<PAGE> 1
As filed with the Securities and Exchange Commission
on November 29, 1995
Registration No. 33-42927; 811-6419
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
[X]
Post-Effective Amendment No. 17
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 18 [X]
(Check appropriate box or boxes)
--------------------
STAGECOACH FUNDS, INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------
Registrant's Telephone Number, including Area Code: (800) 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 Ave., N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant [ ] on _________ pursuant
to Rule 485(b), or to Rule 485(b), or
[ ] 60 Days after filing pursuant [ ] on _________ pursuant
to Rule 485(a), or to Rule 485(a)
[X] 75 days after filing pursuant [ ] on (date) pursuant
to paragraph (a)(2) paragraph (a)(2) of Rule 485
<PAGE> 2
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Rule 24f-2
Notice for the fiscal year ended December 31, 1994, was filed with the
Securities and Exchange Commission on February 28, 1995.
This Post-Effective Amendment to the Registrant's Registration Statement has
been executed by Master Investment Trust (a registered investment company with
separate series in which certain of the Registrant's series invest
substanitally all of their assets) and its trustees and principal officers.
<PAGE> 3
EXPLANATORY NOTE
This Post-Effective Amendment No. 17 to the Registration Statement (the
"Amendment") of Stagecoach Funds, Inc. (the "Company") is being filed to
register a new fund of the Company, the National Tax-Free Money Market Mutual
Fund (the "Fund"). The Fund will invest substantially all of its assets in
the corresponding master portfolio of Master Investment Trust, a management
investment company organized as a Delaware business trust (SEC File No.
811-6415). This Amendment does not affect the Registration Statement for the
Company's Asset Allocation Fund, California Tax-Free Bond Fund, California
Tax-Free Income Fund, California Tax-Free Money Market Mutual Fund, Corporate
Stock Fund, Diversified Income Fund, Ginnie Mae Fund, Growth and Income Fund,
Money Market Mutual Fund, Short-Intermediate U.S. Government Income Fund and
U.S. Government Allocation Fund.
<PAGE> 4
Cross Reference Sheet
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
Form N-1A Item Number
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 The Funds, the Master Trust and Management;Appendix
5 How the Funds Work; The Funds, the Master Trust and
Management; Management and Servicing Fees
6 The Funds, the Master Trust and Management;
Investing in the Funds
7 Investing in the Funds; Dividends; Taxes; Additional
Shareholder Services
8 How to Redeem Shares
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Introduction
13 Investment Restrictions; Additional Permitted
Investment Activities; Portfolio Transactions;
SAI Appendix
14 Management
15 Management
16 Management; Distribution Plan; 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 Distribution Plan
22 Calculation of Yield and Total Return
23 Not Applicable
Part C Other Information
- ------ -----------------
24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE> 5
LOGO
------------------------------
PROSPECTUS
------------------------------
MONEY MARKET MUTUAL FUND - CLASS A SHARES
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
February 16, 1996
<PAGE> 6
STAGECOACH FUNDS(R)
MONEY MARKET MUTUAL FUND - CLASS A SHARES
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
Stagecoach Funds, Inc. (the "Company") is a professionally managed, open-end
series investment company, consisting of several separate funds, each with
different investment objectives and policies. This Prospectus contains
information about three of the funds in the Stagecoach Family of Funds-the MONEY
MARKET MUTUAL FUND, the CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND and the
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND (each, a "Fund" and collectively, the
"Funds" or "Money Market Funds"). The National Tax-Free Money Market Mutual Fund
seeks to achieve its investment objective by investing substantially all of its
assets in the Tax-Free Money Market Master Portfolio (the "Master Portfolio") of
Master Investment Trust (the "Master Trust") an open-end management investment
company, rather than in a portfolio of securities. The Master Portfolio has the
same investment objective as the National Tax-Free Money Market Mutual Fund.
AN INVESTMENT IN THE FUNDS AND MASTER PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUNDS OR THE
MASTER PORTFOLIO WILL BE ABLE TO MAINTAIN A CONSTANT $1.00 NET ASSET VALUE PER
SHARE.
This Prospectus sets forth concisely the information about the Funds and the
Master Portfolio that a prospective investor should know before investing. It
should be read and retained for future reference. Statements of Additional
Information ("SAIs"), dated May 1, 1995, containing additional information about
the Money Market Mutual Fund and California Tax-Free Money Market Mutual Fund,
and dated February , 1996 for the National Tax-Free Money Market Mutual Fund
have been filed with the Securities and Exchange Commission ("SEC") and are
incorporated by reference into this prospectus. The SAI for each Fund is
available without charge and can be obtained by writing to Stagecoach
Shareholder Services, Wells Fargo Bank, N.A., P.O. Box 7066, San Francisco, CA
94120-7066 or by calling 800-222-8222. If you hold shares in an IRA, please call
1-800-BEST-IRA for information or assistance.
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. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES CERTAIN
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED
FEBRUARY 16, 1996
PROSPECTUS
<PAGE> 7
The MONEY MARKET MUTUAL FUND seeks to provide investors with a high level of
income, while preserving capital and liquidity, by investing in high-quality,
short-term securities. This Prospectus describes the Class A Shares of the Money
Market Mutual Fund. The Money Market Mutual Fund offers a second class of
shares, Class S Shares, that are available only to qualified business investors
who purchase Fund shares through certain non-interest bearing transaction
accounts at Wells Fargo Bank. Information concerning Class S Shares is available
by calling 1-800-222-8222.
The CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND seeks to obtain a high level
of income exempt from federal income tax and California personal income tax,
while preserving capital and liquidity, by investing in high-quality, U.S.
dollar-denominated money market instruments, primarily municipal obligations.
The NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND seeks to provide investors with
a high level of income exempt from federal income tax, while preserving capital
and liquidity.
The Funds and the Master Portfolio are advised by Wells Fargo Bank which also
serves as the Funds' transfer and dividend disbursing agent and custodian. In
addition, Wells Fargo Bank is a Shareholder Servicing Agent (as defined below)
and a Selling Agent (as defined below). Stephens Inc. ("Stephens") is the Funds'
sponsor and administrator and serves as the distributor of the Funds' shares.
WELLS FARGO BANK IS THE INVESTMENT ADVISER TO THE FUNDS AND/OR MASTER
PORTFOLIO AND PROVIDES CERTAIN OTHER SERVICES TO THE FUNDS AND MASTER
PORTFOLIO, FOR WHICH IT IS COMPENSATED. STEPHENS, WHICH IS NOT
AFFILIATED WITH WELLS FARGO BANK, IS THE SPONSOR AND
DISTRIBUTOR FOR THE FUNDS AND PLACEMENT AGENT FOR THE
MASTER TRUST.
PROSPECTUS
<PAGE> 8
TABLE OF CONTENTS
-------
PROSPECTUS SUMMARY 1
SUMMARY OF FUND EXPENSES 5
FINANCIAL HIGHLIGHTS 8
HOW THE FUNDS WORK 10
THE FUNDS, THE MASTER TRUST AND MANAGEMENT 17
INVESTING IN THE FUNDS 19
DIVIDENDS 26
HOW TO REDEEM SHARES 26
ADDITIONAL SHAREHOLDER SERVICES 30
MANAGEMENT AND SERVICING FEES 33
TAXES 36
PROSPECTUS APPENDIX - ADDITIONAL INVESTMENT POLICIES A-1
PROSPECTUS
<PAGE> 9
PROSPECTUS SUMMARY
The Funds provide you with a convenient way to invest in a portfolio of
securities selected and supervised by professional management. The following
provides you with summary information about each of the Funds. For more
information, please refer specifically to the identified Prospectus sections and
generally to the Prospectus and the SAI for each Fund.
Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
A. The MONEY MARKET MUTUAL FUND seeks to provide investors with a high level of
income, while preserving capital and liquidity, by investing in
high-quality, short-term securities. In pursuing this objective, the Fund
invests in securities with remaining maturities not exceeding thirteen
months, as determined in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act"). These securities include
obligations of the U.S. Government, its agencies and instrumentalities,
high-quality debt obligations such as corporate debt, certain obligations of
U.S. banks and certain repurchase agreements.
The CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND seeks to obtain a high
level of income exempt from federal income tax and California personal
income tax, while preserving capital and liquidity, by investing in
high-quality, U.S. dollar-denominated money market instruments, primarily
municipal obligations. The Fund, in pursuing its objective, invests in
securities with remaining maturities not exceeding thirteen months, as
determined in accordance with Rule 2a-7 under the 1940 Act. Under normal
market conditions, substantially all of the Fund's assets will be invested
in California municipal obligations that are exempt from federal income
taxes and California personal income taxes. Certain risks may arise from the
Fund's concentration in investments in California municipal obligations.
The NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND seeks to provide investors
with a high level of income exempt from federal income tax, while preserving
capital and liquidity. The Fund seeks to achieve its investment objective by
investing all of its assets in the Tax-Free Money Market Master Portfolio of
the Master Trust, which has the same investment objective as the Fund. The
Master Portfolio seeks to achieve this investment objective by investing in
high-quality, U.S. dollar-denominated money market instruments, primarily
municipal obligations, with remaining maturities not exceeding thirteen
months.
Each Fund and the Master Portfolio seeks to maintain a net asset value of
$1.00 per share; however, there is no assurance that this will be achieved.
See "How the Funds Work -- Investment Objectives and Policies" and
"Prospectus Appendix -- Additional Investment Policies."
1 PROSPECTUS
<PAGE> 10
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, as the investment adviser to the Money Market Mutual Fund,
the California Tax-Free Money Market Mutual Fund and the Master Portfolio,
manages your investments. A separate investment adviser has not been
retained for the National Tax-Free Money Market Mutual Fund because this
Fund invests all of its assets in the Master Portfolio. Wells Fargo Bank
also provides the Funds and the Master Portfolio with transfer agency,
dividend disbursing agency and custodial services. In addition, Wells Fargo
Bank is a Shareholder Servicing Agent and a Selling Agent (as defined below)
of the Funds. See "The Funds, the Master Trust and Management" and
"Management and Servicing Fees."
Q. HOW DO I INVEST?
A. You may invest by purchasing Fund shares at their net asset value. You may
open an account by investing at least $2,500, and you may add to your
account by making additional investments of at least $100, although certain
exceptions to these minimums may be available. Shares of the Funds may be
purchased by wire, by mail, or by electing an automatic investment feature
called the AutoSaver Plan on any day the Funds are open. Shares of the
California Tax-Free Money Market Mutual Fund and the National Tax-Free Money
Market Mutual Fund may not be suitable investments for tax-exempt
institutions or tax-exempt retirement plans, since such investors would not
generally benefit from the tax-exempt status of such Funds' dividends. See
"Investing in the Funds." In addition, California Tax-Free Money Market
Mutual Fund shares are not available in all states. For more details,
contact Stephens (the Funds' sponsor and distributor), a Shareholder
Servicing Agent (such as Wells Fargo Bank) or a Selling Agent.
Q. WHAT ARE THE FEES FOR INVESTING?
A. Unlike certain other mutual funds that charge sales loads or other
transaction fees, the Funds do not impose shareholder transaction fees on
the purchase, redemption or exchange of their shares or for reinvesting
dividends. For its advisory services, Wells Fargo Bank is entitled to
monthly investment advisory fees at the annual rate of 0.50%, 0.40% and
0.30% of the average daily net assets of the California Tax-Free Money
Market Mutual Fund, the Money Market Mutual Fund, and the Master Portfolio,
respectively. Wells Fargo Bank also provides transfer agency services and
custody services to the Funds and the Master Portfolio. Wells Fargo Bank is
not entitled to any additional compensation for providing such services to
the Funds or the Master Portfolio.
For its services as administrator of the Funds and the Master Portfolio,
Stephens is entitled to receive an annual fee at the rate of 0.05% of the
average daily net assets of each Fund.
PROSPECTUS 2
<PAGE> 11
The Funds have adopted Distribution Plans under the SEC's Rule 12b-1 which
permit payment of a monthly fee at the annual rate of 0.05% of each Fund's
average daily net assets to Stephens as compensation for
distribution-related services. The National Tax-Free Money Market Mutual
Fund has adopted a Shareholder Servicing Plan pursuant to which it may enter
into agreements with Shareholder Servicing Agents. The Shareholder Servicing
Plans permit the Funds to compensate Shareholder Servicing Agents at a rate
of up to 0.30%, 0.30% and 0.25% of the average daily net assets of the
California Tax-Free Money Market Mutual Fund, the Money Market Mutual Fund,
and the National Tax-Free Money Market Mutual Fund, respectively. See "The
Funds, The Master Trust and Management."
Q. HOW ARE THE FUNDS' INVESTMENTS VALUED?
A. The price per share or "net asset value"("NAV") of a Fund depends upon the
total value of portfolio securities owned by such Fund (plus cash and other
assets net of liabilities) and the number of its shares outstanding. In the
case of the National Tax-Free Money Market Mutual Fund, the NAV depends on
the NAV of the Master Portfolio's shares, which in turn depends on the total
value of portfolio securities owned by the Master Portfolio (plus cash and
other assets after subtracting liabilities) and the number of Master
Portfolio shares outstanding. Wells Fargo Bank calculates the NAV for each
Fund and the Master Portfolio on each day that the Funds and the Master
Portfolio are open. See "Investing in the Funds -- Share Price." Although
the Funds and Master Portfolio seek to maintain a $1.00 price per share
based on the NAV, there can be no assurance that this will be achieved.
Q. HOW WILL I RECEIVE DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS?
A. Dividends from net investment income are declared daily, paid monthly and
automatically reinvested in additional shares of the Funds at NAV unless you
elect to receive dividends in cash. Any capital gains are distributed at
least annually. See "Dividends" and "Additional Shareholder Services."
Q. ARE EXCHANGES TO OTHER FUNDS PERMITTED?
A. Yes. The exchange privilege enables you to exchange Fund shares for shares
of another fund offered by the Company, or shares of certain other funds
offered by other investment companies in the Stagecoach Family of Funds, to
the extent such shares are offered for sale in your state of residence. See
"Additional Shareholder Services -- Exchange Privilege."
Q. HOW MAY I REDEEM SHARES?
A. You may redeem your shares at NAV, without charge by a Fund, by letter, by
an automatic feature called the Systematic Withdrawal Plan, or by telephone
(unless you specifically decline telephone privileges), on any day the
relevant Fund is open for business. See "How To Redeem Shares." For more
details, contact Stephens, a Shareholder Servicing Agent (such as Wells
Fargo Bank) or a Selling Agent.
3 PROSPECTUS
<PAGE> 12
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?
A. Investments in the Funds are not bank deposits or obligations of Wells Fargo
Bank and are not insured by the Federal Deposit Insurance Corporation
("FDIC"), nor are they insured or guaranteed against loss of principal.
Therefore, investors should be willing to accept some risk with money
invested in the Funds. Although the Funds and the Master Portfolio seek to
maintain a stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so. Since the California Tax-Free Money Market
Mutual Fund invests primarily in securities issued by California, its
agencies and municipalities, events in California are more likely to affect
this Fund's investments. Also, the California Tax-Free Money Market Mutual
Fund is nondiversified, which means that its assets may be invested among
fewer issuers and therefore the value of its assets may be subject to
greater impact by events affecting one of its investments. As with all
mutual funds, there can be no assurance that the Funds will achieve their
investment objectives. See "How the Funds Work -- Investment Objectives and
Policies" and "Prospectus Appendix -- Additional Investment Policies."
PROSPECTUS 4
<PAGE> 13
SUMMARY OF FUND EXPENSES
This expense summary is a standard format required for all mutual funds to
help you understand the various costs and expenses you will bear directly or
indirectly as a shareholder of the Funds. As shown below, you are not charged
sales charges, redemption fees, or exchange fees. You should consider this
expense information together with the important information in this Prospectus,
including the Funds' investment objectives and policies.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL
MONEY MARKET TAX-FREE MONEY TAX-FREE MONEY
MUTUAL FUND MARKET MUTUAL MARKET MUTUAL
(CLASS A SHARES) FUND FUND
<S> <C> <C> <C>
Maximum Sales Charge
Imposed
on Purchases (as a
percentage
of offering
price)............ None None None
Sales Charge Imposed on
Reinvested
Dividends......... None None None
Sales Charge Imposed on
Redemptions*........ None None None
Exchange Fees........... None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
MONEY
MARKET CALIFORNIA NATIONAL TAX-
MUTUAL FUND TAX-FREE FREE MONEY
(CLASS A MONEY MARKET MARKET MUTUAL
SHARES) MUTUAL FUND FUND**
<S> <C> <C> <C> <C> <C> <C>
Management Fee......... 0.40% 0.50% 0.30%
Rule 12b-1 Fee(1)...... 0.02% 0.03% 0.05%
Other Expenses:
Shareholder
Servicing
Fee(1)***........ 0.28% 0.04% 0.00%
Administrative
Fee.............. 0.03% 0.03% 0.05%
Miscellaneous
Expenses(1)...... 0.02% 0.05% 0.10%
----- ----- -----
Total Other
Expenses(1):......... 0.33% 0.12% 0.15%
----- ----- -----
TOTAL FUND OPERATING
EXPENSES(1)........ 0.75% 0.65% 0.50%
</TABLE>
- -------------------------------
<TABLE>
<C> <S>
(1) After any waivers or reimbursements.
* The Company reserves the right to impose a charge for wiring
redemption proceeds.
** Other mutual funds may invest in the Tax-Free Money Market
Master Portfolio and such other funds' expenses and,
correspondingly, investment returns may differ from those of
the National Tax-Free Money Market Mutual Fund.
*** Shareholder Servicing Agents also may impose certain conditions
on their customers, subject to the terms of this Prospectus, in
addition to or different from those imposed by the Funds, such
as requiring a minimum initial investment or payment of a
separate fee for additional services.
</TABLE>
5 PROSPECTUS
<PAGE> 14
EXAMPLE OF EXPENSES
<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
in a Fund, assuming a 5% annual
return and redemption at the end of
each time period indicated:
California Tax-Free Money
Market Mutual Fund............. $7 $ 21 $ 36 $ 81
Money Market Mutual Fund (Class
A Shares)...................... $8 $ 24 $ 42 $ 93
National Tax-Free Money Market
Mutual Fund.................... $5 $ 16 $ N/A $N/A
</TABLE>
EXPLANATION OF TABLES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell Fund
shares. There are no Shareholder Transaction Expenses for these Funds. However,
the Company reserves the right to impose a charge for wiring redemption
proceeds.
ANNUAL FUND OPERATING EXPENSES for the Class A Shares of the Money Market
Mutual Fund and shares of the California Tax-Free Money Market Mutual Fund are
based on amounts incurred during the most recent fiscal year, restated to
reflect voluntary fee waivers and expense reimbursements that are expected to
continue during the current fiscal year. Annual Fund Operating Expenses for the
National Tax-Free Money Market Mutual Fund summarize expenses charged at the
Master Trust level as well as expenses charged at the Company level. The amounts
shown above for the National Tax-Free Money Market Mutual Fund under "Management
Fee," "Rule 12b-1 Fee" and "Administrative Fee" reflect contract amounts; the
amounts shown above under "Shareholder Servicing Fee," "Miscellaneous Expenses,"
"Total Other Expenses" and "Total Fund Operating Expenses" reflect certain
anticipated voluntary fee waivers and expense reimbursements for the current
fiscal year. Wells Fargo Bank and Stephens have each agreed to waive or
reimburse all or a portion of its respective fees if certain Fund expenses
exceed limits set by state securities laws or regulations. In addition, Wells
Fargo Bank and Stephens may each elect to waive or reimburse all or a portion of
its respective fees charged to, or expenses paid by, a Fund or the Master
Portfolio. Any such waivers or reimbursements would reduce the total expenses of
the Funds or Master Portfolio. There can be no assurance that such waivers or
reimbursements would continue. Absent waivers and reimbursements, the
percentages shown above under "Rule 12b-1 Fee," "Total Other Expenses" and
"Total Fund Operating Expenses" would be 0.05%, 0.44% and 0.89%, respectively,
for the Class A Shares of the Money Market Mutual Fund and 0.05%, 0.53% and
1.08%, respectively, for the California Tax-Free Money Market Mutual Fund.
Absent waivers and reimbursements, "Shareholder Servicing Fee," "Miscellaneous
Expenses," "Total Other Expenses" and "Total Fund
PROSPECTUS 6
<PAGE> 15
Operating Expenses" would be 0.25%, 0.30%, 0.60% and 0.95%, respectively, for
the National Tax-Free Money Market Mutual Fund. As of the date of this
Prospectus, the National Tax-Free Money Market Mutual Fund had not commenced
operations. Long-term shareholders in the National Tax-Free Money Market Mutual
Fund could pay more in sales charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers ("NASD"). For more complete
descriptions of the various costs and expenses you can expect to incur as an
investor in each Fund, please see the Prospectus section captioned "Management
and Servicing Fees."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the expenses
associated with a $1,000 investment over the periods shown, based on the
expenses in the table above and an assumed annual rate of return of 5%. This
rate of return should not be considered an indication of actual or expected
performance of a Fund. In addition, the example should not be considered a
representation of past or future expenses and actual expenses may be greater or
lesser than those shown. If current fee waivers and/or reimbursements are
discontinued, the amounts contained in the "Example of Expenses" may increase.
With regard to the combined fees and expenses of the National Tax-Free Money
Market Mutual Fund and the Master Portfolio, the Board of Directors of the
Company has considered whether various costs and benefits of investing all the
Fund's assets in the Master Portfolio would be more or less than if the Fund
invested in portfolio securities directly, and believes that the Fund should
achieve economic efficiencies by investing in the Master Portfolio.
Additionally, the Board of Directors has determined that the aggregate fees
assessed by this Fund and the Master Portfolio should be less than those
expenses that the Directors believe would be incurred had the Fund invested
directly in the securities held by the Master Portfolio. See the Prospectus
sections captioned "The Funds, the Master Trust and Management" and "Management
and Servicing Fees" for more complete descriptions of the various costs and
expenses applicable to investors in this Fund. In addition, if this Fund were to
change its fundamental investment strategy and cease investing in the Master
Portfolio of the Master Trust, these expenses could change.
7 PROSPECTUS
<PAGE> 16
FINANCIAL HIGHLIGHTS
The following information relating to the Class A Shares of the Money Market
Mutual Fund and the shares of the California Tax-Free Money Market Mutual Fund
has been derived from the Financial Highlights in the financial statements for
such Funds' fiscal year ended December 31, 1994 and for the six-month period
ended June 30, 1995. The financial statements for the fiscal year ended December
31, 1994 are included in the SAI for each such Fund and have been audited by
KPMG Peat Marwick LLP, independent auditors, whose report on Stagecoach Funds,
Inc. dated February 17, 1995 also is included in the SAIs. The information
provided below should be read in conjunction with the 1994 annual financial
statements for these Funds and the notes thereto. The financial statements for
the six-month period ended June 30, 1995 are unaudited. The information
presented below should be read in conjunction with the unaudited financial
statements and the notes thereto for the six-month period ended June 30, 1995.
The SAI for each of the Funds has been incorporated by reference into this
Prospectus. Financial information is not provided in connection with the
National Tax-Free Money Market Mutual Fund because the Fund had not begun
operations during the periods presented.
MONEY MARKET MUTUAL FUND
FOR A CLASS A SHARE OUTSTANDING
<TABLE>
<CAPTION>
(UNAUDITED) PERIOD
SIX MONTHS ENDED*
ENDED YEAR ENDED YEAR ENDED DEC.
JUNE 30, DEC. 31, DEC. 31, 31,
1995 1994 1993 1992
---------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of
Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment
Operations:
Net Investment Income........ 0.03 0.04 0.03 0.02
Less Distributions:
Dividends from Net Investment
Income..................... (0.03 ) (0.04) (0.03) (0.02)
Net Asset Value End of
Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return (not
annualized).................. 2.71 % 3.74% 2.70% 1.50%
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)...................... $3,162,345 $2,343,942 $317,474 $236,269
Number of shares outstanding,
End of Period (000's)........ 3,162,433 2,344,028 317,474 236,270
Ratios to Average Net Assets
(annualized):
Ratio of Expenses to Average
Net Assets(1)................ 0.75 % 0.69% 0.58% 0.20%
Ratio of Net Investment Income
to Average Net Assets(2)..... 5.35 % 4.12% 2.67% 2.98%
- -------------------
(1) Ratio of Expenses to
Average Net Assets Prior To
Waived Fees and Reimbursed
Expenses................... 0.84 % 0.89% 1.00% 0.94%
(2) Ratio of Net Investment
Income to Average Net
Assets Prior To Waived Fees
and Reimbursed Expenses.... 5.26 % 3.92% 2.25% 2.24%
* The Fund commenced operations on July 1,
1992
</TABLE>
PROSPECTUS 8
<PAGE> 17
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
FOR A SHARE OUTSTANDING
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment
Operations:
Net Investment
Income.............. 0.02 0.02 0.02 0.03
Less Distributions:
Dividends from Net
Investment Income... (0.02) (0.02) (0.02) (0.03)
Net Asset Value, End of
Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return (not
annualized)........... 1.64% 2.28% 1.89% 2.81%
Ratios/Supplemental
Data:
Net Assets, End of
Period (000's)........ $952,017 $869,745 $793,420 $572,906
Number of shares
outstanding, End of
Period (000's)........ 952,139 869,824 793,426 572,907
Ratios to Average Net
Assets (annualized):
Ratio of Expenses to
Average Net
Assets(1)............. 0.65% 0.62% 0.55% 0.28%
Ratio of Net Investment
Income to Average Net
Assets(2)............. 3.26% 2.26% 1.88% 2.41%
- -------------------
(1) Ratio of Expenses to
Average Net Assets
Prior to
Waived Fees and
Reimbursed
Expenses............ 1.02% 1.08% 1.06% 1.03%
(2) Ratio of Net
Investment Income to
Average Net Assets
Prior to Waived Fees
and Reimbursed
Expenses............ 2.89% 1.80% 1.37% 1.66%
</TABLE>
9 PROSPECTUS
<PAGE> 18
HOW THE FUNDS WORK
INVESTMENT OBJECTIVES AND POLICIES
THE MONEY MARKET MUTUAL FUND
The Money Market Mutual Fund seeks to provide investors with a high level of
income, while preserving capital and liquidity, by investing in high-quality,
short-term instruments. The Fund 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 short-term U.S. Government obligations, obligations of
domestic and foreign banks, commercial paper, and repurchase agreements. In
pursuing its objective, the Fund invests in instruments with remaining
maturities not exceeding thirteen months, as determined in accordance with Rule
2a-7 under the 1940 Act. As with all mutual funds, there can be no assurance
that the Fund, which is a diversified portfolio, will achieve its investment
objective. A more complete description of these investments and investment
activities is contained in the "Prospectus Appendix - Additional Investment
Policies" and in the SAI.
THE CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
The California Tax-Free Money Market Mutual Fund seeks to obtain a high level
of income exempt from federal income tax and California personal income tax,
while preserving capital and liquidity, by investing in high-quality, short-term
U.S. dollar-denominated money market instruments, primarily municipal
obligations. This investment objective is fundamental and cannot be changed
without shareholder approval. There can be no assurance that the Fund, which is
a nondiversified portfolio, will achieve its investment objective. Wells Fargo
Bank, as investment adviser to the Fund, pursues the Fund's objective by
investing (under normal market conditions) substantially all of the Fund's
assets in the following types of municipal obligations that pay interest which
is exempt from both federal income tax and California personal income tax:
bonds, notes, and commercial paper issued by or on behalf of the State of
California, its cities, municipalities, political subdivisions and other public
authorities with remaining maturities not exceeding thirteen months, as
determined in accordance with Rule 2a-7 under the 1940 Act. These municipal
obligations and the taxable investments described below may bear interest at
rates that are not fixed ("floating- and variable-rate instruments").
The California Tax-Free Money Market Mutual Fund may temporarily invest some
of its assets in certain high-quality, taxable money market instruments or may
engage in certain other investment activities as described in this Prospectus.
The Fund may elect to invest temporarily up to 20% of its net assets in certain
permitted taxable investments, which include cash reserves, U.S. Government
obligations, obligations of domestic and foreign banks, foreign securities,
rated commercial paper, taxable municipal
PROSPECTUS 10
<PAGE> 19
obligations, repurchase agreements, and loans of portfolio securities. Such
temporary investments would most likely be made when there is an unexpected or
abnormal level of investor purchases or redemptions of Fund shares or because of
unusual market conditions. The income from these temporary investments and
investment activities may be subject to federal income tax and California
personal income tax. However, as stated above, Wells Fargo Bank seeks to invest
substantially all of the Fund's assets in securities exempt from such taxes. An
additional description of tax-free municipal obligations, taxable money market
instruments, and other investment activities is contained in the "Prospectus
Appendix - Additional Investment Policies" and in the SAI.
As a matter of fundamental policy, at least 80% of the California Tax-Free
Money Market Mutual Fund's net assets are invested (under normal market
conditions) in municipal obligations that pay interest which is exempt from
federal income tax and not subject to the federal alternative minimum tax (or in
other open-end tax-free money market funds with a similar fundamental policy).
At least 65% of the Fund's total assets are invested (under normal market
conditions) in municipal obligations that pay interest which is exempt from
California personal income tax. However, as a matter of general operating
policy, the Fund seeks to have substantially all of its assets invested in such
municipal obligations. The Fund's investment adviser may rely either on an
opinion of counsel to the issuer of the municipal obligations or on Internal
Revenue Service ("IRS") rulings regarding the tax treatment of these
obligations. In addition, the Fund may invest 25% or more of its assets in
California municipal obligations that are related in such a way that an
economic, business or political development or change affecting one such
obligation would also affect the other obligations; for example, the California
Tax-Free Money Market Mutual Fund may own different municipal obligations which
pay interest based on the revenues of similar types of projects.
THE NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
The National Tax-Free Money Market Mutual Fund seeks to provide investors with
a high level of income exempt from federal income tax, while preserving capital
and liquidity. The Fund, which is a diversified portfolio, seeks to achieve its
investment objective by investing all of its assets in the Master Portfolio,
which has the same investment objective as the Fund. The Master Portfolio seeks
to achieve its investment objective by investing in high-quality, short-term
U.S. dollar-denominated money market instruments, primarily municipal
obligations, with remaining maturities not exceeding thirteen months.
The Fund may withdraw its investments in the Master Portfolio only if the
Company's Board of Directors determines that such action is in the best
interests of the Fund and its shareholders. Upon such withdrawal, the Board
would consider alternative investments, including investing all of the Fund's
assets in another investment company with the same investment objective as the
Fund or hiring an investment adviser to manage the Fund's assets in accordance
with the investment policies described in this
11 PROSPECTUS
<PAGE> 20
section with respect to the Master Portfolio. For a description of the
management and expenses of the Master Trust, see the Prospectus section
captioned "The Funds, The Master Trust and Management."
Since the investment characteristics of the Fund correspond directly to those
of the Master Portfolio, the following is a discussion of the various
investments of, and techniques employed by, the Master Portfolio of the Master
Trust.
Wells Fargo Bank, as investment adviser to the Master Portfolio, pursues the
investment objective of the Master Portfolio by investing (under normal market
conditions) substantially all of the Master Portfolio's assets in the following
types of municipal obligations that pay interest which is exempt from federal
income tax: bonds, notes and commercial paper issued by or on behalf of states,
territories, and possessions of the United States (including the District of
Columbia) and their political subdivisions, agencies, instrumentalities
(including government-sponsored enterprises) and authorities, the interest on
which, in the opinion of counsel to the issuer or bond counsel, is exempt from
federal income tax. These municipal obligations and the taxable investments
described below may bear interest at rates that are not fixed ("floating- and
variable-rate instruments").
The Master Portfolio may temporarily invest some of its assets in cash
reserves or certain high-quality, taxable money market instruments, or may
engage in other investment activities as described in this Prospectus. The
Master Portfolio may elect to invest temporarily up to 20% of its net assets in
certain permitted taxable investments, including cash reserves, U.S. Government
obligations, obligations of domestic banks, commercial paper, taxable municipal
obligations and repurchase agreements. The Master Portfolio may also invest in
U.S. dollar-denominated obligations of foreign banks and foreign securities.
Such temporary investments would most likely be made when there is an unexpected
or abnormal level of investor purchases or redemptions of interests in the
Master Portfolio or because of unusual market conditions. The income from these
temporary investments and investment activities may be subject to federal income
tax. However, as stated above, Wells Fargo Bank seeks to invest substantially
all of the Master Portfolio's assets in securities exempt from such tax. A more
complete description of tax-free municipal obligations, taxable money market
instruments, and other investment activities is contained in the "Prospectus
Appendix -- Additional Investment Policies."
As a matter of fundamental policy, at least 80% of the net assets of the
Master Portfolio are invested (under normal market conditions) in municipal
obligations that pay interest which is exempt from federal income tax and is not
subject to the federal alternative minimum tax. However, as a matter of general
operating policy, the Master Portfolio seeks to invest substantially all of its
assets in such municipal obligations. The Master Portfolio's investment adviser
may rely either on the opinion of counsel to the issuer of the municipal
obligations or on Internal Revenue Service ("IRS") rulings regarding the tax
treatment of these obligations. In addition, the Master Portfolio may
PROSPECTUS 12
<PAGE> 21
invest 25% or more of its assets in municipal obligations that are related in
such a way that an economic, business or political development or change
affecting one such obligation would also affect the other obligations; for
example, the Master Portfolio may own different municipal obligations which pay
interest based on the revenues of similar types of projects.
MASTER/FEEDER STRUCTURE
The National Tax-Free Money Market Mutual Fund is a feeder fund in a
master/feeder structure, which means that it invests all of its assets in the
Master Portfolio. The Master Portfolio has the same investment objective as the
Fund. The Master Trust is organized as a trust under the Laws of the State of
Delaware. See "How the Funds Work -- Investment Objectives and Policies." In
addition to selling its shares to the Fund, the Master Portfolio may sell its
shares to other mutual funds or qualified investors. Other mutual funds and
other qualified investors may have different expenses and, accordingly, may
experience different investment returns and yields compared with the Fund.
Information regarding additional options, if any, for investments in shares of
the Master Portfolio is available from Stephens and may be obtained by calling
800-643-9691 or by calling Wells Fargo Bank at 800-222-8222.
The Company's Board of Directors believes that if other investors invest their
assets in the Master Portfolio, certain economic efficiencies may be realized
with respect to the Master Portfolio. For example, fixed expenses that otherwise
would have been borne solely by the Fund would be spread across a potentially
larger asset base provided by more than one fund investing in the Master
Portfolio. The Fund and any other entities investing in the Master Portfolio
would each be liable for all obligations of the Master Portfolio. However, the
risk of the Fund incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance 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 Portfolio. However, if a mutual fund or other investor withdraws its
investment from the Master Portfolio, the economic efficiencies (e.g., spreading
fixed expenses across a larger asset base) that the Company's Board of Directors
believes should be available through investment in the Master Portfolio may not
be fully achieved. In addition, given the relatively novel nature of the
master/feeder structure, accounting and operational difficulties, although
unlikely, could occur.
The investment objective and other fundamental policies of the National
Tax-Free Money Market Mutual Fund and the Master Portfolio 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 Fund's or Master Portfolio's, as
applicable, outstanding voting securities. Whenever the Fund, as a Master
Portfolio interestholder, is requested to vote on matters pertaining to any
fundamental policy of the Master Portfolio, the Fund will
13 PROSPECTUS
<PAGE> 22
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 Fund shares for which it receives no voting instructions in the
same proportion as the votes received from Fund shareholders. In addition,
certain policies of the Master Portfolio which are non-fundamental could be
changed by vote of a majority of the Master Trust's Trustees without
interestholder vote. If the Master Portfolio's investment objective or
fundamental or non-fundamental policies are changed, the Fund could subsequently
change its own investment objective or policies to correspond to those of the
Master Portfolio, or the Fund could redeem its Master Portfolio interests and
either seek a new investment company with a matching objective in which to
invest or it could retain its own investment adviser to manage the Fund's
portfolio in accordance with its investment objective. In the latter case, the
Fund's inability to find a substitute investment company in which to invest or
equivalent management services could adversely affect shareholders' investments
in the Fund. The Fund will provide shareholders with 30 days' written notice
prior to the implementation of any change in the investment objective of such
Fund or the Master Portfolio, to the extent possible. Additional information
regarding the officers and directors/trustees of the Company and the Master
Trust is included in the SAI for the National Tax-Free Money Market Mutual Fund
under "Management."
RISK FACTORS
Investments in the Funds and Master Portfolio are not bank accounts and are
not insured or guaranteed against loss of principal. Although both the Funds and
the Master Portfolio seek to maintain a stable NAV of $1.00 per share, there is
no assurance that they will be able to do so. As with all mutual funds, there
can be no assurance that the Funds and the Master Portfolio will achieve their
investment objectives. See "Prospectus Appendix -- Additional Investment
Policies" for further discussion of investment objectives and risks.
The Funds and the Master Portfolio, under the 1940 Act, must comply with
certain investment criteria designed to provide liquidity, reduce risk, and
allow the Funds and the Master Portfolio to maintain a stable NAV of $1.00 per
share. The dollar-weighted average portfolio maturity of each of the Funds and
the Master Portfolio must not exceed 90 days. Any security that a Fund or the
Master Portfolio purchases must have a remaining maturity of not more than
thirteen months. In addition, any security that a Fund or the Master Portfolio
purchases must present minimal credit risks and be of high quality (i.e., be
rated in the top two rating categories by the required number of nationally
recognized statistical rating organizations ("NRSROs") or, if unrated,
determined to be of comparable quality to such rated securities). These
determinations are made by Wells Fargo Bank, as the Funds' or Master Portfolio's
investment adviser, as the case may be, under guidelines adopted by the Board of
Directors of the Company, or the Master Trust's Board of Trustees, respectively.
