<PAGE> 1
As filed with the Securities and Exchange Commission
on February 28, 1996
Registration No. 33-42927; 811-6419
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
[X]
Post-Effective Amendment No. 20
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 21 [X]
(Check appropriate box or boxes)
----------------------------
STAGECOACH FUNDS, INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
----------------------------
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant [ ] on _________ pursuant
to Rule 485(b), or to Rule 485(b), or
[ ] 60 Days after filing pursuant [ ] on _________ pursuant
to Rule 485(a), or to Rule 485(a)
[ ] 75 days after filing pursuant [ ] on March 4, 1996 pursuant
to paragraph (a)(2) paragraph (a)(2) of Rule 485
<PAGE> 2
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Rule 24f-2
Notice for the fiscal year ending December 31, 1995, will be filed with the
Securities and Exchange Commission on or about February 28, 1996.
This Post-Effective Amendment to the Registrant's Registration Statement also
has been executed by Master Investment Trust (a registered investment company
with separate series in which this series of the Registrant will invest
substantially all of its assets) and its trustees and principal officers.
<PAGE> 3
EXPLANATORY NOTE
This Post-Effective Amendment No. 20 to the Registration Statement
(the "Amendment") of Stagecoach Funds, Inc. (the "Company") is being filed to
add to the Company's Registration Statement the audited financial statements
dated December 31, 1995 and certain related financial information pertaining to
the Strategic Growth Fund of Overland Express Funds, Inc. (SEC File Nos.
33-16296; 811-8275), the "Predecessor Fund" to the Aggressive Growth Fund of
the Company (the "Fund"). The Fund invests substantially all of its assets in
the Capital Appreciation Master Portfolio of Master Investment Trust, a
management investment company organized as a Delaware business trust (SEC File
No. 811-6415). This Amendment does not affect the Registration Statement for
the Company's Asset Allocation Fund, California Tax-Free Bond Fund, California
Tax-Free Income Fund, California Tax-Free Money Market Mutual Fund, Corporate
Stock Fund, Diversified Income Fund, Ginnie Mae Fund, Growth and Income Fund,
Money Market Mutual Fund, National Tax-Free Money Market Mutual Fund,
Short-Intermediate U.S. Government Income Fund and U.S. Government Allocation
Fund.
<PAGE> 4
Cross Reference Sheet
AGGRESSIVE GROWTH FUND
Form N-1A Item Number
<TABLE>
<CAPTION>
Part A Prospectus Captions
- ------ -------------------
<S> <C>
1 Cover Page
2 Prospectus Summary; Summary of Fund Expenses
3 Financial Highlights
4 The Fund, the Master Portfolio and Management; Prospectus Appendix
5 How the Fund Works; The Fund, the Master Portfolio and Management;
Management, Distribution and Servicing Fees
6 The Fund, the Master Portfolio and Management; Investing in the Fund
7 Investing in the Fund; Dividends; Taxes; Additional Shareholder Services
8 How to Redeem Shares
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Introduction
13 Investment Restrictions; Portfolio Transactions
14 Management
15 Management
16 Management; Distribution Plan; Custodian and Transfer and Dividend
Disbursing Agent; Independent Auditors
17 Portfolio Transactions
18 Capital Stock; Other
19 Determination of Net Asset Value
20 Federal Income Tax
21 Distribution Plan
22 Calculation of Yield and Total Return
23 Financial Information; Financial Statements
Part C Other Information
- ------ -----------------
24-32 Information required to be included in Part C is set forth under the appropriate Item,
so numbered, in Part C of this Document.
</TABLE>
<PAGE> 5
LOGO
------------------------------
PROSPECTUS
------------------------------
AGGRESSIVE GROWTH FUND
February 27, 1996
<PAGE> 6
STAGECOACH FUNDS(R)
AGGRESSIVE GROWTH FUND
Stagecoach Funds, Inc. (the "Company") is a professionally managed, open-end
series investment company. This Prospectus contains information about one fund
in the Stagecoach Family of Funds - the AGGRESSIVE GROWTH FUND (the "Fund"). Two
classes of shares of the Fund (each, a "Class") are described in this
Prospectus - Class A Shares and Class B Shares.
THE INVESTMENT OBJECTIVE OF THE FUND IS TO PROVIDE INVESTORS WITH AN ABOVE-
AVERAGE LEVEL OF CAPITAL APPRECIATION. IT SEEKS TO ACHIEVE THIS OBJECTIVE BY
INVESTING ALL OF ITS ASSETS IN THE CAPITAL APPRECIATION MASTER PORTFOLIO (AT
TIMES, THE "MASTER PORTFOLIO") OF MASTER INVESTMENT TRUST (THE "TRUST"), AN
OPEN-END MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN A PORTFOLIO OF
SECURITIES. THE MASTER PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE AS THE FUND.
THE FUND'S INVESTMENT EXPERIENCE, THEREFORE, CORRESPONDS DIRECTLY WITH THE
MASTER PORTFOLIO'S INVESTMENT EXPERIENCE. SHARES OF THE MASTER PORTFOLIO MAY BE
PURCHASED ONLY BY OTHER INVESTMENT COMPANIES OR SIMILAR ACCREDITED INVESTORS.
The Master Portfolio seeks to achieve its investment objective through the
active management of a broadly diversified portfolio of equity securities
expected to experience strong growth in revenues, earnings and assets.
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 the Fund's goal matches your own. A Statement of Additional
Information (the "SAI"), dated February 27, 1996, for the Fund has been filed
with the Securities and Exchange Commission ("SEC") and is incorporated by
reference. The SAI is available free of charge by 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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED FEBRUARY 27, 1996
PROSPECTUS
<PAGE> 7
The Capital Appreciation Master Portfolio is advised by Wells Fargo Bank,
which also serves as the Fund's and Master Portfolio's transfer and dividend
disbursing agent and custodian. In addition, Wells Fargo Bank is a Shareholder
Servicing Agent and a Selling Agent (as defined below). Stephens Inc.
("Stephens") is the Fund's sponsor and administrator and serves as the
distributor of the Fund's shares.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER SERVICES
TO THE FUND AND THE MASTER PORTFOLIO, FOR WHICH IT IS COMPENSATED. STEPHENS,
WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE SPONSOR AND DISTRIBUTOR
FOR THE FUND.
<PAGE> 8
TABLE OF CONTENTS
PROSPECTUS SUMMARY 1
SUMMARY OF FUND EXPENSES 5
FINANCIAL HIGHLIGHTS 7
HOW THE FUND WORKS 10
THE FUND, THE MASTER PORTFOLIO AND MANAGEMENT 16
INVESTING IN THE FUND 20
DIVIDENDS 31
HOW TO REDEEM SHARES 32
ADDITIONAL SHAREHOLDER SERVICES 36
MANAGEMENT, DISTRIBUTION AND SERVICING FEES 39
TAXES 43
PROSPECTUS APPENDIX - ADDITIONAL INVESTMENT POLICIES A-1
<PAGE> 9
PROSPECTUS SUMMARY
The Fund provides 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 Fund. For more information,
please refer specifically to the identified Prospectus sections and generally to
the Prospectus and SAI for the Fund.
Q. WHAT ARE THE FUND'S AND MASTER PORTFOLIO'S INVESTMENT OBJECTIVES AND
PERMISSIBLE INVESTMENTS?
A. The investment objective of the AGGRESSIVE GROWTH FUND is to provide
investors with an above-average level of capital appreciation. The Fund
seeks to achieve this objective by investing all of its assets in the
Trust's Capital Appreciation Master Portfolio, which is a professionally
managed, open-end series investment company. The Capital Appreciation Master
Portfolio has the same investment objective as the Fund. The Master
Portfolio seeks to achieve its investment objective through the active
management of a broadly diversified portfolio of equity securities of
companies expected to experience strong growth in revenues, earnings and
assets. The Fund and Master Portfolio are designed to provide above-average
capital growth for investors willing to assume above-average risk.
The Master Portfolio invests primarily in common stocks that are expected by
Wells Fargo Bank to have above-average prospects for appreciation. In
pursuing its investment objective, the Master Portfolio may invest in the
common stocks of companies with small- or medium-sized capitalizations and
in securities acquired through initial public offerings. The Master
Portfolio also may temporarily invest in preferred stock or investment-grade
debt securities. In addition, the Master Portfolio may purchase or sell
options on securities and on indices of securities, may purchase warrants,
and may purchase privately issued securities that may be resold only in
accordance with Rule 144A under the Securities Act of 1933. (See "How the
Fund Works -- Investment Objective and Policies" and "Additional Permitted
Investment Activities" below.)
As with all mutual funds, there can be no assurance that the Fund or Master
Portfolio will achieve its investment objective. (See "How the Fund Works"
and "Prospectus Appendix - Additional Investment Policies" for further
information on investments.)
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, as the Master Portfolio's investment adviser, manages the
investments of the Master Portfolio. Wells Fargo Bank is entitled to receive
a monthly advisory fee at the annual rate of 0.50% of the average daily net
assets of the Master Portfolio. The Company has not retained the services of
a separate investment adviser for the Fund because the Fund invests all of
its assets in the Master Portfolio. Wells Fargo Bank also provides transfer
agency, dividend disbursing agency and custodial services to the Fund and
Master Portfolio. In addition, Wells Fargo Bank is a Shareholder Servicing
Agent and a Selling Agent for the Fund under a Selling Agreement with
Stephens, the Funds' distributor. (See "The Fund, the Master
1 PROSPECTUS
<PAGE> 10
Portfolio and Management" and "Management and Servicing Fees" for further
information.)
Q. HOW DO I INVEST?
A. You may invest by purchasing shares of the Fund at its public offering price,
which is the net asset value plus any applicable sales charge. Class A
Shares are 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 Fund." For more
details, contact Stephens (the Fund's 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 are declared and paid annually and are
automatically reinvested in shares of the same Class of the Fund at net
asset value without payment of a sales charge, unless you have elected to
receive dividends in cash. You may also elect to reinvest the dividends
earned by the Fund 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" for additional
information.)
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 for business. The Company does not charge a fee for redemption of
Class A Shares. However, contingent deferred sales charges may be imposed
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
PROSPECTUS 2
<PAGE> 11
more details, contact Stephens, a Shareholder Servicing Agent or a Selling
Agent (such as Wells Fargo Bank).
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF INVESTMENT?
A. An investment in the Fund or Master Portfolio is not insured against loss of
principal. When the value of the securities that the Master Portfolio 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 the
Fund. The portfolio equity securities 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. In addition, investments in the
Fund and Master Portfolio are not bank deposits or obligations of Wells
Fargo Bank and are not insured by the Federal Deposit Insurance Corporation
("FDIC"). Given the relatively novel nature of the master/feeder structure,
accounting and operational difficulties, although unlikely, could arise. The
Fund and Master Portfolio were newly formed in 1996 and, therefore, have
limited operational history as a master/feeder structure. As with all mutual
funds, there can be no assurance that the Fund or Master Portfolio will
achieve its investment objective.
Because the Master Portfolio engages in active portfolio management, the
Master Portfolio may experience relatively high turnover and transaction
(i.e., brokerage commission) costs. Portfolio turnover can also generate
short-term capital gain taxes. You should consult your individual tax
advisor with respect to your particular tax situation.
The Master Portfolio may invest a significant portion of its assets in the
securities of smaller and newer issuers. Investments in such companies may
present opportunities for capital appreciation because of high potential
earnings growth. Such investments, however, may present greater risks than
investments in larger-sized companies with more established operating
histories, diverse product lines and financial capacity. Securities of small
and new companies generally trade less frequently or in limited volume, or
only in the over-the-counter market or on a regional securities exchange. As
a result, the prices of such securities may be more volatile than those of
larger, more established companies and, as a group, these securities may
suffer more severe price declines during periods of generally declining
equity prices. (See "How the Fund Works -- Investment Objective and
Policies" and "How the Fund Works -- Additional Permitted Investment
Activities" for further information.)
Q. WHAT ARE DERIVATIVES AND DO THE FUND AND MASTER PORTFOLIO USE THEM?
A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or
rate. Some of the permissible investments described in this Prospectus, such
as variable-rate instruments which have an interest rate that is reset
periodically based on an index, can be considered derivatives. Some
derivatives may be more sensitive than direct securities
3 PROSPECTUS
<PAGE> 12
to changes in interest rates or sudden market moves. Some derivatives also
may be susceptible to fluctuations in yield or value due to their structure
or contract terms.
Q. WHAT STEPS ARE TAKEN TO CONTROL DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank, as investment adviser to the Master Portfolio, uses a
variety of internal risk management procedures to ensure that derivatives
use is consistent with the Fund's and the Master Portfolio's investment
objective, does not expose the Fund or Master Portfolio to undue risks and
is closely monitored. These procedures include providing periodic reports to
the Boards of Directors and Trustees concerning the use of derivatives.
Derivatives use also is subject to broadly applicable investment policies.
For example, neither the Fund nor the Master Portfolio may invest more than
a specified percentage of its assets in "illiquid securities," including
those derivatives that do not have active secondary markets. Nor may certain
derivatives be used without establishing adequate "cover" in compliance with
SEC rules limiting the use of leverage. For more information on the Fund's
and Master Portfolio's investment activities, see "Prospectus
Appendix - Additional Investment Policies".
PROSPECTUS 4
<PAGE> 13
SUMMARY OF FUND EXPENSES
AGGRESSIVE GROWTH FUND
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
<S> <C> <C>
Maximum Sales Charge Imposed
on Purchase (as a percentage
of offering price)................................ 4.50% None
Sales Charge Imposed
on Reinvested Dividends........................... None None
Maximum Sales Charge Imposed
on Redemptions(1)................................... None 3.00%
Exchange Fees......................................... None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES(2)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
<S> <C> <C> <C> <C>
Management Fee.................................. 0.50% 0.50%
Rule 12b-1 Fee.................................. 0.10% 0.75%
Total Other Expenses (after any waivers or
reimbursements):
Shareholder Servicing Fee(2)................ 0.25% 0.25%
Administrative Fee.......................... 0.03% 0.03%
Other Expenses (after any waivers or
reimbursements)........................... 0.40% 0.40%
----- -----
0.68% 0.68%
----- -----
TOTAL FUND OPERATING
EXPENSES (After any waivers or
reimbursements)............................... 1.28% 1.93%
</TABLE>
- -------------------------------
<TABLE>
<C> <S>
(1) The Company reserves the right to impose a charge for wiring
redemption proceeds.
(2) Other mutual funds may invest in the Master Portfolio. Such
other funds' expenses and, accordingly, investment returns may
differ from those of the corresponding fund.
(3) The Fund understands 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 Fund, such as requiring a higher minimum
initial investment or payment of a separate fee for additional
services.
</TABLE>
5 PROSPECTUS
<PAGE> 14
<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 the Fund, assuming (A) a
5% annual return and (B) redemption at the
end of each time period indicated:
Aggressive Growth Fund................. $ 57 $84 $ 112 $193
You would pay the following expenses on a
$1,000
investment in Class B Shares of the Fund,
assuming
(A) a 5% annual return and (B) redemption
at the
end of each time period indicated:
Aggressive Growth Fund................. $ 50 $71 $ 104 $194
You would pay the following expenses on a
$1,000
investment in Class B Shares of the Fund,
assuming a
5% annual return and no redemption:
Aggressive Growth Fund................. $ 20 $61 $ 104 $194
</TABLE>
EXPLANATION OF TABLES
The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The foregoing tables reflect expenses at both the Fund and Master
Portfolio levels.
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 and may be subject to a contingent deferred sales charge on Class B
Shares if you redeem such shares within a specified period. See "Investing in
the Fund - 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
Fund - Sales Charges".
ANNUAL FUND OPERATING EXPENSES for the Class A Shares and Class B Shares are
based on the 1995 actual expenses of the Class A and Class D shares of the
predecessor operating investment company series, the Strategic Growth Fund of
Overland Express Funds, Inc. (the "Predecessor Fund"), to the Master Portfolio.
The Predecessor Fund became a feeder in the Master Portfolio by exchanging the
Predecessor Fund's assets for interests in the Master Portfolio. The figures
shown above are adjusted to reflect the applicable sales charges and expenses
for the Aggressive Growth Fund's Class A Shares and Class B Shares. Wells Fargo
Bank and Stephens each has agreed to waive or reimburse all or a portion of
their 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 their
respective fees charged to, or expenses paid by, the Fund or the Master
Portfolio. Any waivers or reimbursements would reduce the Fund's total expenses.
The amounts shown above under "Other Expenses," "Total Other Expenses" and
"Total Fund Operating Expenses" reflect projected voluntary fee waivers and
expense reimbursements that are expected to continue to reduce the Fund's
expenses in the current fiscal year. Absent waivers and reimbursements, the
percentages shown above under "Other Expenses," "Total Other
PROSPECTUS 6
<PAGE> 15
Expenses" and "Total Fund Operating Expenses" would be 0.52%, 0.80% and 1.40%,
respectively, for the Class A Shares and 0.52%, 0.80% and 2.05%, respectively,
for the Class B Shares of the Aggressive Growth Fund. There can be no assurance
that waivers or reimbursements will continue. With regard to the combined fees
and expenses of the Fund and the Master Portfolio, the Company's Board of
Directors has considered whether various costs and benefits of investing all of
the Fund's assets in the Master Portfolio rather than directly in a portfolio of
securities would be more or less than if the Fund invested in portfolio
securities directly. The Company's Board of Directors believes that the
aggregate per share expenses of a class of shares of the Fund will be less than
or approximately equal to the expenses incurred by such class if the Fund
invested directly in the type of securities held by the Master Portfolio.
Long-term shareholders of the Fund could pay more in sales charges than the
economic equivalent of the maximum front-end sales charges applicable to mutual
funds sold by members of the National Association of Securities Dealers
("NASD"). For more complete descriptions of the various costs and expenses you
can expect to incur as an investor in the Fund, please see the Prospectus
sections under "Investing in the Fund - 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 shares of the Fund over stated periods
based on the expenses in the table above and an assumed annual rate of return of
5%. This rate of return should not be considered an indication of actual or
expected performance of the 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.
FINANCIAL HIGHLIGHTS
The financial information presented below is for informational purposes only
and should not be considered as a projection of the future performance of the
Fund. The Aggressive Growth Fund has been established as a new feeder fund into
the Capital Appreciation Master Portfolio. The Capital Appreciation Master
Portfolio is the successor fund to the Predecessor Fund. The Fund proposes to
assume the financial history and performance from inception of the Predecessor
Fund and the Capital Appreciation Master Portfolio through the Fund's
commencement of operations. Performance information for the Fund will be
calculated in accordance with the published opinions of the SEC staff.
7 PROSPECTUS
<PAGE> 16
The following information has been derived from the Financial Highlights of
the Class A and Class D shares in the Predecessor Fund's 1995 financial
statements. The audited financial statements for the year ended December 31,
1995 are attached to the SAI and have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report dated February 14, 1996 also is attached to
the SAI. Because the Predecessor Fund did not convert to master/feeder structure
until February 20, 1996, the financial highlights for the periods presented
refer only to the prior operating history of the Predecessor Fund on a
stand-alone basis. This information should be read in conjunction with the
Predecessor Fund's annual financial statements and the respective notes thereto.
The SAI has been incorporated by reference into this Prospectus.
PREDECESSOR FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993(1)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 13.29 $ 13.20 $ 10.00
Income from Investment Operations:
Net Investment Loss.............................. (0.04) (0.11) (0.03)
Net Realized and Unrealized Gains on
Investments.................................... 5.66 0.67 3.68
-------- -------- --------
Total from Investment Operations.................. 5.62 0.56 3.65
Less Distributions:
Dividends from Net Investment Income............. 0.00 0.00 (0.03)
Distributions from Net Realized Capital Gains.... (2.09) (0.33) (0.41)
Tax Return of Capital............................ 0.00 (0.14) (0.01)
-------- -------- --------
Total Distributions............................... (2.09) (0.47) (0.45)
Net Asset Value, End of Period.................... $ 16.82 $ 13.29 $ 13.20
======== ======== ========
Total Return (not annualized)(2).................. 42.51% 4.23% 36.56%
Ratios/Supplemental Data:
Net Assets, End of Period (000).................. $ 59,016 $ 26,744 $ 25,413
Number of Shares Outstanding, End of Period
(000).......................................... 3,508 2,013 1,926
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(3)....... 1.28% 1.20% 0.66%
Ratio of Net Investment Loss to Average Net
Assets(4)...................................... (0.76)% (0.81)% (0.01)%
Portfolio Turnover................................ 171% 149% 182%
- ------------
(1) The Predecessor Fund commenced operations on January 20,
1993.
(2) Total returns do not include any sales charges
or contingent deferred sales charges.
(3) Ratio of Expenses to Average Net Assets Prior
to Waived Fees and Reimbursed Expenses........ 1.38% 1.55% 1.64%
(4) Ratio of Net Investment Loss to Average Net
Assets Prior to Waived Fees and Reimbursed
Expenses...................................... (0.86)% (1.16)% (0.99)%
</TABLE>
PROSPECTUS 8
<PAGE> 17
PREDECESSOR FUND
FOR A CLASS D SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993(1)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 16.54 $ 16.55 $ 15.00
Income from Investment Operations:
Net Investment Loss.............................. (0.16) (0.24) (0.43)
Net Realized and Unrealized Capital Gains on
Investments.................................... 6.99 0.81 2.51
-------- -------- --------
Total from Investment Operations.................. 6.83 0.57 2.08
Less Distributions:
Dividends from Net Investment Income............. 0.00 0.00 0.00
Distributions from Net Realized Capital Gains.... (2.58) (0.40) (0.53)
Tax Return of Capital............................ 0.00 (0.18) 0.00
-------- -------- --------
Total Distributions............................... (2.58) (0.58) (0.53)
Net Asset Value, End of Period.................... $ 20.79 $ 16.54 $ 16.55
======== ======== ========
Total Return (not annualized)(2).................. 41.54% 3.46% 13.84%
Ratios/Supplemental Data:
Net Assets, End of Period (000).................. $ 26,326 $ 15,335 $ 11,932
Number of Shares Outstanding, End of Period
(000).......................................... 1,266 927 721
Ratios to Average Net Assets (annualized):
Ratio of Expenses to Average Net Assets(3)....... 2.02% 1.95% 0.61%
Ratio of Net Investment Loss to Average Net
Assets(4)...................................... (1.49)% (1.56)% (1.00)%
Portfolio Turnover................................ 171% 149% 182%
- ------------
(1) This class commenced operations on July 1,
1993.
(2) Total returns do not include any sales charges
or contingent deferred sales charges.
(3) Ratio of Expenses to Average Net Assets Prior
to Waived Fees and Reimbursed Expenses........ 2.09% 2.23% 2.14%
(4) Ratio of Net Investment Loss to Average Net
Assets Prior to Waived Fees and Reimbursed
Expenses...................................... (1.56)% (1.84)% (2.53)%
</TABLE>
9 PROSPECTUS
<PAGE> 18
HOW THE FUND WORKS
INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objective and related
policies of the Fund and the Master Portfolio. As with all mutual funds, there
can be no assurance that the Fund or Master Portfolio will achieve its
investment objective.
The Aggressive Growth Fund seeks to achieve its investment objective by
investing all of its assets in the Capital Appreciation Master Portfolio, which
has the same investment objective as the Fund. The Fund may withdraw its
investment in the Master Portfolio only if the Board of Directors of the Company
determines that such action is in the best interests of the Fund and its
shareholders. Upon such withdrawal, the Company's Board would consider
alternative investments, including investing all of the Fund's assets in another
investment company with the same investment objective as the Fund or hiring an
investment adviser to manage the Fund's assets in accordance with the investment
policies described below with respect to the Master Portfolio. The investment
objective and policies of the Master Portfolio are described in this section.
For a description of the management and expenses of the Master Portfolio, see
the Prospectus section "The Fund, the Master Portfolio and Management."
Investment Objective -- The investment objective of the Capital Appreciation
Master Portfolio is to provide investors with an above-average level of capital
appreciation. It seeks to achieve this objective through the active management
of a broadly-diversified portfolio of equity securities of companies expected to
experience strong growth in revenues, earnings and assets. The Master Portfolio
is designed to provide above-average capital growth for investors willing to
assume above-average risk.
EQUITY SECURITIES
The Master Portfolio invests primarily in common stocks that Wells Fargo Bank,
as the Master Portfolio's investment adviser, believes have better-than-average
prospects for appreciation. These stocks may have some of the following
characteristics:
- Low or no dividends
- Smaller market capitalizations
- Less market liquidity
- Relatively short operating histories
- Aggressive capitalization structures (including high debt levels)
- Involvement in rapidly growing/changing industries and/or new technologies
Under normal market conditions, the Master Portfolio will hold at least 20
common stock issues spread across multiple industry groups, with the majority of
these holdings
PROSPECTUS 10
<PAGE> 19
consisting of established growth companies, turnaround or acquisition
candidates, or attractive larger capitalization companies.
Additionally, it is expected that the Master Portfolio will from time to time
acquire securities through initial public offerings, and will acquire and hold
common stocks of smaller and newer issuers. It is expected that no more than 40%
of the Master Portfolio's assets will be invested in these highly aggressive
issues at one time. There may be some additional risks associated with
investments in smaller and/or newer companies because their shares tend to be
less liquid than securities of larger companies. Further, shares of small and
new companies are generally more sensitive to purchase and sale transactions and
changes in the issuer's financial condition and, therefore, the prices of such
stocks may be more volatile than those of larger company stocks.
From time to time Wells Fargo Bank may determine that conditions in the
securities markets make pursuing the Master Portfolio's basic investment
strategy inconsistent with the best interests of the Master Portfolio's
investors. At such times, Wells Fargo Bank may use temporary alternative
strategies, primarily designed to reduce fluctuations in the value of the Master
Portfolio's assets. In implementing these temporary "defensive" strategies, the
Master Portfolio may invest in preferred stock or investment-grade debt
securities that are convertible into common stock and in money market
securities. It is expected that these temporary "defensive" investments will not
exceed 30% of the Master Portfolio's total assets.
