Prospectuses, the Funds may
advertise certain total return information computed in the manner
described in their Prospectuses. As and to the extent required
by the SEC, an average annual compound rate of return ("T") will
be computed by using the value at the end of a specified period
("ERV") of a hypothetical initial investment ("P") over a period
of years ("n") according to the following formula: P(1+T)n =
ERV. In addition, as indicated in their Prospectuses, the Funds,
at times, also may 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 charge
that would have been paid by an investor, or based on the
assumption that a sales charge other than the maximum sales
charge (reflecting a Volume Discount) was assessed provided that
total return data derived pursuant to the calculation described
above also are presented.
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<PAGE> 388
The average annual total returns on the Funds from
July 2, 1993 (commencement of operations) to February 28, 1995
and for the fiscal year ended February 28, 1995 were as follows:
<TABLE>
<CAPTION>
Commencement
Year Ended Through
2/28/95 2/28/95
---------- ------------
<S> <C> <C>
Asset Allocation Fund 3.28% 5.07%
Bond Index Fund 1.12% 1.50%
Growth Stock Fund 1.70% 11.93%
Short-Intermediate Term Fund 0.89% 1.39%
S&P 500 Stock Fund 6.71% 7.85%
U.S. Treasury Allocation Fund -0.76% 1.52%
</TABLE>
The cumulative total returns on the Funds from July 2,
1993 (commencement of operations) to February 28, 1995 and for
the fiscal year ended February 28, 1995 were as follows:
<TABLE>
<CAPTION>
Commencement
Year Ended Through
2/28/95 2/28/95
---------- ------------
<S> <C> <C>
Asset Allocation Fund 3.28% 8.60%
Bond Index Fund 1.12% 2.51%
Growth Stock Fund 1.70% 20.67%
Short-Intermediate Term Fund 0.89% 2.33%
S&P 500 Stock Fund 6.71% 13.43%
U.S. Treasury Allocation Fund -0.76% 2.55%
</TABLE>
As indicated in their respective Prospectuses, the U.S.
Treasury Allocation Fund, Asset Allocation Fund, Short-
Intermediate Term Fund and the Bond Index Fund may advertise
certain yield information. As and to the extent required by the
SEC, yield will be calculated based on a 30-day (or one month)
period, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share
on the last day of the period, according to the following
formula: YIELD = 2[(((a-b)/cd)+1)6th power-1], where a = dividends
and interest earned during the period; b = expenses accrued for the
period (net of reimbursements); c = the average daily number of
shares outstanding during the period that were entitled to
receive dividends; and d = the maximum offering price per share
on the last day of the period. The net investment income of a
Fund includes actual interest income, plus or minus amortized
purchase discount (which may include original issue discount) or
premium, less accrued expenses. Realized and unrealized gains
and losses on portfolio securities are not included in a Fund's
net investment income. For purposes of sales literature, yield
also may be calculated on the basis of the net asset value per
share rather than public offering price, provided that the yield
data derived pursuant to the calculation described above also are
presented.
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<PAGE> 389
The yields of the Funds for the 30-day period ended
February 28, 1995 were as follows:
<TABLE>
<CAPTION>
Current
Yield
-------
<S> <C>
Asset Allocation Fund 5.32%
Bond Index Fund 7.37%
Short-Intermediate Term Fund 7.25%
U.S. Treasury Allocation Fund 6.76%
</TABLE>
GENERALLY
The yield for the Funds fluctuates from time to time,
unlike bank deposits or other investments that pay a fixed yield
for a stated period of time, and does not provide a basis for
determining future yields since it is based on historical data.
Yield is a function of portfolio quality, composition, maturity
and market conditions as well as the expenses allocated to the
Fund.
Yield information for a Fund may be useful in reviewing
the performance of the Fund and for providing a basis for
comparison with investment alternatives. A Fund's yield,
however, may not be comparable to the yields from investment
alternatives because of differences in the foregoing variables
and differences in the methods used to value portfolio
securities, compute expenses and calculate yield.
In addition, investors should recognize that changes in
the net asset values of shares of a Fund affect the yield of such
Fund for any specified period, and such changes should be
considered together with the Fund's yield in ascertaining the
Fund's total return to shareholders for the period. Yield
information for the Funds may be useful in reviewing the
performance of such Funds and for providing a basis for
comparison with investment alternatives. The yield of a Fund,
however, may not be comparable to the yields from investment
alternatives because of differences in the foregoing variables
and differences in the methods used to value portfolio
securities, compute expenses and calculate yield.
PERFORMANCE COMPARISONS
From time to time and only to the extent the comparison
is appropriate for a Fund, the Company may quote the performance
of a Fund in advertising and other types of literature as
compared to the performance of an S&P Index, the Dow Jones
Industrial Average or any other commonly quoted index of common
stock prices. An S&P Index and the Dow Jones Industrial Average
are unmanaged indices of selected common stock prices.
The performance information for the Short-Intermediate
Term Fund and the Bond Index Fund also may be compared, in
reports and promotional literature, to the Consumer Price Index,
the Salomon One Year Treasury Benchmark Index, Ten Year U.S.
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<PAGE> 390
Government Bond Average, S&P's Corporate Bond Yield Averages,
Schabacker Investment Management Indices, Salomon Brothers High
Grade Bond Index, Lipper General Bond Fund Average, Lipper
Intermediate Investment Grade Debt Fund Average, Lehman Brothers
Government/Corporate Bond Index, Lehman Brothers Intermediate
Government/Corporate Bond Index, and Lehman Brothers Long-Term
High Quality Government/Corporate Bond Index. The performance
information for the Short-Intermediate Term Fund and the Bond
Index Fund also may be compared to the S&P Index, the Dow Jones
Industrial Average, the Lehman Brothers 20+ Treasury Index, the
Lehman Brothers 5-7 Year Treasury Index, Bank Averages (which is
calculated from figures supplied by the U.S. League of Savings
Institutions based on effective annual rates of interest on both
passbook and certificate accounts), or to other indices of bonds,
stocks, or government securities, or by other services,
companies, publications, or persons who monitor mutual funds on
overall performance or other criteria, but not to money market
mutual funds.
Performance information for the U.S. Treasury Allocation
Fund, Asset Allocation Fund, Growth Stock Fund and the S&P 500
Stock Fund may be compared, in reports and promotional
literature, to the S&P 500 Index, the Wilshire 5000 Equity Index,
the Lehman Brothers 20+ Treasury Index, Donoghue's Money Fund
Averages, the Lehman Brothers 5-7 Year Treasury Index, Lehman
Brothers Government Bond Index, Lehman Brothers Treasury Bond
Index, Lipper Balanced Fund Average, Lipper Growth Fund Average,
Lipper Flexible Portfolio Fund Average, Lehman Brothers
Intermediate Treasury Index, 91-Day Treasury Bill Average, or
other appropriate managed or unmanaged indices of the performance
of various types of investments, so that investors may compare a
Fund's results with those of indices widely regarded by investors
as representative of the security markets in general. Unmanaged
indices may assume the reinvestment of dividends, but generally
do not reflect deductions for administrative and management costs
and expenses. Managed indices generally do reflect such
deductions.
The Company also may use the following information in
advertisements and other types of literature, only to the extent
the information is appropriate for a Fund: (i) the Consumer
Price Index may be used to assess the real rate of return from an
investment in a Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business,
may be used to illustrate investment attributes of a Fund or the
general economic, business, investment, or financial environment
in which a Fund operates; (iii) the effect of tax-deferred
compounding on the investment returns of a Fund, or on returns in
general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the
return from an investment in a Fund (or returns in general) on a
tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the return on
a taxable basis; and (iv) the sectors or industries in which a
Fund invests may be compared to relevant indices of stocks or
surveys (e.g., S&P Industry Surveys) to evaluate a Fund's
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<PAGE> 391
historical performance or current or potential value with respect
to the particular industry or sector.
In addition, the Company also may use, in advertisements
and other types of literature, information and statements:
(1) showing that bank savings accounts offer a guaranteed return
of principal and a fixed rate of interest, but no opportunity for
capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment
managers to advise investment accounts using asset allocation and
index strategies. The Company also may include in advertising
and other types of literature information and other data from
reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the
related "Tax Freedom Day." The Company also may disclose in
advertising and other types of sales literature the assets and
categories of assets under management by the Master Series'
investment adviser or sub-investment adviser.
A Fund's performance also may be compared to those of
other mutual funds having similar objectives. This comparative
performance could be expressed as a ranking prepared by Lipper
Analytical Services, Inc., (including the Lipper General Bond
Fund Average, the Lipper Intermediate Investment Grade Debt Fund
Average, the Lipper Bond Fund Average, the Lipper Growth Fund
Average, the Lipper Flexible Fund Average), Donoghue's Money Fund
Report, including Donoghue's Taxable Money Market Fund Average or
Morningstar, Inc., independent services which monitor the
performance of mutual funds. A Fund's performance will be
calculated by relating net asset value per share at the beginning
of a stated period to the net asset value of the investment,
assuming reinvestment of all gains distributions and dividends
paid, at the end of the period. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance
with that of its competitors. Of course, past performance cannot
be a guarantee of future results.
OTHER ADVERTISING ITEMS
From time to time, the Company also may include in
advertisements or other marketing materials a discussion of
certain of the objectives of the investment strategy of the Asset
Allocation Fund and the U.S. Treasury Allocation Fund and a
comparison of this strategy with other investment strategies. In
particular, the responsiveness of these Funds to changing market
conditions may be discussed. For example, the Company may
describe the benefits derived by having Wells Fargo, as
investment adviser, or WFNIA as sub-investment adviser, monitor
and reallocate investments among the three asset categories
described in a Fund's Prospectus. The Company's advertising or
other marketing materials also might set forth illustrations
depicting examples of recommended allocations in different market
conditions.
The Company also may discuss in advertising and other
types of literature that a Fund has been assigned a rating by a
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<PAGE> 392
nationally recognized statistical rating organization ("NRSRO"),
such as Standard & Poor's Corporation. Such rating would assess
the creditworthiness of the investments held by the Fund. The
assigned rating would not be a recommendation to purchase, sell
or hold the Fund's shares since the rating would not comment on
the market price of the Fund's shares or the suitability of the
Fund for a particular investor. In addition, the assigned rating
would be subject to change, suspension or withdrawal as a result
of changes in, or unavailability of, information relating to the
Fund or its investments. The Company may compare a Fund's
performance with other investments which are assigned ratings by
NRSROs. Any such comparisons may be useful to investors who wish
to compare a Fund's past performance with other rated
investments. Of course past performance cannot be a guarantee of
future results. The Company also may include from time to time,
a reference to certain marketing approaches of the Distributor,
including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual
fund statistics provided by the Investment Company Institute may
also be used.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for a Fund is determined by
the Custodian on each day the Fund is open for trading. Each
Fund's investment in the corresponding Master Series of the
Trusts are valued at the net asset value of such Master Series'
shares.
Because the Master Series are closed on certain days
when the NYSE is open for business, shareholders would not be
able to redeem their shares on certain days when there may be
significant changes in the value of a Master Series' portfolio
securities.
Master Series securities for which market quotations are
available are valued at latest prices. Securities of a Master
Series for which the primary market is a national securities
exchange or the National Association of Securities Dealers
Automated Quotations National Market System are valued at last
sale prices. In the absence of any sale of such securities on
the valuation date and in the case of other securities, including
U.S. Government securities but excluding money market instruments
maturing in 60 days or less, the valuations are based on latest
quoted bid prices. Money market instruments maturing in 60 days
or less are valued at amortized cost with cost being the value of
the security on the preceding day (61st day). Futures contracts
will be marked to market daily at their respective settlement
prices determined by the relevant exchange. Options listed on a
national exchange are valued at the last sale price on the
exchange on which they are traded at the close of the NYSE, or,
in the absence of any sale on the valuation date, at latest
quoted bid prices. Options not listed on a national exchange are
valued at latest quoted bid prices. Debt securities maturing in
60 days or less are valued at amortized cost. In all cases, bid
prices will be furnished by an independent pricing service
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<PAGE> 393
approved by the Boards of Trustees. Prices provided by an
independent pricing service may be determined without exclusive
reliance on quoted prices and may take into account appropriate
factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data. Securities held
under a repurchase agreement will be valued at a price equal to
the amount of the cash investment at the time of valuation on the
valuation date. The market value of the underlying securities
shall be determined in accordance with the applicable procedures,
as described above, for the purpose of determining the adequacy
of collateral. All other securities and other assets of the
Funds for which current market quotations are not readily
available are valued at fair value as determined in good faith by
the MIP and MSI's Trusts' Trustees and in accordance with
procedures adopted by the Trustees.
PORTFOLIO TRANSACTIONS
The Trusts have no obligation to deal with any dealer or
group of dealers in the execution of transactions in portfolio
securities. Subject to policies established by the Trusts'
Boards of Trustees, Wells Fargo as adviser, or WFNIA as sub-
adviser to certain of the Master Series, is responsible for each
Master Series' portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Trusts
to obtain the best results taking into account the
broker/dealer's general execution and operational facilities, the
type of transaction involved and other factors such as the
broker/dealer's risk in positioning the securities involved.
While Wells Fargo and WFNIA generally seek reasonably competitive
spreads or commissions, the Master Series will not necessarily be
paying the lowest spread or commission available.
Purchase and sale orders of the securities held by the
Master Series may be combined with those of other accounts that
Wells Fargo manages, and for which it has brokerage placement
authority, in the interest of seeking the most favorable overall
net results. When Wells Fargo determines that a particular
security should be bought or sold for a Master Series and other
accounts managed by Wells Fargo, Wells Fargo undertakes to
allocate those transactions among the participants equitably.
Purchases and sales of securities usually will be
principal transactions. Portfolio securities normally will be
purchased or sold from or to dealers serving as market makers for
the securities at a net price. The Master Series also will
purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally,
municipal obligations and taxable money market securities are
traded on a net basis and do not involve brokerage commissions.
The cost of executing a Master Series' portfolio securities
transactions will consist primarily of dealer spreads and
underwriting commissions.
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Wells Fargo, as the investment adviser of each of the
Master Series, or WFNIA as sub-adviser of certain of the Master
Series, may, in circumstances in which two or more broker/dealers
are in a position to offer comparable results for a Master Series
portfolio transaction, give preference to a broker/dealer that
has provided statistical or other research services to Wells
Fargo or WFNIA. By allocating transactions in this manner, Wells
Fargo and WFNIA are able to supplement their research and
analysis with the views and information of securities firms.
Information so received will be in addition to, and not in lieu
of, the services required to be performed by Wells Fargo under
the Advisory Contracts, or WFNIA under the Sub-Advisory
Contracts, and the expenses of Wells Fargo will not necessarily
be reduced as a result of the receipt of this supplemental
research information. Furthermore, research services furnished
by broker/dealers through which Wells Fargo or WFNIA places
securities transactions for a Fund may be used by Wells Fargo or
WFNIA in servicing its other accounts, and not all of these
services may be used in connection with advising the Master
Series.
Under the 1940 Act, persons affiliated with the Trust
such as Stephens, Wells Fargo and their affiliates are prohibited
from dealing with the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such
transactions is obtained from the SEC or an exemption is
otherwise available.
Except in the case of equity securities purchased by the
Asset Allocation Master Series, S&P 500 Index Master Series and
the Growth Stock Master Series, purchases and sales of securities
usually will be principal transactions. Portfolio securities
normally will be purchased or sold from or to dealers serving as
market makers for the securities at a net price. Each of the
Master Series also will purchase portfolio securities in
underwritten offerings and may purchase securities directly from
the issuer. Generally, money market securities, adjustable rate
mortgage securities ("ARMS") and collateralized mortgage
obligations ("CMOs") are traded on a net basis and do not involve
brokerage commissions. The cost of executing a Master Series'
portfolio securities transactions will consist primarily of
dealer spreads and underwriting commissions.
Purchases and sales of equity securities on a securities
exchange are effected through brokers who charge a negotiated
commission for their services. Orders may be directed to any
broker including, to the extent and in the manner permitted by
applicable law, Stephens or Wells Fargo Securities Inc. In the
over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own
accounts without a stated commission, although the price of the
security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price
that includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or
discount.
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<PAGE> 395
In placing orders for portfolio securities of these
Master Series, Wells Fargo and WFNIA are required to give primary
consideration to obtaining the most favorable price and efficient
execution. This means that Wells Fargo and WFNIA seek to execute
each transaction at a price and commission, if any, that provide
the most favorable total cost or proceeds reasonably attainable
in the circumstances. While Wells Fargo and WFNIA generally seek
reasonably competitive spreads or commissions, the Master Series
will not necessarily be paying the lowest spread or commission
available. Rates are established pursuant to negotiations with
the broker based on the quality and quantity of execution
services provided by the broker in the light of generally
prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Boards of
Trustees.
Portfolio Turnover. The portfolio turnover rates for
the U.S. Treasury Allocation Master Series, Short-Intermediate
Term Master Series, Bond Index Master Series, Asset Allocation
Master Series, S&P 500 Index Master Series and the Growth Stock
Master Series generally are not expected to exceed 450%, 300%,
100%, 450%, 50% and 200%, respectively. The higher portfolio
turnover rates for the U.S. Treasury Allocation Master Series,
Short-Intermediate Term Master Series, Bond Index Master Series,
Asset Allocation Master Series and the Growth Stock Master Series
may result in higher transaction (i.e., principal
markup/markdown, brokerage, and other transaction) costs. The
portfolio turnover rate will not be a limiting factor when Wells
Fargo or WFNIA deem portfolio changes appropriate.
FEDERAL INCOME TAXES
The Prospectus describes generally the tax treatment of
distributions by the Master Series and the Funds. This section
of the SAI includes additional information concerning federal
income taxes.
Qualification as a "regulated investment company" under
the Code requires, among other things, that (a) at least 90% of
each Fund's annual gross income be derived from interest,
payments with respect to securities loans, dividends and gains
from the sale or other disposition of securities or options
thereon; (b) each Fund derives less than 30% of its gross income
from gains from the sale or other disposition of securities or
options thereon held for less than three months; and (c) each
Fund diversifies its holdings so that, at the end of each quarter
of the taxable year, (i) at least 50% of the market value of each
Fund's assets is represented by cash, government securities and
other securities limited in respect of any one issuer to an
amount not greater than 5% of each Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies), or of two or
more issuers which the taxpayer controls and which are determined
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<PAGE> 396
to be engaged in the same or similar trades or businesses or
related trades or businesses. As a regulated investment company,
the Funds will not be subject to federal income tax on their net
investment income and net capital gains distributed to their
shareholders, provided that they distribute to their stockholders
at least 90% of their net investment income earned in each year.
A 4% nondeductible excise tax will be imposed on each
Fund to the extent it does not meet certain minimum distribution
requirements by the end of each calendar year. For this purpose,
any income or gain retained by a Fund that is subject to income
tax will be considered to have been distributed by year-end. In
addition, dividends and distributions of taxable income and
capital gains declared payable as of a record date in October,
November or December of any calendar year are deemed under the
Code to have been distributed by the Fund and received by the
shareholders on December 31 of that calendar year if the dividend
is actually paid in the following January. Such dividends will,
accordingly, be taxable to the recipient shareholders and subject
to income tax for the year in which the record date falls. The
Funds intend to distribute substantially all of their net
investment income and net capital gains and, thus, expect not to
be subject to the excise tax.
Corporate shareholders of a Fund may be eligible for the
dividends-received deduction on the dividends (excluding the net
capital gains dividends) paid by a Fund to the extent that the
Fund's income is derived from dividends (which, if received
directly, would qualify for such deduction) 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 the deduction is based for
at least forty-six days.
Income and dividends received by a Fund from sources
within foreign countries may be subject to withholding and other
taxes imposed by such countries. Tax conventions between certain
countries and the United States may reduce or eliminate such
taxes. Because not more than 50% of the value of the total
assets of any Fund is expected to consist of securities of
foreign issuers, no Fund will be eligible to elect to "pass
through" foreign tax credits to shareholders.
Gains or losses on sales of portfolio securities by a
Fund will be long-term capital gains or losses if the securities
have been held by it for more than one year, except in certain
cases including where a Fund acquires a put or writes a call
thereon. Other gains or losses on the sale of securities will be
short-term capital gains or losses. However, if a shareholder
receives a designed capital gain distribution (to be treated by
the shareholder as a long-term capital gain) with respect to any
Fund share and such Fund share is held for six months or less,
then (unless otherwise disallowed) any loss on the sale or
exchange of that Fund share will be treated as a long-term
capital loss to the extent of the designated capital gain
distribution. Gains recognized on the disposition of a debt
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<PAGE> 397
obligation (including, with respect to obligations purchased
after April 30, 1993, tax-exempt obligations) purchased by a Fund
at a market discount (generally, at a price less than its
principal amount) will be treated as ordinary income to the
extent such discount had not previously been included in income.
As of the printing of this SAI, the maximum individual
marginal tax rate applicable to ordinary income is 39.6%; the
maximum individual marginal tax rate applicable to net realized
capital gains is 28%; and the maximum corporate marginal tax rate
applicable to ordinary income and net realized capital gains is
35%. However, to eliminate the benefit of lower marginal
corporate income tax rates, corporations which have taxable
income in excess of $100,000 for a taxable year will be required
to pay an additional amount of income tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000
for a taxable year will be required to pay an additional amount
of income tax of up to $100,000.
Any loss realized on a redemption or exchange of shares
of a Fund will be disallowed to the extent shares are reacquired
within the 61-day period beginning 30 days before and ending 30
days after the shares are disposed of. In addition, if a
shareholder exchanges or otherwise disposes of shares of a Fund
within 90 days of having acquired such shares, and if as a result
of having acquired those shares, the shareholder subsequently
pays a reduced sales charge for shares of the Fund, or of a
different Fund, the sales charge previously incurred acquiring
the Fund's shares shall not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or
loss on the exchange, but will be treated as having been incurred
in the acquisition of such other shares.
If, in the opinion of the Company, ownership of its
shares has or may become concentrated to an extent that could
cause the Company to be deemed a personal holding company within
the meaning of the Code, the Company may require the redemption
of shares or reject any order for the purchase of shares in an
effort to prevent such concentration.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However,
all or a portion of the gain or loss from the disposition of
non-U.S. dollar denominated securities (including debt
instruments, certain financial forward, futures and option
contracts, and certain preferred stock) may be treated as
ordinary income or loss under Section 988 of the Code (relating
to the taxation of foreign currency transactions). In addition,
all or a portion of the gain realized from the disposition of
certain market discount bonds will be treated as ordinary income
under Section 1276. Finally, all or a portion of the gain
realized from engaging in "conversion transactions" may be
treated as ordinary income under Section 1258. "Conversion
transactions" are defined to include certain forward, futures,
option and straddle transactions, transactions marketed or sold
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<PAGE> 398
to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Foreign currency gain or loss is calculated separately
from any gain or loss on the underlying transaction and is
generally taxable as ordinary gain or loss. The amount of any
realized gain or loss on closing out of a forward currency
contract such as a forward commitment for the purchase or sale of
non-U.S. currency will generally result in a realized capital
gain or loss for tax purposes. Under Section 1256 of the Code,
certain forward currency contracts held by a Fund at the end of
each fiscal year will be required to be "marked to market" for
federal income tax purposes, that is, deemed to have been sold at
market value. Except for certain transactions classified as part
of a "mixed straddle," described below, any gain or loss
recognized with respect to forward currency contracts is
considered to be 60% long-term capital gain or loss and 40%
short-term capital gain or loss, without regard to the holding
period of the contract.
Offsetting positions held by a Fund involving certain
financial forward, futures or option contracts may be considered,
for tax purposes to constitute "straddles." "Straddles" are
defined to include "offsetting positions" in actively traded
personal property. The tax treatment of "straddles" is governed
by Section 1092 of the Code which, in certain circumstances,
overrides or modifies the provisions of Section 1256.
If a Fund were treated as entering into "straddles" by
reason of its engaging in certain financial forward, futures or
option contracts, such straddles would be characterized as "mixed
straddles" if the futures, forwards, or options comprising a part
of such straddles were governed by the applicable provisions of
Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending upon
which election is made, if any, the results with respect to the
Fund may differ. Generally, to the extent the straddle rules
apply to established positions, losses realized by the Fund may
be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the
conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss and
long-term capital gain may be characterized as short-term capital
gain or ordinary income.
Investment by a Fund in securities issued or acquired at
a discount, or providing for deferred interest or for payment of
interest in the form of additional obligations could under
special tax rules affect the amount, timing and character of
distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the
Fund could be required to accrue a portion of the discount (or
deemed discount) at which the securities were issued each year
and to distribute such income in order to maintain its
qualification as a regulated investment company. In such case,
the Fund may have to dispose of securities which it might
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<PAGE> 399
otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
Foreign Shareholders. Under the Code, distributions of
net investment income by a Fund to a nonresident alien
individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign
shareholder") will be subject to U.S. withholding tax (at a rate
of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by a Fund to a foreign shareholder is "effectively
connected" with a U.S. trade or business, in which case the
reporting and withholding requirements applicable to U.S.
citizens, U.S. residents or domestic corporations will apply.
Distributions of net long-term capital gains are not subject to
tax withholding, but in the case of a foreign shareholder who is
a nonresident alien individual, such distributions ordinarily
will be subject to U.S. income tax at a rate of 30% if the
individual is physically present in the U.S. for more than 182
days during the taxable year.
Other Matters. Investors should be aware that the
investments to be made by the Funds may involve sophisticated tax
rules such as the original issue discount, mark to market and
real estate mortgage investment conduit rules that would result
in income or gain recognition by the Funds without corresponding
current cash receipts. Although the Funds will seek to avoid
significant noncash income, such noncash income could be
recognized by the Funds, in which case a Fund may distribute cash
derived from other sources in order to meet the minimum
distribution requirements described above.
CAPITAL STOCK
The Company, an open-end, management investment company,
was incorporated in Maryland on October 15, 1992. The authorized
capital stock of the Company consists of 10,000,000,000 shares
having a par value of $.001 per share. As of the date of this
SAI, the Company's Board of Directors has authorized the issuance
of fourteen series of shares, each representing interests in the
following portfolios -- the U.S. Treasury Allocation Fund, Short-
Intermediate Term Fund, Bond Index Fund, Asset Allocation Fund,
California Tax-Free Intermediate Income Fund, California Tax-Free
Short-Term Income Fund, Money Market Fund, Growth & Income Fund,
National Tax-Free Intermediate Income Fund, National Tax-Free
Money Market Mutual Fund, Overland National Tax-Free
Institutional Money Market Fund, California Tax-Free Money Market
Fund, S&P 500 Stock Fund and Growth Stock Fund -- and 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, except where
voting by a series is required by law or where the matter
involved only affects one series. For example, a change in a
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<PAGE> 400
Fund's fundamental investment policy would be voted upon only by
shareholders of the Fund. Additionally, approval of an advisory
contract is a matter to be determined separately by fund.
Approval by the shareholders of a fund is effective as to that
fund whether or not sufficient votes are received from the
shareholders of the other investment portfolios to approve the
proposal as to those investment portfolios. As used in the
Prospectus of each Fund and in this SAI, the term "majority,"
when referring to approvals to be obtained from shareholders of
the Fund, means the vote of the lesser of (i) 67% of the shares
of the Fund represented at a meeting if the holders of more than
50% of the outstanding shares of the Fund are present in person
or by proxy, or (ii) more than 50% of the outstanding shares of
the Fund. The term "majority," when referring to the approvals
to be obtained from shareholders of the Company as a whole, means
the vote of the lesser of (i) 67% of the Company's shares
represented at a meeting if the holders of more than 50% of the
Company's outstanding shares are present in person or by proxy,
or (ii) more than 50% of the Company's outstanding shares.
Shareholders are entitled to one vote for each full share held
and fractional votes for fractional shares held.
The Company may dispense with an annual meeting of
shareholders in any year in which it is not required to elect
Directors under the 1940 Act. However, the Company has
undertaken to hold a special meeting of its shareholders for the
purpose of voting on the question of removal of a Director or
Directors if requested in writing by the holders of at least 10%
of the Company's outstanding voting securities, and to assist in
communicating with other shareholders as required by
Section 16(c) of the 1940 Act.
Each share of a Fund represents an equal proportional
interest in the Fund with each other share and is entitled to
such dividends and distributions out of the income earned on the
assets belonging to the Fund as are declared in the discretion of
the Directors. In the event of the liquidation or dissolution of
the Company, shareholders of a Fund are entitled to receive the
assets attributable to the Fund that are available for
distribution, and a distribution of any general assets not
attributable to a particular investment portfolio that are
available for distribution in such manner and on such basis as
the Directors in their sole discretion may determine.
Shareholders are not entitled to any preemptive rights.
All shares, when issued, will be fully paid and non-assessable by
the Company.
MSI Trust and MIP Trust are each open-end, series
management investment companies organized as Delaware business
trusts. MSI Trust was organized on October 28, 1993. MIP Trust
was organized on October 21, 1993. In accordance with Delaware
law and in connection with the tax treatment sought by the
Trusts, each Trust's Declaration of Trust provides that its
investors would be personally responsible for Trust liabilities
and obligations, but only to the extent the Trust property is
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<PAGE> 401
insufficient to satisfy such liabilities and obligations. The
Declaration of Trust also provides that a Trust shall maintain
appropriate insurance (for example, fidelity bonding and errors
and omissions insurance) for the protection of the Trust, its
investors, Trustees, officers, employees and agents covering
possible tort and other liabilities, and that investors will be
indemnified to the extent they are held liable for a
disproportionate share of Trust obligations. Thus, the risk of
an investor incurring financial loss on account of investor
liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its
obligations.
The Declarations of Trust further provide that
obligations of a Trust are not binding upon its Trustees
individually but only upon the property of the Trust and that the
Trustees will not be liable for any action or failure to act, but
nothing in the Declarations of Trust protects a Trustee against
any liability to which the Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of the
Trustee's office.
The interests in each Master Series of the Trusts have
substantially identical voting and other rights as those rights
enumerated above for shares of the Funds. The Trusts also intend
to dispense with annual meetings, but are required by
Section 16(c) of the Act to hold a special meeting and assist
investor communications under the circumstances described above
with respect to a Company. Whenever a Fund is requested to vote
on a matter with respect to its Trust, the Fund will hold a
meeting of Fund shareholders and will cast its votes as
instructed by such shareholders.
In a situation where a Fund does not receive instruction
from certain of its shareholders on how to vote the corresponding
shares of a Trust, such Fund will vote such shares in the same
proportion as the shares for which the Fund does receive voting
instructions.
As of June 8, 1995, the shareholders identified below
were known by the Company to own 5% or more of the indicated
Fund's outstanding shares in the following capacity:
<TABLE>
<CAPTION>
Name and Address Percentage Capacity
Name of Fund of Shareholder of Fund Owned
- ------------ ---------------- ---------- --------
<S> <C> <C> <C>
Asset Allocation Fund Jacobs Engineering Group, Inc. 8.79% Record
Benefit Plan
251 South Lake Avenue
Pasadena, CA 91101-3063
</TABLE>
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<PAGE> 402
<TABLE>
<CAPTION>
Name and Address Percentage Capacity
Name of Fund of Shareholder of Fund Owned
- ------------ ---------------- ---------- --------
<S> <C> <C> <C>
Asset Allocation Fund Viking Freight System, Inc. 5.60% Record
Benefit Plan
411 East Plumeria Drive
San Jose, CA 95134
Asset Allocation Fund Cosmair, Inc. 5.60% Record
Retirement Plan
159 Terminal Avenue
Clark, N.J. 07066
Bond Index Fund Emcon Benefit Plan 17.40% Record
Benefit Plan
400 South El Camino Road
Suite 1200
San Mateo, CA 94402
Bond Index Fund Newhall Land & Farming Co. 13.13% Record
Benefit Plan
23823 Valencia Blvd.
Valencia, CA 91355
Bond Index Fund Holston-Life Veba 12.23% Record
Benefit Plan
4509 West Stone Drive
Kingsport, TN 37660
Bond Index Fund Bank of New York 7.10% Record
Trustee for various Plans
One Wall Street
New York, NY 10286
Bond Index Fund Heidelberg Harris, Inc. 6.21% Record
Benefit Plan
121 Broadway
Dover, NH 03820-3290
Bond Index Fund Century Telephone Enterprises 5.59% Record
Inc. Benefit Plan
Post Office Box 4065
Monroe, LA 71211-4065
Growth Stock Fund Hubbell Incorporated 11.94% Record
Benefit Plan
584 Darby Milford Road
Orange, CT 06477-4024
Growth Stock Fund Jacobs Engineering Group, Inc. 8.21% Record
Benefit Plan
251 South Lake Avenue
Pasadena, CA 91101-3063
Growth Stock Fund PMC, Inc. Benefit Plan 6.71% Record
12243 Branford Street
Sun Valley, CA 91352
Growth Stock Fund Wyman-Gordon Investment Castings 5.97% Record
Benefit Plan
2727 Lockheed Way
Carson City, NY 89706-0791
</TABLE>
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<PAGE> 403
<TABLE>
<CAPTION>
Name and Address Percentage Capacity
Name of Fund of Shareholder of Fund Owned
- ------------ ---------------- ---------- --------
<S> <C> <C> <C>
Short-Intermediate Marine Terminals Corp. 15.75% Record
Fund Benefit Plan
600 Harrison Street
Suite 200
San Francisco, CA 94107
Short-Intermediate Senior Engineering Co. 11.03% Record
Term Fund Benefit Plan
5701 South Eastern Avenue
Los Angeles, CA 90040
Short-Intermediate Dyno Nobel Inc. 10.24% Record
Fund Benefit Plan
11th Floor Crossroads Tower
Salt Lake City, UT 84144
Short-Intermediate PMC, Inc. Benefit Plan 10.24% Record
Term Fund 12243 Branford Street
Sun Valley, CA 91352
Short-Intermediate Paracelsus Healthcare 8.66% Record
Term Fund 155 North Lake Avenue
Pasadena, CA 91101
Short-Intermediate Greater Media 8.66% Record
Term Fund P. O. Box 1059
Two Kennedy Boulevard
East Brunswick, NJ 08816
S&P 500 Stock Fund Bankers Trust as Trustee 44.06% Record
for Betchel Master Trust
Benefit Plan
P.O. Box 1742
New York, NY 10008
U.S. Treasury M.A. Hanna Company 14.13% Record
Allocation Fund Benefit Plan -- #002
1301 East Ninth Street
Suite 3600
Cleveland, OH 44114-1860
U.S. Treasury M.A. Hanna Company 14.13% Record
Allocation Fund Benefit Plan -- #003
1301 East Ninth Street
Suite 3600
Cleveland, OH 44114-1860
U.S. Treasury Hubbell Incorporated 9.42% Record
Allocation Fund Benefit Plan
584 Darby Milford Road
Orange, CT 06477
</TABLE>
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<PAGE> 404
<TABLE>
<CAPTION>
Name and Address Percentage Capacity
Name of Fund of Shareholder of Fund Owned
- ------------ ---------------- ---------- --------
<S> <C> <C> <C>
U.S. Treasury Jacobs Engineering Group, Inc. 9.42% Record
Allocation Fund Benefit Plan
251 South Lake Avenue
Pasadena, CA 91101-3063
U.S. Treasury Wymen-Gordon Investment Castings 6.59% Record
Allocation Fund Benefit Plan
2727 Lockheed Way
Carson City, NY 89706-0791
</TABLE>
OTHER
The Registration Statement of the Trusts and the
Company, including the Prospectus for each Fund, the SAI and the
exhibits filed therewith, may be examined at the office of the
SEC in Washington, D.C. Statements contained in a Prospectus or
the SAI as to the contents of any contract or other document
referred to herein or in a Prospectus are not necessarily
complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in
all respects by such reference.
CUSTODIANS AND TRANSFER AND
DIVIDEND DISBURSING AGENT
Wells Fargo has been retained to act as Custodian for
the Short-Intermediate Term Fund, Growth Stock Fund, U.S.
Treasury Allocation Fund, Bond Index Fund, Asset Allocation Fund,
and S&P 500 Stock Fund. The Custodian, among other things,
maintains a custody account or accounts in the name of each Fund;
receives and delivers all assets for each Fund upon purchase and
upon sale or maturity; collects and receives all income and other
payments and distributions on account of the assets of each Fund
and pays all expenses of each Fund. For its services as
Custodian, Wells Fargo is entitled to receive an asset-based fee
from each of the respective Funds.
Wells Fargo also has been retained to act as the
Transfer and Dividend Disbursing Agent for the Funds and the
Master Series, and is entitled to receive an asset-based fee from
each Fund and Master Series for its services.
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<PAGE> 405
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the
independent auditor for the Company and the Trusts. KPMG Peat
Marwick LLP provides audit services, tax return preparation and
assistance and consultation in connection with review of certain
SEC filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.
FINANCIAL INFORMATION
Attached to this SAI are the audited financial
statements and schedules for the Funds and each Fund's Master
Series dated February 28, 1995. The audited financial statements
will be sent free of charge with this SAI to any shareholder who
requests them.
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<PAGE> 406
SAI APPENDIX
The following is a description of the ratings given by
Moody's and S&P to corporate bonds and commercial paper.
Corporate Bonds
Moody's: The four highest ratings for corporate bonds
are "Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to
be of the "best quality" and carry the smallest amount of
investment risk. Bonds rated "Aa" are of "high quality by all
standards," but margins of protection or other elements make
long-term risks appear somewhat greater than "Aaa" rated bonds.
Bonds rated "A" possess many favorable investment attributes and
are considered to be upper medium grade obligations. Bonds rated
"Baa" are considered to be medium grade obligations; interest
payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Such bonds have speculative characteristics as well. Moody's
applies numerical modifiers "1," "2" and "3" in each rating
category from "Aa" through "Baa" in its rating system. The
modifier "1" indicates that the security ranks in the higher end
of its category; the modifier "2" indicates a mid-range ranking;
and the modifier "3" indicates that the issue ranks in the lower
end.
S&P: The four highest ratings for corporate bonds are
"AAA," "AA," "A" and "BBB." Bonds rated "AAA" have the highest
ratings assigned by S&P and have an extremely strong capacity to
pay interest and repay principal. Bonds rated "AA" have a "very
strong capacity to pay interest and repay principal" and differ
"from the highest rated issued only in small degree." Bonds
rated "A" have a "strong capacity" to pay interest and repay
principal, but are "somewhat more susceptible" to adverse effects
of changes in economic conditions or other circumstances than
bonds in higher rated categories. Bonds rated "BBB" are regarded
as having an "adequate capacity" to pay interest and repay
principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to
make such repayments. The ratings from "AA" to "BBB" may be
modified by the addition of a plus or minus sign to show relative
standing within the category.
Corporate Commercial Paper
Moody's: The highest rating for corporate commercial
paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior
capacity for repayment of short-term promissory obligations."
Issuers rated "P-2" (Prime-2) "have a strong capacity for
repayment of short-term promissory obligations," but earnings
trends, while sound, will be subject to more variation.
S&P: The "A-1" rating for corporate commercial paper
indicates that the "degree of safety regarding timely payment is
A-1
<PAGE> 407
either overwhelming or very strong." Commercial paper with
"overwhelming safety characteristics" will be rated "A-1+."
Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
A-2
<PAGE> 408
STAGECOACH INC.
Telephone: 1-800-776-0179
STATEMENT OF ADDITIONAL INFORMATION
Dated June 28, 1995
MONEY MARKET FUND
_______________________________
Stagecoach Inc. (the "Company") is a professionally
managed, open-end, series investment company. This SAI contains
information about the MONEY MARKET FUND (the "Fund"). The
investment objective of the Fund is described in its Prospectus.
See "The Fund -- Investment Objective and Policies."
This SAI is not a prospectus and should be read in
conjunction with the Fund's Prospectus, dated June 28, 1995. All
terms used in this SAI that are defined in the Prospectus will
have the meanings assigned in the Prospectus. A copy of the
Prospectus for the Fund may be obtained without charge by writing
Stephens Inc., the Company's sponsor, administrator and
distributor, at 111 Center Street, Little Rock, Arkansas 72201,
by calling the Transfer Agent at the telephone number indicated
above, or by contacting one of the Fund's Selling Agents.
__________________________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Restrictions................................... 2
Additional Permitted Investment Activities................ 4
Management................................................ 6
Calculation of Yield and Total Return..................... 12
Determination of Net Asset Value.......................... 14
Portfolio Transactions.................................... 15
Federal Income Taxes...................................... 16
Capital Stock............................................. 19
Other..................................................... 21
Custodians and Transfer and Dividend
Disbursing Agent ....................................... 21
Independent Auditors...................................... 22
Financial Information..................................... 22
SAI Appendix.............................................. A-1
Financial Statements...................................... F-1
</TABLE>
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<PAGE> 409
INVESTMENT RESTRICTIONS
The Fund is subject to the following investment
restrictions, all of which are fundamental policies.