PROSPECTUS 14
<PAGE> 23
The Funds and the Master Portfolio seek to reduce risk by investing their
assets in securities of various issuers. As such, the Money Market Mutual Fund,
the National Tax-Free Money Market Mutual Fund and the Master Portfolio, but not
the California Tax-Free Money Market Mutual Fund, are considered to be
diversified for purposes of the 1940 Act. In addition, the Funds and the Master
Portfolio, since their respective inceptions, have emphasized safety of
principal and high credit quality. In particular, the internal investment
policies of Wells Fargo Bank, the investment adviser to the Funds and Master
Portfolio, have always prohibited the purchase for the Funds and Master
Portfolio of many types of floating-rate instruments commonly referred to as
"derivatives" that are considered potentially volatile. The following types of
derivative instruments ARE NOT permitted investments for the Funds and the
Master Portfolio:
- capped floaters (on which interest is not paid when market rates move above
a certain level);
- leveraged floaters (whose interest-rate reset provisions are based on a
formula that magnifies changes in interest rates);
- range floaters (which do not pay any interest if market interest rates move
outside of a specified range);
- dual index floaters (whose interest-rate reset provisions are tied to more
than one index so that a change in the relationship between these indices
may result in the value of the instrument falling below face value); and
- inverse floaters (which reset in the opposite direction of their index).
Additionally, neither the Funds nor the Master Portfolio may invest in
instruments whose interest rate reset provisions are tied to an index that
materially lags short-term interest rates, such as Cost of Funds Index ("COFI")
floaters. The Funds and the Master Portfolio may only invest in floating-rate
instruments that bear interest at a rate that resets quarterly or more
frequently, and which resets based on changes in standard money market rate
indices such as U.S. Government Treasury bills, London Interbank Offered Rate,
the prime rate, published commercial paper rates, federal funds rates, Public
Securities Associates ("PSA") floaters or JJ Kenney index floaters.
Since the California Tax-Free Money Market Mutual Fund invests primarily in
securities issued by California and its agencies and municipalities, events in
California are more likely to affect the Fund's investments. While the
California Tax-Free Money Market Mutual Fund seeks to reduce risk by investing
its assets in securities of various issuers, the Fund is considered to be
nondiversified for purposes of the 1940 Act. However, the California Tax-Free
Money Market Mutual Fund will comply with Internal Revenue Code of 1986 ("Code")
diversification requirements, as described in the "Prospectus
Appendix -- Additional Investment Policies" section below.
California is experiencing recurring budget deficits caused by lower than
anticipated tax revenues and increased expenditures for certain programs. These
budget deficits
15 PROSPECTUS
<PAGE> 24
have depleted the state's available cash resources, and the state has recently
had to use a series of external borrowings to meet its cash needs. In addition,
since 1992 some of the credit rating agencies have assigned their third highest
rating to certain of the state's debt obligations. On July 15, 1994, three of
the ratings agencies rating California's long-term debt lowered their rating of
the state's general obligation bonds. Moody's Investors Service lowered its
rating from "Aa" to "A1," Standard & Poor's Ratings Group lowered its rating
from "A+" to "A" and termed its outlook as "stable," and Fitch Investors Service
lowered its rating from "AA" to "A." Since the California Tax-Free Money Market
Mutual Fund may invest only in securities rated in the top two rating
categories, any further rating downgrade of the state's debt obligations may
impact the availability of securities that meet the Fund's investment policies
and restrictions. The Fund's investment adviser continues to monitor and
evaluate the Fund's investments in light of the events in California and the
California Tax-Free Money Market Mutual Fund's investment objective and
investment policies. The rating agencies also continue to monitor events in the
state and the state and local governments' responses to budget shortfalls. See
"Special Considerations Affecting California Municipal Obligations" in the SAI
for the California Tax-Free Money Market Mutual Fund.
PERFORMANCE
The performance of the Class A Shares of the Money Market Mutual Fund and the
shares of the California Tax-Free Money Market Mutual and National Tax-Free
Money Market Mutual Funds (sometimes, the "Tax-Free Funds") may be advertised in
terms of current yield or effective yield. In addition, the performance of the
Tax-Free Funds may be advertised in terms of tax-equivalent yield or effective
tax-equivalent yield. These performance figures are based on historical results
and are not intended to indicate future performance. The investment performance
of the National Tax-Free Money Market Mutual Fund will correspond to the
investment experience of the Master Portfolio.
Yield refers to the income generated by an investment in shares of a Tax-Free
Fund, or Class of shares of the Money Market Mutual Fund, over a seven- or
thirty-day period (which period will be specified in any advertisement),
expressed as an annual percentage rate. Effective yields are calculated
similarly but assume that the income earned from a Fund is reinvested in the
Fund or in shares of the same Class of such Fund. Because of the effects of
compounding, effective yields are slightly higher than yields. The
tax-equivalent yield and the effective tax-equivalent yield of the Tax-Free
Funds assume that a stated income tax rate has been applied to determine the
tax-equivalent figures. The application of the stated income tax rate results in
higher yield and effective yield figures. The Tax-Free Funds may also present
nonstandard performance information, such as distribution rate, for purposes of
sales literature. Performance quotations are computed separately for Class A
Shares and Class S Shares of the Money Market Mutual Fund.
Additional performance information is contained in the Company's annual report
which is available upon request without charge by calling the Company at
800-222-8222.
PROSPECTUS 16
<PAGE> 25
THE FUNDS, THE MASTER TRUST
AND MANAGEMENT
The Funds are three of the Funds in the Stagecoach Family of Funds. The
Company was organized as a Maryland corporation on September 9, 1991, and is
currently authorized to offer shares of ten other funds: the Aggressive Growth
Fund, Asset Allocation Fund, the California Tax-Free Bond Fund, the California
Tax-Free Income Fund, the Corporate Stock Fund, the Diversified Income Fund, the
Ginnie Mae Fund, the Growth and Income Fund, the Short-Intermediate U.S.
Government Income Fund and the U.S. Government Allocation Fund. The Money Market
Mutual Fund also offers a second class of shares -- Class S Shares. Class S
Shares are subject to different levels of fees and expenses than Class A Shares,
and the performance of such shares may vary accordingly. Class S Shares are
currently available only to qualified business investors who purchase such
shares through certain non-interest bearing transaction accounts with Wells
Fargo Bank. Please contact Stagecoach Shareholder Services at 800-222-8222 if
you would like additional information about Class S Shares.
The Board of Directors of Stagecoach Funds supervises these funds' activities
and monitors their contractual arrangements with various service providers.
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
funds' investment objectives or fundamental investment policies. All shares of
the funds have equal voting rights and will be voted in the aggregate, rather
than by fund or class, unless otherwise required by law (such as when the voting
matter affects only one fund or class). As a shareholder of the Funds, you are
entitled to one vote for each share you own and fractional votes for fractional
shares owned. A more detailed description of the voting rights and attributes of
the shares is contained in the "Capital Stock" section of the SAI for each Fund.
The Master Trust was established on August 15, 1991, as a Delaware business
trust. The Master Trust's Declaration of Trust permits the Board of Trustees to
issue beneficial interests in a Master Portfolio of the Master Trust to
investors based on their proportionate investments in the Master Portfolio. The
Master Trust is divided into separate portfolios called series. The Master Trust
has retained the services of Wells Fargo Bank 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 its Master
Portfolios and supervising the actions of Wells Fargo Bank and Stephens in these
capacities.
INVESTMENT ADVISER
Wells Fargo Bank is the investment adviser to the Master Portfolio, the Money
Market Mutual Fund and the California Tax-Free Money Market Mutual Fund. Wells
Fargo Bank,
17 PROSPECTUS
<PAGE> 26
one of the largest banks in the United States, was founded in 1852 and is the
oldest bank in the western United States. As of October 31, 1995, Wells Fargo
Bank provided investment advisory services for approximately $33.9 billion for
assets for individuals, trusts, estates and institutions. Wells Fargo Bank also
serves as the investment adviser to the other separately managed series of the
Master Trust, funds of the Company and to five other registered, open-end
management investment companies each of which consists of several separately
managed investment portfolios. Wells Fargo Bank, a wholly owned subsidiary of
Wells Fargo & Company, is located at 420 Montgomery Street, San Francisco,
California 94105.
Morrison & Foerster, counsel to the Company and the Master Trust and special
counsel to Wells Fargo Bank, has advised the Company, the Master Trust and Wells
Fargo Bank that Wells Fargo Bank may perform the services contemplated by the
Advisory Contracts 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 Bank from continuing to perform, in
whole or in part, such services. If Wells Fargo Bank were prohibited from
performing any such services, it is expected that the Board of
Directors/Trustees would recommend to the shareholders/interestholders that they
approve a new investment advisory agreement with another entity or entities
qualified to perform such services.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank serves as the Funds' and the Master Portfolio's custodian and
transfer and dividend disbursing agent (the "Transfer Agent"). In addition,
Wells Fargo Bank is a Shareholder Servicing Agent and Selling Agent of the
Funds.
EXPENSES
As noted previously, from time to time, Wells Fargo Bank and Stephens may
waive their respective fees in whole or in part. Any such waivers reduce a
Fund's expenses and, accordingly, have a favorable impact on the Fund's yield.
Except for the expenses borne by Wells Fargo Bank and Stephens, each Fund bears
all costs of its operations, including a pro rata portion of the compensation of
the Company's Directors who are not affiliated with Wells Fargo Bank or Stephens
or any of their affiliates; advisory, administration fees; interest charges;
taxes; fees and expenses of independent auditors, legal counsel, expenses of
redeeming shares, expenses of preparing and printing prospectuses (except the
expense of printing and mailing prospectuses used for promotional purposes),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies;
PROSPECTUS 18
<PAGE> 27
insurance premiums and certain expenses relating to insurance coverage; trade
association membership dues; brokerage and other expenses connected with the
execution of portfolio transactions; expenses of shareholders' meetings;
expenses relating to the issuance, registration and qualification of Fund
shares; pricing services; and any extraordinary expenses. Expenses attributable
to each Fund are charged against such Fund's assets. General expenses of the
Company are allocated among all of the funds of the Company, including the
Funds, in a manner proportionate to the net assets of each fund, on a
transactional basis, or on such other basis as the Company's Board of Directors
deems equitable. Each Fund bears a pro rata portion of the Master Portfolio's
expenses.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens is the Company's and the Master Trust's sponsor and administrator,
and distributes the Funds' 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, they have been
providing discretionary portfolio management services since 1983. Stephens
currently manages investment portfolios for pension and profit-sharing plans,
individual investors, foundations, insurance companies and university
endowments.
INVESTING IN THE FUNDS
OPENING AN ACCOUNT
You can buy Fund shares in one of the several ways described below. You must
complete and sign an Account Application to open an account. Additional
documentation may be required from corporations, associations, and certain
fiduciaries. Do not mail cash. If you have any questions or need extra forms,
you may call 800-222-8222.
After an application has been processed and an account has been established,
subsequent purchases of different funds of the Company under the same umbrella
account do not require the completion of additional Account Applications. A
separate Account Application must be processed for each different umbrella
account number (even if the registration is the same). Call the number on your
confirmation statement to obtain information about what is required to change
registration.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request from you or your representative, the Company
or Stephens will transmit or cause to be transmitted promptly, without charge, a
paper copy of the electronic Prospectus.
19 PROSPECTUS
<PAGE> 28
SHARE PRICE
The price of a share of each Fund is its net asset value ("NAV"). The NAV of
each share of the California Tax-Free Money Market Mutual Fund and the National
Tax-Free Money Market Mutual Fund is computed by adding the value of the
respective Fund's portfolio investments plus cash and other assets, deducting
liabilities and then dividing the result by the number of outstanding shares of
such Fund. The National Tax-Free Money Market Mutual Fund's investments in the
Master Portfolio are valued at the NAV of the Master Portfolio's shares. The
Master Portfolio calculates the NAV of its shares on the same day and at the
same time as the National Tax-Free Money Market Mutual Fund. The NAV of a share
of each Class of the Money Market Mutual Fund is the value of total net assets
attributable to each Class divided by the number of outstanding shares of that
Class. The value of the net assets per Class is determined daily by adjusting
the net assets per Class at the beginning of the day by the value of each
Class's shareholder activity, net investment income and net realized and
unrealized gains or losses for that day. Net investment income is calculated
each day for each Class by attributing to each Class a pro rata share of daily
income and common expenses, and by assigning class-specific expenses to each
Class as appropriate. As noted above, the Funds and the Master Portfolio seek to
maintain a constant $1.00 per share NAV, although there is no assurance that
they will be able to do so.
PURCHASE OF SHARES
Shares of a Fund may be purchased on any day such Fund is open (a "Business
Day"). Currently, the Money Market Mutual Fund and California Tax-Free Money
Market Mutual Fund observe the following holidays: New Year's Day, Presidents'
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day (each, with respect to such Funds, a "Holiday"), the National Tax-Free Money
Market Mutual Fund observes the aforementioned Holidays and also observes Martin
Luther King, Jr. Day, Columbus Day and Veterans Day (with respect to such Fund,
these days are also "Holidays"). The NAV of each Fund's shares is calculated as
of 9:00 a.m. (Pacific time) on each Business Day. The NAV of shares acquired
through other means may be calculated at other times. All transaction orders are
processed at the NAV next determined after the order is received.
The Funds' and the Master Portfolio's NAV are each calculated on the basis of
the amortized cost method. 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 and the Master
Trust's Board of Trustees believe that this valuation method accurately reflects
fair value.
HOW TO BUY SHARES
You may buy shares of the Funds on any Business Day by any of the methods
described below. After a properly completed Account Application is received and
your wire order
PROSPECTUS 20
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or check is received, or an account with a bank which is designated in the
Account Application and which is approved by the Transfer Agent (an "Approved
Account") is debited, your purchase order is effective and full and fractional
shares are purchased at the next determined NAV, which is expected to remain a
constant $1.00 per share. 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. In addition, the Funds may
hold payment on any redemption until reasonably satisfied that investments made
by check have been collected (which may take up to 15 days). The Company
reserves the right to reject any purchase order or suspend sales at any time.
Generally, the minimum initial investment amount is $2,500. However, the
minimum initial investment amount is $100 for investments made through the
AutoSaver Plan purchase method (described below) and $250 for investments in
Class A Shares of the Money Market Mutual Fund made through any tax-sheltered
retirement account for which Wells Fargo Bank serves as custodian or trustee
under a prototype trust approved by the IRS (a "Plan Account"). Where shares of
the California Tax-Free Money Market Mutual Fund, Class A Shares of the Money
Market Mutual Fund or shares of the National Tax-Free Money Market Mutual Fund
are purchased in exchange for shares of another fund in the Stagecoach Family of
Funds, the minimum initial investment amount applicable to the shares being
exchanged carries over. This means, for example, that you can invest $1,000 in
shares of the California Tax-Free Money Market Mutual Fund, Class A Shares of
the Money Market Mutual Fund or shares of the National Tax-Free Money Market
Mutual Fund even though each such Fund ordinarily requires a $2,500 minimum
balance, in an exchange from a fund that has a $1,000 minimum balance. In
addition, the minimum initial or subsequent purchase amount requirements may be
waived or lowered for investments effected on a group basis by certain entities
and their employees, such as pursuant to a payroll deduction or other
accumulation plan. In addition, the minimum initial purchase amount does not
apply to investors who purchase shares of the Funds as customers of a financial
institution which has established a cash sweep arrangement with respect to one
of the Funds. All subsequent investments must be at least $100. If you have
questions regarding purchases of shares, please contact the Company at
800-222-8222 or contact a Shareholder Servicing Agent or Selling Agent (defined
below).
Shares of the National Tax-Free Money Market Mutual Fund and the California
Tax-Free Money Market Mutual Fund may not be suitable investments for tax-exempt
institutions or tax-sheltered retirement plans, since such investors would not
benefit from the exempt status of the Funds' dividends. See "Federal Income
Taxes - Special Tax Considerations" in the SAI for each Fund. In addition,
California Tax-Free Money Market Mutual Fund shares are not available in all
states.
21 PROSPECTUS
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INITIAL PURCHASES BY WIRE
1. Complete an Account Application.
2. Instruct the wiring bank to transmit the specified amount in federal funds
($2,500 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund) (designate Class A, if applicable)
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 NAV 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 $2,500 or more, payable to
"Stagecoach Funds (Name of Fund) (designate Class A, if applicable)," to the
address set forth in "Initial Purchases by Wire."
3. Share purchases are effected at the NAV next determined after the Account
Application is received and accepted.
AUTOSAVER PLAN PURCHASES
The AutoSaver Plan provides you with a convenient way to establish and
automatically add to your Fund account on a monthly basis. To participate in the
AutoSaver Plan, you must specify an amount ($100 or more) to be withdrawn
automatically by the Transfer Agent on a monthly basis from a designated
Approved Bank account. Wells Fargo Bank is an Approved Bank. The Transfer Agent
withdraws and uses this amount to purchase specified shares of the designated
Fund on your behalf on or about the day that you have
PROSPECTUS 22
<PAGE> 31
selected, or, if you have not selected a day, on or about the 20th day of each
month. The Transfer Agent requires a minimum of ten (10) Business Days to
implement your AutoSaver Plan purchases. There are no separate fees charged to
you by the Funds for participating in the AutoSaver Plan.
You may change your investment amount, the date on which your AutoSaver
purchase is effected, suspend purchases or terminate your election at any time
by notifying the Transfer Agent at least five Business Days prior to any
scheduled transaction.
TAX-DEFERRED RETIREMENT PLANS
You may be entitled to invest in the Money Market Mutual Fund through a Plan
Account or other tax-deferred retirement plan. Contact a Shareholder Servicing
Agent (such as Wells Fargo Bank) or a Selling Agent for materials describing
Plan Accounts available through it, and the benefits, provisions, and fees of
such Plan Accounts. The minimum initial investment amount for Class A Shares of
the Money Market Mutual Fund acquired through a Plan Account is $250.
Pursuant to the Code, individuals who are not active participants (and who do
not have a spouse who is an active participant) in certain types of retirement
plans ("qualified retirement plans") may deduct contributions to an Individual
Retirement Account ("IRA"), up to specified limits. Investment earnings in the
IRA will be tax-deferred until withdrawn, at which time the individual may be in
a lower tax bracket.
The maximum annual deductible contribution to an IRA for individuals under age
70 1/2 is 100% of includible compensation up to a maximum of (i) $2,000 for
single individuals; (ii) $4,000 for a married couple when both spouses earn
income; and (iii) $2,250 when one spouse earns, or elects for IRA purposes to be
treated as earning, no income (together the "IRA contribution limits").
The IRA deduction is also available for single individual taxpayers and
married couples who are active participants in qualified retirement plans but
who have adjusted gross incomes which do not exceed certain specified limits. If
their adjusted gross income exceeds these limits, the amount of the deductible
contribution may be phased down and eventually eliminated.
Any individual who works may make nondeductible contributions to an IRA in
addition to any deductible contributions. Total aggregate deductible and
nondeductible contributions are limited to the IRA contribution limits discussed
above. Nondeductible contributions in excess of the applicable IRA contribution
limit are "nondeductible excess contributions." In addition, contributions made
to an IRA for the year in which an individual attains the age of 70 1/2, or any
year thereafter, are also nondeductible excess contributions. Nondeductible
excess contributions are subject to a 6% excise tax penalty which is charged
each year that the nondeductible excess contribution remains in the IRA.
23 PROSPECTUS
<PAGE> 32
An employer also may contribute to an individual's IRA by establishing a
Simplified Employee Pension Plan through a Shareholder Servicing Agent or a
Selling Agent, known as a SEP-IRA. Participating employers may make an annual
contribution in an amount up to the lesser of 15% of earned income or $30,000,
subject to certain provisions of the Code. Investment earnings will be
tax-deferred until withdrawn.
The foregoing discussion regarding IRAs is based on the Code and regulations
in effect as of the date of this Prospectus and summarizes only some of the
important federal tax considerations generally affecting IRA contributions made
by individuals or their employers. It is not intended as a substitute for
careful tax planning. You should consult your tax advisor with respect to your
specific federal tax situation as well as with respect to state and local taxes.
Further federal tax information is contained under the heading "Taxes" in this
Prospectus and in the SAI for each Fund.
A Shareholder Servicing Agent or Selling Agent also 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.
Application materials for opening a tax-deferred retirement plan can be
obtained from a Shareholder Servicing Agent or a Selling Agent. Return your
completed tax-deferred retirement plan application to your Shareholder Servicing
Agent or a Selling Agent for approval and processing. If your tax-deferred
retirement plan application is incomplete or improperly filled out, there may be
a delay before a Fund account is opened. You should ask your Shareholder
Servicing Agent or Selling Agent about the investment options available to your
tax-deferred retirement plan, since some of the funds in the Stagecoach Family
of Funds may be unavailable as options. Moreover, certain features described
herein, such as the AutoSaver Plan and the Systematic Withdrawal Plan, may not
be available to individuals or entities who invest through a tax-deferred
retirement plan.
ADDITIONAL PURCHASES
You may make additional purchases of $100 or more by instructing the Funds'
Transfer Agent to debit a designated Approved Bank account, by wire by
instructing the wiring bank to transmit the specified amount as directed above
for initial purchases, or by mail with a check payable to "Stagecoach Funds
(name of Fund) (designate Class A, if applicable)" to the address set forth in
"Initial Purchases by Wire." Write your Fund account number on the check and
include the detachable stub from your Statement of Account or a letter providing
your Fund account number.
PURCHASES THROUGH SELLING AGENTS
You may place a purchase order for shares of the Funds through a broker/dealer
or financial institution that has entered into a Selling Agreement with
Stephens, as the Funds' Distributor ("Selling Agent"), by 9:00 a.m. (Pacific
time) on any Business Day,
PROSPECTUS 24
<PAGE> 33
including orders for which payment is to be made from your free cash credit
balance in a securities account maintained with a Selling Agent. These purchase
orders generally are executed on the same day the order is placed if notice is
provided to the Transfer Agent by 9:00 a.m. and federal funds are received by
the Transfer Agent before the close of business. If your purchase order is
received by a Selling Agent after 9:00 a.m. on any Business Day or federal funds
are not received by the Transfer Agent before the close of business, then your
purchase order generally is executed on the next Business Day following the day
your order is placed. The Selling Agent is responsible for the prompt
transmission of your purchase order to the Funds. A Selling Agent that is a
financial institution may be required to register as a dealer pursuant to
applicable state securities laws, which may differ from federal law and any
interpretations expressed herein.
PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS
Purchase orders for shares of the Funds may be transmitted to the Transfer
Agent through any entity that has entered into a Shareholder Servicing Agreement
with the Funds ("Shareholder Servicing Agent"), such as Wells Fargo Bank. See
"Management and Servicing Fees - Shareholder Servicing Agent."
The Shareholder Servicing Agent may transmit a purchase order to the Transfer
Agent, on your behalf, including a purchase order for which payment is to be
transferred from an account with an Approved Bank or wired from a financial
institution. If your order is transmitted by the Shareholder Servicing Agent to
the Transfer Agent before 9:00 a.m. (Pacific time) and federal funds are
received by the Transfer Agent before the close of business, the purchase order
generally is executed on the same day. If your Shareholder Servicing Agent
transmits your purchase order to the Transfer Agent after 9:00 a.m. or federal
funds are not received by the Transfer Agent before the close of business, then
your order is executed on the next Business Day, except that automated
investment program purchase orders transmitted through Shareholder Servicing
Agents are executed at 1:00 p.m. on each Business Day. The Shareholder Servicing
Agent is responsible for the prompt transmission of your purchase order to the
Transfer Agent. Financial Institutions acting as Shareholder Servicing Agents
may be required to register as dealers pursuant to applicable state securities
laws, which may differ from federal law and any interpretations expressed
herein.
STATEMENTS AND REPORTS
The Funds, or a Shareholder Servicing Agent on their behalf, will typically
send you a monthly statement of your account after every month in which there
has been a transaction that affects your share balance or your Fund account
registration. The Funds do not issue share certificates. A statement with tax
information will be mailed to you by January 31 of each year, and also will be
filed with the IRS. At least twice a year, the Company's financial statements
will be mailed to investors.
25 PROSPECTUS
<PAGE> 34
DIVIDENDS
The Funds intend to declare dividends on a daily basis payable to shareholders
of record as of 9:00 a.m. (Pacific time). If your purchase order is received
before 9:00 a.m. on any Business Day, you begin earning dividends on that
Business Day and continue to earn dividends through the day prior to the date
you redeem such shares. If your purchase order is processed at or after 9:00
a.m. on any Business Day, you begin earning dividends on the next Business Day
and continue to earn dividends through the day on which you redeem your shares.
Dividends for a Saturday, Sunday or Holiday are declared payable to shareholders
of record as of the preceding Business Day. If you redeem shares before a
dividend payment date, any dividends credited to you are paid on the following
dividend payment date unless you have redeemed all of the shares in your
account, in which case you will receive any accrued dividends together with your
redemption proceeds. The Funds declare and distribute any capital gains at least
annually.
Dividends declared in, and attributable to, a month generally are paid on the
last Business Day of such month. You have three options for receiving dividends
and any capital gain distributions. They are discussed under "Additional
Shareholder Services - Dividend and Distribution Options."
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares in a Fund on any Business Day
without any charge by the Funds. Your shares are redeemed at the next NAV
calculated after the Funds have received your redemption request in proper form.
Redemption proceeds may be more or less than the amount invested and, therefore,
a redemption of shares in a Fund may result in a gain or loss for federal and
state income tax purposes. The Funds ordinarily remit your redemption proceeds
within seven days after your redemption order is received in proper form, unless
the SEC permits a longer period under extraordinary circumstances. Such
extraordinary circumstances could include a period during which an emergency
exists as a result of which (a) disposal by the Funds and/or Master Portfolio of
securities owned by them is not reasonably practicable or (b) it is not
reasonably practicable for the Funds and/or Master Portfolio fairly to determine
the value of their net assets, or (c) a period during which the SEC by order
permits deferral of redemptions for the protection of security holders of the
Funds and/or Master Portfolio. In addition, the Funds may hold payment on your
redemption until reasonably satisfied that your investments made by check have
been collected (which can take up to 15 days from the purchase date). To ensure
acceptance of your redemption request, please follow the procedures described
below. Payment of redemption proceeds may be made in securities, subject to
regulation by some state securities commissions.
PROSPECTUS 26
<PAGE> 35
Due to the high cost of maintaining Fund accounts with small balances, the
Funds reserve the right to close your account and send you the proceeds if the
balance falls below the applicable minimum balance because of a redemption
(including a redemption of Fund shares after you have made only the applicable
minimum initial investment). You will be given 30 days' notice to make an
additional investment to increase your account balance to an amount equal to or
greater than the applicable minimum balance. For a discussion of applicable
minimum balance requirements, see "Investing in the Funds - How to Buy Shares."
Redemption orders that are received by the Transfer Agent before 9:00 a.m.
(Pacific Time) on any Business Day generally are executed on that Business Day.
Redemption orders that are received after 9:00 a.m. on any Business Day
generally are executed on the next Business Day.
REDEMPTIONS BY TELEPHONE
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline such
privileges. Telephone redemption privileges authorize the Transfer Agent to act
on telephone instructions from any person representing himself or herself to be
the investor and reasonably believed by the Transfer Agent to be genuine. The
Company requires the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Company nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
REDEMPTIONS BY LETTER
1. Write a letter of instruction. Indicate the dollar amount or number of Fund
shares you want to redeem. Refer to your Fund account number and give your
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 must sign.
3. Signature guarantees are not required for redemption requests unless
redemption proceeds of $5,000 or more are to be paid to someone other than
you at your address of record or your designated Approved Bank account, or
other unusual circumstances exist which cause the Transfer Agent to determine
that a signature guarantee is necessary or prudent to protect against
unauthorized redemption requests. If required, a signature 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
27 PROSPECTUS
<PAGE> 36
notaries public are not acceptable. Further documentation may be requested
from corporations, administrators, executors, personal representatives,
trustees or custodians.
4. Mail your letter to the Transfer Agent at the mailing address set forth under
"Investing in the Funds - Initial Purchases by Wire."
Unless other instructions are given in proper form, a check for your
redemption proceeds will be sent to your address of record.
EXPEDITED REDEMPTIONS BY LETTER OR TELEPHONE
You may request an expedited redemption of Fund shares by letter, in which
case your receipt of redemption proceeds (but not the Fund's receipt of your
redemption request) would be expedited. Telephone redemption or exchange
privileges are made available to you automatically upon the opening of an
account unless you specifically decline such privileges. You also may request an
expedited redemption of Fund shares by telephone on any Business Day, in which
case both your receipt of redemption proceeds and the Fund's receipt of your
redemption request would be expedited. You may request expedited redemption by
telephone only if the total value of the shares redeemed is equal to $100 or
more.
You may request expedited redemption by telephone by calling the Transfer
Agent at the telephone number listed on your transaction confirmation or by
calling 800-222-8222.
You may mail your expedited redemption request to the Transfer Agent at the
mailing address set forth under "Investing in the Funds - Initial Purchases by
Wire."
Upon request, proceeds of expedited redemptions of $5,000 or more will be
wired or credited to an Approved Bank account designated in your Account
Application or wired to the Selling Agent designated in your Account
Application. The Company reserves the right to impose a charge for wiring
redemption proceeds. When proceeds of your 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 or Selling Agent that you have not predesignated in your
Account Application, your expedited redemption request must be made by letter
and the signature(s) on the letter may be required to be guaranteed, regardless
of the amount of the redemption. If your expedited redemption request is
received by the Transfer Agent before 9:00 a.m. (Pacific time) on a Business
Day, your redemption proceeds will be transmitted to your designated account
with an Approved Bank or Selling Agent on the same Business Day (assuming your
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
PROSPECTUS 28
<PAGE> 37
$5,000 will be mailed to your address of record, or, at your election, credited
to an Approved Bank account designated in your Account Application.
During periods of drastic economic or market activity or changes, you may
experience problems implementing an expedited redemption by telephone. In the
event you are unable to reach the Transfer Agent by telephone, you should
consider using overnight mail to implement an expedited redemption. The Funds
reserve the right to modify or terminate the expedited telephone redemption
privilege at any time.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides you with a convenient way to
have Fund shares redeemed from your account and the proceeds distributed to you
on a monthly basis. You may participate in this plan only if you have a Fund
account valued at $10,000 or more as of the date of your election to
participate, your dividend and capital gain distributions are being reinvested
automatically and you are not a participant in the AutoSaver Plan at any time
while participating in the Systematic Withdrawal Plan. You specify an amount
($100 or more) to be distributed by check to your address of record or deposited
in your Approved Bank account designated in the Account Application. The
Transfer Agent redeems sufficient shares and mails or deposits your 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 you by the Funds for
participating in the Systematic Withdrawal Plan.
You may change your withdrawal amount, suspend withdrawals or terminate your
participation in the Systematic Withdrawal Plan at any time by notifying the
Transfer Agent at least ten Business Days prior to any scheduled transaction.
Your participation in the Systematic Withdrawal Plan will be terminated
automatically if your Fund account is closed or, in some cases, if your Approved
Bank account is closed.
REDEMPTIONS THROUGH SELLING AGENTS
You may request a redemption of Fund shares through your Selling Agent.
Redemption orders transmitted by a Selling Agent to the Transfer Agent before
9:00 a.m. (Pacific time) on any Business Day generally are executed on that day.
Redemption orders transmitted by a Selling Agent to the Transfer Agent after
9:00 a.m. on any Business Day generally are executed on the next Business Day.
The Selling Agent is responsible for the prompt transmission of your redemption
order to the Funds.
Unless you have made other arrangements with a Selling Agent and the Transfer
Agent has been informed of such arrangements, proceeds of a redemption order
made by you through a Selling Agent are credited to an account with an Approved
Bank that you have designated in the Account Application. If no such account is
designated, a check for the proceeds is mailed to your address of record or, if
such address is no longer valid, the proceeds are credited to your account with
the Selling Agent. You may request a
29 PROSPECTUS
<PAGE> 38
check from the Selling Agent or you may elect to retain the redemption proceeds
in such account. The Selling Agent may charge you a service fee. In addition,
the Selling Agent may benefit from the use of your redemption proceeds until the
check it issues to you has cleared or until such proceeds have been disbursed or
reinvested on your behalf.
REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS
You may request a redemption of shares of a Fund through your Shareholder
Servicing Agent. Any redemption request made by telephone through your
Shareholder Servicing Agent must redeem shares with a total value equal to $100
or more. Redemption orders transmitted by a Shareholder Servicing Agent to the
Transfer Agent before 9:00 a.m. (Pacific time) generally are executed on that
day. Redemption orders transmitted by a Shareholder Servicing Agent to the
Transfer Agent after 9:00 a.m. generally are executed on the next Business Day,
except that automated investment program redemption orders transmitted through
Shareholder Servicing Agents are executed at 1:00 p.m. on each Business Day. The
Shareholder Servicing Agent is responsible for the prompt transmission of your
redemption order to the Funds.
Unless you have made other arrangements with your Shareholder Servicing Agent,
and the Transfer Agent has been informed of such arrangements, proceeds of a
redemption order made by you through your Shareholder Servicing Agent are
credited to an account with the Approved Bank that you have designated in the
Account Application. If no such account is designated, a check for the proceeds
is mailed to your address of record or, if such address is no longer valid, the
proceeds are credited to your account with your Shareholder Servicing Agent or
to another account designated in your agreement with your Shareholder Servicing
Agent.
ADDITIONAL SHAREHOLDER SERVICES
The Company offers you a number of optional services. As noted above, you can
take advantage of the AutoSaver Plan, the Systematic Withdrawal Plan, and
Expedited Redemptions by Letter and Telephone. In addition, the Funds offer you
three dividend and distribution payment options and an exchange privilege, which
are described below.
DIVIDEND AND DISTRIBUTION OPTIONS
When you fill out your Account Application, you can choose from three dividend
and distribution options:
A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of your
dividends and capital gain distributions in additional shares of the same
Class of the Fund that paid such dividends or capital gain distributions.
Dividends and distributions declared in a month generally are reinvested at
NAV on the last
PROSPECTUS 30
<PAGE> 39
Business Day of such month. You are assigned this option automatically if
you make no choice on your Account Application.
B. The AUTOMATIC CLEARING HOUSE OPTION permits you to have dividends and
capital gain distributions deposited in your Approved Bank account
designated in the Account Application. In the event your Approved Bank
account is closed, your distribution is held in a non-interest-bearing
omnibus bank account established by the Funds' dividend disbursing agent on
your behalf.
C. The CHECK PAYMENT OPTION lets you receive a check for all dividends and
capital gain distributions, which generally is mailed either to your
designated address or your designated Approved Bank shortly following
declaration. If the U.S. Postal Service cannot deliver your checks, or if
your checks remain uncashed for six months, your distributions are held in
a non-interest-bearing omnibus bank account established by the Funds'
dividend disbursing agent on your behalf.
The Company forwards moneys to the dividend disbursing agent so that it may
issue you dividend checks under the Check Payment Option. The dividend
disbursing agent may benefit from the temporary use of such moneys until these
checks clear.
EXCHANGE PRIVILEGE
Wells Fargo Bank advises a variety of other funds, each with its own
investment objective and policies. The exchange privilege is a convenient way
for you to buy shares in the other funds of the Stagecoach Family of Funds that
are registered in your state of residence in order to respond to changes in your
investment and savings goals or in market conditions. Before you make an
exchange from a Fund into another fund of the Stagecoach Family of Funds, please
observe the following:
- Obtain and carefully read the prospectus of the fund into which you want to
exchange. Prospectuses may be obtained by calling 800-222-8222.
- Shares are exchanged at the next determined NAV.
- You may exchange shares of the California Tax-Free Money Market Mutual Fund
and Class A Shares of the Money Market Mutual Fund for shares of one of the
Company's single-class funds, for Class A or Class B Shares of one of the
Company's multi-class funds or for Retail Shares of another fund. You may
also exchange shares of the California Tax-Free Money Market Mutual Fund for
Class A Shares of the Money Market Mutual Fund and vice versa.
- If you exchange into a fund with a front-end sales charge, you must pay the
difference between that fund's sales charge and any sales charge you already
have paid in connection with the shares you are exchanging.
31 PROSPECTUS
<PAGE> 40
- Each exchange, in effect, represents the redemption of shares of one fund
and the purchase of shares of another, which may produce a gain or loss for
tax purposes. A confirmation of each exchange transaction is sent to you.
- The dollar amount of shares you exchange must meet the minimum initial
and/or subsequent investment amounts of the other fund.
- The Company reserves the right to limit the number of times shares may be
exchanged between funds, to reject any telephone exchange order, to charge a
nominal exchange fee (although it currently does not do so) or otherwise to
modify or discontinue exchange privileges at any time. Under SEC rules,
subject to limited exceptions, the Company must notify you 60 days before it
modifies or discontinues the exchange privilege.
The procedures applicable to Fund share redemptions generally apply to Fund
share exchanges. In particular, transaction orders that are received before 1:00
p.m. (Pacific time) on each Business Day by Shareholder Servicing Agents in
connection with automated investment programs are processed on that Business Day
(provided it is a Business Day for each fund involved in the transaction). Also,
where an exchange order is from a Stagecoach money market mutual fund to a
Stagecoach non-money market mutual fund (a "long-term fund") and the
instructions are received before 1:00 p.m. (Pacific time) by a Shareholder
Servicing Agent by telephone or in person (excluding automated telephone
instructions or Wells Fargo Express ATM instructions), the purchase order for
the long-term fund will be processed as of 1:00 p.m. (Pacific time) at the share
price determined as of that Business Day's close of market. A sufficient number
of money market mutual fund shares will be sold the following Business Day as of
9:00 a.m. (Pacific time) in order to settle the long-term fund purchase. In all
other instances, exchange orders received after 9:00 a.m. (Pacific time) will be
processed on the next day that is a Business Day for each fund involved in the
exchange. In addition, a signature guarantee may be required for exchanges
between shareholder accounts registered in identical names if the amount being
exchanged is more than $25,000.
