<PAGE> 1
STAGECOACH FUNDS, INC.
ASSET ALLOCATION FUND
U.S. GOVERNMENT ALLOCATION FUND
CORPORATE STOCK FUND
SUPPLEMENT DATED JANUARY 2, 1996
TO THE PROSPECTUS DATED MAY 1, 1995,
AS PREVIOUSLY SUPPLEMENTED, AND THE
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1995
Effective January 1, 1996, BZW Barclays Global Fund Advisors ("BGFA")
replaced Wells Fargo Nikko Investment Advisors ("WFNIA") as sub-investment
adviser to the Asset Allocation, U.S. Government Allocation and Corporate Stock
Funds (the "Funds") of Stagecoach Funds, Inc. BGFA was created by the
reorganization of WFNIA with and into an affiliate of Wells Fargo Institutional
Trust Company, N.A. ("WFITC"). Pursuant to a Sub-Advisory Contract with each
Fund and subject to the overall supervision of Wells Fargo Bank, the investment
adviser to each Fund, BGFA is responsible for the day-to-day portfolio
management of each Fund. BGFA will continue to employ substantially the same
personnel and will continue to use the computer-based investment model
developed and previously used by WFNIA to determine the recommended mix of
assets in each Fund's portfolio. BGFA is entitled to receive from Wells Fargo
Bank as compensation for its sub-advisory services monthly fees at the annual
rate of 0.20%, 0.15% and 0.08% of the average daily net assets of the Asset
Allocation, U.S. Government Allocation and Corporate Stock Funds, respectively.
BGFA is also entitled to receive from Wells Fargo Bank annual fees of $40,000
for its services to the U.S. Government Allocation Fund and $40,000 for its
services to the Corporate Stock Fund. BGFA is an indirect subsidiary of
Barclays Bank PLC and is located at 45 Fremont
<PAGE> 2
Street, San Francisco, CA 94105. As of January 1, 1996, BGFA and its
affiliates provide investment advisory services for more than $220 billion of
assets under management. As of January 1, 1996, Wells Fargo Bank provides
investment advisory services for approximately $33 billion of assets.
Effective January 1, 1996, WFITC, due to a change in control of its
outstanding voting securities, became a wholly owned subsidiary of BZW Barclays
Global Investors Holdings Inc. (formerly, The Nikko Building U.S.A., Inc.) and
was renamed BZW Barclays Global Investors, N.A. ("BGI"). BGI currently acts as
custodian to each Fund. BGFA is a subsidiary of BGI. BGI will not be entitled
to receive compensation for its custodial services to the Funds so long as BGFA
is entitled to receive fees for providing investment advisory services to such
Funds. The principal business address of BGI is 45 Fremont Street, San
Francisco, California 94105.
Each Fund's Prospectus and Statement of Additional Information are
hereby amended accordingly.
<PAGE> 3
LOGO
------------------------------
PROSPECTUS
------------------------------
ASSET ALLOCATION FUND
U.S. GOVERNMENT ALLOCATION FUND
May 1, 1995
As Supplemented on June 23, 1995 and August 24, 1995
<PAGE> 4
STAGECOACH FUNDS(R)
ASSET ALLOCATION FUND
U.S. GOVERNMENT ALLOCATION FUND
Stagecoach Funds, Inc. (the "Company") is a professionally managed, open-end
series investment company. This Prospectus contains information about two of the
funds in the Stagecoach Family of Funds - the ASSET ALLOCATION FUND and the U.S.
GOVERNMENT ALLOCATION FUND (each a "Fund" and, collectively, the "Funds"). Two
classes of shares of each Fund (each, a "Class") are described in this
Prospectus - Class A Shares and Class B Shares.
The ASSET ALLOCATION FUND seeks to earn over the long term a high level of
total return, including net realized and unrealized capital gains and net
investment income, consistent with reasonable risk.
The U.S. GOVERNMENT ALLOCATION FUND seeks to achieve over the long term a high
level of total return, including net realized and unrealized capital gains and
net investment income, consistent with reasonable risk.
Please read this Prospectus before investing and retain it for future
reference. It is designed to provide you with important information and to help
you decide if a Fund's goals match your own. Statements of Additional
Information ("SAIs"), dated May 1, 1995, for the Funds have been filed with the
Securities and Exchange Commission ("SEC") and are incorporated by reference.
The SAI for each Fund is available free of charge by writing to Stagecoach
Funds, Inc., c/o Stagecoach Shareholder Services, Wells Fargo Bank, N.A., P.O.
Box 7066, San Francisco, CA 94120-7066 or by calling the Company at
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.
SHARES OF THE FUNDS 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
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED MAY 1, 1995
AS SUPPLEMENTED ON JUNE 23, 1995 AND AUGUST 24, 1995
PROSPECTUS
<PAGE> 5
The ASSET ALLOCATION FUND seeks to achieve its objective by pursuing an "asset
allocation" strategy whereby the Fund allocates and reallocates its investments
among three asset classes - common stocks, U.S. Treasury bonds, and money market
instruments. The Fund is designed for investors with investment horizons of at
least five years.
The U.S. GOVERNMENT ALLOCATION FUND seeks to achieve its objective by pursuing
a strategy of allocating and reallocating its investments among three classes of
debt securities - long-term U.S. Treasury bonds, intermediate-term U.S. Treasury
notes, and short-term money market instruments - at least 65% of which will be
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The Fund is designed for investors with investment horizons
of at least five years.
The Funds are advised by Wells Fargo Bank. Wells Fargo Nikko Investment
Advisors ("WFNIA") serves as sub-adviser to the Funds. Wells Fargo Bank also
serves as the Funds' transfer and dividend disbursing agent, and is a
Shareholder Servicing Agent (as defined below) and a Selling Agent (as defined
below). Wells Fargo Institutional Trust Company, N.A. ("WFITC") serves as the
Funds' custodian. Stephens Inc.
("Stephens") is the Funds' sponsor and administrator and serves as the
distributor of the Funds' shares.
THE FUNDS' SHARES AND PORTFOLIO INVESTMENTS (EXCEPT AS NOTED UNDER "HOW THE
FUNDS WORK - INVESTMENT OBJECTIVES AND POLICIES" AND "PROSPECTUS APPENDIX -
ADDITIONAL INVESTMENT POLICIES") ARE NOT INSURED OR GUARANTEED BY THE UNITED
STATES OR ANY FEDERAL AGENCY OR INSTRUMENTALITY.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER SERVICES
TO THE FUNDS, FOR WHICH IT IS COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED
WITH WELLS FARGO BANK, IS THE SPONSOR AND DISTRIBUTOR FOR THE FUNDS.
PROSPECTUS
<PAGE> 6
TABLE OF CONTENTS
-------
PROSPECTUS SUMMARY 1
SUMMARY OF FUND EXPENSES 4
FINANCIAL HIGHLIGHTS 8
HOW THE FUNDS WORK 12
THE FUNDS AND MANAGEMENT 16
INVESTING IN THE FUNDS 18
DIVIDENDS 28
HOW TO REDEEM SHARES 29
ADDITIONAL SHAREHOLDER SERVICES 33
MANAGEMENT AND SERVICING FEES 36
TAXES 40
PROSPECTUS APPENDIX - ADDITIONAL INVESTMENT POLICIES A-1
PROSPECTUS
<PAGE> 7
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 the Funds. For more information,
please refer specifically to the identified Prospectus sections and generally to
the Prospectus and SAI for each Fund.
Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
A. The ASSET ALLOCATION FUND'S investment objective is to seek over the long
term a high level of total return, including net realized and unrealized
capital gains and net investment income, consistent with reasonable risk.
The Fund seeks to achieve this objective by pursuing an "asset allocation"
strategy whereby its investments are allocated among three asset
classes - common stocks, U.S. Treasury bonds and money market instruments.
The Fund is designed for investors with investment horizons of at least five
years. See "How the Funds Work" and "Prospectus Appendix - Additional
Investment Policies."
The U.S. GOVERNMENT ALLOCATION FUND'S investment objective is to seek over
the long term a high level of total return, including net realized and
unrealized capital gains and net investment income, consistent with
reasonable risk. The Fund seeks to achieve this objective by pursuing a
strategy of allocating and reallocating its investments among three classes
of debt securities: long-term U.S. Treasury bonds, intermediate-term U.S.
Treasury notes and short-term money market instruments. Under normal market
conditions, at least 65% of the Fund's total assets will be invested in
obligations that are issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, including government-sponsored enterprises
("U.S. Government obligations"). The Fund is designed for investors with
investment horizons of at least five years. See "How the Funds Work" and
"Prospectus Appendix - Additional Investment Policies."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank is investment adviser to the Funds. WFNIA serves as
sub-adviser to the Funds and provides allocation advice based on certain
proprietary models. Wells Fargo Bank provides the Funds with transfer agency
and dividend disbursing agency services; WFITC provides the Funds with
custodial services. In addition, Wells Fargo Bank is a Shareholder Servicing
Agent and a Selling Agent under Selling Agreements with Stephens, the Funds'
distributor. See "The Funds and Management" and "Management and Servicing
Fees."
Q. HOW DO I INVEST?
A. You may invest by purchasing shares of a Fund at their public offering
price, which is the net asset value per share plus any applicable sales
charge. Class A Shares are
1 PROSPECTUS
<PAGE> 8
subject to a maximum front-end sales charge of 4.50%. Class B Shares that
are redeemed within four years of purchase are subject to a maximum
contingent deferred sales charge of 3.00% of the lesser of net asset value
at purchase or net asset value at redemption. In some cases, such as for
investments by certain fiduciary or retirement accounts, the front-end sales
charge may be waived. In particular, no front-end sales charge is imposed on
sales of Class A Shares made to various retirement plan customers of Wells
Fargo Bank, including IRAs, Simplified Employee Pension Plans and other
self-directed retirement plans for which Wells Fargo Bank serves as trustee.
In other cases, the front-end sales charge may be reduced. You may open an
account by investing at least $1,000 and may add to your account by making
additional investments of at least $100, although certain exceptions to
these minimums may be available. Shares may be purchased by wire, by mail or
by an automatic investment feature called the AutoSaver Plan on any day the
New York Stock Exchange is open. See "Investing in the Funds." For more
details, contact Stephens (the Funds' Sponsor and Distributor), a
Shareholder Servicing Agent or a Selling Agent (such as Wells Fargo Bank).
Q. HOW WILL I RECEIVE DIVIDENDS AND ANY CAPITAL GAINS?
A. Dividends from net investment income of the Asset Allocation Fund are
declared quarterly and dividends from the net investment income of the U.S.
Government Allocation Fund are declared daily. Dividends paid by each Fund
are automatically reinvested in additional shares of the same Class of the
respective Fund at net asset value without a sales charge unless you elect
to receive dividends in cash. You may also elect to reinvest dividends of
the Funds in shares of the same class of another multi-class fund or in
shares of certain other funds in the Stagecoach Family of Funds with which
you have an established account that has met the applicable minimum initial
investment requirement. Any capital gains will be distributed at least
annually in the same manner. Each Fund's net investment income available for
distribution to holders of Class B Shares will be reduced by the amount of
the higher Rule 12b-1 Fee payable on behalf of the Class B Shares. Class B
Shares automatically convert into Class A Shares of the same Fund six years
after the end of the month in which they were acquired. See "Dividends" and
"Additional Shareholder Services."