The Master Portfolio pursues an active trading investment strategy, and the
length of time the Master Portfolio has held a particular security is not
generally a consideration in investment decisions. Accordingly, the Master
Portfolio's portfolio turnover rate may be higher than that of other funds that
do not pursue an active trading investment strategy. Portfolio turnover
generally involves some expense to the Master Portfolio, including brokerage
commissions or dealer mark-ups and other transactions costs on the sale of
securities and the reinvestment in other securities. Portfolio turnover also can
generate short-term capital gains tax consequences.
Though the Master Portfolio will hold a number of larger capitalization
stocks, under normal market conditions, and subject to the additional risks
described above, more than 50% of the Master Portfolio's total assets will be
invested in companies with smaller to medium capitalizations. The Master
Portfolio will invest primarily in companies with a market capitalization of $50
million or greater, but may invest in companies with a market capitalization
under $50 million if the investment adviser to the Master Portfolio believes
such investments to be in the best interests of the Master Portfolio. It is
currently expected that the majority of the Master Portfolio's investments will
be in companies with market capitalizations, at the time of acquisition, of up
to $750 million.
Under ordinary market conditions, at least 65% of the value of the total
assets of the Master Portfolio will be invested in common stocks and in
securities which are convertible into common stocks that Wells Fargo Bank, as
investment adviser, believes
11 PROSPECTUS
<PAGE> 20
have better-than-average prospects for appreciation. The Master Portfolio also
may invest in convertible debt securities. At most, 5% of the Master Portfolio's
net assets will be invested in convertible debt securities that are not either
rated in the four highest rating categories by one or more nationally recognized
statistical rating organizations ("NRSROs"), such as Moody's Investor Service,
Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"), or unrated securities
determined by Wells Fargo Bank to be of comparable quality. Securities rated in
the fourth lowest rating category (i.e., rated "BBB" by S&P or "Baa" by Moody's)
are regarded by S&P as having an adequate capacity to pay interest and repay
principal, but changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity to make such repayments. Moody's considers
such securities as having speculative characteristics.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Privately Issued Securities (Rule 144A). The Master Portfolio may invest in
privately issued securities which may be resold in accordance with Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities"). Rule 144A Securities
are restricted securities which are not publicly traded. Accordingly, the
liquidity of the market for specific Rule 144A Securities may vary. Wells Fargo
Bank, using guidelines approved by the Board of Directors of the Company, will
evaluate the liquidity characteristics of each Rule 144A Security proposed for
purchase by the Master Portfolio on a case-by-case basis and will consider the
following factors, among others, in their evaluation: (1) the frequency of
trades and quotes for the Rule 144A Security; (2) the number of dealers willing
to purchase or sell the Rule 144A Security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the Rule 144A Security;
and (4) the nature of the Rule 144A Security and the nature of the marketplace
trades (e.g., the time needed to dispose of the Rule 144A Security, the method
of soliciting offers and the mechanics of transfer). Privately issued securities
that are determined by the Master Portfolio's investment adviser to be
"illiquid" will be subject to the Master Portfolio's policy of not investing
more than 15% of its net assets in illiquid securities.
Corporate Reorganizations. The Master Portfolio may invest in securities for
which a tender or exchange offer has been made or announced, and in securities
of companies for which a merger, consolidation, liquidation or similar
reorganization proposal has been announced if, in the judgment of Wells Fargo
Bank, there is a reasonable prospect of capital appreciation significantly
greater than the added portfolio turnover expenses inherent in the short term
nature of such transactions. The principal risk associated with such investments
is that such offers or proposals may not be consummated within the time and
under the terms contemplated at the time of the investment, in which case,
unless such offers or proposals are replaced by equivalent or increased offers
or proposals which are consummated, the Master Portfolio may sustain a loss.
Options. The Master Portfolio may purchase or sell options on individual
securities and options on indices of securities as a means of achieving
additional return or of hedging
PROSPECTUS 12
<PAGE> 21
the value of the Master Portfolio's portfolio. If the Master Portfolio has sold
an option, it may terminate its obligation by effecting a closing purchase
transaction. This is accomplished by purchasing an option of the same series as
the option previously sold. There can be no assurance that a closing purchase
transaction can be effected when the Master Portfolio so desires.
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
foregoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Master Portfolio the credit
risk that the counterparty will fail to honor its obligations. All investments
by the Master Portfolio in off-exchange options will be treated as "illiquid"
and will therefore be subject to the Master Portfolio's policy of not investing
more than 15% of its net assets in illiquid securities. The Master Portfolio
will establish a segregated account with its Custodian in which it will maintain
liquid assets in an amount at least equal in value to the Master Portfolio's
commitments under off-exchange options.
Warrants. The Master Portfolio may invest no more than 5% of its net assets at
the time of purchase in warrants (other than those that have been acquired in
units or attached to other securities) and not more than 2% of its net assets in
warrants which are not listed on the New York or American Stock Exchange.
Warrants represent rights to purchase securities at a specific price valid for a
specific period of time. The prices of warrants do not necessarily correlate
with the prices of the underlying securities. The Master Portfolio may only
purchase warrants on securities in which the Master Portfolio may invest
directly.
Investment in Foreign Securities. The Master Portfolio may invest in
securities of foreign governmental and private issuers that are denominated in
and pay interest in U.S. dollars. These securities may take the form of American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs"). These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are receipts issued in Europe
typically by non-United States banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in the United States securities markets and EDRs and CDRs in
bearer form are designed for use in Europe. Investments in foreign securities
involve certain considerations that are not typically associated with investing
in domestic securities. There may be less publicly available information about a
foreign
13 PROSPECTUS
<PAGE> 22
issuer than about a domestic issuer. Foreign issuers also are not generally
subject to the same accounting, auditing and financial reporting standards or
governmental supervision as domestic issuers. In addition, with respect to
certain foreign countries, interest may be withheld at the source under foreign
income tax laws, and there is a possibility of expropriation or confiscatory
taxation, political or social instability or diplomatic developments that could
adversely affect investments in, the liquidity of, and the ability to enforce
contractual obligations with respect to, securities of issuers located in those
countries.
The investment objective of the Master Portfolio and the Fund, as set forth in
the first paragraphs of the section describing the investment objective and
policies of the Master Portfolio and the Fund, is fundamental; that is, the
investment objective may not be changed without approval by the vote of the
holders of a majority of the outstanding voting securities of the Master
Portfolio or the Fund, as applicable, and, as described under "Capital Stock" in
the SAI. If the Board of Trustees determines, however, that the Master
Portfolio's investment objective can best be achieved by a substantive change in
a non-fundamental investment policy or strategy, the Trust may make such change
without shareholder approval, and the Company will disclose any such material
changes in the then current prospectus.
In addition, as matters of fundamental policy, the Master Portfolio may: (i)
not purchase securities of any issuer (except U.S. Government obligations as
defined below) if as a result, with respect to 75% of the Master Portfolio's
assets, more than 5% of the value of the Master Portfolio's total assets would
be invested in the securities of such issuer or the Master Portfolio would own
more than 10% of the outstanding voting securities of such issuer; (ii) borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such outstanding borrowings exceed 5%
of its net assets); (iii) make loans of portfolio securities in accordance with
its investment policies; and (iv) not invest 25% or more of its assets (i.e.,
concentrate) in any particular industry, except that the Master Portfolio may
invest 25% or more of its assets in U.S. Government obligations. With respect to
fundamental investment policy (iii) above, the Master Portfolio does not intend
to make loans of its portfolio securities during the coming year.
A further description of certain of the Fund's and Master Portfolio's
investments and investment activities is contained in the "Prospectus
Appendix - Additional Investment Policies" and in the Fund's SAI.
PROSPECTUS 14
<PAGE> 23
PERFORMANCE
The performance of each Class of shares of the Fund 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 is based on the overall
dollar or percentage change in value of a hypothetical investment in such shares
and assumes that all Fund dividends and capital gain distributions are
reinvested in shares of that Class. The standardized average annual total return
is calculated for Class A Shares assuming you have paid the maximum sales
charge, and for Class B Shares assuming on a one-year investment you have paid
the maximum contingent deferred sales charge, on your hypothetical investment.
In addition to presenting a standardized total return, at times, the Fund also
may present nonstandardized total returns, yields and distribution rates for
purposes of sales literature. For example, the performance figure of the shares
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 Fund - 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 a Class of shares of the Fund is calculated by dividing the net
investment income per 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 Fund, 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.
Performance quotations are computed separately for Class A Shares and Class B
Shares.
Additional information about the performance of each Class of shares of the
Predecessor Fund is contained in the Annual Report for the Predecessor Fund. The
Annual Reports for the Predecessor Fund and the Fund may be obtained free of
charge by calling the Company at 800-222-8222.
15 PROSPECTUS
<PAGE> 24
THE FUND, THE MASTER PORTFOLIO
AND MANAGEMENT
The Fund is one 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 twelve other series: the Asset Allocation, the California
Tax-Free Bond, the California Tax-Free Income, the California Tax-Free Money
Market Mutual, the Corporate Stock, the Diversified Income, the Growth and
Income, the Ginnie Mae, the Money Market Mutual, the National Tax-Free Money
Market Mutual, the Short-Intermediate U.S. Government Income and the U.S.
Government Allocation Funds. 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 the Fund's investment objectives 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 the 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 Fund's SAI.
The Company has retained the services of Stephens as administrator and
distributor for the Fund but has not retained the services of an investment
adviser for the Fund since the Company seeks to achieve the investment objective
of the Fund by investing all of the Fund's assets in the Master Portfolio of the
Trust. The Company's Board of Directors supervises the actions of the Fund's
administrator and distributor, as set forth below, and decides upon matters of
general policy. As noted above, the Fund may withdraw its investment in the
Master Portfolio only if the Board of Directors of the Company determines that
it is in the best interests of the Fund and its shareholders to do so. Upon any
such withdrawal, the Board of Directors of the Company would consider what
action might be taken, including the investment of all the assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the hiring of an investment adviser to manage the Fund's assets in
accordance with the investment policies described above with respect to the
Master Portfolio.
The Master Portfolio has retained the services of Wells Fargo Bank as
investment adviser and Stephens as administrator and distributor. The Board of
Trustees of the Trust is responsible for the general management of the Master
Portfolio and supervising the actions of Wells Fargo Bank and Stephens in these
capacities. Additional information regarding the Officers and Directors of the
Company and the Officers and Trustees of the Trust is included in the Fund's SAI
under "Management."
PROSPECTUS 16
<PAGE> 25
MASTER/FEEDER STRUCTURE
The Fund, a series of the Company which is an open-end management investment
company, invests all of its assets in the Master Portfolio of the Trust which
has the same investment objective as the Fund. See "How the Fund
Works - Investment Objective and Policies." The Trust is organized as a trust
under the laws of the State of Delaware. In addition to selling its interests to
the Fund, the Master Portfolio may sell its interests to other mutual funds or
accredited investors. The expenses and, correspondingly, the returns of other
investment options in the Master Portfolio may differ from those of the Fund.
The Board of Directors believes that, if other mutual funds or accredited
investors invest their assets in the Master Portfolio, certain economic
efficiencies may be realized with respect to the Master Portfolio. For example,
fixed expenses that otherwise would have been borne solely by the Fund would be
spread among a larger asset base provided by more than one fund investing in the
Master Portfolio. The Fund and other entities investing in the Master Portfolio
are each liable for all obligations of the Master Portfolio. However, the risk
of the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Trust itself is
unable to meet its obligations. Accordingly, the Company's Board of Directors
believes that the Fund and its shareholders will not be adversely affected by
investing Fund assets in the Master Portfolio. However, if a mutual fund or
other investor withdraws its investment from the Master Portfolio, the economic
efficiencies (e.g., spreading fixed expenses among a larger asset base) that the
Company's Board believes should be available through investment in the Master
Portfolio may not be fully achieved. In addition, given the relative novelty of
the master/feeder structure, accounting or operational difficulties, although
unlikely, could arise.
The investment objective and other fundamental policies of the Master
Portfolio, which are identical to those of the Fund, cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of the Master
Portfolio's outstanding interests. Whenever the Fund, as an interestholder of
the Master Portfolio is requested to vote on any matter submitted to
interestholders of the Master Portfolio, the Fund will hold a meeting of its
shareholders to consider such matters. The Fund will cast its votes in
proportion to the votes received from its shareholders. Shares for which the
Fund receives no voting instructions will be voted in the same proportion as the
votes received from the other Fund shareholders.
Certain policies of the Master Portfolio which are non-fundamental may be
changed by vote of a majority of the Trust's Trustees without interestholder
approval. If the Master Portfolio's investment objective or fundamental or
nonfundamental policies are changed, the Fund may elect to change its objective
or policies to correspond to those of the Master Portfolio. The Fund may also
elect to redeem its interests in the Master Portfolio and either seek a new
investment company with a matching objective in which to invest or retain its
own investment adviser to manage the Fund's portfolio in
17 PROSPECTUS
<PAGE> 26
accordance with its objective. In the latter case, the Find's inability to find
a substitute investment company in which to invest or equivalent management
services could adversely affect shareholders' investments in the Fund. The Fund
will provide shareholders with 30 days' written notice prior to the
implementation of any change in the investment objective of the Fund or the
Master Portfolio, to the extent possible. Information regarding additional
options, if any, for investment in the Master Portfolio is available from
Stephens and may be obtained by calling (800) 643-9691. See "Investment
Objective and Policies" for additional description of the Fund and Master
Portfolios objectives and policies and "Management, Distribution and Servicing
Fees" and "Fund Expenses" for additional description of the Fund and Master
Portfolio's expenses and management.
INVESTMENT ADVISER
Pursuant to an Investment Advisory Contract, the Master Portfolio is advised
by Wells Fargo Bank, 420 Montgomery Street, San Francisco, California 94105, a
wholly owned subsidiary of Wells Fargo & Company. Under the Investment Advisory
Contract with the Master Portfolio, Wells Fargo Bank has agreed to furnish to
the Master Portfolio investment guidance and policy direction in connection with
the daily portfolio management of the Master Portfolio. Pursuant to the
Investment Advisory Contract, Wells Fargo Bank also furnishes to the Board of
Directors periodic reports on the investment strategy and performance of the
Master Portfolio.
Purchase and sale orders of the securities held by the Master Portfolio may be
combined with those of other accounts that Wells Fargo Bank manages, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold for the Master Portfolio and other
accounts managed by Wells Fargo Bank, Wells Fargo Bank undertakes to allocate
those transactions among the participants equitably. From time to time, the
Master Portfolio, to the extent consistent with its investment objective,
policies and restrictions, may invest in securities of companies with which
Wells Fargo Bank has a lending relationship.
Mr. Jon Hickman is primarily responsible for the day-to-day management of the
Capital Appreciation Master Portfolio and has performed such duties since the
inception of the Predecessor Fund. In addition, he also manages equity and
balanced portfolios for individuals and employee benefit plans. He has
approximately ten years of experience in the investment management field and is
a member of Wells Fargo's Equity Strategy Committee. Mr. Hickman has a B.A. and
an M.B.A. in finance from Brigham Young University and has been with Wells Fargo
Bank since the merger with Crocker National Bank in 1986.
Mr. Robert Bissell is also primarily responsible for the day-to-day management
of the Capital Appreciation Master Portfolio and has performed such duties since
the inception of the Predecessor Fund. Mr. Bissell joined Wells Fargo Bank at
the time of the merger
PROSPECTUS 18
<PAGE> 27
with Crocker Bank and has been with the combined organization for over 20 years.
Prior to joining Wells Fargo Bank, he was a vice president and investment
counselor with M.H. Edie Investment Counseling, where he managed institutional
and high-net-worth portfolios. Mr. Bissell holds a finance degree from the
University of Virginia. He is a chartered financial analyst and a member of the
Los Angeles Society of Financial Analysts.
Mr. Steve Enos assists Mr. Jon Hickman and Mr. Robert Bissell with the
management of the Capital Appreciation Master Portfolio. Mr. Enos is a member of
the Wells Fargo Growth Equity Team. He began his career with First Interstate
Bank, where he was assistant vice president and portfolio manager. Prior to
joining Wells Fargo Bank, he was a principal at Dolan Capital Management where
he managed both personal and pension portfolios. Mr. Enos received his
undergraduate degree in economics from the University of California at Davis.
Mr. Enos is a Chartered Financial Analyst and a member of the Association for
Investment Management and Research.
Ms. Sandra Thornton also assists Jon Hickman and Robert Bissell with the
management of the Capital Appreciation Master Portfolio. Ms. Thornton manages
equity portfolios and is a member of the Wells Fargo Growth Equity Team. Prior
to joining Wells Fargo in 1993, she worked in the research department of RCM
Capital Management. She obtained her license as a Certified Public Accountant
from the State of California while performing tax/financial planning services at
Price Waterhouse. She holds a B.A. from Albertus Magnus College and is a
Chartered Financial Analyst.
Wells Fargo Bank is the Fund's transfer and dividend disbursing agent, and
custodian. In addition, Wells Fargo Bank is a Shareholder Servicing Agent of the
Fund and a Selling Agent under a Selling Agreement with the Fund's distributor.
Wells Fargo Bank, one of the largest banks in the United States, was founded in
1852 and is the oldest bank in the western United States. As of December 31,
1995, Wells Fargo Bank provided investment advisory services for over $33
billion of assets of individuals, trusts, estates and institutions. Wells Fargo
Bank is the investment adviser to 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 94105.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, 111 Center Street, Little Rock, Arkansas 72201, has entered into
agreements with the Company and the Trust under which Stephens has agreed to act
as administrator for the Fund and the Master Portfolio. Under the respective
Administration Agreements with the Fund and the Master Portfolio, Stephens has
agreed to provide as administrative services, among other things, (i) general
supervision of the operation of the Fund and the Master Portfolio, including
coordination of the services performed by the investment adviser, transfer
agent, custodian, independent auditors and legal counsel; (ii) in connection
with regulatory compliance, compilation of information for
19 PROSPECTUS
<PAGE> 28
documents such as reports to, and filings with, the SEC and state securities
commissions, and the preparation of proxy statements and shareholder reports for
the Fund and the Master Portfolio; and (iii) general supervision relative to the
compilation of data required for the preparation of periodic reports distributed
to the Company's officers and Board of Directors and the Trust's Board of
Trustees. Stephens also furnishes office space and certain facilities required
for conducting the business of the Fund and the Master Portfolio and pays the
compensation of the directors, officers and employees of the Company and the
Trust who are affiliated with Stephens.
Stephens is a full service broker/dealer and investment advisory firm.
Stephens and its predecessor have been providing securities and investment
services for more than 60 years. Additionally, they have been providing
discretionary portfolio management services since 1983. Stephens currently
manages investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.
---------------------
INVESTING IN THE FUND
OPENING AN ACCOUNT
You can buy Fund shares in one of the several ways described below. You must
complete and sign an Account Application to open an account. Additional
documentation may be required from corporations, associations and certain
fiduciaries. Do not mail cash. If you have any questions or need extra forms,
you may call 800-222-8222.
After an application has been processed and an account has been established,
subsequent purchases of different funds of the Company under the same umbrella
account do not require the completion of additional 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 Fund through tax-deferred retirement plans through which the
Fund is available, 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.
PROSPECTUS 20
<PAGE> 29
SHARE VALUE
The value of a share of the Fund is its "net asset value," or NAV. The NAV of
a share of each Class of the Fund is the value of the total net assets
attributable to each such Class (i.e., the value of its investments in the
Master Portfolio and any cash instruments held for liquidity needs) 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 a share of each
Class is expected to fluctuate daily.
The Fund is open for business each day the New York Stock Exchange ("NYSE") is
open for trading (a "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 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 Master Portfolio's 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 Trust's Board of Trustees. Prices
used for such valuations may be provided by independent pricing services.
HOW TO BUY SHARES
Shares of each Class of the 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 is not 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 the Fund promptly. Payment must accompany orders
placed directly through the Transfer Agent.
Payments for shares of each Class of the Fund are invested in full and
fractional shares of such Class at the applicable offering price. If shares are
purchased by a check that does not clear, the Company reserves the right to
cancel the purchase and hold the investor responsible for any losses or fees
incurred. In addition, the Fund may hold payment on any redemption until
reasonably satisfied that your investments made by
21 PROSPECTUS
<PAGE> 30
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 amount is generally $1000. The minimum
investment amount is $100 by the AutoSaver Plan purchase method (described
below) and $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"). Generally subsequent
investments must be made in amounts of $100 or more. Plan Accounts that invest
in the Fund through Wells Fargo ExpressInvest(TM) (available to certain Wells
Fargo tax-deferred retirement plans) are not subject to the minimum initial
investment amount or the subsequent investment amount requirements. If you have
questions regarding purchases of shares or ExpressInvest(TM) please contact the
Company at 800-222-8222, or a Shareholder Servicing Agent or Selling Agent. For
additional information on tax-deferred accounts, please refer to the section
"How to Buy Shares" under Tax-Deferred Retirement Plans or contact a Shareholder
Servicing 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 Fund. 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.
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. Class
B Shares, however, that are redeemed within one, two, three or four years from
the receipt of a purchase order affecting such shares are 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
PROSPECTUS 22
<PAGE> 31
such shares at the time of redemption (the "NAV Amount"). See "Investing in the
Fund - 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 of the
same fund.
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 Rule 12b-1 Fees and contingent deferred sales charges
applicable to such shares. When shares are purchased directly through the
Transfer Agent and no Selling Agent is involved with the purchase, the entire
sales charge is paid to Stephens. In addition, Stephens has established a
non-cash compensation program, pursuant to which broker/dealers or financial
institutions that sell shares of the Fund may earn additional compensation in
the form of trips to sales seminars or vacation destinations, tickets to
sporting events, theater or other entertainment, opportunities to participate in
golf or other outings and gift certificates for meals or merchandise.
REDUCED SALES CHARGE - CLASS A SHARES
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 (other
than Class B Shares) of one or more of the Company's funds which assess a
front-end sales charge (the "Load Funds"). Because Class B Shares are not
subject to a front-end sales charge, the amount of Class B Shares you hold is
not considered 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 the 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 the Fund, the front-end
sales charge on the additional $20,000 investment would be 3.50% of the offering
price. To obtain such a 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.
23 PROSPECTUS
<PAGE> 32
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 the 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 front-end 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 the 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. Dividends 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 the Fund or shares of another of the Company's funds registered in
your state of residence at NAV, without payment of a front-end sales charge,
within 120 days after your redemption. However, if the other investment
portfolio imposes a front-end sales charge that is higher than the front-end
sales charge 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
PROSPECTUS 24
<PAGE> 33
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 (a) shares of another
open-end investment company, or (b) units of a unit investment trust, sold
through Wells Fargo Securities Inc. (ii) on which you paid a front-end sales
charge; and (iii) such redemption occurred within thirty (30) days prior to the
date of the purchase order. 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). Such purchases may not be made at net asset
value to the extent the proceeds are from a redemption of shares of another
open-end investment company that is affiliated with the Company on which you
paid a contingent deferred sales charge upon 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 (the "1940 Act"), which has been
in existence for more than six months and which has a primary purpose other than
acquiring shares of the Fund at a reduced sales 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 directly or indirectly owns,
controls or has the power to vote 5% percent or more of the outstanding voting
securities of such company; (ii) any other company of which such company
directly or indirectly owns, controls or has the power to vote 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 the Fund may be purchased at NAV, without payment of 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 the Fund also may be purchased at NAV, without
payment of 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
25 PROSPECTUS
<PAGE> 34
and/or the respective affiliates agree. Class A Shares of such Fund also may be
purchased at NAV, without payment of 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"),
or by institutions purchasing shares for the sole purpose of creating a unit
investment trust for exclusive distribution through Wells Fargo Securities Inc.
In addition, you may purchase Class A Shares of the Funds at NAV, without
payment of 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 CHARGE - CLASS B SHARES
Class B Shares of the Fund are not subject to front-end sales charges but may
be subject to contingent deferred sales charges. Class B Shares that 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. Contingent deferred sales
charges are not imposed on amounts representing increases in NAV above the NAV
at the time of purchase and are not 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.
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 the 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
PROSPECTUS 26
<PAGE> 35
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 Fund 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
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)
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
set forth in "Initial Purchases by Wire."
27 PROSPECTUS
<PAGE> 36
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 Fund 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 Fund through a Plan Account or other
tax-deferred retirement plan. Contact a Shareholder Servicing Agent or a Selling
Agent (such as Wells Fargo Bank) for materials describing Plan Accounts
available through it, and the benefits, provisions, and fees of such Plan
Accounts. The minimum initial investment amount for Fund shares acquired through
a Plan Account is $250 (the minimum initial investment amount is not applicable
if you participate in ExpressInvest(TM) through a Plan Account).
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 are 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
PROSPECTUS 28
<PAGE> 37
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 Fund's SAI.
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.
29 PROSPECTUS
<PAGE> 38
ADDITIONAL PURCHASES
You may make additional purchases of $100 or more by instructing the Funds'
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 under "Initial Purchases by Wire." Write your Fund account number on the
check and include the detachable stub from your Statement of Account or a letter
providing your Fund account number.
PURCHASES THROUGH SELLING AGENTS
You may place a purchase order for shares of the Fund through a broker/dealer
or financial institution that has entered into a Selling Agreement with
Stephens, as the Funds' Distributor (each, a Selling Agent). If your order is
placed by the close of the NYSE, the purchase order generally is 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 is executed on the next Business Day following the day your order
is placed. The Selling Agent is responsible for the prompt transmission of your
purchase order to the Funds. Because payment for shares of the Fund is not due
until settlement date, the Selling Agent might benefit from the temporary use of
your payment. A financial institution that acts 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.
PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS
Purchase orders for shares of the Fund may be transmitted to the Transfer
Agent through any entity that has entered into a Shareholder Servicing Agreement
with the Funds ("Shareholder Servicing Agent"), such as Wells Fargo Bank. See
"Management, Distribution 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 is 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 is 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.
PROSPECTUS 30
<PAGE> 39
STATEMENTS AND REPORTS
The Fund, or a Shareholder Servicing Agent on their behalf, typically sends
you a confirmation or statement of your account after every transaction that
affects your share balance or your Fund account registration. The Fund does not
issue share certificates. A statement with tax information will be mailed to you
by January 31 of each year, and also will be filed with the IRS. At least twice
a year, you will receive financial statements.
DIVIDENDS
The Fund intends to declare annual dividends of substantially all of its net
investment income. The Fund 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 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.
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 and Class B
Shares.