To exchange shares, write the Transfer Agent at the mailing address under
"Investing in the Funds - Initial Purchases by Wire" or call the Transfer Agent
at the telephone number listed on your transaction confirmation, or contact your
Shareholder Servicing Agent or Selling Agent. The procedures applicable to
telephone redemptions, including the discussion regarding the responsibility for
the authenticity of telephone instructions, are also applicable to telephone
exchange requests. See "How to Redeem Shares - Expedited Redemptions by Letter
and Telephone."
PROSPECTUS 32
<PAGE> 41
MANAGEMENT AND SERVICING FEES
INVESTMENT ADVISER
Subject to the overall supervision of the Company's Board of Directors and the
Board of Trustees of the Master Trust, Wells Fargo Bank, as the Funds' and the
Master Portfolio's investment adviser, provides investment guidance and policy
direction in connection with the management of the Funds' assets. Wells Fargo
Bank also furnishes the Board of Directors with periodic reports on the Funds'
investment strategies and performance. For these services, Wells Fargo Bank is
entitled to a monthly investment advisory fee at the annual rate of 0.40% of the
average daily net assets of the Money Market Mutual Fund, 0.50% of the average
daily net assets of the California Tax-Free Money Market Mutual Fund and 0.30%
of the average daily net assets of the Master Portfolio, of which the National
Tax-Free Money Market Mutual Fund bears a pro rata portion. From time to time,
Wells Fargo Bank may waive such fees in whole or in part. Any such waiver will
reduce expenses of the Funds and the Master Portfolio and, accordingly, have a
favorable impact on the Funds' yields. From time to time, each of the Funds,
consistent with its investment objective, policies and restrictions, may invest
in securities of companies with which Wells Fargo Bank has a lending
relationship. For the year ended December 31, 1994, Wells Fargo Bank was paid
0.40% of the average daily net assets of the Money Market Mutual Fund and 0.49%
of the average daily net assets of the California Tax-Free Money Market Mutual
Fund for its services as investment adviser. As of December 31, 1994, the
National Tax-Free Money Market Mutual Fund had not commenced operations.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank also serves as the Funds' and the Master Portfolio's
custodian and transfer and dividend disbursing agent. Wells Fargo Bank performs
the custodial services at its address above. Under its respective Custody
Agreement with Wells Fargo Bank, each Fund and the Master Portfolio may, at
times, borrow money from Wells Fargo Bank as needed to satisfy temporary
liquidity needs. Wells Fargo Bank charges interest on such overdrafts at a rate
determined pursuant to each Fund's and/or Master Portfolio's Custody Agreement.
The transfer and dividend disbursing agency activities are performed at 525
Market Street, San Francisco, California 94105.
SHAREHOLDER SERVICING AGENT
The Funds have entered into Shareholder Servicing Agreements with Wells Fargo
Bank, and may enter into similar agreements with other entities. Under such
agreements, Shareholder Servicing Agents (including Wells Fargo Bank) has agreed
to, as agent for their customers, among other things: answer customer inquiries
regarding account status and history and the manner in which purchases,
exchanges and redemptions of
33 PROSPECTUS
<PAGE> 42
Fund shares may be effected; assist shareholders in designating and changing
dividend options, account designations and addresses; provide necessary
personnel and facilities to establish and maintain shareholder accounts and
records; assist in processing purchase, redemption and exchange transactions;
arrange for the wiring of money; transfer money in connection with customer
orders to purchase or redeem shares; verify shareholder signatures in connection
with redemption and exchange orders and transfers and changes in accounts with
Approved Banks; furnish (either separately or on an integrated basis with other
reports sent to a shareholder by the Shareholder Servicing Agent) monthly and
year-end statements and confirmations of purchases, redemptions and exchanges;
furnish, on behalf of each of the Funds, proxy statements, annual reports,
updated prospectuses and other communications to shareholders; receive, tabulate
and send to the Fund proxies executed by shareholders; and provide such other
related services as the Funds or a shareholder 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, as calculated on an annualized basis for each Fund's then-current fiscal
year, exceed the lesser of (1) 0.30% of the average daily net assets of the
California Tax-Free Money Market Mutual Fund, 0.30% of the average daily net
assets attributable to the Class A shares of the Money Market Mutual Fund or
0.25% of the average daily net assets of the National Tax-Free Money Market
Mutual Fund, as 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 (2) 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 NASD ("NASD Rules"). In no event
will the portion of such fees that constitutes a "service fee," as that term is
used by the NASD, exceed 0.25% of the average net asset value of a Fund or Class
of a Fund, as the case may be.
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 Funds, such as requiring a minimum initial investment or payment
of a separate fee for additional services. Each Shareholder Servicing Agent
agrees to disclose any fees it may directly charge its customers who are
shareholders of a Fund and to notify them in writing at least 30 days before it
imposes any transaction fees.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Subject to the overall supervision of the governing Board of
Directors/Trustees, Stephens provides each Fund and the Master Portfolio with
administrative services, including general supervision of each Fund's operation,
coordination of the other services provided to each Fund and the Master
Portfolio, compilation of information for
PROSPECTUS 34
<PAGE> 43
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. Stephens also furnishes office
space and certain facilities to conduct each Fund's and the Master Portfolio's
business, and compensates the Directors/Trustees, officers and employees who are
affiliated with Stephens. For these services, Stephens is entitled to a monthly
fee at the annual rate of 0.03% of the Money Market Mutual Fund's and California
Tax-Free Money Market Mutual Fund's average daily net assets and 0.05% of the
National Tax-Free Money Market Mutual Fund's average daily net assets. From time
to time, Stephens may waive its fees charged to a Fund in whole or in part. Any
such waivers will reduce a Fund's expenses and, accordingly, have a favorable
impact on such Fund's yield.
The Company has adopted Distribution Plans on behalf of the Class A Shares of
the Money Market Mutual Fund and shares of the Tax-Free Funds under the SEC's
Rule 12b-1 ("Plans"). The Money Market Mutual Fund, pursuant to the Plan adopted
on behalf of the Class A Shares, may defray all or part of the actual cost of
preparing and printing prospectuses and other promotional materials and of
delivering prospectuses and those materials to prospective Class A shareholders
by paying on an annual basis up to 0.05% of the average daily net assets
attributable to the Class A Shares. Pursuant to the Plan for the California
Tax-Free Money Market Mutual Fund, the Fund may defray all or a part of the cost
of preparing and printing prospectuses and of delivering prospectuses and those
materials to prospective shareholders of the Fund by paying on an annual basis
up to 0.05% of the Fund's average daily net assets. Pursuant to the Plan for the
National Tax-Free Money Market Mutual Fund, Stephens is entitled to receive as
compensation for distribution-related services, a monthly fee at an annual rate
of up to 0.05% of the average daily net assets of the Fund.
Stephens has entered into Distribution Agreements with the Funds and acts as
agent for the Funds for the sale of their shares and may enter into selling
agreements with other agents ("Selling Agents") that wish to make available
shares of the Funds to their respective customers. The Funds may participate in
joint distribution activities with any of the Company's other funds, in which
event, expenses reimbursed out of the assets of a Fund may be attributable, in
part, to the distribution-related activities of another of the Company's funds.
Generally, the expenses attributable to joint distribution activities will be
allocated among each Fund and the other funds of the Company in proportion to
their relative net asset sizes, although the Company's Board of Directors may
allocate such expenses in any other manner that it deems fair and equitable. In
addition, Stephens has established a non-cash compensation program, pursuant to
which broker/dealers or financial institutions that sell shares of the Funds may
earn additional compensation in the form of trips to sales seminars or vacation
destinations, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
meals or merchandise.
35 PROSPECTUS
<PAGE> 44
In addition, the Plans contemplate that, to the extent any fees payable
pursuant to a Shareholder Servicing Agreement (discussed above) are deemed to be
for distribution-related services, such payments are approved and payable
pursuant to the Plans.
Financial institutions acting as Shareholder Servicing Agents or Selling
Agents, or in certain other capacities, may be required to register as dealers
pursuant to applicable state securities laws which may differ from federal law
and any interpretations expressed herein.
FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive their respective
fees in whole or in part and reimburse expenses payable to others. Any such
waivers or reimbursements will reduce a Fund's expenses and, accordingly, have a
favorable impact on such Fund's yield. Except for the expenses borne by Wells
Fargo Bank and Stephens, the Company bears all costs of its operations,
including advisory, shareholder servicing, transfer agency, custody and
administration fees, payments pursuant to any Plans, interest, fees and expenses
of independent auditors and legal counsel, and any extraordinary expenses.
Expenses attributable to each Fund or Class are charged against the assets of
the Fund or Class. General expenses of each Company are allocated among all of
the funds of such Company, including the Funds, in a manner proportionate to the
net assets of each fund, on a transactional basis, or on such other basis as the
Company's Board of Directors deems equitable.
TAXES
By complying with the applicable provisions of the Code, the Money Market
Mutual Fund will not be subject to federal income taxes with respect to net
investment income and net realized capital gains distributed to its
shareholders. Dividends from net investment income (including net short-term
capital gains, if any) declared and paid by the Money Market Mutual Fund will be
taxable as ordinary income to Fund shareholders. Whether you take dividend
payments in cash or have them automatically reinvested in additional shares in
the Money Market Mutual Fund, they will be taxable as ordinary income.
Generally, dividends and distributions are taxable to shareholders 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
such dividends or distributions are actually paid no later than January 31 of
the following year. The Money Market Mutual Fund intends to pay out
substantially all of its net investment income and net realized capital gains
(if any) for each year. The Money Market Mutual Fund does not expect its
dividends to qualify for the dividends-received deduction allowed to corporate
shareholders.
PROSPECTUS 36
<PAGE> 45
By complying with the applicable provisions of the Code, the California
Tax-Free Money Market Mutual Fund will not be subject to federal income taxes
with respect to net investment income and net realized capital gains distributed
to its shareholders, and the Fund's shareholders will not be subject to federal
income taxes on any Fund dividends attributable to interest from tax-exempt
securities. However, dividends attributable to interest from taxable securities
and capital gains (if any) will be taxable to shareholders. In addition, by
complying with the applicable provisions of the California Revenue and Taxation
Code, Fund dividends also will be exempt from California personal income tax to
the extent such dividends are attributable to instruments that pay interest
which would be exempt from California personal income taxes were such
instruments held directly by an individual.
The Company intends to qualify the National Tax-Free Money Market Mutual Fund
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, 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 National Tax-Free
Money Market Mutual Fund will not be subject to federal income taxes with
respect to net investment income and net realized capital gains distributed to
its shareholders, and the Fund's shareholders will not be subject to federal
income taxes on any dividends of the Fund attributable to interest from
tax-exempt securities. However, dividends attributable to interest from taxable
securities and capital gains (if any) will be taxable to shareholders. In
addition, by complying with the applicable provisions of the Code, Fund
dividends also will be exempt from personal income tax to the extent such
dividends are attributable to instruments that pay interest which would be
exempt from personal income taxes if such instruments were held directly by an
individual. The Fund does not make any representation regarding the taxation of
its corporate shareholders and recommends that such shareholders consult their
tax advisors.
The National Tax-Free Money Market Mutual Fund seeks to comply with the
applicable provisions of the Code by investing all of its assets in the Master
Portfolio. The Master Portfolio intends to qualify for federal tax purposes as a
partnership. As such, the Fund will be deemed to own directly its proportionate
share of the Master Trust's assets. Therefore, any interest, dividends, gains or
losses of the Master Portfolio will be deemed to have been "passed through" to
the Fund and other investors in the Master Portfolio, regardless of whether such
interest, dividends or gains have been distributed by the Master Portfolio or
losses have been realized by the Fund or other investors. Accordingly, if the
Master Portfolio were to accrue but not distribute any interest, dividends or
gains, the Fund would be deemed to have realized and recognized its
proportionate share of interest, dividends, or gains without receipt of any
corresponding distribution. The
37 PROSPECTUS
<PAGE> 46
Master Portfolio will seek to minimize recognition by investors of interest,
dividends or gains without a corresponding distribution.
The federal alternative minimum tax ("AMT") rules attempt to ensure that at
least a minimum amount of tax is paid by corporate and high-income noncorporate
taxpayers who obtain significant benefit from certain tax deductions and
exemptions. These deductions and exemptions have been designated "tax preference
items" which must be added back to taxable income for the purposes of
calculating AMT. Among the "tax preference items" and "adjustments" which must
be considered when calculating the AMT is tax-exempt interest from private
activity bonds issued after August 7, 1986. To the extent that the California
Tax-Free Money Market Mutual Fund invests in private activity bonds,
shareholders who pay the alternative minimum tax will be required to report that
portion of Fund dividends attributable to income from the bonds as a tax
preference item in determining their federal AMT. Shareholders will be notified
of the tax status of distributions made by the Funds. Persons who may be
"substantial users" (or "related persons" of substantial users) of facilities
financed by private activity bonds should consult their tax advisors before
purchasing shares in the California Tax-Free Money Market Mutual Fund. There are
other adjustments that may also affect adjusted current earnings for the
purposes of corporate AMT. Shareholders with questions or concerns about AMT
should also consult their tax advisors.
The Funds, or your Shareholder Servicing Agent on their behalf, will inform
you of the amount and nature of such Fund dividends and capital gains. You
should keep all statements you receive to assist in your personal record
keeping. The Company is required to withhold, subject to certain exemptions, at
a rate of 31% on dividends paid or credited to individual shareholders of the
Funds, if a shareholder has not complied with IRS regulations or if a correct
Taxpayer Identification Number, certified when required, is not on file with the
Company or the Transfer Agent. In connection with this withholding requirement,
you will be asked to certify on your Account Application that the social
security or taxpayer identification number you provide is correct and that you
are not subject to 31% back-up withholding for previous underreporting to the
IRS.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - Foreign Shareholders" in the SAIs.
The foregoing discussion regarding dividends, distributions and taxes is based
on tax laws and regulations which were in effect as of the date of this
Prospectus and summarizes only some of the important federal tax considerations
generally affecting the Funds and their shareholders. It is not intended as a
substitute for careful tax planning; you should consult your tax advisor with
respect to your specific tax situation as well as with respect to state and
local taxes.
Further federal tax considerations are discussed in the SAI for each Fund.
PROSPECTUS 38
<PAGE> 47
PROSPECTUS APPENDIX --
ADDITIONAL INVESTMENT POLICIES
FUND AND SERIES INVESTMENTS
Money Market Mutual Fund
The Money Market Mutual Fund may invest in the following:
(i) obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, including government-sponsored enterprises ("U.S.
Government obligations") (discussed below);
(ii) negotiable certificates of deposit, fixed time deposits, bankers'
acceptances or other short-term obligations of U.S. banks (including
foreign branches) that have more than $1 billion in total assets at the
time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are
insured by the FDIC ("bank instruments");
(iii) commercial paper rated at the date of purchase P-1 by Moody's Investors
Service, Inc. ("Moody's") or "A-1+" or "A-1" by Standard & Poor's
Corporation ("S&P") ("rated commercial paper");
(iv) commercial paper unrated at the date of purchase but secured by a letter
of credit from a U.S. bank that meets the above criteria for investment;
(v) certain floating- and variable-rate instruments ("variable-rate
instruments") (discussed below);
(vi) certain repurchase agreements ("repurchase agreements") (discussed
below); and
(vii) short-term, U.S. dollar-denominated obligations of U.S. branches of
foreign banks that at the time of investment have more than $10 billion,
or the equivalent in other currencies, in total assets ("foreign bank
obligations") (discussed below).
California Tax-Free Money Market Mutual Fund
The California Tax-Free Money Market Mutual Fund may invest in the following
municipal obligations with remaining maturities not exceeding thirteen months:
(i) long-term municipal bonds rated at the date of purchase "MIG 1" or "MIG
2" or, if no medium- or short-term rating is available, "Aa" or better
by Moody's or "AA" or better by S&P;
A-1 PROSPECTUS
<PAGE> 48
(ii) medium-term municipal notes rated at the date of purchase "MIG 1" or
"MIG 2" (or "VMIG 1" or "VMIG 2" in the case of an issue having a
variable rate with a demand feature) by Moody's or "SP-1+" or "SP-1" by
S&P; and
(iii) short-term municipal commercial paper rated at the date of purchase
"P-1" by Moody's or "A-1+" or "A-1+" by S&P.
Pending the investment of proceeds from the sale of Fund shares or proceeds
from sales of portfolio securities or in anticipation of redemptions or to
maintain a "defensive" posture when, in the opinion of Wells Fargo Bank, as
investment adviser, it is advisable to do so because of market conditions, the
California Tax-Free Money Market Mutual Fund may elect to invest temporarily up
to 20% of the current value of its total assets in cash reserves or the
following taxable high-quality money market instruments:
(i) U.S. Government obligations;
(ii) bank instruments;
(iii) rated commercial paper;
(iv) repurchase agreements;
(v) foreign bank obligations; and
(vi) high-quality municipal obligations, the income from which may or may not
be exempt from federal income taxes.
Moreover, the California Tax-Free Money Market Mutual Fund may invest
temporarily more than 20% of its total assets in such securities and in
high-quality, short-term municipal obligations the interest on which is not
exempt from federal income taxes to maintain a temporary defensive posture or in
an effort to improve after-tax yield to the California Tax-Free Money Market
Mutual Fund's shareholders when, in the opinion of Wells Fargo Bank, as
investment adviser, it is advisable to do so because of unusual market
conditions.
National Tax-Free Money Market Mutual Fund and
Tax-Free Money Market Master Portfolio
The National Tax-Free Money Market Mutual Fund invests all its assets in
interests of the Master Portfolio of the Master Trust. As a result, the
performance of the Fund corresponds to the investment experience of the Master
Portfolio. The Master Portfolio may invest in the following:
(i) certain municipal obligations (discussed below):
(ii) certain U.S. Government obligations (discussed below);
PROSPECTUS A-2
<PAGE> 49
(iii) negotiable certificates of deposit, fixed time deposits, bankers'
acceptances or other obligations of U.S. banks (including foreign
branches) that have more than $1 billion in total assets at the time of
investment and are members of the Federal Reserve System or are examined
by the Comptroller of the Currency or whose deposits are insured by the
FDIC:
(iv) commercial paper rated at the date of purchase P-1 by Moody's or "A-1+"
or "A-1" by S&P;
(v) certain floating- and variable-rate instruments (discussed below);
(vi) certain repurchase agreements (discussed below); and
(vii) short-term U.S. dollar denominated obligations of foreign branches of
U.S. banks or U.S. branches of foreign banks (discussed below).
The following describes certain instruments in which the Funds and the Master
Portfolio may invest.
Municipal Obligations
Subject to the maturity and other restrictions of Rule 2a-7, the Funds and the
Master Portfolio may invest in Municipal Obligations. Municipal bonds generally
have a maturity at the time of issuance of up to 40 years. Medium-term municipal
notes are generally issued in anticipation of the receipt of tax funds, of the
proceeds of bond placements, or of other revenues. The ability of an issuer to
make payments on notes is therefore especially dependent on such tax receipts,
proceeds from bond sales or other revenues, as the case may be. Municipal
commercial paper is a debt obligation with a stated maturity of 270 days or less
that is issued to finance seasonal working capital needs or as short-term
financing in anticipation of longer-term debt. From time to time, the California
Tax-Free Money Market Mutual Fund and the Master Portfolio may each invest 25%
or more of the current value of its total assets in certain "private activity
bonds," such as pollution control bonds; provided, however, that such
investments will be made only to the extent they are consistent with the Master
Portfolio's fundamental policy of investing, under normal circumstances, at
least 80% of its net assets in municipal obligations that are exempt from
federal income taxes and not subject to the federal alternative minimum tax.
The Master Portfolio will invest in the following municipal obligations with
remaining maturities not exceeding 13 months:
(i) long-term municipal bonds rated at the date of purchase "Aa" or better by
Moody's or "AA" or better by S&P;
(ii) municipal notes rated at the date of purchase "MIG 1" or "MIG 2" (or
"VMIG 1" or "VMIG 2" in the case of an issue having a variable rate with
a demand feature) by Moody's or "SP-1+" "SP-1" or "SP-2" by S&P; and
A-3 PROSPECTUS
<PAGE> 50
(iii) short-term municipal commercial paper rated at the date of purchase
"P-1" by Moody's or "A-1+", or "A-1" or "A-2" by S&P.
For a further discussion of factors affecting purchases of municipal
obligations by the California Tax-Free Money Market Mutual Fund, see "Special
Considerations Affecting California Municipal Obligations" in the SAI.
U.S. Government Obligations
The Master Portfolio may invest in various types of U.S. Government
obligations with remaining maturities of up to 13 months. 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 will 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 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.
Other Investment Companies
For temporary investments the Funds and the Master Portfolio may invest in
shares of other investment companies that invest exclusively in high-quality
short-term securities subject to the limits set forth under Section 12 of the
1940 Act, provided however, that with respect to the California Tax-Free Money
Market and the National Tax-Free Money Market Mutual Funds and the Tax-Free
Money Market Master Portfolio any such company has a fundamental policy of
investing, under normal market conditions, at least 80% of its net assets in
obligations that are exempt from federal income taxes and are not
PROSPECTUS A-4
<PAGE> 51
subject to the federal alternative minimum tax. Such investment companies can be
expected to charge management fees and other operating expenses that would be in
addition to those charged to a Fund or the Master Portfolio; however, Wells
Fargo Bank has undertaken to waive its advisory fees with respect to that
portion of the Funds' or the Master Portfolio's assets so invested, except when
such purchase is part of a plan of merger, consolidation, reorganization or
acquisition. Under Section 12(d)(l), a Fund or the Master Portfolio, together
with any company or companies controlled by the Fund or the Master Portfolio, is
generally prohibited from owning more than 3% of the total outstanding voting
stock of any such investment company, nor may a Fund or the Master Portfolio,
together with any such company or companies, invest more than 5% of its assets
in any one such investment company or invest more than 10% of its assets in
securities of all such investment companies combined. Under Section 12, however,
a Fund may invest substantially all of its assets in the Master Portfolio.
Floating- and Variable-Rate Instruments
Certain of the debt instruments that the Funds may purchase bear interest at
rates that are not fixed, but vary for example, with changes in specified market
rates or indices or at specified intervals. These instruments typically have
maturities of more than thirteen months, 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 Funds and the Master Portfolio may, in accordance with SEC rules,
account for these instruments as maturing at the next interest rate readjustment
date or the date at which the respective Fund or the Master Portfolio may tender
the instrument back to the issuer, whichever is later. The floating-and
variable-rate instruments that the Funds and the Master Portfolio may purchase
include certificates of participation in such obligations. With regard to the
California Tax-Free Money Market Mutual Fund and the Master Portfolio, Wells
Fargo Bank, as investment adviser to the Master Portfolio, may rely upon either
an opinion of counsel or an IRS ruling regarding the tax-exempt status of these
certificates. The Funds and the Master Portfolio may invest in floating- and
variable-rate obligations even if they carry stated maturities in excess of
thirteen months, upon compliance with certain conditions of the SEC, in which
case such obligations will be treated in accordance with these conditions as
having maturities not exceeding thirteen months.
Wells Fargo Bank, as investment adviser to the Funds and the Master Portfolio,
monitors on an ongoing basis the ability of an issuer of a demand instrument to
pay principal and interest on demand. Events affecting the ability of the issuer
of a demand instrument to make payment when due may occur between the time a
Fund or the Master Portfolio elects to demand payment and the time payment is
due, thereby affecting such Fund's ability to obtain payment at par. Demand
instruments whose demand feature is not exercisable within seven days may be
treated as liquid, provided that an active secondary market exists.
A-5 PROSPECTUS
<PAGE> 52
Repurchase Agreements
The Funds and the Master Portfolio may enter into repurchase agreements
wherein the seller of a security to a Fund or the Master Portfolio agrees to
repurchase that security from such Fund or the Master Portfolio at a mutually
agreed-upon time and price. The period of maturity is usually quite short, often
overnight or a few days, although it may extend over a number of months. The
Funds and the Master Portfolio may enter into repurchase agreements only with
respect to U.S. Government obligations and other obligations that could
otherwise be purchased by the participating Fund or the Master Portfolio. All
repurchase agreements will be fully collateralized based on values that are
marked to market daily. While the maturities of the underlying securities in a
repurchase agreement transaction may be greater than thirteen months, the term
of any repurchase agreement on behalf of a Fund or the Master Portfolio will
always be less than thirteen months. If the seller defaults and the value of the
underlying securities has declined, the participating Fund or the Master
Portfolio, as the case may be, may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
disposition of the security by the participating Fund or the Master Portfolio
may be delayed or limited. The Funds and the Master Portfolio will enter into
repurchase agreements only with registered broker/dealers and commercial banks
that meet guidelines established by the Boards of Directors of the Funds or
Board of Trustees of the Master Trust and that are not affiliated with Wells
Fargo Bank. The Funds and the Master Portfolio may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo Bank.
Letters of Credit
Certain of the debt obligations, certificates of participation, commercial
paper and other short-term obligations which the Money Market Mutual Fund and
California Tax-Free Money Market Mutual Fund are permitted to purchase may be
backed by an unconditional and irrevocable letter of credit of a bank, savings
and loan association or insurance company which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Letter
of credit-backed investments must, in the opinion of Wells Fargo Bank, be of
investment quality comparable to other permitted investments of such Fund.
Foreign Obligations
Each Fund and the Master Portfolio may invest up to 25% of its assets in
high-quality, short-term (thirteen months 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. Investments in foreign obligations involve
certain considerations that are not typically associated with investing in
domestic obligations. There may be less publicly available information about a
foreign issuer than about a domestic issuer. Foreign issuers also are not
subject to the same uniform accounting, auditing and financial
PROSPECTUS A-6
<PAGE> 53
reporting standards or governmental supervision as domestic issuers. In
addition, with respect to certain foreign countries, interest may be withheld at
the source under foreign income tax laws and there is a possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments that could affect adversely investments in, the
liquidity of, and the ability to enforce contractual obligations with respect
to, securities of issuers located in those countries.
Taxable Investments
Pending the investment of proceeds from the sale of interests of the Master
Portfolio or proceeds from sales of portfolio securities or in anticipation of
redemptions or to maintain a "defensive" posture when, in the opinion of Wells
Fargo Bank, as investment adviser, it is advisable to do so because of market
conditions, the Master Portfolio may elect to invest temporarily up to 20% of
the current value of its net assets in cash reserves including the following
taxable high-quality money market instruments: (i) U.S. Government obligations;
(ii) negotiable certificates of deposit, bankers' acceptances and fixed time
deposits and other obligations of domestic banks (including foreign branches)
that have more than $1 billion in total assets at the time of investment and are
members of the Federal Reserve System or are examined by the Comptroller of the
Currency or whose deposits are insured by the FDIC; (iii) commercial paper rated
at the date of purchase "P-1" by Moody's or "A-1+" or "A-1" by S&P; (iv) certain
repurchase agreements; and (v) high-quality municipal obligations, the income
from which may or may not be exempt from federal income taxes.
Moreover, the Master Portfolio may invest temporarily more than 20% of its
total assets in such securities and in high-quality, short-term municipal
obligations the interest on which is not exempt from federal income taxes to
maintain a temporary defensive posture or in an effort to improve after-tax
yield to the Master Portfolio's interestholders when, in the opinion of Wells
Fargo Bank, as investment adviser, it is advisable to do so because of unusual
market conditions.
INVESTMENT POLICIES
Each Fund's investment objective, as set forth in the "How the Funds Work --
Investment Objectives and Policies" section, is fundamental. Accordingly, such
investment objectives and policies may not be changed without approval by the
vote of the holders of a majority of such Fund's outstanding 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 a Fund's investment
objective can best be achieved by a substantive change in a nonfundamental
investment policy or strategy, the Company's Board may make such a change
without shareholder approval and will disclose any such material changes in the
then-current prospectus.
A-7 PROSPECTUS
<PAGE> 54
As matters of fundamental policy, the Money Market Mutual Fund and California
Tax-Free Money Market Mutual Fund may: (i) borrow from banks up to 10% of the
current value of each of their 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 each of their net assets (but investments may not be
purchased by a Fund while any such outstanding borrowing in excess of 5% of its
net assets exists); (ii) not make loans of portfolio securities or other assets,
except that loans for purposes of this restriction will not include the purchase
of fixed time deposits, repurchase agreements, commercial paper and other
short-term obligations, and other types of debt instruments commonly sold in a
public or private offering; and (iii) not invest more than 25% of their assets
(i.e. , concentrate) in any particular industry, excluding, (a) investments in
municipal securities by the California Tax-Free Money Market Mutual Fund (for
the purpose of this restriction, private activity bonds shall not be deemed
municipal securities if the payments of principal and interest on such bonds is
the ultimate responsibility of nongovernmental users), (b) U.S. Government
obligations, and (c) 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 matters of nonfundamental policy: (i) the Money Market Mutual Fund may not
purchase securities of any issuer (except for 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 Money Market Mutual Fund's total
assets would be invested in the securities of such issuer or the Money Market
Mutual Fund would own more than 10% of the outstanding voting securities of such
issuer; (ii) the Money Market Mutual Fund may not invest more than 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; and (iii) the California Tax-Free Money
Market Mutual Fund may not invest more than 10% of the current value of its net
assets in repurchase agreements having maturities of more than seven days,
illiquid securities and fixed time deposits that are subject to withdrawal
penalties and that have maturities of more than seven days. With respect to item
(i), it may be possible that the Company would own more than 10% of the
outstanding voting securities of an issuer.
For purposes of complying with the Code, the California Tax-Free Money Market
Mutual Fund will diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the California
Tax-Free Money Market Mutual Fund's assets is represented by cash, U.S.
Government obligations and other securities limited in respect of any one issuer
to an amount not greater than 5% of the California Tax-Free Money Market Mutual
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 obligations and
PROSPECTUS A-8
<PAGE> 55
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.
In addition, at least 65% of the California Tax-Free Money Market Mutual
Fund's total assets are invested (under normal market conditions) in municipal
obligations that pay interest which is exempt from California personal income
taxes. However, as a matter of general operating policy, the California Tax-Free
Money Market Mutual Fund seeks to have substantially all of its assets invested
in such municipal obligations.
The investment objective of the Master Portfolio may not be changed without
approval of the investors in the Master Portfolio. The classification of the
National Tax-Free Money Market Mutual Fund and the Master Portfolio as
"diversified" may not be changed, in the case of the Fund, without the approval
of the Fund's shareholders or, in the case of the Master Portfolio, without the
approval of the Fund and any other investors in the Master Portfolio.
As matters of fundamental policy the National Tax-Free Money Market Mutual
Fund and the Master Portfolio may: (i) borrow from banks up to 10% of the
current value of each of their 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 their respective net assets (but investments by the
Master Portfolio may not be purchased while any such outstanding borrowing in
excess of 5% of its net assets exists); (ii) not make loans, except that each of
the Fund and the Master Portfolio may purchase or hold debt instruments, lend
its portfolio securities and enter into repurchase agreement transactions in
accordance with its investment policies; loans for purposes of this restriction
will not include the Fund's purchase of interests in the Master Portfolio; (iii)
not purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund's or Master Portfolio's investments in that
industry would be 25% or more of the current value of the Fund's or Master
Portfolio's total assets, provided that there is no limitation with respect to
investments in (a) municipal securities (for the purposes of this restriction,
private activity bonds and notes shall not be deemed municipal securities if the
payments of principal and interest on such bonds and notes is the ultimate
responsibility of non-governmental entities), (b) U.S. Government obligations,
and (c) certain obligations of domestic banks; and (iv) not purchase securities
of any issuer (except securities issued or guaranteed by the U.S. Government,
its agencies and instrumentalities, including government-sponsored enterprises)
if, as a result, with respect to 75% of its total assets, more than 5% of the
value of the Master Portfolio's total assets would be invested in the securities
of any one issuer or, with respect to 100% of its total assets the Master
Portfolio's ownership would be more than 10% of the outstanding voting
securities of such issuer.
As matters of non-fundamental policy the National Tax-Free Money Market Mutual
Fund and the Master Portfolio may each: (i) invest up to 10% of the current
value of its
A-9 PROSPECTUS
<PAGE> 56
net assets in securities that are illiquid by virtue of the absence of a readily
available market or the existence of 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; and (ii) invest up to 10% of the current
value of its net assets in repurchase agreements having maturities of more than
seven days, and restricted securities (which include securities that must be
registered under the Securities Act of 1933 before they may be offered to the
public).
PROSPECTUS A-10
<PAGE> 57
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE> 58
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, California 94120-7066
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
For more information about the Funds, simply call 1-800-222-8222, or write:
Stagecoach Funds, Inc.
c/o Stagecoach Shareholder Services
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, California 94120-7066
STAGECOACH FUNDS:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- are NOT FDIC insured
- are NOT guaranteed by Wells Fargo Bank
- are NOT deposits or obligations of the Bank
- involve investment risk, including possible loss of
principal LOGO
Money Market Mutual Funds seek to maintain a stable net
asset value of $1.00 per share; however, there can be no
assurance that the funds will meet this objective.
</TABLE>
LOGO SC 1023 (2/96)
Printed on Recycled Paper
<PAGE> 59
<TABLE>
<S> <C>
LOGO
P.O. Box 7066
San Francisco, CA 94120-7066
</TABLE>
STAGECOACH FUNDS:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- are NOT FDIC insured
- are NOT guaranteed by Wells Fargo Bank
- are NOT deposits or obligations of the Bank
- involve investment risk, including possible loss of
principal LOGO
Money Market Mutual Funds seek to maintain a stable net
asset value of $1.00 per share; however, there can be no
assurance that the funds will meet this objective.
</TABLE>
LOGO SC-1023
Printed on Recycled Paper (2/96)
<PAGE> 60
STAGECOACH FUNDS, INC.
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 16, 1996
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
__________________________________
Stagecoach Funds, Inc. (the "Company") is a professionally
managed, open-end, series investment company. This Statement of Additional
Information ("SAI") contains information about one of the funds in the
Stagecoach Family of Funds -- the NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
(the "Fund"). The Fund seeks to achieve its investment objective by investing
all of its assets in the Tax-Free Money Market Master Portfolio (the "Master
Portfolio") of Master Investment Trust (the "Master Trust"). The Master
Portfolio has the same investment objective as the Fund.
The Fund may withdraw its investment in the Master Portfolio at
any time if the Board of Directors of the Company determines that such action
is in the best interests of the Fund and its shareholders. Upon such
withdrawal, the Company's Board 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 then current Prospectus and SAI.
This SAI is not a prospectus and should be read in conjunction
with the Fund's Prospectus, also dated February 16, 1996. All terms used in
this SAI that are defined in the Fund's Prospectus have the meanings assigned
in such Prospectus. A copy of the Prospectus may be obtained without charge by
writing Stephens Inc., the Company's sponsor, administrator and distributor, at
111 Center Street, Little Rock, Arkansas 72201, or by calling Wells Fargo Bank,
N.A ("Wells Fargo Bank") at 1-800-222-8222.
1
<PAGE> 61
TABLE OF CONTENTS
_____________________
<TABLE>
<CAPTION>
Page
----
<S> <C>
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Calculation of Yield and Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Custodian and Transfer and Dividend Disbursing Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SAI Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
2
<PAGE> 62
INTRODUCTION
The Master Trust is a registered, open-end, management investment
company. The Master Trust is a "series fund," which is a mutual fund divided
into separate portfolios. The Master Trust currently offers four diversified
portfolios: the Cash Investment Trust Master Portfolio, the Short-Term
Municipal Income Master Portfolio (formerly, the 1-3 Year Duration Municipal
Income Master Portfolio), the Short-Term Government-Corporate Income Master
Portfolio (formerly, the 1-3 Year Duration Full Faith and Credit Government
Income Master Portfolio) and the Tax-Free Money Market Master Portfolio. The
Fund invests substantially all of its assets in the Tax-Free Money Market
Master Portfolio, which has the same investment objective as the Fund.
INVESTMENT RESTRICTIONS
The Fund and the Master Portfolio are subject to the following
investment restrictions, all of which are fundamental policies.