Q. HOW MAY I REDEEM SHARES?
A. You may redeem your shares by telephone, by letter or by an automatic
feature called the Systematic Withdrawal Plan on any day the New York Stock
Exchange is open. Contingent deferred sales charges may be charged upon
redemption of Class B Shares. In addition, the Company reserves the right
to impose charges for wiring redemption proceeds. See "How To Redeem
Shares" and "How to Purchase Shares - Contingent Deferred Sales Charges -
Class B Shares." For more details, contact Stephens, a Shareholder
Servicing Agent or a Selling Agent (such as Wells Fargo Bank).
PROSPECTUS 2
<PAGE> 9
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?
A. An investment in shares of the Funds is not insured against loss of
principal. When the value of the securities that a Fund owns declines, so
does the value of your shares of the Fund. Therefore, you should be prepared
to accept some risk with the money you invest in a Fund. Because each Fund
may shift its investment allocations significantly from time to time, its
performance may differ from funds which invest in one asset class or from
funds with a stable mix of assets. Further, shifts among asset classes may
result in relatively high portfolio turnover rates, which may, in turn,
result in increased brokerage and transaction costs, and/or increased
short-term capital gains or losses. The portfolio debt instruments of the
Funds are subject to interest rate risk and credit risk. Interest rate risk
is the risk that increases in market interest rates may adversely affect the
value of the instruments in which a Fund invests and hence the value of your
investment in the Fund. The value of instruments held by the Funds generally
changes inversely to changes in market interest rates. During those periods
in which a high percentage of the portfolio of a Fund is invested in
long-term bonds, its exposure to interest rate risk will be greater because
the longer maturity of those instruments means they generally are more
sensitive to interest rate fluctuations than shorter-term debt instruments.
Credit risk is the risk that the issuer of a debt instrument is unable, due
to financial constraints, to make timely payments on its outstanding
obligations. The portfolio equity investments of the Funds are subject to
equity market risk. Equity market risk is the risk that common stock prices
will fluctuate or decline over short or even extended periods. The U.S.
stock market tends to be cyclical, with periods when stock prices generally
rise and periods when prices generally decline.
As with all mutual funds, there can be no assurance that the Funds will
achieve their investment objectives. Investors should be prepared to accept
that risk, as well as the risk that a Fund may under-perform (over the short
and/or long term) one or more of the three classes of securities in which it
invests.
3 PROSPECTUS
<PAGE> 10
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
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
FOR CLASS A SHARES
<TABLE>
<CAPTION>
ASSET ALLOCATION U.S. GOVERNMENT
FUND ALLOCATION FUND
---------------- ---------------
<S> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)................ 4.50% 4.50%
Sales Charge Imposed on
Reinvested Dividends.............. None None
Sales Charge Imposed on
Redemptions*...................... None None
Exchange Fees......................... None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
FOR CLASS A SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
U.S.
ASSET GOVERNMENT
ALLOCATION ALLOCATION
FUND FUND
------------- --------------
<S> <C> <C> <C> <C>
Management Fee.................................. 0.38% 0.50%
Rule 12b-1 Fee.................................. 0.05% 0.05%
Total Other Expenses(1):
Shareholder Servicing Fee**................. 0.30% 0.30%
Administrative Fee.......................... 0.03% 0.03%
Other Expenses(1)........................... 0.08% 0.13%
----- -----
0.41% 0.46%
----- -----
TOTAL FUND OPERATING
EXPENSES(1)................................. 0.84% 1.01%
</TABLE>
- -------------------------------
<TABLE>
<C> <S>
(1) After any waivers or reimbursements.
* The Company reserves the right to impose a charge for wiring
redemption proceeds.
** The Funds understand that a Shareholder Servicing Agent also
may impose certain conditions on its customers, subject to the
terms of this Prospectus, in addition to or different from
those imposed by the Funds, such as requiring a higher minimum
initial investment or payment of a separate fee for additional
services.
</TABLE>
PROSPECTUS 4
<PAGE> 11
<TABLE>
<CAPTION>
EXAMPLE OF EXPENSES --
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- -------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Class A Shares of a
Fund, assuming (A) a 5% annual return and (B)
redemption at the end of each time period
indicated:
Asset Allocation Fund..................... $ 53 $71 $89 $144
U.S. Government Allocation Fund........... $ 55 $76 $98 $163
</TABLE>
SHAREHOLDER TRANSACTION EXPENSES
FOR CLASS B SHARES
<TABLE>
<CAPTION>
ASSET ALLOCATION U.S. GOVERNMENT
FUND ALLOCATION FUND
---------------- ---------------
<S> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)............. None None
Sales Charge Imposed on
Reinvested Dividends........... None None
Maximum Sales Charge Imposed on
Redemptions*................... 3.00% 3.00%
Exchange Fees...................... None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
FOR CLASS B SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
U.S.
ASSET GOVERNMENT
ALLOCATION ALLOCATION
FUND FUND
------------- --------------
<S> <C> <C> <C> <C>
Management Fee............................ 0.38% 0.50%
Rule 12b-1 Fee............................ 0.70% 0.70%
Total Other Expenses(1):
Shareholder Servicing Fee**........... 0.30% 0.30%
Administrative Fee.................... 0.03% 0.03%
Other Expenses(1)..................... 0.08% 0.13%
----- -----
0.41% 0.46%
----- -----
TOTAL FUND OPERATING
EXPENSES(1)........................... 1.49% 1.66%
</TABLE>
- -------------------------------
<TABLE>
<C> <S>
(1) After any waivers or reimbursements.
* The Company reserves the right to impose a charge for wiring
redemption proceeds.
** The Funds understand that a Shareholder Servicing Agent also may
impose certain conditions on its customers, subject to the terms
of this Prospectus, in addition to or different from those imposed
by the Funds, such as requiring a higher minimum initial
investment or payment of a separate fee for additional services.
</TABLE>
5 PROSPECTUS
<PAGE> 12
EXAMPLE OF EXPENSES -- CLASS B SHARES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- -------
<S> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000
investment in Class B Shares of a
Fund, assuming (A) a 5% annual return
and (B) redemption at the end of each
time period indicated:
Asset Allocation Fund............ $ 45 $57 $ 99 $104
U.S. Government Allocation
Fund........................... $ 47 $62 $ 110 $124
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- -------
<S> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000
investment in Class B Shares of a
Fund, assuming a 5% annual return but
no redemption:
Asset Allocation Fund............ $ 15 $47 $ 99 $104
U.S. Government Allocation
Fund........................... $ 17 $52 $ 110 $124
</TABLE>
EXPLANATION OF TABLES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell Fund
shares. You are subject to a front-end sales charge on purchases of Class A
Shares of the Funds and may be subject to a contingent deferred sales charge on
Class B Shares if you sell such shares within a specified period. See "Investing
in the Funds - Sales Charges." The Company reserves the right to impose a charge
for wiring redemption proceeds. In certain instances, you may qualify for a
reduction or waiver of the front-end sales charge. See "Investing in the
Funds - Sales Charges."
ANNUAL FUND OPERATING EXPENSES for Class A Shares of each Fund are based on
amounts incurred during the most recent fiscal year reflecting voluntary fee
waivers and expense reimbursements. Wells Fargo Bank and Stephens each has
agreed to waive or reimburse all or a portion of its respective fees if certain
Fund expenses exceed limits set by state securities laws or regulations. In
addition, Wells Fargo Bank and Stephens, at their sole discretion, may waive or
reimburse all or a portion of the respective fees charged to, or expenses paid
by, a Fund. Any waivers or reimbursements would reduce a Fund's total expenses.
There can be no assurances that waivers or reimbursements will continue. Absent
waivers or reimbursements, the percentages shown above under "Total
PROSPECTUS 6
<PAGE> 13
Other Expenses" and "Total Fund Operating Expenses" would be 0.41% and 0.84%,
respectively for the Class A Shares of the Asset Allocation Fund and 0.53% and
1.08%, respectively, for the Class A Shares of the U.S. Government Allocation
Fund. Since Class B Shares were not offered during 1994, the percentages shown
above with respect to Class B Shares under "Total Other Expenses" and "Total
Fund Operating Expenses" reflect certain anticipated voluntary fee waivers and
expense reimbursements for the current fiscal year. Absent waivers and
reimbursements, "Total Other Expenses" and "Total Fund Operating Expenses" would
be 0.46% and 1.54%, respectively, for the Class B Shares of the Asset Allocation
Fund and 0.58% and 1.78%, respectively, for the Class B Shares of the U.S.
Government Allocation Fund. The Funds 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
sections captioned "Investing in the Funds - How To Buy Shares" and "Management
and Servicing Fees."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the expenses
associated with a $1,000 investment in Class A Shares or Class B Shares over
stated periods, based on the expenses in the respective tables 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.
7 PROSPECTUS
<PAGE> 14
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights in
the Funds' 1994 annual financial statements. The financial statements are
included in the SAI for each Fund. Except for periods ending prior to January 1,
1992, which were audited by other auditors whose report dated February 19, 1992
expressed an unqualified opinion on this information, the financial statements
have been audited by KPMG Peat Marwick LLP, independent auditors, whose report
dated February 17, 1995 also is included in the SAIs. This information should be
read in conjunction with the Funds' 1994 annual financial statements and notes
thereto. The SAIs have been incorporated by reference into this Prospectus.
Financial information is not provided in connection with Class B Shares because
Class B Shares were not offered during the periods presented.
ASSET ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992 1991*
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $18.80 $17.89 $17.65 $14.45
Income from investment
operations:
Net investment income.......... 0.77 0.77 0.87 0.92
Net realized and unrealized
capital
gains/(losses) on
investments.................. (1.31) 1.88 0.31 2.28
Total from investment
operations................... (0.54) 2.65 1.18 3.20
Less distributions:
Dividends from net investment
income....................... (0.77) (0.77) (0.87) 0.00
Distributions from net realized
capital gains................ (0.76) (0.97) (0.07) 0.00
Total distributions............ (1.53) (1.74) (0.94) 0.00
Net asset value, end of
period....................... $16.73 $18.80 $17.89 $17.65
Total return (not
annualized)**................ (2.82)% 15.00% 7.00% 22.13%
Ratios/supplemental data:
Net assets, end of period
(000)........................ $896,943 $1,048,667 $542,226 $367,251
Number of shares outstanding,
end of period (000).......... 53,618 55,790 30,303 20,811
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets(1)................ 0.84% 0.86% 0.95% 0.95%
Ratio of net investment income
to average net assets(2)..... 4.30% 4.20% 5.22% 5.88%
Portfolio turnover............. 49% 40% 5% 25%
- -------------------------------
(1) Ratio of expenses to
average net assets prior to
waived fees and reimbursed
expenses................... N/A 0.86% 0.97% N/A
(2) Ratio of net investment
income to average net
assets prior to waived fees
and reimbursed expenses.... N/A 4.20% 5.20% N/A
</TABLE>
- ---------------
* The financial information for the fiscal periods prior to, and including,
1991 is based on the financial information for the Asset Allocation Fund
("IRA Asset Allocation Fund") of the Wells Fargo Investment Trust for
Retirement Programs ("Trust") which was reorganized into the Asset Allocation
Fund on January 2, 1992.
+ The Fund commenced operations on November 13, 1986.