The Fund may not:
(1) purchase the securities of issuers conducting their
principal business activity in the same industry if, immediately
after the purchase and as a result thereof, the value of the
Fund's investments in that industry would be 25% or more of the
current value of the Fund's total assets, provided that there is
no limitation with respect to investments in (i) obligations of
the U.S. Government, its agencies or instrumentalities;
(ii) obligations of domestic banks (for the purpose of this
exception, domestic bank obligations do not include obligations
of U.S. branches of foreign banks or obligations of foreign
branches of U.S. banks);
(2) purchase or sell real estate or real estate limited
partnerships (other than securities secured by real estate or
interests therein or securities issued by companies that invest
in real estate or interests therein);
(3) purchase commodities or commodity contracts
(including futures contracts), except that the Fund may purchase
securities of an issuer which invests or deals in commodities or
commodity contracts;
(4) purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or
development programs;
(5) purchase securities on margin (except for short-
term credits necessary for the clearance of transactions and
except for margin payments in connection with options, futures
and options on futures) or make short sales of securities;
(6) underwrite securities of other issuers, except to
the extent that the purchase of permitted investments directly
from the issuer thereof or from an underwriter for an issuer and
the later disposition of such securities in accordance with the
Fund's investment program may be deemed to be an underwriting;
(7) make investments for the purpose of exercising
control or management;
(8) borrow money or issue senior securities as defined
in the 1940 Act, except that the Money Market Fund may borrow
from banks up to 10% of the current value of its net assets for
temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the
current value of its net assets (but investments may not be
purchased while any such outstanding borrowing in excess of 5% of
its net assets exists);
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<PAGE> 410
(9) write, purchase or sell puts, calls, straddles,
spreads, warrants, options or any combination thereof, except
that the Money Market Fund may purchase securities with put
rights in order to maintain liquidity;
(10) purchase securities of any issuer (except
securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities) if, as a result, with respect to
75% of its total assets, more than 5% of the value of the Fund's
total assets would be invested in the securities of any one
issuer or, with respect to 100% of its total assets the Fund's
ownership would be more than 10% of the outstanding voting
securities of such issuer; or
(11) make loans, except that the Fund may purchase or
hold debt instruments or lend its portfolio securities in
accordance with its investment policies, and may enter into
repurchase agreements.
The Fund is subject to the following non-fundamental
policies.
(1) The Money Market Fund may not:
(a) purchase or retain securities of any issuer if
the officers or Directors of the Company or its Investment
Adviser owning beneficially more than one-half of one percent
(0.5%) of the securities of the issuer together owned
beneficially more than 5% of such securities;
(b) purchase securities of issuers who, with their
predecessors, have been in existence less than three years,
unless the securities are fully guaranteed or insured by the U.S.
Government, a state, commonwealth, possession, territory, the
District of Columbia or by an entity in existence at least three
years, or the securities are backed by the assets and revenues of
any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its
total assets.
(2) The Money Market Fund reserves the right to 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, repurchase agreements
maturing in more than seven days or other illiquid securities.
However, as long as the Fund's shares are registered for sale in
a state that imposes a lower limit on the percentage of a fund's
assets that may be so invested, the Fund will comply with such
lower limit. The Fund presently is limited to investing 10% of
its net asset in such securities due to limits applicable in
several states.
(3) The Money Market Fund may not purchase securities
of unseasoned issuers, including their predecessors, which have
been in operation for less than three years, and equity
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<PAGE> 411
securities of issuers which are not readily marketable if by
reason thereof the value of the Fund's aggregate investment in
such classes of securities will exceed 5% of its total assets.
(4) The Money Market Fund, as provided in Rule 2a-7
under the 1940 Act, may only purchase "Eligible Securities" (as
defined in Rule 2a-7) and only if, immediately after such
purchase: the Fund would have no more than 5% of its total
assets in "First Tier Securities" (as defined in Rule 2a-7) of
any one issuer, excluding government securities and except as
otherwise permitted for temporary purposes and for certain
guarantees and unconditional puts; the Money Market Fund would
own no more than 10% of the voting securities of any one issuer;
the Fund would have no more than 5% of its total assets in
"Second Tier Securities" (as defined in Rule 2a-7); and the Fund
would have no more than the greater of $1 million or 1% of its
total assets in Second Tier Securities of any one issuer.
(5) The Fund may invest in shares of other open-end,
management investment companies, subject to the limitations of
Section 12(d)(1) of the 1940 Act, provided that any such
purchases will be limited to temporary investments in shares of
unaffiliated investment companies and the Investment Adviser will
waive its advisory fees for that portion of the Fund's assets so
invested, except when such purchase is part of a plan of merger,
consolidation, reorganization or acquisition. The Fund does not
intend to invest more than 5% of its respective net assets in
such securities during the coming year.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Unrated Investments. The Money Market Fund may purchase
instruments that are not rated if, in the opinion of Wells Fargo,
such obligations are of investment quality comparable to other
rated investments that are permitted for purchase by the Fund, if
they are purchased in accordance with the Fund's procedures
adopted by the Company's Board of Directors in accordance with
Rule 2a-7 under the 1940 Act. Such procedures require approval
or ratification by the Directors of the purchase of unrated
securities. After purchase by the Money Market Fund, a security
may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. Neither event will
require a sale of such security by the Money Market Fund provided
that, when a security ceases to be rated, the Fund's Board of
Directors determines that such security presents minimal credit
risks and, provided further that, when a security rating is
downgraded below the eligible quality for investment or no longer
presents minimal credit risks, the Board finds that the sale of
such security would not be in the Fund's best interest. However,
in no event will such securities exceed 5% of the Fund's net
assets. To the extent the ratings given by Moody's or S&P may
change as a result of changes in such organizations or their
rating systems, the Money Market Fund will attempt to use
comparable ratings as standards for investments in accordance
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<PAGE> 412
with the investment policies contained in the Prospectus and in
this SAI. The ratings of Moody's and S&P are more fully
described in the SAI Appendix.
Letters of Credit. Certain of the debt obligations
(including certificates of participation, commercial paper and
other short-term obligations) which the Money Market Fund may
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. Only banks,
savings and loan associations and insurance companies which, in
the opinion of Wells Fargo, are of comparable quality to issuers
of other permitted investments of the Fund may be used for letter
of credit-backed investments.
Pass-Through Obligations. Certain of the debt
obligations in which the Money Market Fund may invest may be
pass-through obligations that represent an ownership interest in
a pool of mortgages and the resultant cash flow from those
mortgages. Payments by homeowners on the loans in the pool flow
through to certificate holders in amounts sufficient to repay
principal and to pay interest at the pass-through rate. The
stated maturities of pass-through obligations may be shortened by
unscheduled prepayments of principal on the underlying mortgages.
Therefore, it is not possible to predict accurately the average
maturity of a particular pass-through obligation. Variations in
the maturities of pass-through obligations will affect the yield
of any Fund investing in such obligations. Furthermore, as with
any debt obligation, fluctuations in interest rates will
inversely affect the market value of pass-through obligations.
Loans of Portfolio Securities. The Money Market Fund
may lend securities from its portfolio to brokers, dealers and
financial institutions (but not individuals) if cash, U.S.
Government securities or other high-quality debt obligations
equal to at least 100% of the current market value of the
securities loan (including accrued interest thereon) plus the
interest payable to the Fund with respect to the loan is
maintained with the Fund. In determining whether to lend a
security to a particular broker, dealer or financial institution,
the Fund's Investment Adviser will consider all relevant facts
and circumstances, including the creditworthiness of the broker,
dealer, or financial institution. Any loans of portfolio
securities will be fully collateralized based on values that are
marked to market daily. The Fund will not enter into any
portfolio security lending arrangement having a duration of
longer than one year. Any securities that the Fund may receive
as collateral will not become part of the Fund's portfolio at the
time of the loan and, in the event of a default by the borrower,
the Fund will, if permitted by law, dispose of such collateral
except for such part thereof that is a security in which the Fund
is permitted to invest. During the time securities are on loan,
the borrower will pay the Fund any accrued income on those
securities, and the Fund may invest the cash collateral and earn
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<PAGE> 413
income or receive an agreed-upon fee from a borrower that has
delivered cash-equivalent collateral. The Money Market Fund will
not lend securities having a value that exceeds 33 1/3% of the
current value of its total assets. Loans of securities by the
Fund will be subject to termination at the Fund's or the
borrower's option. The Fund may pay reasonable administrative
and custodial fees in connection with a securities loan and may
pay a negotiated portion of the interest or fee earned with
respect to the collateral to the borrower or the placing broker.
Borrowers and placing brokers may not be affiliated, directly or
indirectly, with the Company, its Investment Adviser or its
Distributor.
Foreign Obligations. 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 generally
subject to uniform accounting, auditing and financial reporting
standards or governmental supervision comparable to those
applicable to 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. The Fund may not invest 25%
or more of its assets in foreign obligations.
Obligations of foreign banks and foreign branches of
U.S. banks involve somewhat different investment risks from those
affecting obligations of U.S. banks, including the possibilities
that liquidity could be impaired because of future political and
economic developments, that the obligations may be less
marketable than comparable obligations of U.S. banks, that a
foreign jurisdiction might impose withholding taxes on interest
income payable on those obligations, that foreign deposits may be
seized or nationalized, that foreign governmental restrictions
(such as foreign exchange controls) may be adopted which might
adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be
more difficult because there may be less publicly available
information concerning foreign banks or the accounting, auditing
and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to
U.S. banks. In that connection, foreign banks are not subject to
examination by any U.S. Government agency or instrumentality.
MANAGEMENT
Directors and Officers. The principal occupations
during the past five years of the Directors and executive
officers of the Company are listed below. The address of each,
unless otherwise indicated, is 111 Center Street, Little Rock,
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<PAGE> 414
Arkansas 72201. Directors deemed to be "interested persons" of
the Company for purposes of the 1940 Act are indicated by an
asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Address and Age Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 73 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 44 Trustee, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens Insurance
Services Inc.; Senior
Vice President of
Stephens Sports
Management Inc.; and
President of
Investors Brokerage
Insurance Inc.
Thomas S. Goho, 53 Trustee Associate Professor
321 Beechcliff Court of Finance of the
Winston-Salem, NC 27104 School of Business
and Accounting at
Wake Forest
University since
1983. Financial
Planner and President
of Piedmont Financial
Planning since 1983.
*Zoe Ann Hines, 46 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.
*W. Rodney Hughes, 69 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
</TABLE>
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<PAGE> 415
<TABLE>
<S> <C> <C>
*J. Tucker Morse, 51 Trustee Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
Larry W. Bowden, 41 Vice President Vice President of
Stephens and
Assistant Manager of
Financial Services
Group; Senior Vice
President of Stephens
Insurance Services
Inc.
Ellen M. Gray, 65 Vice President Senior Vice President
of Stephens and
Director of Investors
Brokerage Insurance
Inc. Prior thereto,
Senior Vice President
of Eppler, Guerin &
Turner, Inc.
E. Curtis Jeffries, 38 Vice President Associate of
-- Marketing Financial Services
Group of Stephens.
Prior thereto,
Account Supervisor of
Brooks-Pollard Co.
Jane G. Johnson, 41 Vice President Associate of
Financial Services
Group of Stephens.
Michael W. Nolte, 34 Assistant Associate of
Secretary Financial Services
Group of Stephens.
Ann Bonsteel, 32 Assistant Associate of
Secretary Financial Services
Group of Stephens.
</TABLE>
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<PAGE> 416
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $8,688 $34,188
Director
*R. Greg Feltus 0 0
Director
Thomas S. Goho 8,688 34,188
Director
*Zoe Ann Hines 0 0
Director
*W. Rodney Hughes 8,188 32,188
Director
Robert M. Joses 8,688 34,188
Director
*J. Tucker Morse 8,188 32,188
Director
</TABLE>
Directors of the Company are compensated by the Company
for their services as indicated above and also are reimbursed for
all out-of-pocket expenses relating to attendance at board
meetings. Each of the Directors and Officers of the Company
serves in the identical capacity as officers and Directors of
Overland Express Funds, Inc. and Stagecoach Funds Inc., and as
Trustees and/or Officers of Stagecoach Trust, Master Investment
Portfolio, Life & Annuity Trust, Master Investment Trust and
Managed Series Investment Trust, each of which are registered
open-end management investment companies and each of which is
considered to be in the same "fund complex", as such term is
defined in Form N-1A under the 1940 Act, as the Company. The
Directors are compensated by other Companies and Trusts within
the fund complex for their services as Directors/Trustees to such
Companies and Trusts. Currently the Directors do not receive any
retirement benefits or deferred compensation from the Company or
any other member of the fund complex.
As of the date of this SAI, Directors and officers of
the Company as a group beneficially owned less than 1% of the
outstanding shares of the Company.
Investment Adviser. The Money Market Fund is advised by
Wells Fargo. The Advisory Contract was last approved by the
Board of Directors on February 1, 1995. The Advisory Contract
provides that Wells Fargo shall furnish to the Fund investment
guidance and policy direction in connection with the daily
portfolio management of the Fund. Pursuant to the Advisory
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<PAGE> 417
Contract, Wells Fargo furnishes to the Board of Directors
periodic reports on the investment strategy and performance of
each Fund.
Wells Fargo has agreed to provide to the Fund, among
other things, money market security and fixed-income research,
analysis and statistical and economic data and information
concerning interest rate and security market trends, portfolio
composition, credit conditions.
The Advisory Contract will continue in effect for more
than two years provided the continuance is approved
annually (i) by the holders of a majority of the Fund's
outstanding voting securities or by the Company's Board of
Directors and (ii) by a majority of the Directors of the Company
who are not parties to the Advisory Contract or "interested
persons" (as defined in the 1940 Act) of any such party. The
Advisory Contract may be terminated on 60 days' written notice by
either party and will terminate automatically if assigned. For
its advisory services to the Fund, Wells Fargo is entitled to
receive a fee at an annual rate of 0.35% of the Money Market
Fund's net assets.
For the fiscal period from July 2, 1993 (commencement of
operations) to February 28, 1994, the Fund paid advisory fees to
Wells Fargo of $172,697, after fee waivers of $3,012. For the
fiscal year ended February 28, 1995, the Fund paid advisory fees
to Wells Fargo of $371,199, after fee waivers of $0.
Morrison & Foerster, counsel to the Company and special
counsel to Wells Fargo, have advised Wells Fargo and the Company
that Wells Fargo should be able to perform the services
contemplated by the Advisory Contract, the Selling Agent
Agreement, the Agency Agreement, the Custodian Agreement and the
Prospectuses, without violation of the Glass-Steagall Act. Such
counsel have pointed out, however, that there are no controlling
judicial or administrative interpretations or decisions and that
future judicial or administrative interpretations of, or
decisions relating to, present federal or state statutes and
regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as future changes in
federal or state statutes and regulations and judicial or
administrative decisions or interpretations thereof, could
prevent Wells Fargo from continuing to perform, in whole or in
part, such services. If Wells Fargo were prohibited from
performing any of such services, it is expected that new
agreements would be proposed or entered into with another entity
or entities qualified to perform such services.
Administrator and Distributor. The Company has retained
Stephens as administrator and distributor on behalf of the Fund.
The Administration Agreement between Stephens and the Company on
behalf of the Fund states that Stephens shall provide as
administrative services, among other things: (i) general
supervision of a operation of the Fund, including coordination of
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<PAGE> 418
the services performed by the Fund's investment adviser, transfer
and dividend disbursing agent, custodians, shareholder servicing
agent(s), independent public accountants 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 reports for the Fund; 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. Stephens also furnishes office
space and certain facilities required for conducting the business
of the Fund together with those ordinary clerical and bookkeeping
services that are not being furnished by Wells Fargo. Stephens
also pays the compensation of the Company's Directors, officers
and employees who are affiliated with Stephens. Furthermore,
except as provided in the Company's Advisory Contract, Custodian
Contract and Transfer Agency Contract, the Administrator shall
bear substantially all costs of the Company's and the Fund's
operations. However, the Administrator shall not be required to
bear any cost or expense which a majority of the disinterested
Directors of the Company deem to be an extraordinary expense.
The Advisory Contract and Administration Agreement for
the Fund provide that if, in any fiscal year, the total expenses
of the Fund incurred by, or allocated to, 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 the fees provided for in the Advisory
Contract and the Administration Agreement) 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 and Stephens
shall waive their fees proportionately under the Advisory
Contract and the Administration Agreement, respectively, for the
Fund 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 Contract and the Administration Agreement for the Fund
further provides that the Fund's 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 contract and the agreement
shall be reduced as necessary. The most stringent applicable
restriction limits these expenses for any fiscal year to 2.5% of
the first $30 million of the Fund's average net assets, 2% of the
next $70 million of average net assets, and 1.5% of the average
net assets in excess of $100 million.
For the fiscal period from July 2, 1993 (commencement of
operations) to February 28, 1994 and for the fiscal year ended
February 28, 1995, the Fund paid Stephens $24,671 and $58,429,
respectively, in administrative fees.
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<PAGE> 419
CALCULATION OF YIELD AND TOTAL RETURN
Current yield for the Money Market Fund is calculated
based on the net changes, exclusive of capital changes, over
seven-and/or thirty-day periods, in the value of a hypothetical
pre-existing account having as balance of one share at the
beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the
base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting
yield figure carried to at least the nearest hundredth of one
percent.
The current yields of the Fund for the seven-day and
thirty-day periods ended February 28, 1995 were 5.66% and 5.66%,
respectively.
Effective yield for the Money Market Fund is calculated
by determining the net change exclusive of capital changes in the
value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period
return, and then compounding the base period return by adding
one, raising the sum to a power equal to 365 divided by seven,
and subtracting one from the result.
The effective yield of the Fund for the seven-day period
ended February 28, 1995 was 5.82%.
GENERALLY
The yield for the Fund fluctuates from time to time,
unlike bank deposits or other investments that pay a fixed yield
for a stated period of time, and does not provide a basis for
determining future yields since it is based on historical data.
Yield is a function of portfolio quality, composition, maturity
and market conditions as well as the expenses allocated to the
Fund.
In addition, investors should recognize that changes in
the net asset values of shares of the Fund affect the yield of
such Fund for any specified period, and such changes should be
considered together with the Fund's yield in ascertaining the
Fund's total return to shareholders for the period. Yield
information for the Fund may be useful in reviewing the
performance of such Fund and for providing a basis for comparison
with investment alternatives. The yield of a Fund, however, may
not be comparable to the yields from investment alternatives
because of differences in the foregoing variables and differences
in the methods used to value portfolio securities, compute
expenses and calculate yield.
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<PAGE> 420
PERFORMANCE COMPARISONS
From time to time, the Company may quote the performance
of the Fund in advertising and other types of literature as
compared to the performance of an S&P Index, the Dow Jones
Industrial Average or any other commonly quoted index of common
stock prices. An S&P Index and the Dow Jones Industrial Average
are unmanaged indices of selected common stock prices.
From time to time, the Company may quote the Money
Market Fund's performance in advertising and other types of
literature as compared to the 91-Day Treasury Bill Average
(Federal Reserve), Lipper Money Market Fund Average, Donoghue
Taxable Money Market Fund Average, Salomon Three-Month Treasury
Bill Index, or Bank Averages, which are calculated from figures
supplied by the U.S. League of Savings Institutions based on
effective annual rates of interest on both passbook and
certificate accounts. Savings accounts offer a guaranteed return
of principal and a fixed rate of interest. The Fund's
performance also may be compared to the Consumer Price Index, as
published by the U.S. Bureau of Labor Statistics, which is an
established measure of change over time in the prices of goods
and services in major expenditure groups.
In addition, the Company also may use, in advertisements
and other types of literature, information and statements:
(1) showing that bank savings accounts offer a guaranteed return
of principal and a fixed rate of interest, but no opportunity for
capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment
managers to advise investment accounts using asset allocation and
index strategies. The Company also may include in advertising
and other types of literature information and other data from
reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the
related "Tax Freedom Day." The Company also may disclose in
advertising and other types of sales literature the assets and
categories of assets under management by the Fund's investment
adviser.
The Fund's performance also may be compared to those of
other mutual funds having similar objectives. This comparative
performance could be expressed as a ranking prepared by Lipper
Analytical Services, Inc., Donoghue's Money Fund Report,
including Donoghue's Taxable Money Market Fund Average or
Morningstar, Inc., independent services which monitor the
performance of mutual funds. The Fund's performance will be
calculated by relating net asset value per share at the beginning
of a stated period to the net asset value of the investment,
assuming reinvestment of all gains distributions and dividends
paid, at the end of the period. Any such comparisons may be
useful to investors who wish to compare the Fund's past
performance with that of its competitors. Of course, past
performance cannot be a guarantee of future results.
-13-
<PAGE> 421
OTHER ADVERTISING ITEMS
The Company also may discuss in advertising and other
types of literature that the Fund has been assigned a rating by a
nationally recognized statistical rating organization ("NRSRO"),
such as Standard & Poor's Corporation. Such rating would assess
the creditworthiness of the investments held by the Fund. The
assigned rating would not be a recommendation to purchase, sell
or hold the Fund's shares since the rating would not comment on
the market price of the Fund's shares or the suitability of the
Fund for a particular investor. In addition, the assigned rating
would be subject to change, suspension or withdrawal as a result
of changes in, or unavailability of, information relating to the
Fund or its investments. The Company may compare the Fund's
performance with other investments which are assigned ratings by
NRSROs. Any such comparisons may be useful to investors who wish
to compare the Fund's past performance with other rated
investments.
DETERMINATION OF NET ASSET VALUE
As indicated under "Share Value" in the Money Market
Fund Prospectus, the Money Market Fund uses the amortized cost
method to determine the value of its portfolio securities
pursuant to Rule 2a-7 under the 1940 Act. The amortized cost
method involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, regardless of
the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation,
it may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price that the Money
Market Fund would receive if the security were sold. During
these periods the yield to a shareholder may differ somewhat from
that which could be obtained from a similar fund that uses a
method of valuation based upon market prices. Thus, during
periods of declining interest rates, if the use of the amortized
cost method resulted in a lower value of the Money Market Fund's
portfolio on a particular day, a prospective investor in the
Money Market Fund would be able to obtain a somewhat higher yield
than would result from investment in a fund using solely market
values, and existing Money Market Fund shareholders would receive
correspondingly less income. The converse would apply during
periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio
using the amortized cost method, the Money Market Fund must
maintain a dollar-weighted average portfolio maturity of 90 days
or less, purchase securities having remaining maturities (as
defined in Rule 2a-7) of thirteen months or less and invest only
in those high-quality securities that are determined by the Board
of Directors to present minimal credit risks. The maturity of an
instrument is generally deemed to be the period remaining until
the date when the principal amount thereof is due or the date on
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<PAGE> 422
which the instrument is to be redeemed. However, Rule 2a-7
provides that the maturity of an instrument may be deemed shorter
in the case of certain instruments, including certain variable-
and floating-rate instruments subject to demand features.
Pursuant to the Rule, the Board is required to establish
procedures designed to stabilize, to the extent reasonably
possible, the Money Market Fund's price per share as computed for
the purpose of sales and redemptions at $1.00. Such procedures
include review of the Money Market Fund's portfolio holdings by
the Board of Directors, at such intervals as it may deem
appropriate, to determine whether the Money Market Fund's net
asset value calculated by using available market quotations
deviates from the $1.00 per share based on amortized cost. The
extent of any deviation will be examined by the Board of
Directors. If such deviation exceeds 1/2 of 1%, the Board will
promptly consider what action, if any, will be initiated. In the
event the Board determines that a deviation exists that may
result in material dilution or other unfair results to
shareholders, the Board will take such corrective action as it
regards as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains
or losses or to shorten average portfolio maturity, withholding
dividends or establishing a net asset value per share by using
available market quotations.
PORTFOLIO TRANSACTIONS
GENERALLY
The Company has no obligation to deal with any dealer or
group of dealers in the execution of transactions in portfolio
securities. Subject to policies established by the Company's
Board of Directors, Wells Fargo as adviser is responsible for the
Fund's portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company
to obtain the best results taking into account the
broker/dealer's general execution and operational facilities, the
type of transaction involved and other factors such as the
broker/dealer's risk in positioning the securities involved.
While Wells Fargo generally seeks reasonably competitive spreads
or commissions, the Fund will not necessarily be paying the
lowest spread or commission available.
Wells Fargo, as adviser of the Fund may, in
circumstances in which two or more broker/dealers are in a
position to offer comparable results for a Fund portfolio
transaction, give preference to a broker/dealer that has provided
statistical or other research services to Wells Fargo. By
allocating transactions in this manner, Wells Fargo is able to
supplement its research and analysis with the views and
information of securities firms. Information so received will be
in addition to, and not in lieu of, the services required to be
performed by Wells Fargo under the Advisory Contract, and the
expenses of Wells Fargo will not necessarily be reduced as a
-15-
<PAGE> 423
result of the receipt of this supplemental research information.
Furthermore, research services furnished by broker/dealers
through which Wells Fargo places securities transactions for the
Fund may be used by Wells Fargo in servicing its other accounts,
and not all of these services may be used in connection with
advising the Fund.
Under the 1940 Act, persons affiliated with the Company
such as Stephens, Wells Fargo and their affiliates are prohibited
from dealing with the Company as a principal in the purchase and
sale of securities unless an exemptive order allowing such
transactions is obtained from the SEC or an exemption is
otherwise available.
THE MONEY MARKET FUND
Purchases and sales of securities usually are principal
transactions. Portfolio securities normally are purchased or
sold from or to dealers serving as market makers for the
securities at a net price. The Money Market Fund also purchases
portfolio securities in underwritten offerings and may purchase
securities directly from the issuer. Generally, taxable money
market securities are traded on a net basis and do not involve
brokerage commissions. The cost of executing the portfolio
transactions consists primarily of dealer spreads and
underwriting commissions.
As of February 28, 1995, the Fund owned securities of
its "regular brokers or dealers," or their parents, as defined in
the Act, as follows: $3,689,000 of Goldman Sachs & Co.
Portfolio Turnover. Because the portfolio of the Fund
consists of securities with relatively short-term maturities, the
Fund expects to experience high portfolio turnover. A high
portfolio turnover rate should not adversely affect the Money
Market Fund, however, because portfolio transactions ordinarily
will be made directly with principals on a net basis, and,
consequently, the Fund usually will not incur excessive
transaction costs.
FEDERAL INCOME TAXES
The Money Market Fund prospectus describes generally the
tax treatment of distributions. This section of the SAI includes
additional information concerning federal income taxes.
Qualification as a "regulated investment company" under
the Code requires, among other things, that (a) at least 90% of
the Fund's annual gross income be derived from interest, payments
with respect to securities loans, dividends and gains from the
sale or other disposition of securities or options thereon;
(b) the Fund derives less than 30% of its gross income from gains
from the sale or other disposition of securities or options
thereon held for less than three months; and (c) the Fund
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<PAGE> 424
diversifies its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the
Fund's assets is represented by cash, government securities and
other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies), or of two or
more issuers which the taxpayer controls and which are determined
to be engaged in the same or similar trades or businesses or
related trades or businesses. As a regulated investment company,
the Fund will not be subject to federal income tax on its net
investment income and net capital gains distributed to its
shareholders, provided that the Fund distributes to its
stockholders at least 90% of its net investment income earned in
each year.
A 4% nondeductible excise tax will be imposed on the
Fund to the extent it does not meet certain minimum distribution
requirements by the end of each calendar year. For this purpose,
any income or gain retained by the Fund that is subject to income
tax will be considered to have been distributed by year-end. In
addition, dividends and distributions of taxable income and
capital gains declared payable as of a record date in October,
November or December of any calendar year are deemed under the
Code to have been distributed by the Fund and received by the
shareholders on December 31 of that calendar year if the dividend
is actually paid in the following January. Such dividends will,
accordingly, be taxable to the recipient shareholders in the year
in which the record date falls. The Fund intends to distribute
substantially all of its net investment income and net capital
gains and, thus, expects not to be subject to the excise tax.
Income and dividends received by the Fund from sources
within foreign countries may be subject to withholding and other
taxes imposed by such countries. Tax conventions between certain
countries and the United States may reduce or eliminate such
taxes. Because not more than 50% of the value of the total
assets of the Fund is expected to consist of securities of
foreign issuers, the Fund will not be eligible to elect to "pass
through" foreign tax credits to shareholders.
Gains or losses on sales of portfolio securities by the
Fund will be long-term capital gains or losses if the securities
have been held by it for more than one year, except in certain
cases including where the Fund acquires a put or writes a call
thereon. Other gains or losses on the sale of securities will be
short-term capital gains or losses. However, if a shareholder
receives a designed capital gain distribution (to be treated by
the shareholder as a long-term capital gain) with respect to any
Fund share and such Fund share is held for six months or less,
then (unless otherwise disallowed) any loss on the sale or
exchange of that Fund share will be treated as a long-term
capital loss to the extent of the designated capital gain
-17-
<PAGE> 425
distribution. Gains recognized on the disposition of a debt
obligation (including, with respect to obligations purchased
after April 30, 1993, tax-exempt obligations) purchased by a Fund
at a market discount (generally, at a price less than its
principal amount) will be treated as ordinary income to the
extent such discount had not previously been included in income.
As of the printing of this SAI, the maximum individual
marginal tax rate applicable to ordinary income is 39.6%; the
maximum individual marginal tax rate applicable to net realized
capital gains is 28%; and the maximum corporate marginal tax rate
applicable to ordinary income and net realized capital gains is
35%. However, to eliminate the benefit of lower marginal
corporate income tax rates, corporations which have taxable
income in excess of $100,000 for a taxable year will be required
to pay an additional amount of income tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000
for a taxable year will be required to pay an additional amount
of income tax of up to $100,000.
Any loss realized on a redemption or exchange of shares
of the Fund will be disallowed to the extent shares are
reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of. In addition, if
a shareholder exchanges or otherwise disposes of shares of the
Fund within 90 days of having acquired such shares, and if as a
result of having acquired those shares, the shareholder
subsequently pays a reduced sales charge for shares of the Fund,
or of a different Fund, the sales charge previously incurred
acquiring the Fund's shares shall not be taken into account (to
the extent such previous sales charges do not exceed the
reduction in sales charges) for the purpose of determining the
amount of gain or loss on the exchange, but will be treated as
having been incurred in the acquisition of such other shares.
If, in the opinion of the Company, ownership of its
shares has or may become concentrated to an extent that could
cause the Company to be deemed a personal holding company within
the meaning of the Code, the Company may require the redemption
of shares or reject any order for the purchase of shares in an
effort to prevent such concentration.
Investment by the Fund in securities issued or acquired
at a discount, or providing for deferred interest or for payment
of interest in the form of additional obligations could under
special tax rules affect the amount, timing and character of
distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the
Fund could be required to accrue a portion of the discount (or
deemed discount) at which the securities were issued each year
and to distribute such income in order to maintain its
qualification as a regulated investment company. In such case,
the Fund may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
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<PAGE> 426
Foreign Shareholders. Under the Code, distributions of
net investment income by the Fund to a nonresident alien
individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign
shareholder") will be subject to U.S. withholding tax (at a rate
of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by the Fund to a foreign shareholder is
"effectively connected" with a U.S. trade or business, in which
case the reporting and withholding requirements applicable to
U.S. citizens, U.S. residents or domestic corporations will
apply. Distributions of net long-term capital gains are not
subject to tax withholding, but in the case of a foreign
shareholder who is a nonresident alien individual, such
distributions ordinarily will be subject to U.S. income tax at a
rate of 30% if the individual is physically present in the U.S.
for more than 182 days during the taxable year.
Other Matters. Investors should be aware that the
investments to be made by the Fund may involve sophisticated tax
rules such as the original issue discount, mark to market and
real estate mortgage investment conduit rules that would result
in income or gain recognition by the Fund without corresponding
current cash receipts. Although the Fund will seek to avoid
significant noncash income, such noncash income could be
recognized by the Fund, in which case the Fund may distribute
cash derived from other sources in order to meet the minimum
distribution requirements described above.
CAPITAL STOCK
The Company, an open-end, management investment company,
was incorporated in Maryland on October 15, 1992. The authorized
capital stock of the Company consists of 10,000,000,000 shares
having a par value of $.001 per share. As of the date of this
SAI, the Company's Board of Directors has authorized the issuance
of fourteen series of shares, representing interests in the
following portfolios -- Short-Intermediate Term Fund, S&P 500
Stock Fund, Growth Stock Fund, U.S. Treasury Allocation Fund,
Bond Index Fund, Asset Allocation Fund, California Tax-Free
Intermediate Income Fund, California Tax-Free Short-Term Income
Fund, Money Market Fund, Growth & Income Fund, National Tax-Free
Intermediate Income Fund, National Tax-Free Money Market Mutual
Fund, Overland National Tax-Free Institutional Money Market Fund
and California Tax-Free Money Market Fund -- and the Board of
Directors may, in the future, authorize the issuance of other
series of capital stock representing shares of additional
investment portfolios.
All shares of the Company have equal voting rights and
will be voted in the aggregate, and not by series, except where
voting by a series is required by law or where the matter
involved only affects one series. For example, a change in the
Fund's fundamental investment policy would be voted upon only by
shareholders of the Fund. Additionally, approval of an advisory
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<PAGE> 427
contract is a matter to be determined separately by fund.
Approval by the shareholders of a fund is effective as to that
fund whether or not sufficient votes are received from the
shareholders of the other investment portfolios to approve the
proposal as to those investment portfolios. As used in the Money
Market Fund's Prospectus and in this SAI, the term "majority,"
when referring to approvals to be obtained from shareholders of
the Fund, means the vote of the lesser of (i) 67% of the shares
of the Fund represented at a meeting if the holders of more than
50% of the outstanding shares of the Fund are present in person
or by proxy, or (ii) more than 50% of the outstanding shares of
the Fund. The term "majority," when referring to the approvals
to be obtained from shareholders of the Company as a whole, means
the vote of the lesser of (i) 67% of the Company's shares
represented at a meeting if the holders of more than 50% of the
Company's outstanding shares are present in person or by proxy,
or (ii) more than 50% of the Company's outstanding shares.
Shareholders are entitled to one vote for each full share held
and fractional votes for fractional shares held.
The Company may dispense with an annual meeting of
shareholders in any year in which it is not required to elect
Directors under the 1940 Act. However, the Company has
undertaken to hold a special meeting of its shareholders for the
purpose of voting on the question of removal of a Director or
Directors if requested in writing by the holders of at least 10%
of the Company's outstanding voting securities, and to assist in
communicating with other shareholders as required by
Section 16(c) of the 1940 Act.
Each share of the Fund represents an equal proportional
interest in the Fund with each other share and is entitled to
such dividends and distributions out of the income earned on the
assets belonging to the Fund as are declared in the discretion of
the Directors. In the event of the liquidation or dissolution of
the Company, shareholders of the Fund are entitled to receive the
assets attributable to the Fund that are available for
distribution, and a distribution of any general assets not
attributable to a particular investment portfolio that are
available for distribution in such manner and on such basis as
the Directors in their sole discretion may determine.
Shareholders are not entitled to any preemptive rights.
All shares, when issued, will be fully paid and non-assessable by
the Company.
As of June 8, 1995 the shareholders identified below
were known by the Company to own 5% or more of the Money Market
Fund's outstanding shares in the following capacity:
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<PAGE> 428
<TABLE>
<CAPTION>
Name and Address Percentage Capacity
of Shareholder of Fund Owned
---------------- ---------- --------
<S> <C> <C>
Hubbell Incorporated 11.39% Record
Benefit Plan
584 Darby Milford Road
Orange, CT 06477-4024
NASSCO
Benefit Plan 7.60% Record
P.O. Box 85278
San Diego, CA 92186
Jacobs Engineering Group, 6.65% Record
Inc.
Benefit Plan
251 South Lake Avenue
Pasadena, CA 91101-3063
Gerber Scientific, Inc. 5.70% Record
Benefit Plan
83 Gerber Road West
South Windsor, CT 06074
M.A. Hanna Company 5.70% Record
Benefit Plan - #003
1301 East Ninth Street
Suite 3600
Cleveland, OH 44114-1860
Pacific Volt Information 5.70% Record
Systems Benefit Plan
2411 North Glassall Street
Orange, CA 92665
</TABLE>
OTHER
The Registration Statement, including the Prospectus for
the Money Market Fund, the SAI and the exhibits filed therewith,
may be examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or the SAI as to the
contents of any contract or other document referred to herein or
in the Prospectus are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
CUSTODIAN AND TRANSFER AND
DIVIDEND DISBURSING AGENT
Wells Fargo has been retained to act as Custodian for
the Money Market Fund. The Custodian, among other things,
maintains a custody account or accounts in the name of the Fund;
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<PAGE> 429
receives and delivers all assets for the Fund upon purchase and
upon sale or maturity; collects and receives all income and other
payments and distributions on account of the assets of the Fund
and pays all expenses of the Fund. For its services as
Custodian, Wells Fargo is entitled to receive an asset-based fee
from the Fund.
Wells Fargo also has been retained to act as the
Transfer and Dividend Disbursing Agent for the Fund, and receives
for its services an asset-based fee from the Fund.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the
independent auditors for the Company. KPMG Peat Marwick LLP
provides audit services, tax return preparation and assistance
and consultation in connection with review of certain SEC
filings. KPMG Peat Marwick LLP's address is Three Embarcadero
Center, San Francisco, California 94111.
FINANCIAL INFORMATION
Attached to this SAI are the current audited financial
statements dated February 28, 1995. The audited financial
statements will be sent free of charge with this SAI to any
shareholder who requests them.
-22-
<PAGE> 430
SAI APPENDIX
The following is a description of the ratings given by
Moody's and S&P to corporate bonds and commercial paper.
Corporate Bonds
Moody's: The four highest ratings for corporate bonds
are "Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to
be of the "best quality" and carry the smallest amount of
investment risk. Bonds rated "Aa" are of "high quality by all
standards," but margins of protection or other elements make
long-term risks appear somewhat greater than "Aaa" rated bonds.
Bonds rated "A" possess many favorable investment attributes and
are considered to be upper medium grade obligations. Bonds rated
"Baa" are considered to be medium grade obligations; interest
payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Such bonds have speculative characteristics as well. Moody's
applies numerical modifiers "1," "2" and "3" in each rating
category from "Aa" through "Baa" in its rating system. The
modifier "1" indicates that the security ranks in the higher end
of its category; the modifier "2" indicates a mid-range ranking;
and the modifier "3" indicates that the issue ranks in the lower
end.
S&P: The four highest ratings for corporate bonds are
"AAA," "AA," "A" and "BBB." Bonds rated "AAA" have the highest
ratings assigned by S&P and have an extremely strong capacity to
pay interest and repay principal. Bonds rated "AA" have a "very
strong capacity to pay interest and repay principal" and differ
"from the highest rated issued only in small degree." Bonds
rated "A" have a "strong capacity" to pay interest and repay
principal, but are "somewhat more susceptible" to adverse effects
of changes in economic conditions or other circumstances than
bonds in higher rated categories. Bonds rated "BBB" are regarded
as having an "adequate capacity" to pay interest and repay
principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to
make such repayments. The ratings from "AA" to "BBB" may be
modified by the addition of a plus or minus sign to show relative
standing within the category.
Corporate Commercial Paper
Moody's: The highest rating for corporate commercial
paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior
capacity for repayment of short-term promissory obligations."
Issuers rated "P-2" (Prime-2) "have a strong capacity for
repayment of short-term promissory obligations," but earnings
trends, while sound, will be subject to more variation.
A-1
<PAGE> 431
S&P: The "A-1" rating for corporate commercial paper
indicates that the "degree of safety regarding timely payment is
either overwhelming or very strong." Commercial paper with
"overwhelming safety characteristics" will be rated "A-1+."
Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
A-2
<PAGE> 432
STAGECOACH INC. -- MONEY MARKET FUND -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Yield to Maturity
Principal Security Name Maturity Date Value
<C> <S> <C> <C> <C>
COMMERCIAL PAPER - 68.84%
$3,000,000 ANZ Delaware Inc 6.05% 03/31/95 $ 2,984,875
5,000,000 Associates Corp of North 6.00 03/16/95 4,987,500
America
5,000,000 Canadian Imperial Bank of 6.03 03/01/95 5,000,000
Commerce
5,000,000 Commercial Credit Co 6.00 03/27/95 4,978,333
5,000,000 Den Danske Corp Inc 5.97 03/09/95 4,993,367
5,000,000 Federal Home Loan Mortgage 5.89 03/31/95 4,975,458
Corp
3,000,000 Ford Motor Credit Corp 6.05 05/24/95 2,957,650
5,000,000 General Electric Credit Corp 6.17 04/26/95 4,952,011
4,000,000 Greenwich Funding Corp 6.12 04/17/95 3,968,040
5,000,000 Hanson Finance PLC 6.19 04/10/95 4,965,611
5,000,000 Household Finance Corp 6.00 03/27/95 4,978,333
5,000,000 MCA Funding Corp* 6.20 06/14/95 4,909,583
5,000,000 National Rural Utilities 6.00 05/02/95 4,948,333
Cooperative Finance Corp
5,000,000 PHH Corp* 6.00 03/02/95 4,999,167
5,000,000 Reed Elsevier Inc 6.00 03/22/95 4,982,500
5,000,000 RTZ America Inc* 6.12 04/25/95 4,953,250
5,000,000 Southern California Edison Co 6.14 05/09/95 4,941,158
5,000,000 Southwestern Bell Capital 6.20 03/30/95 4,975,028
Corp
5,000,000 Student Loan Corp 6.00 03/06/95 4,995,833
5,000,000 U.S. Borax & Chemical Corp* 6.20 03/08/95 4,993,972
7,000,000 WCP Funding Inc 6.08 04/20/95 6,940,891
-------------
TOTAL COMMERCIAL PAPER $101,380,893
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 5.91%
$7,000,000 Federal Home Loan Bank 5.85% 03/06/95 $ 6,994,313
1,713,000 Federal Home Loan Mortgage 6.20 03/02/95 1,712,705
Corp
-------------
TOTAL U.S. GOVERNMENT AGENCY DISCOUNT NOTES $ 8,707,018
</TABLE>
31
<PAGE> 433
STAGECOACH INC. -- MONEY MARKET FUND -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 3.40%
$5,000,000 Banque Nationale de Paris 5.19% 03/06/95 $ 4,999,999
VARIABLE AND FLOATING RATE NOTES - 19.70%
$2,500,000 American Express Centurion 6.13% 05/23/95 $ 2,499,808
Bank
5,000,000 BankAmerica Corp 6.68 03/15/95 5,000,377
3,000,000 Beta Finance Inc* 6.20(F) 08/17/95 3,000,000
5,000,000 Boatmen's Bancshares Inc 6.04 09/20/95 4,998,558
2,000,000 Orange County CA Taxable 0.00 07/10/95 1,999,422
Note+
5,000,000 PNC Funding Corp* 6.04 07/26/95 4,997,986
5,000,000 Sweden (Kingdom of) 6.19 10/08/95 4,997,092
1,510,000 U.S. West Financial 6.45 09/05/95 1,511,190
-------------
TOTAL VARIABLE AND FLOATING RATE NOTES $29,004,433
REPURCHASE AGREEMENTS - 2.50%
$3,689,000 Goldman Sachs Pooled 6.08 03/01/95 $ 3,689,000
Repurchase Agreement - 102%
Collateralized by U.S.