The Fund and the Master Portfolio 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 or the Master
Portfolio's investments in that industry would be 25% or more of the current
value of the Fund's or the Master Portfolio's total assets, provided that there
is no limitation with respect to investments in (i) municipal securities (for
the purpose of this restriction, private activity bonds and notes shall not be
deemed municipal securities if the payment of principal and interest on such
bonds or notes is the ultimate responsibility of non-governmental entities);
(ii) obligations of the U.S. Government, its agencies or instrumentalities
(including government-sponsored enterprises); and (iii) the obligations of
domestic banks (for the purpose of this restriction, domestic bank obligations
do not include obligations of U.S. branches of foreign banks or obligations of
foreign branches of U.S. banks); and further provided that this investment
restriction does not affect the Fund's ability to invest all or a portion of
its assets in the Master Portfolio;
(2) purchase or sell real estate or real estate limited
partnerships (other than municipal obligations or other securities secured by
real estate or interests therein or securities issued by companies that invest
in real estate or interests therein), commodities or commodity contracts
(including futures contracts) except that the Fund and Master Portfolio may
purchase securities of an issuer which invests or deals in commodities and
commodity contracts and except that the Fund and Master Portfolio may enter
into futures and options contracts in accordance with their respective
investment policies;
(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions), or make short sales of
securities;
3
<PAGE> 63
(4) underwrite securities of other issuers, except to the
extent that the purchase of municipal securities or other permitted investments
directly from the issuer thereof or from an underwriter for an issuer and the
later disposition of such securities in accordance with the Fund's or Master
Portfolio's investment program (including the Fund's investments in the Master
Portfolio) may be deemed to be an underwriting;
(5) make investments for the purpose of exercising control or
management, provided that this restriction does not affect the Fund's ability
to invest all or a portion of its assets in the Master Portfolio;
(6) issue senior securities, except that the Fund and Master
Portfolio may each 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);
(7) write, purchase or sell puts, calls, warrants, options or
any combination thereof, except that the Fund and Master Portfolio may purchase
securities with put rights in order to maintain liquidity;
(8) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies and instrumentalities,
including government-sponsored enterprises) if, as a result, with respect to
75% of its total assets, more than 5% of the value of the Fund's or Master
Portfolio'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 or Master Portfolio's
ownership would be more than 10% of the outstanding voting securities of such
issuer, provided that this restriction does not affect the Fund's ability to
invest all or a portion of its assets in the Master Portfolio; or
(9) make loans, except that the Fund and Master Portfolio may
each purchase or hold debt instruments, lend its portfolio securities or enter
into repurchase agreement transactions in accordance with its investment
policies; loans for purposes of this restriction will not include the Fund's
purchase of interests in the Master Portfolio.
Fundamental investment restriction number (8), above, is less
restrictive than Rule 2a-7 of the 1940 Act. Nonetheless, it is the operating
policy of the Fund and the Master Portfolio to comply with Rule 2a-7's
diversification requirements.
The Fund and the Master Portfolio are subject to the following
non-fundamental policies.
Neither the Fund nor the Master Portfolio may:
(1) purchase or retain securities of any issuer if the Officers
or Directors/Trustees of the Company, the Master Trust or the investment
adviser owning beneficially more than one-half
4
<PAGE> 64
of one percent (0.5%) of the securities of the issuer together own beneficially
more than 5% of such securities;
(2) purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs;
(3) 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,
provided that this restriction does not affect the Fund's ability to invest all
or a portion of its assets in the Master Portfolio; and
(4) purchase securities of unseasoned issuers, including their
predecessors, which have been in operation for less than three years, and
equity securities of issuers which are not readily marketable if, by reason
thereof, the value of the Fund's or Master Portfolio's aggregate investment in
such classes of securities will exceed 5% of its total assets.
The Fund and the Master Portfolio may each 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. However, the investment adviser will waive its advisory fees for
that portion of the Fund's or the Master Portfolio's assets so invested, except
when such purchase is part of a plan of merger, consolidation, reorganization
or acquisition. In addition, these unaffiliated investment companies must have
a fundamental investment policy of investing at least 80% of their net assets
in obligations that are exempt from federal income taxes and are not subject to
the federal alternative minimum tax. However, the above restrictions do not
affect the Fund's ability to invest all or a portion of its assets in the
Master Portfolio.
In addition, the Fund and the Master Portfolio each 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,
illiquid securities and restricted 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
Portfolio 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.
Furthermore, the Fund and the Master Portfolio may not purchase or
sell real estate limited partnership interests. The Fund and the Master
Portfolio do not currently intend to make loans of their portfolio securities.
5
<PAGE> 65
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Unrated, Downgraded and Below Investment Grade Investments. The
Master Portfolio may purchase instruments that are not rated if, in the opinion
of Wells Fargo Bank, such obligations are of comparable quality to other rated
investments that are permitted to be purchased by the Master Portfolio. The
Master Portfolio may purchase unrated, downgraded or below investment grade
instruments only if they are purchased in accordance with the Master
Portfolio's procedures adopted by the Master Trust's Board of Trustees in
accordance with Rule 2a-7 under the 1940 Act. After purchase by the Master
Portfolio a security may cease to be rated or its rating may be reduced below
the minimum required for purchase by the Master Portfolio. Neither event
requires a sale of such security by the Master Portfolio. However, in no event
will the value of such securities exceed 5% of the Master Portfolio'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 Master
Portfolio will attempt to use comparable ratings as standards for investments
in accordance with the investment policies contained in its Part A and in this
SAI. The ratings of Moody's and S&P are more fully described in the SAI
Appendix.
Because the Master Portfolio is not required to sell downgraded
securities, the Master Portfolio could hold up to 5% of its net assets in debt
securities rated below "Baa" by Moody's or below "BBB" by S&P or, if unrated,
low credit quality (below investment grade) securities. The Master Portfolio
may hold such securities even though it is not permitted to purchase such
securities.
Although they may offer higher yields than do higher rated
securities, low rated and unrated low credit 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 securities markets in which low rated and unrated low credit
quality debt securities are traded are more limited than those in which higher
rated debt securities are traded. The existence of limited markets for
particular securities may diminish the Master Portfolio's 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 the Master Portfolio's
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 the Master Portfolio 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 Portfolio held exclusively higher rated or higher
quality debt securities.
6
<PAGE> 66
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 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
Portfolio may incur additional expenses to seek recovery.
Letters of Credit. Certain of the debt obligations (including
municipal securities, certificates of participation, commercial paper and other
short-term obligations) which the Master Portfolio 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 Bank, are of comparable quality to issuers of other permitted
investments of the Master Portfolio may be used for letter of credit-backed
investments, provided that the Master Trust's Board of Trustees approves or
ratifies such investments.
Loans of Portfolio Securities. The Master Portfolio may lend
securities from its portfolio to brokers, dealers and financial institutions
(but not individuals) if cash, U.S. Government obligations or other
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 Portfolio with respect to the loan is maintained
with the Master Portfolio. In determining whether or not to lend a security to
a particular broker, dealer or financial institution, the Master Portfolio's
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 based
on values that are marked to market daily. The Master Portfolio will not enter
into any portfolio security lending arrangement having a duration longer than
one year. Any securities that the Master Portfolio receives as collateral do
not become part of the Master Portfolio's portfolio at the time of the loan
and, in the event of a default by the borrower, the Master Portfolio will, if
permitted by law, dispose of such collateral except for such part thereof that
is a security in which the Master Portfolio is permitted to invest. During the
time securities are on loan, the borrower will pay the Master Portfolio any
accrued income on those securities, and the Master Portfolio may invest the
cash collateral and earn additional income or receive an agreed-upon fee from a
borrower that has delivered cash-equivalent collateral. The Master Portfolio
will not lend securities having a value that exceeds one-third of the current
value of its total assets. Loans of securities by the Master Portfolio are
subject to termination at the Master Portfolio's or the borrower's option. The
Master Portfolio 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 permitted to be
affiliated, directly or indirectly, with the Master Trust, the Company, the
investment adviser, or the distributor.
7
<PAGE> 67
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 Master
Portfolio 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.
Municipal Bonds. The Master Portfolio may invest in municipal
bonds. The two principal classifications of municipal bonds are "general
obligation" and "revenue" bonds. Municipal bonds are debt obligations issued
to obtain funds for various public purposes, including the construction of a
wide range of public facilities such as bridges, highways, housing, hospitals,
mass transportation, schools, streets, and water and sewer works. Other
purposes for which municipal bonds may be issued include the refunding of
outstanding obligations and obtaining funds for general operating expenses or
to loan to other public institutions and facilities. Industrial development
bonds are a specific type of revenue bond backed by the credit and security of
a private user. Certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide privately-operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal. The Master Portfolio may not
invest 25% or more of its assets in industrial development bonds. Assessment
bonds, wherein a specially created district or project area levies a tax
(generally on its taxable property) to pay for an improvement or project may be
considered a variant of either category. There are, of course, other
variations in the types of municipal bonds, both within a particular
classification and between classifications, depending on numerous factors.
8
<PAGE> 68
Municipal Notes. Municipal notes include, but are not limited to,
tax anticipation notes ("TANs"), bond anticipation notes ("BANs"), revenue
anticipation notes ("RANs") and construction loan notes. Notes sold as interim
financing in anticipation of collection of taxes, a bond sale or receipt of
other revenues are usually general obligations of the issuer.
TANs. Uncertainty concerning a municipal issuer's capacity to
raise taxes as a result of such things as a decline in its tax base or a rise
in delinquencies could adversely affect the issuer's ability to meet its
obligations on outstanding TANs. Furthermore, some municipal issuers mix
various tax proceeds into a general fund that is used to meet obligations other
than those of the outstanding TANs. Use of such a general fund to meet various
obligations could affect the likelihood of making payments on TANs.
BANs. The ability of a municipal issuer to meet its obligations
on its BANs is primarily dependent on the issuer's adequate access to the
longer term municipal bond market and the likelihood that the proceeds of such
bond sales will be used to pay the principal of, and interest on, BANs.
RANs. A decline in the receipt of certain revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.
The values of outstanding municipal securities vary as a result of
changing market evaluations of the ability of their issuers to meet the
interest and principal payments (i.e., credit risk). Such values also change
in response to changes in the interest rates payable on new issues of municipal
securities (i.e., market risk). Should such interest rates rise, the values of
outstanding securities, including those held in the Master Portfolio's
portfolio, will decline and (if purchased at par value) sell at a discount. If
interest rates fall, the values of outstanding securities will generally
increase and (if purchased at par value) would sell at a premium. Changes in
the value of municipal securities held in the Master Portfolio's portfolio
arising from these or other factors will cause changes in the net asset value
per share of the Master Portfolio.
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 Officers and Directors of the Company serve in the identical
capacity as Officers and Trustees of the Master 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.
9
<PAGE> 69
<TABLE>
<CAPTION>
Principal Occupations
Name, Address and Age Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens Insurance
Services Inc.; Senior
Vice President of
Stephens Sports
Management Inc.; and
President of
Investors Brokerage
Insurance Inc.
Thomas S. Goho, 53 Director T.B. Rose Faculty Fellow-
321 Beechcliff Court Business, Wake Forest
Winston-Salem, NC 27104 University, Calloway
School Business and
Accountancy; Associate
Professor of Finance
of the School of
Business and
Accounting at Wake
Forest University
since 1983.
*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.
*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
</TABLE>
10
<PAGE> 70
<TABLE>
<S> <C> <C>
Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 51 Director Private Investor; Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>
COMPENSATION TABLE
For the Fiscal Year Ended December 31, 1994
<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
</TABLE>
11
<PAGE> 71
<TABLE>
<S> <C> <C>
Robert M. Joses 8,688 34,188
Director
*J. Tucker Morse 8,188 32,188
Director
</TABLE>
Directors of the Company are compensated annually by the Company
and by all registrants in the fund complex for their services as indicated in
the Compensation Table 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 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 Fund has not engaged an investment
adviser. The Master Portfolio is advised by Wells Fargo Bank pursuant to an
Investment Advisory Contract approved by the Board of Trustees of the Master
Trust. The Investment Advisory Contract for the Master Portfolio provides that
Wells Fargo Bank shall furnish to the Master Portfolio investment guidance and
policy direction in connection with the daily portfolio management of the
Master Portfolio. Pursuant to the Investment Advisory Contract, Wells Fargo
Bank also furnishes to the Master Trust's Board of Trustees periodic reports on
the investment strategy and performance of the Master Portfolio.
Wells Fargo Bank has agreed to provide to the Master Portfolio,
among other things, money market security and fixed-income research, analysis,
and statistical and economic data, and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the Master Portfolio's portfolio.
The Investment Advisory Contract will continue in effect for more
than two years provided the continuance is approved annually (i) by the holders
of a majority of the Master Portfolio's outstanding voting securities or by the
Master Trust's Board of Trustees and (ii) by a majority of the Trustees of the
Master Trust who are not parties to the Investment Advisory Contract or
"interested persons" (as defined in the 1940 Act) of any such party. The
Investment Advisory Contract may be terminated on 60 days' written notice by
either party and will terminate automatically if assigned.
12
<PAGE> 72
Morrison & Foerster, counsel to the Company and the Master Trust
and special counsel to Wells Fargo Bank, has advised Wells Fargo Bank, the
Master Trust and the Company that Wells Fargo Bank should be able to perform
the services contemplated by the Investment Advisory Contract, the Shareholder
Servicing Agreement, the Selling Group Agreement, the Agency Agreement, the
Custodian Agreement and the Prospectus, without violation of the Glass-Steagall
Act. Such counsel has pointed out, however, that there are no controlling
judicial or administrative interpretations or decisions and that future
judicial or administrative interpretations of, or decisions relating to,
present federal or state statutes 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
Bank from continuing to perform, in whole or in part, such services. If Wells
Fargo Bank 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. In addition, the
Master Trust has retained Stephens as administrator on behalf of the Master
Portfolio. Under the respective Administration Agreements between Stephens and
the Company and the Master Trust, Stephens shall provide as administrative
services, among other things: (i) general supervision of the Fund's and the
Master Portfolio's operations, including coordination of the services performed
by the investment adviser (in the case of the Master Portfolio), transfer
agent, custodian, shareholder servicing agent(s), independent auditors and
legal counsel, regulatory compliance, including the compilation of information
for documents such as reports to, and filings with, the SEC and state
securities commissions; and preparation of proxy statements and shareholder
reports for the Fund and the Master Portfolio; and (ii) general supervision
relative to the compilation of data required for the preparation of periodic
reports distributed to the Company's and Master Trust's Officers, Directors and
Trustees. Stephens also furnishes office space and certain facilities required
for conducting the Fund's and the Master Portfolio's business together with
those ordinary clerical and bookkeeping services that are not being furnished
by Wells Fargo Bank. Stephens also pays the compensation of the Master Trust's
and Company's Directors/Trustees, Officers and employees who are affiliated
with Stephens.
The Investment Advisory Contract and Administration Agreements for
the Master Portfolio or the Fund, respectively, provide that if, in any fiscal
year, the total expenses of the Fund (including expenses relating to the Master
Portfolio) incurred by, or allocated to, the Fund and the Master Portfolio
(excluding taxes, interest, brokerage commissions and other portfolio
transaction expenses, expenditures that are capitalized in accordance with
generally accepted accounting principles, extraordinary expenses and amounts
accrued or paid under the Distribution Plan, but including the fees provided
for in the Investment Advisory Contract and the Administration Agreements)
exceed the most restrictive expense limitation applicable to the Fund imposed
by the securities laws or regulations of the states in which the Fund's shares
are registered for sale, Wells Fargo Bank and Stephens shall waive their fees
proportionately under the Investment Advisory Contract and the Administration
Agreements, respectively, for the fiscal year to the extent of the excess or
reimburse the excess, but only to the extent of their respective
13
<PAGE> 73
fees. The Investment Advisory Contract and the Administration Agreements for
the Master Portfolio and the Fund, respectively, further provide that the
Master Portfolio's and 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.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Distribution Plan")
under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder. The
Distribution Plan for the Fund was adopted by the Company's Board of Directors
on October 10, 1995, including a majority of Directors who were not "interested
persons" (as defined in the 1940 Act) of the Fund and who had no direct or
indirect financial interest in the operation of the Distribution Plan (the
"Qualified Directors").
The Distribution Plan permits the Fund to pay Stephens, for
distribution-related activities provided and related expenses incurred, a
monthly fee at the annual rate of up to 0.05% of the average daily net assets
of the Fund. The Distribution Plan authorizes Stephens to compensate
broker/dealers or financial institutions that have entered into Selling Group
Agreements with Stephens for distribution-related series.
The Distribution Plan continues in effect from year to year if
such continuance is approved by a majority vote of both the Directors of the
Company and the Qualified Directors. Any Agreements related to the
Distribution Plan also must be approved by such vote of the Directors and the
Qualified Directors. Such Agreements terminate automatically if assigned, and
may be terminated at any time, without payment of any penalty, by a vote of a
majority of the outstanding voting securities of the Fund. The Distribution
Plan may not be amended to increase materially the amounts payable thereunder
without the approval of a majority of the outstanding voting securities of the
Fund, and no material amendment to the Distribution Plan may be made except by
a majority of both the Directors of the Company and the Qualified Directors.
The Distribution Plan requires the Company to provide to the
Directors, and the Directors to review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Distribution Plan and
any related agreements. The Rule also requires that the selection and
nomination of Directors who are not "interested persons" of the Company be made
by such disinterested Directors.
14
<PAGE> 74
CALCULATION OF YIELD AND TOTAL RETURN
The Fund may advertise certain yield information. Yield for the
Fund is calculated based on the net changes, exclusive of capital changes, over
a seven- or thirty-day period, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7 or 365/30, as applicable) with the
resulting yield figure carried to at least the nearest hundredth of one
percent.
Tax-equivalent yield for the Fund is computed by dividing that
portion of the yield of the Fund which is tax-exempt by one minus a stated
income tax rate and then adding the product to that portion, if any, of the
Fund's yield that is not tax-exempt.
Effective yield and effective tax-equivalent yield for the Fund
are calculated by determining the net change, or tax-equivalent assumed net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding one, raising the sum to a power
equal to 365 divided by seven or thirty, as applicable, and subtracting one
from the result.
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 value of shares of the Fund will affect the Fund's yield 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 the Fund and for providing a basis for comparison with
investment alternatives. The Fund's yield, however, may not be comparable to
the yields from investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities,
compute expenses and calculate yield.
Performance Comparisons. From time to time and only to the extent
the comparison is appropriate for the Fund, the Company may quote the Fund's
performance or price-earning ratio in advertising and other types of literature
as compared to the performance of the 91-Day Treasury Bill Average (Federal
Reserve), Lipper Money Market Fund Average, Donoghue
15
<PAGE> 75
Taxable Money Market Fund Average, Salomon Three-Month Treasury Bill Index,
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), Dow Jones Industrial Average, Lehman
Brothers 20+ Treasury Index, Lehman Brother 5-7 Year Treasury Index, Real
Estate Investment Averages (as reported by the National Association of Real
Estate Investment Trusts), Gold Investment Averages (provided by the World Gold
Council), the Consumer Price Index (as published by the U.S. Bureau of Labor
Statistics and which is an established measure of change over time in the
prices of goods and services in major expenditure groups), average annualized
certificate of deposit rates (from the Federal Reserve G-13 Statistical
Releases or the Bank Rate Monitor), the Salomon One Year Treasury Benchmark
Index, the Consumer Price Index (as published by the U.S. Bureau of Labor
Statistics), other managed or unmanaged indices or performance data of bonds,
municipal securities, stocks or government securities (including data provided
by Ibbotson Associates), or by other services, companies, publications or
persons who monitor mutual funds on overall performance or other criteria. The
S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices.
The Fund's performance also may be compared to the performance 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, Morningstar,
Inc., or other independent services which monitor the performance of mutual
funds. The Fund's performance will be calculated by relating net asset value
per share at the beginning of a stated period to the net asset value of the
investment, assuming reinvestment of all gains distributions and dividends
paid, at the end of the period. Any such comparisons may be useful to
investors who wish to compare the Fund's past performance with that of its
competitors. Of course, past performance cannot be a guarantee of future
results. The Company also may include in advertisements and other types of
literature references to certain marketing approaches of the Distributor and
may also refer to general mutual fund statistics provided by the Investment
Company Institute.
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for the Fund: (i) the Consumer Price Index may be
used to assess the real rate of return from an investment in the Fund; (ii)
other government statistics, including, but not limited to, The Survey of
Current Business, may be used to illustrate investment attributes of the Fund
or the general economic, business, investment, or financial environment in
which the Fund operates; (iii) the effect of tax-deferred compounding on the
investment returns of the Fund, or on returns in general, may be illustrated by
graphs, charts, etc., where such graphs or charts would compare, at various
points in time, the return from an investment in the Fund (or returns in
general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the return on a taxable
basis; and (iv) the sectors or industries in which the Fund invests may be
compared to relevant indices of stocks or surveys (e.g., S&P Industry Surveys)
to evaluate the
16
<PAGE> 76
Fund's historical performance or current or potential value with respect to the
particular industry or sector.
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 some 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 sales literature the assets and
categories of assets under management by the Fund's or Master Portfolio's
investment adviser and its affiliates.
The Company also may discuss in advertisements and other types of
literature that the Fund has been assigned a rating by a nationally recognized
statistical rating organization ("NRSRO"), such as Standard & Poors
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.
The Company also may discuss in advertisements and other types of
literature the features, terms and conditions of Wells Fargo Bank accounts
through which investments in the Fund may be made via a "sweep" arrangement,
including, without limitation, through investments in a Managed Sweep Account,
National Tax-Free Money Market Checking Account or National Tax-Free Money
Market Access Account (collectively, the "Sweep Accounts"). Such
advertisements and other literature may include, without limitation,
discussions of such terms and conditions as the minimum deposit required to
open a Sweep Account, a description of the yield earned on shares of the Fund
through a Sweep Account, a description of any monthly or other service charge
on a Sweep Account and any minimum required balance to waive such service
charges, any overdraft protection plan offered in connection with a Sweep
Account, a description of any express transfer or "AutoSaver" plan offered in
connection with a Sweep Account, a description of any automated teller machine
("ATM") or check privileges offered in connection with a Sweep Account and any
other terms, conditions, features or plans offered in connection with a Sweep
Account. Such advertising or other literature may also include a discussion of
the advantages of establishing and maintaining a Sweep Account, and may include
statements from customers as to the reasons why such customers have established
and maintained a Sweep Account.
17
<PAGE> 77
DETERMINATION OF NET ASSET VALUE
Net asset value per share of the Fund is determined by the
Custodian on each day the Fund is open for trading. The Fund's investments in
the Master Portfolio are valued at the net asset value of the Master
Portfolio's shares.
As indicated in the Fund's Prospectus, the Master Portfolio 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 Master Portfolio
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 Master Portfolio's portfolio on a
particular day, a prospective investor in the Master Portfolio would be able to
obtain a somewhat higher yield than would result from investment in a fund
using solely market values, and existing Master Portfolio 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 Master Portfolio must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase securities having
remaining maturities (as defined in Rule 2a-7) of thirteen months or less and
invest only in those high-quality securities that are determined by the Master
Trust's Board of Trustees to present minimal credit risks. The maturity of an
instrument is generally deemed to be the period remaining until the date when
the principal amount thereof is due or the date on which the instrument is to
be redeemed. However, Rule 2a-7 provides that the maturity of an instrument
may be deemed shorter in the case of certain instruments, including certain
variable- and floating-rate instruments subject to demand features. Pursuant
to the Rule, the Master Trust's Board of Trustees is required to establish
procedures designed to stabilize, to the extent reasonably possible, the Master
Portfolio's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Master Portfolio's
portfolio holdings by the Master Trust's Board of Trustees, at such intervals
as it may deem appropriate, to determine whether or not the Master Portfolio's
net asset value calculated by using available market quotations deviates from
$1.00 per share based on amortized cost. The extent of any deviation will be
examined by said Board of Trustees. If such deviation exceeds 1/2 of 1%, said
Board will promptly consider what action, if any, will be initiated. In the
event the Board determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing shareholders, the
Board will take such corrective action as it regards as necessary and
appropriate, including the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value per share by using
available market quotations.
18
<PAGE> 78
PORTFOLIO TRANSACTIONS
The Master Trust has no obligation to deal with any dealer or
group of dealers in the execution of transactions in portfolio securities.
Subject to policies established by the Master Trust's Board of Trustees, Wells
Fargo Bank is responsible for the Master Portfolio's portfolio decisions and
the placing of portfolio transactions. In placing orders, it is the policy of
the Master Trust to obtain the best results taking into account the dealer's
general execution and operational facilities, the type of transaction involved
and other factors such as the dealer's risk in positioning the securities
involved. While Wells Fargo Bank generally seeks reasonably competitive
spreads or commissions, the Master Portfolio will not necessarily be paying the
lowest spread or commission available.
Purchase and sale orders of the securities held by the Master
Portfolio may be combined with those of other accounts that Wells Fargo Bank
manages, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank
determines that a particular security should be bought or sold for the Master
Portfolio and other accounts managed by Wells Fargo Bank, Wells Fargo Bank
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 Portfolio also purchases portfolio securities in underwritten offerings
and may purchase securities directly from the issuer. Generally, municipal
obligations, taxable money market securities, adjustable rate mortgage
securities and collateralized mortgage obligations are traded on a net basis
and do not involve brokerage commissions. The cost of executing the Master
Portfolio's portfolio securities transactions consists primarily of dealer
spreads and underwriting commissions. Under the 1940 Act, persons affiliated
with the Master Portfolio are prohibited from dealing with the Master Portfolio
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 Master Portfolio may purchase municipal obligations from
underwriting syndicates of which Stephens or Wells Fargo Bank is a member under
certain conditions in accordance with the provisions of a rule adopted under
the 1940 Act and in compliance with procedures adopted by the Master Trust's
Board of Trustees.
Wells Fargo Bank, as the Master Portfolio's investment adviser,
may, in circumstances in which two or more dealers are in a position to offer
comparable results for a Master Portfolio portfolio transaction, give
preference to a dealer that has provided statistical or other research services
to Wells Fargo Bank. By allocating transactions in this manner, Wells Fargo
Bank is able to supplement its research and analysis with the views and
information of securities firms. Information so received will be in addition
to, and not in lieu of, the services required to be performed by Wells Fargo
Bank under the Investment Advisory Contracts, and the expenses of Wells Fargo
Bank will not necessarily be reduced as a result of the receipt of this
supplemental research information. Furthermore, research services furnished by
dealers through which Wells
19
<PAGE> 79
Fargo Bank places securities transactions for the Master Portfolio may be used
by Wells Fargo Bank in servicing its other accounts, and not all of these
services may be used by Wells Fargo Bank in connection with advising the Master
Portfolio.
Portfolio Turnover. Because the Master Portfolio's portfolio
consists of securities with relatively short- term maturities, the Master
Portfolio can expect to experience high portfolio turnover. A high portfolio
turnover rate should not adversely affect the Master Portfolio (or the Fund),
however, because portfolio transactions ordinarily will be made directly with
principals on a net basis and, consequently, the Master Portfolio (and,
accordingly, the Fund) usually will not incur excessive transaction costs.
FEDERAL INCOME TAXES
The Prospectus describes generally the tax treatment of
distributions by the Master Portfolio and the Fund. This section of the SAI
includes additional information concerning federal income taxes.
Qualification as a "regulated investment company" under the Code
requires, among other things, that (a) at least 90% of the Fund's annual gross
income be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities or options
thereon; (b) the Fund derives less than 30% of its gross income from gains from
the sale or other disposition of securities or options thereon held for less
than three months; and (c) the Fund diversifies its holdings so that, at the
end of each quarter of the taxable year, (i) at least 50% of the market value
of the Fund's assets is represented by cash, government securities and other
securities limited in respect of any one issuer to an amount not greater than
5% of the Fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in
the securities of any one issuer (other than U.S. Government obligations 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. For
purposes of complying with these qualification requirements, the Fund will
"look through" to the Master Portfolio's investments. As a regulated
investment company, the Fund will not be subject to federal income tax on its
net investment income and net capital gains distributed to its shareholders,
provided that it distributes to its stockholders at least 90% of its net
investment income and tax-exempt income earned in each year.
In addition, the Fund intends that at least 50% of the value of
its total assets at the close of each quarter of its taxable year will consist
of obligations the interest on which is exempt from federal income tax, so that
it will qualify under the Code to pay exempt-interest dividends. The exemption
of interest income derived from investments in tax-exempt obligations for
federal income tax purposes may not result in a similar exemption under the
laws of a particular state or local taxing authority.
20
<PAGE> 80
A 4% nondeductible excise tax will be imposed on the Fund (other
than to the extent of the Fund's tax- exempt income) to the extent it does not
meet certain minimum distribution requirements by the end of each calendar
year. 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 declared payable as
of a date in October, November or December of any calendar year are deemed
under the Code to have been 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 subject to income tax for the year in which the
record date falls. The Fund intends to distribute substantially all of its net
investment income and net capital gains and, thus, expects 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.
The Master Portfolio will be treated as a non-publicly traded
partnership rather than as a regulated investment company or a corporation
under the Code. As a non-publicly traded partnership under the Code, any
interest, dividends and gains or losses of the Master Portfolio will be deemed
to have been "passed through" to the Fund and any other investors in the Master
Portfolio, regardless of whether or not such interest, dividends or gains have
been distributed by the Master Portfolio or losses have been realized by the
Fund and any other investors. Therefore, to the extent the Master Portfolio
were to accrue but not distribute any interest, dividends, gains or losses, the
Fund would be deemed to have realized and recognized its proportionate share of
interest, dividends, gains or losses without receipt of any corresponding
distribution. However, the Master Portfolio will seek to minimize recognition
by investors of interest, dividends, gains or losses without a corresponding
distribution.
It is expected that the Net Income of the Fund will be a positive
amount at the time of each determination thereof. If, however, the Fund's Net
Income determined at any time is a negative amount (which could occur, for
instance, upon non-payment of interest and/or principal by an issuer of a
security held by the Fund or by the Master Portfolio), the Fund would, pursuant
to a decision of the Board of Directors as provided by SEC rules, first offset
the negative amount with respect to each shareholder account from the dividends
declared during the month with respect to each such account. If, and to the
extent that, such negative amount exceeds such declared dividends at the end of
the month, the Fund will reduce the number of its outstanding shares by
treating each shareholder as having contributed to the capital of the Fund that
number of full and fractional shares in the account of such shareholder which
represents the shareholder's proportion of the amount of such excess. Each
shareholder will be deemed to have agreed to such contribution in these
circumstances by investing in the Fund.
Although dividends will be declared daily based on each day's
earnings, for federal income tax purposes the Fund's earnings and profits will
be determined at the end of each taxable
21
<PAGE> 81
year and will be allocated pro rata over the entire year. For federal income
tax purposes, only amounts paid out of earnings and profits will qualify as
dividends. Thus, if during a taxable year the Fund's declared dividends (as
declared daily throughout the year) exceed the Fund's net income (as determined
at the end of the year), only that portion of the year's distributions which
equals the year's earnings and profits will be deemed to have constituted a
dividend. If during the year, the Fund had reduced the number of shares due to
such a shortfall, shareholders who had redeemed shares prior to such reduction
could be deemed to have realized a capital gain to the extent of the reduction,
while shareholders redeeming shares after the reduction could be deemed to have
realized a capital loss to the extent of the reduction. It is expected that
the Fund's net income, on an annual basis, will equal the dividends declared
during the year.
Gains or losses on sales of portfolio securities by the Fund
generally will be long-term capital gains or losses if the securities have been
held by it for more than one year, except in certain cases including where 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. In addition,
any loss realized by a shareholder upon the sale or redemption of Fund shares
held less than six months is disallowed to the extent of any exempt-interest
dividends received by the shareholder. Gain recognized on the disposition of a
debt obligation (including, with respect to obligations purchased after April
30, 1993, tax-exempt obligations) purchased by the 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 tax rate
applicable to ordinary income is 39.6% (effective rates may be higher for some
individuals due to phase out of exemptions and elimination of deductions), the
maximum individual rate applicable to net realized capital gains is 28% and the
maximum corporate 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
Fund shares 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
22
<PAGE> 82
company within the meaning of the Code, the Company may require the redemption
of shares or reject any order for the purchase of shares in an effort to
prevent such concentration.
Foreign Shareholders. Under the Code, distributions of net
investment income by the Fund to a nonresident alien individual, non-resident
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 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.
Special Tax Considerations -- Federal. The portion of total
dividends paid by the Fund with respect to any taxable year that qualifies for
exclusion from gross income ("exempt-interest dividends") will be the same for
all shareholders receiving dividends during such year. In order for the Fund
to pay exempt-interest dividends during any taxable year, at the close of each
fiscal quarter at least 50% of the aggregate value of the Fund's assets must
consist of tax-exempt securities. In addition, the Fund must distribute 90% of
the aggregate interest excludable from gross income and 90% of the investment
company taxable income earned by it during the taxable year. Not later than 60
days after the close of its taxable year, the Fund will notify its shareholders
of the portion of the dividends paid with respect to such taxable year which
constitutes exempt-interest dividends. The aggregate amount of dividends so
designated cannot exceed the excess of the amount of interest excludable from
gross income under Section 103 of the Code received by the Fund during the
taxable year over any amounts disallowed as deductions under Sections 265 and
171(a)(2) of the Code. In addition, market discount earned on tax-exempt
obligations will not qualify as tax-exempt income.
The Code treats interest on private activity bonds, as defined
therein, as an item of tax preference subject to an alternative minimum tax on
individuals and corporations at the applicable tax rates. It is expected that
exempt-interest dividends derived from MRBs will be subject to the alternative
minimum tax. As of the printing of the SAI, individuals are subject to an AMT
at a maximum rate of 28% and corporations at a rate of 20%. In addition to
tax- exempt interest on private activity bonds, other "tax preference items"
and "adjustments" which must be considered when calculating the AMT are state
and local taxes and the so-called bargain element of incentive stock options
(the difference between the exercise price and the stock's trading price when
the options are exercised). All interest on municipal bonds and other
tax-exempt obligations, including exempt-interest dividends paid by the Fund,
is included in adjusted current earnings in calculating federal alternative
minimum taxable income, and may also affect corporate federal "environmental
tax" liability.
In addition, any loss realized by a shareholder upon the sale or
redemption of shares of the Fund held less than six months is disallowed to the
extent of any exempt-interest dividends received by the shareholder.
23
<PAGE> 83
Shareholders who may be "substantial users" (or related persons of
substantial users) with respect to municipal securities held by the Fund should
consult their tax advisers to determine whether exempt-interest dividends and
California exempt-interest dividends (as defined below) paid by the Fund with
respect to such obligations retain their federal and California tax exclusions.
In this connection, the rules regarding the possible unavailability of exempt
dividend treatment to substantial users are similar for federal and California
state tax purposes.
Long-term and/or short-term capital gain distributions will not
constitute exempt-interest dividends and will be taxed as capital gains and
ordinary income dividends, respectively. Moreover, interest on indebtedness
incurred by a shareholder to purchase or carry shares of the Fund is not
deductible for personal income tax purposes to the extent the shareholder
receives exempt-interest dividends during his or her taxable year.
Exempt-interest dividends will be tax exempt for purposes of personal income
tax.
Other Matters. Fund shares would not be suitable for tax-exempt
institutions and may not be suitable for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and IRAs since such plans and accounts
are generally tax-exempt and, therefore, would not benefit from the exempt
status of dividends from the Fund. Such dividends would be ultimately taxable
to the beneficiaries when distributed to them.
CAPITAL STOCK
The Company, an open-end, management investment company, was
incorporated in Maryland on September 9, 1991. The authorized capital stock of
the Company consists of 17,000,000,000 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 thirteen series of shares, each representing an
interest in one portfolio -- the Aggressive Growth Fund, the Asset Allocation
Fund, California Tax-Free Bond Fund, the California Tax-Free Income Fund, the
California Tax-Free Money Market Mutual Fund, the Corporate Stock Fund, the
Diversified Income Fund, the Ginnie Mae Fund, the Growth and Income Fund, the
Money Market Mutual Fund, the National Tax-Free Money Market Mutual Fund, the
Short-Intermediate U.S. Government Income Fund, and the U.S. Government
Allocation Fund. The Board of Directors may, in the future, authorize the
issuance of other series of capital stock representing shares of additional
investment portfolios or funds.
All shares of the Fund have equal voting rights and will be voted
in the aggregate, and not by series, except where voting by 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 contract is a
matter to be determined separately by Fund. As used in the 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
24
<PAGE> 84
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.
The Master Trust, a no-load, diversified, open-end management
investment company, was organized as a Delaware business trust on August 15,
1991. In accordance with Delaware law and in connection with the tax
treatment sought by the Master Trust, the Master Trust's Declaration of Trust
provides that its investors would be personally responsible for Master Trust
liabilities and obligations, but only to the extent the Master Trust's property
is insufficient to satisfy such liabilities and obligations. The Declaration
of Trust also provides that the Master Trust shall maintain appropriate
insurance (for example, fidelity bonding and errors and omissions insurance)
for the protection of the Master 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 Master 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 exists and the Master Trust
itself is unable to meet its obligations.
The Declaration of Trust further provides that obligations of the
Master Trust are not binding upon the Trustees individually but only upon the
property of the Master Trust and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which the Trustee would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the Trustee's office.
25
<PAGE> 85
The interests in the Master Portfolio have substantially identical
voting and other rights as those rights enumerated above for shares of the
Fund. The Master Trust also intends to dispense with annual meetings, but is
required by Section 16(c) of the Act to hold a special meeting and assist
investor communications under the circumstances described above with respect to
the Company. Whenever the Fund is requested to vote on a matter with respect
to the Master Portfolio, the Fund will hold a meeting of Fund shareholders and
will cast its votes as instructed by such shareholders.
In a situation where the Fund does not receive instruction from
certain of its shareholders on how to vote the corresponding shares of the
Master Portfolio, the Fund will vote such shares in the same proportion as the
shares for which the Fund does receive voting instructions.
As of November 14, 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>
National Tax-Free Stephens Inc. 100% Record
Money Market 111 Center Street
Mutual Fund Little Rock, AR 72201
</TABLE>
OTHER
The Registration Statements of the Company and the Master Trust,
including the Fund's Prospectus, the SAI and the exhibits filed therewith, may
be examined at the office of the SEC in Washington, D.C. Statements contained
in the Prospectus or the SAI as to the contents of any contract or other
document referred to herein or in the Prospectus are not necessarily complete,
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statements, each such
statement being qualified in all respects by such reference.