31 PROSPECTUS
<PAGE> 40
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares in the Fund on any Business
Day. Your shares are redeemed at the next NAV calculated after the Funds have
received your redemption request in proper form. Redemption proceeds may be more
or less than the amount invested and, therefore, a redemption may result in a
gain or loss for federal and state income tax purposes. The Funds ordinarily
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 Fund's current intention, the Fund may make
payment of redemption proceeds in securities if conditions warrant, subject to
regulation by some state securities commissions. In addition, the Fund reserves
the right to impose charges for wiring redemption proceeds.
Due to the high cost of maintaining Fund accounts with small balances, the
Fund reserves 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
$1,000 or more. Plan Accounts are not subject to minimum Fund account balance
requirements. For a discussion of applicable minimum balance requirements, see
"Investing in the Fund -- 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 redemption privileges authorize the Transfer Agent to act
on telephone instructions from any person representing himself or herself to be
the investor and reasonably believed by the Transfer Agent to be genuine. The
Company requires the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses due to unauthorized or
PROSPECTUS 32
<PAGE> 41
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 that 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 Fund - 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 the 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 the 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.
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.
33 PROSPECTUS
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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 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
have shares of the Fund redeemed from your account and 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 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 Fund for participating in the
Systematic Withdrawal Plan. However, you
PROSPECTUS 34
<PAGE> 43
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 generally is 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 is 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 are 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 is mailed to your address of record or, if such address is no longer
valid, the net proceeds are 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, it 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 the 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 generally is 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 your
order is 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.
35 PROSPECTUS
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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 are credited to an account with the Approved Bank that you have designated
in the Account Application. If no such account is designated, a check for the
net redemption proceeds is mailed to your address of record or, if such address
is no longer valid, the net redemption proceeds are credited to your account
with your Shareholder Servicing Agent or to another account designated in your
agreement with your Shareholder Servicing Agent.
ADDITIONAL SHAREHOLDER SERVICES
The Company offers you a number of optional services. As noted above, you can
take advantage of the AutoSaver Plan, Tax-Deferred Retirement Plans, the
Systematic Withdrawal Plan, and Expedited Redemptions by Letter and Telephone.
In addition, the Fund offers you several dividend and distribution payment
options and an exchange privilege, which are described below.
DIVIDEND AND DISTRIBUTION OPTIONS
When you fill out your Account Application, you can choose from 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 that paid such dividends or capital gain distributions. Dividends
and distributions declared in a month generally are reinvested in additional
shares 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 Fund 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 California Tax-Free Money Market Mutual
Fund and the Money Market Mutual Fund are, collectively, the "Money Market
Mutual Funds"). Dividends and distributions paid on Class A Shares may also be
invested in shares of a non-money market fund 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.
PROSPECTUS 36
<PAGE> 45
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 Fund's dividend disbursing agent on your behalf.
D. The Check Payment Option lets you receive a check for all dividends and
capital gain distributions, which generally is mailed either to your designated
address or your designated Approved Bank shortly following declaration. If the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, your distributions will be held in a
non-interest-bearing omnibus bank account established by the Fund's 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, and allows you to respond to changes in
your investment and savings goals or in market conditions. Class A and Class B
Shares of the Fund 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 the Fund into another fund of the Stagecoach
Family of Funds, please observe the following:
- Obtain and carefully read the prospectus of the fund into which you want to
exchange.
- 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
Class A Shares of the Money Market Mutual Fund or for shares of the
California Tax-Free Money Market Mutual Fund, a contingent deferred sales
charge is not 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.
- The dollar amount of shares you exchange must meet the minimum initial
and/or subsequent investment amounts of the other fund.
37 PROSPECTUS
<PAGE> 46
- 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
Class A Shares of the Money Market Mutual Fund or for shares of the
California Tax-Free 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 Fund - Initial Purchases by Wire" or (if you have authorized
telephone exchanges) 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 the 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, are no longer subject
to the higher Rule 12b-1 Fees applicable to Class B Shares. Such conversion is
on the basis of the relative NAV 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 NAV of the Class A Shares may be higher than that
of the Class B Shares at the time of conversion, a shareholder may receive fewer
PROSPECTUS 38
<PAGE> 47
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 are 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, and exchanges back into
Class B Shares, 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
are converted into Class A Shares.
MANAGEMENT, DISTRIBUTION AND
SERVICING FEES
INVESTMENT ADVISER
Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank, as the Master Portfolio's investment adviser, provides investment
guidance and policy direction in connection with the management of the Fund's
assets. Wells Fargo Bank also furnishes the Trust's Board of Trustees with
periodic reports on the Master Portfolio's investment strategy and performance.
For these services, Wells Fargo Bank is entitled to a monthly investment
advisory fee at the annual rate of 0.50% of the Capital Appreciation Master
Portfolio's average daily net assets. From time to time, Wells Fargo Bank may
waive such fees in whole or in part. Any such waiver will reduce Fund expenses,
and, accordingly, have a favorable impact on the Fund's yield and total return.
From time to time, the Fund, consistent with its investment objective, policies
and restrictions, may invest in securities of companies with which Wells Fargo
Bank has a lending relationship.
Prior to February 20, 1996, the Predecessor Fund directly retained Wells Fargo
Bank as investment adviser. For the year ended December 31, 1995, the
Predecessor Fund paid Wells Fargo Bank an amount equal to 0.50% of the average
daily net assets of the Predecessor Fund as compensation for its advisory
services.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank serves as the Fund's custodian and transfer and dividend
disbursing agent. Pursuant to a Custody Agreement with Wells Fargo Bank, the
Fund may, at times, borrow money from Wells Fargo Bank as needed to satisfy
temporary liquidity needs.
39 PROSPECTUS
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Wells Fargo Bank charges interest on such overdrafts at a rate determined
pursuant to the Fund's Custody Agreement. The transfer and dividend disbursing
agency activities are performed at 525 Market Street, San Francisco, California
94163.
SHAREHOLDER SERVICING AGENT
The Fund has entered into Shareholder Servicing Agreements with Wells Fargo
Bank on behalf of each Class of the Fund, and may enter into similar agreements
with other entities. Under such agreements, Shareholder Servicing Agents
(including Wells Fargo Bank) agree to, 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 the
Fund, proxy statements, annual reports, updated prospectuses and other
communications to shareholders; receive, tabulate and send to the Fund proxies
executed by shareholders; and provide such other related services as the Fund 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 shareholder servicing fees charged to each
Class, as calculated on an annualized basis for each Fund's then current fiscal
year, exceed the lesser of (1) 0.25% of the average daily net assets
attributable to Class A or Class B Shares, as the case may be, owned during the
period for which payment is being made by investors with whom the Shareholder
Servicing Agent maintains a servicing relationship, or (2) an amount which
equals the maximum amount payable to the Shareholder Servicing Agent under
applicable laws, regulations or rules, including the Rules of Fair Practice of
the NASD ("NASD Rules"). In no event will the portion of such fees that
constitutes a "service fee," as that term is used by the NASD, exceed 0.25% of
the average net asset value attributable to the Class A and Class B Shares of
the Fund.
Shareholder Servicing Agents also may impose certain conditions on their
customers, subject to the terms of this Prospectus, in addition to or different
from those imposed by the Fund, such as requiring a higher minimum initial
investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to
PROSPECTUS 40
<PAGE> 49
agree to disclose any fees it may directly charge its customers who are
shareholders of the Fund and to notify them in writing at least 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 Fund and Master Portfolio with administrative services,
including general supervision of the Fund's and Master Portfolio's operation,
coordination of the other services provided to the Fund and Master Portfolio,
compilation of information for reports to the SEC and the state securities
commissions, preparation of proxy statements and shareholder reports, and
general supervision of data compilation in connection with preparing periodic
reports to the Company's Directors and officers. Stephens also furnishes office
space and certain facilities to conduct the Fund's and Master Portfolio'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 the Fund a monthly fee at the annual rate of 0.03% of the Fund's
average daily net assets. From time to time, Stephens may waive its fees from
the Fund in whole or in part. Any such waiver will reduce the Fund's expenses
and, accordingly, have a favorable impact on such Fund's yield and total return.
Under the agreement with the Trust, Stephens is not entitled to receive a fee
for providing administrative services to the Master Portfolio so long as
Stephens is entitled to be compensated for providing administrative services to
another mutual fund that invests all of its assets in the Master Portfolio.
Stephens, as the principal underwriter of the Fund within the meaning of the
1940 Act, has also entered into a Distribution Agreement with the Company
pursuant to which Stephens has the responsibility for distributing Class A
Shares and Class B Shares of the Fund. The Distribution Agreement provides that
Stephens shall act as agent for the Fund for the sale of its Class A Shares and
Class B Shares and may enter into selling agreements with broker/dealers or
financial institutions to market and make available Class A Shares and Class B
Shares to their respective customers ("Selling Agents").
The Company's Board of Directors has adopted a plan of distribution on behalf
of each class of shares of the Fund (each, a "Plan" and, collectively, the
"Plans"). Under the Plans and pursuant to Distribution Agreement, Stephens is
entitled to receive from the Fund a monthly fee at an annual rate of up to 0.10%
of the average daily net assets of the Class A Shares of the Fund and a monthly
fee at an annual rate of up to 0.75% of the average daily net assets of the
Class B Shares of the Fund. The actual fee payable to Stephens is determined,
within such limits, from time to time by mutual agreement between the Company
and Stephens, and may not exceed the maximum amount payable under the Rules of
Fair Practice of the NASD. Stephens may enter into selling agreements with one
or more selling agents under which such agents may receive from Stephens
compensation for sales support services. Compensation paid by Stephens to
Selling Agents may include, but is not limited to, commissions or other payments
for expenses incurred and distribution-related services provided that are
primarily intended
41 PROSPECTUS
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to result in the sale of shares. Services provided by Selling Agents in exchange
for commissions and other payments to Selling Agents are the principal sales
support services provided to the Fund. Stephens may retain any portion of the
total distribution fee payable under the Distribution Agreement to compensate it
for distribution-related services provided by it or to reimburse it for other
distribution-related expenses. Since the Distribution Agreement provides for
fees that are used by Stephens to pay for distribution services, the Plans and
the Distribution Agreement are approved and reviewed in accordance with Rule
12b-1 under the 1940 Act, which regulates the manner in which an investment
company may, directly or indirectly, bear the expense of distributing its
shares.
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
The Master Portfolio's Investment Advisory Contract and the Administration
Agreements with the Master Portfolio and the Fund provide that, if in any fiscal
year, the total aggregate expenses of the Master Portfolio and the Fund incurred
by, or allocated to, the Master Portfolio and the Fund (excluding taxes,
interest, brokerage commissions and other portfolio transaction expenses,
expenditures that are capitalized in accordance with generally accepted
accounting principles, extraordinary expenses and amounts accrued or paid under
a Plan) exceed the most restrictive expense limitation applicable to the Fund
imposed by the securities laws or regulations of the states in which the Fund's
shares are registered for sale, Wells Fargo Bank and Stephens shall waive their
fees proportionately under the Investment Advisory Contract and the
Administration Agreements, respectively, for the fiscal year to the extent of
the excess, or reimburse the excess, but only to the extent of their respective
fees. The Investment Advisory Contract and the Administration Agreements further
provide that the total expenses shall be reviewed monthly so that, to the extent
the annualized expenses for such month exceed the most restrictive applicable
annual expense limitation, the monthly fees under the Investment Advisory
Contract and the Administration Agreements shall be reduced as necessary.
Currently, the most stringent applicable state expense ratio limitation is 2.50%
of the first $30 million of the Fund's average net assets for its current fiscal
year, 2% of the next $70 million of such assets, and 1.50% of such assets in
excess of $100 million.
Except for the expenses borne by Wells Fargo Bank and Stephens, the Company
and the Trust bear all costs of their respective operations, including the
compensation of the Company's directors and the Trust's trustees who are not
officers or employees of Wells
PROSPECTUS 42
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Fargo Bank or Stephens or any of their affiliates; advisory (in the case of the
Master Portfolio), shareholder servicing (in the case of the Fund), and
administration fees; payments pursuant to any Plans (in the case of the Fund);
interest charges; taxes; fees and expenses of independent auditors; legal
counsel, transfer agent and dividend disbursing agent; expenses of redeeming
Fund shares or interests in the Master Portfolio; expenses of preparing and
printing prospectuses (except the expense of printing and mailing prospectuses
used for promotional purposes, unless otherwise payable pursuant to a Plan),
shareholders' or investors' reports, notices, proxy statements and reports to
regulatory agencies; insurance premiums and certain expenses relating to
insurance coverage; trade association membership dues; brokerage and other
expenses connected with the execution of portfolio transactions; fees and
expenses of the custodian, including those of keeping books and accounts and
calculating the net asset value of the Fund and the Master Portfolio; expenses
of shareholders' or investors' meetings; expenses relating to the issuance,
registration and qualification of shares of the Fund; pricing services;
organizational expenses; and any extraordinary expenses. Expenses attributable
to the Fund and/or the Master Portfolio are charged against the respective
assets of the Fund and/or the Master Portfolio.
TAXES
By complying with the applicable provisions of the Code, the Fund will not be
subject to federal income taxes with respect to net investment income and net
realized capital gains distributed to its shareholders. Dividends from
investment income (including net short-term capital gains, if any) declared and
paid by the Fund will be taxable as ordinary income to the Fund's shareholders.
Whether you take such dividend payments in cash or have them automatically
reinvested in additional shares, they will be taxable as ordinary income.
Generally, dividends and distributions are taxable to shareholders at the time
they are paid. However, dividends and distributions declared payable in October,
November and December and made payable to shareholders of record in such a month
are treated as paid and are thereby taxable as of December 31, provided that
such dividends or distributions are actually paid no later than January 31 of
the following year. You may be eligible to defer the taxation of dividend and
capital gain distributions on shares of the Fund which are held under a
qualified tax-deferred retirement plan. See "Investing in the
Fund - Tax-Deferred Retirement Plans" above. The Fund intends to pay out
substantially all of its net investment income and net realized capital gains
(if any) for each year. Corporate shareholders of the Fund may be eligible for
the dividends-received deduction on the dividends (excluding the net capital
gains dividends) paid by the Fund to the extent the Fund's income is derived
from certain dividends received from domestic corporations. In order to qualify
for the dividends-received deduction a corporate shareholder must hold shares of
the Fund paying the dividends upon which such deduction is based for at least 46
days.
43 PROSPECTUS
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Portions of the Fund's investment income may be subject to foreign taxes
withheld at the source; however, the Fund does not expect to be able to pass
through any portion of the foreign taxes to its shareholders.
The Fund, or your Shareholder Servicing Agent on its 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 by federal law to withhold, subject to certain exemptions,
at a rate of 31% on dividends paid and redemption proceeds (including proceeds
from exchanges) paid or credited to individual shareholders of the Fund if a
correct taxpayer identification number, certified when required, is not on file
with the Company or the Transfer Agent. In connection with this withholding
requirement, you will be asked to certify on your Account Application that the
social security or taxpayer identification number you provide is correct and
that you are not subject to 31% backup withholding for previous underreporting
to the IRS.
The Fund seeks to comply with the applicable provisions of the Code by
investing all of its assets in the Master Portfolio. The Master Portfolio will
qualify for federal income tax purposes as a partnership. As such, the Fund will
be deemed to own directly its proportionate share of the Trust's assets.
Therefore, any interest, dividends and gains or losses of a Master Portfolio
will be deemed to have been "passed through" to the Fund and other investors in
the Master Portfolio, regardless of whether such interest, dividends or gains
have been distributed by the Master Portfolio or losses have been realized
(through contribution) by the Fund and other investors. Accordingly, if the
Master Portfolio were to accrue but not distribute any interest, dividends or
gains, the Fund would be deemed to have realized and recognized its
proportionate share of interest, dividends or gains without receipt of any
corresponding distribution. However, each Master Portfolio will seek to minimize
recognition by investors of interest, dividends or gains without a corresponding
distribution.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Tax - Foreign Shareholders" in the Fund's
SAI.
Further federal tax considerations are discussed in the SAI. All investors
should consult their individual tax advisors with respect to their particular
tax situations as well as the state and local tax status of investments in
shares of the Fund.
PROSPECTUS 44
<PAGE> 53
PROSPECTUS APPENDIX --
ADDITIONAL INVESTMENT POLICIES
FUND INVESTMENTS
Temporary Investments
From time to time, for temporary defensive purposes, the Master Portfolio may
hold assets in cash or make short-term investments, to the extent appropriate,
to maintain adequate liquidity for redemption requests or other cash management
needs or for temporary defensive purposes. The short-term investments that the
Funds may purchase for liquidity purposes include: U.S. Treasury bills, shares
of other mutual funds and repurchase agreements (as discussed below). Other
permissible investments include: (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 or "A-1+" or "A-1" by S&P, or, if unrated, of
comparable quality as determined by Wells Fargo Bank, as investment adviser; and
(iv) 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 the Fund.
Repurchase Agreements
The Master Portfolio may enter into repurchase agreements wherein the seller
of a security to the Master Portfolio agrees to repurchase that security from
the Master Portfolio at a mutually agreed-upon time and price. The period of
maturity is usually quite short, often overnight or a few days, although it may
extend over a number of months. The Master Portfolio may enter into repurchase
agreements only with respect to obligations and other securities that could
otherwise be purchased by the Funds. All repurchase agreements will be fully
collateralized based on values that are marked to market daily. The maturities
of the underlying securities in a repurchase agreement transaction entered into
by the Master Portfolio may be greater than one year. If the seller defaults and
the value of the underlying securities has declined, the Master Portfolio may
incur a loss. In addition, if bankruptcy proceedings are commenced with respect
to
A-1 PROSPECTUS
<PAGE> 54
the seller of the security, the Master Portfolio's disposition of the security
may be delayed or limited. The Master Portfolio will enter into repurchase
agreements only with registered broker/dealers and commercial banks that meet
guidelines established by the Trust's Board of Trustees and are not affiliated
with the investment adviser, Wells Fargo Bank. The Master Portfolio may
participate in pooled repurchase agreement transactions with other funds advised
by Wells Fargo Bank.
Money Market Instruments
The Master Portfolio may invest in the following types of money market
instruments that have remaining maturities not exceeding one year: (i) U.S.
Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; and (iii) commercial paper rated at the date of purchase "P-1" by Moody's
or "A-1" or "A-1+" by S&P. The Master Portfolio also may invest in short-term
U.S. dollar-denominated obligations of foreign banks (including U.S. branches)
that at the time of investment: (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) are among the 75 largest
foreign banks in the world as determined on the basis of assets; and (iii) have
branches or agencies in the United States.
Other Investment Companies
The Master Portfolio may invest in shares of other open-end, management
investment companies, subject to the limitations of Section 12(d)(1) of the 1940
Act, provided that any such purchases will be limited to temporary investments
in shares of unaffiliated investment companies and Wells Fargo Bank will waive
its advisory fees for that portion of the Master Portfolio's assets so invested,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition. Notwithstanding any other investment policy or
limitation (whether or not fundamental), as a matter of fundamental policy, the
Aggressive Growth Fund may invest all of its assets in the securities of a
single open-end, management investment company with substantially the same
fundamental investment objective, policies and limitations as the Fund. Subject
to the limitations of the 1940 Act, the Funds may purchase shares of
exchange-listed, closed-end funds consistent with pursuing their investment
objectives.
INVESTMENT POLICY
The Fund's investment objective, as set forth under "How the Fund
Works - Investment Objective and Policies," is fundamental; that is, it may not
be changed without approval by the vote of the holders of a majority of the
Fund's outstanding voting securities, as described under "Capital Stock" in the
SAI for the Fund. If the Board of
PROSPECTUS A-2
<PAGE> 55
Directors determines, however, that the Fund's investment objective can best be
achieved by a substantive change in a nonfundamental investment policy or
strategy, the Company may make such change without shareholder approval and will
disclose any such material changes in the then-current Prospectus.
As matters of fundamental policy: (i) the Fund may 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) the Fund may borrow from banks up to 10% of the current
value of its net assets for temporary purposes only in order to meet
redemptions, and these borrowings may be secured by the pledge of up to 10% of
the current value of its net assets (but investments may not be purchased by the
Fund while any such outstanding borrowings exceed 5% of the Fund's net assets);
(iii) the Fund may make loans of portfolio securities in accordance with its
investment policies; and (iv) the Fund may not invest 25% or more of its assets
(i.e., concentrate) in any particular industry, except that a Fund may invest
25% or more of its assets in U.S. Government obligations. With respect to
fundamental investment policy (i) above, the Fund is subject to this restriction
only with respect to 75% of the Fund's assets, and it may be possible that the
Company would own more than 10% of the outstanding voting securities of the
issuer.
As a matter of nonfundamental policy, the Fund may invest up to 15% of the
current value of its net assets in illiquid securities. For this purpose,
illiquid securities include, among others, (a) securities that are illiquid by
virtue of the absence of a readily available market or legal or contractual
restrictions on resale, (b) fixed time deposits that are subject to withdrawal
penalties and that have maturities of more than seven days and (c) repurchase
agreements not terminable within seven days.
A-3 PROSPECTUS
<PAGE> 56
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND
DIVIDEND DISBURSING AGENT AND
CUSTODIAN
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, California 94120-7066
LEGAL COUNSEL
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
For more information about the Funds, simply call 1-800-222-8222, or write:
Stagecoach Funds, Inc.
c/o Stagecoach Shareholder Services
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, California 94120-7066
STAGECOACH FUNDS:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- are NOT FDIC insured
- are NOT guaranteed by Wells Fargo Bank
- are NOT deposits or obligations of the Bank LOGO
- involve investment risk, including possible loss
of principal
</TABLE>
LOGO SC-02-96-002
Printed on Recycled Paper
<PAGE> 57
LOGO
P.O. Box 7066
San Francisco, CA 94120-7066
STAGECOACH FUNDS:
- --------------------------------------------------------------------------------
- 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
LOGO SC-02-96-002
Printed on Recycled Paper
<PAGE> 58
STAGECOACH FUNDS, INC.
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 27, 1996
AGGRESSIVE GROWTH FUND
Stagecoach Funds, Inc. (the "Company") is a professionally
managed, open-end, series investment company, commonly referred to as a "mutual
fund." This Statement of Additional Information ("SAI") contains information
about one of the funds in the Stagecoach Family of Funds -- the AGGRESSIVE
GROWTH FUND (the "Fund"). The Fund offers two classes of shares -- Class A
Shares and Class B Shares. This SAI relates to both such classes of shares.
The investment objective of the Fund is described in its Prospectus under the
section entitled "How the Fund Works -- Investment Objectives and Policies."
The Fund seeks to achieve its investment objective by investing all of its
assets in the Capital Appreciation Master Portfolio (at times, the "Master
Portfolio") of Master Investment Trust (the "Trust"), which has the same
investment objective as the Fund. The Fund may withdraw its investment in the
Capital Appreciation Master Portfolio at any time, if the Board of Directors of
the Company determines that such action is in the best interests of the Fund
and its shareholders. Upon such withdrawal, the Company's Board would consider
alternative investments, including investing all of the Fund's assets in
another investment company with the same investment objective as the Fund or
hiring an investment adviser to manage the Fund's assets in accordance with the
investment policies and restrictions described in the Prospectus and below with
respect to the Trust.
This SAI is not a prospectus and should be read in conjunction
with the Fund's Prospectus, dated February 27, 1996. All terms used in this
SAI that are defined in the Prospectus have the meanings assigned in the
Prospectus. A copy of the Prospectus for the Fund may be obtained without
charge by writing Stephens Inc., the Company's sponsor, administrator and
distributor, at 111 Center Street, Little Rock, Arkansas 72201 or by calling
the Transfer Agent at the telephone number indicated above.
------------------------
<PAGE> 59
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Calculation of Yield and Total Return . . . . . . . . . . . . . . . . . . . . . . 12
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . 15
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Federal Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Custodian and Transfer and Dividend Disbursing Agent . . . . . . . . . . . . . . 22
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
2
<PAGE> 60
INVESTMENT RESTRICTIONS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Investment Objectives
and Policies." The Fund and the Master Portfolio are subject to the following
investment restrictions, all of which are fundamental policies. These
restrictions cannot be changed, as to either the Fund or the Master Portfolio
without approval by the holders of a majority (as defined by the 1940 Act) of
the outstanding voting securities of the Fund or the Master Portfolio, as
appropriate. Whenever the Fund is requested to vote on a fundamental policy of
the Master Portfolio, the Fund will hold a meeting of Fund shareholders and it
will cast its votes as instructed by such shareholders.
Neither the Fund nor the Master Portfolio may:
(1) purchase the securities of issuers conducting their
principal business activity in the same industry if, immediately after the
purchase and as a result thereof, the value of the Fund's investments in that
industry would be 25% or more of the current value of the Fund's total assets,
provided that there is no limitation with respect to investments in securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities;
and provided further, that the Fund may invest all its assets in a diversified,
open-end management investment company, or a series thereof, with substantially
the same investment objective, policies and restrictions as such Fund, without
regard to the limitations set forth in this paragraph (1);
(2) purchase or sell real estate or real estate limited
partnerships (other than securities secured by real estate or interests therein
or securities issued by companies that invest in real estate or interests
therein), commodities or commodity contracts, or interests in oil, gas, or
other mineral exploration or development programs;
(3) purchase securities on margin (except for short-term
credits necessary for the clearance of transactions) or make short sales of
securities;
(4) underwrite securities of other issuers, except to the
extent that the purchase of permitted investments directly from the issuer
thereof or from an underwriter for an issuer and the later disposition of such
securities in accordance with the Fund's investment program may be deemed to be
an underwriting; and provided further, that the purchase by the Fund of
securities issued by a diversified, open-end management investment company, or
a series thereof, with substantially the same investment objective, policies
and restrictions as such Fund shall not constitute an underwriting for purposes
of this paragraph (4);
(5) make investments for the purpose of exercising control or
management; provided that the Fund may invest all its assets in a diversified
open-end management company, or a series thereof, with substantially the same
investment objective, policies and restrictions as such Fund, without regard to
the limitations set forth in this paragraph (5);
3
<PAGE> 61
(6) issue senior securities except that the Fund may borrow
from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such outstanding borrowings exceed
5% of its net assets);
(7) make loans of portfolio securities having a value that
exceeds 50% of the current value of its total assets, provided that, this
restriction does not apply to the purchase of fixed time deposits, repurchase
agreements, commercial paper and other types of debt instruments commonly sold
in a public or private offering; nor
(8) purchase securities of any issuer (except securities issued
by the U.S. Government, its agencies or instrumentalities ) if, as a result,
with respect to 75% of its total assets, more than 5% of the value of its total
assets would be invested in the securities of any one issuer or, with respect
to 100% of its total assets the Fund's ownership would be more than 10% of the
outstanding voting securities of such issuer; provided that the Fund may invest
all its assets in a diversified, open-end management investment company, or a
series thereof, with substantially the same investment objective, policies and
restrictions as such Fund, without regard to the limitations set forth in this
paragraph (8).