Government Securities
TOTAL INVESTMENTS IN SECURITIES
(Cost $147,781,343)** (Note 100.35% $147,781,343
1)
Other Assets and (0.35)% (512,783)
Liabilities, Net
------- ------------
TOTAL NET ASSETS 100.00% $147,268,560
------- ------------
------- ------------
</TABLE>
- ---------------------------------------------------------------------
(F) YIELD TO MATURITY.
* THESE SECURITIES ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933. PURSUANT TO RULE 144A, THESE SECURITIES ARE ELIGIBLE FOR RESALE IN
TRANSACTIONS EXEMPT FROM REGISTRATION TO INSTITUTIONAL BUYERS. THESE
SECURITIES WERE DEEMED LIQUID BY THE INVESTMENT ADVISER IN ACCORDANCE WITH
POLICIES APPROVED BY THE FUND'S BOARD OF DIRECTORS.
+ WELLS FARGO BANK HAS CHOSEN TO PUT THIS SECURITY ON A NON-ACCRUAL STATUS FOR
INCOME PURPOSES, BUT IT IS NEITHER DELINQUENT NOR IN DEFAULT AS OF FEBRUARY
28, 1995.
** COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE> 434
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995
<TABLE>
<CAPTION>
ASSET BOND GROWTH
ALLOCATION INDEX STOCK
FUND FUND FUND
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
In corresponding Master
Series, at market value
(Note 1) $293,741,285 $18,580,934 $96,883,031
Cash 0 0 0
Receivables:
Dividends and interest 1,272,349 104,333 43,453
Due from Administrator (Note
2) 0 70,818 55,246
Prepaid Expenses 0 0 0
Total Assets 295,013,634 18,756,085 96,981,730
LIABILITIES
Payables:
Distribution to
shareholders 1,183,578 102,594 0
Due to sponsor and
distributor (Note 2) 67,038 2,134 10,313
Due to WFB (Note 2) 66,582 0 0
Other 0 57,867 46,680
Total Liabilities 1,317,198 162,595 56,993
TOTAL NET ASSETS $293,696,436 $18,593,490 $96,924,737
Net assets consist of:
Paid-in capital 295,620,961 19,772,507 89,462,276
Undistributed
(overdistributed) net
investment income 14,719 0 (46,622)
Undistributed
(overdistributed) net
realized gain (loss) on
investments (1,556,380) (332,364) 2,135,736
Net unrealized
appreciation
(depreciation) of
investments (382,864) (846,653) 5,373,347
TOTAL NET ASSETS $293,696,436 $18,593,490 $96,924,737
COMPUTATION OF NET ASSET
VALUE AND OFFERING PRICE
PER SHARE
Net Assets $293,696,436 $18,593,490 $96,924,737
Shares outstanding 29,584,853 2,020,089 8,329,638
Net asset value and offering
price per share $9.93 $9.20 $11.64
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
33
<PAGE> 435
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995
<TABLE>
<CAPTION>
MONEY S&P SHORT-INTERMEDIATE
MARKET 500 STOCK TERM
FUND* FUND FUND
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
In corresponding Master
Series, at market value
(Note 1) $147,781,343 $446,815,899 $14,289,986
Cash 645 0 0
Receivables:
Dividends and interest 301,115 1,986,249 79,658
Due from Administrator (Note
2) 0 90,936 54,526
Prepaid Expenses 0 17,379 75
Total Assets 148,083,103 448,910,463 14,424,245
LIABILITIES
Payables:
Distribution to
shareholders 637,542 0 77,762
Due to sponsor and
distributor (Note 2) 17,048 51,157 1,319
Due to WFB (Note 2) 112,172 0 0
Other 47,781 83,156 46,956
Total Liabilities 814,543 134,313 126,037
TOTAL NET ASSETS $147,268,560 $448,776,150 $14,298,208
Net assets consist of:
Paid-in capital 147,280,506 418,645,456 14,671,476
Undistributed
(overdistributed) net
investment income 0 1,887,038 0
Undistributed
(overdistributed) net
realized gain (loss) on
investments (11,946) (399,110) (380,328)
Net unrealized
appreciation
(depreciation) of
investments 0 28,642,766 7,060
TOTAL NET ASSETS $147,268,560 $448,776,150 $14,298,208
COMPUTATION OF NET ASSET
VALUE AND OFFERING PRICE
PER SHARE
Net Assets $147,268,560 $448,776,150 $14,298,208
Shares outstanding 147,279,914 41,427,361 1,561,855
Net asset value and offering
price per share $1.00 $10.83 $9.15
</TABLE>
- ---------------------------------------------------------------------
* THE MONEY MARKET FUND DOES NOT HAVE A CORRESPONDING MASTER SERIES. THE COST OF
SECURITIES HELD AT FEBRUARY 28, 1995, IS THE SAME AS THE MARKET VALUE.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE> 436
<TABLE>
<CAPTION>
U.S. TREASURY
ALLOCATION
FUND
<S> <C>
- ----------------------------------------------
ASSETS
Investments:
In corresponding Master
Series, at market value
(Note 1) $56,861,328
Cash 0
Receivables:
Dividends and interest 309,179
Due from Administrator (Note
2) 0
Prepaid Expenses 0
Total Assets 57,170,507
LIABILITIES
Payables:
Distribution to
shareholders 291,913
Due to sponsor and
distributor (Note 2) 13,836
Due to WFB (Note 2) 12,949
Other 0
Total Liabilities 318,698
TOTAL NET ASSETS $56,851,809
Net assets consist of:
Paid-in capital 63,430,071
Undistributed
(overdistributed) net
investment income 0
Undistributed
(overdistributed) net
realized gain (loss) on
investments (6,132,682)
Net unrealized
appreciation
(depreciation) of
investments (445,580)
TOTAL NET ASSETS $56,851,809
COMPUTATION OF NET ASSET
VALUE AND OFFERING PRICE
PER SHARE
Net Assets $56,851,809
Shares outstanding 6,323,722
Net asset value and offering
price per share $8.99
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
<PAGE> 437
STATEMENT OF OPERATIONS
For The Year Ended February 28, 1995
<TABLE>
<CAPTION>
ASSET BOND GROWTH
ALLOCATION INDEX STOCK
FUND FUND FUND
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INVESTMENT INCOME
Dividends (Note 5) $3,197,896 $ 0 $169,878
Interest (Note 5) 9,812,675 1,173,339 295,650
Expenses allocated from
Master Series (666,053) (11,657) (299,913)
Net Investment Income 12,344,518 1,161,682 165,615
EXPENSES (NOTE 2)
Administration fees 215,978 8,095 30,409
Custody fees 25,334 1,897 5,500
Advisory fees 329,064 6,449 70,792
Transfer agency fees 215,978 5,615 20,513
Shareholder servicing fees 381,287 8,677 50,042
Legal and audit 0 16,435 14,776
Registration fees 0 42,729 32,673
Directors' fees 0 4,968 4,950
Shareholder reports 0 3,516 7,769
Other 0 3,155 4,637
Total Expenses 1,167,641 101,536 242,061
Less:
Waived fees and reimbursed
expenses (25,353) (75,623) (66,873)
Net expenses 1,142,288 25,913 175,188
NET INVESTMENT INCOME (LOSS) 11,202,230 1,135,769 (9,573)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
sale of investments (Note
5) 1,672,885 (333,833) 2,009,745
Net change in unrealized
appreciation
(depreciation) of
investments (Note 5) (2,125,246) (460,942) 2,123,031
Net Gain (Loss) On
Investments (452,361) (794,775) 4,132,776
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $10,749,869 $340,994 $4,123,203
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
<PAGE> 438
<TABLE>
<CAPTION>
MONEY S&P SHORT-INTERMEDIATE U.S. TREASURY
MARKET 500 STOCK TERM ALLOCATION
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME
Dividends (Note 5) $ 0 $8,563,038 $ 0 $ 0
Interest (Note 5) 5,733,256 1,083,825 571,406 4,024,105
Expenses allocated from
Master Series 0 (149,455) (27,185) (128,991)
Net Investment Income 5,733,256 9,497,408 544,221 3,895,114
EXPENSES (NOTE 2)
Administration fees 58,429 158,245 3,942 49,418
Custody fees 0 0 759 6,313
Advisory fees 371,199 33,202 7,590 82,068
Transfer agency fees 116,858 101,463 2,576 49,417
Shareholder servicing fees 0 215,027 6,059 86,209
Legal and audit 0 16,586 14,982 0
Registration fees 0 40,589 30,880 0
Directors' fees 0 4,969 4,969 0
Shareholder reports 0 15,747 2,600 0
Other 0 38,731 2,311 0
Total Expenses 546,486 624,559 76,668 273,425
Less:
Waived fees and reimbursed
expenses (20,629) (141,469) (56,199) (12,624)
Net expenses 525,857 483,090 20,469 260,801
NET INVESTMENT INCOME (LOSS) 5,207,399 9,014,318 523,752 3,634,313
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
sale of investments (Note
5) (11,946) 2,385,953 (329,022) (5,616,006)
Net change in unrealized
appreciation
(depreciation) of
investments (Note 5) 0 24,560,466 131,359 1,560,503
Net Gain (Loss) On
Investments (11,946) 26,946,419 (197,663) (4,055,503)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $5,195,453 $35,960,737 $326,089 ($421,190)
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
37
<PAGE> 439
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
----------------------------------
FOR THE
PERIOD FROM
JULY 2, 1993
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
FEBRUARY 28, FEBRUARY 28,
1995 * 1994
- ----------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income
(loss) $11,202,230 $4,396,834
Net realized gain (loss)
on sale of investments 1,672,885 2,111,903
Net change in unrealized
appreciation
(depreciation) of
investments (2,125,246) 1,742,382
Net increase (decrease) in
net assets resulting from
operations 10,749,869 8,251,119
Distributions to
shareholders:
From net investment income (11,202,230) (4,382,115)
From net realized gain on
sales of investments (3,444,708) (1,896,460)
In excess of net realized
gain on sale of
investments 0 0
Capital share transactions:
Proceeds from shares sold 143,045,844 263,638,842
Net asset value of shares
issued in reinvestment
of dividends and
distributions 14,136,175 6,278,642
Cost of shares redeemed (76,728,484) (54,775,058)
Net increase in net assets
resulting from capital
share transactions 80,453,535 215,142,426
Increase (Decrease) In Net
Assets 76,556,466 217,114,970
NET ASSETS:
Beginning net assets 217,139,970 25,000
Ending net assets $293,696,436 $217,139,970
SHARES ISSUED AND REDEEMED:
Shares sold 14,750,825 25,968,477
Shares issued in
reinvestment of dividends
and distributions 1,469,673 608,710
Shares redeemed (7,938,475) (5,276,857)
Net increase in shares
outstanding 8,282,023 21,300,330
</TABLE>
- ---------------------------------------------------------------------
* SEE NOTE 4.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
<PAGE> 440
<TABLE>
<CAPTION>
BOND INDEX FUND GROWTH STOCK FUND
---------------------------------- ----------------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JULY 2, 1993 JULY 2, 1993
FOR THE (COMMENCEMENT OF FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO YEAR ENDED OPERATIONS) TO
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1995 * 1994 1995 * 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income
(loss) $1,135,769 $535,758 ($9,573) ($37,049)
Net realized gain (loss)
on sale of investments (333,833) 1,469 2,009,745 1,819,876
Net change in unrealized
appreciation
(depreciation) of
investments (460,942) (385,711) 2,123,031 3,250,316
Net increase (decrease) in
net assets resulting from
operations 340,994 151,516 4,123,203 5,033,143
Distributions to
shareholders:
From net investment income (1,135,769) (535,758) 0 0
From net realized gain on
sales of investments 0 0 (588,577) (1,105,308)
In excess of net realized
gain on sale of
investments 0 0 0 0
Capital share transactions:
Proceeds from shares sold 10,448,187 18,933,513 85,963,624 55,644,602
Net asset value of shares
issued in reinvestment
of dividends and
distributions 1,103,959 67,015 588,598 1,105,308
Cost of shares redeemed (7,062,640) (3,742,527) (38,605,130) (15,259,726)
Net increase in net assets
resulting from capital
share transactions 4,489,506 15,258,001 47,947,092 41,490,184
Increase (Decrease) In Net
Assets 3,694,731 14,873,759 51,481,718 45,418,019
NET ASSETS:
Beginning net assets 14,898,759 25,000 45,443,019 25,000
Ending net assets $18,593,490 $14,898,759 $96,924,737 $45,443,019
SHARES ISSUED AND REDEEMED:
Shares sold 1,134,314 1,889,491 7,877,261 5,223,607
Shares issued in
reinvestment of dividends
and distributions 120,035 6,676 52,460 100,385
Shares redeemed (759,992) (372,935) (3,544,614) (1,381,960)
Net increase in shares
outstanding 494,357 1,523,232 4,385,107 3,942,032
</TABLE>
- ---------------------------------------------------------------------
* SEE NOTE 4.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
39
<PAGE> 441
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND
----------------------------------
FOR THE
PERIOD FROM
JULY 2, 1993
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
FEBRUARY 28, FEBRUARY 28,
1995 1994
- ----------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income
(loss) $5,207,399 $1,367,467
Net realized gain (loss)
on sale of investments (11,946) 600
Net change in unrealized
appreciation
(depreciation) of
investments 0 0
Net increase (decrease) in
net assets resulting from
operations 5,195,453 1,368,067
Distributions to
shareholders:
From net investment income (5,207,399) (1,367,467)
From net realized gain on
sales of investments 0 (600)
In excess of net realized
gain on sale of
investments 0 0
Capital share transactions:
Proceeds from shares sold 111,097,839 125,970,511
Net asset value of shares
issued in reinvestment
of dividends and
distributions 4,680,322 1,150,884
Cost of shares redeemed (50,146,714) (45,497,336)
Net increase in net assets
resulting from capital
share transactions 65,631,447 81,624,059
Increase (Decrease) In Net
Assets 65,619,501 81,624,059
NET ASSETS:
Beginning net assets 81,649,059 25,000
Ending net assets $147,268,560 $81,649,059
SHARES ISSUED AND REDEEMED:
Shares sold 111,097,845 125,969,912
Shares issued in
reinvestment of dividends
and distributions 4,680,322 1,150,884
Shares redeemed (50,146,714) (45,497,336)
Net increase in shares
outstanding 65,631,453 81,263,460
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
40
<PAGE> 442
<TABLE>
<CAPTION>
S&P 500 STOCK FUND SHORT-INTERMEDIATE TERM FUND
---------------------------------- ----------------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JULY 2, 1993 JULY 2, 1993
FOR THE (COMMENCEMENT OF FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO YEAR ENDED OPERATIONS) TO
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1995 * 1994 1995 * 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income
(loss) $9,014,318 $1,730,551 $523,752 $211,981
Net realized gain (loss)
on sale of investments 2,385,953 349,569 (329,022) (51,306)
Net change in unrealized
appreciation
(depreciation) of
investments 24,560,466 4,082,300 131,359 (124,299)
Net increase (decrease) in
net assets resulting from
operations 35,960,737 6,162,420 326,089 36,376
Distributions to
shareholders:
From net investment income (7,631,754) (1,226,077) (523,752) (211,981)
From net realized gain on
sales of investments (3,012,750) (121,882) 0 0
In excess of net realized
gain on sale of
investments 0 0 0 0
Capital share transactions:
Proceeds from shares sold 387,669,466 151,682,104 15,279,142 14,650,433
Net asset value of shares
issued in reinvestment
of dividends and
distributions 10,644,217 0 471,151 131,657
Cost of shares redeemed (97,245,061) (34,130,270) (6,512,467) (9,373,440)
Net increase in net assets
resulting from capital
share transactions 301,068,622 117,551,834 9,237,826 5,408,650
Increase (Decrease) In Net
Assets 326,384,855 122,366,295 9,040,163 5,233,045
NET ASSETS:
Beginning net assets 122,391,295 25,000 5,258,045 25,000
Ending net assets $448,776,150 $122,391,295 $14,298,208 $5,258,045
SHARES ISSUED AND REDEEMED:
Shares sold 38,170,417 14,922,652 1,672,577 1,463,570
Shares issued in
reinvestment of dividends
and distributions 1,047,250 0 51,238 13,211
Shares redeemed (9,443,527) (3,271,931) (703,052) (938,190)
Net increase in shares
outstanding 29,774,140 11,650,721 1,020,763 538,591
</TABLE>
- ---------------------------------------------------------------------
* SEE NOTE 4.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
<PAGE> 443
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY ALLOCATION FUND
----------------------------------
FOR THE
PERIOD FROM
JULY 2, 1993
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
FEBRUARY 28, FEBRUARY 28,
1995 * 1994
- ----------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income
(loss) $3,634,313 $2,252,145
Net realized gain (loss)
on sale of investments (5,616,006) 1,222,682
Net change in unrealized
appreciation
(depreciation) of
investments 1,560,503 (2,006,083)
Net increase (decrease) in
net assets resulting from
operations (421,190) 1,468,744
Distributions to
shareholders:
From net investment income (3,634,313) (2,252,145)
From net realized gain on
sales of investments 0 (1,222,682)
In excess of net realized
gain on sale of
investments 0 (516,675)
Capital share transactions:
Proceeds from shares sold 37,807,075 88,498,189
Net asset value of shares
issued in reinvestment
of dividends and
distributions 3,616,562 287,128
Cost of shares redeemed (38,732,671) (28,071,213)
Net increase in net assets
resulting from capital
share transactions 2,690,966 60,714,104
Increase (Decrease) In Net
Assets (1,364,537) 58,191,346
NET ASSETS:
Beginning net assets 58,216,346 25,000
Ending net assets $56,851,809 $58,216,346
SHARES ISSUED AND REDEEMED:
Shares sold 4,190,630 8,742,364
Shares issued in
reinvestment of dividends
and distributions 401,066 28,456
Shares redeemed (4,287,468) (2,753,826)
Net increase in shares
outstanding 304,228 6,016,994
</TABLE>
- ---------------------------------------------------------------------
* SEE NOTE 4.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
<PAGE> 444
FINANCIAL HIGHLIGHTS
For a share outstanding during each period is as follows:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND BOND INDEX FUND
------------------------- -------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JULY 2, 1993 JULY 2, 1993
(COMMENCEMENT (COMMENCEMENT
YEAR OF YEAR OF
ENDED OPERATIONS) ENDED OPERATIONS)
FEBRUARY TO FEBRUARY TO
28, FEBRUARY 28, 28, FEBRUARY 28,
1995** 1994 1995** 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 10.19 $ 10.00 $ 9.76 $ 10.00
Income from investment operations:
Net investment income 0.44 0.23 0.64 0.38
Net realized and unrealized gain (loss) on
investments (0.14) 0.28 (0.56) (0.24)
---------- ------------- ---------- -------------
Total from investment operations 0.30 0.51 0.08 0.14
Less distributions:
Dividends from net investment income (0.44) (0.23) (0.64) (0.38)
Distributions from net realized gains (0.12) (0.09) 0.00 0.00
---------- ------------- ---------- -------------
Total distributions (0.56) (0.32) (0.64) (0.38)
---------- ------------- ---------- -------------
Net Asset Value, end of period $ 9.93 $ 10.19 $ 9.20 $ 9.76
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
Total return (not annualized) 3.28% 5.14% 1.12% 1.38%
Ratios/Supplemental data:
Net assets, end of period (000) $ 293,696 $ 217,140 $ 18,593 $ 14,899
Number of shares outstanding, end of period
(000) 29,585 21,303 2,020 1,526
Ratios to average net assets+:
Ratio of expenses to average net assets(1) 0.75%++ 0.79% 0.23%++ 0.31%
Ratio of net investment income to average
net assets(2) 4.62% 3.47% 7.08% 5.88%
Portfolio turnover 24%* 33% 14%* 20%
- ----------------------------------------------------------------------------------------------------
(1) RATIO OF EXPENSES TO AVERAGE NET ASSETS
PRIOR TO WAIVED FEES AND REIMBURSED
EXPENSES 0.76% 0.80% 0.96% 0.32%
(2) RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS PRIOR TO WAIVED FEES AND
REIMBURSED EXPENSES 4.61% 3.46% 6.61% 5.87%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* THIS RATE IS FOR THE PERIOD FROM FEBRUARY 28, 1994 TO MAY 25, 1994. AS OF MAY
26, 1994 THE FUNDS INVEST ALL OF THEIR ASSETS IN THE CORRESPONDING MASTER
SERIES, HENCE NO SECURITIES-RELATED ACTIVITY.
** SEE NOTE 4.
+ ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
++ THIS RATIO INCLUDES EXPENSES CHARGED TO THE MASTER SERIES.
43
<PAGE> 445
FINANCIAL HIGHLIGHTS (Continued)
For a share outstanding during each period is as follows:
<TABLE>
<CAPTION>
GROWTH STOCK FUND MONEY MARKET FUND
------------------------- -------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JULY 2,1993 JULY 2,1993
(COMMENCEMENT (COMMENCEMENT
YEAR OF YEAR OF
ENDED OPERATIONS) ENDED OPERATIONS)
FEBRUARY TO FEBRUARY TO
28, FEBRUARY 28, 28, FEBRUARY 28,
1995** 1994 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 11.52 $ 10.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income (loss) 0.00 (0.01) 0.04 0.02
Net realized and unrealized gain (loss) on
investments 0.19 1.86 0.00 0.00
---------- ------------- ---------- -------------
Total from investment operations 0.19 1.85 0.04 0.02
Less distributions:
Dividends from net investment income 0.00 0.00 (0.04) (0.02)
Distributions from net realized gains (0.07) (0.33) 0.00 0.00
---------- ------------- ---------- -------------
Total distributions (0.07) (0.33) (0.04) (0.02)
---------- ------------- ---------- -------------
Net Asset Value, end of period $ 11.64 $ 11.52 $ 1.00 $ 1.00
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
Total return (not annualized) 1.70% 18.65% 4.40% 1.81%
Ratios/supplemental data:
Net assets, end of period (000) $ 96,925 $ 45,443 $ 147,269 $ 81,649
Number of shares outstanding, end of period
(000) 8,330 3,945 147,280 81,648
Ratios to average net assets+:
Ratio of expenses to average net assets(1) 0.76%++ 0.80% 0.45% 0.49%
Ratio of net investment income (loss) to
average net assets(2) (0.02)% (0.18)% 4.44% 2.77%
Portfolio turnover 27%* 104% N/A N/A
- ----------------------------------------------------------------------------------------------------
(1) RATIO OF EXPENSES TO AVERAGE NET ASSETS
PRIOR TO WAIVED FEES AND REIMBURSED
EXPENSES 0.87% 0.80% 0.57% 0.50%
(2) RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS PRIOR TO WAIVED FEES
AND REIMBURSED EXPENSES (0.12)% (0.18)% 4.32% 2.76%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* THIS RATE IS FOR THE PERIOD FROM FEBRUARY 28, 1994 TO MAY 25, 1994. AS OF MAY
26, 1994 THE FUND INVESTS ALL OF ITS ASSETS IN THE CORRESPONDING MASTER
SERIES, HENCE NO SECURITIES-RELATED ACTIVITY.
** SEE NOTE 4.
+ ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
++ THIS RATIO INCLUDES EXPENSES CHARGED TO THE MASTER SERIES.
44
<PAGE> 446
FINANCIAL HIGHLIGHTS (Continued)
For a share outstanding during each period is as follows:
<TABLE>
<CAPTION>
S&P 500 STOCK FUND SHORT-INTERMEDIATE TERM
------------------------- FUND
FOR THE --------------------------
PERIOD FROM FOR THE PERIOD
JULY 2, 1993 FROM JULY 2,
(COMMENCEMENT 1993
YEAR OF YEAR (COMMENCEMENT
ENDED OPERATIONS) ENDED OF OPERATIONS)
FEBRUARY TO FEBRUARY TO
28, FEBRUARY 28, 28, FEBRUARY 28,
1995** 1994 1995** 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 10.50 $ 10.00 $ 9.72 $ 10.00
---------- ------------- ---------- ------
Income from investment operations:
Net investment income 0.27 0.16 0.64 0.42
Net realized and unrealized gain (loss) on
investments 0.41 0.47 (0.57) (0.28)
---------- ------------- ---------- ------
Total from investment operations 0.68 0.63 0.07 0.14
Less distributions:
Dividends from net investment income (0.27) (0.12) (0.64) (0.42)
Distributions from net realized gains (0.08) (0.01) 0.00 0.00
Distributions in excess of net realized
gains 0.00 0.00 0.00 0.00
---------- ------------- ---------- ------
Total distributions (0.35) (0.13) (0.64) (0.42)
---------- ------------- ---------- ------
Net Asset Value, end of period $ 10.83 $ 10.50 $ 9.15 $ 9.72
---------- ------------- ---------- ------
---------- ------------- ---------- ------
Total return (not annualized) 6.71% 6.30% 0.89% 1.42%
Ratios/supplemental data:
Net assets, end of period (000) $ 448,776 $ 122,391 $ 14,298 $ 5,258
Number of shares outstanding, end of period
(000) 41,427 11,653 1,562 541
Ratios to average net assets+:
Ratio of expenses to average net assets(1) 0.21%++ 0.27% 0.65%++ 0.65%
Ratio of net investment income to average
net assets(2) 2.93% 2.46% 7.07% 6.02%
Portfolio turnover 8%* 4% 29%* 277%
- -----------------------------------------------------------------------------------------------------
(1) RATIO OF EXPENSES TO AVERAGE NET ASSETS
PRIOR TO WAIVED FEES AND REIMBURSED
EXPENSES 0.25% 0.28% 1.41% 0.65%
(2) RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS PRIOR TO WAIVED FEES AND
REIMBURSED EXPENSES 2.88% 2.45% 6.32% 6.02%
- -----------------------------------------------------------------------------------------------------
</TABLE>
* THIS RATE IS FOR THE PERIOD FROM FEBRUARY 28, 1994 TO MAY 25, 1994. AS OF MAY
26, 1994 THE FUNDS INVEST ALL OF THEIR ASSETS IN THE CORRESPONDING MASTER
SERIES, HENCE NO SECURITIES-RELATED ACTIVITY.
** SEE NOTE 4.
+ ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
++ THIS RATIO INCLUDES EXPENSES CHARGED TO THE MASTER SERIES.
45
<PAGE> 447
FINANCIAL HIGHLIGHTS (Continued)
For a share outstanding during each period is as follows:
<TABLE>
<CAPTION>
U.S. TREASURY ALLOCATION
FUND
-------------------------
FOR THE
PERIOD FROM
JULY 2, 1993
(COMMENCEMENT
YEAR OF
ENDED OPERATIONS)
FEBRUARY TO
28, FEBRUARY 28,
1995** 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, beginning of period $ 9.67 $ 10.00
---------- -------------
Income from investment operations:
Net investment income 0.59 0.39
Net realized and unrealized gain (loss) on investments (0.68) (0.05)
---------- -------------
Total from investment operations (0.09) 0.34
Less distributions:
Dividends from net investment income (0.59) (0.39)
Distributions from net realized gains 0.00 (0.20)
Distributions in excess of net realized gains 0.00 (0.08)
---------- -------------
Total distributions (0.59) (0.67)
---------- -------------
Net Asset Value, end of period $ 8.99 $ 9.67
---------- -------------
---------- -------------
Total return (not annualized) (0.76)% 3.33%
Ratios/supplemental data:
Net assets, end of period (000) $ 56,852 $ 58,216
Number of shares outstanding, end of period (000) 6,324 6,019
Ratios to average net assets+:
Ratio of expenses to average net assets(1) 0.70%++ 0.78%
Ratio of net investment income to average net assets(2) 6.52% 5.79%
Portfolio turnover 43%* 210%
- ---------------------------------------------------------------------------------------------------
(1) RATIO OF EXPENSES TO AVERAGE NET ASSETS PRIOR TO WAIVED FEES AND
REIMBURSED EXPENSES(1) 0.72% 0.80%
(2) RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS PRIOR TO WAIVED
FEES AND REIMBURSED EXPENSES(2) 6.50% 5.77%
- ---------------------------------------------------------------------------------------------------
</TABLE>
* THIS RATE IS FOR THE PERIOD FROM FEBRUARY 28, 1994, TO MAY 25, 1994. AS OF MAY
26, 1994 THE FUNDS INVEST ALL OF THEIR ASSETS IN THE CORRESPONDING MASTER
SERIES, HENCE NO SECURITIES-RELATED ACTIVITY.
** SEE NOTE 4.
+ ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
++ THIS RATIO INCLUDES EXPENSES CHARGED TO THE MASTER SERIES.
46
<PAGE> 448
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Stagecoach Inc. (the "Company"), is registered under the
Investment Company Act of 1940, as amended, as an open-end series investment
company. The Company commenced operations on July 2, 1993 and currently is
authorized to issue thirteen separate funds, of which the following have
commenced operations: the Asset Allocation Fund, the Bond Index Fund, the Growth
Stock Fund, the Money Market Fund, the S&P 500 Stock Fund, the Short-
Intermediate Term Fund and the U.S. Treasury Allocation Fund (the "Funds").
The following significant accounting policies are consistently followed by
the Company in the preparation of its financial statements, and such policies
are in conformity with generally accepted accounting principles for investment
companies.
INVESTMENT POLICY AND SECURITY VALUATION
Each Fund with the exception of the Growth Stock Fund, Money Market Fund and
the Short-Intermediate Term Fund invests all of its assets in a separate series
(each a "Master Series") of Master Investment Portfolio. Each of the Growth
Stock Fund and the Short-Intermediate Term Fund invests all of its assets in a
separate series (also a "Master Series") of the Managed Series Investment Trust.
Each Master Series has the same investment objective as the Fund bearing the
corresponding name. The value of each Fund's investment in its corresponding
Master Series reflects that Fund's interest in the net assets of that Master
Series (99.99%, 17.20%, 99.99%, 92.02%, 99.99% and 99.99% for the Asset
Allocation Fund, the Bond Index Fund, the Growth Stock Fund, the S&P 500 Stock
Fund, the Short-Intermediate Term Fund, and the U.S. Treasury Allocation Fund,
respectively, at February 28, 1995). The Money Market Fund is not a feeder fund
and does not have a corresponding Master Series.
Investments of each Master Series are valued by the Master Investment
Portfolio for all of the Funds with the exception of the Growth Stock Fund,
Money Market Fund and the Short-Intermediate Term Fund. The investments of the
Growth Stock Fund and the Short-Intermediate Term Fund are valued by the Managed
Series Investment Trust.
47
<PAGE> 449
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
SECURITY TRANSACTIONS AND REVENUE RECOGNITION
Securities transactions are accounted for by each Master Series on the date
the securities are purchased or sold (trade date). Revenue is recognized by each
Master Series as follows. Dividend income is recognized on the ex-dividend date,
and interest income is recognized on a daily accrual basis. Realized gains and
losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized as required by the Internal Revenue
Code (the "Code"). All net investment income and realized and unrealized capital
gains and losses of each Master Series are allocated pro rata among its
respective Funds in the Master Series.
The Money Market Fund uses the amortized cost method to value its portfolio
securities and seeks to maintain a constant net asset value of $1.00 per share.
There is no assurance that the Fund will meet this objective. The amortized cost
method, which involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, approximates market value.
The performance of each Fund, with the exception of the Money Market Fund,
is directly affected by the performance of the corresponding Master Series. The
financial statements of each Master Series, including the schedule of
investments, are included elsewhere in this report and should be read in
conjunction with each Fund's financial statements.
FEDERAL INCOME TAXES
Each Fund of the Company is treated as a separate entity for federal income
tax purposes. It is the policy of each Fund of the Company to continue to
qualify as a regulated investment company by complying with the provisions
applicable to investment companies, as defined in the Code, and to make
distributions of investment company taxable income and net capital gains (after
reduction for capital loss carry-forwards) sufficient to relieve it from all, or
substantially all, federal income taxes. Accordingly, no provision for federal
income taxes was required. The Bond Index Fund has a capital loss carryforward
of $144,965 which will expire in the year 2002. The Money Market Fund has a
capital loss carryforward of $11,557 which will expire in the year 2002. The
Short-Intermediate Term Fund has capital loss carryforwards of $31,607 which
will
48
<PAGE> 450
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
expire in the year 2001 and $387,126 which will expire in the year 2002. The
U.S. Treasury Allocation Fund has a capital loss carryforward of $5,548,747
which will expire in the year 2002. No capital gain distribution shall be made
in any of the Funds until the respective capital loss carryforward has been
fully utilized or expires.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Asset Allocation
Fund, the Bond Index Fund, the Short-Intermediate Term Fund and the U.S.
Treasury Allocation Fund are declared and distributed monthly. Dividends to
shareholders from net investment income of the Growth Stock Fund and the S&P 500
Stock Fund are declared and distributed quarterly. Dividends to shareholders
from net investment income of the Money Market Fund are declared daily and
distributed monthly. Distributions to shareholders from any net realized capital
gains are declared and distributed annually, generally December 31, the Funds'
tax year end.
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the Funds' administrator and distributor, has
paid all the expenses in connection with the organization and registration of
the various Funds.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate contracts on behalf of the Funds with
Wells Fargo Bank, N.A. ("WFB"), whereby WFB has agreed to provide transfer and
dividend disbursing agency services and shareholder services to the Funds. WFB
is compensated for transfer and dividend disbursing agency services based on an
annual rate of 0.03% for all of the Funds except the Asset Allocation Fund, the
Money Market Fund and the U.S. Treasury Allocation Fund which are charged at an
annual rate of 0.10% of the average daily net assets of the Funds. WFB is
compensated for shareholder servicing based on an annual rate of 0.20% for the
Asset Allocation Fund and the U.S. Treasury Allocation Fund; 0.10% for the
49
<PAGE> 451
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
Growth Stock Fund and the Short-Intermediate Term Fund and 0.07% for the Bond
Index Fund and the S&P 500 Stock Fund, based on the average daily net assets of
each of these Funds.
The Company has also entered into an advisory contract on behalf of the
Money Market Fund with WFB. Pursuant to the contract, WFB furnishes to the Fund
investment guidance and policy direction in connection with daily portfolio
management of the Fund. The advisory contract with the Fund provides for
advisory fees, which are accrued daily and paid monthly, at an annual rate of
0.35% of the average daily net assets of the Fund. Prior to conversion (see Note
4), the Company had also entered into advisory contracts on behalf of all the
Funds with WFB. Pursuant to the contract, WFB furnished to the Funds investment
guidance and policy direction in connection with daily portfolio management of
the Funds. The advisory contracts for the Asset Allocation Fund, the Growth
Stock Fund and the U.S. Treasury Allocation Fund provided for advisory fees,
which were accrued daily and paid monthly, at an annual rate of 0.65% of the
average daily net assets of each of these Funds. The advisory contracts for the
Bond Index Fund, the S&P 500 Stock Fund and the Short-Intermediate Term Fund
provided for advisory fees which were accrued daily and paid monthly, at annual
rates of 0.17%, 0.13% and 0.50% of the average daily net assets of each of these
funds, respectively.
In connection with the Asset Allocation Fund, the Bond Index Fund, the S&P
500 Stock Fund and the U.S. Treasury Allocation Fund, the Company and WFB had
entered into sub-advisory contracts prior to conversion (see Note 4) with Wells
Fargo Nikko Investment Advisors ("WFNIA"). WFNIA is an affiliate of Wells Fargo
& Company. Pursuant to such contracts WFB paid WFNIA a sub-advisory fee. In
addition the Company had entered into sub-custodian agreements with Wells Fargo
Institutional Trust Company N.A. ("WFITC"), a subsidiary of WFNIA. Pursuant to
such agreements, WFB had paid WFITC a sub-custodian fee.
The Company has entered into administration and distribution agreements with
Stephens on behalf of the Asset Allocation Fund, the U.S. Treasury Allocation
Fund and the Money Market Fund. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services for these Funds.
As
50
<PAGE> 452
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
compensation for these services, the Asset Allocation Fund and the U.S. Treasury
Allocation Fund pay a monthly fee at an annual rate of 0.10% of each Fund's
average daily net assets. The Money Market Fund pays a monthly fee at an annual
rate of 0.05% of the Fund's average daily net assets. In addition, Stephens is
responsible for paying all other expenses incurred by these Funds other than the
fees payable by the Fund pursuant to the Company's various service contracts.
Under the administration agreement, Stephens has agreed to assume operating
expenses of the Asset Allocation Fund, the U.S. Treasury Allocation Fund and the
Money Market Fund and a pro rata share of the operating expenses of the Asset
Allocation Master Series and the U. S. Treasury Allocation Master Series, except
for extraordinary expenses and those fees and expenses payable pursuant to the
various service contracts described above which will be borne by the
aforementioned funds and those expenses specifically assumed by Wells Fargo
under its contracts with each of the aforementioned funds.
The Company has also entered into administration and distribution agreements
with Stephens on behalf of the Bond Index Fund, the Growth Stock Fund, the S&P
500 Stock Fund and the Short-Intermediate Term Fund. Under the agreements,
Stephens has agreed to provide supervisory, administrative and distribution
services to the Funds. For these services, each Fund pays Stephens a monthly fee
at an annual rate of 0.05% of the Funds' average daily net assets.
WAIVED FEES AND REIMBURSED EXPENSES
The following amounts of fees and expenses have been waived and/or
reimbursed for the year ended February 28, 1995:
<TABLE>
<CAPTION>
REIMBURSED
WAIVED FEES EXPENSES BY
FUND BY WFB STEPHENS TOTAL
<S> <C> <C> <C>
Asset Allocation $ 25,353 $ 0 $ 25,353
Bond Index 7,133 68,490 75,623
Growth Stock 66,873 0 66,873
Money Market 20,629 0 20,629
S&P 500 Stock 141,469 0 141,469
Short-Intermediate Term 8,181 48,018 56,199
U.S. Treasury Allocation 12,624 0 12,624
</TABLE>
51
<PAGE> 453
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens, respectively.
Certain officers and directors of the Company are also officers of Stephens.
As of February 28, 1995, Stephens owned the following shares of the Funds:
<TABLE>
<CAPTION>
FUND SHARES
<S> <C>
Asset Allocation 2,734
Bond Index 2,786
Growth Stock 2,592
Money Market 26,572
S&P 500 Stock 2,618
Short-Intermediate Term 2,796
U.S. Treasury Allocation 2,852
</TABLE>
3. CAPITAL SHARES TRANSACTIONS
As of February 28, 1995, there were 10 billion shares of $.001 par value
capital stock authorized by the Company. At February 28, 1995, each Fund except
the Money Market Fund, the U.S. Treasury Allocation Fund and the Short-
Intermediate Term Fund was authorized to issue 100 million shares of $.001 per
value capital stock. The Money Market Fund was authorized to issue 3 billion
shares. The U.S. Treasury Allocation Fund and Short-Intermediate Term Fund were
each authorized to issue 300 million shares. Transactions in capital shares, for
each Fund, are disclosed in detail in the Statements of Changes in Net Assets.
4. ORGANIZATION OF THE FUNDS
Certain Funds are successors to certain assets of collective investment
funds managed by WFB. A portion of the assets of the collective investment funds
were transferred to the Funds on behalf of the Retirement Plans wishing to
liquidate their collective investment fund holdings and acquire corresponding
investments in the Funds. Such transfers occurred at or shortly after the
commencement of operations of the Funds.
In addition, two "special" meetings were held in 1994 which affected the
organization of the Funds. At a special meeting held February 14, 1994, the
shareholders voted to change the name of the Company from "WellsFunds Inc."
52
<PAGE> 454
STAGECOACH INC.
NOTES TO THE FINANCIAL STATEMENTS
to "Stagecoach Inc." At a special meeting held January 31, 1994, the
shareholders of the Funds approved the reorganization of certain funds into a
"master-feeder" structure, whereby the existing Funds invest all of their assets
in a corresponding series of the Master Investment Portfolio or the Managed
Series Investment Trust (both open-end registered investment companies). On the
conversion date the funds transferred their investments to the corresponding
Master Series in exchange for shares in the corresponding Master Series. Certain
existing Funds then became "feeder" funds. This reorganization was effected in
May 1994. The reorganization had no impact to shareholders of the existing funds
except that certain advisory fees were contractually reduced.