26
<PAGE> 86
CUSTODIAN AND TRANSFER AND
DIVIDEND DISBURSING AGENT
Wells Fargo Bank has been retained to act as Custodian for both
the Fund and the Master Portfolio. The Custodian, among other things,
maintains separate custody accounts in the names of the Fund and the Master
Portfolio; receives and delivers all assets for the Fund and the Master
Portfolio upon purchase and upon sale or maturity; collects and receives all
income and other payments and distributions on account of the assets of the
Fund and the Master Portfolio and pays all expenses of the Fund and the Master
Portfolio. Wells Fargo Bank is not entitled to receive a fee for its services
as Transfer and Dividend Disbursing Agent and Custodian for both the Fund and
the Master Portfolio.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP have been selected as the independent
auditors for the Company and the Master Trust. KPMG Peat Marwick LLP provides
audit services, tax return preparation and assistance and consultation in
connection with review of certain SEC filings. KPMG Peat Marwick LLP's address
is Three Embarcadero Center, San Francisco, California 94111.
FINANCIAL INFORMATION
The audited financial statements and portfolios of investments
contained in the Company's Annual Report are hereby incorporated by reference
in this SAI. The Company's Annual Report and the SAI will be sent free of
charge to any shareholder who requests these documents.
27
<PAGE> 87
SAI APPENDIX
The following is a description of the ratings given by Moody's and
S&P to corporate and municipal bonds, municipal notes, and corporate and
municipal commercial paper.
Corporate and Municipal Bonds
Moody's: The four highest ratings for corporate and municipal
bonds are "Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of
the "best quality" and carry the smallest amount of investment risk. Bonds
rated "Aa" are of "high quality by all standards," but margins of protection or
other elements make long-term risks appear somewhat greater than "Aaa" rated
bonds. Bonds rated "A" possess many favorable investment attributes and are
considered to be upper medium grade obligations. Bonds rated "Baa" are
considered to be medium grade obligations; interest payments and principal
security appear adequate for the present, but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds have speculative characteristics as well. Moody's also
applies numerical modifiers in its rating system: 1, 2 and 3 in each rating
category from "Aa" through "Baa" in its rating system. The modifier 1
indicates that the security ranks in the higher end of its category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end.
S&P: The four highest ratings for corporate and municipal bonds
are "AAA," "AA," "A" and "BBB." Bonds rated "AAA" have the highest ratings
assigned by S&P and have an extremely strong capacity to pay interest and repay
principal. Bonds rated "AA" have a "very strong capacity to pay interest and
repay principal" and differ "from the highest rated issued only in small
degree." Bonds rated "A" have a "strong capacity" to pay interest and repay
principal, but are "somewhat more susceptible" to adverse effects of changes in
economic conditions or other circumstances than bonds in higher rated
categories. Bonds rated "BBB" are regarded as having an "adequate capacity" to
pay interest and repay principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to make such
repayments. The ratings from "AA" to "BBB" may be modified by the addition of
a plus or minus sign to show relative standing within the category.
Municipal Notes
Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG
2" or "VMIG 2" are of "high quality," with margins of protections "ample
although not as large as in the preceding group." Notes rated "MIG 3" or "VMIG
3" are of "favorable quality," with all security elements accounted for, but
lacking the strength of the preceding grades.
A-1
<PAGE> 88
S&P: The "SP-1" rating reflects a "very strong or strong capacity
to pay principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
Corporate and Municipal Commercial Paper
Moody's: The highest rating for corporate and municipal
commercial paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior
capacity for repayment of short-term promissory obligations." Issuers rated
"P-2" (Prime- 2) "have a strong capacity for repayment of short-term promissory
obligations," but earnings trends, while sound, will be subject to more
variation.
S&P: The "A-1" rating for corporate and municipal commercial
paper indicates that the "degree of safety regarding timely payment is either
overwhelming or very strong." Commercial paper with "overwhelming safety
characteristics" will be rated "A-1+." Commercial paper with a strong capacity
for timely payments on issues will be rated "A-2."
Corporate Notes
S&P: The two highest ratings for corporate notes are "SP-1" and
"SP-2." The "SP-1" rating reflects a "very strong or strong capacity to pay
principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
A-2
<PAGE> 89
STAGECOACH FUNDS, INC.
SEC REGISTRATION NOS. 33-42927; 811-6419
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Not Applicable
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
1 - Amended and Restated Articles of Incorporation dated November 22, 1995, filed herewith.
2 - By-Laws, incorporated by reference to the Initial Registration Statement, filed September 30,
1991.
3 - Not Applicable
4 - Not Applicable
5(a)(i)(A) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(i)(B) - Sub-Advisory Contract with Wells Fargo Nikko Investment Advisors on behalf of the Asset
Allocation Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
(ii)(A) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(ii)(B) - Sub-Advisory Contract with Wells Fargo Nikko Investment Advisors on behalf of the U.S.
Government Allocation Fund, incorporated by reference to Post-Effective Amendment No. 2 to
the Registration Statement, filed April 17, 1992.
(iii) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
</TABLE>
C-1
<PAGE> 90
<TABLE>
<S> <C>
(iv) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(v) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Ginnie Mae Fund, incorporated
by reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April 17,
1992.
(vi) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(vii)(A) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(vii)(B) - Sub-Advisory Contract with Wells Fargo Nikko Investment Advisors on behalf of the Corporate
Stock Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(iix) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.
(ix) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Income
Fund, incorporated by reference to Post-Effective Amendment No. 4 to the Registration
Statement, filed September 10, 1992.
(x) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Diversified Income Fund, filed
herewith.
5(b)(i) - Administration Agreement with Stephens Inc. on behalf of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(b)(ii) - Administration Agreement with Stephens Inc. on behalf of the U.S. Government Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(b)(iii) - Administration Agreement with Stephens Inc. on behalf of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(b)(iv) - Administration Agreement with Stephens Inc. on behalf of the California Tax-Free Money Market
Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
</TABLE>
C-2
<PAGE> 91
<TABLE>
<S> <C>
(b)(v) - Administration Agreement with Stephens Inc. on behalf of the Ginnie Mae Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April 17,
1992.
(b)(vi) - Administration Agreement with Stephens Inc. on behalf of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(b)(vii) - Administration Agreement with Stephens Inc. on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
(b)(iix) - Administration Agreement with Stephens Inc. on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.
(b)(ix) - Form of Administration Agreement with Stephens Inc. on behalf of the California Tax-Free
Income Fund, incorporated by reference to Post-Effective Amendment No. 4 to the Registration
Statement, filed September 10, 1992.
(b)(x) - Form of Administration Agreement with Stephens Inc. on behalf of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 4 to the Registration Statement,
filed September 10, 1992.
(b)(xi) - Administration Agreement with Stephens Inc. on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement, filed February 10, 1994.
(b)(xii) - Form of Administration Agreement with Stephens Inc. on behalf of the National Tax-Free Money
Market Mutual Fund, filed herewith.
6(a) - Amended Distribution Agreement with Stephens Inc., incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(b)(i) - Selling Agreement with Marketing One Securities, Inc. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April 17,
1992.
(b)(ii) - Selling Agreement with Wells Fargo Bank, N.A. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April 17,
1992.
7 - Not Applicable
8(a) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on behalf of the
Asset Allocation Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
(b) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on behalf of the
U.S. Government Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
</TABLE>
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<PAGE> 92
<TABLE>
<S> <C>
(c) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on behalf of the
Corporate Stock Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
(d) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
(e) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Bond
Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(h) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Money Market Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the Registration
Statement, filed May 1, 1992.
(i) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Income
Fund, filed herewith.
(j) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Diversified Income Fund,
filed herewith.
(k) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-Effective Amendment No. 8 to
the Registration Statement, filed February 10, 1994.
(l) - Form of Custody Agreement with Wells Fargo Bank, N.A. on behalf of the National Tax-Free
Money Market Mutual Fund, filed herewith.
9(a)(i) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April 17,
1992.
9(a)(ii) - Form of Agency Agreement with Wells Fargo Bank, N.A. on behalf of the National Tax-Free Money
Market Mutual Fund, filed herewith.
9(b)(i) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-
Free Money Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to
the Registration Statement, filed April 17, 1992.
(b)(ii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Corporate Stock
Fund , incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
</TABLE>
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<TABLE>
<S> <C>
(b)(iii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Money Market
Mutual Fund, incorporated by reference to Post-Effective Amendment No. 3 to the Registration
Statement, filed May 1, 1992.
(b)(iv) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-
Free Income Fund, filed herewith.
(b)(v) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Short-
Intermediate U.S. Government Income Fund, incorporated by reference to Post-Effective
Amendment No. 8 to the Registration Statement, filed February 10, 1994.
(b)(vi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B Shares
of the Asset Allocation Fund, incorporated by reference to Post-Effective Amendment No. 15 to
the Registration Statement, filed May 1, 1995.
(b)(vii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B Shares
of the California Tax-Free Bond Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(iix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B Shares
of the Diversified Income Fund, incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
(b)(ix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B Shares
of the Ginnie Mae Fund, incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
(b)(x) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B Shares
of the Growth and Income Fund, incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
(b)(xi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B Shares
of the U.S. Government Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(xii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the Asset Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(xiii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the California Tax-Free Bond Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(b)(xiv) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the Diversified Income Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
</TABLE>
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<PAGE> 94
<TABLE>
<S> <C>
(b)(xv) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the Ginnie Mae Fund, incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
(b)(xvi) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the Growth and Income Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(xvii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the U.S. Government Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(c) - Cross Indemnification Agreement, incorporated by reference to Post-Effective Amendment
No. 11 to the Registration Statement of Stagecoach Inc., filed on or about November 28, 1995.
(d)(i) - Servicing Plan on behalf of the Class B Shares of the Asset Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(d)(ii) - Servicing Plan on behalf of the Class B Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(d)(iii) - Servicing Plan on behalf of the Class B Shares of the Diversified Income Fund, incorporated
by reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(d)(iv) - Servicing Plan on behalf of the Class B Shares of the Ginnie Mae Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(d)(v) - Servicing Plan on behalf of the Class B Shares of the Growth and Income Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(d)(vi) - Servicing Plan on behalf of the Class B Shares of the U.S. Government Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(d)(vii) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the National Tax-Free
Money Market Mutual Fund, filed herewith.
10 - Opinion and Consent of Counsel, filed herewith.
11 - Not Applicable
12 - Not Applicable
</TABLE>
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<PAGE> 95
<TABLE>
<S> <C>
13 - Investment letter, incorporated by reference to Item 24(b) of Pre-Effective Amendment No. 1
to the Registration Statement, filed November 29, 1991.
14 - Not Applicable
15(a)(i) - Distribution Plan on behalf of the California Tax-Free Money Market Mutual Fund, incorporated
by reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April 17,
1992.
(a)(ii) - Distribution Plan on behalf of the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April 17, 1992.
(a)(iii) - Distribution Plan on behalf of the Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 3 to the Registration Statement, filed May 1, 1992.
(a)(iv) - Distribution Plan on behalf of the California Tax-Free Income Fund, incorporated by reference
to Post-Effective Amendment No. 4 to the Registration Statement, filed September 10, 1992.
(a)(v) - Distribution Plan on behalf of the Short-Intermediate U.S. Government Income Fund,
incorporated by reference to Post-Effective Amendment No. 8 to the Registration Statement,
filed February 10, 1994.
(a)(vi) - Distribution Plan on behalf of the National Tax-Free Money Market Mutual Fund, filed
herewith.
(b)(i) - Distribution Plan on behalf of the Class B Shares of the Asset Allocation Fund, incorporated
by reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(b)(ii) - Distribution Plan on behalf of the Class B Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(b)(iii) - Distribution Plan on behalf of the Class B Shares of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(b)(iv) - Distribution Plan on behalf of the Class B Shares of the Ginnie Mae Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(b)(v) - Distribution Plan on behalf of the Class B Shares of the Growth and Income Fund, incorporated
by reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(b)(vi) - Distribution Plan on behalf of the Class B Shares of the U.S. Government Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
</TABLE>
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<TABLE>
<S> <C>
(c)(i) - Amended Distribution Plan on behalf of the Class A Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(c)(ii) - Amended Distribution Plan on behalf of the Class A Shares of the California Tax-Free Bond
Fund, incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(c)(iii) - Amended Distribution Plan on behalf of the Class A Shares of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(c)(iv) - Amended Distribution Plan on behalf of the Class A Shares of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(c)(v) - Amended Distribution Plan on behalf of the Class A Shares of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
(c)(vi) - Amended Distribution Plan on behalf of the Class A Shares of the U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
16(a) - Schedules for Computation of Performance Data, incorporated by reference to Post-
Effective Amendment No. 2, filed April 17, 1992.
16(b) - Schedules for Computation of Performance Data, incorporated by reference to Post-
Effective Amendment No. 15, filed May 1, 1995.
17 - Powers of Attorney, incorporated by reference to Initial Registration Statement, filed
September 30, 1991.
18 - Rule 18f-3 Multi-Class Plan, incorporated by reference to Post-Effective Amendment No. 14 to
the Registration Statement, filed April 14, 1995.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
Stephens Inc. is the beneficial owner of 100% of the outstanding
voting securities of the National Tax-Free Money Market Mutual Fund.
Item 26. Number of Holders of Securities
As of October 31, 1995, the number of record holders of each
class of Securities of the Registrant was as follows:
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<PAGE> 97
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
Class A* Class B
------- -------
<S> <C> <C>
Asset Allocation Fund 14,176 960
U.S. Government Allocation Fund 3,849 119
California Tax-Free Money Market Mutual Fund 15,130 N/A
California Tax-Free Bond Fund 9,023 514
Growth and Income Fund 4,933 318
Ginnie Mae Fund 4,288 233
Corporate Stock Fund 658 N/A
Money Market Mutual Fund 9,506 N/A
California Tax-Free Income Fund 2,293 N/A
Diversified Income Fund 3,859 226
Short-Intermediate U.S. Government 1,964 N/A
Income Fund
</TABLE>
* For purposes of this chart, shares of single class Funds are included under
the designation "Class A"
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
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<PAGE> 98
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 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 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.
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<PAGE> 99
<TABLE>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
------------------- ------------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle & Hastie
Director 455 Market Street
San Francisco, CA 94105
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
William R. Breuner General Partner in Breuner Associates, Breuner Properties and
Director Breuner-Pavarnick Real Estate Developers. Retired Chairman of
the Board of Directors of John Breuner Co.
2300 Clayton Road, Suite 1570
Concord, CA 94520
Vice Chairman of the California State Railroad
Museum Foundation.
111 I Street
Old Sacramento, CA 95814
William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007
Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201
Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302
Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
</TABLE>
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<PAGE> 100
<TABLE>
<S> <C>
Bakersfield, CA 93301
Chairman of the Board of Trustees of Whittier College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Wells Fargo & Company
Board of Directors 420 Montgomery Street
San Francisco, CA 94105
Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108
Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004
Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Accounting Professor and Dean Emeritus of
Director Graduate School of Business, Stanford University
MBA Admissions Office
Stanford, CA 94305
Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
Paul A. Miller Chairman of Executive Committee and Director of
Director Pacific Enterprises
633 West Fifth Street
</TABLE>
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<TABLE>
<S> <C>
Los Angeles, CA 90071
Trustee of Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Trustee of University of Southern California
University Park TGF 200
665 Exposition Blvd.
Los Angeles, CA 90089
Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102
Chair of Board of Trustees of
University of California at San Francisco Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143
Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108
Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814
Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108
Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303
Carl E. Reichardt Chairman and Chief Executive Officer of the
Director Board of Directors of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Hospital Corporation of America,
</TABLE>
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<PAGE> 102
<TABLE>
<S> <C>
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067
Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209
Retired Secretary of the Air Force
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720
John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
William F. Zuendt Director of 3Com Corp.
President 5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of MasterCard International
888 Seventh Avenue
New York, NY 10106
Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
</TABLE>
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<PAGE> 103
Wells Fargo Nikko Investment Advisors ("WFNIA") serves as the
sub-adviser to the Asset Allocation Fund, the Corporate Stock Fund and the U.S.
Government Allocation Fund and as adviser or sub-adviser to various other
open-end management investment companies. For additional information, see "The
Funds and Management" in the Prospectus 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.
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 Inc. and Stagecoach Trust; and is the exclusive
placement agent for Master Investment Trust, Managed Series Investment Trust,
Life & Annuity Trust and Master Investment Portfolio, which are registered
open-end management investment companies, and has acted as principal
underwriter for the Liberty Term Trust, Inc., Nations Government Income Term
Trust 2003, Inc., and Nations Government Income Term Trust 2004, Inc., and
Managed Balanced Target Maturity Fund, Inc., which are closed-end management
investment companies and Nations Fund Trust, Nations Funds, Inc., Nations Fund
Portfolio, Inc. and The Capitol Mutual Funds, which are open-end management
investment companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens Inc. with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940 (file No. 501-15510).
(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 Funds, Inc.
maintains those accounts books and other documents required by Rule 31a-l(b)(4)
and (d), 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 at 525 Market Street, San Francisco,
California 94163; and copies of such documents also are maintained by
stagecoach Funds, Inc. Original and/or copies of certain of the accounts, books
or other documents relating to the Asset Allocation Fund, the Corporate Stock
Fund and the U.S. Government Allocation Fund may be retained by WFNIA, 45
Fremont Street, San Francisco, California 94105, in its capacity as sub-adviser
or by Wells Fargo Institutional Trust Company, N.A., 45 Fremont Street, San
Francisco, California 94105, as custodian to these Funds.
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<PAGE> 104
Item 31. Management Services.
Other than as set forth under the captions "The Funds, the Master
Trust and Management" and "Management and Servicing Fees" in the Prospectus
constituting Part A of this Registration Statement and "Management" in the
Statement of Additional Information constituting Part B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.
Item 32. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions
set forth above in response to Item 27, or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue
(d) Registrant undertakes to hold a special meeting of its shareholders
for the purpose of voting on the question of removal of a director
or directors if requested in writing by the holders of at least 10W
of the Company's outstanding voting securities, and to assist in
communicating with other shareholders as required by Section 16(c)
of the Investment Company Act of 1940.
(e) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its most current annual report to
shareholders, upon request and without charge.
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<PAGE> 105
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Little Rock, State of
Arkansas on the 28th day of November, 1995.
STAGECOACH FUNDS, INC.
By /s/ R. Greg Feltus
----------------------
(R. Greg Feltus, President)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement 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 (Principal Executive
(R. Greg Feltus) Officer)
/s/Richard H. Blank, Jr. Chief Operating Officer,
------------------------ Secretary and Treasurer
(Richard H. Blank, Jr.)
/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)
*By: /s/R. Greg Feltus
-----------------
(R. Greg Feltus)
As Attorney-in-Fact
<PAGE> 106
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to the Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Little Rock, State of
Arkansas on the 28th day of November, 1995.
MASTER INVESTMENT TRUST
By /s/ Richard H. Blank, Jr.
-------------------------
(Richard H. Blank, Jr., Secretary)
Signature Title
--------- -----
/s/ R. Greg Feltus Trustee, Chairman
------------------ and President
(R. Greg Feltus) (Principal Executive Officer)
/s/ Richard H. Blank, Jr. Secretary and Treasurer
------------------------- (Chief Operating Officer)
(Richard H. Blank, Jr.)
/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
*By: /s/Richard H. Blank, Jr.
------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 107
STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL PAGE
EXHIBIT NUMBER DESCRIPTION NO.
<S> <C> <C>
1 - Amended and Restated Articles of Incorporation
5(a)(x) - Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the Diversified Income Fund
5(b)(xii) - Form of Administration Agreement with Stephens
Inc. on behalf of the National Tax-Free Money
Market Mutual Fund
8(i) - Custody Agreement with Wells Fargo Bank, N.A. on
behalf of the California Tax-Free Income Fund
8(j) - Custody Agreement with Wells Fargo Bank, N.A. on
behalf of the Diversified Income Fund
8(l) - Form of Custody Agreement with Wells Fargo Bank,
N.A. on behalf of the National Tax-Free Money
Market Mutual Fund
9(a)(ii) - Form of Agency Agreement with Wells Fargo Bank,
N.A. on behalf of the National Tax-Free Money
Market Mutual
9(b)(iv) - Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the California Tax-Free
Income Fund
9(d)(vii) - Servicing Plan and Form of Shareholder Servicing
Agreement on behalf of the National Tax-Free
Money Market Mutual Fund
10 - Consent of Counsel
15(a)(vi) - Distribution Plan on behalf of the National Tax-
Free Money Market Mutual Fund
</TABLE>
<PAGE> 1
EX-99.B1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
STAGECOACH FUNDS, INC.
Dated November 22, 1995
I.
WHEREAS, the Board of Directors of STAGECOACH FUNDS, INC. (the
"Corporation") approved the establishment of a new series of shares at a
meeting of the Board of Directors on November 15, 1995, and desires to amend the
Corporation's Articles of Incorporation as currently in effect (sometimes
referred to herein as the "Charter" or "Articles of Incorporation") to reflect
the establishment of such series; and
WHEREAS, the Board of Directors desires to restate the
Corporation's Charter as currently in effect; and
WHEREAS, a majority of the Corporation's entire Board of Directors
approved the amendment and restatement of the Charter and authorized the filing
of the amended and restated Charter and no stock entitled to vote on the
amendment was outstanding or subscribed for at the time of approval.
NOW THEREFORE, the undersigned hereby certifies to the Department
of Assessments and Taxation of the State of Maryland that:
FIRST, pursuant to authority expressly vested in the Board of
Directors by the Charter, and pursuant to resolutions duly adopted by the Board
of Directors on November 15, 1995, the board of Directors hereby classifies one
hundred fifty million (150,000,000) shares of the unissued shares of the
Corporation as Class A Shares of a series designated the "Aggressive Growth
Series" and classifies one hundred fifty million (150,000,000) shares of the
unissued shares of the Corporation as Class B Shares of the Aggressive Growth
Series and provides for the issuance of such Series; and
SECOND, an inadvertent error contained in the Articles
Supplementary dated October 19, 1995, which omitted the number of shares
authorized to be issued as Class A Shares and Class S Shares of the Money
Market Mutual Series is corrected to reflect that the Corporation is currently
authorized to issue six billion (6,000,000,000) Class A Shares of the Money
Market Mutual Series and two billion (2,000,000,000) Class S Shares of the
Money Market Mutual Series; and
THIRD, the following comprises the Corporation's Amended and
Restated Articles of Incorproaiton;
INCORPORATOR
Marco E. Adelfio, as incorporator, whose mailing address is 2000
Pennsylvania Avenue, N.W., Suite 5500, Washington, D.C., 20006, being at least
18 years of age, formed the corporation on September 7, 1991 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 September 9, 1991.
1
<PAGE> 2
II.
NAME
The name of the corporation is Stagecoach Funds, Inc.
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 Articles of
Incorporation.
(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 of Incorporation,
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 seventeen billion
(17,000,000,000) 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").
<TABLE>
<S> <C>
Aggressive Growth Series
Class A 150,000,000
Class B 150,000,000
Asset Allocation Series
Class A 100,000,000
Class B 100,000,000
California Tax-Free Bond Series
Class A 100,000,000
Class B 100,000,000
California Tax-Free Income Series 100,000,000
California Tax-Free Money Market
Mutual Series 3,000,000,000
Corporate Stock Series 100,000,000
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
Diversified Income Series
Class A 100,000,000
Class B 100,000,000
Ginnie Mae Series
Class A 300,000,000
Class B 300,000,000
Growth and Income Series
Class A 100,000,000
Class B 100,000,000
Money Market Mutual Series
Class A 6,000,000,000
Class S 2,000,000,000
National Tax-Free Money Market 3,000,000,000
Mutual Series
Short-Intermediate U.S.
Government Income Series 100,000,000
U.S. Government Allocation Series
Class A 300,000,000
Class B 300,000,000
Variable Rate Government Series 100,000,000
Unclassified 300,000,000
--------------
TOTAL 17,000,000,000
</TABLE>
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 of Incorporation
and the By-Laws of the Corporation.
4
<PAGE> 5
(d) As used in these Articles of Incorporation, a "series" of
shares represent 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, 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 of Incorporation of the Corporation 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:
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
5
<PAGE> 6
thereof, including any proceeds derived from the sale, exchange or
liquidation 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 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
6
<PAGE> 7
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 provided by statute or by these Articles of
Incorporation. 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 of Incorporation
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 of Incorporation 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 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
7
<PAGE> 8
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 are currently in office and who will
serve 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
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
8
<PAGE> 9
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
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.
9
<PAGE> 10
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 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 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
10
<PAGE> 11
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 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 of Incorporation and of
the By-Laws of the Corporation.
(k) The Corporation reserves the right from time to time to make
any amendments of its Articles of Incorporation 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 Incorporation, 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 of Incorporation of the Corporation, 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.
11
<PAGE> 12
IX.
DURATION OF THE CORPORATION
The duration of the Corporation shall be perpetual.
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 22nd day of November, 1995.
WITNESS: STAGECOACH FUNDS, INC.
/s/ RICHARD H. BLANK, JR /s/ R. GREG FELTUS
- ------------------------------ By: -------------------------
Richard H. Blank, Jr., Secretary R. Greg Feltus, President
THE UNDERSIGNED, President of the Corporation, who executed on
behalf of the Corporation Amended and Restated Articles of Incorporation,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Amended and 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
12
<PAGE> 1
EX-99.B 5(a)(x)
ADVISORY CONTRACT
DIVERSIFIED INCOME FUND
a portfolio of
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
November 9, 1992
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94163
Dear Sirs:
This will confirm the agreement between the undersigned (the
"Company") on behalf of the Diversified Income 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 eleven 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. 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.
1
<PAGE> 2
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. Except as provided in each of the Company's advisory
contracts and administration agreements, the Company shall bear all costs of
its operations, including the compensation of its directors who are not
affiliated with the Adviser, the Administrator or any of their affiliates;
advisory, shareholder servicing and administration fees; payments of
distribution-related expenses pursuant to any Rule 12b-1 Plan, i.e., a plan of
distribution of the Company adopted on behalf of any of the Funds pursuant to
Rule 12b-1 under the Act; governmental fees; interest charges; taxes; fees and
expenses of its independent accountants, legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming shares; expenses of preparing
and printing stock certificates, prospectuses (except the expense of printing
and mailing prospectuses used for promotional purposes, unless otherwise
payable pursuant to a Rule 12b-1 Plan), shareholders' reports, notices, proxy
statements and reports to regulatory agencies; travel expenses of directors,
officers and employees; office supplies; insurance premiums and certain
expenses relating to insurance coverage; trade association membership dues;
brokerage and other expenses connected with the execution of portfolio
securities transactions; fees and expenses of any custodian, including those
for keeping books and accounts and calculating the net asset value per share of
the Fund; expenses of shareholders' meetings; expenses relating to the
issuance, registration and qualification of shares of the Fund; pricing
services, if any; organizational expenses; and any extraordinary expenses.
Expenses attributable to one or more, but not all, of the Funds are charged
against the assets of the relevant Funds. General expenses of the Funds are
allocated among the Funds in a manner proportionate to the net assets of each
Fund, on a transactional basis or on such other basis as the Board of Directors
deems equitable.
2
<PAGE> 3
5. 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 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.
6. In consideration of the services to be rendered by the
Adviser under this contract, the Company shall pay the Adviser a monthly fee on
the first business day of each month, at the annual rate of 0.50% 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 6 begins to accrue before
the end 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.
7. 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, other expenditures that are
capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Rule 12b-1 Plan of
the Fund, but including the fees provided for in paragraph 6 and those provided
for pursuant to 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 6 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 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
Administration 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
3
<PAGE> 4
it appears likely that the includible expenses will exceed the limitations
referred to in this paragraph 7 for a fiscal year with respect to the Fund, the
monthly fee set forth in paragraph 6 payable to the 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 7. For purposes of
computing the excess, if any, over the most restrictive applicable expense
limitation, the value of the Fund's net assets shall be computed in the manner
specified in the last sentence of paragraph 6, and any reimbursements required
to be made by the Adviser shall be made once a year promptly after the end of
the Company's fiscal year.
8. 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 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).
9. 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.
10. The Adviser and the Company each agree that the words
"Stagecoach," which comprise 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 words "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 words "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 words "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 words "Stagecoach" and following
such change, shall not use the words "Stagecoach," or any combination thereof,
as a part of its
4
<PAGE> 5
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 words.
11. 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 FUNDS, INC.,
on behalf of the Diversified Income
Fund
By: /s/ Richard H. Blank, Jr.
-------------------------
Name: Richard H. Blank, Jr.
Title: Secretary and Treasurer
ACCEPTED as of the date
set forth above:
WELLS FARGO BANK, N.A.
By: /s/Donald J. Herrema
--------------------
Name: Donald J. Herrema
Title: Vice President
By: /s/Henry J. Cavigli, Jr.
------------------------
Name: Henry J. Cavigli, Jr.
Title:Vice President
6
<PAGE> 1
EX-99.B 5(b)(xii)
FORM OF
ADMINISTRATION AGREEMENT
National Tax-Free Money Market Mutual Fund
a portfolio of
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
December , 1995
--
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Dear Sirs:
This will confirm the agreement between the undersigned (the
"Company") on behalf of the National Tax-Free Money Market Mutual Fund (the
"Fund") and Stephens Inc. (the "Administrator") 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 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 Administrator. Any
amendments to those documents shall be furnished to the Administrator promptly.
2. The Company is engaging the Administrator to provide the
administrative services specified elsewhere in this agreement, subject to the
overall supervision of the Board of Directors of the Company. Pursuant to an
advisory contract between the Company and Wells Fargo Bank, N.A. (the
"Adviser") on behalf of the Fund, the Company has engaged the Adviser to manage
the investing and reinvesting of the assets of the Fund and to provide advisory
services.
1
<PAGE> 2
3. The Administrator shall, at its expense, provide the
following administrative services in connection with the operations of the
Company and the Fund: (a) furnishing office space and certain facilities
required for conducting the business of the Fund; (b) general supervision of
the operation of the Fund, including coordination of the services performed by
the Company's investment adviser, transfer and dividend disbursing agent,
shareholder servicing agents, custodians, independent accountants and legal
counsel; regulatory compliance, including the compilation of information for
documents such as reports to, and filings with, the Securities and Exchange
Commission and state securities commissions; and preparation of proxy
statements and shareholder reports for the Company; (c) the compensation of the
Company's directors, officers and employees who are affiliated with the
Administrator; (d) general supervision relating to the compilation of data
required for the preparation of periodic reports on the performance of its
obligations under this agreement and statements of the Fund that are
distributed to the Company's officers and Board of Directors and the
preparation of such additional reports and information as the Company's Board
of Directors or officers shall reasonably request; and (e) all other
administrative services reasonably necessary for the operation of the Fund,
other than those services that are to be provided by the Adviser pursuant to
the Advisory Contracts and by the Company's transfer and dividend disbursing
agent.
4. Except as provided in each of the Company's advisory
contracts and shareholder servicing and administration agreements, the Company
shall bear all costs of its operations, including the compensation of its
directors who are not affiliated with the Adviser, the Administrator or any of
their affiliates; advisory and shareholder servicing and administration fees;
payments for distribution-related expenses pursuant to any Rule 12b-1 Plan,
i.e., a plan of distribution of the Company adopted on behalf of any of the
Funds pursuant to Rule 12b-1 under the Act; governmental fees; interest
charges; taxes; fees and expenses of its independent accountants, legal
counsel, transfer agent and dividend disbursing agent; expenses of redeeming
shares; expenses of preparing and printing any stock certificates, prospectuses
(except the expense of printing and mailing prospectuses used for promotional
purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; travel expenses of directors, officers and employees; office
supplies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio securities transactions; fees and
expenses of any custodian, including those for keeping books and accounts and
calculating the net asset value per share of the Fund; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of shares of the Fund; pricing services, if any; organizational
expenses; and any extraordinary expenses. Expenses attributable to one or
more, but not all, of the Funds are charged against the assets of the relevant
Funds. General expenses of the Funds are allocated among the Funds in a manner
proportionate to the net assets of each Fund, on a transactional basis or on
such other basis as the Board of Directors deems equitable.
5. The Administrator shall give the Company the benefit of the
Administrator's best judgment and efforts in rendering services under this
agreement. As an inducement to the Administrator's undertaking to render these
services, the Company agrees that the Administrator
2
<PAGE> 3
shall not be liable under this agreement for any mistake in judgment or in any
other event whatsoever except for lack of good faith, provided that nothing in
this agreement shall be deemed to protect or purport to protect the
Administrator against any liability to the Company or its shareholders to which
the Administrator would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Administrator's duties
under this agreement or by reason of reckless disregard of its obligations and
duties hereunder.
6. In consideration of the services to be rendered by the
Administrator under this agreement, the Company shall pay the Administrator a
monthly fee on the first business day of each month, at the annual rate of
0.05% of the average daily value (as determined on each business day at the
time set forth in the Prospectus for determining net asset value per share) of
the Fund's net assets during the preceding month. If the fee payable to the
Administrator pursuant to this paragraph 6 begins to accrue before the end of
any month or if this agreement terminates before the end of any month, the fee
for the period from the effective date to the end of that month or from the
beginning of that month to the termination date, respectively, shall be
prorated according to the proportion that the period bears to the full month in
which the effectiveness or termination occurs. For purposes of calculating
each such monthly fee, the value of the Fund's net assets shall be computed in
the manner specified in the 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. For
purposes of this agreement, a "business day" is any day the New York Stock
Exchange is open for trading.
7. 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, other expenditures that are
capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Rule 12b-1 Plan of
the Fund, but including the fees provided for in paragraph 6 and those provided
for pursuant to the Fund's Advisory Agreement ("includable expenses"), exceed
the most restrictive expense limitation applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations may be raised
or lowered from time to time, the Administrator shall waive or reimburse that
portion of the excess derived by multiplying the excess by a fraction, the
numerator of which shall be the percentage at which the excess portion
attributable to the fee payable pursuant to this agreement is calculated under
paragraph 6 hereof, and the denominator of which shall be the sum of such
percentage plus the percentage at which the excess portion attributable to the
fee payable pursuant to the Fund's Advisory 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 includable expenses accrued during that fiscal year to
the end of that period and shall estimate the includable expenses for the
balance of that fiscal year. If as a result of that review and estimation it
appears likely that the includable expenses will exceed the limitations
referred to in this paragraph 7 for a fiscal year with respect to the Fund, the
monthly fee set forth in paragraph 6 payable to the Administrator for such
month shall be reduced, subject to a later adjustment, by an
3
<PAGE> 4
amount equal to the Applicable Ratio times the pro rata portion (prorated on
the basis of the remaining months of the fiscal year, including the month just
ended) of the amount by which the includable expenses for the fiscal year are
expected to exceed the limitations provided for in this paragraph 7. For
purposes of computing the excess, if any, over the most restrictive applicable
expense limitation, the value of the Fund's net assets shall be computed in the
manner specified in the last sentence of paragraph 6, and any reimbursements
required to be made by the Administrator shall be made once a year promptly
after the end of the Company's fiscal year.
8. This agreement shall become effective on its execution date
and shall thereafter continue in effect for a period of no less than three
years. Thereafter, this agreement may be terminated at any time, without the
payment of any penalty, by a vote of a majority of the Fund's outstanding
voting securities (as defined in the Act) and by a vote of a majority of the
Company's entire Board of Directors on 60 days' written notice to the
Administrator or by the Administrator on 60 days' written notice to the
Company.
9. Except to the extent necessary to perform the Administrator's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Administrator, or any affiliate of the Administrator,
or any employee of the Administrator to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
10. This agreement shall be governed by and construed in
accordance with the laws of the State of Arkansas.
4
<PAGE> 5
If the foregoing correctly sets forth the agreement between the
Company and the Administrator, please so indicate by signing and returning to
the Company the enclosed copy hereof.
Very truly yours,
STAGECOACH FUNDS, INC.,
on behalf of the National Tax-Free Money
Market Mutual Fund
By:
-------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer,
Secretary and Treasurer
ACCEPTED as of the date
set forth above:
STEPHENS INC.
By:
-------------------------
Name: R. Greg Feltus
Title: Senior Vice President
5
<PAGE> 1
EX-99.B 8(i)
CUSTODY AGREEMENT
This Agreement is made as of the 9th day of November, 1992 (the
"Agreement"), by and between STAGECOACH FUNDS, INC. on behalf of the
California Tax-Free Income Fund (hereinafter called the "Fund"), and WELLS
FARGO BANK, N.A., (hereinafter called the "Custodian").
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Fund, duly authorized by the Board of Directors ("Directors")
of the Fund to give Oral Instructions and Written Instructions on behalf of the
Fund and listed in the Certificate attached hereto as Appendix A or such other
Certificate as may be received from time to time by the Custodian.
2. Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and Federal agency securities, its successor(s) and
its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of
the Fund by any two officers of the Fund.
4. "Clearing Member" shall mean a registered broker/dealer which is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker/dealer reasonably believed by the Custodian
to be such a clearing member.
5. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's Directors specifically
approving deposits in DTC. The term "Depository" shall further mean and
include any person authorized to act as a depository under the Investment
Company Act of 1940, its successor(s) and its nominee(s), specifically
identified in a certified copy of a resolution of the Fund's Directors
specifically approving deposits therein by the Custodian.
6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, or Clearing
<PAGE> 2
Member, or otherwise, in accordance with an agreement between the Fund, the
Custodian and a broker, dealer, or Clearing Member (a "Margin Account
Agreement"), separate and distinct from the custody account, in which certain
Securities and/or money of the Fund shall be deposited and withdrawn from time
to time in connection with such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or the Depository shall be
deemed to have deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentality's
thereof, commercial paper, certificates of deposit and bankers' acceptances,
repurchase and reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of securities normally requires
settlement in Federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the president, and Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary and Assistant Treasurer or any other person or persons duly
authorized by the Directors of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate attached hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells and agrees to repurchase such Securities at a described or
specified date and price .