With respect to fundamental investment policy (7), the Fund and the Master
Portfolio do not intend to loan their portfolio securities during the coming
year.
The Fund and the Master Portfolio are subject to the following
non-fundamental policies. These restrictions may be changed by a vote of a
majority of the Directors of the Company or the Trustees of the Trust, as the
case may be, at any time.
Neither the Fund nor the Master Portfolio may:
(1) purchase or retain securities of any issuer if the officers
or directors of the Fund or its investment adviser owning beneficially more
than one-half of one percent (0.5%) of the securities of the issuer together
owned beneficially more than 5% of such securities;
(2) purchase or sell real estate limited partnership interests;
(3) write, purchase or sell puts, calls or options or any
combination thereof, except to the extent described in the Prospectus and
except that the Fund may purchase securities with put rights in order to
maintain liquidity;
(4) invest in securities of issuers who, with their
predecessors, have been in existence less than three years, unless the
securities are fully guaranteed or insured by the U.S. Government if, by reason
thereof, the value of its aggregate investment in such securities will exceed
5% of its total assets;
4
<PAGE> 62
(5) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities) if, as
a result, more than 5% of the value of the Fund's total assets would be
invested in the securities of any one issuer; nor
(6) invest more than 15% of the Fund's net assets in illiquid
securities. For this purpose, illiquid securities include, among others, (a)
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale, (b) fixed time deposits
that are subject to withdrawal penalties and that have maturities of more than
seven days, and (c) repurchase agreements not terminable within seven days.
In addition, as a matter of non-fundamental policy, the Fund may
invest in shares of other open-end, management investment companies, subject to
the limitations of Section 12(d)(1) of the Act, provided that any such
purchases will be limited to temporary investments in shares of unaffiliated
investment companies and the investment adviser will waive its advisory fees
for that portion of the Fund's assets so invested, except when such purchase is
part of a plan of merger, consolidation, reorganization or acquisition. The
Fund does not intend to invest more than 5% of its net assets in such
securities during the coming year. Notwithstanding any other investment policy
or limitation (whether or not fundamental), as a matter of fundamental policy,
the Fund may invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objective, policies and limitations as the Fund.
As a matter of non-fundamental policy, the Fund and the Master
Portfolio may each invest up to 25% of their respective net assets in
securities of foreign governmental issuers that are denominated in and pay
interest in U.S. dollars.
MANAGEMENT
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "The Fund, the Master
Portfolio and Management." The principal occupations during the past five
years of the Directors and principal executive Officer of the Company are
listed below. The address of each, unless otherwise indicated, is 111 Center
Street, Little Rock, Arkansas 72201. Directors deemed to be "interested
persons" of the Company for purposes of the 1940 Act are indicated by an
asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Address and Age Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 73 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.
</TABLE>
5
<PAGE> 63
<TABLE>
<S> <C> <C>
*R. Greg Feltus, 44 Director, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens
Insurance Services
Inc.; Senior Vice
President of Stephens
Sports Management
Inc.; and President of
Investor Brokerage
Insurance Inc.
Thomas S. Goho, 53 Director T.B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School, of
Business and
Accountancy:Associate
Professor of Finance of the
School of Business
and Accounting at Wake Forest
University since 1983.
*Zoe Ann Hines, 46 Director Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource
Management.
*W. Rodney Hughes, 69 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 51 Director Private Investor; Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
</TABLE>
6
<PAGE> 64
<TABLE>
<S> <C> <C>
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>
COMPENSATION TABLE
For the Fiscal Year Ended December 31, 1995
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $10,188 $39,750
Director
*R. Greg Feltus 0 0
Director
Thomas S. Goho 10,188 39,750
Director
*Zoe Ann Hines 0 0
Director
*W. Rodney Hughes 9,438 37,000
Director
Robert M. Joses 9,938 39,000
Director
*J. Tucker Morse 8,313 33,250
Director
</TABLE>
Directors of the Company are compensated annually by the Company
and by all the registrants in the fund complex for their services as indicated
above and also are reimbursed for all out-of-pocket expenses relating to
attendance at board meetings. Each of the Directors and Officers of the
Company serves in the identical capacity as Officers and Directors of Overland
Express Funds, Inc. and Stagecoach Inc., and as Trustees and/or Officer of
Stagecoach Trust, Master Investment Portfolio, Life & Annuity Trust, Master
Investment Trust and Managed Series Investment Trust, each of which is a
registered open-end management investment company and each of which is
considered to be in the same "fund complex," as such term is defined in Form
N-1A under the 1940 Act, as the
7
<PAGE> 65
Company. The Directors are compensated by other Companies and Trusts within
the fund complex for their services as Directors/Trustees to such Companies and
Trusts. Currently the Directors do not receive any retirement benefits or
deferred compensation from the Company or any other member of the fund complex.
As of the date of this SAI, the Directors and Principal Officer of
the Company as a group beneficially owned less than 1% of the outstanding
shares of the Company.
Investment Adviser. The Fund has not engaged an investment
adviser. The Master Portfolio (which has the same investment objective as the
Fund, and in which the Fund invests all its assets) is advised by Wells Fargo
Bank. The Advisory Contract provides that Wells Fargo Bank shall furnish to
the Master Portfolio investment guidance and policy direction in connection
with the daily portfolio management of the Master Portfolio. Pursuant to the
Advisory Contract, Wells Fargo Bank furnishes to the Board of Trustees periodic
reports on the investment strategy and performance of the Master Portfolio.
Wells Fargo Bank has agreed to provide to the Master Portfolio,
among other things, money market and fixed- income research, analysis and
statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the portfolio of the Master Portfolio.
The Advisory Contract will continue in effect for more than two
years provided the continuance is approved annually (i) by the holders of a
majority of the Master Portfolio's outstanding voting securities or by the
Trust's Board of Trustees and (ii) by a majority of the Trustees of the Trust
who are not parties to the Advisory Contract or "interested persons" (as
defined in the 1940 Act) of any such party. The Advisory Contract may be
terminated on 60 days' written notice by either party and will terminate
automatically if assigned.
The Strategic Growth Fund of Overland Express Funds, Inc. (as
defined in the Prospectus, the "Predecessor Fund") previously retained Wells
Fargo Bank as investment adviser. For the period from inception of the
Predecessor Fund (January 20, 1993) to February 20, 1996, the Predecessor Fund
operated on a stand-alone basis, did not participate in a master/feeder
structure. From January 20, 1993 to December 31, 1993, Wells Fargo Bank waived
payment of all advisory fees of $68,217. For the year ended December 31, 1994,
the Predecessor Fund incurred $207,239 in advisory fees payable to Wells Fargo
Bank, and $9,550 of such fees were waived. For the year ended December 31,
1995, the Predecessor Fund incurred $302,821 in advisory fees payable to Wells
Fargo Bank. Wells Fargo Bank did not waive any such fees.
Wells Fargo Bank also serves as Custodian and Transfer and
Dividend Disbursing Agent for the Fund and the Master Portfolio. See
"Custodian and Transfer and Dividend Disbursing Agent".
8
<PAGE> 66
Morrison & Foerster, counsel to the Company and the Trust and
special counsel to Wells Fargo Bank, has advised Wells Fargo Bank, the Trust
and the Company that Wells Fargo Bank should be able to perform the services
contemplated by the Advisory Contract, the Selling Agent Agreement, the Agency
Agreement, the Custodian Agreement, the Shareholder Servicing Agreement and the
Prospectus, without violation of the Glass-Steagall Act. Such counsel has
pointed out, however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state statutes
and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in federal or state
statutes and regulations and judicial or administrative decisions or
interpretations thereof, could prevent Wells Fargo Bank from continuing to
perform, in whole or in part, such services. If Wells Fargo Bank were
prohibited from performing any of such services, it is expected that new
agreements would be proposed or entered into with another entity or entities
qualified to perform such services.
Administrator and Distributor. The Company has retained Stephens
as administrator and distributor on behalf of the Fund. In addition, the Trust
has retained Stephens as administrator on behalf of the Master Portfolio.
Under the respective Administration Agreements with the Company and the Trust,
Stephens furnishes the Company and the Trust with office facilities, together
with those ordinary clerical and bookkeeping services that are not furnished by
Wells Fargo Bank. Stephens also has entered into a Distribution Agreement with
the Company pursuant to which Stephens has the responsibility of distributing
shares of the Fund.
Prior to February 20, 1996, Stephens served as administrator and
distributor on behalf of the Predecessor Fund.
For the period from inception to December 31, 1993, the
Predecessor Fund's administrative fees totaled $20,483. For the year ended
December 31, 1993, the aggregate dollar amount of underwriting commissions paid
to Stephens by Overland Express Funds, Inc. was $3,604,377, and Stephens
retained $3,457,989 of such commissions. For the same period, Wells Fargo
Securities Inc. ("WFSI"), a subsidiary of Wells Fargo Bank and an affiliated
broker-dealer of the Company, and its registered representatives, received
$146,388 of such commissions.
For the year ended December 31, 1994, the Predecessor Fund's
administrative fees totaled $62,623. For the same period, the aggregate dollar
amount of underwriting commissions paid by Overland Express Funds, Inc. was
$1,408,759, and Stephens retained $1,351,388 of such commissions. WFSI and its
registered representatives received $57,371 of such commissions for the year
ended December 31, 1994.
For the year ended December 31, 1995, the Predecessor Fund's
administrative fees totaled $91,128. For the same period, the aggregate dollar
amount of underwriting commissions paid on sales/redemptions of the shares of
Overland Express Funds, Inc. was
9
<PAGE> 67
$1,424,127, and Stephens retained $152,656 of such commissions. WFSI and its
registered representatives received $31,366 of such commissions for the year.
DISTRIBUTION PLAN
The following information supplements and should be read in
conjunction with the Prospectus section entitled "Distribution Plans." As
indicated in the Prospectus, the Fund has adopted a distribution plan (a
"Plan") under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the
"Rule") for each class of shares of the Fund. The Plan for the Class A Shares
and the Plan for the Class B Shares were each adopted by the Board of Directors
on November 15, 1995, including a majority of the Directors who were not
"interested persons" (as defined in the 1940 Act) of the Fund and who had no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan (the "Non-Interested Directors").
Under the Plan and pursuant to the Distribution Agreement, the
Fund may pay the Distributor, as reimbursement for distribution-related
expenses and compensation for distribution-related services, a monthly fee at
an annual rate of up to 0.10% of the average daily net assets attributable to
Class A Shares and up to 0.75% of the average daily net assets attributable to
the Class B Shares of the Fund. The actual fee payable to the Distributor is
determined, within such limits, from time to time by mutual agreement between
the Company and the Distributor and will not exceed the maximum sales charges
payable by mutual funds sold by members of the National Association of
Securities Dealers, Inc. ("NASD") under the NASD Rules of Fair Practice. The
Distributor may enter into selling agreements with one or more selling agents
under which such agents may receive compensation for distribution-related
services from the Distributor, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. The Distributor may retain any portion of the
total distribution fee payable thereunder to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses.
Each Plan will continue in effect from year to year if such
continuance is approved by a majority vote of both the Directors of the Company
and the Non-Interested Directors. Agreements related to the Plans also must be
approved by such vote of the directors and the Non-Interested Directors. Such
Agreements will terminate automatically if assigned, and may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
outstanding voting securities of the relevant class of the Fund or by vote of a
majority of the Non-Interested Directors on not more than 60 days' written
notice. Each Plan may not be amended to increase materially the amounts
payable thereunder without the approval of a majority of the outstanding voting
securities of the relevant class of the Fund, and no material amendment to the
Plans may be made except by a majority of both the Directors of the Company and
the Non-Interested Directors.
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Each Plan requires that the Company shall provide to the
Directors, and the directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Directors who are not "interested
persons" of the Company be made by such disinterested directors.
The Class A and Class D Shares of the Predecessor Fund have
distribution plans under Rule 12b-1 currently in place. Pursuant to these
Plans, the Predecessor Fund may pay a monthly fee at the annual rate of up to
0.25% of the average daily net assets attributable to the Class A Shares and up
to 0.75% of the average daily net assets attributable to the Class D Shares of
the Predecessor Fund.
For the year ended December 31, 1995 the Class A Shares and Class
D Shares of the Predecessor Fund incurred $102,390 and $148,475, respectively,
in fees under their respective distribution plans; the fees were paid as
compensation to underwriters.
SERVICING PLAN
As indicated in the Fund's Prospectus, the Fund has adopted a
Servicing Plan ("Servicing Plan") with respect to its Class A and Class B
Shares. The Board of Directors adopted each Servicing Plan on November 15,
1995. The Board of Directors included a majority of the Directors who were not
"interested persons" (as defined in the Act) of the Fund and who had no direct
or indirect financial interest in the operation of the Servicing Plan or in any
agreement related to the Servicing Plan (the "Servicing Plan Non-Interested
Directors").
Under the Servicing Plan and pursuant to the Servicing Agreements
for the Class A Shares, the Fund may pay one or more servicing agents, as
compensation for performing certain services, a fee at an annual rate of up to
0.25% of the average daily net assets of the Fund attributable to its Class A
Shares. Under the Servicing Plan and pursuant to the Servicing Agreements for
the Class B Shares, the Fund may pay one or more servicing agents, as
compensation for performing certain services, a fee at an annual rate of up to
0.25% of the average daily net assets of the Fund attributable to the Class B
Shares. The actual fee payable to servicing agents is determined, within such
limits, from time to time by mutual agreement between the Company and each
servicing agent and will not exceed the maximum service fees payable by mutual
funds sold by members of the NASD under the NASD Rules of Fair Practice.
Each Servicing Plan will continue in effect from year to year if
such continuance is approved by a majority vote of both the Directors of the
Company and the Servicing Plan Non-Interested Directors. Any form of Servicing
Agreement related to the Servicing Plan also must be approved by such vote of
the Directors and the Servicing Plan Non- Interested Directors. Servicing
Agreements will terminate automatically if assigned, and may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
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Servicing Plan Non-Interested Directors. No material amendment to the
Servicing Plans may be made except by a majority of both the Directors of the
Company and the Servicing Plan Non-Interested Directors.
Each Servicing Plan requires that the Treasurer of the Company
shall provide to the Directors, and the Directors shall review, at least
quarterly, a written report of the amounts expended (and purposes therefor)
under the Servicing Plan.
The Predecessor Fund has a Servicing Plan currently in place with
respect to its Class D Shares. Pursuant to the Servicing Plan the Predecessor
Fund may pay one or more servicing agents a fee of up to 0.25% of the average
daily net assets of the Fund attributable to the Class D Shares as compensation
for certain services. The Predecessor Fund paid the following amounts in
servicing fees during each of the last three fiscal years pursuant to the Plan
for the Class D Shares:
1993 $ 7,839
1994 $37,050
1995 $49,492
CALCULATION OF YIELD AND TOTAL RETURN
The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Determination of Net
Asset Value" and "Performance Data."
As indicated in the Prospectus, the Fund may advertise certain
total return information computed in the manner described in the Prospectus.
As and to the extent required by the SEC, an average annual compound rate of
return ("T") will be computed by using the redeemable value at the end of a
specified period ("ERV") of a hypothetical initial investment ("P") over a
period of years ("n") according to the following formula: P(1+T)n = ERV. In
addition, as indicated in the Prospectus, the Fund also may, at times,
calculate total return based on net asset value per share (rather than the
public offering price), in which case the figures would not reflect the effect
of any sales charges that would have been paid by an investor, or based on the
assumption that a sales charge other than the maximum sales charge (reflecting
a Volume Discount) was assessed, provided that total return data derived
pursuant to the calculation described above also are presented.
The average annual total returns on the Class A Shares of the
Predecessor Fund for the period from the Predecessor Fund's commencement of
operations (January 20, 1993) to December 31, 1995, assuming a 4.50% sales load
and no sales load, were 25.05% and 27.01%, respectively. The average annual
total return on the Class D Shares of the Predecessor Fund for the period from
inception (July 1, 1993) to December 31, 1995 was 22.68%. The annual total
returns on the Class A Shares of the Fund for the one year ended December 31,
1995, assuming a 4.50% sales loan and no sales load were 36.06% and 42.51%
respectively. The annual total return on the Class D Shares of the Predecessor
Fund for the one-year ended December 31, 1995 was 40.57%, assuming payment of
the 1% CDSC.
The Fund may advertise the cumulative total return of the
Predecessor Fund. Cumulative total return is computed by determining the
aggregate comppounded rate of return during specified periods that equate the
initial amount invested to the ending redeemable value of such investment.
The cumulative total return on the Class A Shares of the
Predecessor Fund for the period from the Predecessor Fund's commencement of
operation (January 20, 1993) to December 31, 1995, assuming a 4.50% sales load
and no sales load, were 102.84% and 93.74%, respectively.
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The average annual total return on the Class D Shares of the
Predecessor Fund for the period from inception (July 31, 1993) to December 31,
1995, based on the expenses and performance history of the Class D Shares and
restated to include the maximum CDSC of 1.0% applicable on redemption of the
Fund's Class B Shares, was 22.38%. The cumulative total return on the Class D
Shares of the Predecessor Fund for the same period, based on the expenses and
performance history of the Class D Shares and restated to include the maximum
CDSC of 1.0% applicable on redemption of the Fund's Class B Shares, was 65.69%.
The annual total return on the Class D Shares of the Predecessor Fund for the
year ended December 31, 1995, based on the expenses and performance history of
the Class D Shares and restated to include the maximum CDSC of 3.0% applicable
on redemption of the Fund's Class B Shares, was 38.64%.
From time to time and only to the extent the comparison is
appropriate for a class of Shares of the Fund, the Company may quote performance
or price-earning ratios of a class of Shares of the Fund in advertising and
other types of literature as compared to the performance of the Lehman Brothers
Municipal Bond Index, 1-Year Treasury Bill Rate, S&P Index, the Dow Jones
Industrial Average, the Lehman Brothers 20+ Years Treasury Index, the Lehman
Brothers 5-7 Year Treasury Index, IBC/Donoghue's Money Fund Averages, Real
Estate Investment Averages (as reported by the National Association of Real
Estate Investment Trusts), Gold Investment Averages (provided by the World Gold
Council), Bank Averages (which is calculated from figures supplied by the U.S.
League of Savings Institutions based on effective annual rates of interest on
both passbook and certificate accounts), average annualized certificate of
deposit rates (from the Federal Reserve G-13 Statistical Releases or the Bank
Rate Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), Ten Year U.S.
Government Bond Average, S&P's Corporate Bond Yield Averages, Schabacter
Investment Management Indices, Salomon Brothers High Grade Bond Index, Lehman
Brothers Long-Term High Quality Government/Corporate Bond Index, other managed
or unmanaged indices or performance data of bonds, stocks or government
securities (including data provided by Ibbotson Associates), or by other
services, companies, publications or persons who monitor mutual funds on overall
performance or other criteria. The S&P Index and the Dow Jones Industrial
Average are unmanaged indices of selected common stock prices. The performance
of a class of shares of the Fund also may be compared to the performance of
other mutual funds having similar objectives. This comparative performance
could be expressed as a ranking prepared by Lipper Analytical Services, Inc.,
CDA Investment Technologies, Inc., Bloomberg Financial Markets or Morningstar,
Inc., independent services which monitor the performance of mutual funds. The
performance of a class of shares the Fund is calculated by relating net asset
value per share at the beginning of a stated period to the net asset value of
the investment, assuming reinvestment of all gains distributions and dividends
paid, at the end of the period. Any such comparisons may be useful to investors
who wish to compare the Fund's past performance with that of its competitors.
Of course, past performance cannot be a guarantee of future results. The
Company also may include, from time to time, a reference to certain marketing
approaches of the Distributor, including, for example, a reference to a
potential shareholder being contacted by a selected broker or dealer. General
mutual fund statistics provided by the Investment Company Institute may also be
used.
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In addition, the Company also may use, in advertisements and other
types of literature, information and statements: (1) showing that bank savings
accounts offer a guaranteed return of principal and a fixed rate of interest,
but no opportunity for capital growth; and (2) describing Wells Fargo Bank, and
its affiliates and predecessors, as one of the first investment managers to
advise investment accounts using asset allocation and index strategies. The
Company also may include in advertising and other types of literature
information and other data from reports and studies prepared by the Tax
Foundation, including information regarding federal and state tax levels and
the related "Tax Freedom Day."
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for a class of shares of the Fund: (i) the Consumer
Price Index may be used to assess the real rate of return from an investment in
a class of shares of the Fund; (ii) other government statistics, including, but
not limited to, The Survey of Current Business, may be used to illustrate
investment attributes of a class of shares of the Fund or the general economic,
business, investment, or financial environment in which the Fund operates;
(iii) the effect of tax-deferred compounding on the investment returns of a
class of shares of the Fund, or on returns in general, may be illustrated by
graphs, charts, etc., where such graphs or charts would compare, at various
points in time, the return from an investment in a class of shares of the Fund
(or returns in general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates) with the return
on a taxable basis; and (iv) the sectors or industries in which the Fund or the
Master Portfolio invests may be compared to relevant indices of stocks or
surveys (e.g., S&P Industry Surveys) to evaluate the historical performance of
the Fund or the Master Portfolio or current or potential value with respect to
the particular industry or sector.
The Company also may discuss in advertising and other types of
literature that the Fund has been assigned a rating by a nationally recognized
statistical rating organization ("NRSRO"), such as S&P or Moody's. Such rating
would assess the creditworthiness of the investments held by the Fund. The
assigned rating would not be a recommendation to purchase, sell or hold any
class of the Fund's shares since the rating would not comment on the market
price of the Fund's shares or the suitability of the Fund for a particular
investor. In addition, the assigned rating would be subject to change,
suspension or withdrawal as a result of changes in, or unavailability of,
information relating to the Fund or its investments. The Company may compare
the Fund's performance with other investments which are assigned ratings by
NRSROs. Any such comparisons may be useful to investors who wish to compare
the Fund's past performance with other rated investments.
The Company also may disclose in advertising and other types of
literature, information and statements the distribution rate on the shares of
each class of the Fund. Distribution rate, which may be annualized, is the
amount determined by dividing the dollar amount per share of the most recent
dividend by the most recent NAV or maximum offering price per share as of a
date specified in the sales literature. Distribution rate will be accompanied
by the standard 30-day yield as required by the SEC.
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<PAGE> 72
The Company also may disclose, in advertising and other types of
literature, information and statements that the Company's investment adviser,
Wells Fargo Bank, is listed in Nelson Publications' ("Nelson's") "Top 20"
performance rankings as published in the 1994 edition of "America's Best Money
Managers." The Nelson survey ranks the performance of money managers in over
30 asset/style categories and is based on analysis of performance composites
and surveys of institutional money managers. The Company may also disclose in
advertising and other types of sales literature the assets and categories of
assets under management by the Company's investment adviser and the total
amount of assets under management by Wells Fargo Investment Management Group
("IMG"). As of December 31, 1995, IMG had $30.1 billion in assets under
management.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the Prospectus section entitled "Purchase of Shares." Net
asset value per share for each class of the Fund and net asset value per unit
of the Master Portfolio are each determined by the Custodian of the Fund on
each day the Exchange is open for trading as of the close of regular trading on
the Exchange, which is currently 4:00 p.m. New York time.
Securities of the Master Portfolio for which market quotations are
available are valued at latest prices. Any security for which the primary
market is an exchange is valued at the last sale price on such exchange on the
day of valuation or, if there was no sale on such day, the latest bid price
quoted on such day. In the case of other securities, including U.S. Government
securities but excluding money market instruments maturing in 60 days or less,
the valuations are based on latest quoted bid prices. Money market instruments
maturing in 60 days or less are valued at amortized cost. The assets of the
Master Portfolio other than money market instruments maturing in 60 days or
less are valued at latest quoted bid prices. Prices may be furnished by a
reputable independent pricing service approved by the Board of Trustees.
Prices provided by an independent pricing service may be determined without
exclusive reliance on quoted prices and may take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data. All other securities and other assets of the Master
Portfolio for which current market quotations are not readily available are
valued at fair value as determined in good faith by the Trust's Trustees and in
accordance with procedures adopted by the Trustees.
Expenses and fees, including advisory fees, are accrued daily and
are taken into account for the purpose of determining the net asset value of
the Master Portfolio's interests and the Fund's shares.
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<PAGE> 73
PORTFOLIO TRANSACTIONS
Purchases and sales of securities by the Master Portfolio usually
are principal transactions. Portfolio securities normally are purchased or
sold from or to dealers serving as market makers for the securities at a net
price. The Master Portfolio also may purchase portfolio securities in
underwritten offerings and may purchase securities directly from the issuer.
The cost of executing the Master Portfolio's portfolio securities transactions
consists primarily of dealer spreads and underwriting commissions. Under the
1940 Act, persons affiliated with the Trust are prohibited from dealing with
the Trust as a principal in the purchase and sale of securities unless an
exemptive order allowing such transactions is obtained from the SEC or an
exemption is otherwise available. The Master Portfolio may purchase securities
from underwriting syndicates of which Stephens or Wells Fargo Bank is a member
under certain conditions in accordance with the provisions of a rule adopted
under the 1940 Act and in compliance with procedures adopted by the Board of
Trustees.