5. INCOME AND GAIN/LOSS ALLOCATIONS
For the period from May 26, 1994 (commencement of operations) to February
28, 1995, the Funds received allocations from the corresponding Master Series
for income and realized gains/losses. The detail of allocated income and
realized gains/losses and the income and realized gains/losses for the
stand-alone funds are as follows:
<TABLE>
<CAPTION>
STAND-ALONE PERIOD FEEDER PERIOD
FUND INTEREST DIVIDENDS GAINS/LOSSES INTEREST DIVIDENDS GAINS/LOSSES
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Asset Allocation $ 1,674,236 $ 825,999 $ 1,379,885 $ 8,138,439 $ 2,371,897 $ 293,000
Bond Index 256,694 0 (139,037) 916,645 0 (194,796)
Growth Stock 30,995 44,639 (259,665) 264,655 125,239 2,269,410
S&P 500 Stock 54,461 1,002,985 85,812 1,029,364 7,560,053 2,300,141
Short-Intermediate
Term 110,149 0 (61,323) 461,257 0 (267,699)
U.S. Treasury
Allocation 899,036 0 (3,538,562) 3,125,069 0 (2,077,444)
</TABLE>
53
<PAGE> 455
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Directors
Stagecoach Inc.:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments of the Money Market Fund, of Stagecoach
Inc. (comprising, respectively, Asset Allocation Fund, Bond Index Fund, Growth
Stock Fund, Money Market Fund, S&P 500 Stock Fund, Short-Intermediate Term Fund
and U.S. Treasury Allocation Fund) as of February 28, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets and financial highlights for the periods indicated herein. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
February 28, 1995, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned funds of Stagecoach Inc. as of February 28, 1995, the
results of their operations, the changes in their net assets and their financial
highlights for the periods indicated herein in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
SAN FRANCISCO, CALIFORNIA
APRIL 20, 1995
54
<PAGE> 456
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS - 39.62%
26,391 Abbott Laboratories $ 748,320 $ 936,881
3,096 Advanced Micro Devices+ 77,380 94,041
3,729 Aetna Life & Casualty Co 217,028 200,434
3,775 Ahmanson (H F) & Co 71,433 69,366
3,681 Air Products & Chemicals Inc 158,473 181,289
16,140 Airtouch Communications+ 379,306 439,815
951 Alberto-Culver Co Class B 21,607 27,104
8,330 Albertson's Inc 225,120 256,148
7,332 Alcan Aluminium Ltd 159,036 177,801
1,749 Alco Standard Corp 90,015 118,932
1,401 Alexander & Alexander Services 29,952 30,472
2,091 Allergan Inc 49,299 60,378
9,209 Allied Signal Inc 335,302 349,942
6,090 Alltel Corp 187,740 174,326
5,936 Aluminum Co of America 221,269 231,504
2,656 ALZA Corp+ 62,330 60,424
3,748 Amdahl Corp 22,640 41,697
3,007 Amerada Hess Corp 153,974 147,343
6,631 American Brands Inc 220,954 247,834
6,020 American Electric Power Inc 220,223 203,928
16,619 American Express Corp 476,791 560,891
6,712 American General Corp 209,288 212,267
2,444 American Greetings Corp Class A 72,756 71,793
10,037 American Home Products Corp 626,165 717,646
10,348 American International Group Inc 969,228 1,073,605
4,671 American Stores Co 106,917 114,440
18,058 Ameritech Corp 748,752 774,237
4,334 Amgen Inc+ 186,976 299,046
16,299 Amoco Corp 935,922 965,716
3,394 AMP Inc 223,040 254,550
2,532 AMR Corp+ 162,279 154,769
816 Andrew Corp+ 25,576 47,328
8,424 Anheuser-Busch Inc 408,630 474,903
3,884 Apple Computer Inc 116,257 153,418
16,841 Archer-Daniels-Midland Co 259,601 319,979
</TABLE>
55
<PAGE> 457
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
3,392 Armco Inc+ $ 21,419 $ 22,472
1,246 Armstrong World Industries Inc 52,716 57,005
1,363 ASARCO Inc 30,076 37,142
1,995 Ashland Inc 67,840 64,588
51,178 AT & T Corp 2,913,096 2,648,462
5,273 Atlantic Richfield Corp 583,978 578,053
1,570 Autodesk Inc 38,745 61,623
4,628 Automatic Data Processing 241,148 284,622
1,807 Avery Dennison Corp 51,486 67,763
2,306 Avon Products Inc 127,736 129,713
4,639 Baker Hughes Inc 108,660 89,301
958 Ball Corp 27,643 31,375
1,540 Bally Entertainment Corp+ 13,632 11,935
4,798 Baltimore Gas & Electric Co 121,022 118,151
13,233 Banc One Corp 466,521 388,719
3,458 Bank of Boston Corp 85,677 104,172
12,162 BankAmerica Corp 546,918 585,296
2,576 Bankers Trust N Y Corp 192,683 162,610
1,673 Bard (C R) Inc 41,233 44,753
3,192 Barnett Banks Inc 140,126 142,044
11,458 Barrick Gold Corp 319,063 249,212
476 Bassett Furniture Industries 15,019 13,209
1,973 Bausch & Lomb Inc 89,338 65,602
9,294 Baxter International Inc 237,198 289,276
2,317 Becton Dickenson & Co 90,473 121,643
14,283 Bell Atlantic Corp 850,090 765,926
16,265 BellSouth Corp 955,407 959,635
1,695 Bemis Co Inc 38,190 45,977
1,681 Beneficial Corp 64,237 62,407
3,592 Bethlehem Steel Corp+ 64,294 56,125
2,783 Beverly Enterprises+ 32,484 36,179
3,727 Biomet Inc+ 38,322 60,331
2,750 Black & Decker Corp 56,503 73,563
3,440 Block (H & R) Inc 136,927 129,430
3,412 Boatmen's Bancshares Inc 103,246 105,772
</TABLE>
56
<PAGE> 458
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
11,179 Boeing Co $ 461,581 $ 515,631
1,266 Boise Cascade Corp 28,597 40,670
4,879 Boston Scientific Corp+ 100,108 105,508
970 Briggs & Stratton Corp 35,313 33,708
16,713 Bristol-Myers Squibb Co 947,030 1,036,206
607 Brown Group Inc 20,249 19,576
2,262 Brown-Forman Corp Class B 61,854 73,232
6,438 Browning-Ferris Industries Inc 169,154 200,383
2,515 Bruno's Inc 25,489 25,622
3,151 Brunswick Corp 54,436 62,626
2,889 Burlington Northern Inc 156,229 161,784
4,110 Burlington Resources Inc 179,571 158,235
8,097 Campbell Soup Co 322,496 367,401
4,999 Capital Cities/ABC Inc 314,315 442,412
5,180 Carolina Power & Light Co 160,226 142,450
6,619 Caterpillar Inc 307,425 341,706
1,960 CBS Inc 112,306 126,420
1,022 Centex Corp 37,668 26,061
6,239 Central & South West Corp 186,315 153,635
1,448 Ceridian Corp+ 29,194 45,612
3,021 Champion International Corp 99,265 124,239
3,309 Charming Shoppes Inc 38,632 20,268
5,916 Chase Manhattan Corp 207,814 212,237
7,956 Chemical Banking Corp Class A 321,378 319,235
21,352 Chevron Corp 988,846 1,014,220
11,644 Chrysler Corp 574,248 506,514
2,900 Chubb Corp 242,180 228,013
2,338 CIGNA Corp 151,420 177,104
1,146 Cincinnati Milacron Inc 26,928 24,066
4,833 Cinergy Corp 113,735 119,617
3,183 Circuit City Stores Inc 80,486 68,832
8,444 Cisco Systems Inc+ 271,042 284,985
12,876 Citicorp 483,281 579,420
619 Clark Equipment Co+ 31,696 33,117
1,718 Clorox Co 90,883 103,724
</TABLE>
57
<PAGE> 459
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
3,426 Coastal Corp $ 96,312 $ 98,069
42,046 Coca-Cola Co 1,838,075 2,312,530
4,734 Colgate-Palmolive Co 263,349 305,343
1,637 Columbia Gas System Inc+ 42,248 42,562
11,822 Columbia HCA Healthcare Corp 474,216 489,135
7,796 Comcast Corp Class A 161,835 122,787
1,456 Community Psychiatric Centers 18,675 16,926
8,423 Compaq Computer Corp+ 215,039 290,594
5,259 Computer Associates International Inc 191,732 299,763
1,683 Computer Sciences Corp+ 60,611 82,677
8,091 ConAgra Inc 217,827 264,980
2,615 Conrail Inc 147,810 144,479
7,708 Consolidated Edison Co 256,497 212,934
1,204 Consolidated Freightways 23,384 28,595
3,029 Consolidated Natural Gas Co 145,794 112,073
1,765 Continental Corp 49,948 34,197
3,739 Cooper Industries Inc 176,564 146,756
2,738 Cooper Tire & Rubber Co 68,210 76,664
1,272 Coors (Adolph) Co Class B 24,239 20,670
4,617 CoreStates Financial Corp 127,788 139,087
7,430 Corning Inc 230,141 238,689
4,859 CPC International Inc 229,300 259,957
951 Crane Co 26,371 28,649
839 Cray Research Inc+ 19,578 14,158
2,952 Crown Cork & Seal Co+ 110,312 125,829
3,409 CSX Corp 265,091 265,050
1,377 Cummins Engine Co Inc 61,066 62,654
2,978 Cyprus Amax Minerals 81,156 80,406
3,249 Dana Corp 89,677 80,007
1,172 Data General Corp+ 10,836 9,230
2,313 Dayton-Hudson Corp 163,480 163,067
5,623 Dean Witter Discover & Co 219,794 227,029
2,803 Deere & Co 205,053 214,780
1,671 Delta Air Lines Inc 88,210 96,918
2,712 Deluxe Corp 92,397 75,936
</TABLE>
58
<PAGE> 460
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1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
4,760 Detroit Edison Co $ 154,043 $ 136,255
2,981 Dial Corp 60,409 74,525
4,659 Digital Equipment Corp+ 163,394 156,077
3,722 Dillard Department Stores Inc Class A 130,133 102,355
17,461 Disney (Walt) Co 725,753 931,981
5,613 Dominion Resources Inc 250,067 213,294
5,049 Donnelley (R R) & Sons Co 149,589 172,928
1,919 Dover Corp 106,451 114,181
9,073 Dow Chemical Co 559,849 607,891
3,186 Dow Jones & Co Inc 106,027 112,705
5,972 Dresser Industries Inc 131,137 123,173
3,734 DSC Communications Corp+ 114,456 134,424
6,731 Duke Power Co 278,029 264,192
5,593 Dun & Bradstreet Corp 342,933 289,438
22,292 DuPont (E I) de Nemours 1,135,616 1,251,139
1,076 E-Systems Inc 47,467 47,075
696 Eastern Enterprises 18,248 18,357
2,701 Eastman Chemical Co 137,179 147,880
11,073 Eastman Kodak Co 529,486 564,723
2,478 Eaton Corp 127,004 124,210
1,949 Echlin Inc 59,463 67,484
3,623 Echo Bay Mines Ltd 42,081 32,607
2,167 Ecolab Inc 47,379 50,112
1,794 EG & G Inc 31,683 25,789
7,329 Emerson Electric Co 437,596 484,630
3,139 Engelhard Corp 82,320 82,791
8,261 Enron Corp 276,080 272,613
2,116 Enserch Corp 39,454 29,624
7,408 Entergy Corp 252,877 165,754
40,615 Exxon Corp 2,619,793 2,599,360
1,854 Federal Express Corp+ 117,590 120,742
5,921 Federal Home Loan Mortgage Corp 315,446 343,418
8,941 Federal National Mortgage Association 712,329 689,575
1,358 Federal Paper Board Co 31,272 40,401
2,958 First Chicago Corp 139,567 149,749
</TABLE>
59
<PAGE> 461
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
3,601 First Data Corp $ 178,105 $ 193,554
2,655 First Fidelity Bancorp 120,861 134,078
2,495 First Interstate Bancorp 166,906 203,031
666 First Mississippi Corp 9,038 16,151
5,782 First Union Corp 254,880 258,022
4,445 Fleet Financial Group Inc 147,883 138,351
1,502 Fleetwood Enterprises Inc 33,400 32,856
1,228 Fleming Co Inc 36,886 23,946
2,691 Fluor Corp 120,172 131,186
1,211 FMC Corp+ 61,540 70,844
33,358 Ford Motor Co 961,222 871,478
1,204 Foster Wheeler Corp 40,740 39,431
6,088 FPL Group Inc 229,492 218,407
4,538 Gannett Co Inc 231,929 249,590
4,778 Gap Inc 156,941 155,285
2,086 General Dynamics Corp 90,785 98,303
55,953 General Electric Co 2,753,950 3,070,421
5,123 General Mills Inc 310,841 310,582
24,642 General Motors Corp 1,181,971 1,050,365
3,763 General Public Utilities 112,932 113,831
2,673 General Re Corp 325,231 348,158
1,527 General Signal Corp 51,543 54,781
3,987 Genuine Parts Co 146,628 154,995
2,998 Georgia-Pacific Corp 200,545 224,475
1,985 Giant Food Inc Class A 45,396 47,144
1,140 Giddings & Lewis Inc 24,374 19,380
7,285 Gillette Co 443,938 576,426
1,990 Golden West Financial 82,654 76,118
834 Goodrich (B F) Co 38,085 37,113
4,933 Goodyear Tire & Rubber Co 203,992 181,904
3,047 Grace (W R) & Co 118,170 137,115
1,684 Grainger (W W) Inc 97,897 102,935
1,272 Great Atlantic & Pacific Tea Co 32,375 24,486
2,189 Great Lakes Chemical Corp 151,001 131,614
4,335 Great Western Financial Corp 78,928 81,281
</TABLE>
60
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MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
31,506 GTE Corp $ 1,122,212 $ 1,051,513
3,764 Halliburton Co 135,806 140,209
1,133 Handleman Co 12,595 12,038
2,570 Harcourt General Inc 97,593 95,411
1,001 Harland (John H) Co 24,847 22,648
1,542 Harnischfeger Industries Inc 36,442 42,983
1,309 Harris Corp 56,696 58,905
912 Hartmarx Corp+ 5,855 5,244
2,862 Hasbro Inc 101,753 90,153
8,054 Heinz (H J) Co 296,454 317,126
796 Helmerich & Payne Inc 24,923 20,696
3,774 Hercules Inc 122,592 165,584
2,857 Hershey Foods Corp 140,247 139,993
8,269 Hewlett Packard Co 643,718 950,935
1,564 Hilton Hotels Corp 80,661 109,871
14,815 Home Depot Inc 615,190 664,823
4,545 Homestake Mining Co 84,986 70,448
4,184 Honeywell Inc 147,541 152,193
3,172 Household International Inc 117,266 138,775
4,339 Houston Industries Inc 190,181 165,967
3,772 Illinois Tool Works Inc 148,639 169,269
3,855 Inco Ltd 91,248 103,603
3,425 Ingersoll-Rand Co 124,535 109,172
1,447 Inland Steel Industries Inc+ 46,704 41,601
13,553 Intel Corp 867,497 1,080,852
1,479 Intergraph Corp+ 15,529 18,118
19,213 International Business Machines Corp 1,004,099 1,445,778
3,601 International Flavors & Fragrances 138,439 173,298
4,106 International Paper Co 276,900 313,596
2,498 Interpublic Group Cos Inc 77,121 85,244
3,472 ITT Corp 294,329 338,520
2,679 James River Corp 54,974 65,970
1,567 Jefferson-Pilot Corp 80,801 89,319
20,998 Johnson & Johnson 908,313 1,191,637
1,341 Johnson Controls Inc 72,700 66,715
</TABLE>
61
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1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
1,502 Jostens Inc $ 28,717 $ 31,354
14,955 K Mart Corp 310,227 190,676
1,104 Kaufman & Broad Home Corp 20,408 16,146
7,249 Kellogg Co 392,514 392,352
1,646 Kerr-McGee Corp 83,045 82,917
8,014 KeyCorp 247,670 232,406
5,288 Kimberly-Clark Corp 269,279 274,976
1,251 King World Productions+ 47,264 44,567
1,731 Knight-Ridder Inc 94,105 94,989
3,830 Kroger Co+ 83,635 100,538
9,539 Lilly (Eli) & Co 508,325 639,113
11,724 Limited Inc 244,915 205,170
3,131 Lincoln National Corp 135,276 126,414
2,541 Liz Claiborne Inc 54,702 40,974
2,055 Lockheed Corp 134,786 159,519
685 Longs Drug Stores Corp 22,830 21,749
2,735 Loral Corp 92,875 111,793
1,561 Lotus Development Corp+ 70,724 65,172
1,123 Louisiana Land & Exploration Co 49,556 38,884
3,697 Louisiana-Pacific Corp 129,036 104,440
5,194 Lowe's Co Inc 138,806 174,648
817 Luby's Cafeterias Inc 18,964 18,587
731 M/A-Com Inc+ 6,296 5,026
2,533 Mallinckrodt Group Inc 80,487 82,956
2,022 Manor Care Inc 47,967 59,902
4,022 Marriott International 106,249 124,682
2,370 Marsh & McLennan Companies Inc 202,442 194,340
3,155 Martin Marietta Inc 138,614 150,651
5,184 Masco Corp 157,035 130,248
7,258 Mattel Inc 143,875 162,398
4,444 Maxus Energy Corp+ 29,314 17,221
8,127 May Co Department Stores Co 333,170 296,636
3,477 Maytag Corp 57,937 57,371
4,829 MBNA Corp 112,119 127,365
1,735 McDermott International Inc 48,402 48,580
</TABLE>
62
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1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
22,846 McDonald's Corp $ 639,298 $ 759,630
3,867 McDonnell Douglas Corp 128,502 216,552
1,603 McGraw-Hill Inc 111,217 113,012
22,264 MCI Communications 565,372 448,063
1,965 Mead Corp 89,130 107,584
3,776 Medtronic Inc 145,188 226,560
4,761 Mellon Bank Corp 176,334 181,513
3,457 Melville Corp 146,069 112,353
1,229 Mercantile Stores Co Inc 42,502 51,157
41,142 Merck & Co Inc 1,378,237 1,743,392
496 Meredith Corp 19,995 24,118
6,262 Merrill Lynch & Co Inc 277,635 256,742
3,370 Micron Technology Inc 124,729 208,940
19,067 Microsoft Corp+ 1,046,254 1,201,221
851 Millipore Corp 31,776 45,209
13,783 Minnesota Mining & Manufacturing Co 729,559 754,619
12,984 Mobil Corp 1,048,093 1,129,608
3,795 Monsanto Co 265,542 300,754
3,295 Moore Corp Ltd 62,536 60,958
6,131 Morgan (J P) & Co Inc 433,733 395,450
1,099 Morrison Knudsen Corp 24,159 8,517
4,798 Morton International Inc 142,177 140,342
19,178 Motorola Inc 971,151 1,102,735
333 NACCO Industries Inc Class A 15,700 17,108
2,219 Nalco Chemical Co 76,433 76,278
4,896 National City Corp 134,269 135,864
5,400 National Medical Enterprises 67,253 83,700
3,976 National Semiconductor+ 71,302 67,095
1,568 National Service Industries Inc 39,969 42,140
9,061 NationsBank 453,915 451,917
2,472 Navistar International Corp+ 54,287 35,844
5,079 NBD Bancorp Inc 161,819 158,084
3,262 New York Times Co Class A 80,859 70,133
5,117 Newell Co 100,568 122,168
2,799 Newmont Mining Corp 111,895 101,114
</TABLE>
63
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MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
4,654 Niagara Mohawk Power Corp $ 98,178 $ 69,228
1,678 NICOR Inc 46,771 41,531
2,434 Nike Inc Class B 135,139 174,944
3,967 NorAm Energy Corp 31,427 22,314
2,694 Nordstrom Inc 96,545 113,822
4,404 Norfolk Southern Corp 296,322 291,215
2,141 Northern States Power Co 95,689 96,880
8,237 Northern Telecom Ltd 233,359 281,088
1,562 Northrop Grumman Corp 58,183 69,314
10,136 Norwest Corp 262,308 261,002
12,070 Novell Inc+ 230,950 245,360
2,879 Nucor Corp 158,438 161,584
13,763 NYNEX Corp 585,382 540,198
10,229 Occidental Petroleum Corp 204,564 203,301
1,565 Ogden Corp 35,632 33,452
5,038 Ohio Edison Co 115,761 105,798
906 ONEOK Inc 18,059 15,629
14,075 Oracle Systems Corp+ 295,274 441,587
3,217 Oryx Energy Co 65,542 35,387
386 Oshkosh B'Gosh Inc Class A 6,487 5,501
663 Outboard Marine Corp 12,854 13,923
1,424 Owens Corning Fiberglass+ 58,136 47,882
1,290 PACCAR Inc 68,336 56,760
2,654 Pacific Enterprises 65,667 65,023
14,119 Pacific Gas & Electric Co 464,859 361,799
13,923 Pacific Telesis Group 439,288 417,690
9,282 PacifiCorp 176,911 177,518
3,771 Pall Corp 69,418 75,891
4,916 Panhandle Eastern Corp 112,425 110,610
1,593 Parker Hannifin Corp 58,455 74,473
7,293 PECO Energy Co 220,424 195,088
7,675 Penney (J C) Co Inc 368,028 329,066
1,495 Pennzoil Co 88,536 70,826
1,170 Peoples Energy Corp 35,170 30,713
1,995 Pep Boys-Manny Moe & Jack 52,952 65,336
</TABLE>
64
<PAGE> 466
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
25,939 Pepsico Inc $ 979,182 $ 1,014,863
1,408 Perkin-Elmer Corp 45,883 40,304
10,262 Pfizer Inc 664,868 849,181
2,362 Phelps Dodge Corp 115,370 128,729
28,143 Philip Morris Co Inc 1,448,876 1,709,687
8,574 Phillips Petroleum Co 279,657 286,157
2,806 Pioneer Hi Bred International Inc 100,911 94,703
5,083 Pitney Bowes Inc 199,370 180,447
1,362 Pittston Services Group 32,404 34,050
7,791 Placer Dome Inc 170,299 158,742
7,662 PNC Bank Corp 222,108 195,381
1,548 Polaroid Corp 54,976 46,440
917 Potlatch Corp 38,547 39,546
6,932 PPG Industries Inc 249,882 254,751
4,464 Praxair Inc 76,759 100,998
2,104 Premark International Inc 75,755 90,998
6,344 Price/Costco Inc+ 116,174 86,437
22,402 Procter & Gamble Co 1,189,402 1,489,733
3,393 Promus Co Inc+ 145,463 121,300
3,239 Providian Corp 124,920 114,580
8,024 Public Services Enterprise Group 261,877 233,699
867 Pulte Corp 28,885 19,941
4,332 Quaker Oats Co 149,855 141,332
3,297 Ralston-Purina Group 121,708 157,432
1,395 Raychem Corp 53,769 56,323
4,036 Raytheon Co 255,289 284,538
2,615 Reebok International Ltd 73,702 95,774
1,993 Reynolds Metals Co 95,386 99,650
2,733 Rite Aid Corp 50,449 67,642
1,303 Roadway Services Inc 77,417 70,688
7,136 Rockwell International Corp 259,082 274,736
2,188 Rohm & Haas Co 121,129 122,802
1,943 Rollins Environmental Services 11,030 9,958
2,720 Rowan Co Inc+ 24,736 17,000
17,530 Royal Dutch Petroleum Co 1,830,334 1,965,551
</TABLE>
65
<PAGE> 467
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
5,267 Rubbermaid Inc $ 168,432 $ 166,569
1,286 Russell Corp 36,732 38,902
1,798 Ryan's Family Steak House+ 14,664 13,935
2,561 Ryder System Inc 64,474 59,543
2,069 SAFECO Corp 121,688 113,795
1,920 Safety-Kleen Corp 29,352 31,680
3,488 Salomon Inc 161,941 125,568
2,871 Santa Fe Energy Resources Inc 27,943 25,839
4,070 Santa Fe Pacific Corp 64,695 86,488
4,215 Santa Fe Pacific Gold Corp+ 63,026 45,838
15,736 Sara Lee Corp 399,197 413,070
14,601 SCEcorp 307,347 239,091
6,267 Schering-Plough Corp 410,861 491,176
7,997 Schlumberger Ltd 495,703 454,829
2,470 Scientific-Atlanta Inc 43,091 57,736
2,458 Scott Paper Co 105,822 194,797
12,180 Seagram Co Ltd 343,668 374,535
11,516 Sears Roebuck & Co 605,821 567,163
3,095 Service Corp International 80,053 87,047
749 Shared Medical System Corp 18,407 25,794
3,904 Shawmut National Corp 85,568 100,040
2,843 Sherwin Williams Co 96,857 95,596
1,388 Shoney's Inc+ 27,879 15,268
1,581 Sigma Aldrich Corp 57,772 57,707
4,547 Silicon Graphics Inc+ 149,547 157,440
392 Skyline Corp 7,076 7,154
1,373 Snap-On Inc 54,078 46,682
2,837 Sonat Inc 92,364 82,273
21,376 Southern Co 461,503 440,880
4,676 Southwest Airlines Co 126,467 82,415
19,647 Southwestern Bell Corp 846,363 817,806
609 Springs Industries Inc Class A 22,063 23,979
11,393 Sprint Corp 400,314 333,245
368 SPX Corp 6,235 5,612
1,497 St Jude Medical Inc 47,741 54,266
</TABLE>
66
<PAGE> 468
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
2,782 St Paul Co Inc $ 123,753 $ 135,275
1,450 Stanley Works 60,152 58,544
2,969 Stone Container Corp+ 37,563 69,400
1,610 Stride Rite Corp 23,484 20,729
3,465 Sun Co Inc 100,613 100,918
3,109 Sun Microsystems Inc+ 81,340 99,488
3,839 SunTrust Banks Inc 174,051 206,826
2,302 Super Value Inc 77,058 59,277
5,973 Sysco Corp 165,462 169,484
3,777 Tandem Computers Inc+ 45,110 64,209
2,010 Tandy Corp 76,129 89,948
1,049 Tektronix Inc 28,785 35,928
20,041 Tele-Communication Inc Class A+ 496,928 455,933
1,776 Teledyne Inc+ 42,879 41,070
1,863 Temple-Inland Inc 82,916 91,054
5,977 Tenneco Inc 301,176 271,954
8,538 Texaco Inc 556,198 544,298
3,048 Texas Instruments Inc 219,903 240,030
7,367 Texas Utilities Co 319,088 242,190
2,869 Textron Inc 160,213 157,078
624 Thomas & Betts Corp 39,369 41,574
12,450 Time Warner Inc 499,471 480,881
4,226 Times Mirror Co Class A 98,810 78,181
966 Timken Co 32,083 34,655
2,352 TJX Companies Inc 62,958 31,752
2,314 Torchmark Corp 114,690 96,899
9,301 Toys R Us Inc+ 341,779 259,265
2,287 Transamerica Corp 130,482 124,927
10,510 Travelers Inc 429,258 408,576
2,188 Tribune Co 119,244 122,255
963 Trinova Corp 29,029 26,001
2,115 TRW Inc 141,164 139,061
2,440 Tyco International Inc 115,618 127,185
3,176 U.S. Bancorp 81,248 79,797
5,252 U.S. Healthcare Inc 237,980 225,836
</TABLE>
67
<PAGE> 469
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
751 U.S. Life Corp $ 29,749 $ 28,632
14,921 U.S. West Inc 677,351 578,189
7,046 Unicom Corp 199,251 179,673
5,245 Unilever NV 574,835 637,268
2,250 Union Camp Corp 102,068 115,875
4,911 Union Carbide Corp 109,057 140,577
3,356 Union Electric Co 136,997 127,109
6,741 Union Pacific Corp 410,467 352,217
5,478 Unisys Corp+ 60,158 48,617
5,597 United Healthcare Corp 259,599 240,671
1,871 United States Surgical 42,563 39,291
4,117 United Technologies Corp 250,257 273,266
8,010 Unocal Corp 229,977 227,284
2,414 UNUM Corp 131,287 102,595
5,695 Upjohn Co 169,059 200,749
1,961 USAir Group Inc+ 23,840 11,521
2,907 USF & G Corp 43,828 41,425
6,530 UST Inc 178,083 194,268
9,404 USX - Marathon Group 176,647 152,815
2,530 USX - US Steel Group 90,195 84,123
1,428 Varity Corp+ 56,479 52,122
2,127 VF Corp 96,737 109,541
11,689 Viacom Inc Class B+ 460,277 523,083
5,578 Wachovia Corp 206,122 193,836
75,204 Wal Mart Stores Inc 1,898,829 1,786,095
4,061 Walgreen Co 162,994 191,882
4,393 Warner Lambert Co 307,816 335,515
1,676 Wells Fargo & Co 215,068 269,208
3,339 Wendy's International Inc 52,026 51,755
1,714 Western Atlas Inc+ 67,837 70,703
11,628 Westinghouse Electric Corp 164,651 180,234
2,164 Westvaco Corp 75,773 85,478
6,731 Weyerhaeuser Co 279,845 274,288
2,476 Whirlpool Corp 150,228 134,633
3,452 Whitman Corp 53,372 65,157
</TABLE>
68
<PAGE> 470
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
2,954 Williams Co Inc $ 86,977 $ 84,928
2,375 Winn-Dixie Stores Inc 133,645 133,000
15,794 WMX Technologies Inc 448,621 416,567
4,336 Woolworth Corp 95,901 66,124
2,973 Worthington Industries Inc 58,222 59,832
3,768 Wrigley (Wm) Jr Co 166,816 170,031
3,507 Xerox Corp 296,162 388,839
892 Yellow Corp 20,108 18,844
1,482 Zenith Electronic Corp+ 13,187 12,041
428 Zurn Industries Inc 11,482 7,704
------------ -------------
TOTAL COMMON STOCKS $110,920,664 $116,366,179
</TABLE>
69
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1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES - 58.72%
$12,000,000 U.S. Treasury Bonds 6.25% 08/15/23 $10,207,500
6,450,000 U.S. Treasury Bonds 7.13 02/15/23 6,139,594
18,200,000 U.S. Treasury Bonds 7.25 05/15/16 17,568,660
5,700,000 U.S. Treasury Bonds 7.25 08/15/22 5,496,938
5,850,000 U.S. Treasury Bonds 7.50 11/15/24 5,833,538
3,250,000 U.S. Treasury Bonds 7.63 11/15/22 3,277,417
6,000,000 U.S. Treasury Bonds 7.88 02/15/21 6,178,116
16,500,000 U.S. Treasury Bonds 8.00 11/15/21 17,268,257
9,000,000 U.S. Treasury Bonds 8.13 08/15/19 9,511,875
5,650,000 U.S. Treasury Bonds 8.13 05/15/21 5,983,695
4,300,000 U.S. Treasury Bonds 8.13 08/15/21 4,555,313
7,300,000 U.S. Treasury Bonds 8.50 02/15/20 8,020,875
15,400,000 U.S. Treasury Bonds 8.75 05/15/17 17,281,664
13,100,000 U.S. Treasury Bonds 8.75 08/15/20 14,770,250
9,900,000 U.S. Treasury Bonds 8.88 02/15/19 11,270,516
4,300,000 U.S. Treasury Bonds 9.00 11/15/18 4,950,375
5,000,000 U.S. Treasury Bonds 9.13 05/15/18 5,825,000
1,900,000 U.S. Treasury Bonds 9.25 02/15/16 2,228,341
4,800,000 U.S. Treasury Bonds 9.88 11/15/15 5,941,498
7,400,000 U.S. Treasury Bonds 11.25 02/15/15 10,179,623
-------------
TOTAL U.S. TREASURY SECURITIES $172,489,046
(Cost $178,314,668)
</TABLE>
70
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1995
Portfolio of Investments
<TABLE>
<CAPTION>
Yield to Maturity
Principal Security Name Maturity Date Value
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.29%
$2,533,000 U.S. Treasury Bills 5.84% 05/11/95 $ 2,504,525
1,310,000 U.S. Treasury Bills 5.87 05/25/95 1,292,214
-------------
TOTAL SHORT-TERM INSTRUMENTS $ 3,796,739
(Cost $3,796,700)
TOTAL INVESTMENTS IN SECURITIES
(Cost $293,032,032)* (Notes 99.63% $292,651,964
1 and 3)
Other Assets and 0.37% 1,092,129
Liabilities, Net
------- ------------
TOTAL NET ASSETS 100.00% $293,744,093
------- ------------
------- ------------
</TABLE>
- ---------------------------------------------------------------------
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 13,663,319
Gross Unrealized Depreciation (14,043,387)
-------------
Net Unrealized Depreciation ($ 380,068)
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
71
<PAGE> 473
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
LONG-TERM BONDS - 23.79%
BANK & FINANCE - 6.03%
$ 500,000 American Express Co 8.63% 05/15/22 $ 503,771
750,000 Associates Corp of North 8.80 03/01/96 762,528
America
500,000 BankAmerica Corp 7.20 04/15/06 466,250
750,000 Chrysler Financial Corp 5.38 10/15/98 699,047
1,000,000 Commercial Credit Corp 8.70 06/15/10 1,096,297
500,000 First Union Corp 6.63 07/15/05 447,949
500,000 General Electric Capital Corp 8.75 05/21/07 538,090
500,000 International Lease Finance 7.90 10/01/96 503,993
500,000 Lehman Brothers Inc 9.88 10/15/00 530,757
500,000 NationsBank Corp 6.88 02/15/05 456,553
500,000 U.S. Leasing International 8.75 05/01/96 508,993
-------------
$ 6,514,228
INDUSTRIALS - 7.88%
$ 500,000 Anheuser Busch Co 8.75% 12/01/99 $ 523,839
500,000 Archer-Daniels-Midland Co 8.38 04/15/17 514,260
500,000 Dow Chemical Co 8.63 04/01/06 523,908
750,000 DuPont (E l) De Nemours 6.00 12/01/01 686,913
500,000 Ford Capital BV 9.00 08/15/98 521,343
500,000 Ford Motor Co 8.88 04/01/06 528,911
750,000 General Motors Corp 8.13 04/15/16 724,661
500,000 Hertz Corp 6.38 10/15/05 445,673
500,000 Hertz Corp 6.50 04/01/00 473,320
500,000 International Business 6.38 06/15/00 474,926
Machines
500,000 Kmart Corp 12.50 03/01/05 628,086
500,000 PepsiCo Inc 7.00 11/15/96 498,661
500,000 Philip Morris Co 7.13 10/01/04 467,730
750,000 Seagram (J) & Sons 9.75 06/15/00 772,043
750,000 Weyerhaeuser Co 7.50 03/01/13 721,236
-------------
$ 8,505,510
</TABLE>
72
<PAGE> 474
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
LONG-TERM BONDS (CONTINUED)
INTERNATIONAL AGENCIES - 0.40%
$ 500,000 International Bank of 5.25% 09/16/03 $ 435,389
Reconstruction &
Development
TELECOMMUNICATIONS - 1.44%
$ 750,000 GTE North Inc 6.00% 01/15/04 $ 664,832
500,000 New York Telephone Co 5.88 09/01/03 439,853
500,000 Southwestern Bell Telephone 6.75 06/01/08 454,027
Co
-------------
$ 1,558,712
UTILITIES - 3.41%
$ 500,000 Alabama Power Co 8.50% 05/01/22 $ 497,455
1,000,000 Pennsylvania Power & Light Co 7.75 05/01/02 990,867
750,000 Philadelphia Electric Co 8.75 04/01/22 747,069
500,000 Public Service Electric & Gas 6.13 08/01/02 452,255
Co
500,000 Public Service Electric & Gas 8.75 11/01/21 502,996
Co
500,000 Virginia Electric & Power Co 7.38 07/01/02 488,969
-------------
$ 3,679,611
YANKEE BONDS - 4.63%
$ 500,000 African Development Bank 7.75% 12/15/01 $ 501,209
500,000 Finland (Republic of) 7.88 07/28/04 503,060
500,000 Hanson Overseas BV 7.38 01/15/03 485,912
500,000 Italy (Republic of) 6.00 09/27/03 440,841
500,000 Matsushita Electric Industry 7.25 08/01/02 488,253
Co
750,000 Ontario (Province of) 7.63 06/22/04 739,672
1,000,000 Quebec (Province of) 11.00 06/15/15 1,142,809
750,000 Sweden (Kingdom of) 6.50 03/04/03 695,747
-------------
$ 4,997,503
TOTAL LONG-TERM BONDS $25,690,953
(Cost $25,766,261)
</TABLE>
73
<PAGE> 475
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 8.78%
FEDERAL AGENCY - OTHER - 3.43%
$ 800,000 Federal Home Loan Mortgage 7.13% 07/21/99 $ 795,323
Corp
300,000 Resolution Funding Corp 8.88 04/15/30 341,294
500,000 Resolution Funding Corp 9.38 10/15/20 583,543
500,000 Tennessee Valley Authority 4.60 12/15/96 480,272
1,000,000 Tennessee Valley Authority 6.13 07/15/03 905,276
200,000 Tennessee Valley Authority 7.75 12/15/22 190,373
100,000 Tennessee Valley Authority 8.25 04/15/42 100,702
300,000 Tennessee Valley Authority 8.63 11/15/29 304,440
-------------
$ 3,701,223
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.35%
$ 300,000 Federal National Mortgage 5.25% 05/13/98 $ 282,450
Association
400,000 Federal National Mortgage 5.30 12/10/98 373,342
Association
1,000,000 Federal National Mortgage 6.95 09/10/02 961,025
Association
500,000 Federal National Mortgage 7.55 04/22/02 497,215
Association
200,000 Federal National Mortgage 7.55 06/10/04 196,448
Association
1,000,000 Federal National Mortgage 7.60 01/10/97 1,010,845
Association
500,000 Federal National Mortgage 7.90 04/10/02 500,000
Association
700,000 Federal National Mortgage 8.00 07/10/96 708,734
Association
</TABLE>
74
<PAGE> 476
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
$ 1,000,000 Federal National Mortgage 8.17%(F) 07/05/14 $ 212,395
Association
1,000,000 Federal National Mortgage 8.25 12/18/00 1,043,122
Association
-------------
$ 5,785,576
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 9,486,799
(Cost $9,492,209)
U.S. TREASURY SECURITIES - 65.45%
U.S. TREASURY BONDS - 19.02%
$ 2,000,000 U.S. Treasury Bonds 7.25% 08/15/22 $ 1,928,750
2,000,000 U.S. Treasury Bonds 7.50 11/15/16 1,982,500
1,500,000 U.S. Treasury Bonds 7.63 11/15/22 1,512,654
400,000 U.S. Treasury Bonds 7.63 02/15/25 407,874
2,000,000 U.S. Treasury Bonds 7.88 02/15/21 2,059,372
1,450,000 U.S. Treasury Bonds 8.13 08/15/19 1,532,469
2,100,000 U.S. Treasury Bonds 8.13 08/15/21 2,224,688
375,000 U.S. Treasury Bonds 8.75 11/15/08 406,054
1,900,000 U.S. Treasury Bonds 8.75 08/15/20 2,142,250
500,000 U.S. Treasury Bonds 9.13 05/15/09 555,313
250,000 U.S. Treasury Bonds 10.63 08/15/15 328,515
1,290,000 U.S. Treasury Bonds 11.13 08/15/03 1,599,195
2,600,000 U.S. Treasury Bonds 12.00 08/15/13 3,578,250
190,000 U.S. Treasury Bonds 13.88 05/15/11 282,388
-------------
$ 20,540,272
U.S. TREASURY NOTES - 46.43%
$ 1,000,000 U.S. Treasury Notes 4.38% 08/15/96 $ 969,061
2,500,000 U.S. Treasury Notes 4.75 10/31/98 2,321,090
500,000 U.S. Treasury Notes 5.00 01/31/99 466,093
3,000,000 U.S. Treasury Notes 5.50 07/31/97 2,910,933
300,000 U.S. Treasury Notes 5.75 08/15/03 271,875
</TABLE>
75
<PAGE> 477
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (CONTINUED)
$ 3,000,000 U.S. Treasury Notes 6.00% 12/31/97 $ 2,932,500
1,600,000 U.S. Treasury Notes 6.25 08/31/96 1,589,498
1,400,000 U.S. Treasury Notes 6.25 02/15/03 1,318,185
2,600,000 U.S. Treasury Notes 6.38 06/30/97 2,574,809
2,950,000 U.S. Treasury Notes 6.38 01/15/99 2,887,313
2,300,000 U.S. Treasury Notes 6.38 08/15/02 2,190,750
1,700,000 U.S. Treasury Notes 6.50 09/30/96 1,694,688
1,000,000 U.S. Treasury Notes 6.50 08/15/97 992,186
3,700,000 U.S. Treasury Notes 6.75 02/28/97 3,697,688
2,800,000 U.S. Treasury Notes 6.88 10/31/96 2,806,121
600,000 U.S. Treasury Notes 6.88 02/28/97 601,125
1,200,000 U.S. Treasury Notes 6.88 08/31/99 1,192,123
400,000 U.S. Treasury Notes 7.13 09/30/99 401,124
400,000 U.S. Treasury Notes 7.13 02/29/00 401,125
1,100,000 U.S. Treasury Notes 7.25 11/15/96 1,108,938
600,000 U.S. Treasury Notes 7.25 02/15/98 605,625
800,000 U.S. Treasury Notes 7.25 08/15/04 800,500
1,300,000 U.S. Treasury Notes 7.38 11/15/97 1,315,029
1,500,000 U.S. Treasury Notes 7.50 11/15/01 1,527,188
500,000 U.S. Treasury Notes 7.50 02/15/05 509,063
1,600,000 U.S. Treasury Notes 7.63 04/30/96 1,619,000
1,400,000 U.S. Treasury Notes 7.75 11/30/99 1,438,060
900,000 U.S. Treasury Notes 8.75 08/15/00 966,938
2,200,000 U.S. Treasury Notes 9.00 05/15/98 2,327,875
3,400,000 U.S. Treasury Notes 9.13 05/15/99 3,655,000
2,000,000 U.S. Treasury Notes 9.38 04/15/96 2,060,622
-------------
$50,152,125
TOTAL U.S. TREASURY SECURITIES $70,692,397
(Cost $71,860,050)
</TABLE>
76
<PAGE> 478
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Yield to Maturity
Principal Security Name Maturity Date Value
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 0.89%
U.S. TREASURY BILLS - 0.89%
$ 628,000 U.S. Treasury Bills 5.84% 05/11/95 $ 620,940
342,000 U.S. Treasury Bills 5.87 05/25/95 337,357
------------
TOTAL SHORT-TERM INSTRUMENTS $ 958,297
(Cost $958,211)
TOTAL INVESTMENTS IN SECURITIES
(Cost $108,076,731)* (Notes 98.91% $106,828,446
1 and 3)
Other Assets and 1.09% 1,180,034
Liabilities, Net
------- ------------
TOTAL NET ASSETS 100.00% $108,008,480
------- ------------
------- ------------
- ---------------------------------------------------------------------
<FN>
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
</TABLE>
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 384,407
Gross Unrealized Depreciation (1,632,692)
-------------
Net Unrealized Depreciation ($ 1,248,285)
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
77
<PAGE> 479
(THIS PAGE INTENTIONALLY LEFT BLANK)
78
<PAGE> 480
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS - 87.60%
AEROSPACE - 0.17%
3,500 Boeing Co $ 163,030 $ 161,438
AUTOMOBILE & RELATED - 1.89%
35,000 Top Source Inc+ $ 238,470 $ 236,250
45,000 Wabash National Corp 1,566,813 1,597,500
------------ -------------
$ 1,805,283 $ 1,833,750
BASIC INDUSTRIES - 1.65%
18,500 Minerals Technologies Inc $ 556,087 $ 543,438
20,000 N-Viro International Corp+ 27,500 40,000
60,000 Quadrax Corp New+ 229,421 161,250
50,000 Repap Enterprises+ 257,133 350,000
10,000 Rhodia-Ster SA ADR+ * 135,000 117,500
30,000 Usinas Siderurgicas de Minas Gerals 398,400 390,000
ADR+
------------ -------------
$ 1,603,541 $ 1,602,188
BIOTECHNOLOGY - 0.56%
10,000 Biogen Inc+ $ 482,969 $ 412,500
12,000 Liposome Co Inc+ 144,532 130,500
------------ -------------
$ 627,501 $ 543,000
COMPUTER SOFTWARE - 8.12%
25,000 Atria Software Inc+ $ 709,895 $ 1,006,250
40,000 Informix Corp+ 1,064,875 1,510,000
13,000 Integrated Silicon Systems+ 366,500 354,250
37,700 Metatec Corp Class A+ 362,088 490,100
27,000 Microsoft Corp+ 1,364,000 1,701,000
10,000 Oak Technology Inc+ 188,750 206,250
12,500 Phamis Inc+ 206,438 250,000
71,500 Seventh Level Inc+ 576,197 518,375
23,000 Synopsys Inc+ 1,026,065 1,086,750
</TABLE>
79
<PAGE> 481
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
15,000 Veritas Software Corp+ $ 352,915 $ 345,000
40,000 VTEL Corp+ 442,376 400,000
------------ -------------
$ 6,660,099 $ 7,867,975
COMPUTER SYSTEMS - 11.44%
60,000 Adaptec Inc+ $ 1,219,633 $ 1,980,000
53,500 Chipcom Corp+ 1,942,021 2,380,750
37,500 Chips & Technologies Inc+ 225,938 234,375
76,500 Cisco Systems Inc+ 2,158,125 2,581,875
44,000 Digital Link Corp+ 1,081,356 1,034,000
65,000 Komag Inc+ 1,583,103 1,641,250
49,000 Solectron Corp+ 1,193,378 1,182,125
20,000 Wave System Corp Class A+ 60,000 50,000
------------ -------------
$ 9,463,554 $11,084,375
CONSUMER - GROWTH - 3.09%
37,500 Barnes & Noble+ $ 1,067,657 $ 1,106,250
15,000 NETCOM On-Line Communication Services 324,250 405,000
Inc+
29,600 Rite Aid Corp 677,668 732,600
32,500 Safety 1st Inc+ 829,209 747,500
------------ -------------
$ 2,898,784 $ 2,991,350
ELECTRICAL EQUIPMENT - 2.82%
10,000 FORE Systems Inc+ $ 371,042 $ 367,500
40,500 Integrated Device Technology Inc+ 1,113,311 1,544,063
33,500 Merix Corp+ 657,063 816,563
------------ -------------
$ 2,141,416 $ 2,728,126
</TABLE>
80
<PAGE> 482
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONIC SEMICONDUCTORS - 4.72%
13,250 Applied Materials Inc+ $ 598,125 $ 611,156
40,000 Integrated Process Equipment Corp+ 673,125 740,000
21,000 Intel Corp 1,363,500 1,674,750
15,000 Mattson Technology Inc+ 271,875 273,750
30,000 Uniphase Corp+ 443,750 525,000
49,000 VLSI Technology Inc+ 616,313 750,313
------------ -------------
$ 3,966,688 $ 4,574,969
ENERGY & RELATED - 3.33%
25,000 Anadarko Petroleum Corp $ 1,192,030 $ 1,096,875
50,000 Global Marine Inc+ 246,750 206,250
35,000 KCS Energy 714,087 568,750
40,000 Offshore Pipeline Inc+ 835,592 905,000
22,500 Trigen Energy Corp 395,548 450,000
------------ -------------
$ 3,384,007 $ 3,226,875
ENTERTAINMENT - 5.94%
54,500 Anchor Gaming+ $ 914,843 $ 926,500
23,000 Children's Discovery Centers of 314,916 353,625
America Inc+
30,000 Gallery Rodeo International Inc+ * 11,100 9,375
20,000 Iwerks Entertainment Inc+ 309,063 90,000
80,000 Mirage Resorts Inc+ 1,681,524 1,910,000
118,000 Radica Games Ltd+ 965,261 575,250
30,000 Regal Cinemas Inc+ 737,500 648,750
90,000 Sports Club Inc+ 705,653 652,500
30,000 Station Casino Inc+ 427,110 356,250
5,000 Viacom Inc Class A+ 206,250 231,250
------------ -------------
$ 6,273,220 $ 5,753,500
ENVIRONMENTAL CONTROL - 1.28%
70,000 Molten Metal Technology Inc+ $ 1,332,285 $ 1,242,500
</TABLE>
81
<PAGE> 483
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCE & RELATED - 9.40%
25,000 Emphesys Financial Group $ 820,038 $ 946,875
114,500 Envoy Corp+ 1,972,977 2,633,500
27,500 First Financial Management Corp 1,564,637 1,900,938
31,500 Green Tree Financial Inc 844,142 1,204,875
30,000 Household International Inc 1,150,210 1,312,500
30,000 Student Loan Marketing Association 1,111,340 1,106,250
------------ -------------
$ 7,463,344 $ 9,104,938
FOOD & RELATED - 1.98%
20,000 Coca-Cola FEMSA SA Class B $ 45,000 $ 24,400
29,000 General Nutrition Co Inc+ 764,250 696,000
50,000 Taco Cabana Inc Class A+ 597,500 381,250
60,000 Whole Foods Market Inc+ 924,153 810,000
------------ -------------
$ 2,330,903 $ 1,911,650
HEALTHCARE - 10.32%
59,500 Coram Healthcare+ $ 1,027,142 $ 1,398,250
63,500 Genesis Health Ventures Inc+ 1,581,318 1,920,875
75,000 Health System International Class A+ 1,729,172 2,034,375
20,000 Healthsouth Rehabilitation Corp+ 711,850 805,000
4,000 MedPartners Inc+ 52,000 70,000
50,000 Renal Treatment Centers+ 950,750 1,087,500
55,000 Value Health Inc+ 2,103,238 2,048,750
20,000 Vencor Inc+ 634,899 635,000
------------ -------------
$ 8,790,369 $ 9,999,750
HOSPITAL & MEDICAL SUPPLIES - 4.15%
50,000 Angeion Corp+ $ 118,750 $ 162,500
80,000 Bioject Medical Technologies+ 306,665 185,000
35,000 Endosonics Corp+ 301,875 266,875
70,000 Fresenius USA Inc+ 455,656 752,500
63,500 Heart Technology Inc+ 1,424,381 1,182,688
</TABLE>
82
<PAGE> 484
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
17,500 I-Stat Corp+ $ 419,656 $ 420,000
30,000 Innerdyne Inc+ 153,100 150,000
30,000 Mediscience Technology Corp+ 18,600 16,875
10,000 Sola International Inc+ 171,025 170,000
20,000 Sybron International Corp+ 694,760 715,000
------------ -------------
$ 4,064,468 $ 4,021,438
MATERIAL MANUFACTURING - 2.87%
15,000 Cryenco Sciences Inc Class A+ $ 48,750 $ 57,188
40,000 Lydall Inc+ 1,246,357 1,400,000
52,500 Material Sciences Corp+ 778,167 833,438
45,000 Seda Specialty Packaging Corp+ 625,207 483,750
------------ -------------
$ 2,698,481 $ 2,774,376
PHARMACEUTICAL - 0.53%
7,500 Genzyme Corp - General Division+ $ 262,838 $ 290,625
47,500 Seragen Inc+ 330,162 225,625
------------ -------------
$ 593,000 $ 516,250
RETAIL STORES - 0.98%
27,000 Pacific Sunwear of California+ $ 393,625 $ 344,250
40,000 Woolworth Corp 608,540 610,000
------------ -------------
$ 1,002,165 $ 954,250
TELECOMMUNICATIONS - 8.56%
37,900 Cellstar Corp+ $ 691,341 $ 843,275
51,000 LCI International Inc+ 1,096,477 1,122,000
19,537 LDDS Communications+ 359,999 457,898
35,000 Mobile Telecommunication Technologies 707,250 774,375
Corp+
25,000 Nokia Corp ADR 1,829,750 1,881,250
</TABLE>
83
<PAGE> 485
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
62,500 Paging Network Inc+ $ 1,809,375 $ 2,078,125
25,000 Telephone & Data Systems Inc 1,141,516 1,140,625
------------ -------------
$ 7,635,708 $ 8,297,548
TRANSPORTATION - 3.80%
30,000 Greenbrier Companies Inc $ 475,638 $ 461,250
77,500 Landair Services Inc+ 1,403,448 1,298,125
45,000 Mesa Airlines Inc+ 756,744 281,250
30,000 Southern Pacific Rail Corp+ 544,225 536,250
62,650 Southwest Airlines Co 1,606,867 1,104,206
------------ -------------
$ 4,786,922 $ 3,681,081
TOTAL COMMON STOCKS $ 79,684,768 $ 84,871,327
WARRANTS - 1.57%
ELECTRONIC SEMICONDUCTORS - 1.56%
80,000 Intel Corp Expires 03/14/1998+ $ 1,106,063 $ 1,510,000
HOSPITAL & MEDICAL SUPPLIES - 0.01%
50,000 Angeion Corp Expires 03/12/1996+ $ 0 $ 12,500
------------ -------------
TOTAL WARRANTS $ 1,106,063 $ 1,522,500
PREFERRED STOCKS - 0.62%
CONSUMER - STAPLES - 0.62%
20,000 LCI International Inc Convertible $ 500,000 $ 600,000
MUTUAL FUNDS - 0.56%
CLOSED-END MUTUAL FUNDS - 0.56%
15,000 Emerging Markets Infrastructure Fund $ 151,875 $ 142,500
25,000 Morgan Stanley India Investment Fund 345,910 246,875
15,000 The India Fund Inc 213,750 155,625
------------ -------------
TOTAL MUTUAL FUNDS $ 711,535 $ 545,000
</TABLE>
84
<PAGE> 486
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
LONG-TERM BONDS - 1.98%
CONVERTIBLE CORPORATE BONDS - 1.98%
$ 600,000 Careline Inc+* 8.00% 05/01/01 $ 489,000
500,000 First Financial Management 5.00 12/15/99 575,000
595,000 IDB Communications 5.00 08/15/03 449,225
50,000 Novacare Corp 5.50 01/15/00 41,625
227,200 Oryx Energy Co 7.50 05/15/14 168,128
4,652 Surgical Laser Technologies 8.00 07/30/99 4,094
Inc
150,000 Vencor Inc 6.00 10/01/02 189,000
-------------
TOTAL LONG-TERM BONDS $ 1,916,072
(Cost $2,078,741)
SHORT-TERM INSTRUMENTS - 8.38%
U.S. TREASURY BILLS - 2.78%
$ 2,700,000 U.S. Treasury Bills 5.21 (F) 03/09/95 $ 2,696,459
</TABLE>
85
<PAGE> 487
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- FEBRUARY 28,
1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS (CONTINUED)
REPURCHASE AGREEMENTS - 5.60%
$5,419,000 Goldman Sachs Pooled 6.08 03/01/95 $ 5,419,000
Repurchase Agreement - 102%
Collateralized by U.S.