11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities (including, without limitation, general
obligations bonds), bonds, debentures, notes, mortgages or other obligations,
and other certificates, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or assets.
12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or assets
of the Fund shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
13. "Shares" shall mean the shares of beneficial interest of the Fund,
each of which, in the case of a Fund having Series, is allocated to a
particular Series.
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14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes
or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian
of all the Securities and moneys at any time owned by the Fund during the term
of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in Article V, the Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will
be entitled to reverse any credits made on the Fund's behalf where such credits
have been previously made and moneys are not finally collected. The Fund shall
deliver to the Custodian a certified resolution of the Directors of the Fund
authorizing and instructing the Custodian on a continuous and ongoing basis to
deposit in the Book-Entry System all Securities eligible for deposit therein
and utilize the Book-Entry System to the- extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of the Fund in the Depository, the Fund shall deliver to the
Custodian a certified resolution of the Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys of the
Fund deposited in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity .
2. The Custodian shall credit a separate account in the name of the Fund
all moneys received by it for the account of the Fund, and shall disburse the
same only:
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(a) In payment for Securities purchased, as provided in Article IV hereof;
(b) In payment of dividends or distributions, as provided in Article VIII
hereof;
(c) In payment of original issue or other taxes, as provided in Article
IX hereof;
(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;
(e) Pursuant to Certificates setting forth the name and addresses of the
person to whom the payment is to be made, and the purpose for which payment is
to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where securities are transferred to
the account of the Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to the Fund a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-entry System or the
Depository. The Custodian shall furnish the Fund at least monthly with a
detailed statement of the Securities and moneys held for the Fund under this
Agreement.
4. Except as otherwise provided in Article V, all Securities held for
the Fund, which are issued or issuable only in bearer form, except such
Securities as are held in the BookEntry System, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor(s) or their
nominee(s). The Fund agrees to furnish to the custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee or in the name
of the Book-Entry System or the Depository, any Securities which it may hold
for the account of the Fund and which may from time to time be registered in
the name of the Fund. The Custodian shall hold all such Securities which are
not held in the Book-Entry System or in the Depository in a separate account in
the name of the Fund physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or
through the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall with respect to all Securities held for the
Fund in accordance with this Agreement:
(a) Collect all income due or payable;
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<PAGE> 5
(b) Present for payment and collect the account payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian upon five business days' prior notifications to
the Fund
(c) Present for payment and collect the amount payable upon all Securities
which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of the Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation, or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called
as specified in the Certificate.
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ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of Securities by
the Fund, other than a purchase or sale of any Reverse Repurchase Agreement,
the Fund shall deliver to the Custodian (i) with respect to each purchase or
sale of Securities which are not Money Market Securities, a Certificate; and
(ii) with respect to each purchase or sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions, specifying with respect
to each purchase or sale: (a) the name of the issuer and the title of the
Securities; (b) the number of shares or the principal amount purchased or sold
and accrued interest, if any; (c) the date of purchase or sale and settlement
date; (d) the purchase or sale price per unit; (e) the total amount payable
upon such purchase or sale; (f) the name of the person from whom or the broker
through whom the purchase or sale was made, and the name of the clearing
broker, if any; (g) in the case of a purchase, the name of the broker to which
payment is to be made; and (h) in the case of a sale, the name of the broker to
whom the Securities are to be delivered. In the case of a purchase, the
Custodian shall, upon receipt of Securities purchased by or for the Fund, pay
out of the moneys held for the account of the Fund the total amount payable to
the person from whom, or the broker through whom, the purchase was made,
provided that the same conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written Instructions. In the case of a
sale, the Custodian shall deliver the Securities upon receipt of the total
amount payable to the Fund upon such sale, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver Securities
and arrange for payment in accordance with the customs prevailing among dealers
in securities.
ARTICLE V
SHORT SALES
1. Promptly after any short sale, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the name of the issuer and the title of
the Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; and
(d) the sale price per unit; (e) the total amount credited to the Fund upon
such sales, if any; (f) the amount of cash and/or the amount and kind of
Securities, if any, which are to be deposited in a Margin Account and the name
in which such Margin Account has been or is to be established; (g) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account; and (h) the name of the broker through which such
short sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming such sale and that the total amount credited to the Fund
upon such sale, if any, as specified in the Certificate is held by such broker
for the account of the Custodian (or any nominee of the Custodian) as custodian
of the Fund, issue a receipt or make the deposits into the Margin Account and
the Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the
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<PAGE> 7
issuer and the title of the Security; (b) the number of shares or the principal
amount, and accrued interest or dividends, if any, required to effect such
closing-out to be delivered to the broker; (c) the dates of the closing-out and
settlement; (d) the purchase price per unit; (e) the net total amount payable
to the Fund upon such closing-out; (f) the net total amount payable to the
broker upon such closing-out; (g) the amount of cash and the amount and kind of
Securities, if any, to be withdrawn, from the Margin Account; (h) the amount of
cash and/or the amount and kind of Securities, if any, to be withdrawn from the
Segregated Security Account; and (i) the name of the broker through which the
Fund is effecting such closing-out. The Custodian shall, upon receipt of the
net total amount payable to the Fund upon such closing-out and the return
and/or cancellation of the receipts, if any, issued by the Custodian with
respect to the short sale being closed-out, pay out the moneys held for the
account of the Fund to the broker the net total amount payable to the broker,
and make the withdrawals from the Margin Account and the Segregated Security
Account as the same are specified in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse Repurchase Agreement
with respect to Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate, or in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total amount payable
to the Fund in connection with such Reverse Repurchase Agreement; (b) the
broker or dealer through or with which the Reverse Repurchase Agreement is
entered; (c) the amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase Agreement; and
(e) the amount of cash and/or the amount and kind of Securities, if any, to be
deposited in a Segregated Security Account in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of the total amount
payable to the Fund specified in the Certificate, Oral Instructions or Written
Instructions make the delivery to the broker or dealer, and the deposits, if
any, to the Segregated Security Account, specified in such Certificate, Oral
Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article VI, the Fund shall promptly deliver a Certificate
or, in the event such Reverse Repurchase Agreement is a Money Market Security,
a Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the
total amount payable by the Fund in connection with such termination; (c) the
amount and kind of Securities to be received by the Fund in connection with
such termination; (d) the date of termination; (e) the name of the broker or
dealer with or through which the Reverse Repurchase agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind of Securities
to be withdrawn from the Segregated Security Account. The Custodian shall,
upon receipt of the amount and kind of Securities to be received by the Fund
specified in the Certificate, Oral Instructions or Written Instructions, make
the payment to the broker or dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such Certificate, Oral Instructions
or Written Instructions.
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ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY ACCOUNTS
AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund fails to specify
in a Certificate the name of the issuer, the title and the number of shares or
the principal amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Segregated Securities Account, the
Custodian shall be under no obligation to make any such deposit or withdrawal
and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Marqin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.
5. On each business day, the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker or dealer specified in the name of a
Margin Account a copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding the delivery of
the Fund of such statement, the Fund shall furnish to the Custodian a
Certificate or Written Instructions specifying the then market value of the
Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Directors, certified by the Secretary or any Assistant Secretary, either
(i) setting forth the date of the
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<PAGE> 9
declaration of a dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be determined,
the amount payable per share to the shareholders of record as of that date and
the total amount payable to the Dividend Agent of the Fund on the payment date,
or (ii) authorizing the declaration of dividends and distributions on a daily
basis or some other periodic basis and authorizing the Custodian to rely on
Oral Instructions, Written Instructions, or a Certificate setting forth the
date of the declaration of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written instructions or Certificate, the Custodian shall pay out
the moneys held for the account of the Fund the total amount payable to the
Dividend Agent of the Fund.
ARTICLE IX
SALE-AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any of its Shares, it shall deliver to
the Custodian a Certificate duly specifying the number of Shares sold, trade
date, price and the amount of money to be received by the Custodian for the
sale of such Shares.
2. Upon receipt of such money from the Transfer Agent or Co-Transfer
Agent, the Custodian shall credit such money to the account of the Fund.
3. Upon issuance of any of the Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of the Fund, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall redeem any of
its Shares, it shall furnish to the Custodian a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent or Co-Transfer Agent of an
advice setting forth the number of Shares received by the Transfer Agent or
Co-Transfer Agent, for redemption and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the Transfer Agent as
the case may be, out of the moneys held for the account of the Fund of the
total amount specified in the Certificate issued pursuant to paragraph 4 of
this Article IX.
6. Notwithstanding the above provisions regarding the redemption of any
of the Fund's Shares. Whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from the Fund or its agent setting forth that the redemption is in
good form for redemption in accordance with the check redemption procedure,
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<PAGE> 10
honor the check presented as part of such check redemption privilege out of the
money held in the account of the Fund for such purposes.
ARTICLE X
OVERDRAFTS OF INDEBTEDNESS
1. The Custodian may, in its sole discretion, advance funds on behalf of
the Fund which results in an overdraft because the moneys held by the Custodian
for the account of the Fund shall be insufficient to pay the total amount
payable upon a purchase of Securities as set forth in a Certificate or Oral
Instructions issued pursuant to Article IV or which results in an overdraft for
some other reason, or if the Fund is for any other reason indebted to the
Custodian (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement and
subject to the provisions of paragraph 2 of this Article X.)
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against delivery of a stated
amount or collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of the
bank; (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into; (d) the date on which the loan becomes due and
payable; (e) the total amount payable to the Fund on the borrowing date; (f)
the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal of any particular Securities; and (g) a statement specifying whether
such loan is for investment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company Act of 1940 and
the Funds prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amounts payable as
set forth in the Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
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ARTICLE XI
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Articles of
Incorporation and as disclosed in its most recent and currently effective
prospectus to lend its portfolio securities, within twenty-four (24; hours
after each loan of portfolio Securities the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect to each such
loan: (a) the name of the issuer and the title of the Securities; (b) the
number of shares or the principal amount loaned; (c) the date of loan and
delivery (d) the total amount to be delivered to the Custodian against the loan
of the Securities, including the amount of cash collateral and the premium, if
any, separately identified; and (e) the name of the broker, dealer or financial
institution to which the loan was made. The Custodian shall deliver the
securities thus designated to the broker, dealer, or financial institution to
which the loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or a bank cashier's check payable to
the order of the fund or the custodian drawn on New York Clearing House Funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the name of the issuer and the title of the Securities to be
returned; (b) the number of shares or the principal amount to be returned; (c)
the date of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The
Custodian shall receive all Securities returned from the broker, dealer or
financial institution to which such Securities were loaned and upon receipt
Whereof shall repay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of securities as set forth in the
Certificate.
ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including attorney's fees, resulting
from its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion. The Custodian shall be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
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2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount Paid or received thereof;
(b) The legality of the issue or sale of any of the Fund's Shares, or the
sufficiency of the amount to be received therefor:
(c) The legality of the redemption of any of the Fund's Shares or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by the
Fund;
(e) The legality of any borrowing by the Fund using securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement nor shall the Custodian be under any duty or obligation to
see to it that any cash collateral delivered to it by a broker, dealer or
financial institutions or held by it at anytime as a result of such loan of
portfolio Securities of the Fund is adequate collateral for the Fund against
any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such
cash collateral held by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XI of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account
in connection with transactions by the Fund. In addition, the Custodian shall
be under no duty or obligation to see that any broker, dealer or Clearing
Member makes payment to the fund of any variation margin payment or similar
payment which the Fund may be entitled to receive from such broker, dealer, or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, or Clearing Member is the amount the Fund is entitled to
receive, or to notify the Fund of the Custodians receipt or non-receipt of any
such payment; provided however that the Custodian, upon the Fund's written
request, shall as Custodian, demand from any broker, dealer, or Clearing Member
identified by the Fund the payment of any variation margin payment or similar
payment that the Fund asserts it is entitled to receive pursuant to the terms
of a Margin Account Agreement or otherwise from such broker, dealer or
Clearing Member.
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3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchange, offers,
tenders, interest rate changes or similar matters relating to Securities held
in the Depository unless the Custodian shall have actually received timely
notice from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to collect, or
for the late collection or late crediting by the Depository of any amount
payable upon Securities deposited in the Depository which may mature or be
redeemed, retired, called or otherwise become payable. However, upon receipt
of a Certificate from the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make a claim against the Depository on behalf
of the Fund, except that the Custodian shall not be under any obligation to
appear in, prosecute or defend any action suit or proceeding in respect to any
Securities held by the Depository which in its opinion may involve it expense
or liability, unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including,
but not limited to, banking institutions located in foreign countries, of
Securities and moneys at any time owned by the Fund, upon terms and conditions
approved in the Certificate, which shall, if requested by the Custodian, be
accompanied by an approving resolution of the Fund's Board of Directors adopted
in accordance with Rule 17f-5 under the Investment Company Act of 1940, as
amended.
8. The custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account
of the Fund are such as properly may be held by the Fund under the provisions
of its Articles of Incorporation.
9. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and fees as set forth in Appendix D
attached hereto. The Custodian may charge such fees and any expenses incurred
by the Custodian in the performance of its duties
13
<PAGE> 14
against any money held by it for the account of the Fund. The Custodian shall
also be entitled to charge against any money held by it for the account of the
Fund the amount of any loss, damage, liability or expense, including attorney's
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement. The expense which the Custodian may charge against the account
of the Fund include, but are not limited to, the expenses of Sub-Custodians of
the Custodian incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably
believed by the custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions and any Written Instructions actually
received by the Custodian pursuant to Articles IV or VII hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile thereof,
confirming such Oral Instructions or Written Instructions in such manner so
that such Certificate or facsimile thereof is received by the Custodian,
whether by hand delivery, telex or otherwise, by the close of business of the
same day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming instructions are
not received by the Custodian shall in no way affect the validity of the
transactions hereby authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions, provided such
instructions reasonably appear to have been received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained if any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative at the Fund's expense.
13. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever
14
<PAGE> 15
arising or incurred because of or in connection with the Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article IX as part of any
check redemption privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian
in accordance with the customs prevailing from time to time among brokers and
dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix E attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until December 31, 1994, and thereafter
shall continue automatically for successive annual periods ending on December
31 of each year, provided such continuance is specifically approved at least
annually by (i) the Fund's Directors or (ii) vote of a majority (as defined in
the Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Fund's Directors who are not "interested persons" (as defined
in said Act) of any part to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable without penalty, on sixty (60)
days' notice, by the Fund's Directors or by vote of holders of a majority of
the Fund's shares or, upon not less than ninety (90) days' notice, by the
Custodian. In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Directors of the Fund, certified
by the Secretary or any Assistant Secretary, electing to terminate this
Agreement and designating a successor custodian or custodians, each of which
shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event such notice is given by
the Custodian, the Fund shall, on or before the termination date, deliver to
the Custodian a copy of a resolution of its Directors, certified by the
Secretary or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by its as Custodian,
after deducting all fees, expenses, and other amounts for the payment of
reimbursement of which shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall, upon the
date specified in the notice of termination
15
<PAGE> 16
of this Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Fund) and moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect
to Securities held in the Book-Entry System, in any Depository or by a Clearing
Member which cannot be delivered to the Fund, to hold such Securities hereunder
in accordance with this Agreement.
ARTICLE XIV
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by an Officer of
the Fund under its seal, setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian a new
certificate in similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers of the Fund. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Fund, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth
in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
420 Montgomery Street, San Francisco, California, 94104, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given the Fund, shall be deemed sufficiently given if
addressed to the Fund and mailed or delivered to at its office at 111 Center
Street, Little Rock, Arkansas, 72201, or at such other place as the Fund may
from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by
a resolution of the Directors of the Fund.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however,
that this Agreement shall not be
16
<PAGE> 17
assignable by the fund without the written consent of the Custodian, or by the
Custodian without the written consent of the Fund, authorized or approved by a
resolution of its Directors.
7. This Agreement shall be construed in accordance with the laws of the
state of California.
8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
9. This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an Officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Director, Officer or
shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the their respective Officers, thereunto duly authorized, as of the
day and year first above written.
STAGECOACH FUNDS, INC.
By: /s/ Richard H. Blank, Jr.
---------------------------
Title: Secretary and Treasurer
-----------------------
WELLS FARGO BANK, N.A.
By: /s/ Henry J. Cavigli
---------------------------
Title: Vice President
-----------------------
17
<PAGE> 1
EX-99.B 8(j)
CUSTODY AGREEMENT
This Agreement is made as of the 9th day of November, 1992 (the
"Agreement"), by and between STAGECOACH FUNDS, INC. on behalf of the
Diversified Income Fund (hereinafter called the "Fund"), and WELLS FARGO BANK,
N.A., (hereinafter called the "Custodian").
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Fund, duly authorized by the Board of Directors ("Directors")
of the Fund to give Oral Instructions and Written Instructions on behalf of the
Fund and listed in the Certificate attached hereto as Appendix A or such other
Certificate as may be received from time to time by the Custodian.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and Federal agency securities, its
successor(s) and its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of
the Fund by any two Officers of the Fund.
4. "Clearing Member" shall mean a registered broker/dealer which is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker/dealer reasonably believed by the Custodian
to be such a clearing member.
5. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's Directors specifically
approving deposits in DTC. The term "Depository" shall further mean and
include any person authorized to act as a depository under the Investment
Company Act of 1940, its successor(s) and its nominee(s), specifically
identified in a certified copy of a resolution of the Fund's Directors
specifically approving deposits therein by the Custodian.
6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, or Clearing Member, or otherwise, in accordance with an
agreement between the Fund, the Custodian and a
<PAGE> 2
broker, dealer, or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities
thereof, commercial paper, certificates of deposit and bankers' acceptances,
repurchase and reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of securities normally requires
settlement in Federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the President, and Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary and Assistant Treasurer or any other person or persons duly
authorized by the Directors of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate attached hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells and agrees to repurchase such Securities at a described or
specified date and price.
11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities (including, without limitation, general
obligations bonds), bonds, debentures, notes, mortgages or other obligations,
and other certificates, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or assets.
12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or assets
of the Fund shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
13. "Shares" shall mean the shares of beneficial interest of the Fund,
each of which, in the case of a Fund having Series, is allocated to-a
particular Series.
2
<PAGE> 3
14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes
or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
l. The Fund hereby constitutes and appoints the Custodian as custodian
of all the Securities and moneys at any time owned by the Fund during the term
of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
l. Except as otherwise provided in Article V, the Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will
be entitled to reverse any credits made on the Fund's behalf where such credits
have been previously made and moneys are not finally collected. the Fund shall
deliver to the Custodian a certified resolution of the Directors of the Fund
authorizing and instructing the Custodian on a continuous and ongoing basis to
deposit in the Book-Entry System all Securities eligible for deposit therein
and utilize the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales-of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of the Fund in the Depository, the Fund shall deliver to the
Custodian a certified resolution of the Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys of the
Fund deposited in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity.
2. The Custodian shall credit a separate account in the name of the Fund
all moneys received by it for the account of the Fund, and shall disburse the
same only:
(a) In payment for Securities purchased, as provided in Article IV hereof;
3
<PAGE> 4
(b) In payment of dividends or distributions, as provided in Article VIII
hereof;
(c) In payment of original issue or other taxes, as provided in Article
IX hereof;
(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;
(e) Pursuant to Certificates setting forth the name and addresses of the
person to whom the payment is to be made, and the purpose-e for which payment
is to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where securities are transferred to
the account of the Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to the Fund a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the hooks of the Book-Entry System or the
Depository. The Custodian shall furnish the Fund at least monthly with a
detailed statement of the Securities and moneys held for the Fund under this
Agreement.
4. Except as otherwise provided in Article V, all Securities held for
the Fund, which are issued or issuable only in bearer form, except such
Securities as are held in the Book Entry System, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor(s) or their
nominee(s). The Fund agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee or in the name
of the Book-Entry System or the Depository, any Securities which it may hold
for the account of the Fund and which may from time to time be registered in
the name of the Fund. The Custodian shall hold all such Securities which are
not held in the Book-Entry System or in the Depository in a separate account in
the name of the Fund physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or
through the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall with respect to all Securities held for the
Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the account payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of
4
<PAGE> 5
such call appears in one or more of the publications listed in Appendix C
annexed hereto, which may be amended at any time by the Custodian upon five
business days' prior notifications to the Fund:
(c) Present for payment and collect the amount payable upon all Securities
which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of the Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation, or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called
as specified in the Certificate.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of Securities by
the Fund, other than a purchase or sale of any Reverse Repurchase Agreement,
the Fund shall deliver to the
5
<PAGE> 6
Custodian (i) with respect to each purchase or sale of Securities which are not
Money Market Securities, a Certificate; and (ii) with respect to each purchase
or sale of Money Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each purchase or sale: (a) the name of
the issuer and the title of the Securities; (b) the number of shares or the
principal amount purchased or sold and accrued interest, if any; (c) the date
of purchase or sale and settlement date; (d) the purchase or sale price per
unit; (e) the total amount payable upon such purchase or sale; (f) the name of
the person from whom or the broker through whom the purchase or sale was made,
and the name of the clearing broker, if any; (g) in the case of a purchase, the
name of the broker to which payment is to be made; and (h) in the case of a
sale, the name of the broker to whom the Securities are to be delivered. In
the case of a purchase, the Custodian shall, upon receipt of Securities
purchased by or for the Fund, pay out of the moneys held for the account of the
Fund the total amount payable to the person from whom, or the broker through
whom, the purchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate, Oral Instructions or Written
Instructions. In the case of a sale, the Custodian shall deliver the
Securities upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
ARTICLE V
SHORT SALES
1. Promptly after any short sale, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the name of the issuer and the title of
the Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; and
(d) the sale price per unit; (e) the total amount credited to the Fund upon
such sales if any; (f) the amount of cash and/or the amount and kind of
Securities, if any, which are to be deposited in a Margin Account and the name
in which such Margin Account has been or is to be established; (g) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account; and (h) the name of the broker through which such
short sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming such sale and that the total amount credited to the Fund
upon such sale, if any, as specified in the Certificate is held by such broker
for the account of the Custodian (or any nominee of the Custodian) as custodian
of the Fund, issue a receipt or make the deposits into the Margin Account and
the Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued interest or
dividends, if any, required to effect such closing-out to be delivered to the
broker; (c) the dates of the closing-out and settlement; (d) the purchase price
per unit; (e) the net total amount payable to the Fund upon such closing-out;
(f) the net total amount payable to the broker upon such closing-out; (g) the
amount of cash and the amount and kind of Securities, if any, to be
6
<PAGE> 7
withdrawn, from the Margin Account; (h) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Segregated Security
Account; and (i) the name of the broker through which the Fund is effecting
such closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out and the return and/or cancellation of
the receipts, if any, issued by the Custodian with respect to the short sale
being closed-out, pay out the moneys held for the account of the Fund to the
broker the net total amount payable to the broker, and make the withdrawals
from the Margin Account and the Segregated Security Account as the same are
specified in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse Repurchase Agreement
with respect to Securities and money he]d by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate, or in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total amount payable
to the Fund in connection with such Reverse Repurchase Agreement; (b) the
broker or dealer through or with which the Reverse Repurchase Agreement is
entered; (c) the amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase Agreement; and
(e) the amount of cash and/or the amount and kind of Securities, if any, to be
deposited in a Segregated Security Account in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of the total amount
payable to the Fund specified in the Certificate, Oral Instructions or Written
Instructions make the delivery to the broker or dealer, and the deposits, if
any, to the Segregated Security Account, specified in such Certificate, Oral
Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph l of this Article VI, the Fund shall promptly deliver a Certificate
or, in the event such Reverse Repurchase Agreement is a Money Market Security,
a Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the
total amount payable by the Fund in connection with such termination; (c) the
amount and kind of Securities to be received by the Fund in connection with
such termination; (d) the date of termination; (e) the name of the broker or
dealer with or through which the Reverse Repurchase agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind of Securities
to be withdrawn from the Segregated Security Account. The Custodian shall,
upon receipt of the amount and kind of Securities to be received by the Fund
specified in the Certificate, Oral Instructions or Written Instructions, make
the payment to the broker or dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such Certificate, Oral Instructions
or Written Instructions.
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<PAGE> 8
ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY ACCOUNTS
AND COLLATERAL ACCOUNTS
l. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund fails to specify
in a Certificate the name of the issuer, the title and the number of shares or
the principal amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Segregated Securities Account, the
Custodian shall be under no obligation to make any such deposit or withdrawal
and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.
5. On each business day, the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker or dealer specified in the name of a
Margin Account a copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding the delivery of
the Fund of such statement, the Fund shall furnish to the Custodian a
Certificate or Written Instructions specifying the then market value of the
Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Directors, certified by the Secretary or any Assistant Secretary, either
(i) setting forth the date of the declaration of a dividend or distribution,
the date of payment thereof, the record date as of which
8
<PAGE> 9
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total amount
payable to the Dividend Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distributions on a daily basis or
some other periodic basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions, or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of the Find the total amount payable to the
Dividend Agent of the Fund.
ARTICLE IX
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any of its Shares, it shall deliver to
the Custodian a Certificate duly specifying the number of Shares sold, trade
date, price and the amount of money to be received by the Custodian for the
sale of such Shares.
2. Upon receipt of such money from the Transfer Agent or Co-Transfer
Agent, the Custodian shall credit such money to the account of the Fund.
3. Upon issuance of any of the Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of the Fund, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall redeem any of
its Shares, it shall furnish to the Custodian a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent or Co-Transfer Agent of an
advice setting forth the number of Shares received by the Transfer Agent or
Co-Transfer Agent, for redemption and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the Transfer Agent as
the case may be, out of the moneys held for the account of the Fund of the
total amount specified in the Certificate issued pursuant to paragraph 4 of
this Article IX.
6. Notwithstanding the above provisions regarding the redemption of any
of the Fund's Shares. Whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from the Fund or its agent setting forth that the redemption is in
good form for redemption in accordance with the check redemption procedure,
honor the check presented as part of such check redemption privilege out of the
money held in the account of the Fund for such purposes.
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<PAGE> 10
ARTICLE X
OVERDRAFTS OF INDEBTEDNESS
1. The Custodian may, in its sole discretion, advance funds on behalf of
the Fund which results in an overdraft because the moneys held by the Custodian
for the account of the Fund shall be insufficient to pay the total amount
payable upon a purchase of Securities as set forth in a Certificate or Oral
Instructions issued pursuant to Article IV or which results in an overdraft for
some other reason, or if the Fund is for any other reason indebted to the
Custodian (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement and
subject to the provisions of paragraph 2 of this Article X.)
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against delivery of a stated
amount or collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of the
bank; (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into; (d) the date on which the loan becomes due and
payable; (e) the total amount payable to the Fund on the borrowing date; (f)
the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal of any particular Securities and (g) a statement specifying whether
such loan is for investment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company Act of 1940 and
the Fund's prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amounts payable as
set forth in the Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
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<PAGE> 11
ARTICLE XI
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Articles of
Incorporation and as disclosed in its most recent and currently effective
prospectus to lend its portfolio securities, within twenty-four (24) hours
after each loan of portfolio Securities the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect to each such
loan: (a) the name of the issuer and the title of the Securities; (b) the
number of shares or the principal amount loaned; (c) the date of loan and
delivery (d) the total amount to be delivered to the Custodian against the loan
of the Securities, including the amount of cash collateral and the premium, if
any, separately identified; and (e) the name of the broker, dealer or financial
institution to which the loan was made. The Custodian shall deliver the
securities thus designated to the broker, dealer, or financial institution to
which the loan was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or a bank cashier's check payable to
the order of the fund or the custodian drawn on New York Clearing House Funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the name of the issuer and the title of the Securities to be
returned; (b) the number of shares or the principal amount to be returned; (c)
the date of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The
Custodian shall receive all Securities returned from the broker, dealer or
financial institution to which such Securities were loaned and upon receipt
thereof shall repay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including attorney's fees, resulting
from its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion. The Custodian shall be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
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<PAGE> 12
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount Paid or received thereof;
(b) The legality of the issue or sale of any of the Fund's Shares, or the
sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by the
Fund;
(e) The legality of any borrowing by the Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement nor shall the Custodian be under any duty or obligation to
see to it that any cash collateral delivered to it by a broker, dealer or
financial institutions or held by it at anytime as a result of such loan of
portfolio Securities of the Fund is adequate collateral for the Fund against
any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such
cash collateral held by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XI of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account
in connection with transactions by the Fund. In addition, the Custodian shall
be under no duty or obligation to see that any broker, dealer or Clearing
Member makes payment to the fund of any variation margin payment or similar
payment which the Fund may be entitled to receive from such broker, dealer, or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, or Clearing Member is the amount the Fund is entitled to
receive, or to notify the Fund of the Custodian's receipt or non-receipt of any
such payment; provided however that the Custodian, upon the Fund's written
request, shall as Custodian, demand from any broker, dealer, or Clearing Member
identified by the Fund the payment of any variation margin payment or similar
payment that the Fund asserts it is entitled to receive pursuant to the terms
of a Margin Account Agreement or otherwise from such broker, dealer, or
Clearing Member.
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<PAGE> 13
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchange, offers,
tenders, interest rate changes or similar matters relating to Securities held
in the Depository unless the Custodian shall have actually received timely
notice from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to collect, or
for the late collection or late crediting by the Depository of any amount
payable upon Securities deposited in the Depository which may mature or be
redeemed, retired, called or otherwise become payable. However, upon receipt
of a Certificate from the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make a claim against the Depository on behalf
of the Fund, except that the Custodian shall not be under any obligation to
appear in, prosecute or defend any action suit or proceeding in respect to any
Securities held by the Depository which in its opinion may involve it expense
or liability, unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action .
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including,
but not limited to, banking institutions located in foreign countries, of
Securities and moneys at any time owned by the Fund, upon terms and conditions
approved in the Certificate, which shall, if requested by the Custodian be
accompanied by an approving resolution of the Fund's Board of Directors adopted
in accordance with Rule 17f-5 under the Investment Company Act of 1940, as
amended.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account
of the Fund are such as properly may be held by the Fund under the provisions
of its Articles of Incorporation.
9. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and fees as set forth in Appendix D
attached hereto. The Custodian may charge such fees and any expenses incurred
by the Custodian in the performance of its duties
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<PAGE> 14
against any money held by it for the account of the Fund. The Custodian shall
also be entitled to charge against any money held by it for the account of the
Fund the amount of any loss, damage, liability or expense, including attorney's
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement. The expense which the Custodian may charge against the account
of the Fund include, but are not limited to, the expenses of Sub-Custodians of
the Custodian incurred in settling outside of New York City transactions
involving the purchase and sale of securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably
believed by the custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions and any Written Instructions actually
received by the Custodian pursuant to Articles IV or VII hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile thereof,
confirming such Oral Instructions or Written Instructions in such manner so
that such Certificate or facsimile thereof is received by the Custodian,
whether by hand delivery, telex or otherwise, by the close of business of the
same day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming instructions are
not received by the Custodian shall in no way affect the validity of the
transactions hereby authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions, provided such
instructions reasonably appear to have been received from an Authorized Person.
ll. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained if any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodians normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative at the Fund's expense.
13. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever
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<PAGE> 15
arising or incurred because of or in connection with the Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article IX as part of any
check redemption privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian
in accordance with the customs prevailing from time to time among brokers and
dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix E attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until December 31, 1994, and thereafter
shall continue automatically for successive annual periods ending on December
31 of each year, provided such continuance is specifically approved at least
annually by (i) the Fund's Directors or (ii) vote of a majority (as defined in
the Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Fund's Directors who are not "interested persons" (as defined
in said Act) of any part to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is
terminable without penalty, on sixty (60) days' notice, by the Fund's Directors
or by vote of holders of a majority of the Fund's shares or, upon not less than
ninety (90) days' notice, by the Custodian. In the event such notice is given
by the Fund, it shall be accompanied by a copy of a resolution of the Directors
of the Fund, certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of its Directors, certified by
the Secretary or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by its as Custodian,
after deducting all fees, expenses, and other amounts for the payment of
reimbursement of which shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall, upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities
15
<PAGE> 16
held in the Book-Entry System which cannot be delivered to the Fund) and moneys
then owned by the Fund, be deemed to be its own custodian, and the Custodian
shall thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the
Book-Entry System, in any Depository or by a Clearing Member which cannot be
delivered to the Fund, to hold such Securities hereunder in accordance with
this Agreement.
ARTICLE XIV
MISCELLANEOUS
l. Annexed hereto as Appendix A is a Certificate signed by an Officer of
the Fund under its seal, setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian a new
certificate in similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
Certificate shall he received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers of the Fund. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Fund, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth
in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
420 Montgomery Street, San Francisco, California, 94104, or at such other place
as the Custodian may from time to time designate in writing .
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given the Fund, shall be deemed sufficiently given if
addressed to the Fund and mailed or delivered to at its office at 111 Center
Street, Little Rock, Arkansas, 72201, or at such other place as the Fund may
from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by
a resolution of the Directors of the Fund.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however,
that this Agreement shall not be assignable by the fund without the written
consent of the Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of its Directors.
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<PAGE> 17
7. This Agreement shall be construed in accordance with the laws of the
State of California.
8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
9. This Agreement has been executed on behalf of the Fund by the
undersigned Officer of the Fund in his capacity as an Officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Director, Officer or
shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the their respective Officers, thereunto duly authorized, as of the
day and year first above written.
STAGECOACH FUNDS, INC.
By: /s/Richard H. Blank, Jr.
------------------------------
Title: Secretary and Treasurer
---------------------------
WELLS FARGO BANK, N.A.
By: /s/Donald J. Herrema
------------------------------
Title: Senior Vice President
---------------------------
By: /s/Henry J. Cavigli
------------------------------
Title: Vice President
---------------------------
17
<PAGE> 1
EX-99.B 8(l)
FORM OF
CUSTODY AGREEMENT
STAGECOACH FUNDS, INC.
111 CENTER STREET
LITTLE ROCK, ARKANSAS 72201
This Agreement is made as of the ____ day of December, 1995 (the
"Agreement"), by and between STAGECOACH FUNDS, INC. (the "Company"), on behalf
of the National Tax-Free Money Market Mutual Fund (the "Fund"), and WELLS FARGO
BANK, N.A. (the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Company and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Company, duly authorized by the Board of Directors
("Directors") to give Oral Instructions and Written Instructions on behalf of
the Fund and listed in the Certificate attached hereto as Appendix A or such
other Certificate as may be received from time to time by the Custodian.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor(s) and its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of
the Fund by any two Officers of the Company.
4. "Clearing Member" shall mean a registered broker-dealer that is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably believed by the Custodian
to be such a clearing member.
5. "Depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency registered
with the Securities and
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Exchange Commission under Section 17A of the Securities Exchange Act of 1934,
its successor(s) and its nominee(s), provided the Custodian has received a
certified copy of a resolution of the Board of Directors specifically approving
deposits in DTC, PTC or such other clearing agency. The term "Depository"
shall further mean and include any person authorized to act as a depository
pursuant to Section 17, Rule 17f-4 or Rule 17f-5 thereunder, under the
Investment Company Act of 1940, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board of
Directors approving deposits therein by the Custodian.
6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Company or the Fund
for the benefit of a broker, dealer, or Clearing Member, or otherwise, in
accordance with an agreement between the Company on behalf of the Fund, the
Custodian and a broker, dealer, or Clearing Member (a "Margin Account
Agreement"), separate and distinct from the custody account, in which certain
Securities and/or moneys of the Fund shall be deposited and withdrawn from time
to time in connection with such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or the Depository shall be
deemed to have deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities
thereof, commercial paper, certificates of deposit and bankers' acceptances,
repurchase and reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the President, Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly authorized by the
Directors of the Company to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the Certificate attached
hereto as Appendix B or such other Certificate as may be received by the
Custodian from time to time.
9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics similar to common
stocks, preferred stocks, debt obligations issued
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by state or municipal governments and by public authorities (including, without
limitation, general obligations bonds), bonds, debentures, notes, mortgages or
other obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase, sell or subscribe for the
same, or evidencing or representing any other rights or interest therein, or
any property or assets.
12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of the Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
13. "Shares" shall mean the shares of common stock of the Fund, each of
which, in the case of the Fund having Series, is allocated to a particular
Series.
14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes
or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
1. The Company on behalf of the Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any time owned by
the Fund during the term of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in Article V, the Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will
be entitled to reverse any credits made on the Fund's behalf where such credits
have been previously made and moneys are not finally collected. The Fund shall
deliver to the Custodian a certified resolution of the Directors of the Company
authorizing and instructing the Custodian on a continuous and ongoing basis to
deposit in the Book-Entry System all Securities eligible for deposit therein
and to utilize the Book-Entry System to the extent possible in connection with
its
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performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of the Fund in the Depository, the Fund shall deliver to the
Custodian a certified resolution of the Directors of the Company approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys of the
Fund deposited in either the Book- Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of the
Fund all moneys received by it for the account of the Fund, and shall disburse
the same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions, as provided in Article VIII
hereof;
(c) In payment of original issue or other taxes, as provided in Article
IX hereof;
(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;
(e) Pursuant to Certificate(s) setting forth the name(s) and address(es)
of the person(s) to whom the payment is to be made, and the purpose for which
payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where Securities are transferred to
the account of the Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to the Fund a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. The Custodian shall furnish the Fund at least monthly with a
detailed statement of the Securities and moneys held for the Fund under this
Agreement.