Wells Fargo Bank, as the investment adviser of the Master
Portfolio, may, in circumstances in which two or more dealers are in a position
to offer comparable results for the Master Portfolio's portfolio transaction,
give preference to a dealer that has provided statistical or other research
services to Wells Fargo Bank. By allocating transactions in this manner, Wells
Fargo Bank is able to supplement its research and analysis with the views and
information of securities firms. Information so received is in addition to,
and not in lieu of, the services required to be performed by Wells Fargo Bank
under the Advisory Contract, and the expenses of Wells Fargo Bank are not
necessarily reduced as a result of the receipt of this supplemental research
information. Furthermore, research services furnished by dealers through which
Wells Fargo Bank places securities transactions for the Master Portfolio may be
used by Wells Fargo Bank in servicing its other accounts, and not all of these
services may be used by Wells Fargo Bank in connection with advising the Master
Portfolio.
The Trust has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Trust's Board of Trustees, Wells Fargo Bank is
responsible for the Master Portfolio's portfolio decisions and the placing of
portfolio transactions. In placing orders, it is the policy of the Company and
Trust to obtain the best results taking into account the dealer's general
execution and operational facilities, the type of transaction involved and
other factors such as the dealer's risk in positioning the securities involved.
While Wells Fargo Bank generally seeks reasonably competitive spreads or
commissions, the Master Portfolio does not necessarily pay the lowest spread or
commission available.
On December 31, 1995, the Predecessor Fund to the Master Portfolio
owned securities of its "regular brokers or dealers or their parents", as
defined in the 1940 Act, as follows: $1,638,000 of Goldman Sachs & Co.
Government Repurchase Agreement.
For the year ended December 31, 1994, the Predecessor Fund paid
brokerage commission in the amount of $171,356.
For the year ended December 31, 1995, the Predecessor Fund paid
brokerage commissions in the amount of $190,359; brokerage commissions were not
paid to any affiliated brokers.
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Portfolio Turnover. Portfolio turnover generally involves some
expenses to the Master Portfolio, including brokerage commissions or dealer
mark-ups and other transaction costs on the sale of securities and the
reinvestment in other securities. A high portfolio turnover rate should not
result in the Master Portfolio paying substantially more brokerage commissions,
since most transactions in government securities and municipal securities are
effected on a principal basis. Portfolio turnover can generate short-term
capital gain tax consequences. The portfolio turnover rate will not be a
limiting factor when Wells Fargo Bank deems portfolio changes appropriate.
FEDERAL INCOME TAX
The following information supplements and should be read in
conjunction with the Prospectus sections entitled "Dividends and Distributions"
and "Taxes." The Prospectus of the Fund describes generally the tax treatment
of distributions by the Master Portfolio and the Fund. This section of the SAI
includes additional information concerning federal income taxes.
Qualification as a regulated investment company under the
Code requires, among other things, that (a) the Fund derive at least
90% of its annual gross income from interest, payments with respect to
securities loans, dividends and gains from the sale or other disposition of
securities or options thereon; (b) the Fund derives less than 30% of its gross
income from gains from the sale or other disposition of securities or options
thereon held for less than three months; and (c) the Fund diversify its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Fund's assets is represented by cash, government
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities and the securities of other regulated investment
companies), or in two or more issuers which the taxpayer controls and which are
determined to be engaged in the same or similar trades or businesses. For
purposes of complying with these qualification requirements, the Fund will be
deemed to own a proportionate share of the Master Portfolio's assets. As a
regulated investment company, the Fund will not be subject to federal income
tax on its net investment income and net capital gains distributed to its
shareholders, provided that it distributes to its stockholders at least 90%
of the sum of its net investment income and net tax-exempt income earned in
each year.
A 4% nondeductible excise tax will be imposed on the Fund to
(other than to the extent of the Fund's tax-exempt income) the extent it
does not meet certain minimum distribution requirements by the end of each
calendar year. For this purpose, any income or gain retained by the Fund
that is subject to income tax will be considered to have been distributed by
year-end. In addition, dividends and distributions of taxable income and
capital gains declared payable as of a record date in October, November or
December of any calendar year are deemed under the Code to have been
distributed by the Fund and received by the shareholders on December 31 of that
calendar year if the dividend is actually paid no later than January 31 of the
following year. Such
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dividends will, accordingly, be taxable to the recipient shareholders in the
year in which the record date falls. The Fund intends to distribute
substantially all of its net investment income and net capital gains and, thus,
expects not to be subject to the excise tax.
Income and dividends received by the Fund from sources within
foreign countries may be subject to withholding and other taxes (generally at
rates from 10% to 40%) imposed by such countries. Tax conventions between
certain countries and the United States may reduce or eliminate such taxes.
Because the Master Portfolio does not expect to hold more than 50% of the
value of its total assets in securities of foreign issuers, the Fund does
not expect to be eligible to elect to "pass through" foreign tax credits to
shareholders.
The Master Portfolio will be treated as a non-publicly traded
partnership rather than as a regulated investment company or a corporation under
the Code. As a non-publicly traded partnership under the Code, any interest,
dividends and gains or losses of the Master Portfolio will be deemed to have
been "passed through" to the Fund and other investors in the Master Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Master Portfolio or losses (through contribution) have been realized by the
Fund and other investors. Therefore, to the extent the Master Portfolio were to
accrue but not distribute any interest, dividends or gains, the Fund would be
deemed to have realized and recognized its proportionate share of interest,
dividends or gains without receipt of any corresponding distribution. However,
the Master Portfolio will seek to minimize recognition by investors of interest,
dividends, gains or losses without a corresponding distribution.
Gains or losses on sales of portfolio securities by the Master
Portfolio will generally be long-term capital gains or losses if the securities
have been held by it for more than one year, except in certain cases such as
where the Master Portfolio acquires a put or writes a call thereon. Other
gains or losses on the sale of securities will be short-term capital gains or
losses.
To the extent that the Fund recognizes long-term capital gains, such
gains will be distributed at least annually and these distributions will be
taxable to shareholders as long-term capital gains, regardless of how long a
shareholder has held Fund shares. Such distributions will be designated as
capital gain distributions in a written notice mailed by the Fund to
shareholders not later than 60 days after the close of the Fund's taxable year.
If a shareholder receives such a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any
Fund share and such Fund share is held for six months or less, then (unless
otherwise disallowed) any loss on the sale or exchange of that Fund share will
be treated as a long-term capital loss to the extent of the designated capital
gain distribution. Gains recognized on the disposition of a debt obligation
(including tax-exempt obligations purchased after April 30, 1993) purchased by
the Fund at a market discount (generally at a price less than its principal
amount) will be treated as ordinary income to the extent of the portion of
market discount which accrued during the period of time the Master Portfolio
held the debt obligation.
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As of the printing of this SAI, the maximum individual marginal tax
rate applicable to ordinary income is 39.60% (marginal rates may be higher for
some individuals due to phase out of exemptions and elimination of deductions);
the maximum individual marginal tax rate applicable to net capital gains is
28.00%; and the maximum marginal corporate tax rate applicable to ordinary
income and net capital gains is 35.00% (except that to eliminate the benefit of
lower marginal corporate income tax rates, corporations which have taxable
income in excess of $100,000 for a taxable year will be required to pay an
additional amount of income tax of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of tax of up to $100,000). Naturally, the amount of
tax payable by an individual or corporation will be affected by a combination
of tax laws covering, for example, deductions, credits, deferrals, exemptions,
sources of income and other matters.
If a shareholder exchanges or otherwise disposes of shares of the
Fund within 90 days of having acquired such shares and if, as a result of
having acquired those shares, the shareholder subsequently pays a reduced sales
charge for shares of the Fund or of a different fund, the sales charge
previously incurred acquiring the Fund's shares shall not be taken into account
(to the extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares.
Also, any loss realized on a redemption or exchange of shares of
the Fund will be disallowed to the extent that substantially identical shares
are reacquired within the 61-day period beginning 30 days before and ending 30
days after the shares are disposed of. If an option written by a Master
Portfolio lapses or is terminated through a closing transaction, such as a
repurchase by such Master Portfolio of the option from its holder, the Master
Portfolio will realize a short-term capital gain or loss, depending on whether
the premium income is greater or less than the amount paid by the Master
Portfolio in the closing transaction. Some realized capital losses may be
deferred if they result from a position which is part of a tax straddle.
If securities are sold by a Master Portfolio pursuant to the exercise
of a call option written by it, such Master Portfolio will add the premium
received to the sale price of the securities delivered in determining the
amount of gain or loss on the sale. If securities are purchased by a Master
Portfolio pursuant to the exercise of a put option written by it, such Master
Portfolio will subtract the premium received from its cost basis in the
securities purchased. The requirement that the Master Portfolio derive less
than 30% of its gross income from gains from the sale of securities held for
less than three months may limit the Master Portfolio's ability to write
options.
Offsetting positions held by a regulated investment company involving
certain financial forward futures or option contracts may be considered for tax
purposes to constitute "straddles". "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of "straddles" is governed by Section 1092 of the Code which, in certain
circumstances, overrides or modifies the provisions of Section 1256.
If a regulated investment company were treated as entering into
"straddles" by reason of its engaging in certain financial forward, futures or
option contracts, such straddles could be characterized as "mixed straddles" if
the futures, forwards, or options comprising a part of such straddles were
governed by Section 1256 of the Code. The regulated investment company may
make one or more elections with respect to "mixed straddles." Depending upon
which election is made, if any, the results with respect to the regulated
investment company may differ. Generally, to the extent the straddle rules
apply to positions established by the regulated investment company, losses
realized by the regulated investment company may be deferred to the extent of
unrealized gain in any offsetting positions. Moreover, as a result of the
straddle and the conversion transaction rules, short-term capital loss on
straddle positions may be recharacterized as long-term capital loss, and
long-term capital gain may be characterized as short-term capital gain or
ordinary income.
Foreign Shareholders. Under the Code, distributions of net
investment income by the Fund to a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by the Fund to a foreign shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. Distributions of net long-term capital gains are not
subject to tax withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, such distributions ordinarily will be subject to
U.S. income tax at a rate of 30% if the individual is physically present in the
U.S. for more than 182 days during the taxable year.
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Other Matters. Investors should be aware that the investments to
be made by the Master Portfolio may involve sophisticated tax rules such as
marked to market rules that would result in income or gain recognition by the
Master Portfolio without corresponding current cash receipts. Although the
Master Portfolio will seek to avoid significant noncash income, such noncash
income could be recognized by the Master Portfolio, in which case the Fund
may distribute cash derived from other sources in order to meet the minimum
distribution requirements described above.
The foregoing discussion and the discussions in the Prospectus
address only some of the federal tax considerations generally affecting
investments in a Fund. Each investor is urged to consult his or her tax
advisor regarding specific questions as to Federal, state or local taxes.
CAPITAL STOCK
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "The Fund, the Master
Portfolio and Management."
The Company, an open-end management investment company, was
incorporated in Maryland on September 9, 1991. The authorized capital stock of
the Company consists of 17,000,000,000 shares having a par value of $.001 per
share. As of the date of this SAI, the Company's Board of Directors has
authorized the issuance of thirteen series of shares, each representing an
interest in one of the following funds -- the Asset Allocation, California
Tax-Free Bond, California Tax-Free Income, California Tax-Free Money Market
Mutual, Corporate Stock, Diversified Income, Ginnie Mae, Growth and Income,
Money Market Mutual, National Tax-Free Money Market Mutual, Short-Intermediate
U.S. Government Income, U.S. Government Allocation and Variable Rate Government
Funds -- and the Board of Directors may, in the future, authorize the issuance
of other series of capital stock representing shares of additional investment
portfolios.
The Fund is comprised of two classes of shares, Class A Shares and
Class B Shares. With respect to matters that affect one class but not another,
shareholders vote as a class; for example, the approval of a Plan. Subject to
the foregoing, on any matter submitted to a vote of shareholders, all shares
then entitled to vote will be voted separately by series unless otherwise
required by the Act, in which case all shares will be voted in the aggregate.
For example, a change in a series' fundamental investment policy affects only
one series and would be voted upon only by shareholders of the series and not
by shareholders of the Company's other series. Additionally, approval of an
advisory contract is a matter to be determined separately by each series.
Approval by the shareholders of one series is effective as to that series
whether or not sufficient votes are received from the shareholders of the other
series to approve the proposal as to those series. As used in the Prospectus
and in this SAI, the term "majority" when referring to approvals to be obtained
from shareholders of a class of the Fund, means the vote of the lesser of (i)
67% of the shares of such class the Fund represented at a meeting if the
holders of more than 50% of the outstanding shares such class of the Fund are
present in person or by proxy, or (ii) more than 50% of the outstanding shares
of such class the Fund. The term "majority," when referring to the approvals
to be obtained from shareholders of the Company as a whole, means the vote of
the lesser of (i) 67% of the Company's shares represented at a meeting if the
holders of more than 50% of the Company's outstanding shares are present in
person
20
<PAGE> 78
or by proxy, or (ii) more than 50% of the Company's outstanding shares.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held.
The Company may dispense with an annual meeting of shareholders in
any year in which it is not required to elect directors under the Act.
However, the Company has undertaken to hold a special meeting of its
shareholders for the purpose of voting on the question of removal of a director
or directors if requested in writing by the holders of at least 10% of the
Company's outstanding voting securities, and to assist in communicating with
other shareholders as required by Section 16(c) of the 1940 Act.
Each share of a class of the Fund represents an equal proportional
interest in the Fund with each other share in the same class and is entitled to
such dividends and distributions out of the income earned on the assets
belonging to the Fund as are declared in the discretion of the Directors. In
the event of the liquidation or dissolution of the Company, shareholders of the
Fund are entitled to receive the assets attributable to the relevant class of
shares of the Fund that are available for distribution, and a distribution of
any general assets not attributable to a particular investment portfolio that
are available for distribution in such manner and on such basis as the
Directors in their sole discretion may determine.
Shareholders are not entitled to any preemptive rights. All
shares, when issued for the consideration described in the Prospectus, will be
fully paid and non-assessable by the Company.
The Trust is a business trust organized under the laws of
Delaware. In accordance with Delaware law and in connection with the tax
treatment sought by the Trust, the Trust's Declaration of Trust provides that
its investors would be personally responsible for Trust liabilities and
obligations, but only to the extent the Trust property is insufficient to
satisfy such liabilities and obligations. The Declaration of Trust also
provides that the Trust shall maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its investors, Trustees, officers, employees and agents covering
possible tort and other liabilities, and that investors will be indemnified to
the extent they are held liable for a disproportionate share of Trust
obligations. Thus, the risk of an investor incurring financial loss on account
of investor liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act. However, nothing in the Declaration of Trust protects a Trustee
against any liability to which the Trustee would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of the Trustee's office.
21
<PAGE> 79
The interests in the Master Portfolio have substantially identical
voting and other rights as those rights enumerated above for Fund shares. The
Trust also intends to dispense with annual meetings, but will hold a special
meeting and assist investor communications under the circumstances described
above with respect to the Company in accord with provisions under Section 16(c)
of the Act. Whenever the Fund is requested to vote on a matter with respect to
the Master Portfolio, the Fund will hold a meeting of Fund shareholders and
will cast its votes as instructed by such shareholders. In a situation where
the Fund does not receive instruction from certain of its shareholders on how
to vote the corresponding shares of the Master Portfolio, the Fund will vote
such shares in the same proportion as the shares for which the Fund does
receive voting instructions.
As of February 23, 1996, Stephens was the beneficial owner of 100%
of the outstanding voting securities of the Fund.
OTHER
The Registration Statement of the Trust and the Company, including
the Fund's Prospectus, the SAI and the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C. Statements contained in
the Prospectus or the SAI as to the contents of any contract or other document
referred to herein or in the Prospectus are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. The Annual Report will be sent
free of charge to any shareholder who requests it.
CUSTODIAN AND TRANSFER AND
DIVIDEND DISBURSING AGENT
The following information supplements and should be read in
conjunction with the section of the Prospectus entitled "Custodian, Transfer
and Dividend Disbursing Agent." Wells Fargo Bank has been retained to act as
Custodian and Transfer and Dividend Disbursing Agent for the Fund and the
Master Portfolio. The Custodian, among other things, maintains a custody
account or accounts in the name of the Fund and the Master Portfolio; receives
and delivers all assets for the Fund and the Master Portfolio upon purchase and
upon sale or maturity; collects and receives all income and other payments and
distributions on account of the assets of the Fund and the Master Portfolio and
pays all expenses of the Fund and the Master Portfolio. For its services as
Custodian, Wells Fargo Bank receives an asset-based fee and transaction charge
from the Master Portfolio; and for its services as transfer and dividend and
disbursing agent, it receives a base fee and per-account fees from the Fund.
22
<PAGE> 80
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company and the Trust. KPMG Peat Marwick LLP provides audit
services, tax return preparation and assistance and consultation in connection
with review of certain SEC filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.
FINANCIAL INFORMATION
The audited financial statements and portfolio of investments of
the Predecessor Fund for the most recent fiscal year are hereby attached to
this SAI. The Annual Report will be sent free of charge with this SAI to any
shareholder who requests the SAI.
23
<PAGE> 81
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - 94.80%
ADVERTISING - 0.90%
25,000 HA-LO Industries inc+ $ 410,000 $ 768,750
BASIC INDUSTRIES - 0.17%
10,000 Cronos Group $ 100,000 $ 101,250
55,000 Quadrax Corp+ 212,492 46,406
------------ ------------
$ 312,492 $ 147,656
BIOTECHNOLOGY - 4.50%
10,000 Cephalon Inc+ $ 277,250 $ 407,500
30,000 Genzyme Corp - General Division+ 1,550,250 1,871,250
40,000 Genzyme Corp - Tissue Repair+ 601,250 635,000
35,000 Liposome Co Inc+ 426,103 700,000
25,000 Neurex Corp+ 112,500 228,125
------------ ------------
$ 2,967,353 $ 3,841,875
COMMERCIAL SERVICES - 2.20%
20,000 AccuStaff Inc+ $ 318,229 $ 880,000
11,000 Central Parking Corp+ 198,000 316,250
22,000 Sylvan Learning Systems Inc+ 562,625 654,500
86,000 Work Recovery Inc+ 367,812 21,500
------------ ------------
$ 1,446,666 $ 1,872,250
COMPUTER SOFTWARE - 16.90%
20,000 Adobe Systems Inc $ 1,270,195 $ 1,240,000
26,000 Avant! Corp+ 803,308 500,500
25,000 First Data Corp 1,608,075 1,671,875
48,500 IKOS Systems Inc+ 397,989 539,563
20,000 Imnet Systems Inc+ 364,750 480,000
33,000 LifeRate Systems Inc+ 259,875 367,125
45,000 Metatec Corp Class A+ 530,657 495,000
12,500 MetaTools Inc+ 312,500 325,000
10,000 Microsoft Corp+ 668,063 877,500
12,000 Minnesota Educational Computing Corp+ 360,469 300,000
48,000 Oracle Systems Corp+ 1,815,084 2,034,000
</TABLE>
1
<PAGE> 82
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - CONTINUED
COMPUTER SOFTWARE - CONTINUED
20,000 Phamis Inc+ 520,435 595,000
22,000 Premenos Tech Corp+ 562,709 580,250
100,000 Sanctuary Woods Multimedia+ 512,831 287,500
10,000 Software 2000 Inc+ 110,000 77,500
10,000 Syncronys Softcorp+ 127,078 28,750
20,000 Synopsys Inc+ 559,875 760,000
50,000 Veritas Software Corp+ 1,126,348 1,900,000
20,000 Verity Inc+ 326,850 885,000
40,000 Viasoft Inc+ 404,688 475,000
------------ ------------
$12,641,779 $ 14,419,563
COMPUTER SYSTEMS - 12.81%
5,000 3Com Corp+ $ 214,313 $ 233,125
45,000 Adaptec Inc+ 1,329,158 1,845,000
30,000 Cisco Systems Inc+ 1,054,875 2,238,750
19,000 Clarify Inc+ 442,875 570,000
60,000 Komag Inc+ 2,865,072 2,767,500
40,000 RadiSys Corp+ 517,500 470,000
15,000 Silicon Storage Technology Inc+ 135,000 198,750
36,000 Solectron Corp+ 851,938 1,588,500
22,500 Sync Research Inc+ 1,153,750 1,018,125
------------ ------------
$ 8,564,481 $ 10,929,750
ELECTRICAL EQUIPMENT - 2.12%
45,000 Interlink Electronics Inc+ $ 225,000 $ 292,500
32,000 Nokia Corp ADR Class A 1,197,215 1,244,000
50,000 Power (R F) Products Inc+ 348,463 275,000
------------ ------------
$ 1,770,678 $ 1,811,500
ENERGY & RELATED - 4.70%
28,200 Camco International Inc $ 703,960 $ 789,600
40,000 Digicon Inc+ 232,400 320,000
15,000 Ensco International Inc+ 250,367 345,000
15,000 Global Industries Ltd+ 389,375 450,000
</TABLE>
2
<PAGE> 83
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - CONTINUED
ENERGY & RELATED - CONTINUED
32,400 J Ray McDermott SA+ 700,762 579,150
15,000 Marine Drilling Co Inc+ 71,250 76,875
10,000 Petroleum Geo-Services ADR+ 244,167 250,000
10,000 Sonat Offshore Drilling Co 350,561 447,500
15,000 Sun Co Inc 469,950 410,625
17,500 Trigen Energy Corp 300,850 341,250
------------ ------------
$ 3,713,642 $ 4,010,000
ENTERTAINMENT & LEISURE - 3.19%
40,000 Family Golf Centers Inc+ $ 600,000 $ 730,000
30,000 Mirage Resorts Inc+ 971,405 1,035,000
8,000 Morrow Snowboards Inc+ 88,000 130,000
5,000 Mountasia Entertainment International Inc+ 24,063 24,063
19,500 Sports Club Inc+ 136,260 60,938
20,000 Station Casino Inc+ 293,750 292,500
45,000 Stratosphere Corp+ 378,617 444,375
------------ ------------
$ 2,492,095 $ 2,716,876
ENVIRONMENTAL CONTROL - 3.29%
55,000 Molten Metal Technology Inc+ $ 1,248,970 $ 1,794,375
15,000 Republic Industries Inc+ 349,107 541,875
25,000 U.S.A. Waste Services Inc+ 505,045 471,873
------------ ------------
$ 2,103,122 $ 2,808,123
FINANCE & RELATED - 4.76%
60,000 Capital One Financial Corp $ 1,655,226 $ 1,432,500
20,000 Cole Taylor Financial Group Inc 391,740 597,500
70,000 Envoy Corp (New)+ 414,846 1,211,875
20,000 NHP Inc+ 252,500 370,000
20,000 Oxford Corp Class A+ 534,709 450,000
------------ ------------
$ 3,249,021 $ 4,061,875
FOOD & RELATED - 1.75%
40,000 Garden Fresh Restaurant Corp+ $ 328,375 $ 260,000
</TABLE>
3
<PAGE> 84
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - CONTINUED
FOOD & RELATED - CONTINUED
30,000 General Nutrition Co Inc+ 378,750 690,000
10,000 NuCo2 Inc+ 126,040 130,000
30,000 Whole Foods Market Inc+ 566,125 416,250
------------ ------------
$ 1,399,290 $ 1,496,250
GENERAL BUSINESS & RELATED - 0.27%
12,500 LeCroy Corp+ $ 176,875 $ 231,250
HEALTHCARE - 8.28%
15,000 Coventry Corp+ $ 309,550 $ 309,375
40,000 Genesis Health Ventures Inc+ 909,602 1,460,000
60,000 Healthsouth Corp+ 1,229,949 1,747,500
25,000 Owen Healthcare Inc+ 454,375 690,625
40,000 Renal Treatment Centers+ 973,000 1,760,000
40,000 Value Health Inc+ 1,337,160 1,100,000
------------ ------------
$ 5,213,636 $ 7,067,500
MANUFACTURING PROCESSING - 1.50%
8,200 Intertape Polymer Group Inc+ $ 247,180 $ 257,275
25,000 Lydall Inc+ 371,040 568,750
25,000 Waters Corp+ 414,500 456,250
------------ ------------
$ 1,032,720 $ 1,282,275
MEDICAL EQUIPMENT & SUPPLIES - 6.57%
30,000 AVECOR Cardiovascular Inc+ $ 468,125 $ 532,500
50,000 Bioject Medical Technologies+ 229,063 93,750
40,000 Biomatrix Inc+ 347,292 670,000
50,000 CompuMed Inc+ 475,938 212,500
60,000 Endosonics Corp+ 553,906 907,500
40,000 Heart Technology Inc+ 777,569 1,315,000
35,000 ICU Medical Inc+ 465,000 595,000
30,000 InStent Inc+ 514,031 450,000
12,500 Life Med Sciences Inc+ 92,188 112,500
</TABLE>
4
<PAGE> 85
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
32,500 Molecular Devices Corp+ 358,750 341,250
15,000 Sola International Inc+ 261,879 378,750
------------ ------------
$ 4,543,741 $ 5,608,750
PHARMACEUTICALS - 0.74%
16,000 Ergo Science Corp+ $ 144,000 $ 228,000
1,000 Fuisz Technologies Ltd+ 12,000 15,250
20,000 Medarex Inc+ 111,250 142,500
60,000 Seragen Inc+ 414,940 247,500
------------ ------------
$ 682,190 $ 633,250
RETAIL & RELATED - 2.70%
30,000 Barnes & Noble+ $ 875,857 $ 870,000
15,000 Concord Camera Corp+ 63,750 67,500
30,000 Corporate Express Inc+ 723,750 903,750
15,000 PetSmart Inc+ 383,125 465,000
------------ ------------
$ 2,046,482 $ 2,306,250
SEMICONDUCTORS - 5.00%
93,500 Integrated Device Technology Inc+ $ 2,335,108 $ 1,203,813
18,000 Intel Corp 904,125 1,021,500
40,000 OnTrak Systems Inc+ 991,438 580,000
15,000 S3 Inc+ 262,188 264,375
40,000 Semtech Corp+ 857,655 780,000
40,600 Tegal Corp+ 518,414 416,150
------------ ------------
$ 5,868,928 $ 4,265,838
TELECOMMUNICATIONS - 10.93%
65,000 Accom Inc+ $ 552,594 $ 422,500
25,000 AML Communications Inc+ 232,750 262,500
15,000 Anicom Inc+ 135,000 159,375
15,000 Arch Communications Group Inc+ 408,681 360,000
15,000 Cascade Communications Corp+ 1,218,005 1,278,750
15,000 Celeritek Inc+ 112,500 159,375
</TABLE>
5
<PAGE> 86
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<S> <C> <C> <C>
COMMON STOCKS - CONTINUED
TELECOMMUNICATIONS - CONTINUED
45,000 Comdial Corp+ 541,000 410,625
42,800 DSC Communications Corp+ 1,864,154 1,578,250
100,000 LCI International Inc+ 913,174 2,050,000
50,000 PanAmSat Corp+ 805,536 1,103,125
15,000 Premisys Communications Inc+ 674,063 840,000
20,000 WorldCom Inc+ 605,000 705,000
------------ ------------
$ 8,062,457 $ 9,329,500
TRANSPORTATION - 1.52%
20,000 Greenbrier Companies Inc $ 307,323 $ 242,500
40,000 Landair Services Inc+ 666,866 530,000
10,000 Marten Transportation Ltd+ 196,250 165,000
40,000 Mesa Airlines Inc+ 622,588 360,000
------------ ------------
$ 1,793,027 $ 1,297,500
TOTAL COMMON STOCKS $70,490,675 $ 80,906,581
</TABLE>
6
<PAGE> 87
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 1.47%
CONVERTIBLE CORPORATE BONDS - 1.47%
$ 240,000 First Financial Management Corp 5.00 % 12/15/99 $ 383,280
100,000 Genesis Health Ventures Inc 6.00 11/30/03 162,000
100,000 LDDS Communications Inc 5.00 08/15/03 105,000
800,000 Softkey International Inc 5.50 11/01/00 604,000
------------
TOTAL CORPORATE BONDS & NOTES $ 1,254,280
(Cost $1,215,624)
</TABLE>
7
<PAGE> 88
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME VALUE
<S> <C> <C>
WARRANTS - 2.22%
50,000 Intel Corp expires 3/14/1998+
$ 1,337,500
3,000 Interlink Electronics Inc expires 06/07/1996+
3,188
100,000 Viacom Inc Class E expires 07/07/1999+
550,000
------------
TOTAL WARRANTS $ 1,890,688
(Cost $1,099,271)
</TABLE>
8
<PAGE> 89
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.92%
REPURCHASE AGREEMENTS - 1.92%
$ 1,638,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 1,638,000
(Cost $1,638,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<S> <C> <C> <C>
(Cost $74,443,570)* (Notes 1 and 3) 100.41% 85,689,549
Other Assets and Liabilities, Net (0.41) (347,079)
--------- -------------
TOTAL NET ASSETS 100.00% $ 85,342,470
--------- -------------
--------- -------------
...............................................................................