Government Securities
------------
TOTAL SHORT-TERM INSTRUMENTS $ 8,115,459
(Cost $8,115,691)
TOTAL INVESTMENTS IN SECURITIES
(Cost $92,196,798)** (Notes 100.71% $97,570,358
1 and 3)
Other Assets and (0.71)% (687,104)
Liabilities, Net
------ -----------
TOTAL NET ASSETS 100.00% $96,883,254
------ -----------
------ -----------
- ---------------------------------------------------------------------
+ NON-INCOME EARNING SECURITIES.
* THESE SECURTIES ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933. PURSUANT TO RULE 144A THESE SECURITIES ARE ELIGIBLE FOR RESALE IN
TRANSACTIONS EXEMPT FROM REGISTRATION TO INSTITUTIONAL BUYERS. THESE
SECURITIES WERE DEEMED LIQUID BY THE INVESTMENT ADVISER IN ACCORDANCE WITH
POLICIES APPROVED BY THE FUND'S BOARD OF DIRECTORS.
(F) YIELD TO MATURITY.
** COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
</TABLE>
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 10,673,700
Gross Unrealized Depreciation (5,300,140)
-------------
Net Unrealized Appreciation $ 5,373,560
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
86
<PAGE> 488
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS - 94.25%
103,740 Abbott Laboratories $ 2,983,740 $ 3,682,770
12,203 Advanced Micro Devices+ 316,970 370,666
14,441 Aetna Life & Casualty Co 781,488 776,204
14,900 Ahmanson (H F) & Co 279,641 273,788
14,527 Air Products & Chemicals Inc 629,816 715,455
63,478 Airtouch Communications+ 1,554,158 1,729,776
3,602 Alberto-Culver Co Class B 82,148 102,657
32,579 Albertson's Inc 909,821 1,001,804
28,878 Alcan Aluminium Ltd 658,642 700,292
7,072 Alco Standard Corp 396,051 480,896
5,591 Alexander & Alexander Services 109,147 121,604
8,175 Allergan Inc 194,471 236,053
36,413 Allied Signal Inc 1,279,297 1,383,694
24,144 Alltel Corp 744,551 691,122
22,990 Aluminum Co of America 868,001 896,610
10,510 ALZA Corp+ 244,973 239,103
14,934 Amdahl Corp 99,429 166,141
11,954 Amerada Hess Corp 589,134 585,746
25,932 American Brands Inc 858,479 969,209
23,805 American Electric Power Inc 765,643 806,394
65,187 American Express Corp 1,785,784 2,200,061
26,418 American General Corp 757,609 835,469
9,509 American Greetings Corp Class A 273,807 279,327
39,394 American Home Products Corp 2,364,899 2,816,671
40,648 American International Group Inc 3,673,652 4,217,230
18,327 American Stores Co 450,641 449,012
70,792 Ameritech Corp 2,804,967 3,035,207
17,144 Amgen Inc+ 764,188 1,182,936
63,929 Amoco Corp 3,680,576 3,787,793
13,472 AMP Inc 908,452 1,010,400
9,777 AMR Corp+ 585,944 597,619
3,282 Andrew Corp+ 118,096 190,356
33,338 Anheuser-Busch Inc 1,700,161 1,879,430
15,334 Apple Computer Inc 503,856 605,693
66,333 Archer-Daniels-Midland Co 1,033,817 1,260,327
</TABLE>
87
<PAGE> 489
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
13,200 Armco Inc+ $ 81,337 $ 87,450
5,040 Armstrong World Industries Inc 226,253 230,580
5,404 ASARCO Inc 141,685 147,259
7,751 Ashland Inc 267,639 250,939
201,070 AT & T Corp 11,102,377 10,405,373
20,708 Atlantic Richfield Corp 2,193,901 2,270,115
6,020 Autodesk Inc 163,484 236,285
18,167 Automatic Data Processing 963,907 1,117,271
7,005 Avery Dennison Corp 208,870 262,688
8,905 Avon Products Inc 520,614 500,906
18,016 Baker Hughes Inc 385,326 346,808
3,808 Ball Corp 105,924 124,712
5,958 Bally Entertainment Corp+ 44,500 46,175
18,990 Baltimore Gas & Electric Co 441,407 467,629
52,182 Banc One Corp 1,809,341 1,532,846
13,909 Bank of Boston Corp 360,316 419,009
47,784 BankAmerica Corp 2,188,345 2,299,605
10,020 Bankers Trust N Y Corp 703,312 632,513
7,003 Bard (C R) Inc 171,378 187,330
12,456 Barnett Banks Inc 557,853 554,292
44,967 Barrick Gold Corp 1,150,156 978,032
1,824 Bassett Furniture Industries 52,726 50,616
7,619 Bausch & Lomb Inc 318,472 253,332
36,356 Baxter International Inc 955,433 1,131,581
9,135 Becton Dickenson & Co 372,263 479,588
56,092 Bell Atlantic Corp 3,102,456 3,007,934
63,796 BellSouth Corp 3,741,427 3,763,964
6,526 Bemis Co Inc 150,338 177,018
6,859 Beneficial Corp 258,826 254,640
14,092 Bethlehem Steel Corp+ 271,053 220,188
10,877 Beverly Enterprises+ 140,516 141,401
15,270 Biomet Inc+ 159,638 247,183
10,967 Black & Decker Corp 222,191 293,367
13,386 Block (H & R) Inc 537,225 503,648
13,483 Boatmen's Bancshares Inc 422,737 417,973
</TABLE>
88
<PAGE> 490
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
43,839 Boeing Co $ 1,928,992 $ 2,022,074
6,020 Boise Cascade Corp 144,243 193,393
19,177 Boston Scientific Corp+ 393,471 414,703
3,724 Briggs & Stratton Corp 124,164 129,409
65,740 Bristol-Myers Squibb Co 3,639,064 4,075,880
2,317 Brown Group Inc 82,153 74,723
8,847 Brown-Forman Corp Class B 253,083 286,422
25,316 Browning-Ferris Industries Inc 740,314 787,961
10,380 Bruno's Inc 86,468 105,746
12,248 Brunswick Corp 250,087 243,429
11,463 Burlington Northern Inc 616,966 641,928
16,310 Burlington Resources Inc 693,533 627,935
31,905 Campbell Soup Co 1,204,144 1,447,689
19,770 Capital Cities/ABC Inc 1,391,520 1,749,645
20,261 Carolina Power & Light Co 546,413 557,178
26,039 Caterpillar Inc 1,314,074 1,344,263
7,890 CBS Inc 471,954 508,905
3,818 Centex Corp 108,458 97,359
24,439 Central & South West Corp 613,060 601,810
5,831 Ceridian Corp+ 131,658 183,677
12,022 Champion International Corp 403,672 494,405
14,053 Charming Shoppes Inc 142,844 86,075
23,346 Chase Manhattan Corp 846,020 837,538
31,451 Chemical Banking Corp Class A 1,223,647 1,261,971
83,869 Chevron Corp 3,672,106 3,983,778
45,634 Chrysler Corp 2,209,609 1,985,079
11,218 Chubb Corp 892,307 882,015
9,296 CIGNA Corp 623,911 704,172
4,303 Cincinnati Milacron Inc 96,691 90,363
18,977 Cinergy Corp 429,203 469,681
12,333 Circuit City Stores Inc 290,296 266,701
33,137 Cisco Systems Inc+ 936,321 1,118,374
50,592 Citicorp 1,985,094 2,276,640
2,206 Clark Equipment Co+ 130,162 118,021
6,909 Clorox Co 354,430 417,131
</TABLE>
89
<PAGE> 491
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
13,540 Coastal Corp $ 386,827 $ 387,583
165,454 Coca-Cola Co 7,157,714 9,099,970
18,679 Colgate-Palmolive Co 1,048,409 1,204,796
7,093 Columbia Gas System Inc+ 192,369 184,418
46,566 Columbia HCA Healthcare Corp 1,805,920 1,926,668
30,750 Comcast Corp Class A 568,064 484,313
5,865 Community Psychiatric Centers 73,331 68,181
33,236 Compaq Computer Corp+ 1,035,588 1,146,642
20,714 Computer Associates International Inc 798,800 1,180,698
7,084 Computer Sciences Corp+ 283,840 348,002
31,870 ConAgra Inc 917,947 1,043,743
10,124 Conrail Inc 559,458 559,351
30,240 Consolidated Edison Co 893,651 835,380
4,635 Consolidated Freightways 103,896 110,081
11,922 Consolidated Natural Gas Co 493,757 441,114
7,319 Continental Corp 149,865 141,806
14,881 Cooper Industries Inc 594,503 584,079
10,712 Cooper Tire & Rubber Co 263,861 299,936
4,878 Coors (Adolph) Co Class B 89,747 79,268
18,141 CoreStates Financial Corp 489,773 546,498
29,296 Corning Inc 955,109 941,134
19,005 CPC International Inc 908,784 1,016,768
3,841 Crane Co 103,630 115,710
3,137 Cray Research Inc+ 72,450 52,937
11,510 Crown Cork & Seal Co+ 431,496 490,614
13,526 CSX Corp 1,020,666 1,051,647
5,351 Cummins Engine Co Inc 232,132 243,471
11,852 Cyprus Amax Minerals 337,536 320,004
12,677 Dana Corp 347,430 312,171
4,490 Data General Corp+ 37,679 35,359
9,234 Dayton-Hudson Corp 701,775 650,997
21,982 Dean Witter Discover & Co 836,368 887,523
11,119 Deere & Co 789,996 851,993
6,468 Delta Air Lines Inc 311,843 375,144
</TABLE>
90
<PAGE> 492
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
10,611 Deluxe Corp $ 318,717 $ 297,108
18,654 Detroit Edison Co 527,666 533,971
11,807 Dial Corp 250,016 295,175
18,404 Digital Equipment Corp+ 515,393 616,534
14,521 Dillard Department Stores Inc Class A 467,549 399,328
68,868 Disney (Walt) Co 2,898,557 3,675,830
22,162 Dominion Resources Inc 878,740 842,156
19,764 Donnelley (R R) & Sons Co 568,849 676,917
7,320 Dover Corp 406,323 435,540
35,665 Dow Chemical Co 2,319,876 2,389,555
12,553 Dow Jones & Co Inc 405,490 444,062
23,647 Dresser Industries Inc 514,449 487,719
14,541 DSC Communications Corp+ 364,764 523,493
26,353 Duke Power Co 1,002,186 1,034,355
21,848 Dun & Bradstreet Corp 1,264,563 1,130,634
87,627 DuPont (E I) de Nemours 4,927,300 4,918,065
4,326 E-Systems Inc 174,760 189,263
2,954 Eastern Enterprises 74,672 77,912
10,635 Eastman Chemical Co 503,573 582,266
43,697 Eastman Kodak Co 2,017,973 2,228,547
9,771 Eaton Corp 506,163 489,771
7,813 Echlin Inc 232,493 270,525
14,209 Echo Bay Mines Ltd 165,429 127,881
8,705 Ecolab Inc 187,572 201,303
6,980 EG & G Inc 113,160 100,338
28,814 Emerson Electric Co 1,707,420 1,905,326
12,282 Engelhard Corp 312,553 323,938
32,567 Enron Corp 1,045,321 1,074,711
8,439 Enserch Corp 129,326 118,146
29,283 Entergy Corp 853,268 655,207
159,694 Exxon Corp 9,754,005 10,220,416
7,182 Federal Express Corp+ 478,171 467,728
23,233 Federal Home Loan Mortgage Corp 1,327,724 1,347,514
35,155 Federal National Mortgage Association 2,897,916 2,711,329
</TABLE>
91
<PAGE> 493
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
5,622 Federal Paper Board Co $ 137,244 $ 167,255
11,773 First Chicago Corp 568,203 596,008
14,121 First Data Corp 701,834 759,004
10,473 First Fidelity Bancorp 487,924 528,887
9,809 First Interstate Bancorp 740,088 798,207
2,501 First Mississippi Corp 38,726 60,649
22,664 First Union Corp 1,028,565 1,011,381
17,316 Fleet Financial Group Inc 629,648 538,961
5,906 Fleetwood Enterprises Inc 123,176 129,194
4,718 Fleming Co Inc 133,614 92,001
10,598 Fluor Corp 520,982 516,653
4,670 FMC Corp+ 245,479 273,195
131,293 Ford Motor Co 3,798,503 3,430,030
4,607 Foster Wheeler Corp 165,474 150,879
24,054 FPL Group Inc 806,444 862,937
17,873 Gannett Co Inc 906,049 983,015
18,791 Gap Inc 720,721 610,708
8,134 General Dynamics Corp 339,368 383,315
219,937 General Electric Co 10,679,839 12,069,043
20,336 General Mills Inc 1,167,898 1,232,870
96,940 General Motors Corp 4,779,989 4,132,068
14,791 General Public Utilities 443,894 447,428
10,557 General Re Corp 1,207,501 1,375,049
6,074 General Signal Corp 203,552 217,905
15,812 Genuine Parts Co 567,051 614,692
11,674 Georgia-Pacific Corp 751,069 874,091
7,586 Giant Food Inc Class A 165,098 180,168
4,292 Giddings & Lewis Inc 83,177 72,964
28,466 Gillette Co 1,854,153 2,252,372
7,803 Golden West Financial 309,184 298,465
3,406 Goodrich (B F) Co 151,138 151,567
19,440 Goodyear Tire & Rubber Co 736,780 716,850
12,094 Grace (W R) & Co 487,917 544,230
6,505 Grainger (W W) Inc 406,197 397,618
4,777 Great Atlantic & Pacific Tea Co 120,307 91,957
</TABLE>
92
<PAGE> 494
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
8,810 Great Lakes Chemical Corp $ 535,307 $ 529,701
17,113 Great Western Financial Corp 305,461 320,869
123,739 GTE Corp 4,013,732 4,129,789
14,630 Halliburton Co 503,948 544,968
4,206 Handleman Co 46,494 44,689
9,944 Harcourt General Inc 354,078 369,171
3,807 Harland (John H) Co 87,882 86,133
5,820 Harnischfeger Industries Inc 136,838 162,233
5,101 Harris Corp 220,951 229,545
3,859 Hartmarx Corp+ 23,971 22,189
11,225 Hasbro Inc 365,126 353,588
31,688 Heinz (H J) Co 1,091,534 1,247,715
3,126 Helmerich & Payne Inc 89,523 81,276
15,114 Hercules Inc 522,210 663,127
11,142 Hershey Foods Corp 501,759 545,958
32,694 Hewlett Packard Co 2,655,697 3,759,810
6,214 Hilton Hotels Corp 343,642 436,534
58,110 Home Depot Inc 2,518,692 2,607,686
17,553 Homestake Mining Co 335,551 272,072
16,614 Honeywell Inc 556,299 604,334
12,356 Household International Inc 428,943 540,575
16,923 Houston Industries Inc 625,016 647,305
14,648 Illinois Tool Works Inc 585,960 657,329
14,963 Inco Ltd 381,423 402,131
13,494 Ingersoll-Rand Co 478,090 430,121
5,642 Inland Steel Industries Inc+ 192,175 162,208
53,306 Intel Corp 3,238,921 4,251,154
6,185 Intergraph Corp+ 58,466 75,766
75,509 International Business Machines Corp 4,461,904 5,682,052
14,321 International Flavors & Fragrances 570,479 689,198
16,045 International Paper Co 1,103,810 1,225,437
9,914 Interpublic Group Cos Inc 305,159 338,315
13,768 ITT Corp 1,159,178 1,342,380
10,522 James River Corp 199,235 259,104
</TABLE>
93
<PAGE> 495
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
6,268 Jefferson-Pilot Corp $ 314,061 $ 357,276
82,643 Johnson & Johnson 3,646,857 4,689,990
5,186 Johnson Controls Inc 261,093 258,004
5,879 Jostens Inc 102,412 122,724
58,599 K Mart Corp 1,016,785 747,137
4,106 Kaufman & Broad Home Corp 66,682 60,050
28,641 Kellogg Co 1,540,618 1,550,194
6,690 Kerr-McGee Corp 319,038 337,009
31,357 KeyCorp 983,244 909,353
20,573 Kimberly-Clark Corp 1,088,139 1,069,796
4,695 King World Productions+ 178,304 167,259
6,854 Knight-Ridder Inc 366,434 376,113
15,049 Kroger Co+ 346,982 395,036
37,582 Lilly (Eli) & Co 2,041,662 2,517,994
46,089 Limited Inc 875,475 806,558
12,151 Lincoln National Corp 487,846 490,597
9,953 Liz Claiborne Inc 235,028 160,492
8,175 Lockheed Corp 538,835 634,584
2,621 Longs Drug Stores Corp 89,433 83,217
10,847 Loral Corp 382,842 443,371
6,086 Lotus Development Corp+ 264,602 254,091
4,286 Louisiana Land & Exploration Co 179,563 148,403
14,365 Louisiana-Pacific Corp 464,027 405,811
20,499 Lowe's Co Inc 658,687 689,279
3,246 Luby's Cafeterias Inc 74,353 73,847
3,307 M/A-Com Inc+ 26,351 22,736
9,939 Mallinckrodt Group Inc 310,873 325,502
7,934 Manor Care Inc 198,970 235,045
16,000 Marriott International 430,166 496,000
9,491 Marsh & McLennan Companies Inc 801,061 778,262
12,243 Martin Marietta Inc 535,012 584,603
20,574 Masco Corp 574,493 516,922
28,727 Mattel Inc 588,175 642,767
17,043 Maxus Energy Corp+ 97,997 66,042
31,953 May Co Department Stores Co 1,249,836 1,166,285
</TABLE>
94
<PAGE> 496
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
14,141 Maytag Corp $ 247,720 $ 233,327
19,079 MBNA Corp 446,791 503,209
6,935 McDermott International Inc 174,296 194,180
89,789 McDonald's Corp 2,552,217 2,985,484
15,228 McDonnell Douglas Corp 566,966 852,768
6,342 McGraw-Hill Inc 424,506 447,111
87,358 MCI Communications 2,099,886 1,758,080
7,609 Mead Corp 343,287 416,593
14,732 Medtronic Inc 600,824 883,920
18,879 Mellon Bank Corp 711,448 719,762
13,582 Melville Corp 537,700 441,415
4,718 Mercantile Stores Co Inc 167,293 196,387
161,879 Merck & Co Inc 5,223,890 6,859,623
1,800 Meredith Corp 76,406 87,525
24,470 Merrill Lynch & Co Inc 948,703 1,003,270
13,128 Micron Technology Inc 482,063 813,936
74,967 Microsoft Corp+ 4,082,631 4,722,921
3,133 Millipore Corp 154,339 166,441
54,119 Minnesota Mining & Manufacturing Co 2,821,308 2,963,015
51,143 Mobil Corp 4,111,730 4,449,441
14,941 Monsanto Co 1,098,685 1,184,074
12,846 Moore Corp Ltd 228,160 237,651
24,339 Morgan (J P) & Co Inc 1,570,656 1,569,866
4,112 Morrison Knudsen Corp 88,208 31,868
18,993 Morton International Inc 527,057 555,545
75,446 Motorola Inc 3,687,946 4,338,145
1,102 NACCO Industries Inc Class A 57,228 56,615
8,884 Nalco Chemical Co 291,788 305,388
19,268 National City Corp 533,669 534,687
21,264 National Medical Enterprises 313,373 329,592
15,706 National Semiconductor+ 286,291 265,039
6,387 National Service Industries Inc 167,359 171,651
35,585 NationsBank 1,829,394 1,774,802
9,485 Navistar International Corp+ 168,165 137,533
</TABLE>
95
<PAGE> 497
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
20,060 NBD Bancorp Inc $ 626,284 $ 624,368
12,968 New York Times Co Class A 320,484 278,812
20,264 Newell Co 422,148 483,803
11,101 Newmont Mining Corp 459,856 401,024
18,364 Niagara Mohawk Power Corp 326,521 273,165
6,684 NICOR Inc 176,674 165,429
9,473 Nike Inc Class B 553,802 680,872
15,710 NorAm Energy Corp 108,462 88,369
10,599 Nordstrom Inc 422,019 447,808
17,349 Norfolk Southern Corp 1,113,238 1,147,203
8,580 Northern States Power Co 366,085 388,245
32,566 Northern Telecom Ltd 970,650 1,111,315
6,310 Northrop Grumman Corp 248,118 280,006
39,725 Norwest Corp 1,031,470 1,022,919
47,562 Novell Inc+ 897,215 966,845
11,242 Nucor Corp 686,027 630,957
54,309 NYNEX Corp 2,154,770 2,131,628
40,196 Occidental Petroleum Corp 784,519 798,896
6,287 Ogden Corp 143,067 134,385
19,510 Ohio Edison Co 389,168 409,710
3,410 ONEOK Inc 65,979 58,823
55,247 Oracle Systems Corp+ 1,306,882 1,733,359
12,687 Oryx Energy Co 209,887 139,557
1,761 Oshkosh B'Gosh Inc Class A 25,620 25,094
2,466 Outboard Marine Corp 50,071 51,786
5,769 Owens Corning Fiberglass+ 201,107 193,983
4,958 PACCAR Inc 243,714 218,152
10,601 Pacific Enterprises 229,671 259,725
55,578 Pacific Gas & Electric Co 1,509,708 1,424,186
54,534 Pacific Telesis Group 1,671,750 1,636,020
36,403 PacifiCorp 650,290 696,207
15,106 Pall Corp 249,941 304,008
19,154 Panhandle Eastern Corp 411,604 430,965
6,304 Parker Hannifin Corp 255,646 294,712
28,527 PECO Energy Co 795,120 763,097
</TABLE>
96
<PAGE> 498
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
30,035 Penney (J C) Co Inc $ 1,504,307 $ 1,287,751
5,906 Pennzoil Co 314,778 279,797
4,409 Peoples Energy Corp 122,041 115,736
7,898 Pep Boys-Manny Moe & Jack 234,565 258,660
101,844 Pepsico Inc 3,487,597 3,984,647
5,615 Perkin-Elmer Corp 172,096 160,729
40,544 Pfizer Inc 2,621,576 3,355,016
9,122 Phelps Dodge Corp 502,123 497,149
110,552 Philip Morris Co Inc 5,814,383 6,716,034
33,632 Phillips Petroleum Co 1,068,784 1,122,468
10,959 Pioneer Hi Bred International Inc 379,485 369,866
20,032 Pitney Bowes Inc 767,115 711,136
5,685 Pittston Services Group 144,437 142,125
30,687 Placer Dome Inc 661,278 625,248
30,194 PNC Bank Corp 874,266 769,947
6,114 Polaroid Corp 205,510 183,420
3,996 Potlatch Corp 160,823 172,328
27,360 PPG Industries Inc 1,020,912 1,005,480
17,697 Praxair Inc 348,241 400,395
8,224 Premark International Inc 305,488 355,688
26,698 Price/Costco Inc+ 427,996 363,760
88,224 Procter & Gamble Co 4,885,751 5,866,896
13,133 Promus Co Inc+ 442,959 469,505
12,546 Providian Corp 413,959 443,815
31,415 Public Services Enterprise Group 903,140 914,962
3,501 Pulte Corp 91,555 80,523
17,208 Quaker Oats Co 613,335 561,411
12,903 Ralston-Purina Group 480,562 616,118
5,604 Raychem Corp 207,998 226,262
15,872 Raytheon Co 1,017,771 1,118,976
10,420 Reebok International Ltd 330,181 381,633
7,955 Reynolds Metals Co 393,239 397,750
10,840 Rite Aid Corp 217,956 268,290
5,024 Roadway Services Inc 315,728 272,552
28,238 Rockwell International Corp 1,019,042 1,087,163
</TABLE>
97
<PAGE> 499
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
8,744 Rohm & Haas Co $ 518,303 $ 490,757
7,621 Rollins Environmental Services 40,843 39,058
10,673 Rowan Co Inc+ 89,009 66,706
68,979 Royal Dutch Petroleum Co 7,247,397 7,734,270
20,749 Rubbermaid Inc 576,851 656,187
5,062 Russell Corp 148,384 153,126
6,774 Ryan's Family Steak House+ 51,297 52,499
10,085 Ryder System Inc 255,758 234,476
8,105 SAFECO Corp 454,360 445,775
7,596 Safety-Kleen Corp 123,311 125,334
13,613 Salomon Inc 615,840 490,068
11,359 Santa Fe Energy Resources Inc 105,576 102,231
15,945 Santa Fe Pacific Corp 243,778 338,831
16,798 Santa Fe Pacific Gold Corp+ 261,334 182,678
61,822 Sara Lee Corp 1,405,085 1,622,828
57,620 SCEcorp 950,362 943,528
24,452 Schering-Plough Corp 1,586,225 1,916,426
31,358 Schlumberger Ltd 1,858,721 1,783,486
10,004 Scientific-Atlanta Inc 177,802 233,844
9,706 Scott Paper Co 480,079 769,201
47,879 Seagram Co Ltd 1,405,478 1,472,279
45,230 Sears Roebuck & Co 2,156,049 2,227,578
12,069 Service Corp International 304,801 339,441
2,960 Shared Medical System Corp 74,901 101,935
15,495 Shawmut National Corp 341,075 397,059
11,035 Sherwin Williams Co 354,718 371,052
5,245 Shoney's Inc+ 88,921 57,695
6,419 Sigma Aldrich Corp 235,665 234,294
18,212 Silicon Graphics Inc+ 598,189 630,591
1,457 Skyline Corp 26,357 26,590
5,469 Snap-On Inc 203,632 185,946
11,191 Sonat Inc 350,771 324,539
83,977 Southern Co 1,664,875 1,732,026
18,431 Southwest Airlines Co 503,549 324,846
77,090 Southwestern Bell Corp 3,210,318 3,208,871
</TABLE>
98
<PAGE> 500
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
2,216 Springs Industries Inc Class A $ 73,741 $ 87,255
44,792 Sprint Corp 1,574,606 1,310,166
1,633 SPX Corp 26,041 24,903
5,944 St Jude Medical Inc 195,699 215,470
10,815 St Paul Co Inc 444,440 525,879
5,701 Stanley Works 227,976 230,178
11,676 Stone Container Corp+ 168,870 272,927
6,221 Stride Rite Corp 85,081 80,095
13,753 Sun Co Inc 389,746 400,566
12,158 Sun Microsystems Inc+ 308,707 389,056
15,131 SunTrust Banks Inc 723,858 815,183
9,099 Super Value Inc 279,188 234,299
23,594 Sysco Corp 584,127 669,480
14,713 Tandem Computers Inc+ 190,247 250,121
7,947 Tandy Corp 288,302 355,628
3,888 Tektronix Inc 116,026 133,164
78,806 Tele-Communication Inc Class A+ 1,748,471 1,792,837
7,037 Teledyne Inc+ 130,581 162,731
7,168 Temple-Inland Inc 340,225 350,336
23,324 Tenneco Inc 1,114,627 1,061,242
33,402 Texaco Inc 2,105,216 2,129,378
11,923 Texas Instruments Inc 915,297 938,936
29,045 Texas Utilities Co 1,056,867 954,854
11,387 Textron Inc 612,543 623,438
2,471 Thomas & Betts Corp 158,272 164,630
48,731 Time Warner Inc 1,808,161 1,882,235
16,494 Times Mirror Co Class A 372,542 305,139
3,911 Timken Co 131,120 140,307
9,329 TJX Companies Inc 221,569 125,942
9,177 Torchmark Corp 393,283 384,287
36,657 Toys R Us Inc+ 1,290,681 1,021,814
8,996 Transamerica Corp 472,113 491,407
41,209 Travelers Inc 1,450,107 1,602,000
8,598 Tribune Co 471,274 480,413
3,694 Trinova Corp 126,065 99,738
</TABLE>
99
<PAGE> 501
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
8,360 TRW Inc $ 553,632 $ 549,670
9,441 Tyco International Inc 444,374 492,112
12,917 U.S. Bancorp 334,626 324,540
20,563 U.S. Healthcare Inc 869,958 884,209
3,266 U.S. Life Corp 119,623 124,516
58,642 U.S. West Inc 2,464,086 2,272,378
27,576 Unicom Corp 682,888 703,188
20,598 Unilever NV 2,201,204 2,502,657
8,981 Union Camp Corp 410,450 462,522
19,122 Union Carbide Corp 495,122 547,367
13,075 Union Electric Co 468,956 495,216
26,393 Union Pacific Corp 1,520,574 1,379,034
21,994 Unisys Corp+ 233,050 195,197
22,186 United Healthcare Corp 1,030,226 953,998
7,325 United States Surgical 168,564 153,825
16,068 United Technologies Corp 1,003,128 1,066,514
31,336 Unocal Corp 892,023 889,159
9,298 UNUM Corp 462,767 395,165
22,306 Upjohn Co 671,822 786,287
7,511 USAir Group Inc+ 67,912 44,127
11,383 USF & G Corp 162,138 162,208
25,826 UST Inc 709,842 768,324
36,909 USX - Marathon Group 639,364 599,771
9,788 USX - US Steel Group 353,326 325,451
5,603 Varity Corp+ 207,237 204,510
8,275 VF Corp 400,347 426,163
45,951 Viacom Inc Class B+ 1,777,197 2,056,307
21,982 Wachovia Corp 758,990 763,875
295,720 Wal Mart Stores Inc 7,367,769 7,023,350
15,775 Walgreen Co 620,489 745,369
17,285 Warner Lambert Co 1,190,293 1,320,142
6,704 Wells Fargo & Co 961,964 1,076,830
13,689 Wendy's International Inc 215,989 212,180
6,813 Western Atlas Inc+ 294,546 281,036
45,775 Westinghouse Electric Corp 608,095 709,513
</TABLE>
100
<PAGE> 502
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Shares Security Name Cost Value
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
8,588 Westvaco Corp $ 287,042 $ 339,226
26,414 Weyerhaeuser Co 1,103,617 1,076,371
9,598 Whirlpool Corp 527,224 521,891
13,524 Whitman Corp 210,080 255,266
11,855 Williams Co Inc 338,657 340,831
9,546 Winn-Dixie Stores Inc 472,668 534,576
62,225 WMX Technologies Inc 1,772,510 1,641,184
16,937 Woolworth Corp 319,009 258,289
11,649 Worthington Industries Inc 230,392 234,436
14,942 Wrigley (Wm) Jr Co 669,651 674,258
13,665 Xerox Corp 1,305,559 1,515,107
3,584 Yellow Corp 69,859 75,712
5,615 Zenith Electronic Corp+ 52,754 45,622
1,557 Zurn Industries Inc 36,784 28,026
------------ -------------
TOTAL COMMON STOCKS $429,095,921 $457,701,950
</TABLE>
101
<PAGE> 503
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Yield to Maturity
Principal Security Name Maturity Date Value
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 5.98%
$1,353,000 U.S. Treasury Bills* 4.86% 03/16/95 $ 1,349,952
756,000 U.S. Treasury Bills* 4.95 03/23/95 753,552
2,104,000 U.S. Treasury Bills* 5.21 03/09/95 2,101,278
12,420,000 U.S. Treasury Bills* 5.48 04/06/95 12,350,849
218,000 U.S. Treasury Bills* 5.58 04/13/95 216,564
268,000 U.S. Treasury Bills* 5.73 04/20/95 265,957
8,131,000 U.S. Treasury Bills* 5.84 05/11/95 8,039,705
4,034,000 U.S. Treasury Bills* 5.87 05/25/95 3,979,230
------------
TOTAL SHORT-TERM INSTRUMENTS $ 29,057,087
(Cost $29,053,826)
TOTAL INVESTMENTS IN SECURITIES
(Cost $458,149,747)** 100.23% $486,759,037
(Notes 1 and 3)
Other Assets and (0.23)% (1,153,663)
Liabilities, Net
------ ------------
TOTAL NET ASSETS 100.00% $485,605,374
------ ------------
------ ------------
- ---------------------------------------------------------------------
+ NON-INCOME EARNING SECURITIES.