4. Except as otherwise provided in Article V, all Securities held for
the Fund which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered nominee of the
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<PAGE> 5
Custodian as the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor(s) or their
nominee(s). The Company agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee or in the name
of the Book-Entry System or the Depository, any Securities which it may hold
for the account of the Fund and which may from time to time be registered in
the name of the Fund. The Custodian shall hold all such Securities which are
not held in the Book-Entry System or in the Depository in a separate account in
the name of the Fund physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or
through the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall, with respect to all Securities held for
the Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian upon five business days' prior notification to the
Fund;
(c) Present for payment and collect the amount payable upon all
Securities which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be exercised;
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<PAGE> 6
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of the Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called
as specified in the Certificate.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of Securities by
the Fund, other than a purchase or sale of any Reverse Repurchase Agreement,
the Fund shall deliver to the Custodian (i) with respect to each purchase or
sale of Securities which are not Money Market Securities, a Certificate; and
(ii) with respect to each purchase or sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions, specifying with respect
to each such purchase or sale: (a) the name of the issuer and the title of the
Securities; (b) the number of shares or the principal amount purchased or sold
and accrued interest, if any; (c) the date of purchase or sale and settlement
date; (d) the purchase or sale price per unit; (e) the total amount payable
upon such purchase or sale; (f) the name of the person from whom or the broker
through whom the purchase or sale was made, and the name of the clearing
broker, if any; (g) in the case of a purchase, the name of the broker to which
payment is to be made; and (h) in the case of a sale, the name of the broker to
whom the Securities are to be delivered. In the case of a purchase, the
Custodian shall, upon receipt of Securities purchased by or for the Fund, pay
out of the moneys held for the account of the Fund the total amount payable to
the person from whom, or the broker through whom, the purchase was made,
provided that the same conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written Instructions. In the case of a
sale, the Custodian shall deliver the Securities upon receipt of the total
amount payable to the Fund upon such sale, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver Securities
and arrange for payment in accordance with the customs prevailing among dealers
in securities.
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ARTICLE V
SHORT SALES
1. Promptly after any short sale, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the name of the issuer and the title
of the Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d)
the sale price per unit; (e) the total amount credited to the Fund upon such
sale, if any (f) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in which
such Margin Account has been or is to be established; (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account; and (h) the name of the broker through which such
short sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming such sale and that the total amount credited to the Fund
upon such sale, if any, as specified in the Certificate is held by such broker
for the account of the Custodian (or any nominee of the Custodian) as custodian
of the Fund, issue a receipt or make the deposits into the Margin Account and
the Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security;
(b) the number of shares or the principal amount, and accrued interest or
dividends, if any, required to effect such closing-out to be delivered to the
broker; (c) the dates of the closing-out and settlement; (d) the purchase price
per unit; (e) the net total amount payable to the Fund upon such closing-out;
(f) the net total amount payable to the broker upon such closing-out; (g) the
amount of cash and the amount and kind of Securities, if any, to be withdrawn,
from the Margin Account; (h) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Segregated Security Account; and
(i) the name of the broker through which the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount payable
to the Fund upon such closing-out and the return and/or cancellation of the
receipts, if any, issued by the Custodian with respect to the short sale being
closed-out, pay out the moneys held for the account of the Fund to the broker
the net total amount payable to the broker, and make the withdrawals from the
Margin Account and the Segregated Security Account, as the same are specified
in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse Repurchase Agreement
with respect to Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate, or in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total amount payable
to the Fund in connection with such Reverse Repurchase Agreement; (b) the
broker or dealer through or with which the Reverse Repurchase Agreement is
entered; (c) the amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase Agreement; and
(e) the amount of cash and/or the amount and kind of Securities, if
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any, to be deposited in a Segregated Security Account in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total
amount payable to the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article VI, the Fund shall promptly deliver a Certificate
or, in the event such Reverse Repurchase Agreement is a Money Market Security,
a Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the
total amount payable by the Fund in connection with such termination; (c) the
amount and kind of Securities to be received by the Fund in connection with
such termination; (d) the date of termination; (e) the name of the broker or
dealer with or through which the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind of Securities
to be withdrawn from the Segregated Security Account. The Custodian shall,
upon receipt of the amount and kind of Securities to be received by the Fund
specified in the Certificate, Oral Instructions or Written Instructions, make
the payment to the broker or dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such Certificate, Oral Instructions
or Written Instructions.
ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund fails to specify
in a Certificate the name of the issuer, the title and the number of shares or
the principal amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Segregated Securities Account, the
Custodian shall be under no obligation to make any such deposit or withdrawal
and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.
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5. On each business day, the Custodian shall furnish the Fund with a
statement with respect to the Fund's Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind of
Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker or dealer specified
in the name of a Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish the Fund with a statement with respect to the Fund's Collateral
Account specifying the amount of cash and/or the amount and kind of Securities
held therein. No later than the close of business next succeeding the delivery
to the Fund of such statement, the Fund shall furnish the Custodian with a
Certificate or Written Instructions specifying the then market value of the
Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish the Custodian with a copy of the resolution of
the Directors, certified by the Secretary or any Assistant Secretary, either
(i) setting forth the date of the declaration of a dividend or distribution,
the date of payment thereof, the record date as of which shareholders entitled
to payment shall be determined, the amount payable per share to the
shareholders of record as of that date and the total amount payable to the
Dividend Agent of the Fund on the payment date, or (ii) authorizing the
declaration of dividends and distributions on a daily basis or some other
periodic basis and authorizing the Custodian to rely on Oral Instructions,
Written Instructions or a Certificate setting forth the date of the declaration
of such dividend or distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date and the total
amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of the Fund the total amount payable to the
Dividend Agent of the Fund.
ARTICLE IX
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any of its Shares, it shall deliver to
the Custodian a Certificate duly specifying the number of Shares sold, trade
date, price and the amount of money to be received by the Custodian for the
sale of such Shares.
2. Upon receipt of such money from the Transfer Agent or a co-transfer
agent, the Custodian shall credit such money to the account of the Fund.
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3. Upon issuance of any of the Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of the Fund, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall redeem any of
its Shares, it shall furnish the Custodian with a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent or co-transfer agent of an
advice setting forth the number of Shares received by the Transfer Agent or
co-transfer agent for redemption, and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the Transfer Agent or
co-transfer agent, as the case may be, out of the moneys held for the account
of the Fund of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article IX.
6. Notwithstanding the above provisions regarding the redemption of any
of the Fund's Shares, whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from the Fund or its agent setting forth that the redemption is in
good form for redemption in accordance with the check redemption procedure,
honor the check presented as part of such check redemption privilege out of the
money held in the account of the Fund for such purposes.
ARTICLE X
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of the Fund which results in an overdraft because the moneys held by the
Custodian for the account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if the Fund is, for any other reason,
indebted to the Custodian (except a borrowing for investment or for temporary
or emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article X), such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
the Fund payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days involved)
equal to 1/2% over the Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date of any change in
such prime commercial lending rate but in no event to be less than 6% per
annum. Any such overdraft or indebtedness shall be reduced by an amount equal
to the total of all amounts due the Fund which have not been collected by the
Custodian on behalf of the Fund when due because of the failure of the
Custodian to make timely demand or presentment for payment. In addition, the
Company on behalf of the Fund hereby agrees that the Custodian
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shall have a continuing lien and security interest in and to any property at
any time held by it for the benefit of the Fund or in which the Fund may have
an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting on the Custodian's behalf. The
Company authorizes the Custodian, in its sole discretion, at any time to charge
any such overdraft or indebtedness together with interest due thereon against
any balance of account standing to the Fund's credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against delivery of a stated
amount of collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of
the bank; (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into; (d) the date on which the loan becomes due and
payable; (e) the total amount payable to the Fund on the borrowing date; (f)
the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal of any particular Securities; and (g) a statement specifying whether
such loan is for investment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company Act of 1940 and
the Fund's prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amounts payable as
set forth in the Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of the Company's Articles of
Incorporation and as disclosed in the Fund's most recent and currently
effective prospectus to lend its portfolio Securities, within twenty-four (24)
hours after each loan of portfolio Securities the Fund shall deliver or cause
to be delivered to the Custodian a Certificate specifying with respect to each
such loan; (a) the name of the issuer and the title of the Securities; (b) the
number of shares or the
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principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of the Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, it shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date of
termination; (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The
Custodian shall receive all Securities returned from the broker, dealer, or
financial institution to which such Securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including attorney's fees, resulting
from its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion. The Custodian shall be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received thereof;
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<PAGE> 13
(b) The legality of the issue or sale of any of the Fund's Shares, or
the sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by the
Fund;
(e) The legality of any borrowing by the Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement, nor shall the Custodian be under any duty or obligation
to see to it that any cash collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of
portfolio Securities of the Fund is adequate collateral for the Fund against
any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such
cash collateral held by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XI of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account
in connection with transactions by the Fund. In addition, the Custodian shall
be under no duty or obligation to see that any broker, dealer, or Clearing
Member makes payment to the Fund of any variation margin payment or similar
payment which the Fund may be entitled to receive from such broker, dealer, or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, or Clearing Member is the amount the Fund is entitled to
receive, or to notify the Fund of the Custodian's receipt or non-receipt of any
such payment; provided however that the Custodian, upon the Fund's written
request, shall as Custodian, demand from any broker, dealer, or Clearing Member
identified by the Fund the payment of any variation margin payment or similar
payment that the Fund asserts it is entitled to receive pursuant to the terms
of a Margin Account Agreement or otherwise from such broker, dealer, or
Clearing Member.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
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<PAGE> 14
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchanges, offers,
tenders, interest rate changes or similar matters relating to Securities held
in the Depository unless the Custodian shall have actually received timely
notice from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to collect, or
for the late collection or late crediting by the Depository of any amount
payable upon Securities deposited in the Depository which may mature or be
redeemed, retired, called or otherwise become payable. However, upon receipt
of a Certificate from the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make a claim against the Depository on behalf
of the Fund, except that the Custodian shall not be under any obligation to
appear in, prosecute or defend any action, suit or proceeding in respect to any
Securities held by the Depository which in its opinion may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub- custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by the Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Company's Board of Directors adopted in accordance
with Rule 17f-5 under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account
of the Fund are such as properly may be held by the Fund under the provisions
of its Articles of Incorporation.
9. The Custodian shall not be entitled to compensation for providing
custody services to the Fund so long as the Custodian receives fees for
providing advisory services to the Fund. If it no longer receives compensation
for providing such services, the Custodian shall be entitled to such reasonable
fees as it may from time to time negotiate with the Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions and any Written Instructions actually
received by the Custodian pursuant to Article IV or VII hereof. The Fund
14
<PAGE> 15
agrees to forward to the Custodian a Certificate or facsimile thereof,
confirming such Oral Instructions or Written Instructions in such manner so
that such Certificate or facsimile thereof is received by the Custodian,
whether by hand delivery, telex or otherwise, by the close of business of the
same day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming instructions are
not received by the Custodian shall in no way affect the validity of the
transactions hereby authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions, provided such
instructions reasonably appear to have been received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. The Fund, or the Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative(s) at the Fund's expense.
13. The Custodian shall provide the Company with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Company may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article IX as part of any check redemption privilege program of
the Fund, except for any such liability, claim, loss and demand arising out of
the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian
in accordance with the customs prevailing from time to time among brokers or
dealers in such Securities.
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<PAGE> 16
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix D attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until December __, 1996, and thereafter
shall continue automatically for successive annual periods ending on the last
day of December of each year, provided such continuance is specifically approved
at least annually by (i) the Company's Directors or (ii) vote of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Company's Directors who are not "interested persons" (as
defined in said Act) of any party to this Agreement, by vote cast in person at
a meeting called for the purpose of voting on such approval. This Agreement is
terminable without penalty, on sixty (60) days' notice, by the Company's
Directors or, by vote of holders of a majority of the Fund's Shares or, upon
not less than ninety (90) days' notice, by the Custodian. In the event such
notice is given by the Fund, it shall be accompanied by a copy of a resolution
of the Directors of the Company on behalf of the Fund, certified by the
Secretary or any Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of the Directors, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the absence of
such designation by the Fund, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice, this Agreement shall terminate and the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, on that date
deliver directly to the successor custodian all Securities and moneys then
owned by the Fund and held by it as Custodian, after deducting all fees,
expenses, and other amounts for the payment of reimbursement of which shall
then be entitled.
2. If a successor custodian is not designated by the Company on behalf
of the Fund or the Custodian in accordance with the preceding paragraph, the
Fund shall, upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be delivered to the Fund)
and moneys then owned by the Fund, be deemed to be its own custodian, and the
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities held in the
Book-Entry System, in any Depository or by a Clearing Member which cannot be
delivered to the Fund, to hold such Securities hereunder in accordance with
this Agreement.
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<PAGE> 17
ARTICLE XIV
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by an Officer of
the Company under its seal, setting forth the names and the signatures of the
present Authorized Persons. The Company agrees to furnish to the Custodian a
new Certificate in similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Company under its seal, setting forth the names and the
signatures of the present Officers of the Company. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Company, or in the event that
other or additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully be protected in
acting under the provisions of this Agreement upon the signatures of the
Officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
420 Montgomery Street, San Francisco, California, 94105, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given by or on behalf of the Fund, shall be deemed
sufficiently given if addressed to the Fund and mailed or delivered to it at
its office at 111 Center Street, Little Rock, Arkansas, 72201, or at such other
place as the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by
a resolution of the Directors of the Company.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however,
that this Agreement shall not be assignable by the Company without the written
consent of the Custodian, or by the Custodian without the written consent of
the Company, authorized or approved by a resolution of its Directors.
7. This Agreement shall be construed in accordance with the laws of the
State of California.
8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized, as of the day
and year first above written.
STAGECOACH FUNDS, INC. WELLS FARGO BANK, N.A.
By: By:
----------------------- --------------------------
Name: Name:
--------------------- ------------------------
Title: Title:
-------------------- ------------------------
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<PAGE> 19
APPENDIX A
----------
AUTHORIZED PERSONS
Pursuant to Article I, Para. 1, and Article XIV, Para. 1, of the
Custody Agreement, the following persons have been authorized by the Board of
Directors to give Oral Instructions and Written Instructions on behalf of the
Fund.
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
By:
------------------------
Name:
----------------------
Title:
---------------------
-A-
<PAGE> 20
APPENDIX B
OFFICERS
Pursuant to Article I, Para. 8, and Article XIV, Para. 2, of the
Custody Agreement, the term "Officers" does not include any persons other than
the President, Vice President, Secretary, Treasurer, Controller, Assistant
Secretary and Assistant Treasurer; and the following persons are Officers of
the Company authorized by the Board of Directors to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund.
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
By: By:
----------------------- -------------------------
Name: Name:
--------------------- -------------------------
Title: Title:
-------------------- -------------------------
-B-
<PAGE> 21
APPENDIX C
DESIGNATED PUBLICATIONS LIST FOR CALLED INSTRUMENTS
The following publications are designated publications for the
purposes of Article III, Para. 5(b):
A. The Bond Buyer
B. The Depository Trust Company Notices
C. Financial Daily Card Services
D. The New York Times
E. Standard & Poor's Called Bond Record
F. The Wall Street Journal
-C-
<PAGE> 22
APPENDIX D
COMPANY AND FUND ACCOUNTING SERVICES:
SCHEDULE OF SERVICES
A. Maintain Fund general ledger and journal.
B. Prepare and record disbursements for direct Fund expenses.
C. Prepare daily money transfers.
D. Reconcile all Fund bank and custodian accounts.
E. Assist Fund independent auditors as appropriate.
F. Prepare daily projection of available cash balances.
G. Record trading activity for purposes of determining net asset values and
daily dividend.
H. Prepare daily portfolio evaluation report to value portfolio Securities
and determine daily accrued income.
I. Determine the daily net asset value per share.
J. Determine the daily dividend per share.
K. Prepare monthly, quarterly, semi-annual and annual financial statements.
L. Provide financial information for reports to the Securities and Exchange
Commission in compliance with the provisions of the Investment Company
Act of 1940 and the Securities Act of 1933, the Internal Revenue Service
and any other regulatory or governmental agencies as required.
M. Provide financial, yield, net asset value, etc., information to National
Association of Securities Dealers, Inc., and other survey and statistical
agencies as instructed from time to time by the Fund.
-D-
<PAGE> 1
EX-99.B 9(a)(ii)
FORM OF
AGENCY AGREEMENT
This agreement is made and entered into as of this ___ day of December, 1995
(the "Agreement"), by and between Stagecoach Funds, Inc., a registered
diversified management investment company incorporated in the State of Maryland
(the "Company"), and Wells Fargo Bank, N.A., national association ("Agent"),
for transfer agency and dividend disbursing as follows:
I. SERVICES.
A. Appointment of Agent. The Company hereby appoints Agent as
its transfer and dividend disbursing agent for the National Tax-Free Money
Market Mutual Series (the "Fund") and Agent accepts such appointment.
B. Description of Services. As consideration for the
compensation hereinafter described in Section I (C), Agent agrees to provide
the Company with the facilities and services described and set forth on
Schedule A attached hereto and incorporated herein by reference.
C. Compensation. As consideration for the services described in
Section I (B), above, the Company shall pay to Agent a fee of 0.10% of the
average daily net assets of the Fund.
II. EXPENSES. The Company, on behalf of the Fund, shall promptly
reimburse Agent for all reasonable out-of-pocket expenses incurred by Agent in
connection with the performance of services under this Agreement, including,
without limitation, the following:
A. Postage, including first class mail insurance in connection
with mailing share certificates, express delivery, etc.;
B. Envelopes, check forms, continuous forms, forms for reports
and statements, stationary and other similar supplies;
C. Fees and costs of outside legal counsel employed by Agent;
D. Banking services, fees, and costs for wire transfers, deposit
accounts, etc.
E. Expenses of fidelity and liability insurance and bonding;
F. Fees and costs relating to the use, licensing, development or
implementation of data processing software used by or for the Fund;
G. Data transmission expenses;
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<PAGE> 2
H. Costs and microfilm/microfiche; and
I. Costs for telephone lines and equipment.
III. TERM. This Agreement shall become effective as of the date first
above written and shall continue until terminated pursuant to its provisions.
III. INSURANCE. Agent agrees to procure and maintain such fidelity bond
coverage as may be required by the Investment Company Act of 1940 (the "1940
Act"), in the amounts and with such deductibles as are required by or permitted
under the 1940 Act, as it may be amended from time to time.
IV. REGISTRATION AND COMPLIANCE.
A. Agent represents that it is registered as a transfer agent
with the Securities and Exchange Commission ("SEC") pursuant to Section 17A of
the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations promulgated thereunder, and Agent agrees to maintain said
registration current and comply with all of the requirements of the Exchange
Act, rules and regulations during the term of this Agreement.
B. The Company represents that it is a diversified management
investment company registered with the SEC in accordance with the 1940 Act and
the rules and regulations promulgated thereunder. The Company is authorized to
offer and sell its shares pursuant to the 1940 Act, the Securities Act of 1933
("1933 Act") and the rules and regulations promulgated thereunder. The Company
will furnish Agent with a list of those jurisdictions in the United States and
elsewhere in which it is authorized to offer and sell its shares to the general
public and will maintain the currency of such list by amendment. The Company
agrees promptly to advise Agent of any change in or limitation upon its
authority to carry on business as an investment company pursuant to the 1940
Act, the Exchange Act and the 1933 Act and the statutes, rules and regulations
of each and every jurisdiction to which it is subject.
V. DOCUMENTATION. The Company and Agent shall each supply to the
other upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles or incorporation, bylaws, codes of ethics, registration statements,
permits, financial reports, third party audits, certificates of authority,
computer tapes and related items.
VI. PROPRIETARY INFORMATION. It is agreed that all records and
documents, excepting computer data processing programs and any related
documentation used or prepared by, or on behalf of Agent for the performance of
its services hereunder, are the property of the Company and shall be open to
audit or inspection by the Company or its agents during the normal business
hours of Agent, shall be maintained in a manner designed to preserve the
confidentiality thereof and to comply with applicable federal and state laws
and regulations, and shall, in whole or any specified part, be surrendered to
the Company or its duly authorized agents upon receipt by Agent of reasonable
notice of and request therefor.
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<PAGE> 3
VII. INDEMNITY. The Company shall indemnify and hold Agent harmless
against any losses, claims, damages, liabilities or expenses (including
reasonable attorney's fees and expenses) resulting from any claim, demand,
action or suit brought by any person other than the Company (including a
shareholder naming the Company as a party) and not resulting from Agent's bad
faith, willful misfeasance, reckless disregard of its obligations and duties,
gross negligence or breach of this Agreement, and arising out of, or in
connection with:
A. Agency's performance hereunder;
B. Any error or omission in any record (including but not
limited to magnetic tapes, computer printouts, hard copies and microfilm or
microfiche copies) delivered, or caused to be delivered, by the Company to
Agent in connection with this Agreement;
C. Bad faith, willful misfeasance, reckless disregard of its
obligations and duties or negligence of the Company, or Agent's acting upon any
instructions reasonably believed by it to have been properly executed or
communicated by any person duly authorized by the Company;
D. Agent's acting in reliance upon advice given by counsel for
Agent or upon advice reasonably believed by it to have been given by counsel
for the Company; or
E. Agent's acting in reliance upon any instrument reasonably
believed by it to have been genuine and signed, countersigned or executed by
the proper person(s) in accordance with the currently effective certificate(s)
of authority delivered to Agent by the Company.
In the event that Agent requests the Company to indemnify or
hold it harmless hereunder, agent shall use its best efforts to inform the
Company of the relevant facts concerning the matter in question. Agent shall
use reasonable care to identify and promptly notify the Company concerning any
matter which presents, or appears likely to present, a claim for
indemnification against the Company.
The Company shall have the election of defending Agent
against any claim which may be the subject of indemnification hereunder. In
the event the Company so elects, it will so notify Agent and thereupon the
Company shall take over defense of the claim, and (if so requested by the
Company) Agent shall incur no further legal limit or other expenses related
thereto for which it would be entitled to indemnify hereunder; provided,
however, that nothing herein contained shall prevent Agent from retaining, at
its own expense, counsel to defend any claim. Except with the Company's prior
consent, Agent shall in no event confess any claim or make any compromise in
any matter in which the Company will be asked to indemnify or hold harmless
hereunder.
VIII. LIABILITY
A. Damages. Agent shall not be liable to the Company, or any
third party, for punitive, exemplary, indirect, special or consequential
damages (even if Agent has been advised of
3
<PAGE> 4
the possibility of such damages) arising from its obligations and the services
provided under this Agreement, including but not limited to loss of profits,
loss of use of the shareholder accounting system, cost of capital and expenses
of substitute facilities, programs or services.
B. Force Majeure. Anything in this Agreement to the contrary
notwithstanding, Agent shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts
or civil or military authority, national emergencies, work stoppage, fire,
flood, catastrophe, earthquake, acts of God, insurrection, war, riot, data
processing and communications downtime (where such downtime occurs for reasons
other than Agent's gross negligence or willful misconduct) or interruption of
power supply.
IX. AMENDMENT. This Agreement and the Schedules attached hereto and
made a part hereof may be amended at any time, with or without shareholder
approval (except as otherwise required by law), in writing signed by each of
the parties hereto. Any change in the Fund's registration statement or
other documents of compliance or in the forms relating to any plan, program or
service offered by its current prospectus which would require a change in
Agent's obligations hereunder shall be subject to Agent's approval, which
approval shall not be unreasonably withheld.
X. TERMINATION. This Agreement may be terminated by either party
without cause upon one hundred twenty (120) days prior written notice to the
other, and at any time for cause in the event that such cause remains
unremedied for more than thirty (30) days after receipt by the other party of
written specification of such cause.
In the event the Company designates a successor to any of Agent's
obligations hereunder, Agent shall, at the expense and pursuant to the
direction of the Company, transfer promptly to such successor all relevant
books, records and other data of the Company in the possession or under the
control of Agent.
XI. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall continue
in full force and effect.
XII. APPLICABLE LAW. This Agreement shall be subject to and construed
in accordance with the laws of the State of California.
XIII. ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement constitutes the entire and complete agreement of the parties hereto
relating to the subject matter hereof and supersedes and merges all prior
contracts and discussions between the parties.
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<PAGE> 5
XIV. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
STAGECOACH FUNDS, INC. WELLS FARGO BANK, N.A.
By: By:
------------------------- -------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
---------------------- ----------------------
5
<PAGE> 6
SCHEDULE A
SCHEDULE OF SERVICES
1. Share Transfer and Dividend Disbursing Services
A. Maintenance of shareholder accounts, including processing of new
accounts.
B. Posting address changes and other file maintenance for shareholder
accounts.
C. Posting all transactions to the shareholder file, including:
- Direct purchase
- Wire order purchases
- Direct redemptions
- Telephone redemption
- Wire order redemption
- Direct exchanges
- Dividend payments
- Dividend reinvestments
- Telephone exchanges
- Transfers
D. Prepare daily reconciliations of shareholder processing to money
movement instructions.
E. Issuing all checks and stopping and replacing checks.
F. Mailing confirmations and checks
G. Performing certain of the Fund's other mailings, including:
- Dividend and capital gain distributions
- 1099/year-end shareholder reporting
- Daily confirmations
- Furnish certified list of shareholders (hard copy of
microfilm)
H. Maintaining and retrieving all required past history for
shareholders and provide research capabilities as follows:
- Daily monitoring of all processing activity to verify
back-up documentation
- Provide exception reports
- Microfilming
- Storage, retrieval and archive of records in accordance
with Rules 31a-1, 31a-2, and 31a-3 under the 1940 Act.
I. Reporting and remitting as necessary for state escheat
requirements.
<PAGE> 1
EX-99.B 9(b)(iv)
SHAREHOLDER SERVICING AGREEMENT
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of November
9, 1992, is made by and between Stagecoach Funds, Inc. ("Company"), a Maryland
corporation having its principal place of business at 111 Center Street, Little
Rock, Arkansas 72201, on behalf of the California Tax-Free Income Fund
("Fund"), and Wells Fargo Bank, N.A., 525 Market Street, Suite 1900, San
Francisco, California 94163, as shareholder servicing agent hereunder
("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, shares of common stock (.001 par value) of the Fund ("Shares")
may be purchased or redeemed through a broker/dealer or financial institution
which has entered into a shareholder servicing agreement with the Company on
behalf of the Fund; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate purchases
and redemption's of Shares by its customers (the "Customers") and wishes to act
as the Customers agent in performing certain administrative functions in
connection with transactions in Shares from time to time for the account of the
Customers and to provide related services to the Customers in connection with
their investments in the Fund; and
WHEREAS, it is in the best interest of the Fund to make the services of
the Shareholder Servicing Agent available to the Customers who, from time to
time, become shareholders of the Fund;
NOW THEREFORE, the Company, on behalf of the Fund, and the Shareholder
Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees to
perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent shall be
responsible for performing shareholder account administrative and servicing
functions, which shall include, without limitation:
(a) answering Customer inquiries regarding account status and history,
the manner in which purchases, exchanges and redemptions of Fund shares may be
effected:
(b) assisting Customers in designating and changing dividend options,
account designations and addresses;
<PAGE> 2
(c) providing necessary personnel and facilities to establish and
maintain Customer accounts and records;
(d) assisting in processing purchase, redemption and exchange
transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with Customer orders to purchase or
redeem shares;
(g) verify and guarantee Customer signatures in connection with
redemption and exchange orders and transfers and changes in Customer accounts
with a bank which is designated in the Fund Account Application and which is
approved by the Fund's Transfer Agent;
(h) furnishing (either separately or on an integrated basis with other
reports sent to a Customer by the Shareholder Servicing Agent) monthly and
year-end statements and confirmations of purchases, redemptions and exchanges;
(i) furnishing, on behalf of the Fund, proxy statements, annual reports,
updated prospectuses and other communications to Customers;
(j) receiving, tabulating and sending to the Fund proxies executed by
Customers; and
(k) providing such other related services, and necessary personnel and
facilities to provide all of the shareholder services contemplated hereby, in
each case, as the Company or a Customer may reasonably request.
2.2 Standard of Services. All services to be rendered by the
Shareholder Servicing Agent hereunder, shall be performed in a professional,
competent and timely manner. Any detailed operating standards and procedures
to be followed by the Shareholder Servicing Agent in performing the services
described above shall be determined from time to time by agreement between the
Shareholder Servicing Agent and the Company. The Company acknowledges that the
Shareholder Servicing Agent's ability to perform on a timely basis certain of
its obligations under this Agreement depends upon the Fund's timely delivery of
certain materials and/or information to the Shareholder Servicing Agent. The
Company agrees to use its best efforts to provide, or cause to be provided,
such materials to the Shareholder Servicing Agent in a timely manner.
2.3 Investments through Distributor. The Company and the Shareholder
Servicing Agent hereby agree that all purchases of Shares effected by the
Shareholder Servicing Agent on behalf of its Customers shall be effected by it
through Stephens Inc. ("Distributor") in its capacity as the Fund's
principal underwriter.
2
<PAGE> 3
3. Fees.
3.1 Fees from the Fund. In consideration of the services described in
Section 2 hereof and the incurring of expenses in connection therewith, the
Shareholder Servicing Agent shall receive a fee to be paid in arrears
periodically or on a periodic basis to be agreed upon by the Company and the
Shareholder Servicing Agent from time to time (but in no event less frequently
than semi-annually) 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 assets or activity in such accounts during such
period, and/or the expenses incurred by the Shareholder Servicing Agent. In no
event will such fees exceed 0.30W, on an annualized basis, of the average daily
net assets of the Fund represented by Shares owned of record by the Shareholder
Servicing Agent on behalf of the Customers during the period for which payment
is being made. For purposes of determining the fees payable to the Shareholder
Servicing Agent hereunder, the per share value of the Fund's net assets shall
be computed in the manner specified in the Fund's then-current prospectus.
Notwithstanding the foregoing, if applicable laws, regulations or rules impose
a maximum fee amount (a "cap") on the Fund with respect to shareholder
servicing fees and/or fees for distribution-related services, the amount
payable hereunder shall be reduced to an amount which, when considered in
conjunction with the fees payable by the Fund for distribution-related
activities, is the maximum amount payable to the Shareholder Servicing Agent
under applicable laws, regulations or rules. The above fee constitutes all
fees to be paid to the Shareholder Servicing Agent by the Fund or the Company
with respect to the shareholder services contemplated hereby.
3.2 Fees from Customers. It is agreed that the Shareholder Servicing
Agent may impose certain conditions on Customers, subject to the terms of the
Fund's then current prospectus, in addition to or different from those imposed
by the Fund, such as requiring a minimum initial investment or the payment of
additional fees directly by the Customer for additional services offered by the
Shareholder Servicing Agent to the Customer; provided, however, that the
Shareholder Servicing Agent may not charge customers any direct fee which would
constitute a "sales load within the meaning of Section 2(a)(35) of the
Investment Company Act of 1940, as amended (the "1940 Act"). The Shareholder
Servicing Agent shall bill Customers directly for any such additional fees. In
the event the Shareholder Servicing Agent charges Customers such additional
fees, it shall notify the Company in advance and make appropriate prior written
disclosure (such disclosure to be in accordance with all applicable laws) to
Customers of any such additional fees charged directly to the Customer. To the
extent required by applicable rules and regulations of the Securities and
Exchange Commission, the Company shall make written disclosure of the fees paid
or to be paid by the Fund to the Shareholder Servicing Agent pursuant to
Section 3.1 of this Agreement. In no event shall the Shareholder Servicing
Agent have recourse or access, as Shareholder Servicing Agent or otherwise, to
the assets in the Customer's account, except to the extent expressly authorized
by law or by such Customer, or to any assets of the Fund or the Company, for
payment of any additional direct fees referred to in this Section 3.2
4. Information Pertaining to the Shares. The Shareholder Servicing
Agent and its officers, employees and agents are not authorized to make any
representations concerning the
3
<PAGE> 4
Company, the Fund or the Shares to Customers or prospective Customers,
excepting only accurate communication of any information provided by or on
behalf of any administrator of the Company or the Fund or any distributor of
the Shares or information contained in the then-current Fund prospectus. In
furnishing such information regarding the Company, the Fund or the Shares, the
Shareholder Servicing Agent shall act as agent for the Customer only and shall
have no authority to act as agent for the Company or the Fund. Advance copies
or proofs of all materials which are proposed to be circulated or disseminated
by the Shareholder Servicing Agent to Customers or prospective Customers and
which identify or describe the Company or the Fund shall be provided to the
Company at least 10 days prior to such circulation or dissemination (unless the
Company consents in writing to a shorter period), and such materials shall not
be circulated or disseminated or further circulated or disseminated at any time
after the Company shall have given written notice to the shareholder Servicing
Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Company liable
for the use (as opposed to the accuracy) of any information about the Company
or the Fund which is disseminated by the Shareholder Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company shall not
use the name of the Shareholder Servicing Agent, or any of its affiliates or
subsidiaries, in any prospectus, sales literature or other materials relating
to the Company or the Fund in a manner not approved by the Shareholder
Servicing Agent prior thereto in writing; provided, however, that the approval
of the Shareholder Servicing Agent shall not be required for any use of its
name which merely refers in accurate and factual terms to its appointment
hereunder or which is required by the Securities and Exchange Commission or any
state securities authority or any other appropriate regulatory, governmental or
judicial authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
6. Use of the Name of the Fund or the Company. The Shareholder
Servicing Agent shall not use the name of the Fund or the Company on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Company prior thereto in writing; provided, however,
that the approval of the Company shall not be required for the use of the
Company's name or the Fund's name in connection with communications permitted
by Section 4 hereof or (subject to Section 4, to the extent the same may be
applicable) for any use of the Company's name or the Fund's name which merely
identifies the Company or the Fund, as the case may be in connection with the
Shareholder Servicing Agent's role hereunder or which is required by the
Securities and Exchange Commission-on or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; provided,
further, that in no event shall such approval be unreasonably withheld or
delayed.
7. Security. The Shareholder Servicing Agreement represents and
warrants that to the best of its knowledge, the various procedures and systems
which it has implemented (including provision for twenty-four hours a day
restricted access) with regard to safeguarding from loss or damage
attributable to fire, theft or any other cause the Company's records and other
data within its possession or control and the Shareholder Servicing Agent's
records, data, equipment, facilities
4
<PAGE> 5
and other property used in the performance of its obligations hereunder are
adequate and that it will make such changes therein from time to time as in its
judgment are required for the secure performance of its obligations hereunder.
The parties shall review such systems and procedures on a periodic basis, and
the Company shall from time to time specify the types of records and other data
of the Company to be safeguarded in accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent shall comply
with all applicable federal and state laws and regulations, including
securities laws. The Shareholder Servicing Agent represents and warrants to
the Company that the performance of all its obligations hereunder will comply
with all applicable laws and regulations, the provisions of its charter
documents and bylaws and all material contractual obligations binding upon the
Shareholder Servicing Agent. The Shareholder Servicing Agent furthermore
undertakes that it will promptly, after the Shareholder Servicing Agent becomes
so aware, inform the Company of any change in applicable laws or regulations
(or interpretations thereof) or in its charter or By-Laws or material
contracts which would prevent or impair full performance of any of its
obligations hereunder.
9. Reports. To the extent requested by the Company from time to time,
but at least quarterly, the Shareholder Servicing Agent will provide the
Treasurer of the Company with a written report of the amounts expended by the
Shareholder Servicing Agent pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keening.
10.1 Section 31(a). The Shareholder Servicing Agent shall maintain
records in a form acceptable to the Company and in compliance with applicable
laws and the rules and regulations of the Securities and Exchange Commission,
including but not limited to the record-keeping requirements of Section 31(a)
of the 1940 Act and the rules thereunder, with respect to the services
contemplated by this Agreement. Such records shall be deemed to be the
property of the Company and will be made available, at the Company's request,
for inspection and use by the Company, representatives of the Company and
governmental authorities. The Shareholder Servicing Agent agrees that, for so
long as it retains any records hereunder, it will meet all reporting
requirements pursuant to the 1940 Act and applicable to the Shareholder
Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing Agent shall
maintain accurate and complete records with respect to services performed by
the Shareholder Servicing Agent in connection with the purchase and redemption
of Shares through the Distributor. Such records shall be maintained in a form
reasonably acceptable to the Company and in compliance with the requirements of
Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934, as amended,
5
<PAGE> 6
pursuant to which any dealer of the Shares must maintain certain records. All
such records maintained by the Shareholder Servicing Agent shall be the
property of the Distributor and will be made available for inspection and use
by the Company or the Distributor upon the request of either. The Shareholder
Servicing Agent shall file with the Securities and Exchange Commission and
other appropriate governmental authorities, and furnish to the Company and the
Distributor copies of, all reports and undertakings as may be reasonably
requested by the Company or the Distributor in order to comply with such rules.
If so requested by the Distributor, the Shareholder Servicing Agent shall
confirm to the Distributor its obligations under this Section 10.2 by a writing
reasonably satisfactory to the Distributor.
10.3 Identification, Etc. of Records. The Company shall from time to
time instruct the Shareholder Servicing Agent in writing as to, and the Company
and the Shareholder Servicing Agent shall periodically review, the records to
be maintained and the procedures to be followed by the Shareholder Servicing
Agent in complying with the foregoing Sections 10.1 and 10.2 and Section 8 to
the extent it relates to record-keeping required under federal securities laws
and regulations. Notwithstanding the provisions of Section 8, the Shareholder
Servicing Agreement I be entitled to rely on such instructions.
10.4 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Shareholder Servicing Agent is appointed, the
Shareholder Servicing Agent shall, at the expense of the Company, transfer to
such successor as the Company may designate a certified list of the beneficial
owners of shares of the Company serviced by the Shareholder Servicing Agent
(with name, address and tax identification or Social Security number), a
complete record of the account of each such shareholder and the status thereof,
and all other relevant books, records, correspondence, and other data
established or maintained by the Shareholder Servicing Agent under this
Agreement. In the event this Agreement is terminated, the Shareholder
Servicing Agent will use its best efforts to cooperate in the orderly transfer
of such duties and responsibilities to the successor, including assistance in
the establishment of books, records and other data by the successor.