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation 18,980,372
Gross Unrealized Depreciation (7,734,393)
-------------
NET UNREALIZED APPRECIATION $ 11,245,979
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 90
OVERLAND EXPRESS FUNDS, INC.
STRATEGIC GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments:
In securities, at identified cost (Note 3) $74,443,570
- -----------------------------------------------------------------------
In securities, at market value $85,689,549
Cash 2,170
Receivables:
Dividends and interest 14,679
Fund shares sold 277,987
Organization expenses, net of amortization 35,626
Prepaid expenses 35,008
-----------
TOTAL ASSETS 86,055,019
LIABILITIES
Payables:
Investment securities purchased 468,750
Fund shares redeemed 44,362
Due to administrator 90,525
Due to advisor 93,585
Accrued expenses 15,327
-----------
TOTAL LIABILITIES 712,549
-----------
NET ASSETS $85,342,470
===========
NET ASSETS CONSIST OF:
Paid-in capital- Class A $50,306,393
Paid-in capital - Class D 22,955,679
Undistributed net investment loss (1,105,810)
Undistributed net realized gain on investments 1,940,229
Net unrealized appreciation of investments 11,245,979
-----------
NET ASSETS $85,342,470
===========
COMPUTATION OF NET ASSET VALUE
AND OFFERING PRICE :
Net assets - Class A $59,016,086
Shares outstanding - Class A 3,508,125
Net asset value and offering price - Class A $16.82
Maximum offering price per share - Class A $17.61(1)
Net assets - Class D $26,326,384
Shares outstanding - Class D 1,266,478
Net asset value and offering price - Class D $20.79
</TABLE>
- -----------------------------------------------------------------------
(1) Maximum offering price is computed as 100/95.5 of net asset value.
On investments of $100,000 or more the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
<PAGE> 91
OVERLAND EXPRESS FUNDS, INC.
STRATEGIC GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $132,455
Interest 186,812
-----------
TOTAL INVESTMENT INCOME 319,267
EXPENSES (Note 2):
ADVISORY FEES 302,821
Administration fees 91,128
Custody fees 22,191
Distribution fees 250,865
Shareholder servicing fees 49,492
Portfolio accounting fees 63,554
Transfer Agency fees 56,926
Amortization of organization expenses 14,899
Legal and audit fees 29,255
Registration fees 43,014
Directors fees 5,000
Shareholder reports 35,206
Other 18,734
-----------
TOTAL EXPENSES 983,085
Less:
Waived Fees (Note 2) (57,496)
Net expenses 925,589
-----------
NET INVESTMENT LOSS (606,322)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on sale of investments 10,895,873
Net change in unrealized appreciation of investm 8,601,611
-----------
NET GAIN ON INVESTMENTS 19,497,484
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $18,891,162
</TABLE>
- -----------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE> 92
OVERLAND EXPRESS FUNDS, INC.
STRATEGIC GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment loss $(606,322) $(449,157)
Net realized gain on sale of investments 10,895,873 1,481,221
Net change in unrealized appreciation on investments 8,601,611 336,969
------------- -------------
NET INCREASE IN NET ASSETS 18,891,162 1,369,033
RESULTING FROM OPERATIONS
Distributions to shareholders:
From net realized capital gains - Class A (6,182,997) (655,929)
From net realized capital gains - Class D (2,772,646) (376,137)
From tax return of capital - Class A 0 (278,477)
From tax return of capital - Class D 0 (170,680)
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold - Class A 36,545,391 11,769,539
Net asset value of shares issued in reinvestment
of dividend distributions - Class A 4,705,176 403,346
Cost of shares redeemed -Class A (15,571,514) (10,877,764)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -CLASS A 25,679,053 1,295,121
Proceeds from shares sold - Class D 11,752,195 6,859,821
Net asset value of shares issued in reinvestment
of dividend distributions - Class D 1,754,560 175,834
Cost of shares redeemed - Class D (5,858,015) (3,485,125)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -CLASS D 7,648,740 3,550,530
------------- -------------
INCREASE IN NET ASSETS 43,263,312 4,733,461
NET ASSETS
Beginning net assets 42,079,158 37,345,697
------------- -------------
ENDING NET ASSETS $85,342,470 $42,079,158
============= =============
SHARES ISSUED AND REDEEMED
Shares sold - Class A 2,168,399 890,673
Shares issued in reinvestment of dividends and
distributions - Class A 292,301 30,559
Shares redeemed - Class A (965,246) (834,218)
NET INCREASE IN SHARES OUTSTANDING - CLASS A 1,495,454 87,014
Shares sold - Class D 552,068 410,160
Shares issued in reinvestment of dividends and
distributions - Class D 88,848 10,884
Shares redeemed - Class D (301,590) (214,855)
NET INCREASE IN SHARES OUTSTANDING - CLASS D 339,326 206,189
- ----------------------------------------------------------------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 93
OVERLAND EXPRESS FUNDS, INC.
STRATEGIC GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected Data for a Share Outstanding During Each Period are as Follows:
<TABLE>
<CAPTION>
Class A Class D
------- -------
From From
Year Year inception Year Year inception
ended ended on January ended ended on July 1,
Dec. 31, Dec. 31, 20, 1993 to Dec. 31, Dec. 31, 1993 to
1995 1994 Dec. 31, 1995 1994 Dec. 31,
1993 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.29 $13.20 $10.00 $16.54 $16.55 $15.00
Income from investment operations:
Net investment loss (0.04) (0.11) (0.03) (0.16) (0.24) (0.43)
Net realized and unrealized gains on 5.66 0.67 3.68 6.99 0.81 2.51
investments
--------------------------------------------------------------------
Total from investment operations 5.62 0.56 3.65 6.83 0.57 2.08
Less distributions:
Dividends from net investment income 0.00 0.00 (0.03) 0.00 0.00 0.00
Distributions from net realized capital gains (2.09) (0.33) (0.41) (2.58) (0.40) (0.53)
Tax return of capital 0.00 (0.14) (0.01) 0.00 (0.18) 0.00
--------------------------------------------------------------------
Total from distributions (2.09) (0.47) (0.45) (2.58) (0.58) (0.53)
--------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $16.82 $ 13.29 $13.20 $20.79 $16.54 $16.55
====================================================================
TOTAL RETURN (not annualized) (3) 42.51% 4.23% 36.56% 41.54% 3.46% 13.84%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $59,016 $26,744 $25,413 $26,326 $15,335 $11,932
Number of shares outstanding, end of 3,508 2,013 1,926 1,266 927 721
period (000)
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1) 1.28% 1.20% 0.66% 2.02% 1.95% 0.61%
Ratio of net investment loss to
average net assets(2) (0.76)% (0.81)% (0.01)% (1.49)% (1.56)% (1.00)%
Portfolio turnover 171% 149% 182% 171% 149% 182%
-----------------------------------------------------------------------------------------------------------------------
(1) Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses 1.38% 1.55% 1.64% 2.09% 2.23% 2.14%
(2) Ratio of net investment loss to average
net assets prior to waived fees and
reimbursed expenses (0.86)% (1.16)% (0.99)% (1.56)% (1.84)% (2.53)%
</TABLE>
(3) Total returns do not include any sales charges.
The accompanying notes are an integral part of these financial statements.
<PAGE> 94
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Strategic Growth Fund (the "Fund") is a series of Overland Express
Funds, Inc. (the "Company") is registered under the Investment Company Act of
1940 (the "1940 Act"), as amended, as a diversified, open-end series investment
company. The Company commenced operations on April 7, 1988 and includes ten
separate diversified funds: the Asset Allocation Fund, the Money Market Fund,
the Municipal Income Fund, the Overland Sweep Fund, the Short-Term
Government-Corporate Income Fund, the Short-Term Municipal Income Fund, the
Strategic Growth Fund, the U.S. Government Income Fund, the U.S. Treasury Money
Market Fund, the Variable Rate Government Fund, and two non-diversified funds:
the California Tax-Free Bond Fund and the California Tax-Free Money Market
Fund. These financial statements represent the Strategic Growth Fund. These
Funds invest in a range of securities, generally including money market
instruments, equities and U.S. government securities.
The Fund commenced offering Class D shares on July 1, 1993. The two
classes of shares differ principally in their respective sales charges, service
fees, and distribution fees. Shareholders of each class also bear certain
expenses that pertain to that particular class. All shareholders bear the
common expenses of the Fund, and earn income from the portfolio, pro rata based
on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. Gains are
allocated to each class pro rata based upon net assets of each class on the
date of distribution. No class has preferential dividend rights. Differences
in per share dividend rates generally result from the relative weightings of
pro rata income and gain allocations and from differences in separate class
expenses, including distribution and service fees.
The following significant accounting policies are consistently followed by
the Company in the preparation of its financial statements, and such policies
are in conformity with generally accepted accounting principles for investment
companies.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
Investments in securities for which the primary market is a national
securities exchange or the NASDAQ National Market System are stated at the last
reported sales price on the day of valuation. U.S. Government obligations are
valued at stated mean between the last reported bid and ask prices. In the
absence of any sale of such securities on the valuation date and in the case of
other securities, excluding debt securities maturing in 60 days or less, the
valuations are based on latest quoted bid prices. Debt securities maturing in
60 days or less are valued at amortized cost. Debt securities other than those
maturing in 60 days or less and other than U.S. government obligations are
valued at the latest quoted bid price. Securities for which quotations are not
readily available are valued at fair value as determined by policies set by the
Board of Directors.
<PAGE> 95
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the
ex-dividend date, and interest income is accrued daily. Realized gains or
losses are reported on the basis of identified cost of securities delivered.
Bond discounts are accreted and premiums are amortized as required by the
Internal Revenue Code.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell
("repurchase agreements") are treated as collateralized financing transactions
and are recorded at their contracted resale amounts. These repurchase
agreements, if any, are detailed in the Fund's Portfolio of Investments. The
adviser to the Funds pools the Funds' cash and invests in repurchase agreements
entered into by the Funds. The prospectuses require that the cash investments
be fully collateralized based on values that are marked to market daily. The
collateral is held by an agent bank under a tri-party agreement. It is the
adviser's responsibility to value collateral daily and to obtain additional
collateral as necessary to maintain market value equal to or greater than the
resale price. The repurchase agreements held in the Funds at December 31, 1995
are collateralized by U.S. Treasury or federal agency obligations. The
repurchase agreements were entered into on December 29, 1995.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Fund, if any,
are declared and distributed annually. Any dividends to shareholders from net
realized capital gains are declared and distributed annually.
FEDERAL INCOME TAXES
The Company's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute substantially all its net investment income and any net realized
capital gains to its shareholders. Therefore, no federal or state income tax
provision is required.
Due to the timing of dividend distributions and the differences in
accounting for income and realized gains (losses) for financial statement and
federal income tax purposes, the fiscal year in which amounts are distributed
may differ from the year in which the income and realized gains (losses) were
recorded by the portfolio. The differences between the income or gains
distributed on a book versus tax basis are shown as excess distributions of net
investment income and net realized gain on sales of investments in the
accompanying Statements of Changes in Net Assets.
On the Statement of Assets and Liabilities, as a result of book-to-tax
differences due to previous year tax returns of capital, reclassification
adjustments have been made to the Fund to decrease overdistributed net
investment income and paid-in-capital by $449,157.
<PAGE> 96
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the Funds' administrator, sponsor and
distributor, has incurred expenses in connection with the organization and
initial registration of the various funds. These expenses were charged to the
individual Funds and are being amortized by the Funds on a straightline basis
over 60 months from the date the Funds commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the
Fund with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contract, WFB has
agreed to provide the Fund with investment guidance and policy direction in
connection with daily portfolio management. Under the contract WFB is entitled
to be paid a monthly advisory fee at the annual rate of 0.50% of the average
daily net assets of the Fund.
The Company has entered into contracts on behalf of the Fund with WFB
whereby WFB is responsible for providing custody and portfolio accounting
services for the Funds. For this service, WFB is entitled to an annual fee for
custody services at the annual rate of 0.0167% of the average daily net assets
of the Fund. For portfolio accounting services, WFB is entitled to a monthly
base fee from the Fund of $2,000 plus an annual fee of 0.07% of the first $50
million, 0.045% of the next $50 million and 0.02% of the remaining average
daily net assets.
The Company has entered into a contract on behalf of the Fund with WFB
whereby WFB provides transfer agent services for the Fund. Under the transfer
agency agreement, WFB is paid a per account fee and other related costs with a
minimum monthly fee of $3,000 per fund unless net assets of the fund are under
$20 million. For as long as the assets remain under $20 million the fund will
not be charged any transfer agency fees by WFB.
The Fund may enter into service agreements with one or more servicing
agents on behalf of Class D shares of the Fund. Under such agreements,
servicing agents have agreed to provide shareholder liaison services, including
responding to customer inquiries and providing information on their
investments, and to provide such other related services as the Fund or a Class
D shareholder may reasonably request. For these services, a servicing agent
receives a fee, on an annualized basis for the Fund's then-current fiscal year,
not to exceed 0.25% of the average daily net assets of the Class D shares of
the Fund. The Service fees for Class D for the year ended December 31, 1995
were $49,492.
The Company has entered into administration and distribution agreements on
behalf of the Fund with Stephens. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services to the Fund. For
providing supervisory and administrative services, the Fund has agreed to pay
Stephens a monthly fee at the annual rate of 0.15% of the Fund's average daily
net assets up to $200 million and 0.10% of the average daily net assets in
excess of $200 million.
<PAGE> 97
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
The Company also has adopted separate distribution plans for Class A and D
shares pursuant to Rule 12b-1 under the 1940 Act, whereby on behalf of the
Fund, the Fund may pay Stephens, as compensation for distribution-related
services, a monthly fee at an annual rate of up to 0.25% of the average daily
net assets attributable to the Fund's Class A shares. The Class D Distribution
Plan of the Fund provides that the Fund may pay the Distributor a monthly fee
at an annual rate of up to 0.75% of the Fund's average daily net assets
attributable to Class D shares. Distribution fees, for Class A and Class D of
the Fund, for the year ended December 31, 1995 were $102,390 and $148,475
respectively.
For the year ended WFB has waived certain of its fees in the amount of
$57,496. Waived fees continue at the discretion of WFB.
Certain officers and directors of the Company are also officers of
Stephens. At December 31, 1995, Stephens owned 6,030 shares of the Strategic
Growth Fund.
Stephens has retained $1,424,127 as sales charges from the proceeds of
capital shares sold by the Company for the year ended December 31, 1995. Wells
Fargo Securities Inc., a subsidiary of WFB, received $31,366 as sales charges
from the proceeds of capital shares sold by the Company for the year ended
December 31, 1995.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for
the Strategic Growth Fund for the year ended December 31, 1995, were as
follows:
AGGREGATE PURCHASES
AND SALES OF:
- -------------------------------------------
SECURITIES OTHER THAN U.S. GOVERNMENT OBLIGATIONS:
<TABLE>
<S> <C>
Purchases at cost $122,483,641
Sales proceeds 100,543,477
</TABLE>
4. CAPITAL SHARES TRANSACTIONS
As of December 31, 1995, there were 20 billion shares of $.001 par value
capital stock authorized by the Company. As of December 31, 1995, the Fund was
authorized to issue 100 million shares of $.001 par value capital stock for
each class of shares. Transactions in capital shares for the years ended
December 31, 1995 and 1994 are disclosed in detail in the Statements of Changes
in Net Assets.
5. OVERLAND STRATEGIC GROWTH FUND CONVERSION TO MASTER-FEEDER STRUCTURE
The Company has received shareholder approval for a reorganization of the
Overland Express Strategic Growth Fund into a master-feeder structure. Under
this structure , the Fund will become a feeder fund and will invest all of its
assets in any corresponding, newly established Master Portfolio. The
reorganization will not result in any changes to the Fund's investment
objective. WFB has agreed to absorb the additional expenses for at least one
year after the reorganization.
<PAGE> 98
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OVERLAND EXPRESS FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Strategic Growth Fund (one of
the funds comprising Overland Express Funds, Inc.) as of December 31, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and
financial highlights for the periods indicated herein. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1995, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Strategic Growth Fund of Overland Express Funds, Inc. as of
December 31, 1995, the results of its operations, the changes in its net assets
and its financial highlights for the periods indicated herein in conformity
with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1996
<PAGE> 99
PROXY VOTING RESULTS
A special shareholder meeting was held on January 30, 1996, to vote on the
following proposal for the Strategic Growth Fund. The proposal received the
required majority of votes and was adopted.
PROPOSAL 1.
To consider approval of the proposal to reorganize the Strategic Growth Fund
into a master/feeder structure, with amendments to certain fundamental
investment restrictions to permit the Strategic Growth Fund to invest all of
its assets in another investment company.
<TABLE>
<S> <C> <C>
For Against Abstain
2,138,338 119,480 133,942
</TABLE>
<PAGE> 100
STAGECOACH FUNDS, INC.
SEC REGISTRATION NOS. 33-42927; 811-6419
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The following audited financial statements for the year ended
December 31, 1995, for the Strategic Growth Fund of Overland Express Funds, Inc.
(SEC File No. 33-16296; 811-8275), the predecessor fund to the Aggressive Growth
Fund of the Company, are included in Part B, Item 23:
Portfolio of Investments - December 31, 1995
Statement of Assets and Liabilities - December 31, 1995
Statement of Operations for the year ended December 31, 1995
Statement of Changes in Net Assets for the year ended December 31,
1995
Financial Highlights for the year ended December 31, 1995
Notes to Financial Statements - December 31, 1995
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
1 - Amended and Restated Articles of Incorporation dated November 22, 1995,
incorporated by reference to Post-Effective Amendment No. 17 to the
Registration Statement, filed November 29, 1995.
2 - By-Laws, incorporated by reference to the Initial Registration
Statement, filed September 30, 1991.
3 - Not Applicable
4 - Not Applicable
5(a)(i)(A) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Asset
Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
(i)(B) - Sub-Advisory Contract with Wells Fargo Nikko Investment Advisors on
behalf of the Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
</TABLE>
C-1
<PAGE> 101
<TABLE>
<S> <C> <C>
(ii)(A) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the U.S.
Government Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement, filed April 17, 1992.
(ii)(B) - Sub-Advisory Contract with Wells Fargo Nikko Investment Advisors on
behalf of the U.S. Government Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(iii) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the
California Tax-Free Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration Statement, filed
April 17, 1992.
(iv) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the
California Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(v) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Ginnie
Mae Fund, incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
(vi) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Growth
and Income Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
(vii)(A) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the
Corporate Stock Fund, incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement, filed April 17, 1992.
(vii)(B) - Sub-Advisory Contract with Wells Fargo Nikko Investment Advisors on
behalf of the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(viii) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Money
Market Mutual Fund, incorporated by reference to Post-Effective
Amendment No. 3 to the Registration Statement, filed May 1, 1992.
(ix) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the
California Tax-Free Income Fund, incorporated by reference to Post-
Effective Amendment No. 4 to the Registration Statement, filed
September 10, 1992.
(x) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the
Diversified Income Fund, incorporated by reference to Post-Effective
Amendment No. 17 to the Registration Statement, filed November 29,
1995.
5(b)(i) - Administration Agreement with Stephens Inc. on behalf of the Asset
Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
(b)(ii) - Administration Agreement with Stephens Inc. on behalf of the U.S.
Government Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement, filed April 17, 1992.
</TABLE>
C-2
<PAGE> 102
<TABLE>
<S> <C> <C>
(b)(iii) - Administration Agreement with Stephens Inc. on behalf of the California
Tax-Free Bond Fund, incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement, filed April 17, 1992.
(b)(iv) - Administration Agreement with Stephens Inc. on behalf of the California
Tax-Free Money Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(b)(v) - Administration Agreement with Stephens Inc. on behalf of the Ginnie Mae
Fund, incorporated by reference to Post-Effective Amendment No. 2 to
the Registration Statement, filed April 17, 1992.
(b)(vi) - Administration Agreement with Stephens Inc. on behalf of the Growth and
Income Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
(b)(vii) - Administration Agreement with Stephens Inc. on behalf of the Corporate
Stock Fund, incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
(b)(viii) - Administration Agreement with Stephens Inc. on behalf of the Money
Market Mutual Fund, incorporated by reference to Post-Effective
Amendment No. 3 to the Registration Statement, filed May 1, 1992.
(b)(ix) - Form of Administration Agreement with Stephens Inc. on behalf of the
California Tax-Free Income Fund, incorporated by reference to Post-
Effective Amendment No. 4 to the Registration Statement, filed
September 10, 1992.
(b)(x) - Form of Administration Agreement with Stephens Inc. on behalf of the
Diversified Income Fund, incorporated by reference to Post-Effective
Amendment No. 4 to the Registration Statement, filed September 10,
1992.
(b)(xi) - Administration Agreement with Stephens Inc. on behalf of the Short-
Intermediate U.S. Government Income Fund, incorporated by reference to
Post-Effective Amendment No. 8 to the Registration Statement, filed
February 10, 1994.
(b)(xii) - Administration Agreement with Stephens Inc. on behalf of the National
Tax-Free Money Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement, filed
December 18, 1995.
(b)(xiii) - Administration Agreement with Stephens Inc. on behalf of the Aggressive
Growth Fund, incorporated by reference to Post-Effective Amendment No.
19 to the Registration Statement, filed December 18, 1995.
6(a) - Amended Distribution Agreement with Stephens Inc., incorporated by
reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(b)(i) - Selling Agreement with Marketing One Securities, Inc. on behalf of the
Funds, incorporated by reference to Post-Effective Amendment No. 2 to
the Registration Statement, filed April 17, 1992.
</TABLE>
C-3
<PAGE> 103
<TABLE>
<S> <C> <C>
(b)(ii) - Selling Agreement with Wells Fargo Bank, N.A. on behalf of the Funds,
incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
7 - Not Applicable
8(a) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on
behalf of the Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(b) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on
behalf of the U.S. Government Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(c) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on
behalf of the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(d) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the
California Tax-Free Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration Statement, filed
April 17, 1992.
(e) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the
California Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Growth
and Income Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Ginnie
Mae Fund, incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
(h) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Money
Market Fund, incorporated by reference to Post-Effective Amendment
No. 3 to the Registration Statement, filed May 1, 1992.
(i) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the
California Tax-Free Income Fund, incorporated by reference to Post-
Effective Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
(j) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the
Diversified Income Fund, incorporated by reference to Post-Effective
Amendment No. 17 to the Registration Statement, filed November 29,
1995.
(k) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Short-
Intermediate U.S. Government Income Fund, incorporated by reference to
Post-Effective Amendment No. 8 to the Registration Statement, filed
February 10, 1994.
(l) - Form of Custody Agreement with Wells Fargo Bank, N.A. on behalf of the
National Tax-Free Money Market Mutual Fund, incorporated by reference
to
</TABLE>
C-4
<PAGE> 104
<TABLE>
<S> <C> <C>
Post-Effective Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
(m) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the
Aggressive Growth Fund, filed herewith.
9(a)(i) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the Funds,
incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
9(a)(ii) - Form of Agency Agreement with Wells Fargo Bank, N.A. on behalf of the
National Tax-Free Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
9(a)(iii) - Form of Agency Agreement with Wells Fargo Bank, N.A. on behalf of the
Aggressive Growth Fund, incorporated by reference to Post-Effective
Amendment No. 19 to the Registration Statement, filed December 18,
1995.
9(b)(i) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the California Tax-Free Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(b)(ii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
(b)(iii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Money Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 3 to the Registration Statement, filed May 1,
1992.
(b)(iv) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the California Tax-Free Income Fund, incorporated by reference to
Post-Effective Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
(b)(v) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Short-Intermediate U.S. Government Income Fund, incorporated by
reference to Post-Effective Amendment No. 8 to the Registration
Statement, filed February 10, 1994.