** Total returns do not include any sales charges.
PROSPECTUS 8
<PAGE> 15
ASSET ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1990* 1989* 1988* 1987* 1986*+
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $13.42 $12.00 $10.93 $10.07 $10.00
Income from investment
operations:
Net investment income.......... 0.91 0.93 0.72 0.72 0.07
Net realized and unrealized
capital
gains/(losses) on
investments.................. 0.12 0.49 0.35 0.14 0.00
Total from investment
operations................... 1.03 1.42 1.07 0.86 0.07
Less distributions:
Dividends from net investment
income....................... 0.00 0.00 0.00 0.00 0.00
Distributions from net realized
capital gains................ 0.00 0.00 0.00 0.00 0.00
Total distributions............ 0.00 0.00 0.00 0.00 0.00
Net asset value, end of
period....................... $14.45 $13.42 $12.00 $10.93 $10.07
Total return (not
annualized)**................ 7.68% 11.83% 9.79% 8.54% 0.70%
Ratios/supplemental data:
Net assets, end of period
(000)........................ $261,881 $229,211 $172,326 $111,025 $1,600
Number of shares outstanding,
end of period (000).......... 18,124 17,078 14,362 10,158 159
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets(1)................ 0.96% 1.02% 1.00% 1.04% 0%
Ratio of net investment income
to average net assets(2)..... 6.59% 7.35% 6.23% 6.79% 0.29%
Portfolio turnover............. 88% 117% 94% 81% 0%
- -------------------------------
(1) Ratio of expenses to
average net assets prior to
waived fees and reimbursed
expenses................... N/A N/A N/A N/A N/A
(2) Ratio of net investment
income to average net
assets prior to waived fees
and reimbursed expenses.... N/A N/A N/A N/A N/A
</TABLE>
- ---------------
* The financial information for the fiscal periods prior to, and including,
1991 is based on the financial information for the Asset Allocation Fund
("IRA Asset Allocation Fund") of the Wells Fargo Investment Trust for
Retirement Programs ("Trust") which was reorganized into the Asset Allocation
Fund on January 2, 1992.
+ The Fund commenced operations on November 13, 1986.
** Total returns do not include any sales charges.
9 PROSPECTUS
<PAGE> 16
U.S. GOVERNMENT ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992 1991*
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.......................... $15.71 $15.41 $15.41 $13.14
Income from investment operations:
Net investment income............. 0.87 0.96 0.87 0.94
Net realized and unrealized
capital gains/(losses) on
investments..................... (1.95) 1.69 0.04 1.33
Total from investment
operations...................... (1.08) 2.65 0.91 2.27
Less distributions:
Dividends from net investment
income.......................... (0.87) (0.96) (0.87) 0.00
Distributions from net realized
capital gains................... 0.00 (1.39) (0.04) 0.00
Total distributions............... (0.87) (2.35) (0.91) 0.00
Net asset value, end of period.... $13.76 $15.71 $15.41 $15.41
Total return (not annualized)**... (6.99)% 17.46% 6.30% 17.21%
Ratios/supplemental data:
Net assets, end of period (000)... $140,066 $283,206 $127,504 $30,098
Number of shares outstanding, end
of period
(000)........................... 10,177 18,031 8,272 1,954
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets(1)....................... 1.01% 0.99% 1.00% 1.01%
Ratio of net investment income to
average net assets(2)........... 5.94% 5.92% 6.06% 6.77%
Portfolio turnover................ 112% 150% 33% 147%
- ----------------------------------
(1) Ratio of expenses to average
net assets prior to waived fees
and reimbursed expenses........ 1.08% 1.02% 1.08% N/A
(2) Ratio of net investment income
to
average net assets prior to
waived fees and reimbursed
expenses....................... 5.87% 5.89% 5.98% N/A
- ---------------
* The financial information for the fiscal periods prior to, and including, 1991
is based on the financial information for the Fixed Income Strategy Fund ("IRA
Fixed Income Strategy Fund") of the Trust which was reorganized into the U.S.
Government Allocation Fund on January 2, 1992.
+ The Fund commenced operations on March 31, 1987.
** Total returns do not include any sales charges.
</TABLE>
PROSPECTUS 10
<PAGE> 17
U.S. GOVERNMENT ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1990* 1989* 1988* 1987*+
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..... $12.49 $11.05 $10.34 $10.00
Income from investment operations:
Net investment income.................... 0.92 0.93 0.87 0.64
Net realized and unrealized capital
gains/(losses)
on investments......................... (0.27) 0.51 (0.16) (0.30)
Total from investment operations......... 0.65 1.44 0.71 0.34
Less distributions:
Dividends from net investment income..... 0.00 0.00 0.00 0.00
Distributions from net realized capital
gains.................................. 0.00 0.00 0.00 0.00
Total distributions...................... 0.00 0.00 0.00 0.00
Net asset value, end of period........... $13.14 $12.49 $11.05 $10.34
Total return (not annualized)**.......... 5.20% 13.03% 6.87% 3.50%
Ratios/supplemental data:
Net assets, end of period (000).......... $19,777 $14,367 $10,330 $7,469
Number of shares outstanding, end of
period
(000).................................. 1,505 1,151 935 722
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets(1).............................. 1.03% 1.05% 0.99% 0.99%
Ratio of net investment income to average
net
assets(2).............................. 7.34% 7.90% 8.04% 6.33%
Portfolio turnover....................... 558% 17% 42% 21%
- -----------------------------------------
(1) Ratio of expenses to average net
assets prior to waived fees and
reimbursed expenses.................. N/A N/A N/A N/A
(2) Ratio of net investment income to
average net assets prior to waived
fees and reimbursed expenses........... N/A N/A N/A N/A
- ---------------
* The financial information for the fiscal periods prior to, and including, 1991 is
based on the financial information for the Fixed Income Strategy Fund ("IRA Fixed
Income Strategy Fund") of the Trust which was reorganized into the U.S. Government
Allocation Fund on January 2, 1992.
+ The Fund commenced operations on March 31, 1987.
** Total returns do not include any sales charges.
</TABLE>
11 PROSPECTUS
<PAGE> 18
HOW THE FUNDS WORK
INVESTMENT OBJECTIVE AND POLICIES
ASSET ALLOCATION FUND
The Asset Allocation Fund's investment objective is to seek over the long term
a high level of total return, including net realized and unrealized capital
gains and net investment income, consistent with reasonable risk. This
investment objective is fundamental and cannot be changed without shareholder
approval. As with all mutual funds, there can be no assurance that the Fund,
which is a diversified portfolio, will achieve its investment objective. The
Fund seeks to achieve its objective by pursuing an asset allocation strategy.
This strategy is based upon the premise that these asset classes from time to
time are undervalued or overvalued relative to each other by the market and that
undervalued asset classes represent relatively better long-term, risk-adjusted
investment opportunities. Timely, low-cost shifts among common stocks, U.S.
Treasury bonds and money market instruments (as determined by their perceived
relative overvaluation or undervaluation) can therefore produce attractive
investment returns. Using this strategy, WFNIA regularly determines the
appropriate mix of asset classes and the Fund's portfolio is periodically
adjusted to achieve this mix.
In determining the recommended mix, WFNIA uses an investment model developed
over the past 17 years, which is presently used as a basis for managing large
employee benefit trust funds and other institutional accounts. The Asset
Allocation Model, which is proprietary to WFNIA, analyzes extensive financial
data from numerous sources and recommends a portfolio allocation among common
stocks, U.S. Treasury bonds and money market instruments. As further described
in the "Prospectus Appendix - Additional Investment Policies," WFNIA bases its
investment decisions on the Asset Allocation Model's recommendations. At any
given time, substantially all of the Fund's assets may be invested in a single
asset class and the relative allocation among the asset classes may shift
significantly from time to time.
The Asset Allocation Fund's assets will be invested as follows:
Stock Investments. In making its stock investments, the Fund invests in the
common stocks which comprise the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index")* using, to the extent feasible, the same weighting
formula used by that
- ---------------
* The S&P 500 Index is an unmanaged index of stocks comprised of 500
industrial, financial, utility and transportation companies. "Standard &
Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and "500" are
trademarks of McGraw-Hill, Inc. The Asset Allocation Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes
no representation regarding the advisability of investing in the Fund.
PROSPECTUS 12
<PAGE> 19
index. The Fund does not individually select common stocks on the basis of
traditional investment analysis.
Bond Investments. The Fund purchases U.S. Treasury bonds with maturities
greater than 20 years. The bond portion of the Fund's portfolio is generally
managed to attain an average maturity of between 22 and 28 years for the U.S.
Treasury bonds held. This form of debt instrument has been selected by WFNIA
because of the relatively low transaction costs of buying and selling U.S.
Treasury bonds and because of the low default risk associated with such
instruments.
Money Market Investments. The money market instrument portion of the Fund's
portfolio generally will be invested in high-quality money market instruments,
including U.S. Government obligations, obligations of domestic and foreign
banks, short-term corporate debt instruments and repurchase agreements.
The portion of the Fund's portfolio invested in stocks is subject to equity
market risk. Equity market risk is the possibility that common stock prices may
decline over short or even extended periods. The portion of the Fund's portfolio
invested in debt instruments is subject to interest rate risk and credit risk,
but the Fund minimizes its exposure to credit risk by only purchasing U.S.
Treasury bonds and high-quality money market instruments.
A more complete description of the Asset Allocation Model, certain trading
policies relating to the implementation of the model's recommendations, and the
Fund's investments is contained in the "Prospectus Appendix - Additional
Investment Policies" and in the SAI.
U.S. GOVERNMENT ALLOCATION FUND
The U.S. Government Allocation Fund's investment objective is to seek over the
long term a high level of total return, including net realized and unrealized
capital gains and net investment income, consistent with reasonable risk. This
investment objective is fundamental and cannot be changed without shareholder
approval. As with all mutual funds, there can be no assurance that the Fund,
which is a diversified portfolio, will achieve its investment objective. The
Fund seeks to achieve its objective by pursuing a strategy of allocating and
reallocating its investments among the following three classes of debt
instruments: long-term U.S. Treasury bonds, intermediate-term U.S. Treasury
notes, and short-term money market instruments. This strategy is based upon the
premise that these asset classes from time to time are overvalued or undervalued
relative to each other by the market and that undervalued asset classes
represent relatively better long-term investment opportunities. Timely, low-cost
shifts among such securities (as determined by their perceived relative
overvaluation or undervaluation) can therefore produce attractive long-term
investment returns. Using this strategy, WFNIA regularly determines the
recommended mix of asset classes and the Fund's portfolio is
13 PROSPECTUS
<PAGE> 20
periodically adjusted to achieve this mix. Under normal market conditions, the
Fund will invest at least 65% of the value of its total assets in U.S.
Government obligations.
In determining the recommended mix, WFNIA uses an investment model which is
presently used as a basis for managing large employee benefit trust funds and
other institutional accounts. The model, which is proprietary to WFNIA, analyzes
risk, correlation and expected return data and recommends a portfolio allocation
among the three classes of debt instruments. As further described in the
"Prospectus Appendix - Additional Investment Policies," WFNIA bases its
investment decisions on the model's recommendations. At any given time,
substantially all of the Fund's assets may be invested in a single asset class
and the relative allocation among the asset classes may shift significantly from
time to time. The Fund is not designed to profit from short-term market changes.
Instead, it is designed for investors with investment horizons of five years and
greater.
The U.S. Government Allocation Fund's assets will be invested and reinvested
in the following types of debt instruments:
Long-Term Investments. The Fund purchases U.S. Treasury bonds with maturities
greater than 20 years. This portion of the Fund's portfolio is generally managed
to attain an average maturity of between 22 and 28 years.