* THESE U.S. TREASURY BILLS ARE HELD IN A SEGREGATED ACCOUNT FOR MARGIN
REQUIREMENTS ON FUTURES CONTRACTS. CERTAIN OF THESE U.S. TREASURY BILLS ARE
PLEDGED TO THE BROKER AS COLLATERAL FOR FUTURES CONTRACTS. SEE NOTE 1.
** COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
</TABLE>
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 42,192,656
Gross Unrealized Depreciation (13,583,366)
-------------
Net Unrealized Appreciation $ 28,609,290
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
102
<PAGE> 504
MANAGED SERIES INVESTMENT TRUST -- SHORT-INTERMEDIATE TERM MASTER
SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
CORPORATE NOTES - 12.01%
$ 250,000 BankAmerica Corp 8.38% 03/15/02 $ 254,455
250,000 First Union Bank 6.75 11/15/98 244,428
250,000 Ford Holdings 9.25 07/15/97 259,125
250,000 NBD Bancorp Inc 6.55 06/02/97 247,060
500,000 Norwest Financial Inc 7.88 02/15/02 506,220
198,000 Sears Roebuck & Co 9.25 08/01/97 205,312
-------------
TOTAL CORPORATE NOTES $ 1,716,600
(Cost $1,749,752)
U.S. GOVERNMENT AGENCY SECURITIES - 6.46%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 6.46%
$ 951,162 Federal National Mortgage 7.00% 06/01/09 $ 922,627
Association
(Cost $933,796)
U.S. TREASURY SECURITIES - 71.07%
U.S. TREASURY BONDS - 13.98%
$1,600,000 U.S. Treasury Bonds 10.75% 08/15/05 $ 1,998,000
U.S. TREASURY NOTES - 57.09%
$2,200,000 U.S. Treasury Notes 7.88% 01/15/98 $ 2,254,648
5,700,000 U.S. Treasury Notes 8.50 07/15/97 5,903,946
-------------
$ 8,158,594
TOTAL U.S. TREASURY SECURITIES $ 10,156,594
(Cost $10,105,220)
SHORT-TERM INSTRUMENTS - 10.18%
U.S. TREASURY BILLS - 3.47%
$ 500,000 U.S. Treasury Bills 5.73%(F) 04/20/95 $ 496,136
</TABLE>
103
<PAGE> 505
MANAGED SERIES INVESTMENT TRUST -- SHORT-INTERMEDIATE TERM MASTER
SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS (CONTINUED)
REPURCHASE AGREEMENTS - 6.70%
$ 958,000 Goldman Sachs Pooled 6.08% 03/01/95 $ 958,000
Repurchase Agreement - 102%
Collateralized by U.S.
Government Securities
------------
TOTAL SHORT-TERM INSTRUMENTS $ 1,454,136
(Cost $1,454,111)
TOTAL INVESTMENTS IN SECURITIES
(Cost $14,242,879)* (Notes 1 99.72% $ 14,249,957
and 3)
Other Assets and 0.28% 40,056
Liabilities, Net
------ ------------
TOTAL NET ASSETS 100.00% $ 14,290,013
------ ------------
------ ------------
- ---------------------------------------------------------------------
<FN>
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
</TABLE>
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 119,265
Gross Unrealized Depreciation (112,187)
-------------
Net Unrealized Appreciation $ 7,078
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
104
<PAGE> 506
(THIS PAGE INTENTIONALLY LEFT BLANK)
105
<PAGE> 507
MASTER INVESTMENT PORTFOLIO -- U.S. TREASURY ALLOCATION MASTER
SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
Interest Maturity
Principal Security Name Rate Date Value
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES - 96.34%
U.S. TREASURY BONDS - 2.84%
$ 500,000 U.S. Treasury Bonds 8.00% 08/15/01 $ 506,093
1,100,000 U.S. Treasury Bonds 8.38 08/15/00 1,107,905
-------------
$ 1,613,998
U.S. TREASURY NOTES - 93.50%
$13,100,000 U.S. Treasury Notes 5.50% 04/15/00 $12,232,125
5,900,000 U.S. Treasury Notes 7.50 11/15/01 6,006,938
5,000,000 U.S. Treasury Notes 7.75 02/15/01 5,150,000
4,000,000 U.S. Treasury Notes 7.88 08/15/01 4,150,000
5,000,000 U.S. Treasury Notes 8.00 05/15/01 5,209,375
6,000,000 U.S. Treasury Notes 8.50 11/15/00 6,388,116
9,600,000 U.S. Treasury Notes 8.75 08/15/00 10,314,000
3,442,000 U.S. Treasury Notes 8.88 05/15/00 3,714,128
-------------
$53,164,682
TOTAL U.S. TREASURY SECURITIES $54,778,680
(Cost $55,224,241)
SHORT-TERM INSTRUMENTS - 2.78%
U.S. TREASURY BILLS - 2.78%
$ 22,000 U.S. Treasury Bills 4.95%(F) 03/23/95 $ 21,929
17,000 U.S. Treasury Bills 5.21 (F) 03/09/95 16,978
76,000 U.S. Treasury Bills 5.48 (F) 04/06/95 75,577
340,000 U.S. Treasury Bills 5.58 (F) 04/13/95 337,761
47,000 U.S. Treasury Bills 5.73 (F) 04/20/95 46,642
884,000 U.S. Treasury Bills 5.84 (F) 05/11/95 874,079
211,000 U.S. Treasury Bills 5.87 (F) 05/25/95 208,133
-------------
TOTAL SHORT-TERM INSTRUMENTS $ 1,581,099
(Cost $1,580,944)
</TABLE>
106
<PAGE> 508
MASTER INVESTMENT PORTFOLIO -- U.S. TREASURY ALLOCATION MASTER
SERIES -- FEBRUARY 28, 1995
Portfolio of Investments
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $56,805,185)* (Notes 1 99.12% $ 56,359,779
and 3)
Other Assets and 0.88% 501,735
Liabilities, Net
------ -------------
TOTAL NET ASSETS 100.00% $ 56,861,514
------ -------------
------ -------------
</TABLE>
- ---------------------------------------------------------------------
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 491,263
Gross Unrealized Depreciation (936,669)
-------------
Net Unrealized Depreciation ($ 445,406)
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
107
<PAGE> 509
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995
<TABLE>
<CAPTION>
MASTER MASTER
INVESTMENT INVESTMENT MANAGED SERIES
PORTFOLIO PORTFOLIO INVESTMENT TRUST
ASSET ALLOCATION BOND INDEX GROWTH STOCK
MASTER SERIES MASTER SERIES MASTER SERIES
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
In securities, at market
value (see cost below)
(Note 1) $292,651,964 $106,828,446 $97,570,358
Cash 762 219,265 997
Receivables:
Dividends and interest 2,517,961 1,590,015 53,571
Investment securities sold 26,976 0 1,867,820
Variation margin on
futures contracts 0 0 0
Prepaid expenses 0 8,713 0
Organizational costs (Note
2) 0 0 8,615
Total Assets 295,197,663 108,646,439 99,501,360
LIABILITIES
Cash overdraft due to
custodian 0 0 0
Payables:
Investment securities
purchased 103,679 0 2,478,857
Allocations to beneficial
interest holders 1,272,353 614,472 43,452
Due to sponsor and
distributor 0 0 8,615
Due to WFB (Note 2) 77,538 6,532 0
Other 0 16,955 87,182
Total Liabilities 1,453,570 637,959 2,618,106
TOTAL NET ASSETS $293,744,093 $108,008,480 $96,883,254
INVESTMENTS AT COST (Note 3) $293,032,032 $108,076,731 $92,196,798
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
108
<PAGE> 510
STATEMENT OF ASSETS AND LIABILITIES 2/28/95
<TABLE>
<CAPTION>
MASTER
MASTER MANAGED SERIES INVESTMENT
INVESTMENT INVESTMENT TRUST PORTFOLIO
PORTFOLIO SHORT-INTERMEDIATE U.S. TREASURY
S&P 500 INDEX TERM ALLOCATION
MASTER SERIES MASTER SERIES MASTER SERIES
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
In securities, at market
value (see cost below)
(Note 1) $486,759,037 $14,249,957 $56,359,779
Cash 0 9,082 2,407
Receivables:
Dividends and interest 1,431,365 112,971 821,427
Investment securities sold 93,033 0 0
Variation margin on
futures contracts 194,400 0 0
Prepaid expenses 8,713 0 0
Organizational costs (Note 2) 0 8,615 0
Total Assets 488,486,548 14,380,625 57,183,613
LIABILITIES
Cash overdraft due to
custodian 276,692 0 0
Payables:
Investment securities
purchased 407,669 0 0
Allocations to beneficial
interest holders 2,161,576 79,658 309,179
Due to sponsor and
distributor 0 8,615 0
Due to WFB (Note 2) 18,227 0 12,920
Other 17,010 2,339 0
Total Liabilities 2,881,174 90,612 322,099
TOTAL NET ASSETS $485,605,374 $14,290,013 $56,861,514
INVESTMENTS AT COST (Note 3) $458,149,747 $14,242,879 $56,805,185
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
109
<PAGE> 511
STATEMENT OF OPERATIONS
For the Period From May 26, 1994 (commencement of operations) to February 28,
1995
<TABLE>
<CAPTION>
MASTER MASTER
INVESTMENT INVESTMENT MANAGED SERIES
PORTFOLIO PORTFOLIO INVESTMENT TRUST
ASSET ALLOCATION BOND INDEX GROWTH STOCK
MASTER SERIES MASTER SERIES MASTER SERIES
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $2,371,897 $ 0 $131,982
Interest 8,138,443 4,089,726 257,912
Total Investment Income 10,510,340 4,089,726 389,894
EXPENSES (Note 2)
Advisory fees 666,053 43,294 299,914
Legal and audit 0 15,289 16,451
Directors fees 0 2,137 0
Total Expenses 666,053 60,720 316,365
Less:
Waived fees by WFB (Note
2) 0 (8,713) (16,451)
Net expenses 666,053 52,007 299,914
NET INVESTMENT INCOME 9,844,287 4,037,719 89,980
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
sale of investments 292,999 (498,410) 2,269,409
Net realized gain on sale of
futures contracts 0 0 0
Net change in unrealized
appreciation
(depreciation) of
investments (380,068) (1,248,285) 5,373,560
Net change in unrealized
appreciation of futures
contracts 0 0 0
Net Gain (Loss) On
Investments (87,069) (1,746,695) 7,642,969
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $9,757,218 $2,291,024 $7,732,949
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
110
<PAGE> 512
STATEMENT OF OPERATIONS 2/28/95
<TABLE>
<CAPTION>
MASTER
MASTER MANAGED SERIES INVESTMENT
INVESTMENT INVESTMENT TRUST PORTFOLIO
PORTFOLIO SHORT-INTERMEDIATE U.S. TREASURY
S&P 500 INDEX TERM ALLOCATION
MASTER SERIES MASTER SERIES MASTER SERIES
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $7,906,895 $ 0 $ 0
Interest 1,076,590 461,257 3,125,069
Total Investment Income 8,983,485 461,257 3,125,069
EXPENSES (Note 2)
Advisory fees 156,694 27,183 128,994
Legal and audit 15,345 16,510 0
Directors fees 2,137 0 0
Total Expenses 174,176 43,693 128,994
Less:
Waived fees by WFB (Note 2) (17,864) (16,510) 0
Net expenses 156,312 27,183 128,994
NET INVESTMENT INCOME 8,827,173 434,074 2,996,075
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
sale of investments 2,143,795 (267,700) (2,077,444)
Net realized gain on sale of
futures contracts 158,998 0 0
Net change in unrealized
appreciation
(depreciation) of
investments 28,609,290 7,078 (445,406)
Net change in unrealized
appreciation of futures
contracts 1,217,675 0 0
Net Gain (Loss) On
Investments 32,129,758 (260,622) (2,522,850)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $40,956,931 $173,452 $473,225
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
111
<PAGE> 513
STATEMENT OF CHANGES IN NET ASSETS
For the Period From May 26, 1994 (commencement of operations) to February 28,
1995
<TABLE>
<CAPTION>
MASTER MASTER
INVESTMENT INVESTMENT
PORTFOLIO PORTFOLIO
ASSET ALLOCATION BOND INDEX
MASTER SERIES MASTER SERIES
- ----------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $9,844,287 $4,037,719
Net realized gain (loss)
on sale of investments 292,999 (498,410)
Net realized gain on sale
of futures contracts 0 0
Net change in unrealized
appreciation
(depreciation) of
investments (380,068) (1,248,285)
Net change in unrealized
appreciation of futures
contracts 0 0
Net increase in net assets
resulting from operations 9,757,218 2,291,024
Net increase in net assets
resulting from beneficial
interests transactions 283,986,875 105,717,456
Increase In Net Assets 293,744,093 108,008,480
NET ASSETS
Beginning net assets $ 0 $ 0
Ending net assets $293,744,093 $108,008,480
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
112
<PAGE> 514
STATEMENT OF CHANGES IN NET ASSETS 2/28/95
<TABLE>
<CAPTION>
MANAGED SERIES MASTER
MANAGED SERIES MASTER INVESTMENT INVESTMENT
INVESTMENT INVESTMENT TRUST PORTFOLIO
TRUST PORTFOLIO SHORT-INTERMEDIATE U.S. TREASURY
GROWTH STOCK S&P 500 INDEX TERM ALLOCATION
MASTER SERIES MASTER SERIES MASTER SERIES MASTER SERIES
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $89,980 $8,827,173 $434,074 $2,996,075
Net realized gain (loss)
on sale of investments 2,269,409 2,143,795 (267,700) (2,077,444)
Net realized gain on sale
of futures contracts 0 158,998 0 0
Net change in unrealized
appreciation
(depreciation) of
investments 5,373,560 28,609,290 7,078 (445,406)
Net change in unrealized
appreciation of futures
contracts 0 1,217,675 0 0
Net increase in net assets
resulting from operations 7,732,949 40,956,931 173,452 473,225
Net increase in net assets
resulting from beneficial
interests transactions 89,150,305 444,648,443 14,116,561 56,388,289
Increase In Net Assets 96,883,254 485,605,374 14,290,013 56,861,514
NET ASSETS
Beginning net assets $ 0 $ 0 $ 0 $ 0
Ending net assets $96,883,254 $485,605,374 $14,290,013 $56,861,514
</TABLE>
- ---------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
113
<PAGE> 515
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Master Investment Portfolio ("Master Portfolio") is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company. Master Portfolio was
organized on October 21, 1993 as a Delaware business trust pursuant to an
Agreement and Declaration of Trust dated May 14, 1993 and had no operations
prior to May 26, 1994. Master Portfolio is currently authorized to issue
fourteen separate diversified portfolios (the "Master Series"), of which the
following have commenced operations: LifePath 2000 Master Series, LifePath 2010
Master Series, LifePath 2020 Master Series, LifePath 2030 Master Series,
LifePath 2040 Master Series, Asset Allocation Master Series, Bond Index Master
Series, S&P 500 Index Master Series and U.S. Treasury Allocation Master Series.
The following significant accounting policies are consistently followed by
Master Portfolio in the preparation of its financial statements, and such
policies are in conformity with generally accepted accounting principles for
investment companies. The financial statements for each of the LifePath Master
Series are presented separately.
SECURITY VALUATION
The securities of each Master Series are valued at the last sale price on
the primary securities exchange or national securities market on which such
securities are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the most recent bid prices. Debt securities maturing in 60 days or less are
valued at amortized cost, which approximates market value. Debt securities,
other than those maturing in 60 days or less, are valued at the latest quoted
bid price. Any securities, restricted securities or other assets for which
recent market quotations are not readily available, are valued at fair value as
determined in good faith in accordance with policies approved by the Master
Portfolio's Board of Trustees.
SECURITY TRANSACTIONS AND REVENUE RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the ex-dividend
date, and interest income is recognized on a daily accrual basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized as required by the Internal Revenue
Code (the "Code").
114
<PAGE> 516
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS
FEDERAL INCOME TAXES
Each Master Series of the Master Portfolio intends to qualify as a
partnership for federal income tax purposes. Each Master Series therefore
believes that it will not be subject to any federal income tax on its income and
any net capital gains. However, each investor in a Master Series will be taxable
on its allocable share of the partnership's income and capital gains for
purposes of determining its federal income tax liability. The determination of
such share will be made in accordance with the applicable sections of the Code.
It is intended that each Master Series' assets, income and allocations will
be managed in such a way that a regulated investment company investing in a
Master Series will be able to satisfy the requirements of Subchapter M of the
Code, assuming that an investment company invested all of its assets in the
respective Master Series.
FUTURES CONTRACTS
The S&P 500 Index Master Series may purchase futures contracts to gain
exposure to market changes as this may be more efficient or cost effective than
actually buying the securities. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date and is
exchange traded. Upon entering into such a contract, a Master Series is required
to pledge to the broker an amount of cash, U.S. government securities or other
high-quality debt securities equal to the minimum "initial margin" requirements
of the exchange. Pursuant to the contract, the Master Series agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the Master Series as unrealized gains or losses.
When the contract is closed, the Master Series records a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Pursuant to regulations and/or
published positions of the Securities and Exchange Commission, the S&P 500 Index
Master Series is required to segregate cash or high quality, liquid debt
instruments in connection with futures transactions in an amount generally equal
to the entire value of the underlying contracts. Risks of entering into futures
contracts include the possibility that there may be an illiquid market and that
a change in the value of
115
<PAGE> 517
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS
the contract may not correlate with changes in the value of the underlying
securities. As of February 28, 1995 the S&P 500 Index Master Series had the
following open futures contracts:
<TABLE>
<CAPTION>
NOTIONAL NET
NUMBER OF EXPIRATION CONTRACT UNREALIZED
CONTRACTS TYPE DATE VALUE APPRECIATION
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
108 S&P 500 Index March 1995 26,381,700 1,217,675
</TABLE>
The S&P 500 Index Master Series has pledged to brokers U.S. Treasury Bills
for initial margin requirements with a par value of $1,335,000.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Master Portfolio has entered into an investment advisory agreement on
behalf of the Master Series with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the
agreement, WFB has agreed to provide investment guidance and policy direction in
connection with daily portfolio management of each Master Series. For the Asset
Allocation Master Series, the Bond Index Master Series, the S&P 500 Index Master
Series, and the U.S. Treasury Allocation Master Series, WFB is entitled to be
compensated monthly, at annual rates of 0.35%, 0.08%, 0.05% and 0.30% of the
respective average daily net assets of each of these Master Series.
In connection with the Asset Allocation Master Series, the Bond Index Master
Series, the S&P 500 Index Master Series and the U.S. Treasury Allocation Master
Series, the Master Portfolio and WFB have entered into sub-advisory agreements
with Wells Fargo Nikko Investment Advisors ("WFNIA"). WFNIA is an affiliate of
Wells Fargo & Company. Pursuant to Sub-Advisory Agreements, WFNIA, subject to
the supervision and approval of WFB, provides investment advisory assistance and
the day-to-day management of each Master Series' assets, subject to the overall
authority of the Master Portfolio's Board of Trustees. For providing these
services, WFNIA will be compensated by WFB.
In addition, Wells Fargo Institutional Trust Company N.A. ("WFITC"), a
subsidiary of WFNIA, acts as custodian for these Master Series. Custody fees are
paid to WFITC from the sub-advisory fee paid to WFNIA.
In mid-April 1995, it was announced that Wells Fargo Bank and The Nikko
Securities Co., Ltd., which are the co-owners of WFNIA, had begun considering a
116
<PAGE> 518
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS
variety of potential transactions which could result in a change of ownership or
control of WFNIA. It is not possible at this time to predict whether any such
transaction will occur or if it does, what structure it would take.
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the administrator, sponsor and distributor for
the Master Series, has paid all expenses in connection with the Master Series'
organization and initial registration.
Pursuant to the Administration Agreement, Stephens has agreed to assume all
operating expenses of the Asset Allocation Master Series and the U.S. Treasury
Allocation Master Series, except for advisory fees, interest, brokerage fees and
commissions, if any, costs of independent pricing services and any extraordinary
expenses.
Certain fees have been waived by WFB for the Bond Index Master Series and
S&P 500 Index Master Series, for the period from May 26, 1994 to February 28,
1995. Waived fees continue at the discretion of WFB.
Certain officers and directors of the Master Portfolio are also officers of
Stephens. As of February 28, 1995, these officers of Stephens collectively owned
less than 1% of the Master Series' outstanding beneficial interests.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for
each Master Series for the period from May 26, 1994 (commencement of operations)
to February 28, 1995 are as follows:
<TABLE>
<CAPTION>
U.S.
ASSET BOND S&P 500 TREASURY
ALLOCATION INDEX INDEX ALLOCATION
AGGREGATE PURCHASES MASTER MASTER MASTER MASTER
AND SALES OF: SERIES SERIES SERIES SERIES
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS:
Purchases at Cost $ 87,229,070 $ 87,245,306 $ 0 $ 49,798,805
Sales Proceeds 18,412,281 21,776,010 0 42,822,827
OTHER SECURITIES:
Purchases at Cost 33,654,535 26,739,683 287,801,855 0
Sales Proceeds 33,214,448 1,004,195 16,642,238 0
- ----------------------------------------------------------------------------------------------------
</TABLE>
117
<PAGE> 519
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, excluding short-term securities, for the
Master Series for the period from May 26, 1994 (commencement of operations) to
February 28, 1995 are as follows:
<TABLE>
<CAPTION>
U.S.
S&P 500 TREASURY
ASSET BOND INDEX INDEX ALLOCATION
ALLOCATION MASTER MASTER MASTER
MASTER SERIES SERIES SERIES SERIES
<S> <C> <C> <C> <C>
Portfolio Turnover 23% 37% 5% 87%
- ------------------------------------------------------------------------------------------------
</TABLE>
5. ORGANIZATION OF THE MASTER SERIES
At a special meeting held January 31, 1994, the shareholders of the Asset
Allocation Fund, Bond Index Fund, S&P 500 Stock Fund and U.S. Treasury
Allocation Fund (the "Funds") approved the reorganization of certain funds into
a "master-feeder" structure, whereby the existing funds invest all of their
assets in a corresponding series of the Master Portfolio. As of end of day May
25, 1994, the Funds transferred their investments to the corresponding Master
Series of the Master Portfolio in exchange for shares in the corresponding
Master Series. The transfer of assets was accomplished as a tax-free exchange.
The investments transferred had costs of $221,581,217, $16,556,893, $157,312,274
and $51,537,523, and unrealized appreciation (depreciation) of $(9,431,883),
$(939,294), $1,692,082 and $(1,788,579), respectively.
118
<PAGE> 520
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Master Investment Portfolio:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Asset Allocation Master Series, Bond
Index Master Series, S&P 500 Index Master Series, and U.S. Treasury Allocation
Master Series (each a series of Master Investment Portfolio) as of February 28,
1995, and the related statements of operations, the statements of changes in net
assets, and the financial highlights for the period from May 26, 1994
(commencement of operations) through February 28, 1995. These financial
statements and financial highlights are the responsibility of Master Investment
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Asset Allocation Master Series, Bond Index Master Series, S&P 500 Index Master
Series, and U.S. Treasury Allocation Master Series as of February 28, 1995, and
the results of their operations, the changes in their net assets, and their
financial highlights for the period from May 26, 1994 (commencement of
operations) through February 28, 1995, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
April 20, 1995
119
<PAGE> 521
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Managed Series Investment Trust ("Master Trust") is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Master Trust was organized as a Delaware
business trust pursuant to an Agreement and Declaration of Trust dated October
28, 1993. The Master Trust consists of eight separate portfolios (the "Master
Series"): Growth Stock Master Series, Short-Intermediate Term Master Series,
Growth and Income Master Series, California Tax-Free Intermediate Income Master
Series, California Tax-Free Money Market Master Series, California Tax-Free
Short-Term Income Master Series, Tax-Free Intermediate Income Master Series and
the Tax-Free Money Market Master Series. At February 28, 1995 the Growth and
Income Master Series, California Tax-Free Intermediate Income Master Series,
California Tax-Free Money Market Master Series, California Tax-Free Short-Term
Income Master Series, Tax-Free Intermediate Income Master Series and the Tax-
Free Money Market Master Series had not yet commenced operations. The following
significant accounting policies are consistently followed by the Master Trust in
the preparation of its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
SECURITY VALUATION
The securities of each Master Series are valued at the last sale price on
the securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the most recent bid prices. Debt securities maturing in 60 days or less are
valued at amortized cost, which approximates market value. Any securities,
restricted securities or other assets for which recent market quotations are not
readily available are valued at fair value as determined in good faith in
accordance with policies approved by the Master Trust's Board of Trustees.
120
<PAGE> 522
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS
SECURITY TRANSACTIONS AND REVENUE RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the ex-dividend
date, and interest income is recognized on a daily accrual basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized as required by the Internal Revenue
Code (the "Code").
FEDERAL INCOME TAXES
Each Master Series of the Master Trust intends to qualify for federal income
tax purposes as a partnership. Each Master Series therefore believes that it
will not be subject to any federal income tax on its income and net capital
gains (if any). However, each investor in a Master Series will be taxable on its
allocable share of the partnership's income for purposes of determining its
federal income tax liability. The determination of such share will be made in
accordance with the Code.
It is intended that each Master Series' assets, income and allocations will
be managed in such a way that a regulated investment company investing in a
Master Series will be able to satisfy the requirements of Subchapter M of the
Code, assuming that an investment company invested all of its assets in a Master
Series.
ORGANIZATION EXPENSES
Stephens has charged the Master Series for expenses incurred in connection
with organization and registration as investment companies under the Investment
Company Act of 1940. Such expenses are being amortized on a straight-line basis
over 60 months from the date the Series commenced operations. In the event any
of the initial beneficial interests are redeemed during the 60 month
amortization period, Stephens will reimburse the Series for the unamortized
balance of such organizational costs in the same proportion as the number of
beneficial interests reduced bears to the number of initial beneficial interests
outstanding at the time of redemption.
121
<PAGE> 523
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell
("repurchase agreements") are treated as collateralized financing transactions
and are recorded at their contracted resale amounts. These repurchase
agreements, if any, are detailed in each Master Series' Portfolio of
Investments. The adviser to the Master Series pools the Master Series' cash and
invests in repurchase agreements entered into by the Master Series. The Master
Series' prospectus requires that the cash investments be fully collateralized
based on values that are marked to market daily. The collateral is held by an
agent bank under a tri-party agreement. It is the adviser's responsibility to
value collateral daily and to obtain additional collateral as necessary to
maintain the value at equal to or greater than 102% of market value. The
repurchase agreements held in the Master Series as of February 28, 1995 are
collateralized by U.S. Government Securities. The repurchase agreements were
entered into on February 28, 1995.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Master Trust has entered into an advisory contract on behalf of the
Growth Stock Master Series and the Short-Intermediate Term Master Series with
Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contract, WFB has agreed to
furnish each Master Series with investment guidance and policy direction in
connection with daily portfolio management. The advisory contracts for the
Growth Stock Master Series and the Short-Intermediate Term Master Series provide
for advisory fees, which are accrued daily and paid monthly, at annual rates of
0.60% and 0.45% of the average daily net assets of each of these Master Series
respectively.
122
<PAGE> 524
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for
each series for the period from May 26, 1994 (commencement of operations) to
February 28, 1995 were as follows:
<TABLE>
<CAPTION>
GROWTH
STOCK SHORT-INTERMEDIATE
MASTER TERM MASTER
AGGREGATE PURCHASES AND SALES OF: SERIES SERIES
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS:
Purchases at Cost $ 0 $ 10,448,234
Sales Proceeds 0 5,579,610
OTHER SECURITIES:
Purchases at Cost 93,735,494 2,566,461
Sales Proceeds 56,858,031 1,048,420
-------------------------------------------------------------------------------------------------
</TABLE>
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, excluding short-term securities, for the
Master Series for the period from May 26, 1994 (commencement of operations) to
February 28, 1995 were as follows:
<TABLE>
<CAPTION>
GROWTH STOCK SHORT-INTERMEDIATE
MASTER TERM
SERIES MASTER SERIES
<S> <C> <C>
Portfolio Turnover 93% 96%
- ---------------------------------------------------------------------------------------
</TABLE>
5. ORGANIZATION OF THE MASTER SERIES
At a special meeting held January 31, 1994, the shareholders of the Growth
Stock Fund and the Short-Intermediate Term Fund (the Funds) approved the
reorganization of certain funds into a "master-feeder" structure, whereby the
existing funds invest all of their assets in a corresponding series of the
Managed Series Investment Trust. As of the end of day May 25, 1994, the Funds
transferred their investments to the corresponding Master Series of the Managed
Series Investment Trust in exchange for shares in the corresponding Master
Series. The investments transferred had costs of $48,121,213 and $7,401,856 and
unrealized depreciation of $899,189 and $285,454 respectively.
123
<PAGE> 525
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustees
Managed Series Investment Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Managed Series Investment Trust
(comprising, respectively, Growth Stock Master Series and Short-Intermediate
Term Master Series) as of February 28, 1995, and the related statements of
operations and changes in net assets and financial highlights set forth in note
4 for the period from May 26, 1994 (commencement of operations) to February 28,
1995. These financial statements and financial highlights are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
February 28, 1995, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned master series of Managed Series Investment Trust as
of February 28, 1995, the results of their operations, the changes in their net
assets and their financial highlights for the period from May 26, 1994
(commencement of operations) to February 28, 1995 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
SAN FRANCISCO, CALIFORNIA
APRIL 14, 1995
124
<PAGE> 526
STAGECOACH INC.
FILE NO. 33-54126; 811-7332
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(1) The following audited Financial Statements for the
Asset Allocation Fund, Bond Index Fund, Growth Stock Fund, Money
Market Fund Short-Intermediate Term Fund, S&P 500 Stock Fund and
U.S. Treasury Allocation Fund are included in Part B, Item 23:
Statement of Assets and Liabilities -- February 28, 1995
Statement of Operations for the period ended February 28, 1995
Statement of Changes in Net Assets for the period ended
February 28, 1995
Financial Highlights for the period ended February 28, 1995
Notes to Financial Statements -- February 28, 1995
Portfolio of Investment -- February 28, 1995 (Money Market
Fund only)
(2) The following audited Financial Statements for the
Asset Allocation Master Series, Bond Index Master Series, Growth
Stock Master Series, Short-Intermediate Term Master Series, S&P
500 Index Master Series and U.S. Treasury Allocation Master Series
are included in Part B, Item 23:
Portfolio of Investments -- February 28, 1995
Statement of Assets and Liabilities -- February 28, 1995
Statement of Operations for the period ended February 28, 1995
Statement of Changes in Net Assets for the period ended
February 28, 1995
Notes to Financial Statements -- February 28, 1995
(b) Exhibits:
C-1
<PAGE> 527
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
1(a) - Articles of Incorporation, incorporated by Reference
to Exhibit in Item 24(b) of Initial Registration
Statement, filed November 2, 1992.
(b) - Articles Supplementary dated October 8, 1993,
incorporated by Reference to Post-Effective Amendment
No. 1 to the Registration Statement, filed
November 1, 1993.
(c) - Articles Supplementary dated November 15, 1993,
incorporated by Reference to Post-Effective Amendment
No. 2 to Registration Statement, filed March 11,
1994.
(d) - Amended and Restated Articles of Incorporation dated
June 27, 1995, filed herewith.
2 - By-Laws, incorporated by Reference to Exhibit in Item
24(b) of Initial Registration Statement, filed
November 2, 1992.
(a) - By-Laws, filed herewith.
3 - Not applicable
4 - Not applicable
5(a)(i)(A) - Investment Advisory Agreement with Wells Fargo Bank,
N.A. on behalf of the Money Market Fund dated
February 1, 1994 filed herewith.
(i)(B) - Form of Sub-Advisory Contract with Wells Fargo Nikko
Investment Advisors on behalf of the Asset Allocation
Fund, incorporated by Reference to Exhibit in Item
24(b) of Initial Registration Statement, filed
November 2, 1992.
(ii)(A) - Form of Advisory Contract with Wells Fargo Bank, N.A.
on behalf of the Bond Index Fund, incorporated by
Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(ii)(B) - Form of Sub-Advisory Contract with Wells Fargo Nikko
Investment Advisors on behalf of the Bond Index Fund,
incorporated by Reference to Exhibit in Item 24(b) of
Initial Registration Statement, filed November 2,
1992.
</TABLE>
C-2
<PAGE> 528
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
(iii) - Form of Advisory Contract with Wells Fargo Bank, N.A.
on behalf of the Growth Stock Fund, incorporated by
Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(iv) - Form of Advisory Contract with Wells Fargo Bank, N.A.
on behalf of the Short-Intermediate Term Fund,
incorporated by Reference to Pre-Effective Amendment
No. 4 to the Registration Statement, filed April 9,
1993.
(v)(A) - Investment Advisory Agreement with Wells Fargo Bank,
N.A. on behalf of the Money Market Mutual Fund,
formerly the Money Market Fund, dated February 1,
1994, filed herewith.
(vi)(A) - Form of Advisory Contract with Wells Fargo Bank, N.A.
on behalf of the S&P 500 Stock Fund, incorporated by
Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(vi)(B) - Form of Sub-Advisory Contract with Wells Fargo Nikko
Investment Advisors on behalf of the S&P 500 Stock
Fund, incorporated by Reference to Exhibit in Item
24(b) of Initial Registration Statement, filed
November 2, 1992.
(vii)(A) - Form of Advisory Contract with Wells Fargo Bank, N.A.
on behalf of the U.S. Treasury Allocation Fund,
incorporated by Reference to Pre-Effective Amendment
No. 4 to the Registration Statement, filed April 9,
1993.
(vii)(B) - Form of Sub-Advisory Contract with Wells Fargo Nikko
Investment Advisors on behalf of the U.S. Treasury
Allocation Fund, incorporated by Reference to Exhibit
in Item 24(b) of Initial Registration Statement, filed
November 2, 1992.
5(a) - Form of Administration Agreement with Stephens Inc. on
behalf of each Fund, incorporated by Reference to
Exhibit in Item 24(b) of Pre-Effective Amendment No. 2
to Registration Statement, filed January 15, 1993.
(b) - Form of Amended Administration Agreement with Stephens
on behalf of the Money Market Fund, Asset Allocation
Fund, S&P 500 Stock Fund, Growth Stock Fund, U.S.
Treasury Allocation Fund, Bond Index Fund, Short-
Intermediate Term Fund and Growth and Income Fund,
incorporated by Reference to Post-Effective Amendment
No. 1 to the Registration Statement, filed November 1,
1993.
</TABLE>
C-3
<PAGE> 529
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
(c) - Form of Administration Agreement with Stephens Inc. on
behalf of the National Tax-Free Intermediate Income
Fund, National Tax-Free Money Market Fund, California
Tax-Free Intermediate Income Fund, California Tax-Free
Short-Term Income Fund and California Tax-Free Money
Market Fund, incorporated by Reference to
Post-Effective Amendment No. 1 to the Registration
Statement, filed November 1, 1993.
6(a) - Form of Distribution Agreement with Stephens Inc. on
behalf of each Fund, incorporated by Reference to
Exhibit in Item 24(b) of Pre-Effective Amendment No. 2
to Registration Statement, filed January 15, 1993.
(b) - Form of amended Distribution Agreement with Stephens
Inc. on behalf of each Fund, incorporated by Reference
to Post-Effective Amendment No. 1 to the Registration
Statement, filed November 1, 1993.
(c) - Form of Selling Group Agreement on behalf of each
Fund, incorporated by Reference to Exhibit in Item
24(b) of Initial Registration Statement, filed
November 2, 1992.
7 - Not applicable, incorporated by Reference to Exhibit
in Item 24(b) of Initial Registration Statement, filed
November 2, 1992.
8(a) - Form of Custodian Contract with Wells Fargo
Institutional Trust Company, N.A. on behalf of the
Asset Allocation Fund, incorporated by Reference to
Pre-Effective Amendment No. 4 to the Registration
Statement, filed April 9, 1993.
(b) - Form of Custodian Contract with Wells Fargo
Institutional Trust Company, N.A. on behalf of the
Bond Index Fund, incorporated by Reference to
Pre-Effective Amendment No. 4 to the Registration
Statement, filed April 9, 1993.
(c) - Form of Custodian Contract with Wells Fargo Bank, N.A.
on behalf of the Growth Stock Fund, incorporated by
Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(d) - Form of Custodian Contract with Wells Fargo Bank, N.A.
on behalf of the Short-Intermediate Term Fund,
incorporated by Reference to Pre-Effective Amendment
No. 4 to the Registration Statement, filed April 9,
1993.
</TABLE>
C-4
<PAGE> 530
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
(e) - Form of Custodian Contract with Wells Fargo Bank, N.A.
on behalf of the Money Market Fund, incorporated by
Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(f) - Form of Custodian Contract with Wells Fargo
Institutional Trust Company, N.A. on behalf of the S&P
500 Stock Fund, incorporated by Reference to
Pre-Effective Amendment No. 4 to the Registration
Statement, filed April 9, 1993.
(g) - Form of Custodian Contract with Wells Fargo
Institutional Trust Company, N.A. on behalf of the
U.S. Treasury Allocation Fund, incorporated by
Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(h) - Form of Custodian Contract with Wells Fargo Bank, N.A.
on behalf of the Growth and Income Fund, incorporated
by Reference to Pre-Effective Amendment No. 4 to the
Registration Statement, filed April 9, 1993.
(i) - Form of Custodian Contract with Wells Fargo Bank, N.A.
on behalf of the National Tax-Free Intermediate Income
Fund, National Tax-Free Money Market Fund, California
Tax-Free Intermediate Income Fund, California Tax-Free
Short-Term Income Fund and California Tax-Free Money
Market Fund, incorporated by Reference to
Post-Effective Amendment No. 1 to the Registration
Statement, filed November 1, 1993.
9(a) - Form of Agency Agreement with Wells Fargo Bank, N.A.
on behalf of each Fund, incorporated by Reference to
Pre-Effective Amendment No. 4 to the Registration
Statement, filed April 9, 1993.
(b) - Form of Amended Agency Agreement on behalf of each
Fund, incorporated by Reference to Post-Effective
Amendment No. 1 to the Registration Statement, filed
November 1, 1993.
9(c) - Form of Servicing Plan for the Growth and Income Fund,
Growth Stock Fund, Short-Intermediate Term Fund, Asset
Allocation Fund, Bond Index Fund and S&P 500 Stock
Fund, incorporated by Reference to Post-Effective
Amendment No. 2 to Registration Statement, filed
March 11, 1994.
9(d) - Form of Shareholder Servicing Agreement for the Growth
and Income Fund, Growth Stock Fund, Short-Intermediate
Term Fund, Asset Allocation Fund, Bond Index Fund and
S&P 500 Stock Fund, incorporated by Reference to Post-
Effective Amendment No. 2 to Registration Statement,
filed March 11, 1994.
</TABLE>
C-5
<PAGE> 531
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
9(e) - Form of Cross Indemnification Agreement, incorporated
by Reference to Post-Effective Amendment No. 6 to the
Registration Statement, filed July 21, 1994.
10 - Opinion and Consent of Counsel, filed herewith.
11(a) - Consent of Auditors -- KPMG Peat Marwick LLP, filed
herewith.
(b) - Consent of Auditors -- Coopers & Lybrand L.L.P., filed
herewith.
12 - Not applicable
13 - Form of Investment Letter, incorporated by Reference
to Pre-Effective Amendment No. 4 to the Registration
Statement, filed April 9, 1993.
14 - Not applicable
15(a) - Form of Distribution and Services Plan on behalf of
National Tax-Free Intermediate Income Fund,
incorporated by Reference to Post-Effective Amendment
No. 1 to the Registration Statement, filed November 1,
1993.
(b) - Form of Distribution and Services Plan on behalf of
National Tax-Free Money Market Fund, incorporated by
Reference to Post-Effective Amendment No. 1 to the
Registration Statement, filed November 1, 1993.
(c) - Form of Distribution and Services Plan on behalf of
California Tax-Free Intermediate Income Fund,
incorporated by Reference to Post-Effective Amendment
No. 1 to the Registration Statement, filed November 1,
1993.
(d) - Form of Distribution and Services Plan on behalf of
California Tax-Free Short-Term Income Fund,
incorporated by Reference to Post-Effective Amendment
No. 1 to the Registration Statement, filed November 1,
1993.
(e) - Form of Distribution and Services Plan on behalf of
California Tax-Free Money Market Fund, incorporated by
Reference to Post-Effective Amendment No. 1 to the
Registration Statement, filed November 1, 1993.