10.5 Survival of Record-Keeping Obligations. The record-keeping
obligations imposed in this Section 10 shall survive the termination of this
Agreement for the shorter of a period of six years or that minimum period
required by applicable rules or regulations of the Securities and Exchange
Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in this Section 10
shall be construed to mean that the Shareholder Servicing Agent would, by
virtue of its role hereunder, be required under applicable law to maintain the
records required to be maintained by it under this Section 10, but it is
understood that the Shareholder Servicing Agent has agreed to do so in order to
enable the Company and the Distributor to comply with laws and regulations
applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy Records. Anything in
this Section 10 to the contrary notwithstanding, except to the extent otherwise
prohibited by law, the Shareholder Servicing Agent shall have the right to
copy, maintain and use any records maintained by the
6
<PAGE> 7
Shareholder Servicing Agent pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not be liable
or responsible for delays or errors by reason of circumstances beyond its
reasonable control, including, but not limited to, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent. The Company
will indemnify and hold the Shareholder Servicing Agent harmless from all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) from any claim, demand, action or suit (collectively,
"Claims") (a) arising in connection with misstatements or omissions in the
Fund's prospectus, actions or inactions by the Company or any of its agents or
contractors or the performance of the Shareholder Servicing Agent's obligations
hereunder and (b) not resulting from (i) the bad faith or negligence of the
Shareholder Servicing Agent, its officers, employees or agents, or (ii) any
breach of applicable law by the Shareholder Servicing Agent, its officers,
employees or agents, or (iii) any action of the Shareholder Servicing Agent,
its officers, employees or agents which exceeds the legal authority of the
Shareholder Servicing Agent or its authority hereunder, or (iv) any error or
omission of the Shareholder Servicing Agent, its officers, employees or agents
with respect to the purchase, redemption and transfer of Customers Shares or
the Shareholder Servicing Agent's verification or guarantee of any Customer
signature. Notwithstanding anything herein to the contrary, the Company will
indemnify and hold the Shareholder Servicing Agent harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any Claim as a result of its acting in
accordance with any written instructions reasonably believed by the Shareholder
Servicing Agent to have been executed by any person duly authorized by the
Company, or as a result of acting in reliance upon any instrument or stock
certificate reasonably believed by the Shareholder Servicing Agent to have been
genuine and signed, countersigned or executed by a person duly authorized by
the Company, excepting only the gross negligence or bad faith of the
Shareholder Servicing Agent.
In any case in which the Company may be asked to indemnify or hold the
Shareholder Servicing Agent harmless, the Company shall be advised of all
pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and notify the Company
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company. The Company shall have the
option to defend the Shareholder Servicing Agent against any Claim which may be
the subject of indemnification hereunder. In the event that the Company elects
to defend against such Claim, the defense shall be conducted by counsel chosen
by the Company and reasonably satisfactory to the Shareholder Servicing Agent.
The Shareholder Servicing Agent may retain additional counsel at its expense.
Except with the prior written consent of the Company, the Shareholder Servicing
Agent shall not
7
<PAGE> 8
confess any Claim or make any compromise in any case in which the Company will
be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Company. Without limiting the rights of the
Company under applicable law, the Shareholder Servicing Agent will indemnify
and hold the Company harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any Claim (a)
resulting from (i) the bad faith or negligence of the Shareholder Servicing
Agent, its officers, employees or agents, or (ii) any breach of applicable
law by the Shareholder Servicing Agent, its officers, employees or agents, or
(iii) any action of the Shareholder Servicing Agent, its officers, employees
or agents which exceeds the legal authority of the Shareholder Servicing Agent
or its authority hereunder, or (iv) any error or omission of the Shareholder
Servicing Agent, its officers, employees or agents with respect to the
purchase, redemption and transfer of Customers' Shares or the Shareholder
Servicing Agent's verification or guarantee of any Customer signature, and (b)
not resulting from the Shareholder Servicing Agent's actions in accordance with
written instructions reasonably believed by the Shareholder Servicing Agent to
have been executed by any person duly authorized by the Company, or in reliance
upon any instrument or stock certificate reasonably believed by the Shareholder
Servicing Agent to have been genuine and signed, countersigned or executed by a
person duly authorized by the Company.
In any case in which the Shareholder Servicing Agent may be asked to
indemnify or hold the Company , harmless, the Shareholder Servicing Agent shall
be advised of all pertinent facts concerning the situation in question and the
Company shall use reasonable care to identify and notify the Shareholder
Servicing Agent promptly concerning any situation which presents or appears
likely to present a claim for indemnification against the Shareholder Servicing
Agent. The Shareholder Servicing Agent shall have the option to defend the
Company against any Claim which may be the subject of indemnification
hereunder. In the event that the Shareholder Servicing Agent elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Shareholder Servicing Agent and satisfactory to the Company. The Company may
retain additional counsel at its expense. Except with the prior written
consent of the Shareholder Servicing Agent, the Company shall not confess any
Claim or make any compromise in any case in which the Shareholder Servicing
Agent will be asked to indemnify the Company.
12.3 Survival of Indemnities. The indemnities granted by the parties in
this Section 12 shall survive the termination of this Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such
party at the address of such party set forth in the preamble of this Agreement
or at such other address as such party may have designated by written notice to
the other.
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<PAGE> 9
15. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. Implementation and Duration of Agreement. This Agreement is
effective upon a "vote of a majority of the outstanding voting securities" (as
defined in the 1940 Act) and approval by the Company's Board of Directors, and
of the Directors who are not "interested persons" of the Company (as defined in
the 1940 Act) and have no direct or indirect financial interest in the
operation of the Fund's Distribution Plan (the "Plan"), this Agreement, or any
other agreement related to such Plan, including the Fund's Distribution
Agreement, cast in person at a meeting called for the purpose of voting on this
Agreement. Subject to Section 17, this Agreement shall continue in effect for
a period of more than one year from the date hereof so long as such continuance
is specifically approved at least annually by a vote of Company's Board of
Directors, in the manner described above.
17. Termination. This Agreement may be terminated by the Company,
without the payment of any penalty, at any time upon not more than 60 days' nor
less than 30 days' notice, by a vote of a majority of the Board of Directors of
the Company who are not "interested persons" of the Company (as defined in the
1940 Act) and have no direct or indirect financial interest in the operation
of the Plan, this Agreement or any other agreement related to such Plan,
including the Fund's Distribution Agreement, or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Fund. The
Shareholder Servicing Agent may terminate this Agreement upon not more than 60
days' nor less than 30 days' notice to the Company. Notwithstanding anything
herein to the contrary, but except as provided in Section 20 of this Agreement,
this Agreement may not be assigned and shall terminate automatically without
notice to either party upon any assignment. Upon termination hereof, the Fund
shall pay such compensation as may be due the Shareholder Servicing Agent as of
the date of such termination.
18. Changes: Amendments. This Agreement may be supplemented or amended
only by written instrument signed by both parties, but may not be amended to
increase materially the maximum amount payable without approval of "a vote of a
majority of the outstanding voting securities" (as defined in the 1940 Act)
of the Fund, and all material amendments must be approved in the manner
described in Section 16.
19. Limitation of Liability. The Shareholder Servicing Agent hereby
agrees that obligations assumed by the Company pursuant to this Agreement shall
be limited in all cases to the Fund and its assets and that the Shareholder
Servicing Agent shall not seek satisfaction of any such obligations from the
Board of Directors or any individual Director of the Company or from the assets
of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The Shareholder
Servicing Agent may, with the written approval of the Company (such approval
not to be unreasonably withheld or delayed), subcontract for the performance of
the Shareholder Servicing Agent's obligations hereunder with any one or more
persons, including but got limited to any one or more persons which is an
affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder
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<PAGE> 10
Servicing Agent shall be as fully responsible to the Company for the acts and
omissions of any subcontractor as it would be for its own acts or omissions.
21. Authority to Vote. The Company hereby confirms that, nothing
contained in the Articles of Incorporation of the Company would preclude the
Shareholder Servicing Agent, at any meeting of shareholders of the Company or
of the Fund, from voting any Shares held in accounts serviced by the
Shareholder Servicing Agent and which are otherwise not represented in person
or by proxy at the meeting, proportionately in accordance with the votes cast
by holders of all Shares otherwise represented at the meeting in person or by
proxy and held in accounts serviced by the Shareholder Servicing Agent.
22. Compliance with Laws and Policies: Cooperation. The Company hereby
agrees that it will comply with all laws and regulations applicable to the
Fund's operations and the Shareholder Servicing Agent agrees that it will
comply with all laws and regulations applicable to providing the services
contemplated hereby.
22.1 Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of California. The
captions in this Agreement are included for convenience of reference only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
STAGECOACH FUNDS, INC.
on behalf of the California Tax-Free
Income Fund
By: /s/Richard H. Blank, Jr.
----------------------------------
Title: Secretary and Treasurer
-------------------------------
WELLS FARGO BANK, N.A.
By: /s/Donald J. Herrema
----------------------------------
Title: Senior Vice President
-------------------------------
By: /s/Henry J. Cavigli
----------------------------------
Title: Vice President
-------------------------------
10
<PAGE> 1
EX-99.B 9(d)(vii)
STAGECOACH FUNDS, INC.
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
SERVICING PLAN
Section 1. Each of the proper officers of Stagecoach Funds, Inc.
(the "Company") is authorized to execute and deliver, in the name and on behalf
of the Company, written agreements based substantially on the form attached
hereto as Appendix A or any other form duly approved by the Company's Board of
Directors ("Agreements") with broker/dealers, banks and other financial
institutions that are dealers of record or holders of record or which have a
servicing relationship with the beneficial owners of shares ("Servicing
Agents") of the Company's National Tax-Free Money Market Mutual Fund (the
"Fund"). Pursuant to such Agreements, Servicing Agents shall provide support
services as set forth therein to their clients who beneficially own Fund shares
in consideration of a fee, computed monthly in the manner set forth in the
Fund's then current prospectus, at an annual rate of up to 0.25% of the average
daily net asset value of Fund shares beneficially owned by or attributable to
such clients. The Company's distributor, administrator and adviser and their
respective affiliates are eligible to become Servicing Agents and to receive
fees under this Servicing Plan. All expenses incurred by the Fund in
connection with the Agreements and the implementation of this Servicing Plan
shall be borne entirely by the holders of Fund shares.
Section 2. The Company's administrator shall monitor the
arrangements pertaining to the Company's Agreements with Servicing Agents. The
Company's administrator shall not, however, be obligated by this Servicing Plan
to recommend, and the Company shall not be obligated to execute, any Agreement
with any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the
Company's administrator shall provide to the Company's Board of Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.
Section 4. Unless sooner terminated, this Servicing Plan (and
each related agreement) shall continue in effect for a period of one year from
its date of execution and shall continue thereafter for successive annual
periods, provided that such continuance is specifically approved at least
annually by a majority of the Board of Directors, including a majority of the
Directors who are not "interested persons," as defined in the Investment
Company Act of 1940, of the Company and have no direct or indirect financial
interest in the operation of this Servicing Plan or in any Agreement related to
this Servicing Plan (the "Disinterested Directors") cast in person at a meeting
called for the purpose of voting on such approval.
Section 5. This Servicing Plan may be amended at any time with
respect to the Fund by the Company's Board of Directors, provided that any
material amendment of the terms of this Servicing Plan (including a material
increase of the fee payable hereunder) shall become effective only upon the
approvals set forth in Section 4.
Section 6. This Servicing Plan is terminable at any time with
respect to the Fund by vote of a majority of the Disinterested Directors.
<PAGE> 2
Section 7. While this Servicing Plan is in effect, the selection
and nomination of the Disinterested Directors shall be committed to the
discretion of such Disinterested Directors.
Section 8. Notwithstanding anything herein to the contrary, the
Fund shall not be obligated to make any payments under this Plan that exceed
the maximum amounts payable under Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
Section 9. The Company will preserve copies of this Servicing
Plan, Agreements, and any written reports regarding this Servicing Plan
presented to the Board of Directors for a period of not less than six years.
Dated: December , 1995
--
2
<PAGE> 3
FORM OF
SHAREHOLDER SERVICING AGREEMENT
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
December __, 1995, is made by and between Stagecoach Funds, Inc. ("Company"), a
Maryland corporation having its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, on behalf of the National Tax-Free Money
Market Mutual Fund ("Fund"), and Wells Fargo Bank, N.A., 525 Market Street,
Suite 1900, San Francisco, California 94163, as shareholder servicing agent
hereunder ("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, shares of common stock (.001 par value) of the Fund
(hereinafter "Fund Shares") may be purchased or redeemed through a
broker/dealer or financial institution which has entered into a shareholder
servicing agreement with the Company on behalf of the Fund; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate
purchases and redemptions of Fund Shares by its customers (the "Customers") and
wishes to act as the Customers' agent in performing certain administrative
functions in connection with transactions in Fund Shares from time to time for
the account of the Customers and to provide related services to the Customers
in connection with their investments in the Fund; and
WHEREAS, it is in the best interest of the Fund to make the
services of the Shareholder Servicing Agent available to the Customers who,
from time to time, become shareholders of the Fund;
NOW THEREFORE, the Company, on behalf of the Fund, and the
Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent
shall be responsible for performing shareholder account administrative and
servicing functions, which shall include, without limitation:
<PAGE> 4
(a) answering Customer inquiries regarding account
status and history, the manner in which purchases, exchanges and redemptions of
Fund Shares may be effected;
(b) assisting Customers in designating and changing
dividend options, account designations and addresses;
(c) providing necessary personnel and facilities to
establish and maintain Customer accounts and records;
(d) assisting in processing purchase, redemption and
exchange transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with Customer
orders to purchase or redeem shares;
(g) verifying and guaranteeing Customer signatures in
connection with redemption and exchange orders and transfers and changes in
Customer accounts with banks which are designated in a Fund Account Application
and which are approved by the Fund's Transfer Agent;
(h) furnishing (either separately or on an integrated
basis with other reports sent to a Customer by the Shareholder Servicing Agent)
monthly and year-end statements and confirmations of purchases, redemptions and
exchanges;
(i) furnishing, on behalf of the Fund, proxy
statements, annual reports, updated prospectuses and other communications to
Customers;
(j) receiving, tabulating and sending to the Fund
proxies executed by Customers; and
(k) providing such other related services, and
necessary personnel and facilities to provide all of the shareholder services
contemplated hereby, in each case, as the Company or a Customer may reasonably
request.
2.2 Standard of Services. All services to be rendered by
the Shareholder Servicing Agent hereunder shall be performed in a professional,
competent and timely manner. Any detailed operating standards and procedures
to be followed by the Shareholder Servicing Agent in performing the services
described above shall be determined from time to time by agreement between the
Shareholder Servicing Agent and the Company. The Company acknowledges that the
Shareholder Servicing Agent's ability to perform on a timely basis certain of
its obligations under this Agreement depends upon the Fund's timely delivery of
certain materials and/or information to the Shareholder Servicing Agent. The
Company agrees to use its
2
<PAGE> 5
best efforts to provide, or cause to be provided, such materials to the
Shareholder Servicing Agent in a timely manner.
2.3 Investments through Distributor. The Company and the
Shareholder Servicing Agent hereby agree that all purchases of Fund Shares
effected by the Shareholder Servicing Agent on behalf of its Customers shall be
effected by it through Stephens Inc. ("Distributor") in its capacity as the
Fund's principal underwriter.
3. Fees.
3.1 Fees from the Fund. In consideration of the services
described in Section 2 hereof and the incurring of expenses in connection
therewith, the Shareholder Servicing Agent shall receive a fee to be paid in
arrears periodically or on a periodic basis to be agreed upon by the Company
and the Shareholder Servicing Agent from time to time (but in no event less
frequently than semi-annually) 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 assets or activity in such accounts
during such period, and/or the expenses incurred by the Shareholder Servicing
Agent. In no event will such fees exceed 0.25%, on an annualized basis, of the
average daily net assets of the Fund represented by Fund Shares owned of record
by the Shareholder Servicing Agent on behalf of the Customers during the period
for which payment is being made. For purposes of determining the fees payable
to the Shareholder Servicing Agent hereunder, the per share value of the Fund's
net assets shall be computed in the manner specified in the Fund's
then- current prospectus. Notwithstanding the foregoing, if applicable
laws, regulations or rules impose a maximum fee amount (a "cap") on the Fund
with respect to shareholder servicing fees and/or fees for distribution-related
services, the amount payable hereunder shall be reduced to an amount which,
when considered in conjunction with the fees payable by the Fund for the Fund's
distribution-related activities, is the maximum amount payable to the
Shareholder Servicing Agent under applicable laws, regulations or rules. The
above fee constitutes all fees to be paid to the Shareholder Servicing Agent by
the Fund or the Company with respect to the shareholder services contemplated
hereby.
3.2 Fees from Customers. It is agreed that the Shareholder
Servicing Agent may impose certain conditions on Customers, subject to the
terms of the Fund's then-current prospectus, in addition to or different from
those imposed by the Fund, such as requiring a minimum initial investment or
the payment of additional fees directly by the Customer for additional services
offered by the Shareholder Servicing Agent to the Customer; provided, however,
that the Shareholder Servicing Agent may not charge customers any direct fee
which would constitute a "sales load" within the meaning of Section 2(a)(35) of
the Investment Company Act of 1940, as amended (the "1940 Act"). The
Shareholder Servicing Agent shall bill Customers directly for any such
additional fees. In the event the Shareholder Servicing Agent charges
Customers such additional fees, it shall notify the Company in advance and make
appropriate prior written disclosure (such disclosure to be in accordance with
all applicable laws) to Customers of any such additional fees charged directly
to the Customer. To the extent required by applicable rules and regulations of
the Securities and Exchange Commission, the Company shall make written
disclosure of the fees paid or to be paid by the Fund to the
3
<PAGE> 6
Shareholder Servicing Agent pursuant to Section 3.1 of this Agreement. In no
event shall the Shareholder Servicing Agent have recourse or access, as
Shareholder Servicing Agent or otherwise, to the assets in the Customer's
account, except to the extent expressly authorized by law or by such Customer,
or to any assets of the Fund or the Company, for payment of any additional
direct fees referred to in this Section 3.2
4. Information Pertaining to the Shares. The Shareholder Servicing Agent
and its officers, employees and agents are not authorized to make any
representations concerning the Company, the Fund or the Fund Shares to
Customers or prospective Customers, excepting only accurate communication of
any information provided by or on behalf of any administrator of the Company or
the Fund or any distributor of Fund Shares or information contained in the
Fund's then-current prospectus. In furnishing such information regarding the
Company or the Fund or Fund Shares, the Shareholder Servicing Agent shall act
as agent for the Customer only and shall have no authority to act as agent for
the Company or the Fund. Advance copies or proofs of all materials which are
proposed to be circulated or disseminated by the Shareholder Servicing Agent to
Customers or prospective Customers and which identify or describe the Company,
the Fund or Fund Shares shall be provided to the Company at least 10 days prior
to such circulation or dissemination (unless the Company consents in writing to
a shorter period), and such materials shall not be circulated or disseminated
or further circulated or disseminated at any time after the Company shall have
given written notice to the Shareholder Servicing Agent of any objection
thereto.
Nothing in this Section 4 shall be construed to make the Company
liable for the use (as opposed to the accuracy) of any information about the
Company or the Fund which is disseminated by the Shareholder
Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company shall not use
the name of the Shareholder Servicing Agent, or any of its affiliates or
subsidiaries, in any prospectus, sales literature or other materials relating
to the Company or the Fund in a manner not approved by the Shareholder
Servicing Agent prior thereto in writing; provided, however, that the approval
of the Shareholder Servicing Agent shall not be required for any use of its
name which merely refers in accurate and factual terms to its appointment
hereunder or which is required by the Securities and Exchange Commission or any
state securities authority or any other appropriate regulatory, governmental or
judicial authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
6. Use of the Name of the Fund or the Company. The Shareholder Servicing
Agent shall not use the name of the Fund or the Company on any checks, bank
drafts, bank statements or forms for other than internal use in a manner not
approved by the Company prior thereto in writing; provided, however, that the
approval of the Company shall not be required for the use of the Company's name
or the Fund's name in connection with communications permitted by Section 4
hereof or (subject to Section 4, to the extent the same may be applicable) for
any use of the Company's name or the Fund's name which merely identifies the
Company or the Fund, as the case may be in connection with the Shareholder
Servicing Agent's role hereunder or which is required by the Securities and
Exchange Commission or any
4
<PAGE> 7
state securities authority or any other appropriate regulatory, governmental or
judicial authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
7. Security. The Shareholder Servicing Agent represents and
warrants that to the best of its knowledge, the various procedures and systems
which it has implemented (including provision for twenty-four hours a day
restricted access) with regard to safeguarding from loss or damage attributable
to fire, theft or any other cause the Company's records and other data within
its possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Company shall from time to time specify
the types of records and other data of the Company to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent shall
comply with all applicable federal and state laws and regulations, including
securities laws. The Shareholder Servicing Agent represents and warrants to
the Company that the performance of all its obligations hereunder will comply
with all applicable laws and regulations, the provisions of its charter
documents and by-laws and all material contractual obligations binding upon the
Shareholder Servicing Agent. The Shareholder Servicing Agent furthermore
undertakes that it will promptly, after the Shareholder Servicing Agent becomes
so aware, inform the Company of any change in applicable laws or regulations
(or interpretations thereof) or in its charter or by-laws or material contracts
which would prevent or impair full performance of any of its obligations
hereunder.
9. Reports. To the extent requested by the Company from time to
time, but at least quarterly, the Shareholder Servicing Agent will provide the
Treasurer of the Company with a written report of the amounts expended by the
Shareholder Servicing Agent pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keeping.
10.1 Section 31(a). The Shareholder Servicing Agent shall
maintain records in a form acceptable to the Company and in compliance with
applicable laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping requirements of
Section 31(a) of the 1940 Act and the rules thereunder, with respect to the
services contemplated by this Agreement. Such records shall be deemed to be
the property of the Company and will be made available, at the Company's
request, for inspection and use by the Company, representatives of the Company
and governmental authorities. The Shareholder Servicing Agent agrees that, for
so long as it retains any records hereunder, it will meet all
5
<PAGE> 8
reporting requirements pursuant to the 1940 Act and applicable to the
Shareholder Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing Agent
shall maintain accurate and complete records with respect to services performed
by the Shareholder Servicing Agent in connection with the purchase and
redemption of Fund Shares through the Distributor. Such records shall be
maintained in a form reasonably acceptable to the Company and in compliance
with the requirements of Rules 17a-3 and 17a-4 under the Securities Exchange
Act of 1934, as amended, pursuant to which any dealer of Fund Shares must
maintain certain records. All such records maintained by the Shareholder
Servicing Agent shall be the property of the Distributor and will be made
available for inspection and use by the Company or the Distributor upon the
request of either. The Shareholder Servicing Agent shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Company and the Distributor copies of, all
reports and undertakings as may be reasonably requested by the Company or the
Distributor in order to comply with such rules. If so requested by the
Distributor, the Shareholder Servicing Agent shall confirm to the Distributor
its obligations under this Section 10.2 by a writing reasonably satisfactory to
the Distributor.
10.3 Identification, Etc. of Records. The Company shall
from time to time instruct the Shareholder Servicing Agent in writing as to,
and the Company and the Shareholder Servicing Agent shall periodically review,
the records to be maintained and the procedures to be followed by the
Shareholder Servicing Agent in complying with the foregoing Sections 10.1 and
10.2 and Section 8 to the extent it relates to record-keeping required under
federal securities laws and regulations. Notwithstanding the provisions of
Section 8, the Shareholder Servicing Agent shall be entitled to rely on such
instructions.
10.4 Transfer of Customer Data. In the event this Agreement
is terminated or a successor to the Shareholder Servicing Agent is appointed,
the Shareholder Servicing Agent shall, at the expense of the Company, transfer
to such successor as the Company may designate a certified list of the
beneficial owners of Fund Shares serviced by the Shareholder Servicing Agent
(with name, address and tax identification or Social Security number), a
complete record of the account of each such shareholder and the status thereof,
and all other relevant books, records, correspondence, and other data
established or maintained by the Shareholder Servicing Agent under this
Agreement. In the event this Agreement is terminated, the Shareholder
Servicing Agent will use its best efforts to cooperate in the orderly transfer
of such duties and responsibilities to the successor, including assistance in
the establishment of books, records and other data by the successor.
10.5 Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 10 shall survive the
termination of this Agreement for the shorter of a period of six years or that
minimum period required by applicable rules or regulations of the Securities
and Exchange Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in
this Section 10 shall be construed to mean that the Shareholder Servicing Agent
would, by virtue of its role
6
<PAGE> 9
hereunder, be required under applicable law to maintain the records required to
be maintained by it under this Section 10, but it is understood that the
Shareholder Servicing Agent has agreed to do so in order to enable the Company
and the Distributor to comply with laws and regulations applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy Records.
Anything in this Section 10 to the contrary notwithstanding, except to the
extent otherwise prohibited by law, the Shareholder Servicing Agent shall have
the right to copy, maintain and use any records maintained by the Shareholder
Servicing Agent pursuant to this Section 10, except as otherwise prohibited by
Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not be
liable or responsible for delays or errors by reason of circumstances beyond
its reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent.
The Company will indemnify and hold the Shareholder Servicing Agent harmless
from all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) from any claim, demand, action or suit
(collectively, "Claims") (a) arising in connection with misstatements or
omissions in the Fund's prospectus, actions or inactions by the Company or any
of its agents or contractors or the performance of the Shareholder Servicing
Agent's obligations hereunder and (b) not resulting from (i) the bad faith or
negligence of the Shareholder Servicing Agent, its officers, employees or
agents, or (ii) any breach of applicable law by the Shareholder Servicing
Agent, its officers, employees or agents, or (iii) any action of the
Shareholder Servicing Agent, its officers, employees or agents which exceeds
the legal authority of the Shareholder Servicing Agent or its authority
hereunder, or (iv) any error or omission of the Shareholder Servicing Agent,
its officers, employees or agents with respect to the purchase, redemption and
transfer of Customers' Fund Shares or the Shareholder Servicing Agent's
verification or guarantee of any Customer signature. Notwithstanding anything
herein to the contrary, the Company will indemnify and hold the Shareholder
Servicing Agent harmless from any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) resulting from any
Claim as a result of its acting in accordance with any written instructions
reasonably believed by the Shareholder Servicing Agent to have been executed by
any person duly authorized by the Company, or as a result of acting in reliance
upon any instrument or stock certificate reasonably believed by the Shareholder
Servicing Agent to have been genuine and signed, countersigned or executed by a
person duly authorized by the Company, excepting only the gross negligence or
bad faith of the Shareholder Servicing Agent.
In any case in which the Company may be asked to indemnify or hold
the Shareholder Servicing Agent harmless, the Company shall be advised of all
pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and
7
<PAGE> 10
notify the Company promptly concerning any situation which presents or appears
likely to present a claim for indemnification against the Company. The Company
shall have the option to defend the Shareholder Servicing Agent against any
Claim which may be the subject of indemnification hereunder. In the event that
the Company elects to defend against such Claim, the defense shall be conducted
by counsel chosen by the Company and reasonably satisfactory to the Shareholder
Servicing Agent. The Shareholder Servicing Agent may retain additional counsel
at its expense. Except with the prior written consent of the Company, the
Shareholder Servicing Agent shall not confess any Claim or make any compromise
in any case in which the Company will be asked to indemnify the Shareholder
Servicing Agent.
12.2 Indemnification of the Company. Without limiting the
rights of the Company under applicable law, the Shareholder Servicing Agent
will indemnify and hold the Company harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any Claim (a) resulting from (i) the bad faith or negligence of the Shareholder
Servicing Agent, its officers, employees or agents, or (ii) any breach of
applicable law by the Shareholder Servicing Agent, its officers, employees or
agents, or (iii) any action of the Shareholder Servicing Agent, its officers,
employees or agents which exceeds the legal authority of the Shareholder
Servicing Agent or its authority hereunder, or (iv) any error or omission of
the Shareholder Servicing Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Fund Shares or the
Shareholder Servicing Agent's verification or guarantee of any Customer
signature, and (b) not resulting from the Shareholder Servicing Agent's actions
in accordance with written instructions reasonably believed by the Shareholder
Servicing Agent to have been executed by any person duly authorized by the
Company, or in reliance upon any instrument or stock certificate reasonably
believed by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company.
In any case in which the Shareholder Servicing Agent may be asked
to indemnify or hold the Company harmless, the Shareholder Servicing Agent
shall be advised of all pertinent facts concerning the situation in question
and the Company shall use reasonable care to identify and notify the
Shareholder Servicing Agent promptly concerning any situation which presents or
appears likely to present a claim for indemnification against the Shareholder
Servicing Agent. The Shareholder Servicing Agent shall have the option to
defend the Company against any Claim which may be the subject of
indemnification hereunder. In the event that the Shareholder Servicing Agent
elects to defend against such Claim, the defense shall be conducted by counsel
chosen by the Shareholder Servicing Agent and satisfactory to the Company. The
Company may retain additional counsel at its expense. Except with the prior
written consent of the Shareholder Servicing Agent, the Company shall not
confess any Claim or make any compromise in any case in which the Shareholder
Servicing Agent will be asked to indemnify the Company.
12.3 Survival of Indemnities. The indemnities granted by
the parties in this Section 12 shall survive the termination of this Agreement.
8
<PAGE> 11
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if mailed to
such party at the address of such party set forth in the preamble of this
Agreement or at such other address as such party may have designated by written
notice to the other.
15. Further Assurances. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
16. Implementation and Duration of Agreement. This Agreement is
effective upon a "vote of a majority of the outstanding voting securities" (as
defined in the 1940 Act) and approval by the Company's Board of Directors, and
of the Directors who are not "interested persons" of the Company (as defined in
the 1940 Act) and have no direct or indirect financial interest in the
operation of the Fund's Distribution Plan (the "Plan"), this Agreement, or any
other agreement related to such Plan, including the Fund's Amended Distribution
Agreement, cast in person at a meeting called for the purpose of voting on this
Agreement. Subject to Section 17, this Agreement shall continue in effect for
a period of more than one year from the date hereof so long as such continuance
is specifically approved at least annually by a vote of Company's Board of
Directors, in the manner described above.
17. Termination. This Agreement may be terminated by the
Company, without the payment of any penalty, at any time upon not more than 60
days' nor less than 30 days' notice, by a vote of a majority of the Board of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Plan, this Agreement or any other agreement related to
such Plan, including the Amended Distribution Agreement, or by "a vote of a
majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund. The Shareholder Servicing Agent may terminate this Agreement upon
not more than 60 days' nor less than 30 days' notice to the Company.
Notwithstanding anything herein to the contrary, but except as provided in
Section 20 of this Agreement, this Agreement may not be assigned and shall
terminate automatically without notice to either party upon any assignment.
Upon termination hereof, the Fund shall pay such compensation as may be due the
Shareholder Servicing Agent as of the date of such termination.
18. Changes; Amendments. This Agreement may be supplemented or
amended only by written instrument signed by both parties, but may not be
amended to increase materially the maximum amount payable without approval of
"a vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund, and all material amendments must be approved in the
manner described in Section 16.
19. Limitation of Liability. The Shareholder Servicing Agent
hereby agrees that obligations assumed by the Company pursuant to this
Agreement shall be limited in all cases to the Fund and its assets and that the
Shareholder Servicing Agent shall not seek satisfaction of any
9
<PAGE> 12
such obligations from the Board of Directors or any individual Director of the
Company or from the assets of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The
Shareholder Servicing Agent may, with the written approval of the Company (such
approval not to be unreasonably withheld or delayed), subcontract for the
performance of the Shareholder Servicing Agent's obligations hereunder with any
one or more persons, including but not limited to any one or more persons which
is an affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder Servicing Agent shall be as fully responsible to the Company for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.
21. Authority to Vote. The Company hereby confirms that, nothing
contained in the Articles of Incorporation of the Company would preclude the
Shareholder Servicing Agent, at any meeting of shareholders of the Company or
of the Fund, from voting any Fund Shares held in accounts serviced by the
Shareholder Servicing Agent and which are otherwise not represented in person
or by proxy at the meeting, proportionately in accordance with the votes cast
by holders of all Fund Shares otherwise represented at the meeting in person or
by proxy and held in accounts serviced by the Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The Company
hereby agrees that it will comply with all laws and regulations applicable to
the Fund's operations and the Shareholder Servicing Agent agrees that it will
comply with all laws and regulations applicable to providing the services
contemplated hereby.
10
<PAGE> 13
22.1 Miscellaneous. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of
California. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
STAGECOACH FUNDS, INC. on behalf of the
National Tax-Free Money Market Mutual Fund
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
WELLS FARGO BANK, N.A.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
11
<PAGE> 1
EX-99.B 10
[MORRISON & FOERSTER LETTERHEAD]
November 29, 1995
(202) 887-1500
Stagecoach Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of Stagecoach Funds, Inc.
Ladies/Gentlemen:
We refer to Post-Effective Amendment No. 17 and Amendment No. 18 to
the Registration Statement on Form N-1A (SEC File Nos. 33-42927 and 811-6419)
(the "Registration Statement") of Stagecoach Funds, 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 inquires 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 orginals 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.
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
description of advice rendered by our firm under the heading "The Funds, the
Master Trust and Management" in the Prospectus and "Management" in the
Statement of Additional Information, both of which are included as part of the
Registration Statment.
Very truly yours,
/s/ Morrison & Foerster
MORRISON & FOERSTER
<PAGE> 1
EX-99.B 15(a)(vi)
DISTRIBUTION PLAN
National Tax-Free Money Market Mutual Fund
WHEREAS, Stagecoach Funds, Inc. ("Company") is an open-end,
management investment company and is registered as such under the Investment
Company Act of 1940, as amended ("Act"); and
WHEREAS, the Company desires to adopt a Distribution Plan ("Plan")
pursuant to Rule 12b-1 under the Act on behalf of the National Tax-Free Money
Market Mutual Fund ("Fund") and the Board of Directors, including a majority of
the Qualified Directors (as defined below), has determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders;
NOW THEREFORE, the Fund hereby adopts the Plan in accordance with
Rule 12b-1 under the Act on the following terms and conditions:
Section 1. Pursuant to the Plan, the Fund may compensate its
distributor or others for activities provided and expenses incurred in
connection with the provision of distribution-related or shareholder liaison
services up to 0.05% of the Fund's average daily net assets on an annual basis.
Section 2. The Plan shall be effective on the date upon which it
is approved by "vote of a majority of the outstanding voting securities" (as
defined below) of the Fund and a majority of the Directors of the Company,
including a majority of the Qualified Directors (as defined below), pursuant to
a vote cast in person at a meeting (or meetings) called for the purpose of
voting on the approval of the Plan.
Section 3. The Plan (and each related agreement) will continue in
effect for one year from its effective date, unless earlier terminated in
accordance with its terms, and will remain in effect from year to year
thereafter if such continuance is specifically approved at least annually by
vote of a majority of both (a) the Directors of the Company and (b) the
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.
Section 4. The Company shall provide to the Company's Board of
Directors and the Directors shall review, at least quarterly, a written report
of the amounts expended by the Company under the Plan and each related
agreement and the purposes for which such expenditures were made.
Section 5. The Plan may be terminated at any time by vote of a
majority of the Qualified Directors or by vote of a majority of the outstanding
voting securities of the Fund.
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Section 6. All agreements related to the Plan shall be in writing
and shall be approved by vote of a majority of both (a) the Directors of the
Company and (b) the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval; provided however, that the identity of
a particular participating organization executing any such agreement may be
ratified by such a vote within 90 days of such execution. Any agreement
related to the Plan shall provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified
Directors or by vote of a majority of the outstanding voting
securities of the Fund, on not more than 60 days' written notice to
any other party to the agreement; and
B. That such agreement shall terminate automatically in the
event of its "assignment" (as defined below).
Section 7. The Plan may not be amended to increase materially the
amount that may be expended by the Fund pursuant to the Plan without the
approval by a vote of a majority of the outstanding voting securities of the
Fund, and no material amendment to the Plan shall be made unless approved by
vote of a majority of both (a) the Directors of the Company and (b) the
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.
Section 8. While the Plan is in effect, the selection and
nomination of each Director who is not an "interested person" (as defined
below) of the Company shall be committed to the discretion of the Directors who
are not interested persons.
Section 9. The Company shall preserve copies of the Plan, each
related agreement and each report made pursuant to Section 4 hereof, for a
period of not less than six years from the date of the Plan, such agreement or
such report, as the case may be, the first two years in an easily accessible
place.
Section 10. As used in the Plan, (a) the terms "assignment,"
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemption as may be granted
by the Securities and Exchange Commission, and (b) the term "Qualified
Directors" shall mean the Directors of the Company who are not interested
persons of the Company and have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan.
Section 11. The Company, on behalf of the Fund, intends to
enter into Shareholder Servicing Agreements with one or more financial
institutions serving as Servicing Agents under which such Servicing Agents
would be paid a fee for the provision of shareholder services. To the extent
any portion of the fees payable under the Shareholder Servicing Agreements is
deemed to be for distribution-related services, such fees are approved and may
be
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paid pursuant to the Plan and in accordance with Rule 12b-1 under the Act,
provided that the Shareholder Servicing Agreements, to the extent they are
deemed to relate to distribution-related services, are approved and otherwise
treated in all respects as agreements related to the Plan.
Dated: December , 1995
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