Intermediate-Term Investments. The Fund purchases U.S. Treasury notes with
maturities generally ranging from 5 to 7 years. This portion of the Fund's
portfolio is generally managed to attain an average maturity of approximately 6
years.
Short-Term Investments. The Fund purchases short-term money market instruments
with remaining maturities of one year or less. This portion of the Fund's
portfolio may be invested in various types of short-term money market
instruments, including U.S. Government obligations, commercial paper, bankers'
acceptances, certificates of deposit, fixed time deposits, and repurchase
agreements. Obligations of both domestic and foreign banks may be included.
U.S. Government obligations have been selected by Wells Fargo Bank as the
Fund's principal investments because of their relatively low purchase and sale
transaction costs and because of the low default risk associated with them
(i.e., they are issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, including government-sponsored
enterprises).
A key component of the U.S. Government Allocation model is a set of
assumptions concerning expected risk and return and investor attitudes toward
risk, which are incorporated into the allocation decision. The principal inputs
of financial data to the model currently are: (i) yields on 90-day U.S. Treasury
bills, 5-year U.S. Treasury notes, and 30-year U.S. Treasury bonds; (ii) the
expected statistical standard deviation in investment returns for each class of
fixed income instrument; and (iii) the expected statistical correlation of
investment return among the various classes of fixed income
PROSPECTUS 14
<PAGE> 21
instruments. Using these and other data, the model is run daily to determine the
recommended allocation. The model's recommendations are presently implemented in
10% increments. Because the Fund may shift its investment allocations
significantly from time to time, its performance may differ from funds which
invest in one asset class or from funds with a constant mix of assets. The Fund
is subject to interest rate risk and credit risk, but minimizes its exposure to
credit risk by purchasing U.S. Treasury bonds and notes and high quality money
market instruments.
A more complete description of the model and the Fund's investments and
investment activities is contained in the "Prospectus Appendix - Additional
Investment Policies" and in the SAI.
PERFORMANCE
The performance of each Class of shares of the Funds may be advertised in
terms of average annual total return and yield. These performance figures are
based on historical results and are not intended to indicate future performance.
Average annual total return of the shares of a Class of a Fund is based on the
overall dollar or percentage change in value of a hypothetical investment in the
Class and assumes that all dividends and capital gain distributions are
reinvested in shares of that Class. The standardized average annual total return
for Class A Shares is calculated assuming you have paid the maximum sales
charge, and for Class B Shares is calculated on a one-year investment assuming
you have paid the maximum contingent deferred sales charge, on your hypothetical
investment. In addition to presenting a standardized total return, at times,
each Class also may present nonstandardized total returns, yields and
distribution rates for purposes of sales literature. For example, the
performance figure of a Class may be calculated on the basis of an investment at
the net asset value per share or at net asset value per share plus a reduced
sales charge (see "Investing in the Funds -- How To Buy Shares"), rather than
the public offering price per share. In this case, the figure might not reflect
the effect of the sales charge that you may have paid.
The yield of the shares of each Class of shares of the Funds is calculated by
dividing the net investment income per Class share earned during a specified
period (usually 30 days) for Class A Shares by its public offering price per
share (which includes the maximum sales charge), or for Class B Shares by its
net asset value (which does not include the maximum contingent deferred sales
charge), on the last day of such period and annualizing the result.
Because of differences in the fees and/or expenses borne by Class B Shares of
the Funds, the net performance quotations on such shares can be expected, at any
given time, to be lower than the net performance quotations on Class A Shares.
Standardized performance quotations are computed separately for Class A Shares
and Class B Shares.
15 PROSPECTUS
<PAGE> 22
Additional information about the performance of each Fund is contained in the
Annual Report for each Fund. The Annual Reports may be obtained free of charge
by calling the Company at 800-222-8222.
THE FUNDS AND MANAGEMENT
The Funds are two of the funds in the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991, and currently
offers shares of nine other series: the 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 and the
Short-Intermediate U.S. Government Income Fund. The Board of Directors of the
Company supervises the 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 requested
for purposes such as electing or removing Directors, approving advisory
contracts and distribution plans, and changing a Fund's investment objective or
fundamental investment policies. All shares of the Company have equal voting
rights and will be voted in the aggregate, rather than by series or Class,
unless otherwise required by law (such as when the voting matter affects only
one series or Class). As a shareholder of a Fund, you receive 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 Funds' SAIs.
Wells Fargo Bank is the Funds' investment adviser and transfer and dividend
disbursing agent. In addition, Wells Fargo Bank is a Shareholder Servicing Agent
of the Funds and a Selling Agent under Selling Agreements with the Funds'
distributor. Wells Fargo Bank, one of the ten largest banks in the United
States, was founded in 1852 and is the oldest bank in the western United States.
As of June 30, 1995, Wells Fargo Bank provided investment advisory services for
approximately $28 billion of assets of individuals, trusts, estates and
institutions. As of June 30, 1995, various divisions and affiliates of Wells
Fargo Bank (including WFNIA) provided investment advisory services for
approximately $211 billion of assets of individuals, trusts, estates and
institutions. As of June 30, 1995, WFNIA managed or advised approximately $183
billion in assets. Wells Fargo Bank also serves as the investment adviser to the
other separately managed series of the Company, and to six other registered,
open-end, management investment companies, which consist 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 94163.
WFNIA, located at 45 Fremont Street, San Francisco, California 94105, is a
sub-adviser to the Funds, and its subsidiary serves as the Funds' custodian.
WFNIA is a general partnership owned 50% by a wholly owned subsidiary of Wells
Fargo Bank and 50% by a
PROSPECTUS 16
<PAGE> 23
subsidiary of The Nikko Securities Co., Ltd., a Japanese investment firm. As of
December 31, 1994, WFNIA managed over $14 billion using the Asset Allocation
Model. WFNIA also serves as the sub-adviser to some of the other separately
managed series of the Company, and as investment adviser to other registered,
open-end, management investment companies.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd. signed
a definitive agreement to sell their joint venture interest in Wells Fargo Nikko
Investment Advisors ("WFNIA") to Barclays PLC of the U.K. The sale, which is
subject to the approval of appropriate regulatory authorities, is expected to
close in the fourth quarter of 1995.
Barclays is the largest clearing Bank in the U.K., with $259 billion in total
assets. Barclays has announced its intention to combine WFNIA with the
quantitative group of BZW Asset Management ("BZWAM"), its international asset
management arm. BZWAM is the largest quantitative fund manager in Europe, with
approximately $32 billion of quantitative funds under management, as of March
31, 1995. The BZW Division of Barclays, of which BZWAM forms a part, is the
investment banking arm of Barclays and offers a full range of investment
banking, capital markets and asset management services.
Under the Investment Company Act of 1940, this proposed change of control of
WFNIA would result in assignment and termination of the current Sub-Investment
Advisory Agreements between WFNIA, Wells Fargo Bank and the Funds. Subject to
the approval of the Company's Board of Directors, it is contemplated that a
special meeting of shareholders of the Funds will be convened to consider a new
Sub-Investment Advisory Agreement with WFNIA, which will become effective only
upon the change of control of WFNIA. It is not anticipated that the proposed
change of control will change the investment objective of overall investment
strategy of the Funds.
Stephens is the Funds' 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.
17 PROSPECTUS
<PAGE> 24
INVESTING IN THE FUNDS
OPENING AN ACCOUNT
You can buy shares in either Fund 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 applications. A separate
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.
To invest in the Funds through a tax-deferred retirement plan, please contact
a Shareholder Servicing Agent or a Selling Agent to receive information and the
required separate application. See "Tax-Deferred Retirement Plans" below.
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.
SHARE VALUE
The value of a share of a Class of the Funds is its "net asset value," or NAV.
The NAV of a share of each Class of the Asset Allocation Fund or U.S. Government
Allocation Fund is the value of total net assets attributable to such Class
divided by the number of outstanding shares of that Class. The value of 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. The NAV of each
Class is expected to fluctuate daily.
The Funds are open for business each day the New York Stock Exchange ("NYSE")
is open for trading ("Business Day"). Currently, the NYSE is closed on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday
falls on a weekend, the NYSE is closed on the weekday immediately before or
after such Holiday. Wells Fargo Bank calculates the NAV of each Class of the
Funds each Business Day as
PROSPECTUS 18
<PAGE> 25
of the close of regular trading on the NYSE (referred to hereafter as "the close
of the NYSE"), which is currently 1:00 p.m. (Pacific time).
Except for debt obligations with remaining maturities of 60 days or less,
which are valued at amortized cost, the Funds' other assets are valued at
current market prices, or if such prices are not readily available, at fair
value as determined in good faith by the Company's Board of Directors. Prices
used for such valuations may be provided by independent pricing services.
HOW TO BUY SHARES
Shares of each Fund are offered continuously at the applicable offering price
(the NAV plus the applicable sales charge) next determined after a purchase
order is received in the form specified for the purchase method being used, as
described in the following sections. Payment for shares purchased through a
Selling Agent will not be due from the Selling Agent until the settlement date.
The settlement date normally is three Business Days after the order is placed.
It is the responsibility of the Selling Agent to forward payment for shares
being purchased to a Fund promptly. Payment must accompany orders placed
directly through the Transfer Agent.
Payments for shares of each Class of a Fund will be invested in full and
fractional shares of such Class at the applicable offering price. If shares are
purchased by a check which 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 your 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.
The minimum initial investment is $100 by the AutoSaver Plan purchase method
(described below), $250 for any tax-sheltered retirement account for which Wells
Fargo Bank serves as trustee or custodian under a prototype trust approved by
the Internal Revenue Service ("IRS") (a "Plan Account") and $1,000 by all other
methods or for all other investors. 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 a Shareholder Servicing Agent or Selling Agent.
SALES CHARGES
Set forth below is a Front-end Sales Charge Schedule listing the front-end
sales charges applicable to purchases of Class A Shares of the Funds. As shown
below, reductions in the rate of front-end sales charges ("Volume Discounts")
are available as you purchase additional shares (other than Class B Shares). You
should consider the front-end sales charge information set forth below and the
other information contained in this Prospectus when making your investment
decisions.
19 PROSPECTUS
<PAGE> 26
The following is the Front-end Sales Charge Schedule for purchasing Class A
Shares of each Fund:
<TABLE>
<CAPTION>
FRONT-END FRONT-END
SALES CHARGE SALES CHARGE DEALER ALLOWANCE
AS % OF AS % OF NET AS % OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- -------------------------------------- --------------- ----------------
<S> <C> <C> <C>
Less than $50,000....... 4.50% 4.71% 4.00%
$ 50,000 up to
$ 99,999.............. 4.00 4.17 3.55
$100,000 up to
$249,999.............. 3.50 3.63 3.125
$250,000 up to
$499,999.............. 3.00 3.09 2.65
$500,000 up to
$999,999.............. 2.00 2.04 1.75
$1,000,000 and over..... 1.00 1.01 0.85
</TABLE>
Class B Shares of the Fund are not subject to a front-end sales charge.
However, Class B Shares which are redeemed within one, two, three or four years
from the receipt of a purchase order affecting such shares will be subject to a
contingent deferred sales charge equal to 3.00%, 2.00%, 1.00% and 1.00%,
respectively, of the dollar amount equal to the lesser of the NAV at the time of
purchase of the shares being redeemed or the NAV of such shares at the time of
redemption. See "Investing in the Funds - Contingent Deferred Sales
Charges - Class B Shares."