16 - Schedule for Computation of Performance Quotations, to
Be Filed By Amendment.
</TABLE>
C-6
<PAGE> 532
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
27(a) - Financial Data Schedule for the Asset Allocation Fund,
filed herewith.
(b) - Financial Data Schedule for the Bond Index Fund, filed
herewith.
(c) - Financial Data Schedule for the Growth Stock Fund,
filed herewith.
(d) - Financial Data Schedule for the Money Market Fund,
filed herewith.
(e) - Financial Data Schedule for the Short-Intermediate
Term Fund, filed herewith.
(f) - Financial Data Schedule for the S&P 500 Stock Fund,
filed herewith.
(g) - Financial Data Schedule for the U.S. Treasury
Allocation Fund, filed herewith.
</TABLE>
Item 25. Persons Controlled by or under
Common Control with Registrant.
As of June 19, 1995, the Asset Allocation Fund, S&P 500 Stock
Fund and U.S. Treasury Allocation Fund owned approximately 100%, 93%
and 100% of the outstanding voting securities of the Asset Allocation
Master Series, S&P 500 Index Master Series and U.S. Treasury
Allocation Master Series of Master Investment Portfolio, respectively.
As of June 19, 1995, the Growth Stock Fund and Short-Intermediate Fund
each owned approximately 100% of the outstanding voting securities of
the Growth Stock Master Series and U.S. Treasury Allocation Master
Series. As such, each Fund could be considered a controlling person
of the corresponding Master Series for purposes of the 1940 Act.
Item 26. Number of Holders of Securities.
As of June 19, 1995 the number of record holders of each
class of securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Asset Allocation Fund................... 24,132
Bond Index Fund......................... 2,383
Growth Stock Fund....................... 11,501
Short-Intermediate Term Fund............ 2,107
</TABLE>
C-7
<PAGE> 533
<TABLE>
<S> <C>
Money Market Fund....................... 17,599
S&P 500 Stock Fund...................... 27,911
U.S. Treasury Allocation Fund........... 9,243
Growth and Income Fund.................. 0
National Tax-Free Money Market Mutual
Fund.................................... 0
National Tax-Free Intermediate
Income Fund............................. 0
California Tax-Free Money Market Fund... 0
California Tax-Free Intermediate
Income Fund............................. 0
California Tax-Free Short-Term
Income Fund............................. 0
Overland National Tax-Free Institutional
Money Market Fund....................... 0
</TABLE>
Item 27. Indemnification.
The following paragraphs of Article VIII of the Registrant's
Articles of Incorporation provide:
(h) The Corporation shall indemnify (1) its
Directors and officers, whether serving the
Corporation or at its request any other entity, to
the full extent required or permitted by the
General Laws of the State of Maryland now or
hereafter in force, including the advance of
expenses under the procedures and to the full
extent permitted by law, and (2) its other
employees and agents to such extent as shall be
authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The
foregoing rights of indemnification shall not be
exclusive of any other rights to which those
seeking indemnification may be entitled. The Board
of Directors may take such action as is necessary
to carry out these indemnification provisions and
is expressly empowered to adopt, approve and amend
from time to time such By-Laws, resolutions or
contracts implementing such provisions or such
further indemnification arrangements as may be
permitted by law. No amendment of these Articles
of Incorporation of the Corporation shall limit or
C-8
<PAGE> 534
eliminate the right to indemnification provided
hereunder with respect to acts or omissions
occurring prior to such amendment or repeal.
Nothing contained herein shall be construed to
authorize the Corporation to indemnify any Director
or officer of the Corporation against any liability
to the Corporation or to any holders of securities
of the Corporation to which he is subject by reason
of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties
involved in the conduct of his office. Any
indemnification by the Corporation shall be
consistent with the requirements of law, including
the 1940 Act.
(i) To the fullest extent permitted by
Maryland statutory and decisional law and the 1940
Act, as amended or interpreted, no Director or
officer of the Corporation shall be personally
liable to the Corporation or its stockholders for
money damages; provided, however, that nothing
herein shall be construed to protect any Director
or officer of the Corporation against any liability
to which such Director or officer would otherwise
be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
No amendment, modification or repeal of this
Article VIII shall adversely affect any right or
protection of a Director or officer that exists at
the time of such amendment, modification or repeal.
Item 28. Business and Other Connections
of Investment Adviser.
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, serves as investment adviser to
all of the Registrant's investment portfolios, and to certain other
registered open-end management investment companies. Wells Fargo
Bank's business is that of a national banking association with respect
to which it conducts a variety of commercial banking and trust
activities.
To the knowledge of Registrant, none of the directors or
executive officers of Wells Fargo Bank, except those set forth below,
is or has been at any time during the past two fiscal years engaged in
any other business, profession, vocation or employment of a
substantial nature, except that certain executive officers also hold
various positions with and engage in business for Wells Fargo &
Company. Set forth below are the names and principal businesses of
the directors and executive officers of Wells Fargo Bank who are or
during the past two fiscal years have been engaged in any other
business, profession, vocation or employment of a substantial nature
C-9
<PAGE> 535
for their own account or in the capacity of director, officer,
employee, partner or trustee. All the directors of Wells Fargo Bank
also serve as directors of Wells Fargo & Company.
<TABLE>
<CAPTION>
Principal Business(es) During at
Name Position(s) Least the Last Two Fiscal Years
- ---- ----------- --------------------------------
<S> <C> <C>
H. Jesse Arnelle Director Senior Partner of Arnelle & Hastie,
Director of FPL Group, Inc.
William R. Breuner Director General Partner in Breuner
Associates, Breuner Properties and
Breuner-Pevarnick Real Estate
Developers. Vice Chairman of the
California State Railroad Museum
Foundation. Retired Chairman of the
Board of Directors of John Breuner
Co.
Williams S. Davila Director President and Director of The Vons
Companies, Inc. Officer of Western
Assoc. of Food Chains.
Rayburn S. Dezember Director Former Chairman of Central Pacific
Corp. Director of CalMat Co., Tejon
Ranch Co., Turner Casting Inc., The
Bakersfield Californian and Kern
County Economic Development Corp.
Chairman of the Board of Trustees of
Whittier College.
Paul Hazen Chairman of the Chairman of the Board of Directors of
Board of Wells Fargo & Company. Director of
Directors Pacific Telesis Group, Phelps Dodge
Corp. and Safeway Inc.
Robert K. Jaedicke Director Accounting Professor and Dean
Emeritus of Graduate School of
Business, Stanford University.
Director of Homestake Mining Co.,
California Water Service Company,
Boise Cascade Corp., Enron Corp. and
GenCorp, Inc.
Paul A. Miller Director Chairman of Executive Committee and
Director of Pacific Enterprises.
Trustee of Mutual Life Insurance
Company of New York. Director of
Newhall Management Corporation.
Trustee of University of Southern
California.
Ellen M. Newman Director President of Ellen Newman Associates.
Chair of Board of Trustees of
University of California at San
</TABLE>
C-10
<PAGE> 536
<TABLE>
<CAPTION>
Principal Business(es) During at
Name Position(s) Least the Last Two Fiscal Years
- ---- ----------- --------------------------------
<S> <C> <C>
Francisco Foundation. Director of
American Conservatory Theatre and
California Chamber of Commerce.
Philip J. Quigley Director Chairman and Chief Executive Officer
of Pacific Telesis Group.
Carl E. Reichardt Director Director of Ford Motor Company,
Hospital Corporation of America,
HCA-Hospital Corp. of America,
Pacific Gas and Electric Company and
Newhall Management Corporation.
Donald B. Rice Director President and Chief Operating
Officer, Teledyne, Inc.
Susan G. Swenson Director President and Chief Executive Officer
of Cellular One.
Chang-Lin Tien Director Chancellor of University of
California at Berkeley.
John A. Young Director Retired President, Director and Chief
Executive Officer of Hewlett-Packard
Company. Director of Chevron
Corporation.
William F. Zuendt President President of Wells Fargo & Company.
Director of 3Com Corporation and
MasterCard International.
</TABLE>
Wells Fargo Nikko Investment Advisors ("WFNIA") serves
as the sub-adviser to the Asset Allocation Fund, the U.S.
Treasury Allocation Fund, the Bond Index Fund and the S&P 500
Stock Fund, and as adviser or sub-adviser to various other
open-end management investment companies. For additional
information, see "Management of the Fund" in the Prospectuses
and "Management" in the Statement of Additional Information.
For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
management committees of WFNIA, reference is made to WFNIA's
Form ADV and Schedules A and D filed under the Investment
Advisers Act of 1940, File No. 801-36479, incorporated herein
by reference.
C-11
<PAGE> 537
Item 29. Principal Underwriters.
(a) Stephens Inc., distributor for the Registrant,
does not presently act as investment adviser for any other
registered investment companies, but does act as principal
underwriter for the Overland Express Funds, Inc., Stagecoach
Funds, Inc., Stagecoach Trust, Life & Annuity Trust, Nations
Fund, Inc. and Nations Fund Trust and is the exclusive
placement agent for Master Investment Trust, Master Investment
Portfolio and Managed Series Investment Trust all of which are
registered open-end management investment companies, and has
acted as principal underwriter for the Liberty Term Trust, Inc.
and the Nations Government Income Term Trust 2003, Inc.,
closed-end management investment companies.
(b) Information with respect to each director and
officer of the principal underwriter is incorporated by
reference to Form ADV and Schedules A and D filed by Stephens
Inc. with the Securities and Exchange Commission pursuant to
The Investment Advisers Act of 1940 (file No. 501-15510).
(c) Not applicable.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of
1940 and the Rules thereunder are maintained at one or more of
the following offices: Stagecoach Inc. maintains those
accounts, books and other documents required by
Rule 31a-1(b)(4) and (d), and Rule 31a-2(a)(3) and (c) at 111
Center Street, Little Rock, Arkansas 72201; Wells Fargo Bank
maintains all other accounts, books or other documents required
by Rules 31a-1, 31a-2 and 31a-3, and copies of most of such
documents are also maintained by Stagecoach Inc. at 525 Market
Street, San Francisco, California 94163.
Item 31. Management Services.
Other than as set forth under the captions "The Fund"
and "Management of the Fund" in the Prospectuses constituting
Part A of this Registration Statement and "Management" in the
Statements of Additional Information constituting Part B of
this Registration Statement, the Registrant is not a party to
any management-related service contract.
Item 32. Undertakings.
(a) Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of
the Registrant pursuant to the provisions set
forth above in response to Item 27, or otherwise,
C-12
<PAGE> 538
the registrant has been advised that in the
opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in such Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the registrant of expenses
incurred or paid by a director, officer or
controlling person of the registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question whether such indemnification by it is
against public policy as expressed in the Act and
will be governed by the final adjudication of
such issue.
(b) Registrant undertakes to hold a special meeting
of its shareholders for the purpose of voting on
the question of removal of a director or
directors if requested in writing by the holders
of at least 10% of the Company's outstanding
voting securities, and to assist in communicating
with other shareholders as required by
Section 16(c) of the Investment Company Act of
1940.
(c) Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of its
most current annual report to shareholders, upon
request and without charge.
C-13
<PAGE> 539
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for effectiveness of this Post-
Effective Amendment to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement on Form N-1A to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Little Rock, State of Arkansas on the 26th day of June, 1995.
STAGECOACH INC.
By /s/Richard H. Blank, Jr.
(Richard H. Blank, Jr.)
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form N-1A has been signed below by the
following persons in the capacities and on the date indicated:
Signature Title
--------- -----
/s/R. Greg Feltus Director, Chairman and President
(R. Greg Feltus) (Principal Executive Officer)
/s/Richard H. Blank, Jr. Secretary and Treasurer
(Richard H. Blank, Jr.) (Principal Financial Officer)
/s/Jack S. Euphrat Director
(Jack S. Euphrat)
/s/Thomas S. Goho Director
(Thomas S. Goho)
/s/Zoe Ann Hines Director
(Zoe Ann Hines)
/s/W. Rodney Hughes Director
(W. Rodney Hughes)
/s/Robert M. Joses Director
(Robert M. Joses)
/s/J. Tucker Morse Director
(J. Tucker Morse)
June 26, 1995
*By /s/Richard H. Blank, Jr.
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 540
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant certifies that it meets all of the requirements
for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to
the Registration Statement on Form N-1A to be signed on its
behalf by the undersigned, thereto duly authorized in the
City of Little Rock, State of Arkansas on the 26th day of
June, 1995.
MASTER INVESTMENT PORTFOLIO
By /s/Richard H. Blank, Jr.
(Richard H. Blank, Jr.)
Secretary and Treasurer
(Principal Financial
Officer)
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and
on the date indicated:
Signature Title
--------- -----
/s/R. Greg Feltus Chairman, President (Principal
(R. Greg Feltus) Executive Officer) and Trustee
/s/Richard H. Blank, Jr. Secretary and Treasurer
(Richard H. Blank, Jr.) (Principal Financial Officer)
/s/Jack S. Euphrat Trustee
(Jack S. Euphrat)
/s/Thomas S. Goho Trustee
(Thomas S. Goho)
/s/Zoe Ann Hines Trustee
(Zoe Ann Hines)
/s/W. Rodney Hughes Trustee
(W. Rodney Hughes)
/s/Robert M. Joses Trustee
(Robert M. Joses)
/s/J. Tucker Morse Trustee
(J. Tucker Morse)
June 26, 1995
*By /s/Richard H. Blank, Jr.
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 541
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to the Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized in the
City of Little Rock, State of Arkansas on the 26th day of June, 1995.
MANAGED SERIES INVESTMENT TRUST
By:/s/Richard H. Blank
-----------------------------
(Richard H. Blank, Jr.)
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration has been signed below by the
following persons in the capacities and on the date indicated:
Signature Title
--------- -----
/s/R. Greg Feltus Chairman, President
- ----------------------------- (Principal Executive
(R. Greg Feltus) Officer) and Trustee
/s/Richard H. Blank, Jr. Secretary and Treasurer
- ----------------------------- (Principal Financial
(Richard H. Blank, Jr.) Officer)
/s/Jack S. Euphrat Trustee
- -----------------------------
(Jack S. Euphrat)
/s/Thomas S. Goho Trustee
- -----------------------------
(Thomas S. Goho)
/s/Zoe Ann Hines Trustee
- -----------------------------
(Zoe Ann Hines)
/s/W. Rodney Hughes Trustee
- -----------------------------
(W. Rodney Hughes)
/s/Robert M. Joses Trustee
- -----------------------------
(Robert M. Joses)
/s/J. Tucker Morse Trustee
- -----------------------------
(J. Tucker Morse)
June 26, 1995
*By: /s/Richard H. Blank, Jr.
-------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 542
STAGECOACH INC.
FILE NO. 33-54126; 811-7332
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
99.B1(d) - Amended and Restated
Articles of Incorporation
dated June 27, 1995
99.B2(a) - By-Laws
99.B5(a)(v)(A) - Investment Advisory
Agreement on behalf of the
Money Market Fund
99.B10 - Opinion and Consent of
Counsel
99.B11(a) - Consent of Auditors --
KPMG Peat Marwick LLP
99.B11(b) - Consent of Auditors --
Coopers & Lybrand L.L.P.
27.1 Financial Data Schedule
for the Asset Allocation
Fund
27.2 - Financial Data Schedule
for the Bond Index Fund
27.3 - Financial Data Schedule
for the Growth Stock Fund
27.4 - Financial Data Schedule
for the Money Market Fund
27.5 - Financial Data Schedule
for the Short-Intermediate
Term Fund
</TABLE>
<PAGE> 543
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
27.6 - Financial Data Schedule
for the S&P 500 Stock Fund
27.7 - Financial Data Schedule
for the U.S. Treasury
Allocation Fund
</TABLE>
<PAGE> 1
EXHIBIT 99.B1(d)
RESTATED ARTICLES OF INCORPORATION
of
STAGECOACH INC.
WHEREAS, the Board of Directors of STAGECOACH INC.
(the "Corporation") desires to restate the Corporation's
Articles of Incorporation as currently amended and
supplemented (sometimes referred to herein as the
"Charter"); and
WHEREAS, in accordance with the provisions of
Section 2-608 of Maryland General Corporation Law, a
majority of the Corporation's entire Board of Directors
approved the restatement of the Charter at a meeting held on
June 23, 1995; and
WHEREAS, the restated Charter sets forth all of the
provisions of the Corporation's Charter currently in effect;
and
WHEREAS, the Corporation's Board of Directors has
duly authorized the filing of the restated Charter.
NOW THEREFORE, the undersigned hereby certifies
that the following comprises the Corporation's Restated
Articles of Incorporation:
I.
INCORPORATOR
Thomas A. Fox, as incorporator, whose mailing
address was 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C., 20006, being at least 18 years of age,
formed the corporation on October 14, 1992 under and by
virtue of the General Laws of the State of Maryland; and
such Articles of Incorporation were filed with the Maryland
Department of Assessments and Taxation on October 15, 1992.
II.
NAME
The name of the Corporation is Stagecoach Inc.
1
<PAGE> 2
III.
PURPOSES AND POWERS
The purpose or purposes for which the Corporation
is formed and the business or objects to be transacted,
carried on and promoted by it are:
(a) To conduct and carry on the business of an
open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act").
(b) To hold, invest and reinvest its assets in
securities and other investments including holding part or
all of its assets in cash, including foreign currencies.
(c) To issue and sell shares of its capital stock
in such accounts and on such terms and conditions and for
such purposes and for such amount or kind of consideration
(including, without limitation, securities) now or hereafter
permitted by law.
(d) To redeem, purchase or otherwise acquire,
hold, dispose of, resell, transfer, reissue or cancel (all
without the vote or consent of the shareholders of the
Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by these
Restated Articles of Incorporation (the "Articles").
(e) To do any and all such acts or things and to
exercise any and all such further powers or rights as may be
necessary, incidental, relative, conducive, appropriate or
desirable for the accomplishment, carrying out or attainment
of the purposes stated in this Article.
The foregoing enumerated purposes and objects shall
be in no way limited or restricted by reference to, or
inference from, the terms of any other clause of this or any
other Article of these Articles, and shall each be regarded
as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the
Corporation and shall be in addition to, and not in
limitation of, the general powers of corporations under the
laws of the State of Maryland.
2
<PAGE> 3
IV.
PRINCIPAL OFFICE AND PLACE OF BUSINESS
The present address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation
Trust Incorporated, 32 South Street, Baltimore, Maryland,
21202.
V.
RESIDENT AGENT
The name and address of the Corporation's resident
agent is The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland, 21202. Said resident agent is
a Maryland corporation.
VI.
CAPITAL STOCK
(a) The total number of shares of capital stock
which the Corporation shall have the authority to issue is
eleven billion nine hundred million (11,900,000,000) shares
of the par value of $.001 per share allocated to the series
as follows. (Such series and any further series of shares
from time to time created by the Board of Directors being
referred to individually herein as a "series").
Series Number of Shares
------ ----------------
Asset Allocation Fund Series 100,000,000
Bond Index Fund Series 100,000,000
California Tax-Free Money Market
Class 2,500,000,000
California Tax-Free Intermediate
Income Class 100,000,000
California Tax-Free Short-Term
Income Class 100,000,000
Growth and Income Class 100,000,000
Growth Stock Fund Series 100,000,000
3
<PAGE> 4
Money Market Fund Series 3,000,000,000
National Tax-Free Money Market
Mutual Series 2,500,000,000
National Tax-Free Intermediate
Income Class 100,000,000
S&P 500 Stock Fund Series 100,000,000
Short-Intermediate Term Series 300,000,000
U.S. Treasury Allocation Fund
Series 300,000,000
Overland National Tax-Free
Institutional Money Market Class 2,000,000,000
Unclassified 500,000,000
The Board of Directors of the Corporation is hereby
empowered to increase or decrease, from time to time, the
total number of shares of capital stock or the number of
shares of capital stock of any class or series that the
Corporation shall have authority to issue without any action
by the shareholders.
(b) Any fractional share shall carry
proportionately all the rights of a whole share, excepting
any right to receive a certificate evidencing such
fractional share, but including the right to vote and the
right to receive dividends.
(c) All persons who shall acquire stock in the
Corporation shall acquire the same subject to the provisions
of these Articles and the By-Laws of the Corporation.
(d) As used in these Articles, a "series" of
shares represents interests in the same assets, liabilities,
income, earnings and profits of the Corporation; each
"class" of shares of a series represents interests in the
same underlying assets, liabilities, income, earnings and
profits, but may differ from other classes of such series
with respect to fees and expenses or such other matters as
shall be established by the Board of Directors. The Board
of Directors shall have authority to classify and reclassify
any authorized but unissued shares of capital stock from
time to time by setting or changing in any one or more
respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
4
<PAGE> 5
qualifications or terms or conditions of redemption of the
capital stock. Subject to the provisions of Section (e) of
this Article VI and applicable law, the power of the Board
of Directors to classify or reclassify any of the shares of
capital stock shall include, without limitation, authority
to classify or reclassify any such stock into one or more
series of capital stock and to divide and classify shares of
any series into one or more classes of such series, by
determining, fixing or altering one or more of the
following:
1. The distinctive designation of such class
or series and the number of shares to constitute
such class or series; provided that, unless
otherwise prohibited by the terms of such class or
series, the number of shares of any class or series
may be decreased by the Board of Directors in
connection with any classification or
reclassification of unissued shares and the number
of shares of such class or series may be increased
by the Board of Directors in connection with any
such classification or reclassification, and any
shares of any class or series which have been
redeemed, purchased or otherwise acquired by the
Corporation shall remain part of the authorized
capital stock and be subject to classification and
reclassification as provided herein;
2. Whether or not and, if so, the rates,
amounts and times at which, and the conditions
under which, dividends shall be payable on shares
of such class or series;
3. Whether or not shares of such class or
series shall have voting rights in addition to any
general voting rights provided by law and these
Articles and, if so, the terms of such additional
voting rights;
4. The rights of the holders of shares of
such class or series upon the liquidation,
dissolution or winding up of the affairs of, or
upon a distribution of the assets of, the
Corporation.
(e) Shares of capital stock of the Corporation
shall have the following preferences, conversion and other
rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of
redemption:
5
<PAGE> 6
1. Assets Belonging to a Series. All
consideration received by the Corporation for the
issue or sale of stock of any series of capital
stock, together with all assets in which such
consideration is invested and reinvested, income,
earnings, profits and proceeds thereof, including
any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably
belong to the series of shares of capital stock
with respect to which such assets, payments or
funds were received by the Corporation for all
purposes, subject only to the rights of creditors,
and shall be so handled upon the books of account
of the Corporation. Such consideration, assets,
income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets
derived from any reinvestment of such proceeds in
whatever form, are herein referred to as "assets
belonging to" such series. Any assets, income,
earnings, profits, and proceeds thereof, funds or
payments which are not readily attributable to any
particular series shall be allocable among any one
or more of the series in such manner and on such
basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable.
2. Liabilities Belonging to a Series. The
assets belonging to any series of capital stock
shall be charged with the liabilities in respect of
such series and shall also be charged with such
series' share of the general liabilities of the
Corporation determined as hereinafter provided.
The determination of the Board of Directors shall
be conclusive as to the amount of such liabilities,
including the amount of accrued expenses and
reserves; as to any allocation of the same to a
given series; and as to whether the same are
allocable to one or more series. The liabilities
so allocated to a series are herein referred to as
"liabilities belonging to" such series. Any
liabilities which are not readily attributable to
any particular series shall be allocable among any
one or more of the series in such manner and on
such basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable.
3. Dividends and Distributions. Shares of
each series of capital stock shall be entitled to
6
<PAGE> 7
such dividends and distributions, in stock or in
cash or both, as may be declared from time to time
by the Board of Directors, acting in its sole
discretion, with respect to such series, provided,
however, that dividends and distributions on shares
of a series of capital stock shall be paid only out
of the lawfully available "assets belonging to"
such series as such phrase is defined in
Section (e)(1) of this Article VI.
4. Liquidating Dividends and Distributions.
In the event of the liquidation or dissolution of
the Corporation, shareholders of each series of
capital stock shall be entitled to receive, as a
series, out of the assets of the Corporation
available for distribution to shareholders, but
other than general assets not belonging to any
particular series of capital stock, the assets
belonging to such series; and the assets so
distributable to the shareholders of any series of
capital stock shall be distributed among such
shareholders in proportion to the number of shares
of such series held by them and recorded on the
books of the Corporation. In the event that there
are any general assets not belonging to any
particular series of capital stock and available
for distribution, such distribution shall be made
to the holders of stock of all series of capital
stock in proportion to the asset value of the
respective series of capital stock determined as
hereinafter provided.
5. Voting. Each shareholder of each series
of capital stock shall be entitled to one vote for
each share of capital stock, irrespective of the
class, then standing in his name on the books of
the Corporation, and on any matter submitted to a
vote of shareholders, all shares of capital stock
then issued and outstanding and entitled to vote
shall be voted in the aggregate and not by series
except that: (i) when expressly required by law,
shares of capital stock shall be voted by
individual class or series and (ii) only shares of
capital stock of the respective series or class or
classes affected by a matter shall be entitled to
vote on such matter. At all meetings of the
shareholders, the holders of one-third of the
shares of capital stock of the Corporation entitled
to vote at the meeting, present in person or by
proxy, shall constitute a quorum for the
transaction of any business, except as otherwise
7
<PAGE> 8
provided by statute or by these Articles. In the
absence of a quorum no business may be transacted,
except that the holders of a majority of the shares
of capital stock present in person or by proxy and
entitled to vote may adjourn the meeting from time
to time, without notice other than announcement at
the meeting except as otherwise required by these
Articles or the By-Laws, until the holders of the
requisite amount of shares of capital stock shall
be present. At any such adjourned meeting at which
a quorum may be present any business may be
transacted which might have been transacted at the
meeting as originally called. The absence from any
meeting, in person or by proxy, of holders of the
number of shares of capital stock of the
Corporation in excess of the quorum which may be
required by the laws of the State of Maryland, the
1940 Act, or other applicable statute, these
Articles or the By-Laws, for action upon any given
matter shall not prevent action at such meeting
upon any other matter or matters which may properly
come before the meeting, if there shall be present
at the meeting, in person or by proxy, holders of
the number of shares of capital stock of the
Corporation required for action in respect of such
other matter or matters.
6. Redemption. To the extent the
Corporation has funds or other property legally
available therefor, each holder of shares of
capital stock of the Corporation shall be entitled
to require the Corporation to redeem all or any
part of the shares standing in the name of such
holder on the books of the Corporation, at the
redemption price of such shares as in effect from
time to time as may be determined by the Board of
Directors of the Corporation in accordance with the
provisions hereof, subject to the right of the
Board of Directors of the Corporation to suspend
the right of redemption of shares of capital stock
of the Corporation or postpone the date of payment
of such redemption price in accordance with
provisions of applicable law. Without limiting the
generality of the foregoing, the Corporation shall,
to the extent permitted by applicable law, have the
right at any time to redeem the shares owned by any
holder of capital stock of the Corporation if the
value of such shares in the account of such holder
is less than the minimum initial investment amount
applicable to that account as set forth in the
Corporation's current registration statement under
8
<PAGE> 9
the 1940 Act, and subject to such further terms and
conditions as the Board of Directors of the
Corporation may from time to time adopt. The
redemption price of shares of capital stock of the
Corporation shall, except as otherwise provided in
this Section (e)(6), be the net asset value thereof
as determined by, or pursuant to methods approved
by, the Board of Directors of the Corporation from
time to time in accordance with the provisions of
applicable law, less such redemption fee or other
charge, if any, as may be specified in the
Corporation's current registration statement under
the 1940 Act for that class or series. Payment of
the redemption price shall be made in cash by the
Corporation at such time and in such manner as may
be determined from time to time by the Board of
Directors of the Corporation unless, in the opinion
of the Board of Directors, which shall be
conclusive, conditions exist which make payment
wholly in cash unwise or undesirable; in such event
the Corporation may make payment wholly or partly
by securities or other property included in the
assets belonging or allocable to the series of the
shares redemption of which is being sought, the
value of which shall be determined as provided
herein.
VII.
DIRECTORS
The number of Directors of the Corporation shall be
seven (7), which number may be, from time to time, increased
or decreased pursuant to the By-Laws of the Corporation, but
shall never be less than the minimum number permitted by the
General Laws of the State of Maryland now or hereafter in
force. The names of the Directors who will serve until the
first shareholders meeting or until their successors are
elected and qualified are as follows:
Jack S. Euphrat
R. Greg Feltus
Thomas S. Goho
Zoe Ann Hines
W. Rodney Hughes
Robert M. Joses
J. Tucker Morse
9
<PAGE> 10
VIII.
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
DIRECTORS AND SHAREHOLDERS
The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of
the Corporation and of the Directors and shareholders:
(a) No holder of any stock or any other securities
of the Corporation, whether now or hereafter authorized,
shall have any preemptive right to subscribe for or purchase
any stock or any other securities of the Corporation other
than such, if any, as the Board of Directors, in its sole
discretion, may determine and at such price or prices and
upon such other terms as the Board of Directors, in its sole
discretion, may fix; and any stock or other securities which
the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole
discretion shall determine, be offered to the holders of any
class, series or type of stock or other securities at the
time outstanding to the exclusion of the holders of any or
all other classes, series or types of stock or other
securities at the time outstanding.
(b) The Board of Directors of the Corporation
shall have power from time to time and in its sole
discretion to determine, in accordance with sound accounting
practice, what constitutes annual or other net income,
profits, earnings, surplus or net assets; to fix and vary
from time to time the amount to be reserved as working
capital, or determine that retained earnings or surplus
shall remain in the hands of the Corporation; to set apart
out of any funds of the Corporation such reserve or reserves
in such amount or amounts and for such proper purpose or
purposes as it shall determine and to abolish any such
reserve or any part thereof; to distribute and pay
distributions or dividends in stock, cash or other
securities or property, out of surplus or any other funds or
amounts legally available therefor, at such times and to the
shareholders of record on such dates as it may from to time
determine; and to determine whether and to what extent and
at what times and places and under what conditions and
regulations the books, accounts and documents of the
Corporation, or any of them, shall be open to the inspection
of shareholders, except as otherwise provided by statute or
by the By-Laws, and, except as so provided, no shareholder
shall have any right to inspect any book, account or
10
<PAGE> 11
document of the Corporation unless authorized so to do by
resolution of the Board of Directors.
(c) The Board of Directors of the Corporation may
establish in its absolute discretion the basis or method for
determining the value of the assets belonging to any series,
and the net asset value of each share of capital stock of
each series and class for purposes of sales, redemptions,
repurchases of shares or otherwise.
(d) Any Director or officer, individually, or any
firm of which any Director or officer may be a member, or
any corporation, trust or association of which any Director
or officer may be an officer or Director or in which any
Director or officer may be directly or indirectly interested
as the holder of any amount of its capital stock or
otherwise, may be a party to, or may be financially or
otherwise interested in, any contract or transaction of the
Corporation; and any such Director or officer of the
Corporation may be counted in determining the existence of a
quorum at the meeting of the Board of Directors of the
Corporation or a committee thereof which shall authorize any
such contract or transaction, and may vote thereat to
authorize any such contract or transaction, and such
transaction or contract shall not as a result be void or
voidable provided either
(i) the fact of the common directorship or
interest is disclosed or known to: (a) the Board of
Directors or the committee and the Board or
committee authorizes, approves, or ratifies the
contract or transaction by the affirmative vote of
a majority of disinterested Directors, even if the
disinterested Directors constitute less than a
quorum; or (b) the shareholders entitled to vote,
and the contract or transaction is authorized,
approved, or ratified by a majority of the votes
cast by the shareholders entitled to vote other
than the votes of shares owned of record or
beneficially by the interested Director or
corporation, firm, or other entity; or
(ii) the contract or transaction is fair and
reasonable to the Corporation.
In furtherance and not in limitation of the
foregoing, the Board of Directors of the Corporation is
expressly authorized to contract for management services of
any nature, with respect to the conduct of the business of
the Corporation with any entity, person or company,
incorporated or unincorporated, on such terms as the Board
11
<PAGE> 12
of Directors may deem desirable. Any such contract may
provide for the rendition of management services of any
nature with respect to the conduct of the business of the
Corporation, and for the management or direction of the
business and activities of the Corporation to such extent as
the Board of Directors may determine, whether or not the
contract involves delegation of functions usually or
customarily performed by the Board of Directors or officers
of the Corporation or of a corporation organized under the
laws of Maryland. The Board of Directors is further
expressly authorized to contract with any person or company
on such terms as the Board of Directors may deem desirable
for the distribution of shares of the Corporation and to
contract for other services, including, without limitation,
services as custodian of the Corporation's assets and as
transfer agent for the Corporation's shares, with any
entity(ies), person(s) or company(ies), incorporated or
unincorporated, on such terms as the Directors may deem
desirable. Any entity, person or company which enters into
one or more of such contracts may also perform similar or
identical services for other investment companies and other
persons and entities without restriction by reason of the
relationship with the Corporation unless the contract
expressly provides otherwise.
(e) Any contract, transaction, or act of the
Corporation or of the Board of Directors which shall be
ratified by a majority of a quorum of the shareholders
having voting powers at any annual meeting, or at any
special meeting called for such purpose, shall so far as
permitted by law be as valid and as binding as though
ratified by every shareholder of the Corporation.
(f) Unless the By-Laws otherwise provide, any
officer or employee of the Corporation (other than a
Director) may be removed at any time with or without cause
by the Board of Directors or by any committee or superior
officer upon whom such power of removal may be conferred by
the By-Laws or by authority of the Board of Directors.
(g) Notwithstanding any provision of law requiring
the authorization of any action by a greater proportion than
a majority of the total number of shares of any series or
class, or of all classes or series of capital stock, or by
the total number of such shares, such action shall be valid
and effective if authorized by the affirmative vote of the
holders of a majority of the total number of shares
outstanding and entitled to vote thereon.
(h) The Corporation shall indemnify (1) its
Directors and officers, whether serving the Corporation or
12
<PAGE> 13
at its request any other entity, to the full extent required
or permitted by the General Laws of the State of Maryland
now or hereafter in force, including the advance of expenses
under the procedures and to the full extent permitted by
law, and (2) its other employees and agents to such extent
as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The
foregoing rights of indemnification shall not be exclusive
of any other rights to which those seeking indemnification
may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and
amend from time to time such By-Laws, resolutions or
contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No
amendment of these Articles of the Corporation shall limit
or eliminate the right to indemnification provided hereunder
with respect to acts or omissions occurring prior to such
amendment or repeal. Nothing contained herein shall be
construed to authorize the Corporation to indemnify any
Director or officer of the Corporation against any liability
to the Corporation or to any holders of securities of the
Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his
office. Any indemnification by the Corporation shall be
consistent with the requirements of law, including the 1940
Act.
(i) To the fullest extent permitted by Maryland
statutory and decisional law and the 1940 Act, as amended or
interpreted, no Director or officer of the Corporation shall
be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein
shall be construed to protect any Director or officer of the
Corporation against any liability to which such Director or
officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his
office. No amendment, modification or repeal of this
Article VIII shall adversely affect any right or protection
of a Director or officer that exists at the time of such
amendment, modification or repeal.
(j) In addition to the powers and authority
hereinbefore, hereinafter or by statute expressly conferred
upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised
or done by the Corporation, subject, nevertheless, to the
express provisions of the laws of Maryland, of these
Articles and of the By-Laws of the Corporation.
13
<PAGE> 14
(k) The Corporation reserves the right from time
to time to make any amendments of its Articles which may now
or hereafter be authorized by law, including any amendments
changing the terms or contract rights, as expressly set
forth in its Articles, of any of its outstanding stock by
classification, reclassification or otherwise but no such
amendment which changes such terms or contract rights of any
of its outstanding stock shall be valid unless such
amendment shall have been authorized by not less than a
majority of the aggregate number of the votes entitled to be
cast thereon, by a vote at a meeting or in writing with or
without a meeting.
(l) The Corporation shall not be required to hold
an annual meeting of shareholders in any year in which the
laws of Maryland do not require that such a meeting be held.
The enumeration and definition of particular powers
of the Board of Directors included in the foregoing shall in
no way be limited or restricted by reference to or inference
from the terms of any other clause of this or any other
Article of these Articles, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any
powers conferred upon the Board of Directors under the
General Laws of the State of Maryland now or hereafter in
force.
IX.
DURATION OF THE CORPORATION
The duration of the Corporation shall be perpetual.
The Corporation's Charter is not amended by these
Restated Articles of Incorporation, which supersede the
original Articles of Incorporation and all Articles of
Amendment and Articles Supplementary thereof.
14
<PAGE> 15
IN WITNESS WHEREOF, the Corporation has caused
these presents to be signed in its name and on its behalf by
its President and witnessed by its Secretary on the 26th day
of June, 1995.
WITNESS: STAGECOACH INC.
/s/ Richard H. Blank, Jr. By: /s/ R. Greg Feltus
Richard H. Blank, Jr., Secretary R. Greg Feltus, President
THE UNDERSIGNED, President of the Corporation, who
executed on behalf of the Corporation Restated Articles of
Incorporation, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Restated Articles of
Incorporation to be the corporate act of said Corporation and
hereby certifies that the matters and facts set forth herein
with respect to the authorization and approval thereof are true
in all material respects under the penalties of perjury.
/s/ R. Greg Feltus
R. Greg Feltus, President
15
<PAGE> 1
EXHIBIT 99.B2(a)
STAGECOACH INC.
BY-LAWS
<PAGE> 2
BY-LAWS
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section and Title
- -----------------
Article I. SHAREHOLDERS
1.1 Annual Meetings......................... 1
1.2 Special Meetings ....................... 1
1.3 Place of Meetings ...................... 1
1.4 Notice of Meetings ..................... 2
1.5 Quorum ................................. 2
1.6 Votes Required ......................... 2
1.7 Proxies ................................ 2
1.8 List of Shareholders ................... 3
1.9 Voting ................................. 3
1.10 Action by Shareholders Other than at a
Meeting ................................ 3
Article II. BOARD OF DIRECTORS
2.1 Powers ................................. 4
2.2 Number of Directors .................... 4
2.3 Election of Directors .................. 4
2.4 Regular Meetings ....................... 4
2.5 Special Meetings ....................... 4
2.6 Notice of Meetings ..................... 5
2.7 Quorum ................................. 5
2.8 Vacancies .............................. 5
2.9 Compensation and Expenses .............. 6
2.10 Action by Directors Other than at a
Meeting ................................ 6
2.11 Audit Committee ........................ 6
2.12 Nominating Committee of Directors....... 7
2.13 Other Committees ....................... 7
2.14 Holding of Meetings by Conference
Telephone Call ......................... 7
Article III. OFFICERS
3.1 Executive Officers ..................... 7
3.2 Chairman and Vice Chairman of the
Board .................................. 8
3.3 President .............................. 8
3.4 Vice Presidents ........................ 8
3.5 Chief Operating Officer ................ 9
3.6 Secretary and Assistant Secretaries .... 9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.7 Treasurer and Assistant Treasurers ..... 9
3.8 Subordinate Officers ................... 10
3.9 Removal ................................ 10
Article IV. STOCK
4.1 Certificates ........................... 10
4.2 Transfers .............................. 10
4.3 Stock Ledgers .......................... 10
4.4 Record Dates ........................... 11
Article V. GENERAL PROVISIONS
5.1 Dividends .............................. 11
5.2 Checks ................................. 11
5.3 Fiscal Year ............................ 11
5.4 Custodian .............................. 11
5.5 Seal ................................... 12
5.6 Representation of Shares ............... 12
5.7 Prohibited Transactions ................ 12
5.8 Bonds .................................. 13
5.9 Annual Statement of Affairs ............ 13
Article VI. AMENDMENT OF BY-LAWS ................. 13
</TABLE>
ii
<PAGE> 4
BY-LAWS
OF
STAGECOACH INC.
(the "Corporation")
ARTICLE I
SHAREHOLDERS
Section 1.1 Annual Meetings. The Corporation is
not required to hold an annual meeting of shareholders in
any year in which the election of directors is not required
to be acted upon by shareholders under the Investment
Company Act of 1940, as amended (the "1940 Act"). If such
action is required to be acted upon under the 1940 Act, then
such meeting (or the first such meeting in any year) shall
be designated as the annual meeting of shareholders for that
year. Except as the Articles of Incorporation or statute
provides otherwise, any business may be considered at an
annual meeting without the purpose of the meeting having
been specified in the notice. Failure to hold an annual
meeting does not invalidate the Corporation's existence or
affect any otherwise valid corporate acts.
Section 1.2 Special Meetings. At any time in the
interval between annual meetings, special meetings of the
shareholders may be called by the Chairman of the Board, if
any, the President in the absence of the Chairman, the Chief
Operating Officer in the absence of the Chairman and the
President, or by a majority of the Board or by shareholders
entitled to cast 10% in number of votes by vote at a meeting
or in writing with or without a meeting.
Section 1.3 Place of Meetings. Meetings of the
shareholders for the election of Directors shall be held at
such place either within or without the State of Maryland or
elsewhere in the United States as shall be designated from
time to time by the Board of Directors and stated in the
notice of the meeting. Meetings of shareholders for any
other purpose may be held at such time and place, within the
State of Maryland or elsewhere in the United States, as
shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 1.4 Notice of Meetings. Not less than ten
days nor more than ninety days before the date of every
shareholders' meeting, the Secretary shall give to each
shareholder entitled to vote at such meeting, written or
printed notice stating the time and place of the meeting
and, if the meeting is a special meeting or notice of the
purpose is required by statute, the purpose or purposes for
which the meeting is called, either by mail or by presenting
1
<PAGE> 5
it to the shareholder personally or by leaving it at the
shareholder's residence or usual place of business. If
mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the
shareholder at his post office address as it appears on the
records of the Corporation, with postage thereon prepaid.
Notwithstanding the foregoing provision, a waiver of notice
in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at
the meeting in person or by proxy, shall be deemed
equivalent to the giving of such notice to such persons.