A Selling Agent or Servicing Agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A Shares as compared with Class B Shares.
If Class A Shares are purchased through a Selling Agent, Stephens reallows the
portion of the front-end sales charge shown above as the Dealer Allowance.
Stephens also compensates Selling Agents for sales of Class B Shares, and is
then reimbursed out of applicable Rule 12b-1 Fees and contingent deferred sales
charges applicable to such shares. In addition, Stephens has established a
non-cash compensation program, pursuant to which broker/dealers or financial
institutions that sell shares of the Funds may earn additional compensation in
the form of trips to sales seminars or vacation destinations, tickets to
sporting events, theater or other entertainment, opportunities to participate in
golf or other outings and gift certificates for meals or merchandise. When
shares are purchased directly through the Transfer Agent and no Selling Agent is
involved with the purchase, the entire front-end sales charge is paid to
Stephens.
REDUCED SALES CHARGE
Volume Discounts
The Volume Discounts described in the Front-end Sales Charge Schedule are
available to you based on the combined dollar amount you invest in shares of one
or more of the Company's funds which assess a front-end sales charge (the "Load
Funds"). Since
PROSPECTUS 20
<PAGE> 27
Class B Shares are not subject to front-end sales charges, you may not consider
the amount of any Class B Shares you hold in determining any Volume Discount.
Right of Accumulation
The Right of Accumulation allows you to combine the amount you invest in Class
A Shares of a Fund with the total NAV of shares (other than Class B Shares) in
any of the Load Funds to determine reduced front-end sales charges in accordance
with the above Front-end Sales Charge Schedule. In addition, you also may
combine the total NAV of shares (other than Class B Shares) which you currently
have invested in any other mutual fund that assesses a front-end sales charge
and is advised by Wells Fargo Bank and sponsored by Stephens. For example, if
you own Class A Shares of the Load Funds with an aggregate NAV of $90,000 and
you invest an additional $20,000 in Class A Shares of a Fund, the front-end
sales charge on the additional $20,000 investment would be 3.50% of the
applicable offering price. To obtain such discount, you must provide sufficient
information at the time of your purchase to verify that your purchase qualifies
for the reduced front-end sales charge. Confirmation of the order is subject to
such verification. The Right of Accumulation may be modified or discontinued at
any time without prior notice with respect to all subsequent shares purchased.
Letter of Intent
A Letter of Intent allows you to purchase Class A Shares of a Fund over a
13-month period at a reduced front-end sales charge based on the total amount of
Class A Shares you intend to purchase plus the total NAV of shares (other than
Class B Shares) in any of the Load Funds you already own. Each investment in
Class A Shares that you make during the period may be made at the reduced
front-end sales charge that is applicable to the total amount you intend to
invest. If you do not invest the total amount within the period, you must pay
the difference between the higher front-end sales charge rate that would have
been applied to the purchases you made and the reduced sales charge rate you
have paid. The minimum initial investment for a Letter of Intent is 5% of the
total amount you intend to purchase, as specified in the Letter. Shares of a
Fund equal to 5% of the amount you intend to invest will be held in escrow and,
if you do not pay the difference within 20 days following the mailing of a
request, a sufficient amount of escrowed shares will be redeemed for payment of
the additional front-end sales charge. Dividend and capital gains paid on such
shares held in escrow will be reinvested in additional Fund shares.
Reinvestment
You may reinvest proceeds from a redemption of Class A Shares in Class A
Shares of a Fund or in shares of another of the Company's funds registered in
your state of residence at NAV, without a front-end sales charge, within 120
days after your redemption. However, if the other investment portfolio charges a
front-end sales charge that is
21 PROSPECTUS
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higher than the sales load that you have paid in connection with the Class A
Shares you have redeemed, you must pay the difference between the dollar amount
of the two front-end sales charges. You may reinvest at this NAV price up to the
total amount of the redemption proceeds. A written purchase order for the shares
must be delivered to the Company, a Selling Agent, a Shareholder Servicing
Agent, or the Transfer Agent at the time of reinvestment.
If you realized a gain on your redemption, your reinvestment would not alter
the amount of any federal capital gains tax you pay on the gain. If you realized
a loss on your redemption, your reinvestment may cause some or all of the loss
to be disallowed as a tax deduction, depending on the number of shares you
purchase by reinvestment and the period of time that elapses after the
redemption although, for tax purposes, the amount disallowed is added to the
cost of the shares you acquire upon the reinvestment.
Reductions for Families or Fiduciaries
Reductions in front-end sales charges apply to purchases by a single "person,"
including an individual, members of a family unit, consisting of a husband, wife
and children under the age of 21 purchasing securities for their own account, or
a trustee or other fiduciary purchasing for a single fiduciary account or single
trust estate.
Waivers for Investments of Proceeds From Other Investments
Purchases may be made at NAV, without a front-end sales charge, to the extent
that: (i) you are investing proceeds from a redemption of shares of another
open-end investment company or (ii) you are investing proceeds from a redemption
of units of a unit investment trust sold through Wells Fargo Securities Inc. on
which you paid a front-end sales charge; (iii) such redemption occurred within
thirty (30) days prior to the date of the purchase order; and (iv) such other
investment company or trust is distributed and advised by entities other than
Stephens and Wells Fargo Bank, respectively, or their affiliates. You must
notify the Fund and/or the Transfer Agent at the time you place such purchase
order of your eligibility for the waiver of front-end sales charges and provide
satisfactory evidence thereof (e.g., a confirmation of the redemption).
Reductions for Qualified Groups
Reductions in front-end sales charges also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate dollar
amount of Class A Shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the Investment Company Act of 1940 ("1940 Act"), which has been in
existence for more than six months and which has a primary purpose other than
acquiring shares of a Fund at a reduced sales charge, and the "related parties"
of such company. For purposes of this paragraph, a "related party" of a company
is: (i) any individual or other company who
PROSPECTUS 22
<PAGE> 29
directly or indirectly owns, controls or has the power to vote 5% or more of the
outstanding voting securities of such company; (ii) any other company of which
such company directly or indirectly owns, controls or has the power to vote 5%
or more of its outstanding voting securities; (iii) any other company under
common control with such company; (iv) any executive officer, director or
partner of such company or of a related party; and (v) any partnership of which
such company is a partner. Investors seeking to rely on their membership in a
qualified group to purchase shares at a reduced sales load must provide evidence
satisfactory to the Transfer Agent of the existence of a bona fide qualified
group and their membership therein.
Waivers for Certain Parties
Class A Shares of a Fund may be purchased at NAV, without a front-end sales
charge, by directors, officers and employees (and their spouses and children
under the age of 21) of the Company, Stephens, its affiliates and Selling
Agents. Class A Shares of a Fund also may be purchased at NAV, without a
front-end sales charge, by present and retired directors, officers and employees
(and their spouses and children under the age of 21) of Wells Fargo Bank and its
affiliates if Wells Fargo Bank and/or the respective affiliates agree. Class A
Shares of a Fund also may be purchased at NAV, without a front-end sales charge,
by employee benefit and thrift plans for such persons and by any investment
advisory, trust or other fiduciary account, including a Plan Account, that is
maintained, managed or advised by Wells Fargo Bank or its affiliates ("Fiduciary
Accounts"). In addition, you may purchase Class A Shares of a Fund at NAV,
without a front-end sales charge, with proceeds from a required minimum
distribution from any Individual Retirement Account ("IRA"), Simplified Employee
Pension Plan or other self-directed retirement plan for which Wells Fargo Bank
serves as trustee, provided that the proceeds are invested in the Funds within
30 days of such distribution and such distribution is required as a result of
reaching age 70 1/2.
CONTINGENT DEFERRED SALES CHARGES - CLASS B SHARES
Class B Shares of the Funds are not subject to front-end sales charges but may
be subject to contingent deferred sales charges. Class B Shares which are
redeemed within one, two, three or four years from the receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 3.00%, 2.00%, 1.00% and 1.00%, respectively, of the dollar amount equal
to the lesser of the NAV at the time of purchase of the shares being redeemed or
the NAV of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
NAV above the NAV at the time of purchase. Contingent deferred sales charges
will not be assessed on Class B Shares purchased through reinvestment of
dividends or capital gains distributions. Class B Shares automatically convert
into Class A Shares of the same Fund six years after the end of the month in
which such Class B Shares were acquired.
23 PROSPECTUS
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The amount of a contingent deferred sales charge, if any, paid upon redemption
of Class B Shares is determined in a manner designed to result in the lowest
sales charge rate being assessed. When a redemption request is made, Class B
Shares acquired pursuant to the reinvestment of dividends and capital gain
distributions are considered to be redeemed first. After this, Class B Shares
are considered redeemed on a first-in, first-out basis so that Class B Shares
held for a longer period of time are considered redeemed prior to more recently
acquired Class B Shares. For a discussion of the interaction between the
optional Exchange Privilege and contingent deferred sales charges on Class B
Shares, see "Additional Shareholder Services - Exchange Privilege."
Contingent deferred sales charges are waived on redemptions of Class B Shares
of a Fund (i) following the death or disability (as defined in the Internal
Revenue Code of 1986, as amended (the "Code")) of a shareholder, (ii) to the
extent that the redemption represents a minimum required distribution from an
individual retirement account or other retirement plan to a shareholder who has
reached age 70 1/2, (iii) effected pursuant to the Company's right to liquidate
a shareholder's account if the aggregate net asset value of the shareholder's
account is less than the minimum account size, or (iv) in connection with the
combination of the Company with any other registered investment company by a
merger, acquisition of assets, or by any other transaction.
In deciding whether to purchase Class A or Class B Shares, you should compare
the fees assessed on Class A Shares (including front-end sales charges) against
those assessed on Class B Shares (including potential contingent deferred sales
charges and higher Rule 12b-1 fees than Class A Shares) in light of the amount
to be invested and the anticipated time that the shares will be owned.
You may buy shares of the Funds on any Business Day by any of the methods
described below.
INITIAL PURCHASES BY WIRE
1. Complete an Account Application.
2. Instruct the wiring bank to transmit the specified amount in federal funds
($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund) (designate Class A or B)
Account Name(s): Name(s) in which to be registered
Account Number: (if investing into an existing account)
PROSPECTUS 24
<PAGE> 31
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 public offering price or, in the case of
Class B Shares, 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 $1,000 or more payable to
"Stagecoach Funds (Name of Fund) (designate Class A or B)," to the address
above.
3. Share purchases are effected at the public offering price or, in the case of
Class B Shares, at the NAV next determined after the Account Application is
received and accepted.
AUTOSAVER PLAN PURCHASES
The Company's AutoSaver Plan provides you with a convenient way to establish
and automatically add to a 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 an account with a
bank, which is designated in your Account Application and which is approved by
the Transfer Agent ("Approved Bank"). Wells Fargo Bank is an Approved Bank. The
Transfer Agent withdraws and uses this amount to purchase specified Fund shares
on your behalf on or about the fifth Business Day of each month. There are no
separate fees charged to you by the Funds for participating in the AutoSaver
Plan.
You may change your investment amount, suspend purchases or terminate your
election at any time by providing notice to 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 Funds 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
25 PROSPECTUS
<PAGE> 32
the benefits, provisions, and fees of such Plan Accounts. The minimum initial
investment amount for Fund shares 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 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.