Any meeting of shareholders, annual or special, may adjourn
from time to time to reconvene at the same or some other
place, and no notice need be given of any such adjourned
meeting other than by announcement at the meeting.
Section 1.5 Quorum. At any meeting of
shareholders the presence in person or by proxy of
shareholders entitled to cast one third of the votes thereat
shall constitute a quorum; but this Section shall not affect
any requirement under statute or under the Articles for the
vote necessary for the adoption of any measure. In the
absence of a quorum the shareholders present in person or by
proxy, by majority vote and without notice, may adjourn the
meeting from time to time until a quorum shall attend. At
any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have
been transacted at the meeting as originally called.
Section 1.6 Votes Required. A majority of the
votes cast at a meeting of shareholders, duly called and at
which a quorum is present, shall be sufficient to take or
authorize action upon any matter which may properly come
before the meeting, unless more than a majority of votes
cast is required by statute or by the Articles. Each
outstanding share of stock shall be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders
and fractional shares shall be entitled to corresponding
fractions of one vote on such matters, except that a
plurality of all the votes cast at a meeting at which a
quorum is present is sufficient to elect a Director.
Section 1.7 Proxies. A shareholder may vote the
shares owned of record by him either in person or by proxy
executed in writing by the shareholder or by the
shareholder's duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from its date, unless
otherwise provided in the proxy. Every proxy shall be in
writing, subscribed by the shareholder or the shareholder's
duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
2
<PAGE> 6
Section 1.8 List of Shareholders. At each meeting
of shareholders, a full, true and complete list in
alphabetical order of all shareholders entitled to vote at
such meeting, certifying the number and class or series of
shares held by each, shall be made available by the
Secretary.
Section 1.9 Voting. In all elections for
Directors every shareholder shall have the right to vote, in
person or by proxy, the shares owned of record by the
shareholder, for as many persons as there are Directors to
be elected and for whose election the shareholder has a
right to vote. At all meetings of shareholders, unless the
voting is conducted by inspectors, the proxies and ballots
shall be received, and all questions regarding the
qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the
chairman of the meeting. If demanded by shareholders,
present in person or by proxy, entitled to cast 10% in
number of votes, or if ordered by the chairman, the vote
upon any election or question shall be taken by ballot.
Upon like demand or order, the voting shall be conducted by
two inspectors in which event the proxies and ballots shall
be received, and all questions regarding the qualification
of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot,
and voting need not be conducted by inspectors. Inspectors
may be elected by the shareholders at their annual meeting,
to serve until the close of the next annual meeting and
their election may be held at the same time as the election
of Directors. In case of a failure to elect inspectors, or
in case an inspector shall fail to attend, or refuse or be
unable to serve, the shareholders at any meeting may choose
an inspector or inspectors to act at such meeting, and in
default of such election the chairman of the meeting may
appoint an inspector or inspectors.
Section 1.10 Action by Shareholders Other than at
a Meeting. Any action required or permitted to be taken at
any meeting of shareholders may be taken without a meeting,
if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the
subject matter thereof and any other shareholders entitled
to notice of a meeting of shareholders (but not to vote
thereat) have waived in writing any rights which they may
have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
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ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Powers. The Board may exercise all
the powers of the Corporation, except such as are by statute
or the charter or these By-Laws conferred upon or reserved
to the shareholders. The Board shall keep full and fair
accounts of its transactions.
Section 2.2 Number of Directors. The number of
Directors shall be such number as shall be fixed from time
to time by vote of a majority of the Directors; provided,
however, that the number of Directors shall in no event
exceed fifteen nor be reduced to fewer than three. The
tenure of office of a Director shall not be affected by any
decrease in the number of Directors made by the Board.
Section 2.3 Election of Directors. Until the
first annual meeting of shareholders and until successors or
additional Directors are duly elected and qualify, the Board
shall consist of the persons named as such in the charter.
At the first annual meeting of shareholders and at each
annual meeting thereafter, the shareholders shall elect
Directors to hold office until the next succeeding annual
meeting and until their successors are elected and qualify.
At any meeting of shareholders, duly called and at which a
quorum is present, the shareholders may, by the affirmative
vote of the holders of a majority of the votes entitled to
be case thereon, remove any Director or Directors from
office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed
Directors.
Section 2.4 Regular Meetings. After each meeting
of shareholders at which a Board of Directors shall have
been elected, the Board so elected shall meet for the
purpose of organization and the transaction of other
business. No notice of such first meeting shall be
necessary if held immediately after the adjournment, and at
the site, of such meeting of shareholders. Other regular
meetings of the Board shall be held without notice on such
dates and at such places within or without the State of
Maryland as may be designated from time to time by the
Board.
Section 2.5 Special Meetings. Special meetings of
the Board may be called at any time by the Chairman of the
Board, the President, the Chief Operating Officer, or the
Secretary of the Corporation, or by a majority of the Board
by vote at a meeting, or in writing with or without a
meeting. Such special meetings shall be held at such place
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or places within or without the State of Maryland as may be
designated from time to time by the Board. In the absence
of such designation such meetings shall be held at such
places as may be designated in the Notice of Meeting.
Section 2.6 Notice of Meetings. Except as
provided in Section 2.4, notice of the place, day, and hour
of all meetings shall be given to each Director two days (or
more) before the meeting, by delivering the same personally,
or by sending the same by telegraph, or by leaving the same
at the Director's residence or usual place of business, or,
in the alternative, by mailing such notice three days (or
more) before the meeting, postage prepaid, and addressed to
the Director at the Director's last known business or
residence post office address, according to the records of
the Corporation. Unless required by these By-Laws or by
resolution of the Board, no notice of any meeting of the
Board need state the business to be transacted thereat. No
notice of any meeting of the Board need be given to any
Director who attends or, to any Director who in writing
executed and filed with the records of the meeting either
before or after the holding thereof, waives such notice.
Any meeting of the Board, regular or special, may adjourn
from time to time to reconvene at the same or some other
place, and no notice need be given of any such adjourned
meeting other than by announcement at the adjourned meeting.
Section 2.7 Quorum. At all meetings of the Board,
one-third of the Directors (but in no event fewer than two
Directors) shall constitute a quorum for the transaction of
business. Except in cases in which it is by statute, by the
charter or by these By-Laws otherwise provided, the vote of
a majority of such quorum at a duly constituted meeting
shall be sufficient to elect and pass any measure. In the
absence of a quorum, the Directors present by majority vote
and without notice other than by announcement at the meeting
may adjourn the meeting from time to time until a quorum
shall attend. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted
which might have been transacted at the meeting as
originally noticed.
Section 2.8 Vacancies. Any vacancy occurring in
the Board of Directors for any cause other than by reason of
an increase in the number of Directors may be filled by a
majority of the remaining members of the Board of Directors,
although such majority is less than a quorum. Any vacancy
occurring by reason of an increase in the number of
Directors may be filled by action of a majority of the
entire Board of Directors; provided, in either case, that
immediately after filling such vacancy at least two-thirds
of the Directors then holding office shall have been elected
to such office by the shareholders at an annual or special
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meeting thereof. If at any time after the first annual
meeting of shareholders of the Corporation a majority of the
Directors in office shall consist of Directors elected by
the Board of Directors, a meeting of the shareholders shall
be called forthwith for the purpose of electing the entire
Board of Directors, and the terms of office of the Directors
then in office shall terminate upon the election and
qualification of such Board of Directors. A Director
elected by the Board of Directors or the shareholders to
fill a vacancy shall be elected to hold office until the
next annual meeting of shareholders and until his successor
is elected and qualifies.
Section 2.9 Compensation and Expenses. Directors
may, pursuant to resolution of the Board, be paid fees for
their services, which fees may consist of an annual fee or
retainer and/or a fixed fee for attendance at meetings. In
addition, Directors may in the same manner be reimbursed for
expenses incurred in connection with their attendance at
meetings or otherwise in performing their duties as
Directors. Members of committees may be allowed like
compensation and reimbursement. Nothing herein contained
shall preclude any Director from serving the Corporation in
any other capacity and receiving compensation therefor.
Section 2.10 Action by Directors Other than at a
Meeting. Any action required or permitted to be taken at
any meeting of the Board, or of any committee thereof, may
be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such
committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or
committee.
Section 2.11 Audit Committee. The Board of
Directors may by the affirmative vote of a majority of the
entire Board appoint from its members an Audit Committee
composed of two or more Directors who are not "interested
persons" (as defined in the 1940 Act) of the Corporation, as
the Board may from time to time determine. The Audit
Committee shall (a) recommend independent public accountants
for selection by the Board, (b) review the scope of audit,
accounting and financial internal controls and the quality
and adequacy of the Corporation's accounting staff with the
independent public accountants and such other persons as may
be deemed appropriate, (c) review with the accounting staff
and the independent public accountants the compliance of
transactions of the Corporation with Wells Fargo Bank, N.A.
or any other manager or investment adviser of the affairs of
the Corporation and with any affiliate of such firm or
manager or investment adviser with the financial terms of
applicable agreements, (d) review reports of the independent
public accountants and comment to the Board when warranted,
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(e) report to the Board at least once each year and at such
other times as the committee deems desirable, and (f) be
directly available at all times to independent public
accountants and responsible officers of the Corporation for
consultation on audit, accounting and related financial
matters.
Section 2.12 Nominating Committee of Directors.
The Board of Directors may by the affirmative vote of a
majority of the entire Board appoint from its members a
Director Nominating Committee composed of two or more
Directors. The Director Nominating Committee shall
recommend to the Board a slate of persons to be nominated
for election as Directors by the stockholders at each annual
meeting of stockholders and a person to be elected to fill
any vacancy occurring for any reason in the Board.
Notwithstanding anything in this Section 2.12 to the
contrary, so long as the Corporation has in effect one or
more plans pursuant to Rule 12b-1 under the 1940 Act, the
selection and nomination of those Directors who are not
"interested persons" (as defined in the 1940 Act) shall be
committed to the discretion of such disinterested Directors.
Section 2.13 Other Committees. The Board of
Directors may appoint from among its members other
committees composed of two or more of its Directors which
shall have such powers as may be delegated or authorized by
the resolution appointing them.
Section 2.14 Holding of Meetings by Conference
Telephone Call. At any regular or special meeting of the
Board or any committee thereof, members thereof may
participate in such meeting by means of conference telephone
or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting, unless the
1940 Act specifically requires the Directors to act "in
person," in which case such term shall be construed
consistent with Securities and Exchange Commission or staff
releases or interpretations.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers. The Board of
Directors may choose a Chairman of the Board and a Vice
Chairman of the Board from among the Directors, and shall
choose a President, a Chief Operating Officer, a Secretary
and a Treasurer who need not be Directors. The Board of
Directors may choose an Executive Vice President, one or
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more Senior Vice Presidents, one or more Vice Presidents,
one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers or assistant officers,
none of whom need be a Director. Any two or more of the
above-mentioned offices, except those of President and a
Secretary, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more
than one capacity if such instrument be required by law, by
the charter, by the By-Laws or by resolution of the Board of
Directors to be executed by any two or more officers. Each
such officer shall hold office until his successor shall
have been duly chosen and qualified, or until he shall have
resigned or shall have been removed. Any vacancy in any of
the above offices may be filled for the unexpired portion of
the term of the Board of Directors at any regular or special
meeting.
Section 3.2 Chairman and Vice Chairman of the
Board. The Chairman of the Board, if one be elected, shall
preside at all meetings of the Board of Directors and of the
shareholders at which he is present. He shall have and may
exercise such powers as are, from time to time, assigned to
him by the Board of Directors. The Vice Chairman of the
Board, if one be elected, shall, when present and in the
absence of the Chairman of the Board, preside at all
meetings of the shareholders and Directors, and he shall
perform such other duties as may from time to time be
assigned to him by the Board of Directors or as may be
required by law.
Section 3.3 President. In the absence of the
Chairman or Vice Chairman of the Board, the President shall
preside at all meetings of the shareholders and of the Board
at which the President is present; shall be the chief
executive officer; and in general, shall perform all duties
incident to the office of a president of a Maryland
corporation, and such other duties, as from time to time,
may be assigned to him by the Board.
Section 3.4 Vice Presidents. The Vice President
or Vice Presidents, including any Executive or Senior Vice
President(s), at the request of the President or in the
President's absence or during the President's inability or
refusal to act, shall perform the duties and exercise the
functions of the President, and when so acting shall have
the powers of the President. If there be more than one Vice
President, the Board may determine which one or more of the
Vice Presidents shall perform any of such duties or exercise
any of such functions, or if such determination is not made
by the Board, the President may make such determination.
The Vice President or Vice Presidents shall have such other
powers and perform such other duties as may be assigned by
the Board, the Chairman of the Board, or the President.
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Section 3.5 Chief Operating Officer. The Chief
Operating Officer shall have the authority and duties that
generally pertain to such office, including, but not limited
to, those delegated by the Chairman or the President.
Section 3.6 Secretary and Assistant Secretaries.
The Secretary shall keep the minutes of the meetings of the
shareholders, of the Board and of any committees, in books
provided for the purpose; shall see that all notices are
duly given in accordance with the provisions of these
By-Laws or as required by law; be custodian of the records
of the Corporation; see that the corporate seal is affixed
to all documents the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so
affixed may attest the same; and in general perform all
duties incident to the office of a secretary of a Maryland
corporation, and such other duties as, from time to time,
may be assigned to him by the Board, the Chairman of the
Board, or the President.
The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order determined by
the Board, the President or the Chairman of the Board,
shall, in the absence of the Secretary or in the event of
the Secretary's inability or refusal to act, perform the
duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the
Board may from time to time prescribe.
Section 3.7 Treasurer and Assistant Treasurers.
The Treasurer shall have charge of and be responsible for
all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited in
the name of the Corporation, all moneys or other valuable
effects in such banks, trust companies or other depositories
as shall, from time to time, be selected by the Board in
accordance with Section 5.4 of these By-Laws; render to the
Chief Operating Officer, President, the Chairman of the
Board and to the Board, whenever requested, an account of
the financial condition of the Corporation; and in general,
perform all the duties incident to the office of a treasurer
of a corporation, such other duties as may be assigned to
him by the Board, the President, the Chief Operating Officer
or the Chairman of the Board.
The Assistant Treasurer, or if there shall be more
than one, the Assistant Treasurers in the order determined
by the Board, the President, the Chief Operating Officer or
the Chairman of the Board shall, in the absence of the
Treasurer or in the event of the Treasurer's inability or
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refusal to act, perform the duties and exercise the powers
of the Treasurer and shall perform other duties and have
such other powers as the Board may from time to time
prescribe.
Section 3.8 Subordinate Officers. The Board may
from time to time appoint such subordinate officers as it
may deem desirable. Each such officer shall hold office for
such period and perform such duties as the Board, the
President, the Chief Operating Officer or the Chairman of
the Board may prescribe. The Board may, from time to time,
authorize any committee or officer to appoint and remove
subordinate officers and prescribe the duties thereof.
Section 3.9 Removal. Any officer or agent of the
Corporation may be removed by the Board whenever, in its
judgment, the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
ARTICLE IV
STOCK
Section 4.1 Certificates. In accordance with
Section 2-210 of the Maryland General Corporation Law,
shareholders will not be entitled to a certificate or
certificates which represent the number of shares of stock
owned by him or her in the Corporation, unless a majority of
the Board of Directors otherwise provides by resolution. At
the time of issuance of shares of stock, the Corporation
shall send, or cause to be sent, to the shareholder a
written statement of the information otherwise required on
stock certificates.
Section 4.2 Transfers. The Board of Directors
shall have power and authority to make such rules and
regulations as it may deem necessary or expedient concerning
the issue, transfer and registration of shares of stock; and
may appoint transfer agents and registrars thereof. The
duties of transfer agent and registrar, if any, may be
combined.
Section 4.3 Stock Ledgers. A stock ledger,
containing the names and addresses of the shareholders of
the Corporation and the number of shares of each class held
by them, respectively, shall be kept by the Transfer Agent
of the Corporation. The stock ledger may be in written form
or in any other form which can be converted within a
reasonable time into written form for visual inspection.
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Section 4.4 Record Dates. The Board is hereby
empowered to fix, in advance, a date as the record date for
the purpose of determining shareholders entitled to notice
of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend,
capital gains distribution or the allotment of any rights,
or in order to make a determination of shareholders for any
other proper purpose. Such date in any case shall be not
more than ninety days, and in case of a meeting of
shareholders, not less than ten days, prior to the date on
which the particular action, requiring such determination of
shareholders, is to be taken.
ARTICLE V
GENERAL PROVISIONS
Section 5.1 Dividends. Dividends or distribution
upon the capital stock of the Corporation, subject to
provisions of the charter, if any, may be declared by the
Board of Directors at any regular or special meeting,
pursuant to law. Dividends or distributions may be paid
only in cash or in shares of the capital stock, subject to
the provisions of the Articles of Incorporation.
Before payment of any dividend or distribution
there may be set aside out of any funds of the Corporation
available for dividends or distributions such sum or sums as
the Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends or distributions
or for maintaining any property of the Corporation, or for
such other purpose as the Directors shall think conducive to
the interest of the Corporation, and the Directors may
modify or abolish any such reserve in the manner in which it
was created.
Section 5.2 Checks. All checks or demands for
money and notes of the Corporation shall be signed by such
officer or officers or such other person or persons as the
Board may from time to time designate.
Section 5.3 Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 5.4 Custodian. All securities and cash of
the Corporation shall be placed in the custody of a bank or
trust company ("Custodian") having (according to its last
published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a
Custodian can be found ready and willing to act (or
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maintained in such other manner as is consistent with
Section 17(f) of the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder). The
Corporation shall enter into a written contract with the
Custodian regarding the powers, duties and compensation of
the Custodian with respect to the cash and securities of the
Corporation held by the Board of Directors of the
Corporation. The Corporation shall upon the resignation or
inability to serve of the Custodian use its best efforts to
obtain a successor custodian; require that the cash and
securities owned by the Corporation be delivered directly to
the successor custodian; and in the event that no successor
custodian can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by the
Corporation to other than a successor custodian, the
question whether or not the Corporation shall be liquidated
or shall function without a custodian.
Section 5.5 Seal. The Board of Directors may
provide a suitable seal, bearing the name of the
Corporation, which shall be in the custody of the Secretary.
The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof.
Section 5.6 Representation of Shares. Any officer
of the Corporation is authorized to vote, represent and
exercise for the Corporation any and all rights incident to
any shares of any corporation or other business enterprise
owned by the Corporation.
Section 5.7 Prohibited Transactions. No officer
or Director of the Corporation or of its investment adviser
shall deal for or on behalf of the Corporation with himself,
as principal or agent, or with any corporation or
partnership in which he has a financial interest. This
prohibition shall not prevent: (a) officers or Directors of
the Corporation from having a financial interest in the
Corporation, its principal underwriter or its investment
adviser; (b) the purchase of securities for the portfolio of
the Corporation or the sale of securities owned by the
Corporation through a securities dealer, one or more of
whose partners, officers or Directors is an officer or
Director of the Corporation, provided such transactions are
handled in the capacity of broker only and provided
commissions charged do not exceed customary brokerage
charges for such service; or (c) the employment of legal
counsel, registrar, transfer agent, dividend disbursing
agent, or custodian having a partner, officer or Director
who is an officer or Director of the Corporation, provided
only customary fees are charged for services rendered to or
for the benefit of the Corporation.
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Section 5.8 Bonds. The Board of Directors may
require any officer, agent or employee of the Corporation to
give a bond to the Corporation, conditioned upon the
faithful discharge of his duties, with one or more sureties
and in such amount as may be satisfactory to the Board of
Directors. The Board of Directors shall, in any event,
require the Corporation to provide and maintain a bond
issued by a reputable fidelity insurance company, against
larceny and embezzlement, covering each officer and employee
of the Corporation who may singly, or jointly with others,
have access to securities or funds of the Corporation,
either directly or through authority to draw upon such
funds, or to direct generally the disposition of such
securities, such bond or bonds to be in such reasonable
amount as a majority of the Board of Directors who are not
such officers or employees of the Corporation shall
determine with due consideration to the value of the
aggregate assets of the Corporation to which any such
officer or employee may have access, or in any amount or
upon such terms as the Securities and Exchange Commission
may prescribe by order, rule or regulations.
Section 5.9 Annual Statement of Affairs. The
President or the Controller shall prepare annually a full
and correct statement of the affairs of the Corporation, to
include a balance sheet and a financial statement of
operations for the preceding fiscal year. The statement of
affairs shall be placed on file at the Corporation's
principal office within 120 days after the end of the fiscal
year.
ARTICLE VI
AMENDMENT OF BY-LAWS
These By-Laws of the Corporation may be altered,
amended, added to or repealed by majority vote of the
shareholders or by majority vote of the entire Board.
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EXHIBIT 99.B5(a)(v)(A)
INVESTMENT ADVISORY AGREEMENT
Money Market Fund
a portfolio of
STAGECOACH INC.
111 Center Street
Little Rock, Arkansas 72201
February 1, 1994
Wells Fargo Bank, N.A.
525 Market Street
San Francisco, California 94163
Dear Sirs:
This will confirm the agreement between Stagecoach
Inc. (the "Company") on behalf of the Money Market Fund (the
"Fund") and Wells Fargo Bank, N.A. (the "Adviser") as
follows:
1. The Company is a registered open-end
management investment company currently consisting of
thirteen investment portfolios, but which may from time to
time consist of a greater or lesser number of investment
portfolios (the "Funds"). The Company proposes to engage in
the business of investing and reinvesting the assets of the
Fund in the manner and in accordance with the investment
objective and restrictions specified in the Company's
currently effective prospectus and the currently effective
statement of additional information incorporated by
reference therein relating to the Fund and the Company (such
prospectus and such statement of additional information
being collectively referred to as the "Prospectus") included
in the Company's Registration Statement, as amended from
time to time (the "Registration Statement"), filed by the
Company under the Investment Company Act of 1940 (the "Act")
and the Securities Act of 1933. Copies of the documents
referred to in the preceding sentence have been furnished to
the Adviser. Any amendments to those documents shall be
furnished to the Adviser promptly.
2. The Company is engaging the Adviser to manage
the investing and reinvesting of the assets of the Fund and
to provide the advisory services specified elsewhere in this
contract, subject to the overall supervision of the Board of
Directors of the Company. The Company, by separate Custody
Agreement and Agency Agreement, also is engaging the Adviser
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to provide custodial and transfer agency services for the
Fund. Pursuant to an administration agreement between the
Company and Stephens Inc. (the "Administrator") on behalf of
the Fund, the Company has engaged the Administrator to
provide the administrative services specified therein.
3. (a) The Adviser shall make investments for the
account of the Fund in accordance with the Adviser's best
judgment and consistent with the investment objective and
restrictions set forth in the Company's Prospectus, the Act
and the provisions of the Internal Revenue Code relating to
regulated investment companies, subject to policy decisions
adopted by the Company's Board of Directors. The Adviser
shall advise the Company's officers and Board of Directors,
at such times as the Company's Board of Directors may
specify, of investments made for the Fund and shall, when
requested by the Company's officers or Board of Directors,
supply the reasons for making particular investments.
(b) The Adviser shall provide to the Company
investment guidance and policy direction in connection with
its daily management of the Fund's portfolio, including oral
and written research, analysis, advice, statistical and
economic data and information and judgments, and shall
furnish to the Company's Board of Directors periodic reports
on the investment strategy and performance of the Fund and
such additional reports and information as the Company's
Board of Directors and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing
and distributing all materials relating to the Fund prepared
by it, or prepared at its request, other than such costs
relating to proxy statements, prospectuses, shareholder
reports and other materials distributed to existing or
prospective shareholders on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or
associate with itself such persons as the Adviser believes
appropriate to assist it in performing its obligations under
this contract.
4. The Adviser shall give the Company the benefit
of the Adviser's best judgment and efforts in rendering
services under this contract. As an inducement to the
Adviser's undertaking to render these services, the Company
agrees that the Adviser shall not be liable under this
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contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that
nothing in this contract shall be deemed to protect or
purport to protect the Adviser against any liability to the
Company or its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of the
Adviser's duties under this contract or by reason of
reckless disregard of its obligations and duties hereunder.
5. In consideration of the services to be
rendered by the Adviser under this contract, the Company
shall pay the Adviser a fee on the first business day of
each calendar month, at the annual rate of 0.35% of the
average daily value (as determined on each day that such
value is determined for the Fund at the time set forth in
the Prospectus for determining net asset value per share) of
the Fund's net assets during the preceding month. If the
fee payable to the Adviser pursuant to this paragraph 5
begins to accrue after the beginning of any month or if this
contract terminates before the end of any month, the fee for
the period from the effective date to the end of that month
or from the beginning of that month to the termination date,
respectively, shall be prorated according to the proportion
that the period bears to the full month in which the
effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of the Fund's
net assets shall be computed in the manner specified in the
Prospectus and the Company's Articles of Incorporation for
the computation of the value of the Fund's net assets in
connection with the determination of the net asset value of
Fund shares.
6. If in any fiscal year the total expenses of
the Fund incurred by, or allocated to, the Fund excluding
extraordinary expenses of the Fund, but including the fees
provided for in paragraph 5 and those provided for pursuant
to the Fund's Administration Agreement ("includible
expenses"), exceed the most restrictive expense limitation
applicable to the Fund imposed by state securities laws or
regulations thereunder, as these limitations may be raised
or lowered from time to time, the Adviser shall waive or
reimburse that portion of the excess derived by multiplying
the excess by a fraction, the numerator of which shall be
the percentage at which the excess portion attributable to
the fee payable pursuant to this agreement is calculated
under paragraph 5 hereof, and the denominator of which shall
be the sum of such percentage plus the percentage at which
the excess portion attributable to the fee payable pursuant
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to the Fund's Administration Agreement is calculated (the
"Applicable Ratio"), but only to the extent of the fee
hereunder for the fiscal year. If the fees payable under
this agreement and/or the Fund's Advisory Agreement
contributing to such excess portion are calculated at more
than one percentage rate, the Applicable Ratio shall be
calculated separately on the basis of, and applied
separately to, the portions of the fees calculated at the
different rates. At the end of each month of the Company's
fiscal year, the Company shall review the includible
expenses accrued during that fiscal year to the end of the
period and shall estimate the contemplated includible
expenses for the balance of that fiscal year. If as a
result of that review and estimation it appears likely that
the includible expenses will exceed the limitations referred
to in this paragraph 6 for a fiscal year with respect to the
Fund, the monthly fee set forth in paragraph 5 payable to
the Adviser for such month shall be reduced, subject to a
later adjustment, by an amount equal to the Applicable Ratio
times the pro rata portion (prorated on the basis of the
remaining months of the fiscal year, including the month
just ended) of the amount by which the includible expenses
for the fiscal year are expected to exceed the limitations
provided for in this paragraph 6. For purposes of computing
the excess, if any, over the most restrictive applicable
expense limitation, the value of the Fund's net assets shall
be computed in the manner specified in the last sentence of
paragraph 5, and any reimbursements required to be made by
the Adviser shall be made once a year promptly after the end
of the Company's fiscal year.
7. This contract shall become effective on its
execution date and shall thereafter continue in effect,
provided that this contract shall continue in effect for a
period of more than two years from the date hereof only so
long as the continuance is specifically approved at least
annually (a) by the vote of a majority of the Fund's
outstanding voting securities (as defined in the Act) or by
the Company's Board of Directors and (b) by the vote, cast
in person at a meeting called for the purpose, of a majority
of the Company's directors who are not parties to this
contract or "interested persons" (as defined in the Act) of
any such party. This contract may be terminated at any time
by the Company, without the payment of any penalty, by a
vote of a majority of the Fund's outstanding voting
securities (as defined in the Act) or by a vote of a
majority of the Company's entire Board of Directors on 60
days' written notice to the Adviser or by the Adviser, at
any time after the second anniversary of the effective date
4
<PAGE> 5
of this contract, on 60 days' written notice to the Company.
This contract shall terminate automatically in the event of
its assignment (as defined in the Act).
8. Except to the extent necessary to perform the
Adviser's obligations under this contract, nothing herein
shall be deemed to limit or restrict the right of the
Adviser, or any affiliate of the Adviser, or any employee of
the Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of any
other business, whether of a similar or dissimilar nature,
or to render services of any kind to any other corporation,
firm, individual or association.
9. The Adviser and the Company each agree that
the word "Stagecoach" which comprises a component of the
Company's name, is a property right of the parent of the
Adviser. The Company agrees and consents that: (i) it will
use the word "Stagecoach" as a component of its corporate
name, the name of any class, or both and for no other
purpose; (ii) it will not grant to any third party the right
to use the word "Stagecoach" for any purpose; (iii) the
Adviser or any corporate affiliate of the Adviser may use or
grant to others the right to use the word "Stagecoach" or
any combination or abbreviation thereof, as all or a portion
of a corporate or business name or for any commercial
purpose, other than a grant of such right to another
registered investment company not advised by the Adviser or
one of its affiliates; and (iv) in the event that the
Adviser or an affiliate thereof is no longer acting as
investment adviser to any class, the Company shall, upon
request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing
the word "Stagecoach" and following such change, shall not
use the word "Stagecoach" or any combination thereof, as a
part of its corporate name or for any other commercial
purpose, and shall use its best efforts to cause its
directors, officers, and shareholders to take any and all
actions that the Adviser may request to effect the foregoing
and to reconvey to the Adviser any and all rights to such
word.
10. This contract shall be governed by and
construed in accordance with the laws of the State of
California.
5
<PAGE> 6
If the foregoing correctly sets forth the agreement
between the Company and the Adviser, please so indicate by
signing and returning to the Company the enclosed copy
hereof.
Very truly yours,
STAGECOACH INC.,
on behalf of
the Money Market Fund
By: /s/ Richard H. Blank, Jr.
----------------------------
Name: Richard H. Blank, Jr.
--------------------------
Title: Chief Operating Officer
-------------------------
ACCEPTED as of the date
set forth above:
WELLS FARGO BANK, N.A.
By: /s/ Alan Kizor
---------------------------
Name: Alan Kizor
-------------------------
Title: Executive Vice President
------------------------
By: /s/ Nancy Van Gelden
---------------------------
Name: Nancy Van Gelden
-------------------------
Title: Vice President
------------------------
6
<PAGE> 1
EXHIBIT 99.B10
June 26, 1995
Stagecoach Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of Stagecoach Inc.
Gentlemen:
We refer to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A (SEC File Nos. 33-54126
and 811-7332) (the "Registration Statement") of Stagecoach
Inc. (the "Company") relating to the registration of an
indefinite number of shares of common stock of the Company
(collectively, the "Shares").
We have been requested by the Company to furnish
this opinion as Exhibit 10 to the Registration Statement.
We have examined such records, documents,
instruments, certificates of public officials and of the
Company, made such inquiries of the Company, and examined
such questions of law as we have deemed necessary for the
purpose of rendering the opinion set forth herein. We have
assumed the genuineness of all signatures and the
authenticity of all items submitted to us as originals and
the conformity with originals of all items submitted to us
as copies.
Based upon and subject to the foregoing, we are of
the opinion that:
The issuance and sale of the Shares by the Company
have been duly and validly authorized by all appropriate
action, and upon delivery thereof and payment therefor in
accordance with the Registration Statement, the Shares will
be validly issued, fully paid and nonassessable by the
Company.
<PAGE> 2
Stagecoach Inc.
June 26, 1995
Page Two
We consent to the inclusion of this opinion as an
exhibit to the Registration Statement.
In addition, we hereby consent to the use of our
name and to the reference to our firm under the caption
"Legal Counsel" in the Prospectus and the description of
advice rendered by our firm under the heading "Management of
the Fund" in the Prospectus and "Management" in the
Statement of Additional Information, both of which are
included as part of the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER
<PAGE> 1
EXHIBIT 99.B11(a)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Stagecoach Inc.
We consent to incorporation by reference in the
Stagecoach Inc. Post-Effective Amendment No. 8 to the
Registration Statement Number 33-54126 on Form N-1A under
the Securities Act of 1933 and Amendment No. 12 to the
Registration Statement Number 811-7332 on Form N-1A under
the Investment Company Act of 1940 of our reports dated
April 20, 1995 on the financial statements and financial
highlights of the Asset Allocation Fund, Bond Index Fund,
Growth Stock Fund, Money Market Fund, S&P 500 Stock Fund,
Short-Intermediate Term Fund and U.S. Treasury Allocation
Fund (seven of the series constituting Stagecoach Inc.) (the
"Funds") as of February 28, 1995 and for the periods
indicated therein, which reports have been included in the
Statements of Additional Information of each of the
aforementioned Funds. We also consent to the reference to
our firm under the headings "Financial Highlights" in the
prospectuses and "Independent Auditors" in the Statements of
Additional Information incorporated by reference into the
prospectuses.
We also consent to incorporation by reference of our reports
dated April 14, 1995, on the financial statements and financial
highlights of the Growth Stock Master Series and Short-
Intermediate Term Master Series (two of the master portfolios
comprising Managed Series Investment Trust) for the period from
May 26, 1994 (commencement of operations) to February 28, 1995,
which reports have been incorporated by reference in the Statement
of Additional Information for the aforementioned Funds.
San Francisco, California /s/ KPMG Peat Marwick LLP
June 27, 1995
<PAGE> 1
EXHIBIT 99.B11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A
(File No. 33-54126) of Stagecoach Inc. for the Asset
Allocation Fund, Bond Index Fund, Growth Stock Fund, Short-
Intermediate Term Fund, S&P 500 Stock Fund, and U.S.
Treasury Allocation Fund of our report dated April 20, 1995
on our audit of the financial statements and financial
highlights of Asset Allocation Master Series, Bond Index
Master Series, S&P 500 Index Master Series, and U.S.
Treasury Allocation Master Series (each a series of Master
Investment Portfolio) for the periods indicated thereon.
/s/ Coopers & Lybrand LLP
San Francisco, California
June 26, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893818
<NAME> STAGECOACH INC.
<SERIES>
<NUMBER> 1
<NAME> ASSET ALLOCATION FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 294,124,149
<INVESTMENTS-AT-VALUE> 293,741,285
<RECEIVABLES> 1,272,349
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 295,013,634
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,317,198
<TOTAL-LIABILITIES> 1,317,198
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 295,620,961
<SHARES-COMMON-STOCK> 29,584,853
<SHARES-COMMON-PRIOR> 21,302,830
<ACCUMULATED-NII-CURRENT> 14,719
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,556,380)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (382,864)
<NET-ASSETS> 293,696,436
<DIVIDEND-INCOME> 3,197,896
<INTEREST-INCOME> 9,812,675
<OTHER-INCOME> 0
<EXPENSES-NET> 1,808,341
<NET-INVESTMENT-INCOME> 11,202,230
<REALIZED-GAINS-CURRENT> 1,672,885
<APPREC-INCREASE-CURRENT> (2,125,246)
<NET-CHANGE-FROM-OPS> 10,749,869
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,202,230
<DISTRIBUTIONS-OF-GAINS> 3,444,708
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,750,825
<NUMBER-OF-SHARES-REDEEMED> 7,938,475
<SHARES-REINVESTED> 1,469,673
<NET-CHANGE-IN-ASSETS> 76,556,466
<ACCUMULATED-NII-PRIOR> 14,719
<ACCUMULATED-GAINS-PRIOR> 215,443
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 329,064
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,833,694
<AVERAGE-NET-ASSETS> 240,220,000
<PER-SHARE-NAV-BEGIN> 10.19
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> (0.14)
<PER-SHARE-DIVIDEND> 0.44
<PER-SHARE-DISTRIBUTIONS> 0.12
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893818
<NAME> STAGECOACH INC.
<SERIES>
<NUMBER> 2
<NAME> BOND INDEX FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 19,427,587
<INVESTMENTS-AT-VALUE> 18,580,934
<RECEIVABLES> 175,151
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,756,085
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 162,595
<TOTAL-LIABILITIES> 162,595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,772,507
<SHARES-COMMON-STOCK> 2,020,089
<SHARES-COMMON-PRIOR> 1,525,732
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (332,364)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (846,653)
<NET-ASSETS> 18,593,490
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,173,339
<OTHER-INCOME> 0
<EXPENSES-NET> 37,570
<NET-INVESTMENT-INCOME> 1,135,769
<REALIZED-GAINS-CURRENT> (333,833)
<APPREC-INCREASE-CURRENT> (460,942)
<NET-CHANGE-FROM-OPS> 340,994
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,135,769
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,134,314
<NUMBER-OF-SHARES-REDEEMED> 759,992
<SHARES-REINVESTED> 120,035
<NET-CHANGE-IN-ASSETS> 3,694,731
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,469
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,449
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 113,193
<AVERAGE-NET-ASSETS> 16,037,000
<PER-SHARE-NAV-BEGIN> 9.76
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> (0.56)
<PER-SHARE-DIVIDEND> 0.64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.20
<EXPENSE-RATIO> 0.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893818
<NAME> STAGECOACH INC.
<SERIES>
<NUMBER> 3
<NAME> GROWTH STOCK FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 91,509,684
<INVESTMENTS-AT-VALUE> 96,883,031
<RECEIVABLES> 98,699
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,981,730
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56,993
<TOTAL-LIABILITIES> 56,993
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 89,462,276
<SHARES-COMMON-STOCK> 8,329,638
<SHARES-COMMON-PRIOR> 3,944,532
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,135,736
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,373,347
<NET-ASSETS> 96,924,737
<DIVIDEND-INCOME> 169,878
<INTEREST-INCOME> 295,650
<OTHER-INCOME> 0
<EXPENSES-NET> 475,101
<NET-INVESTMENT-INCOME> (9,573)
<REALIZED-GAINS-CURRENT> 2,009,745
<APPREC-INCREASE-CURRENT> 2,123,031
<NET-CHANGE-FROM-OPS> 4,123,203
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 588,577
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,877,261
<NUMBER-OF-SHARES-REDEEMED> 3,544,614
<SHARES-REINVESTED> 52,460
<NET-CHANGE-IN-ASSETS> 51,481,718
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 714,568
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70,792
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 541,974
<AVERAGE-NET-ASSETS> 64,015,000
<PER-SHARE-NAV-BEGIN> 11.52
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0.19
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.07
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.64
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893818
<NAME> STAGECOACH INC.
<SERIES>
<NUMBER> 4
<NAME> MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 147,781,343
<INVESTMENTS-AT-VALUE> 147,781,343
<RECEIVABLES> 301,115
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 645
<TOTAL-ASSETS> 148,083,103
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 814,543
<TOTAL-LIABILITIES> 814,543
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 147,280,506
<SHARES-COMMON-STOCK> 147,279,914
<SHARES-COMMON-PRIOR> 81,648,460
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11,946)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 147,268,560
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,733,256
<OTHER-INCOME> 0
<EXPENSES-NET> 525,857
<NET-INVESTMENT-INCOME> 5,207,399
<REALIZED-GAINS-CURRENT> (11,946)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,195,453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,207,399
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 111,097,845
<NUMBER-OF-SHARES-REDEEMED> 50,146,714
<SHARES-REINVESTED> 4,680,322
<NET-CHANGE-IN-ASSETS> 65,619,501
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 371,199
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546,486
<AVERAGE-NET-ASSETS> 117,039,000
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893818
<NAME> STAGECOACH INC.
<SERIES>
<NUMBER> 5
<NAME> S & P 500 STOCK FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 418,173,133
<INVESTMENTS-AT-VALUE> 446,815,899
<RECEIVABLES> 2,077,185
<ASSETS-OTHER> 17,379
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 448,910,463
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 134,313
<TOTAL-LIABILITIES> 134,313
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 418,645,456
<SHARES-COMMON-STOCK> 41,427,361
<SHARES-COMMON-PRIOR> 11,653,221
<ACCUMULATED-NII-CURRENT> 1,887,038
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (399,110)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 28,642,766
<NET-ASSETS> 448,776,150
<DIVIDEND-INCOME> 8,563,038
<INTEREST-INCOME> 1,083,825
<OTHER-INCOME> 0
<EXPENSES-NET> 632,545
<NET-INVESTMENT-INCOME> 9,014,318
<REALIZED-GAINS-CURRENT> 2,385,953
<APPREC-INCREASE-CURRENT> 24,560,466
<NET-CHANGE-FROM-OPS> 35,960,737
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,631,754
<DISTRIBUTIONS-OF-GAINS> 3,012,750
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,170,417
<NUMBER-OF-SHARES-REDEEMED> 9,443,527
<SHARES-REINVESTED> 1,047,250
<NET-CHANGE-IN-ASSETS> 326,384,855
<ACCUMULATED-NII-PRIOR> 504,474
<ACCUMULATED-GAINS-PRIOR> 227,687
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 774,014
<AVERAGE-NET-ASSETS> 297,438,000
<PER-SHARE-NAV-BEGIN> 10.50
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 0.41
<PER-SHARE-DIVIDEND> 0.27
<PER-SHARE-DISTRIBUTIONS> 0.08
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.83
<EXPENSE-RATIO> 0.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893818
<NAME> STAGECOACH INC.
<SERIES>
<NUMBER> 6
<NAME> SHORT-INTERMEDIATE TERM FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 14,282,926
<INVESTMENTS-AT-VALUE> 14,289,986
<RECEIVABLES> 134,184
<ASSETS-OTHER> 75
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,424,245
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126,037
<TOTAL-LIABILITIES> 126,037
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,671,476
<SHARES-COMMON-STOCK> 1,561,855
<SHARES-COMMON-PRIOR> 541,091
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (380,328)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,060
<NET-ASSETS> 14,298,208
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 571,406
<OTHER-INCOME> 0
<EXPENSES-NET> 47,654
<NET-INVESTMENT-INCOME> 523,752
<REALIZED-GAINS-CURRENT> (329,022)
<APPREC-INCREASE-CURRENT> 131,359
<NET-CHANGE-FROM-OPS> 326,089
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 523,752
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,672,577
<NUMBER-OF-SHARES-REDEEMED> 703,052
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