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. Investors should consult their tax advisors with respect
to their specific tax situations 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.
PROSPECTUS 26
<PAGE> 33
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 a Fund's
Transfer Agent to debit an Approved Bank account designated in your Account
Application, by wire by instructing the wiring bank to transmit the specified
amount as directed above for initial purchases, or by mail with a check payable
to "Stagecoach Funds (Name of Fund) (designate Class A or B)" 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 Class A or Class B Shares of a Fund through
a broker/dealer or financial institution which has entered into a Selling
Agreement with Stephens, as the Funds' Distributor ("Selling Agent"). If your
order is placed by the close of the NYSE, the purchase order generally will be
executed on the same day if the order is received by the Transfer Agent before
the close of business. If your purchase order is received by a Selling Agent
after the close of the NYSE or by the Transfer Agent after the close of
business, then your purchase order will be 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 Fund. Because payment for
shares of the Funds will not be due until settlement date, the Selling Agent
might benefit from temporary use of your payment. A financial institution acting
as a Selling Agent, Shareholder Servicing Agent, or in certain other capacities,
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.
27 PROSPECTUS
<PAGE> 34
PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS
Purchase orders for Class A or Class B Shares of the Funds may be transmitted
to the Transfer Agent through any entity that has entered into a Shareholder
Servicing Agreement with the Fund ("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, on
your behalf, to the Transfer Agent before the close of the NYSE, the purchase
order generally will be executed on the same day. If your Shareholder Servicing
Agent transmits your purchase order to the Transfer Agent after the close of the
NYSE, then your order will be executed on the next Business Day following the
day your order is received. The Shareholder Servicing Agent is responsible for
the prompt transmission of your purchase order to the Transfer Agent.
STATEMENTS AND REPORTS
The Funds, or a Shareholder Servicing Agent on their behalf, will typically
send you a confirmation or statement of your account after every transaction
that affects your share balance or your Fund account registration. 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, you will receive financial
statements.
DIVIDENDS
The Asset Allocation Fund intends to declare a quarterly dividend and the U.S.
Government Allocation Fund intends to declare a daily dividend of substantially
all of their respective net investment income to shareholders of record.
Dividends declared by the U.S. Government Allocation Fund in a month generally
are paid on the last Business Day of each month to shareholders of record. With
regard to the U.S. Government Allocation Fund, dividends for a Saturday, Sunday
or Holiday are declared payable to shareholders of record as of the preceding
Business Day. The Funds will distribute any capital gains at least annually. You
have several options for receiving dividends and capital gain distributions.
They are discussed under "Additional Shareholder Services - Dividend and
Distribution Options."
Dividends and capital gain distributions will have the effect of reducing the
NAV per share by the amount distributed. Although a distribution paid to you on
newly issued shares shortly after your purchase would represent, in substance, a
return of your capital, the distribution would consist of net investment income
and, accordingly, would be taxable to you as ordinary income.
PROSPECTUS 28
<PAGE> 35
Net investment income available for distribution to the holders of Class B
Shares is reduced by the amount of the higher Rule 12b-1 Fee payable on such
shares. Other expenses, such as state securities registration fees and transfer
agency fees, that are attributable to a particular class also may affect the
relative dividends and/or capital gains distributions of Class A Shares and
Class B Shares.
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares in a Fund on any Business Day.
Your shares will be 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 may result in a
gain or loss for federal and state income tax purposes. The Funds ordinarily
will remit redemption proceeds, net of any contingent deferred sales charge
applicable with respect to Class B Shares (the "net 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 a Fund of securities owned by it is
not reasonably practicable or (b) it is not reasonably practicable for a Fund
fairly to determine the value of its net assets, or a period during which the
SEC by order permits deferral of redemptions for the protection of security
holders of such Fund. In addition, a Fund may hold payment on your redemptions
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. Although it is not the Funds' current intention, the Funds may make
payment of redemption proceeds in securities if conditions warrant, subject to
regulation by some state securities commissions. In addition, the Funds reserve
the right to impose charges for wiring redemption proceeds.
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 shares of a Fund after an investor has made only the
applicable minimum initial investment). However, 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. Plan Accounts
are not subject to minimum Fund account balance requirements. For a discussion
of applicable minimum balance requirements, see "Investing in the Funds - How To
Buy Shares."
REDEMPTIONS BY TELEPHONE
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline the
privileges. Telephone
29 PROSPECTUS
<PAGE> 36
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 will
require 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 MAIL
1. Write a letter of instruction. Indicate the Class and the dollar amount or
number of Fund shares you want to redeem. Refer to your Fund account number
and give your social security or taxpayer identification number (where
applicable).
2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all must sign.
3. Signature guarantees are not required for redemption requests unless
redemption proceeds of $5,000 or more are to be paid to someone other than
yourself 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 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 net
redemption proceeds will be sent to your address of record.
EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE
You may request an expedited redemption of shares of a Fund by letter, in
which case your receipt of redemption proceeds, but not the Fund's receipt of
your redemption request, would be expedited. In addition, you also may request
an expedited redemption of shares of a Fund 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 $100 or more.
PROSPECTUS 30
<PAGE> 37
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 request expedited redemption by mail by mailing 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, net redemption proceeds of your 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 by the close of the NYSE on a Business Day, your
redemption proceeds will be transmitted to your designated account with an
Approved Bank or Selling Agent on the next 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 the net redemption
proceeds 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
redeem Fund shares from your account and have the net redemption proceeds
distributed to you on a monthly basis. You may participate in the Systematic
Withdrawal Plan only if you have a Fund account valued at $10,000 or more as of
the date of your election to participate, your dividends and capital gain
distributions are being reinvested automatically and you are not participating
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
31 PROSPECTUS
<PAGE> 38
Approved Bank account designated in the Account Application. The Transfer Agent
redeems sufficient shares and mails or deposits your net 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. However, you should not participate in the
Systematic Withdrawal Plan if you also are purchasing shares of the same Fund
that are subject to a sales charge.
You may change your withdrawal amount, suspend withdrawals or terminate your
election 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
If your redemption order is received by a Selling Agent before the close of
the NYSE and received by the Transfer Agent before the close of business on the
same day, the order will be executed at the NAV determined as of the close of
the NYSE on that day. If your redemption order is received by a Selling Agent
after the close of the NYSE, or not received by the Transfer Agent prior to the
close of business, your order will be executed at the NAV determined as of the
close of the NYSE 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 the Selling Agent, and the
Transfer Agent has been informed of such arrangements, net redemption proceeds
of a redemption order made by you through a Selling Agent will be credited to an
account with an Approved Bank that you have designated in your Account
Application. If no such account is designated, a check for the net redemption
proceeds will be mailed to your address of record or, if such address is no
longer valid, the net redemption proceeds will be credited to your account with
the Selling Agent. You may request a check from the Selling Agent or may elect
to retain the net 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. If your redemption order is transmitted by the Shareholder Servicing
Agent, on your behalf, to the Transfer Agent before the close of the NYSE, the
redemption order will be executed at the NAV determined as of the close of the
NYSE on that day. If your Shareholder Servicing Agent transmits your redemption
order to the Transfer Agent after the close of the NYSE, then
PROSPECTUS 32
<PAGE> 39
your order will be executed on the next Business Day following the date your
order is received. 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, net redemption
proceeds of a redemption order made by you through your Shareholder Servicing
Agent will be 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 net redemption proceeds will be mailed to your address of record or, if
such address is no longer valid, the net redemption proceeds will be 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, Tax-Deferred Retirement Plans, the
Systematic Withdrawal Plan, and Expedited Redemptions by Letter and Telephone.
In addition, the Funds offer you several dividend and distribution payment
options and an exchange privilege, which are described below. If you have any
questions about the dividend and distribution payment options available to you,
please call 800-222-8222.
DIVIDEND AND DISTRIBUTION OPTIONS
When you fill out your Account Application, you can choose from the following
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 which paid such dividends or capital gain distributions. Dividends
and distributions declared in a month generally are reinvested at NAV on the
last Business Day of such month. You are assigned this option automatically if
you make no choice on your Account Application.
B. The Fund Purchase Option lets you use your dividends and/or capital gain
distributions from the Funds to purchase, at NAV, shares of another fund in the
Stagecoach Family of Funds with which you have an established account that has
met the applicable minimum initial investment requirement. Dividends and
distributions paid on Class A or Class B Shares may be invested in Class A or
Class B Shares, respectively, of another fund, in Retail Shares of another fund,
in Class A Shares of the Money Market Mutual Fund or in shares of the California
Tax-Free Money Market Mutual Fund (the Money Market Mutual Fund and California
Tax-Free Money Market Mutual Fund are, collectively, the Money Market Mutual
Funds.). Dividends and distributions paid on
33 PROSPECTUS
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Class A Shares may also be invested in shares of a non-money market fund of the
Stagecoach Family of Funds with a single class of shares (a "single class
fund"). Dividends and distributions paid on Class B Shares may not be invested
in shares of a single class fund.
C. 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 will be held in a non-interest-bearing omnibus bank account
established by the Funds' dividend disbursing agent on your behalf.
D. The Check Payment Option lets you receive a check for all dividends and/or
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 will be held in a
non-interest-bearing omnibus bank account established by the Funds' dividend
disbursing agent on your behalf.
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 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 goal or in market conditions. Class A and Class B Shares
of the Funds may be exchanged for Class A and Class B Shares, respectively, of
another fund, for Class A Shares of the Money Market Mutual Fund, or for shares
of the California Tax-Free Money Market Mutual Fund. Class A Shares may also be
exchanged for shares of a single-class fund or for Retail Shares of another
fund. Before making an exchange from a Fund into another fund advised by Wells
Fargo Bank, please observe the following:
- Obtain and carefully read the prospectus of the fund into which you want to
exchange.
- If you exchange into another 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.
- If you exchange Class B Shares for Class B Shares of another fund, for
shares of the California Tax-Free Money Market Mutual Fund or for Class A
Shares of the Money Market Mutual Fund, a contingent deferred sales charge
will not be imposed upon the exchange.
- 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 will be sent to
you.
PROSPECTUS 34
<PAGE> 41
- 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, 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.
- If you exchange Class B Shares for Class B Shares of another fund, for
shares of the California Tax-Free Money Market Mutual Fund or for Class A
Shares of the Money Market Mutual Fund, the remaining period of time (if
any) that the contingent deferred sales charge applicable to such shares is
in effect will be computed from the time of initial purchase of the
previously held shares. For example, if you exchange Class B Shares of a
Fund for shares of the California Tax-Free Money Market Mutual Fund and
redeem those shares of the California Tax-Free Money Market Mutual Fund
within four years of the purchase of the exchanged Class B Shares, you will
be required to pay a contingent deferred sales charge equal to the charge
which would have applied had you redeemed the original Class B Shares at
that time.
- If you exchange Class B Shares for shares of one of the Money Market Mutual
Funds as described above, you subsequently may re-exchange the acquired
shares only for Class B Shares of one of the Company's funds or for shares
of the other Money Market Mutual Fund.
The procedures applicable to Fund share redemptions also apply to Fund share
exchanges.
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."
CONVERSION
Class B Shares of a Fund that have been outstanding for six years after the
end of the month in which the shares were initially purchased automatically
convert to Class A Shares of such Fund and, consequently, will no longer be
subject to the higher Rule 12b-1 Fees applicable to Class B Shares. Such
conversion will be on the basis of the relative net asset values of the two
Classes, without the imposition of any sales charge or other charge except that
the lower Rule 12b-1 Fees applicable to Class A Shares shall thereafter be
applied to such converted shares. Because the per share net asset value of the
Class A
35 PROSPECTUS
<PAGE> 42
Shares may be higher than that of the Class B Shares at the time of conversion,
a shareholder may receive fewer Class A Shares than the number of Class B Shares
converted, although the dollar value will be the same. Reinvestments of
dividends and distributions in Class B Shares will be considered new purchases
for purposes of the conversion feature.
If a shareholder effects one or more exchanges among Class B Shares, Class A
Shares of the Money Market Mutual Fund or shares of the California Tax-Free
Money Market Mutual Fund during the six-year period, the holding period for
shares so exchanged will be counted toward the six-year period and any Class B
Shares held at the end of six years will be converted into Class A Shares.
MANAGEMENT AND SERVICING FEES
INVESTMENT ADVISER
Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank, as the Funds' 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 strategy and performance.
For these services, Wells Fargo Bank is entitled to a monthly advisory fee at
the annual rate of 0.50% of the first $250 million of each Fund's average daily
net assets, 0.40% of the next $250 million, and 0.30% of the average daily net
assets in excess of $500 million. Out of its fees from the Asset Allocation Fund
and the U.S. Government Allocation Fund, Wells Fargo Bank pays WFNIA for its
sub-advisory services annual fees equal to 0.20% of the average daily net assets
of the Asset Allocation Fund and $40,000 plus 0.15% of the average daily net
assets of the U.S. Government Allocation Fund. From time to time, Wells Fargo
Bank may waive such fees in whole or in part. Any such waiver will reduce a
Fund's expenses and, accordingly, have a favorable impact on a Fund's total
return and yield. For the year ended December 31, 1994, the Company paid 0.38%
of the average daily net assets of the Asset Allocation Fund and 0.50% of the
average daily net assets of the U.S. Government Allocation Fund to Wells Fargo
Bank for its services as investment adviser to such Funds.
Pursuant to the Sub-Advisory Agreement, Wells Fargo Bank has delegated certain
advisory responsibilities to WFNIA. Nevertheless, Wells Fargo Bank has retained
authority over the management of each Fund, and the investment and disposition
of each Fund's assets, and Wells Fargo Bank may reject any investment
recommendations or decisions for a Fund if Wells Fargo Bank determines that such
recommendations or decisions are not consistent with the best interests of the
Fund. For the year ended December 31, 1994, Wells Fargo Bank paid 0.20% of the
average daily net assets of the
PROSPECTUS 36
<PAGE> 43
Asset Allocation Fund and 0.17% of the average daily net assets of the U.S.
Government Allocation Fund to WFNIA for its services as sub-adviser to such
Funds.
From time to time, each of the Funds, consistent with its investment
objectives, policies and restrictions, may invest in securities of companies
with which Wells Fargo Bank has a lending relationship.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
WFITC serves as the Funds' custodian. WFITC, located at 45 Fremont Street, San
Francisco, California 94105, is a special purpose trust company that is owned
99.9% by WFNIA and 0.1% by Wells Fargo & Company. Wells Fargo Bank serves as the
Funds' transfer and dividend disbursing agent. Wells Fargo Bank performs the
transfer and dividend disbursing agency activities at 525 Market Street, San
Francisco, California 94105.
SHAREHOLDER SERVICING AGENT
The Funds have entered into Shareholder Servicing Agreements with Wells Fargo
Bank on behalf of each Class of Shares of the Funds, and may enter into similar
agreements with other entities. Under such agreements, Shareholder Servicing
Agents (including Wells Fargo Bank) will, as agent for their customers, among
other things: answer customer inquiries regarding account status and history,
and the manner in which purchases, redemptions and exchanges of 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 Funds
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 receives 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 the fees charged to each Class, 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 attributable to
the Class A or Class B Shares, as the case may be, owned during the period
37 PROSPECTUS
<PAGE> 44
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 NAV
attributable to the Class A or Class B Shares of each Fund.
The Funds understand that a Shareholder Servicing Agent also may impose
certain conditions on its customers, subject to the terms of this Prospectus, in
addition to or different from those imposed by the Funds, such as requiring a
higher minimum initial investment or payment of a separate fee for additional
services. Each Shareholder Servicing Agent will be required to agree 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 Company's Board of Directors,
Stephens provides the Funds with administrative services, including general
supervision of each Fund's operation, coordination of the other services
provided to each Fund, compilation of information for reports to the SEC and the
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Directors and officers. Stephens
also furnishes office space and certain facilities to conduct each Fund's
business, and compensates the Company's Directors, officers and employees who
are affiliated with Stephens. For these services, Stephens is entitled to
receive from each Fund a monthly fee at the annual rate of 0.03% of each Fund's
average daily net assets. From time to time, Stephens may waive its fees from a
Fund in whole or in part. Any such waiver will reduce a Fund's expenses and,
accordingly, have a favorable impact on such Fund's yield and total return.
Stephens, as the principal underwriter of the Funds within the meaning of the
1940 Act, has entered into a Distribution Agreement with the Company pursuant to
which Stephens is responsible for distributing Class A and Class B Shares of the
Funds. The Company also has adopted a Distribution Plan on behalf of each Class
of shares of the Funds under the SEC's Rule 12b-1 ("Plans"). Under the Class A
Plans for each Fund, each Fund may defray all or part of the cost of preparing
and printing prospectuses and other promotional materials and of delivering
prospectuses and those materials to prospective 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 of the Funds. The Class A Plans provide only for the
reimbursement of actual expenses. Under the Class B Plans, each Fund may defray
all or part of such costs and pay compensation to the Distributor and Selling
Agents for sales support services. The Class B Plans provide for payments, on an
PROSPECTUS 38
<PAGE> 45
annual basis, of up to 0.70% of the average daily net assets attributable to the
Class B Shares of each Fund. The Distribution Agreement provides that Stephens
shall act as agent for the Funds for the sale of their shares, and may enter
into Selling Agreements with 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 other funds of the Company, in which
event expenses reimbursed out of the assets of the Fund may be attributable, in
part, to the distribution-related activities of another fund of the Company.
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
goods or merchandise.
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 subject to any limits under applicable law, regulations or
rules, including the NASD Rules. Financial institutions acting as Selling
Agents, Shareholder Servicing 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 and total return. 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, fees and expenses of
its 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 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.
39 PROSPECTUS
<PAGE> 46
TAXES
By complying with the applicable provisions of the Code, the Funds will not be
subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to their shareholders. Dividends from the
investment income (including net short-term capital gains, if any) declared and
paid by each Fund will be taxable as ordinary income to a Fund's shareholders.
Whether you take such dividend payments in cash or have them automatically
reinvested in additional shares, they will be taxable. Generally, dividends are
taxable to shareholders at the time they are paid. However, dividends declared
payable in October, November and December and made payable to shareholders of
record in such a month are treated as paid and are thereby taxable as of
December 31, provided that such dividends are actually paid no later than
January 31 of the following year. You may be eligible to defer the taxation of
dividend and capital gain distributions on shares of a Fund which are held under
a qualified tax-sheltered retirement plan. See "Investing in the
Funds - Tax-Deferred Retirement Plans" above. The Funds intend to pay out all
their net investment income and net realized capital gains (if any) for each
year. Corporate shareholders of the Asset Allocation Fund may be eligible for
the dividends-received deduction on the dividends (excluding the net capital
gain dividends) paid by such Fund to the extent such Fund's income is derived
from certain dividends received from domestic corporations. The U.S. Government
Allocation Fund's dividends will not qualify for the dividends-received
deduction allowed to corporate shareholders. In order to qualify for the
dividends received deduction a corporate shareholder must hold the Fund shares
paying the dividends upon which such deduction is based for at least 46 days.
The Funds, or your Shareholder Servicing Agent on their behalf, will inform
you of the amount and nature of such dividends and capital gains. You should
keep all statements you receive to assist in your personal record keeping. The
Company is required to withhold, subject to certain exemptions, at a rate of 31%
on dividends paid and redemption proceeds (including proceeds from exchanges)
paid or credited to individual shareholders of the Funds if a correct Taxpayer
Identification Number, certified when required, is not on file with the Company
or the Transfer Agent. In connection with this withholding requirement, you will
be asked to certify on your Account Application that the social security or
taxpayer identification number you provide is correct and that you are not
subject to 31% backup withholding for previous underreporting to the IRS.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes - Foreign Shareholders" in the SAIs.
Further federal tax considerations are discussed in the SAIs. All investors
should consult their individual tax advisers with respect to their particular
tax situations as well as the state and local tax status of investments in
shares of the Funds.
PROSPECTUS 40
<PAGE> 47
PROSPECTUS APPENDIX -
ADDITIONAL INVESTMENT POLICIES
FUND INVESTMENTS
ASSET ALLOCATION MODEL
WFNIA compares the Asset Allocation Fund's investments daily to the Asset
Allocation Model's recommended allocation. The investment model recommends
allocations among each asset class in 10% increments only. Any recommended
reallocation will be implemented in accordance with trading policies that have
been designed to take advantage of market opportunities and to reduce
transaction costs. Under current trading policies employed by WFNIA, recommended
reallocations may be implemented promptly upon receipt of recommendations or may
not be acted upon for as long as two or three months thereafter depending on
factors such as the percentage change from previous recommendations and the
consistency of recommended reallocations over a period of time. In addition, the
Asset Allocation Fund generally will invest the net proceeds from the sale of
shares of the Fund and will liquidate existing Fund investments to meet net
redemption requirements in a manner that best allows the Fund's existing asset
allocation to follow that recommended by the Model. Notwithstanding any
recommendation of the model to the contrary, the Asset Allocation Fund will
generally maintain at least that portion of its assets in money market
instruments reasonably considered necessary to meet redemption requirements. In
general, cash maintained for short-term liquidity needs is only invested in U.S.
Treasury bills, shares of other mutual funds and repurchase agreements. There is
no requirement that the Fund maintain positions in any particular asset class or
classes.
Wells Fargo Bank and WFNIA manage other portfolios which also invest in
accordance with the Asset Allocation Model. The performance of each of those
other portfolios is likely to vary among themselves and from the performance of
the Fund. Such variation in performance is primarily due to different
equilibrium asset mix assumptions used for the various portfolios, timing
differences in the implementation of the model's recommendations and differences
in expenses and liquidity requirements.
There are 500 common stocks, including Wells Fargo & Company stock, which make
up the S&P 500 Index. S&P occasionally makes changes in the S&P 500 Index based
on its criteria for inclusion of stocks in the S&P 500 Index. The S&P 500 Index
is market-capitalization-weighted so that each stock in the S&P 500 Index
represents its proportion of the total market value of all stocks in the S&P 500
Index. In making its stock investments, the policy of the Asset Allocation Fund
is to invest its assets in substantially the same stocks, and in substantially
the same percentages, as the S&P 500 Index, including Wells Fargo & Company
stock.
A-1 PROSPECTUS
<PAGE> 48
U.S. GOVERNMENT ALLOCATION MODEL
WFNIA compares the U.S. Government Allocation Fund's investments daily to the
U.S. Government Allocation Model's recommended allocation. Any recommended
reallocation will be implemented in accordance with trading policies that have
been designed to take advantage of market opportunities and to reduce
transaction costs. Under current trading policies employed by WFNIA, recommended
reallocations may be implemented promptly upon receipt of recommendations or may
not be acted upon for as long as two to three months thereafter depending on
factors such as the percentage change from previous recommendations and the
consistency of recommended reallocations over a period of time. In addition, the
U.S. Government Allocation Fund generally will invest the net proceeds from the
sale of shares of the Fund and will liquidate existing Fund investments to meet
net redemption requirements in a manner that best allows the Fund's existing
asset allocation to follow the allocation recommended by the computer Model.
Notwithstanding any recommendation of the computer model to the contrary, the
Fund will generally maintain at least that portion of its assets in money market
instruments reasonably considered necessary to meet redemption requirements. In
general, cash maintained for short-term liquidity needs is only invested in U.S.
Treasury bills, shares other mutual funds and repurchase agreements. There is no
requirement that the Fund maintain positions in any particular asset class or
classes.
WFNIA manages other funds which invest in accordance with a substantially
similar version of the Model. The performance of each of those other funds is
likely to vary among themselves and from the performance of the Fund. Such
variation in performance is primarily due to timing differences in the
implementation of the Model's recommendations, differences in expenses and
liquidity requirements, and the ability of other funds to invest a higher
portion of their assets in short-term investments that may generate a higher
yield, but are not issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Although WFNIA intends to use the Models as bases for its investment decisions
with respect to the Asset Allocation Fund and U.S. Government Allocation Fund,
WFNIA may change from time to time the criteria and methods it uses to implement
the model's recommendations if it believes such a change is desirable for a
Fund. Nevertheless, Wells Fargo Bank has continuing and exclusive authority over
the management of the Funds, the conduct of their affairs and the disposition of
the Funds' assets, and Wells Fargo Bank has the right to reject WFNIA's
investment decisions for a Fund if Wells Fargo Bank determines that any such
decision is not consistent with the best interests of a Fund.
Money Market Instruments and Temporary Investments
In accordance with its investment policies, the Funds will invest varying
percentages of their assets in money market instruments. In addition, the Funds
may have temporary
PROSPECTUS A-2
<PAGE> 49
cash balances on account of new purchases, dividends, interest and reserves for
redemptions, and which the Funds may invest in the following high-quality money
market instruments: (i) obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, including government-sponsored enterprises
("U.S. Government obligations"); (ii) negotiable certificates of deposit,
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 Investors Service, Inc. ("Moody's") or "A-1+" or "A-1" by S&P, or, if
unrated, of comparable quality as determined by Wells Fargo Bank, as investment
adviser; (iv) nonconvertible corporate debt securities (e.g., bonds and
debentures) with remaining maturities at the date of purchase of no more than
one year that are rated at least "Aa" by Moody's or "AA" by S&P; (v) repurchase
agreements; and (vi) short-term, U.S. dollar-denominated obligations of foreign
banks (including U.S. branches) that at the time of investment: (a) have more
than $10 billion, or the equivalent in other currencies, in total assets; (b)
are among the 75 largest foreign banks in the world as determined on the basis
of assets; (c) have branches or agencies in the United States; and (d) in the
opinion of Wells Fargo Bank, as investment adviser, are of comparable quality to
obligations of U.S. banks which may be purchased by a Fund.
U.S. Government Obligations
U.S. Government obligations include securities issued or guaranteed as to
principal and interest by the U.S. Government and supported by the full faith
and credit of the U.S. Treasury. U.S. Treasury obligations differ mainly in the
length of their maturity. Treasury bills, the most frequently issued marketable
government securities, have a maturity of up to one year and are issued on a
discount basis. U.S. Government obligations also include securities issued or
guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees; others, by the right of
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government will provide
financial support to its agencies or instrumentalities where it is not obligated
to do so. In addition, U.S. Government obligations are subject to fluctuations
in market value due to fluctuations in market interest rates. As a general
matter, the value of debt instruments, including U.S. Government obligations,
declines when market interest rates increase and rises when market interest
rates decrease. Certain types of U.S. Government
A-3 PROSPECTUS
<PAGE> 50
obligations are subject to fluctuations in yield or value due to their structure
or contract terms.
Short-Term Corporate Debt Instruments
The Funds may invest in commercial paper (including variable amount master
demand notes), which refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes.
The Funds also may invest in nonconvertible corporate debt securities (e.g.,
bonds and debentures) with no more than one year remaining to maturity at the
date of settlement. The Funds will invest only in such corporate bonds and
debentures that are rated at the time of purchase at least "Aa" by Moody's or
"AA" by S&P.
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 specified intervals. Certain of these instruments may carry
a demand feature that would permit the holder to tender them back to the issuer
at par value prior to maturity. The floating- and variable-rate instruments that
the Funds may purchase include certificates of participation in such
obligations. Wells Fargo Bank or WFNIA, as appropriate will monitor on an
ongoing basis the ability of an issuer of a demand instrument to pay principal
and interest on demand. Events affecting the ability of the issuer of a demand
instrument to make payment when due may occur between the date a Fund elects to
demand payment and the date payment is due. Such events may affect the ability
of the issuer of the instrument to make payment when due, thereby affecting a
Fund's ability to obtain payment at par. Demand instruments whose demand feature
is not exercisable within seven days may be treated as liquid, provided that an
active secondary market exists.
Repurchase Agreements
The Funds may enter into repurchase agreements wherein the seller of a
security to a Fund agrees to repurchase that security from such Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Funds may enter into repurchase agreements only with respect to U.S.
Government obligations and those securities which are permissible investments
for the Fund. All repurchase agreements will be fully
PROSPECTUS A-4
<PAGE> 51
collateralized based on values that are marked to market daily. The maturities
of the underlying securities in a repurchase agreement transaction entered into
by the Funds may be greater than one year. If the seller defaults and the value
of the underlying securities has declined, a Fund may incur a loss. In addition,
if bankruptcy proceedings are commenced with respect to the seller of the
security, a Fund's disposition of the security may be delayed or limited. The
Funds will enter into repurchase agreements only with registered broker/dealers
and commercial banks that meet guidelines established by the Company's Board of
Directors and are not affiliated with the Funds' investment adviser. The Funds
may participate in pooled repurchase agreement transactions with other funds
advised by Wells Fargo Bank.
Loans of Portfolio Securities
The Funds may lend securities from their portfolios to brokers, dealers and
financial institutions (but not individuals) if cash, U.S. Government
obligations or other high-quality debt instruments equal to at least 100% of the
current market value of the securities loan (including accrued interest thereon)
plus the interest payable to a Fund with respect to the loan is maintained with
the Fund. In determining whether to lend a security to a particular broker,
dealer or financial institution, a Fund's investment adviser will consider all
relevant facts and circumstances, including the creditworthiness of the broker,
dealer or financial institution. Any loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. The Funds will
not enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities that a Fund may receive as collateral will
not become part of the Fund's portfolio at the time of the loan and, in the
event of a default by the borrower, the Fund, if permitted by law, will dispose
of such collateral except for such part thereof that is a security in which the
Fund is permitted to invest. During the time securities are on loan, the
borrower will pay a Fund any accrued income on those securities, and the Fund
may invest the cash collateral and earn additional income or receive an
agreed-upon fee from a borrower that has delivered cash-equivalent collateral.
Neither Fund will lend securities having a value that exceeds one-third of the
current value of its total assets. Loans of securities by a Fund will be subject
to termination at the Fund's or the borrower's option. The Funds may pay
reasonable administrative and custodial fees in connection with a securities
loan and may pay a negotiated portion of the interest or fee earned with respect
to the collateral to the borrower or the placing broker. Borrowers and placing
brokers may not be affiliated, directly or indirectly, with the Company, the
investment adviser, or the Distributor.
Foreign Obligations
Each Fund may invest up to 25% of its respective assets in high-quality,
short-term debt obligations of foreign branches of U.S. banks or U.S. branches
of foreign banks that are denominated in and pay interest in U.S. dollars.
Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic
A-5 PROSPECTUS
<PAGE> 52
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 reporting standards or
governmental supervision as domestic issuers. In addition, with respect to
certain foreign countries, interest may be withheld at the source under foreign
income tax laws, and there is a possibility of expropriation or confiscatory
taxation, political or social instability or diplomatic developments that could
adversely affect investments in, the liquidity of, and the ability to enforce
contractual obligations with respect to, securities of issuers located in those
countries.
INVESTMENT POLICIES
Each Fund's investment objective, as set forth in the first paragraph of the
"How The Funds Work - Investment Objectives and Policies" section, is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of a Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI for each Fund. In addition, any fundamental
investment policy may not be changed without such shareholder approval. If the
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 change without shareholder
approval and will disclose any such material changes in the then-current
prospectus.
As matters of fundamental policy, each Fund may: (i) not purchase securities
of any issuer (except U.S. Government obligations) if as a result more than 5%
of the value of the Fund's total assets would be invested in the securities of
such issuer or the Fund would own more than 10% of the outstanding voting
securities of such issuer; (ii) borrow from banks up to 20% of the current value
of its net assets for temporary purposes only in order to meet redemptions, and
these borrowings may be secured by the pledge of up to 20% of the current value
of its net assets (but investments may not be purchased while any such
outstanding borrowings exceed 5% of its net assets); (iii) make loans of
portfolio securities in accordance with its investment policies; and (iv) not
invest 25% or more of its assets (i.e., concentrate) in any particular industry,
except that each Fund may invest 25% or more of its assets in U.S. Government
obligations, the Asset Allocation Fund is permitted to concentrate its assets in
any industry for the same period as does the S&P 500 Index, and the Asset
Allocation Fund's money market investments may be invested in the banking
industry and in U.S. Government obligations, and such investments may, from time
to time, represent 25% or more of the Asset Allocation Fund's total assets.
However, the Asset Allocation Fund's money market investments in the banking
industry will not represent 25% or more of its total assets unless the SEC staff
has confirmed that it does not object to the Fund reserving freedom of action to
concentrate investments in the banking industry. With respect to paragraph (ii)
above, each Fund presently does not intend to put at risk more than 5% of its
assets during the coming year. With respect to paragraph (iii) above, the
PROSPECTUS A-6
<PAGE> 53
Asset Allocation Fund presently does not intend to put at risk more than 5% of
its assets during the coming year. With respect to paragraph (i), it may be
possible that the Company would own more than 10% of the outstanding voting
securities of an issuer.
As a matter of nonfundamental policy, each 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, and other illiquid securities (including
restricted securities).
A-7 PROSPECTUS
<PAGE> 54
- --------------------------------------------------------------------------------
Advised by WELLS FARGO BANK, N.A. - Sponsored/Distributed by
Stephens Inc., Member NYSE/SIPC
NOT FDIC INSURED
<PAGE> 55
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 56
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, California 94120-7066
SUB-INVESTMENT ADVISER
Wells Fargo Nikko Investment Advisors
45 Fremont Street
San Francisco, California 94105
CUSTODIAN
Wells Fargo Institutional Trust
Company, N.A.
45 Fremont Street
San Francisco, California 94105
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
For more information about the Fund
simply call 1-800-222-8222 or write:
Stagecoach 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 LOGO
- involve investment risk, including possible loss
of principal
</TABLE>
LOGO SC 1021 (8/95)
Printed on Recycled Paper
<PAGE> 57
<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 LOGO
- involve investment risk, including possible loss
of principal
</TABLE>
LOGO SC 1021 (8/95)
Printed on Recycled Paper