(b)(vi) - Form of Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the National Tax-Free Money Market Mutual Fund, incorporated
by reference to Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
(b)(vii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the Asset Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(b)(viii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
</TABLE>
C-5
<PAGE> 105
<TABLE>
<S> <C> <C>
(b)(ix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the Diversified Income Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(b)(x) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the Ginnie Mae Fund, incorporated by reference
to Post-Effective Amendment No. 15 to the Registration Statement, filed
May 1, 1995.
(b)(xi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the Growth and Income Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(b)(xii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the U.S. Government Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
(b)(xiii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class B Shares of the Aggressive Growth Fund, filed herewith.
(b)(xiv) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the Class A Shares of the Asset Allocation Fund, incorporated
by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(b)(xv) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the Class A Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
(b)(xvi) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the Class A Shares of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
(b)(xvii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the Class A Shares of the Ginnie Mae Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
(b)(xviii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the Class A Shares of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
(b)(xix) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on
behalf of the Class A Shares of the U.S. Government Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
</TABLE>
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<PAGE> 106
<TABLE>
<S> <C> <C>
(b)(xx) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Class A Shares of the Aggressive Growth Fund, filed herewith.
(c) - Cross Indemnification Agreement, incorporated by reference to Post-
Effective Amendment No. 11 to the Registration Statement of Stagecoach
Inc., filed December 1, 1995.
(d)(i) - Servicing Plan on behalf of the National Tax-Free Money Market Mutual
Fund, incorporated by reference to Post-Effective Amendment No. 17 to
the Registration Statement, filed November 29, 1995.
(d)(ii) - Servicing Plan on behalf of the Class B Shares of the Asset Allocation
Fund, incorporated by reference to Post-Effective Amendment No. 15 to
the Registration Statement, filed May 1, 1995.
(d)(iii) - Servicing Plan on behalf of the Class B Shares of the California Tax-
Free Bond Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(d)(iv) - Servicing Plan on behalf of the Class B Shares of the Diversified
Income Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(d)(v) - Servicing Plan on behalf of the Class B Shares of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
(d)(vi) - Servicing Plan on behalf of the Class B Shares of the Growth and Income
Fund, incorporated by reference to Post-Effective Amendment No. 15 to
the Registration Statement, filed May 1, 1995.
(d)(vii) - Servicing Plan on behalf of the Class B Shares of the U.S. Government
Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(d)(viii) - Servicing Plan on behalf of the Class B Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment No. 19 to
the Registration Statement, filed December 18, 1995.
(d)(ix) - Servicing Plan on behalf of the Class A Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment No. 19 to
the Registration Statement, filed December 18, 1995.
10 - Opinion and Consent of Counsel, filed herewith.
11 - Consent of Auditors -- KPMG Peat Marwick LLP, filed herewith.
12 - Not Applicable
13 - Investment letter, incorporated by reference to Item 24(b) of Pre-
Effective Amendment No. 1 to the Registration Statement, filed
November 29, 1991.
14 - Not Applicable
</TABLE>
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<PAGE> 107
<TABLE>
<S> <C> <C>
15(a)(i) - Distribution Plan on behalf of the California Tax-Free Money Market
Mutual Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
(a)(ii) - Distribution Plan on behalf of the Corporate Stock Fund, incorporated
by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
(a)(iii) - Distribution Plan on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement, filed May 1, 1992.
(a)(iv) - Distribution Plan on behalf of the California Tax-Free Income Fund,
incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement, filed September 10, 1992.
(a)(v) - Distribution Plan on behalf of the Short-Intermediate U.S. Government
Income Fund, incorporated by reference to Post-Effective Amendment
No. 8 to the Registration Statement, filed February 10, 1994.
(a)(vi) - Distribution Plan on behalf of the National Tax-Free Money Market
Mutual Fund, incorporated by reference to Post-Effective Amendment No.
17 to the Registration Statement, filed November 29, 1995.
(b)(i) - Distribution Plan on behalf of the Class B Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(ii) - Distribution Plan on behalf of the Class B Shares of the California
Tax-Free Bond Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(b)(iii) - Distribution Plan on behalf of the Class B Shares of the Diversified
Income Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(iv) - Distribution Plan on behalf of the Class B Shares of the Ginnie Mae
Fund, incorporated by reference to Post-Effective Amendment No. 15 to
the Registration Statement, filed May 1, 1995.
(b)(v) - Distribution Plan on behalf of the Class B Shares of the Growth and
Income Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(b)(vi) - Distribution Plan on behalf of the Class B Shares of the U.S.
Government Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(b)(vii) - Distribution Plan on behalf of the Class B Shares of the Aggressive
Growth Fund, incorporated by reference to Post-Effective Amendment No.
19 to the Registration Statement, filed December 18, 1995.
</TABLE>
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<TABLE>
<S> <C> <C>
(c)(i) - Amended Distribution Plan on behalf of the Class A Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(c)(ii) - Amended Distribution Plan on behalf of the Class A Shares of the
California Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
(c)(iii) - Amended Distribution Plan on behalf of the Class A Shares of the
Diversified Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(c)(iv) - Amended Distribution Plan on behalf of the Class A Shares of the Ginnie
Mae Fund, incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
(c)(v) - Amended Distribution Plan on behalf of the Class A Shares of the Growth
and Income Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
(c)(vi) - Amended Distribution Plan on behalf of the Class A Shares of the U.S.
Government Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
(c)(vii) - Distribution Plan on behalf of the Class A Shares of the Aggressive
Growth Fund, incorporated by reference to Post-Effective Amendment No.
19 to the Registration Statement, filed December 18, 1995.
16(a) - Schedules for Computation of Performance Data, incorporated by
reference to Post-Effective Amendment No. 2, filed April 17, 1992.
16(b) - Schedules for Computation of Performance Data, incorporated by
reference to Post-Effective Amendment No. 15, filed May 1, 1995.
17 - Powers of Attorney, incorporated by reference to Initial Registration
Statement, filed September 30, 1991.
18(a) - Rule 18f-3 Multi-Class Plan, incorporated by reference to Post-
Effective Amendment No. 14 to the Registration Statement, filed
April 14, 1995.
18(b) - Amended Rule 18f-3 Multi-Class Plan, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement, filed
December 18, 1995.
27(1)(A) - Financial Data Schedule for the Class A Shares of the Predecessor Fund,
filed herewith,
27(1)(B) - Financial Data Schedule for the Class D Shares of the Predecessor Fund,
filed herewith.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
As of February 23, 1996, no person was controlled by or under
common control with the Aggressive Growth Fund.
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Item 26. Number of Holders of Securities
As of December 31, 1995, the number of record holders of each
class of Securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
Class A* Class B
------- -------
<S> <C> <C>
Asset Allocation Fund 68,157 1,390
U.S. Government Allocation Fund 13,687 146
California Tax-Free Money Market Mutual Fund 30,571 N/A
California Tax-Free Bond Fund 9,182 641
Growth and Income Fund 20,734 411
Ginnie Mae Fund 13,105 325
Corporate Stock Fund 28,407 N/A
Money Market Mutual Fund 141,756 4,389**
California Tax-Free Income Fund 2,599 N/A
Diversified Income Fund 9,304 273
Short-Intermediate U.S. Government 4,114 N/A
Income Fund
National Tax-Free Money Market 1 N/A
Mutual Fund
</TABLE>
* For purposes of this chart, shares of single class Funds are included under
the designation "Class A".
** Designates the number of Class S Shares outstanding.
Item 27. Indemnification
The following paragraphs of Article VIII of the Registrant's
Articles of Incorporation provide:
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(h) The Corporation shall indemnify (1) its Directors and
officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by law,
and (2) its other employees and agents to such extent as shall be
authorized by the Board of Directors or the Corporation's By-Laws and be
permitted by law. The foregoing rights of indemnification shall not be
exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary
to carry out these indemnification provisions and is expressly empowered
to adopt, approve and amend from time to time such By-Laws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of these Articles
of Incorporation of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal. Nothing contained herein
shall be construed to authorize the Corporation to indemnify any Director
or officer of the Corporation against any liability to the Corporation or
to any holders of securities of the Corporation to which he is subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. Any
indemnification by the Corporation shall be consistent with the
requirements of law, including the 1940 Act.
(i) To the fullest extent permitted by Maryland statutory and
decisional law and the 1940 Act, as amended or interpreted, no Director
or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however,
that nothing herein shall be construed to protect any Director or officer
of the Corporation against any liability to which such Director or
officer would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his office. No amendment, modification or repeal of this
Article VIII shall adversely affect any right or protection of a Director
or officer that exists at the time of such amendment, modification or
repeal.
Item 28. Business and Other Connections of Investment Adviser.
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, and to certain other registered open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or
executive officers of Wells Fargo Bank, except those set forth below, is or has
been at any time during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain executive officers also hold various positions with and engage in
business for Wells Fargo & Company. Set forth below are the names and principal
businesses of the directors
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<PAGE> 111
and executive officers of Wells Fargo Bank who are or during the past two
fiscal years have been engaged in any other business, profession, vocation or
employment of a substantial nature for their own account or in the capacity of
director, officer, employee, partner or trustee. All the directors of Wells
Fargo Bank also serve as directors of Wells Fargo & Company.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
------------------- ------------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle & Hastie
Director 455 Market Street
San Francisco, CA 94105
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
William R. Breuner General Partner in Breuner Associates, Breuner Properties and
Director Breuner-Pavarnick Real Estate Developers. Retired Chairman of
the Board of Directors of John Breuner Co.
2300 Clayton Road, Suite 1570
Concord, CA 94520
Vice Chairman of the California State Railroad
Museum Foundation.
111 I Street
Old Sacramento, CA 95814
William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007
Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201
Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302
</TABLE>
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<PAGE> 112
<TABLE>
<S> <C>
Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301
Chairman of the Board of Trustees of Whittier College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Wells Fargo & Company
Board of Directors 420 Montgomery Street
San Francisco, CA 94105
Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108
Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004
Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Accounting Professor and Dean Emeritus of
Director Graduate School of Business, Stanford University
MBA Admissions Office
Stanford, CA 94305
Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
</TABLE>
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<PAGE> 113
<TABLE>
<S> <C>
Paul A. Miller Chairman of Executive Committee and Director of
Director Pacific Enterprises
633 West Fifth Street
Los Angeles, CA 90071
Trustee of Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Trustee of University of Southern California
University Park TGF 200
665 Exposition Blvd.
Los Angeles, CA 90089
Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102
Chair of Board of Trustees of
University of California at San Francisco Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143
Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108
Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814
Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108
Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303
</TABLE>
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<PAGE> 114
<TABLE>
<S> <C>
Carl E. Reichardt Chairman and Chief Executive Officer of the
Director Board of Directors of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Hospital Corporation of America,
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067
Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209
Retired Secretary of the Air Force
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720
John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
</TABLE>
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<PAGE> 115
<TABLE>
<S> <C>
William F. Zuendt Director of 3Com Corp.
President 5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of MasterCard International
888 Seventh Avenue
New York, NY 10106
Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
</TABLE>
BZW Barclays Global Fund Advisors ("BGFA"), a wholly-owned
subsidiary of BZW Barclays Global Investors, N.A. ("BGI", formerly, Wells Fargo
Institutional Trust Company), serves as sub-adviser to the Asset Allocation,
Corporate Stock and U.S. Treasury Allocation Funds of the Company and as
adviser or sub-adviser to certain other open- end management investment
companies.
The directors and officers of BGFA consist primarily of persons
who during the past two years have been active in the investment management
business of the former sub-adviser to the Asset Allocation, Corporate Stock
and U.S. Treasury Allocation Funds, Wells Fargo Nikko Investment Advisors
("WFNIA") and, in some cases, the service business of BGI. With the exception
of Irving Cohen, each of the directors and executive officers of BGFA will also
have substantial responsibilities as directors and/or officers of BGI. To the
knowledge of the Registrant, except as set forth below, none of the directors
or executive officers of BGFA is or has been at any time during the past two
fiscal years engaged in any other business, profession, vocation or employment
of a substantial nature.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
--------------------- --------------------------------
<S> <C>
Frederick L.A. Grauer Chairman and Director of WFNIA and WFITC+
Chairman, Director
Donald L. Luskin Chief Executive Officer of WFNIA's Defined Contribution Group+
Vice Chairman & Director
Irving Cohen Chief Financial Officer and Chief Operating Officer of Barclays Bank PLC,
Director New York Branch and Chief Operating Officer of Barclays Group, Inc.
(USA)*: previously Chief Financial Officer of Barclays de Zoete Wedd
Securities Inc. (1994)*
</TABLE>
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<PAGE> 116
<TABLE>
<S> <C>
Andrea M. Zolberti Chief Financial Officer of WFNIA and WFITC+
Chief Financial Officer
Vincent J. Bencivenga Previously Vice President at State Street Bank & Trust Company++
Chief Fiduciary Officer
</TABLE>
* 222 Broadway, New York, New York, 10038.
+ 45 Fremont Street, San Francisco, California 94105.
++ One Financial Center, Boston, Massachusetts 02111.
Prior to January 1, 1996, Wells Fargo Nikko Investment Advisors
("WFNIA") served as the sub-adviser to the Asset Allocation, Corporate Stock
and U.S. Government Allocation Funds of the Company and as adviser or
sub-adviser to various other open-end management investment companies. For
additional information, see "The Fund, the Master Portfolio and Management" in
the Prospectus and "Management" in the Statement of Additional Information of
such Funds. For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and management
committees of WFNIA, reference is made to WFNIA's Form ADV and Schedules A and
D filed under the Investment Advisers Act of 1940, File No. 801-36479,
incorporated herein by reference.
Item 29. Principal Underwriters.
(a) Stephens Inc., distributor for the Registrant, does not
presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for the Overland Express
Funds, Inc., Stagecoach Inc. and Stagecoach Trust; and is the exclusive
placement agent for Master Investment Trust, Managed Series Investment Trust,
Life & Annuity Trust and Master Investment Portfolio, which are registered
open-end management investment companies, and has acted as principal
underwriter for the Liberty Term Trust, Inc., Nations Government Income Term
Trust 2003, Inc., and Nations Government Income Term Trust 2004, Inc., and
Managed Balanced Target Maturity Fund, Inc., which are closed-end management
investment companies and Nations Fund Trust, Nations Funds, Inc., Nations Fund
Portfolios, Inc. and The Capitol Mutual Funds, which are open-end management
investment companies.
(b) Information with respect to each director and officer of
the principal underwriter is incorporated by reference to Form ADV and
Schedules A and D filed by Stephens Inc. with the Securities and Exchange
Commission pursuant to the Investment Advisers Act of 1940 (file No.
501-15510).
(c) Not Applicable.
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<PAGE> 117
Item 30. Location of Accounts and Records.
(a) The Registrant maintains accounts, books and other
documents required by Section 31(a) of the Investment Company Act of 1940 and
the rules thereunder (collectively, "Records") at the offices of Stephens Inc.,
111 Center Street, Little Rock, Arkansas 72201.
(b) Wells Fargo Bank maintains all Records relating to its
services as investment adviser and custodian and transfer and dividend
disbursing agent at 525 Market Street, San Francisco, California 94105.
(c) WFNIA and Wells Fargo Institutional Trust Company, N.A.
maintain all Records relating to their services as sub-adviser and custodian,
respectively, for the period prior to January 1, 1996, at 45 Fremont Street,
San Francisco, California 94105.
(d) BGFA maintains all Records relating to its services as
sub-adviser for the period beginning January 1, 1996 at 45 Fremont Street, San
Francisco, California 94105.
(e) Stephens maintains all Records relating to its services as
sponsor, administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.
Item 31. Management Services.
Other than as set forth under the captions "The Fund, the Master
Portfolio and Management" and "Management, Distribution and Servicing Fees" in
the Prospectus constituting Part A of this Registration Statement and
"Management" in the Statement of Additional Information constituting Part B of
this Registration Statement, the Registrant is not a party to any
management-related service contract.
Item 32. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the provisions set forth above in response to Item 27,
or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the
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<PAGE> 118
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue
(d) Registrant undertakes to hold a special meeting of its
shareholders for the purpose of voting on the question of
removal of a director or directors if requested in writing
by the holders of at least 10W of the Company's outstanding
voting securities, and to assist in communicating with
other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
(e) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of its most current
annual report to shareholders, upon request and without
charge.
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<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Secruties Act of 1933
and has duly caused this Amendment to its Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized in the
City of Little Rock, State of Arkansas on the 26th day of February, 1996.
STAGECOACH FUNDS, INC.
By /s/ Richard H. Blank, Jr.
-------------------------
(Richard H. Blank, Jr.)
Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ R. Greg Feltus Director, Chairman and
------------------ President (Principal Executive Officer)
(R. Greg Feltus)
/s/ Richard H. Blank, Jr. Chief Operating Officer,
------------------------- Secretary and Treasurer
(Richard H. Blank, Jr.)
/s/ Jack S. Euphrat Director
-------------------
(Jack S. Euphrat)
/s/ Thomas S. Goho Director
------------------
(Thomas S. Goho)
/s/ Zoe Ann Hines Director
-----------------
(Zoe Ann Hines)
/s/ W. Rodney Hughes Director
--------------------
(W. Rodney Hughes)
/s/ Robert M. Joses Director
-------------------
(Robert M. Joses)
/s/ J. Tucker Morse Director
-------------------
(J. Tucker Morse)
</TABLE>
*By: /s/Richard H. Blank, Jr.
------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to the Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Little Rock, State of
Arkansas on the 26th day of February, 1996.
MASTER INVESTMENT TRUST
By /s/ Richard H. Blank, Jr.
-------------------------
(Richard H. Blank, Jr., Secretary)
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ R. Greg Feltus Trustee, Chairman and President
------------------ (Principal Executive Officer)
(R. Greg Feltus)
/s/ Richard H. Blank, Jr. Secretary and Treasurer (Chief
------------------------- Operating Officer)
(Richard H. Blank, Jr.)
/s/Jack S. Euphrat Trustee
------------------
(Jack S. Euphrat)
/s/ Thomas S. Goho Trustee
------------------
(Thomas S. Goho)
/s/ Zoe Ann Hines Trustee
-----------------
(Zoe Ann Hines)
/s/ W. Rodney Hughes Trustee
--------------------
(W. Rodney Hughes)
/s/ Robert M. Joses Trustee
-------------------
(Robert M. Joses
/s/ J. Tucker Morse Trustee
-------------------
(J. Tucker Morse
</TABLE>
*By: /s/Richard H. Blank, Jr.
------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 121
STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C> <C>
EX-99.B8(m) o Custody Agreement with Wells Fargo Bank on behalf of the
Aggressive Growth Fund
EX-99.B9(b)(xiii) o Shareholder Servicing Agreement with Wells Fargo Bank on
behalf of the Class B Shares of the Aggressive Growth Fund
EX-99.B9(b)(xx) o Shareholder Servicing Agreement with Wells Fargo Bank on
behalf of the Class A Shares of the Aggressive Growth Fund
EX-99.B10 o Opinion and Consent of Counsel
EX-99.B11 o Consent of Auditors -- KPMG Peat Marwick LLP
EX-27.1A o Financial Data Schedule for the Class A Shares of the
Predecessor Fund
EX-27.1B o Financial Data Schedule for the Class D Shares of the
Predecessor Fund
</TABLE>
<PAGE> 1
EX-99.B8(m)
CUSTODY AGREEMENT
STAGECOACH FUNDS, INC.
111 CENTER STREET
LITTLE ROCK, ARKANSAS 72201
This Agreement is made as of the 16th day of February, 1996 (the
"Agreement"), by and between STAGECOACH FUNDS, INC. (the "Company"), on behalf
of the Aggressive Growth Fund (the "Fund"), and WELLS FARGO BANK, N.A. (the
"Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Company and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer,
the controller or any other person, whether or not any such person is an
Officer or employee of the Company, duly authorized by the Board of Directors
("Directors") to give Oral Instructions and Written Instructions on behalf of
the Fund and listed in the Certificate attached hereto as Appendix A or such
other Certificate as may be received from time to time by the Custodian.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor(s) and its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian, which is actually received by the Custodian and signed on behalf
of the Fund by any two Officers of the Company.
4. "Clearing Member" shall mean a registered broker-dealer that
is a member of a national securities exchange qualified to act as a custodian
for an investment company, or any broker-dealer reasonably believed by the
Custodian to be such a clearing member.
5. "Depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, its successor(s) and its nominee(s), provided the
Custodian has received a certified copy of a resolution of the Board of
Directors specifically approving deposits in DTC, PTC or such other
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<PAGE> 2
clearing agency. The term "Depository" shall further mean and include any
person authorized to act as a depository pursuant to Section 17, Rule 17f-4 or
Rule 17f-5 thereunder, under the Investment Company Act of 1940, its
successor(s) and its nominee(s), specifically identified in a certified copy of
a resolution of the Board of Directors approving deposits therein by the
Custodian.
6. "Margin Account" shall mean a segregated account in the name
of a broker, dealer, or Clearing Member, or in the name of the Company or the
Fund for the benefit of a broker, dealer, or Clearing Member, or otherwise, in
accordance with an agreement between the Company on behalf of the Fund, the
Custodian and a broker, dealer, or Clearing Member (a "Margin Account
Agreement"), separate and distinct from the custody account, in which certain
Securities and/or moneys of the Fund shall be deposited and withdrawn from time
to time in connection with such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or the Depository shall be
deemed to have been deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities
thereof, commercial paper, certificates of deposit and bankers' acceptances,
repurchase and reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the President, Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Directors of the Company to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate attached hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
9. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.
11. "Security" or "Securities" shall be deemed to include,
without limitation, Money Market Securities, Reverse Repurchase Agreements,
common stock and other instruments or rights having characteristics similar to
common stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities (including, without limitation, general
obligations bonds), bonds, debentures, notes, mortgages or other obligations,
and any certificates, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe
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<PAGE> 3
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
12. "Segregated Security Account" shall mean an account
maintained under the terms of this Agreement as a segregated account, by
recordation or otherwise, within the custody account in which certain
Securities and/or other assets of the Fund shall be deposited and withdrawn
from time to time in accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to time determine.
13. "Shares" shall mean the shares of common stock of the Fund,
each of which, in the case of the Fund having Series, is allocated to a
particular Series.
14. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized Person by telex or any
other such system whereby the receiver of such communications is able to verify
by codes or otherwise with a reasonable degree of certainty the authenticity of
the sender of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
1. The Company on behalf of the Fund hereby constitutes and
appoints the Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the term of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in Article V, the Fund will
deliver or cause to be delivered to the Custodian all Securities and all moneys
owned by it, including cash received for the issuance of its Shares, at any
time during the term of this Agreement. The Custodian will not be responsible
for such Securities and such moneys until actually received by it. The
Custodian will be entitled to reverse any credits made on the Fund's behalf
where such credits have been previously made and moneys are not finally
collected. The Fund shall deliver to the Custodian a certified resolution of
the Directors of the Company authorizing and instructing the Custodian on a
continuous and ongoing basis to deposit in the Book-Entry System all Securities
eligible for deposit therein and to utilize the Book-Entry System to the
extent possible in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of Securities
collateral. Prior to a deposit of Securities of the Fund in the Depository,
the Fund shall deliver to the
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<PAGE> 4
Custodian a certified resolution of the Directors of the Company approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys of the
Fund deposited in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name
of the Fund all moneys received by it for the account of the Fund, and shall
disburse the same only:
(a) In payment for Securities purchased, as provided in Article
IV hereof;
(b) In payment of dividends or distributions, as provided in
Article VIII hereof;
(c) In payment of original issue or other taxes, as provided in
Article IX hereof;
(d) In payment for Shares redeemed by it, as provided in Article
IX hereof;
(e) Pursuant to Certificate(s) setting forth the name(s) and
address(es) of the person(s) to whom the payment is to be made, and the purpose
for which payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses
and liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a summary of all
transfers to or from the account of the Fund during said day. Where Securities
are transferred to the account of the Fund, the Custodian shall also by
book-entry or otherwise identify as belonging to the Fund a quantity of
Securities in a fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account on the books of
the Book-Entry System or the Depository. The Custodian shall furnish the Fund
at least monthly with a detailed statement of the Securities and moneys held
for the Fund under this Agreement.
4. Except as otherwise provided in Article V, all Securities held
for the Fund which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor(s) or their
nominee(s). The Company agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in
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<PAGE> 5
proper form for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or the Depository, any Securities which
it may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities which are not held in the Book-Entry System or in the Depository in
a separate account in the name of the Fund physically segregated at all times
from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by itself,
or through the use of the Book-Entry System or the Depository with respect to
the Securities therein deposited, shall, with respect to all Securities held
for the Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended
at any time by the Custodian upon five business days' prior notification to the
Fund;
(c) Present for payment and collect the amount payable upon all
Securities which mature;
(d) Surrender Securities in temporary form for definitive
Securities;
(e) Execute, as Custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of the
Fund all rights and similar securities issued with respect to any Securities
held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System or the
Depository, shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for
other Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
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<PAGE> 6
(c) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of the Fund and
take such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of
Securities by the Fund, other than a purchase or sale of any Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i) with respect to each
purchase or sale of Securities which are not Money Market Securities, a
Certificate; and (ii) with respect to each purchase or sale of Money Market
Securities, a Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such purchase or sale: (a) the name of the
issuer and the title of the Securities; (b) the number of shares or the
principal amount purchased or sold and accrued interest, if any; (c) the date
of purchase or sale and settlement date; (d) the purchase or sale price per
unit; (e) the total amount payable upon such purchase or sale; (f) the name of
the person from whom or the broker through whom the purchase or sale was made,
and the name of the clearing broker, if any; (g) in the case of a purchase, the
name of the broker to which payment is to be made; and (h) in the case of a
sale, the name of the broker to whom the Securities are to be delivered. In
the case of a purchase, the Custodian shall, upon receipt of Securities
purchased by or for the Fund, pay out of the moneys held for the account of the
Fund the total amount payable to the person from whom, or the broker through
whom, the purchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate, Oral Instructions or Written
Instructions. In the case of a sale, the Custodian shall deliver the
Securities upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
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<PAGE> 7
ARTICLE V
SHORT SALES
1. Promptly after any short sale, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the name of the issuer and the title
of the Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d)
the sale price per unit; (e) the total amount credited to the Fund upon such
sale, if any (f) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in which
such Margin Account has been or is to be established; (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account; and (h) the name of the broker through which such
short sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming such sale and that the total amount credited to the Fund
upon such sale, if any, as specified in the Certificate is held by such broker
for the account of the Custodian (or any nominee of the Custodian) as custodian
of the Fund, issue a receipt or make the deposits into the Margin Account and
the Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to each such closing-out: (a) the name of the issuer and the title of the
Security; (b) the number of shares or the principal amount, and accrued
interest or dividends, if any, required to effect such closing-out to be
delivered to the broker; (c) the dates of the closing-out and settlement; (d)
the purchase price per unit; (e) the net total amount payable to the Fund upon
such closing-out; (f) the net total amount payable to the broker upon such
closing-out; (g) the amount of cash and the amount and kind of Securities, if
any, to be withdrawn, from the Margin Account; (h) the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from the Segregated
Security Account; and (i) the name of the broker through which the Fund is
effecting such closing-out. The Custodian shall, upon receipt of the net total
amount payable to the Fund upon such closing-out and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect to
the short sale being closed-out, pay out the moneys held for the account of the
Fund to the broker the net total amount payable to the broker, and make the
withdrawals from the Margin Account and the Segregated Security Account, as the
same are specified in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse Repurchase
Agreement with respect to Securities and money held by the Custodian hereunder,
the Fund shall deliver to the Custodian a Certificate, or in the event such
Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total amount payable
to the Fund in connection with such Reverse Repurchase Agreement; (b) the
broker or dealer through or with which the Reverse Repurchase Agreement is
entered; (c) the amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase Agreement; and
(e) the amount of cash and/or the amount and kind of Securities, if
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<PAGE> 8
any, to be deposited in a Segregated Security Account in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total
amount payable to the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement
described in paragraph 1 of this Article VI, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions or Written Instructions to
the Custodian specifying: (a) the Reverse Repurchase Agreement being
terminated; (b) the total amount payable by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received by the Fund
in connection with such termination; (d) the date of termination; (e) the name
of the broker or dealer with or through which the Reverse Repurchase Agreement
is to be terminated; and (f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Segregated Security Account. The Custodian
shall, upon receipt of the amount and kind of Securities to be received by the
Fund specified in the Certificate, Oral Instructions or Written Instructions,
make the payment to the broker or dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such Certificate, Oral Instructions
or Written Instructions.
ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to,
or withdrawals from, a Segregated Security Account as specified in a
Certificate received by the Custodian. Such Certificate shall specify the
amount of cash and/or the amount and kind of Securities to be deposited in, or
withdrawn from, the Segregated Security Account. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the title and the
number of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Segregated Securities
Account, the Custodian shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer or Clearing Member in whose name, or for whose
benefit, the account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt with
in accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the Custodian in any
Collateral Account described herein.
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<PAGE> 9
5. On each business day, the Custodian shall furnish the Fund
with a statement with respect to the Fund's Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind of
Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker or dealer specified
in the name of a Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each business day in
which cash and/or Securities are maintained in a Collateral Account, the
Custodian shall furnish the Fund with a statement with respect to the Fund's
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall furnish the
Custodian with a Certificate or Written Instructions specifying the then market
value of the Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish the Custodian with a copy of the
resolution of the Directors, certified by the Secretary or any Assistant
Secretary, either (i) setting forth the date of the declaration of a dividend
or distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total amount
payable to the Dividend Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distributions on a daily basis or
some other periodic basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of the Fund the total amount payable to the
Dividend Agent of the Fund.
ARTICLE IX
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any of its Shares, it shall
deliver to the Custodian a Certificate duly specifying the number of Shares
sold, trade date, price and the amount of money to be received by the Custodian
for the sale of such Shares.
2. Upon receipt of such money from the Transfer Agent or a
co-transfer agent, the Custodian shall credit such money to the account of the
Fund.
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<PAGE> 10
3. Upon issuance of any of the Fund's Shares in accordance with
the foregoing provisions of this Article IX, the Custodian shall pay, out of
the money held for the account of the Fund, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall redeem
any of its Shares, it shall furnish the Custodian with a Certificate specifying
the number of Shares redeemed and the amount to be paid for the Shares
redeemed.
5. Upon receipt from the Transfer Agent or co-transfer agent of
an advice setting forth the number of Shares received by the Transfer Agent or
co-transfer agent for redemption, and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the Transfer Agent or
co-transfer agent, as the case may be, out of the moneys held for the account
of the Fund of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article IX.
6. Notwithstanding the above provisions regarding the redemption
of any of the Fund's Shares, whenever its Shares are redeemed pursuant to any
check redemption privilege which may from time to time be offered by the Fund,
the Custodian, unless otherwise instructed by a Certificate, shall, upon
receipt of an advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check
redemption privilege out of the money held in the account of the Fund for such
purposes.
ARTICLE X
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds
on behalf of the Fund which results in an overdraft because the moneys held by
the Custodian for the account of the Fund shall be insufficient to pay the
total amount payable upon a purchase of Securities as set forth in a
Certificate or Oral Instructions issued pursuant to Article IV, or which
results in an overdraft for some other reason, or if the Fund is, for any other
reason, indebted to the Custodian (except a borrowing for investment or for
temporary or emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of paragraph 2 of this Article
X), such overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund payable on demand and shall bear interest from the date
incurred at a rate per annum (based on a 360-day year for the actual number of
days involved) equal to 1/2% over the Custodian's prime commercial lending rate
in effect from time to time, such rate to be adjusted on the effective date of
any change in such prime commercial lending rate but in no event to be less
than 6% per annum. Any such overdraft or indebtedness shall be reduced by an
amount equal to the total of all amounts due the Fund which have not been
collected by the Custodian on behalf of the Fund when due because of the
failure of the Custodian to make timely demand or presentment for payment. In
addition, the Company on behalf of the Fund hereby agrees that the Custodian
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<PAGE> 11
shall have a continuing lien and security interest in and to any property at
any time held by it for the benefit of the Fund or in which the Fund may have
an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting on the Custodian's behalf. The
Company authorizes the Custodian, in its sole discretion, at any time to charge
any such overdraft or indebtedness together with interest due thereon against
any balance of account standing to the Fund's credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any
bank (including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against delivery of a stated
amount of collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of
the bank; (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (c) the time and date, if known, on which the
loan is to be entered into; (d) the date on which the loan becomes due and
payable; (e) the total amount payable to the Fund on the borrowing date; (f)
the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal of any particular Securities; and (g) a statement specifying whether
such loan is for investment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company Act of 1940 and
the Fund's prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amounts payable as
set forth in the Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of the Company's
Articles of Incorporation and as disclosed in the Fund's most recent and
currently effective prospectus to lend its portfolio Securities, within
twenty-four (24) hours after each loan of portfolio Securities the Fund shall
deliver or cause to be delivered to the Custodian a Certificate specifying with
respect to each such loan; (a) the name of the issuer and the title of the
Securities; (b) the number of shares or the
-11-
<PAGE> 12
principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of the Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by
the Fund, it shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the name of the issuer and the title of the Securities to be
returned; (b) the number of shares or the principal amount to be returned; (c)
the date of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The
Custodian shall receive all Securities returned from the broker, dealer, or
financial institution to which such Securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its
nominee shall be liable for any loss or damage, including attorney's fees,
resulting from its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or damage arising
out of its own negligence or willful misconduct. The Custodian may, with
respect to questions of law arising hereunder or under any Margin Account
Agreement, apply for and obtain the advice and opinion of counsel to the Fund
or of its own counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or willful misconduct on the
part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the
Custodian shall be under no obligation to inquire into, and shall not be liable
for:
(a) The validity of the issue of any Securities purchased, sold
or written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received thereof;
-12-
<PAGE> 13
(b) The legality of the issue or sale of any of the Fund's
Shares, or the sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's Shares,
or the propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by
the Fund;
(e) The legality of any borrowing by the Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to
Article XI of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a broker,
dealer or financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for the Fund
against any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such
cash collateral held by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XI of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Segregated Security Account or
Collateral Account in connection with transactions by the Fund. In addition,
the Custodian shall be under no duty or obligation to see that any broker,
dealer, or Clearing Member makes payment to the Fund of any variation margin
payment or similar payment which the Fund may be entitled to receive from such
broker, dealer, or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or
non-receipt of any such payment; provided however that the Custodian, upon the
Fund's written request, shall as Custodian, demand from any broker, dealer, or
Clearing Member identified by the Fund the payment of any variation margin
payment or similar payment that the Fund asserts it is entitled to receive
pursuant to the terms of a Margin Account Agreement or otherwise from such
broker, dealer, or Clearing Member.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
-13-
<PAGE> 14
4. The Custodian shall have no responsibility and shall not be
liable for ascertaining or acting upon any calls, conversions, exchanges,
offers, tenders, interest rate changes or similar matters relating to
Securities held in the Depository unless the Custodian shall have actually
received timely notice from the Depository. In no event shall the Custodian
have any responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the Depository of any
amount payable upon Securities deposited in the Depository which may mature or
be redeemed, retired, called or otherwise become payable. However, upon
receipt of a Certificate from the Fund of an overdue amount on Securities held
in the Depository, the Custodian shall make a claim against the Depository on
behalf of the Fund, except that the Custodian shall not be under any obligation
to appear in, prosecute or defend any action, suit or proceeding in respect to
any Securities held by the Depository which in its opinion may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount due to the Fund from the
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by the Transfer Agent of the Fund of any amount paid by the
Custodian to the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount, if the Securities upon which
such amount is payable are in default, or if payment is refused after due
demand or presentation, unless and until (i) it shall be directed to take such
action by a Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub-custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by the Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Company's Board of Directors adopted in accordance
with Rule 17f-5 under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by it for the
account of the Fund are such as properly may be held by the Fund under the
provisions of its Articles of Incorporation.
9. The Custodian shall not be entitled to compensation for
providing custody services to the Fund so long as the Custodian or an affiliate
receives fees for providing agency services to the Fund. If the Custodian or
an affiliate no longer receives compensation for providing such services, the
Custodian shall be entitled to such reasonable fees as it may from time to time
negotiate with the Fund.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions and any Written
-14-
<PAGE> 15
Instructions actually received by the Custodian pursuant to Article IV or VII
hereof. The Fund agrees to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written Instructions in such
manner so that such Certificate or facsimile thereof is received by the
Custodian, whether by hand delivery, telex or otherwise, by the close of
business of the same day that such Oral Instructions or Written Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions hereby authorized by the Fund. The Fund agrees
that the Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. The Fund, or the Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative(s) at the Fund's expense.
13. The Custodian shall provide the Company with any report
obtained by the Custodian on the system of internal accounting control of the
Book-Entry System or the Depository and with such reports on its own systems of
internal accounting control as the Company may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against and save
the Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising or incurred because of
or in connection with the Custodian's payment or non-payment of checks pursuant
to paragraph 6 of Article IX as part of any check redemption privilege program
of the Fund, except for any such liability, claim, loss and demand arising out
of the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the
Custodian may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian
in accordance with the customs prevailing from time to time among brokers or
dealers in such Securities.
-15-
<PAGE> 16
16. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement or Appendix D attached hereto, and no covenant or
obligation shall be implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until February 28, 1997, and
thereafter shall continue automatically for successive annual periods ending on
the last day of December of each year, provided such continuance is
specifically approved at least annually by (i) the Company's Directors or (ii)
vote of a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Company's Directors who are
not "interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable without penalty, on sixty (60)
days' notice, by the Company's Directors or, by vote of holders of a majority
of the Fund's Shares or, upon not less than ninety (90) days' notice, by the
Custodian. In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Directors of the Company on behalf
of the Fund, certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Directors, certified by
the Secretary or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses, and other amounts for the payment of
reimbursement of which shall then be entitled.
2. If a successor custodian is not designated by the Company on
behalf of the Fund or the Custodian in accordance with the preceding paragraph,
the Fund shall, upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be delivered to the Fund)
and moneys then owned by the Fund, be deemed to be its own custodian, and the
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities held in the
Book-Entry System, in any Depository or by a Clearing Member which cannot be
delivered to the Fund, to hold such Securities hereunder in accordance with
this Agreement.
-16-
<PAGE> 17
ARTICLE XIV
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Company under its seal, setting forth the names and
the signatures of the present Authorized Persons. The Company agrees to
furnish to the Custodian a new Certificate in similar form in the event that
any such present Authorized Person ceases to be an Authorized Person or in the
event that other or additional Authorized Persons are elected or appointed.
Until such new Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon Oral
Instructions or signatures of the present Authorized Persons as set forth in
the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Company under its seal, setting forth the names and
the signatures of the present Officers of the Company. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event any
such present Officer ceases to be an Officer of the Company, or in the event
that other or additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully be protected in
acting under the provisions of this Agreement upon the signatures of the
Officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be deemed
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at 420 Montgomery Street, San Francisco, California, 94105, or
at such other place as the Custodian may from time to time designate in
writing.
4. Any notice or other instrument in writing, authorized or
required by this Agreement to be given by or on behalf of the Fund, shall be
deemed sufficiently given if addressed to the Fund and mailed or delivered to
it at its office at 111 Center Street, Little Rock, Arkansas, 72201, or at such
other place as the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties to this Agreement and
approved by a resolution of the Directors of the Company.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successor(s) and assign(s); provided,
however, that this Agreement shall not be assignable by the Company without the
written consent of the Custodian, or by the Custodian without the written
consent of the Company, authorized or approved by a resolution of its
Directors.
7. This Agreement shall be construed in accordance with the laws
of the State of California.
8. This Agreement may be executed in any number of counterparts,
each which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
-17-
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective Officers, thereunto duly authorized, as of
the day and year first above written.
<TABLE>
<S> <C>
STAGECOACH FUNDS, INC. WELLS FARGO BANK, N.A.
By: /s/ R. H. Blank, Jr. By: /s/ Vito P. Limitone
----------------------------------------- ---------------------------------------
Name: Richard H. Blank Jr. Name: Vito P. Limitone
--------------------------------------- --------------------------------------
Title: Chief Operating Officer Title: Senior Vice President
-------------------------------------- -------------------------------------
</TABLE>
-18-
<PAGE> 19
AUTHORIZED PERSONS
Pursuant to Article I, Para. 1, and Article XIV, Para. 1,
of the Custody Agreement, the following persons have been authorized by the
Board of Directors to give Oral Instructions and Written Instructions on behalf
of the Fund.
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
By:
------------------------
Name:
----------------------
Title:
---------------------
-A-
<PAGE> 20
APPENDIX B
OFFICERS
Pursuant to Article I, Para. 8, and Article XIV, Para.
2, of the Custody Agreement, the term "Officers" does not include any persons
other than the President, Vice President, Secretary, Treasurer, Controller,
Assistant Secretary and Assistant Treasurer; and the following persons are
Officers of the Company authorized by the Board of Directors to execute any
Certificate, instruction, notice or other instrument on behalf of the Fund.
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
Signature:
----------------------------
Name:
---------------------------------
By: By:
----------------------------- -----------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
----------------------------- -----------------------------
-B-
<PAGE> 21
APPENDIX C
DESIGNATED PUBLICATIONS LIST FOR CALLED INSTRUMENTS
The following publications are designated publications for the
purposes of Article III, Para. 5(b):
A. The Bond Buyer
B. The Depository Trust Company Notices
C. Financial Daily Card Services
D. The New York Times
E. Standard & Poor's Called Bond Record
F. The Wall Street Journal
-C-
<PAGE> 22
APPENDIX D
COMPANY AND FUND ACCOUNTING SERVICES:
SCHEDULE OF SERVICES
A. Maintain Fund general ledger and journal.
B. Prepare and record disbursements for direct Fund expenses.
C. Prepare daily money transfers.
D. Reconcile all Fund bank and custodian accounts.
E. Assist Fund independent auditors as appropriate.
F. Prepare daily projection of available cash balances.
G. Record trading activity for purposes of determining net asset values and
daily dividend.
H. Prepare daily portfolio evaluation report to value portfolio Securities
and determine daily accrued income.
I. Determine the daily net asset value per share.
J. Determine the daily dividend per share.
K. Prepare monthly, quarterly, semi-annual and annual financial statements.
L. Provide financial information for reports to the Securities and Exchange
Commission in compliance with the provisions of the Investment Company
Act of 1940 and the Securities Act of 1933, the Internal Revenue Service
and any other regulatory or governmental agencies as required.
M. Provide financial, yield, net asset value, etc., information to National
Association of Securities Dealers, Inc., and other survey and statistical
agencies as instructed from time to time by the Fund.
-D-
<PAGE> 1
EX-99.B9(b)(xiii)
SHAREHOLDER SERVICING AGREEMENT
(Class B Shares)
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
February 16, 1996, is made by and between Stagecoach Funds, Inc. ("Company"), a
Maryland corporation having its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, on behalf of the Aggressive Growth Fund
("Fund"), and Wells Fargo Bank, N.A., 525 Market Street, Suite 1900, San
Francisco, California 94163, as shareholder servicing agent hereunder
("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, Class B shares of common stock (.001 par value) of the
Fund (hereinafter "Class B Shares") may be purchased or redeemed through a
broker/dealer or financial institution which has entered into a shareholder
servicing agreement with the Company on behalf of the Fund; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate
purchases and redemptions of Class B Shares by its customers (the "Customers")
and wishes to act as the Customers' agent in performing certain administrative
functions in connection with transactions in Class B Shares from time to time
for the account of the Customers and to provide related services to the
Customers in connection with their investments in the Fund; and
WHEREAS, it is in the best interest of the Fund to make the
services of the Shareholder Servicing Agent available to the Customers who,
from time to time, become shareholders of the Fund;
NOW THEREFORE, the Company, on behalf of the Fund, and the
Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent
shall be responsible for performing shareholder account administrative and
servicing functions, which shall include, without limitation:
<PAGE> 2
(a) answering Customer inquiries regarding
account status and history, the manner in
which purchases, exchanges and redemptions of
Class B Shares may be effected;
(b) assisting Customers in designating and
changing dividend options, account
designations and addresses;
(c) providing necessary personnel and facilities
to establish and maintain Customer accounts
and records;
(d) assisting in processing purchase, redemption
and exchange transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with
Customer orders to purchase or redeem shares;
(g) verifying and guaranteeing Customer
signatures in connection with redemption and
exchange orders and transfers and changes in
Customer accounts with banks which are
designated in a Fund Account Application and
which are approved by the Fund's Transfer
Agent;
(h) furnishing (either separately or on an
integrated basis with other reports sent to a
Customer by the Shareholder Servicing Agent)
monthly and year-end statements and
confirmations of purchases, redemptions and
exchanges;
(i) furnishing, on behalf of the Class B Shares
of the Fund, proxy statements, annual
reports, updated prospectuses and other
communications to Customers;
(j) receiving, tabulating and sending to the Fund
proxies executed by Customers; and
(k) providing such other related services, and
necessary personnel and facilities to provide
all of the shareholder services contemplated
hereby, in each case, as the Company or a
Customer may reasonably request.
2.2 Standard of Services. All services to be rendered
by the Shareholder Servicing Agent hereunder shall be performed in a
professional, competent and timely manner. Any detailed operating standards
and procedures to be followed by the Shareholder Servicing Agent in performing
the services described above shall be determined from time to time by
2
<PAGE> 3
agreement between the Shareholder Servicing Agent and the Company. The Company
acknowledges that the Shareholder Servicing Agent's ability to perform on a
timely basis certain of its obligations under this Agreement depends upon the
Fund's timely delivery of certain materials and/or information to the
Shareholder Servicing Agent. The Company agrees to use its best efforts to
provide, or cause to be provided, such materials to the Shareholder Servicing
Agent in a timely manner.
2.3 Investments through Distributor. The Company and
the Shareholder Servicing Agent hereby agree that all purchases of Class B
Shares effected by the Shareholder Servicing Agent on behalf of its Customers
shall be effected by it through Stephens Inc. ("Distributor") in its capacity
as the Fund's principal underwriter.
3. Fees.
3.1 Fees from the Fund. In consideration of the
services described in Section 2 hereof and the incurring of expenses in
connection therewith, the Shareholder Servicing Agent shall receive a fee to be
paid in arrears periodically or on a periodic basis to be agreed upon by the
Company and the Shareholder Servicing Agent from time to time (but in no event
less frequently than semi-annually) determined by a formula based upon the
number of accounts serviced by the Shareholder Servicing Agent during the
period for which payment is being made, the level of assets or activity in such
accounts during such period, and/or the expenses incurred by the Shareholder
Servicing Agent. In no event will such fees exceed 0.25%, on an annualized
basis, of the average daily net assets of the Fund represented by Class B
Shares owned of record by the Shareholder Servicing Agent on behalf of the
Customers during the period for which payment is being made. For purposes of
determining the fees payable to the Shareholder Servicing Agent hereunder, the
per share value of the Class B Shares' net assets shall be computed in the
manner specified in the Class B Shares' then-current prospectus.
Notwithstanding the foregoing, if applicable laws, regulations or rules impose
a maximum fee amount (a "cap") on Class B Shares with respect to shareholder
servicing fees and/or fees for distribution-related services, the amount
payable hereunder shall be reduced to an amount which, when considered in
conjunction with the fees payable by the Fund for the Class B Shares'
distribution-related activities, is the maximum amount payable to the
Shareholder Servicing Agent under applicable laws, regulations or rules. The
above fee constitutes all fees to be paid to the Shareholder Servicing Agent by
the Fund or the Company with respect to the shareholder services contemplated
hereby.
3.2 Fees from Customers. It is agreed that the
Shareholder Servicing Agent may impose certain conditions on Customers, subject
to the terms of the Fund's then-current prospectus, in addition to or different
from those imposed by the Fund, such as requiring a minimum initial investment
or the payment of additional fees directly by the Customer for additional
services offered by the Shareholder Servicing Agent to the Customer; provided,
however, that the Shareholder Servicing Agent may not charge customers any
direct fee which would constitute a "sales load" within the meaning of Section
2(a)(35) of the Investment Company Act of 1940, as amended (the "1940 Act").
The Shareholder Servicing Agent shall bill Customers directly for any such
additional fees. In the event the Shareholder Servicing Agent
3
<PAGE> 4
charges Customers such additional fees, it shall notify the Company in advance
and make appropriate prior written disclosure (such disclosure to be in
accordance with all applicable laws) to Customers of any such additional fees
charged directly to the Customer. To the extent required by applicable rules
and regulations of the Securities and Exchange Commission, the Company shall
make written disclosure of the fees paid or to be paid by the Fund to the
Shareholder Servicing Agent pursuant to Section 3.1 of this Agreement. In no
event shall the Shareholder Servicing Agent have recourse or access, as
Shareholder Servicing Agent or otherwise, to the assets in the Customer's
account, except to the extent expressly authorized by law or by such Customer,
or to any assets of the Fund or the Company, for payment of any additional
direct fees referred to in this Section 3.2
4. Information Pertaining to the Shares. The Shareholder
Servicing Agent and its officers, employees and agents are not authorized to
make any representations concerning the Company, the Fund or Class B Shares to
Customers or prospective Customers, excepting only accurate communication of
any information provided by or on behalf of any administrator of the Company or
the Fund or any distributor of Class B Shares or information contained in the
Class B Shares' then-current prospectus. In furnishing such information
regarding the Company, the Fund or Class B Shares, the Shareholder Servicing
Agent shall act as agent for the Customer only and shall have no authority to
act as agent for the Company, the Fund or the Class B Shares. Advance copies
or proofs of all materials which are proposed to be circulated or disseminated
by the Shareholder Servicing Agent to Customers or prospective Customers and
which identify or describe the Company, the Fund or Class B Shares shall be
provided to the Company at least 10 days prior to such circulation or
dissemination (unless the Company consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Company shall have given written notice to
the Shareholder Servicing Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Company
liable for the use (as opposed to the accuracy) of any information about the
Company, the Fund or Class B Shares which is disseminated by the Shareholder
Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company
shall not use the name of the Shareholder Servicing Agent, or any of its
affiliates or subsidiaries, in any prospectus, sales literature or other
materials relating to the Company, the Fund or Class B Shares in a manner not
approved by the Shareholder Servicing Agent prior thereto in writing; provided,
however, that the approval of the Shareholder Servicing Agent shall not be
required for any use of its name which merely refers in accurate and factual
terms to its appointment hereunder or which is required by the Securities and
Exchange Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided, further, that in no
event shall such approval be unreasonably withheld or delayed.
6. Use of the Name of the Fund or the Company. The
Shareholder Servicing Agent shall not use the name of the Fund, the Company or
Class B Shares on any checks, bank drafts, bank statements or forms for other
than internal use in a manner not approved by the Company prior thereto in
writing; provided, however, that the approval of the Company shall not
4
<PAGE> 5
be required for the use of the Company's name or the Fund's name in connection
with communications permitted by Section 4 hereof or (subject to Section 4, to
the extent the same may be applicable) for any use of the Company's name or the
Fund's name which merely identifies the Company or the Fund, as the case may be
in connection with the Shareholder Servicing Agent's role hereunder or which is
required by the Securities and Exchange Commission or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
7. Security. The Shareholder Servicing Agent represents and
warrants that to the best of its knowledge, the various procedures and systems
which it has implemented (including provision for twenty-four hours a day
restricted access) with regard to safeguarding from loss or damage attributable
to fire, theft or any other cause the Company's records and other data within
its possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Company shall from time to time specify
the types of records and other data of the Company to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent
shall comply with all applicable federal and state laws and regulations,
including securities laws. The Shareholder Servicing Agent represents and
warrants to the Company that the performance of all its obligations hereunder
will comply with all applicable laws and regulations, the provisions of its
charter documents and by-laws and all material contractual obligations binding
upon the Shareholder Servicing Agent. The Shareholder Servicing Agent
furthermore undertakes that it will promptly, after the Shareholder Servicing
Agent becomes so aware, inform the Company of any change in applicable laws or
regulations (or interpretations thereof) or in its charter or by-laws or
material contracts which would prevent or impair full performance of any of its
obligations hereunder.
9. Reports. To the extent requested by the Company from time
to time, but at least quarterly, the Shareholder Servicing Agent will provide
the Treasurer of the Company with a written report of the amounts expended by
the Shareholder Servicing Agent pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keeping.
10.1 Section 31(a). The Shareholder Servicing Agent
shall maintain records in a form acceptable to the Company and in compliance
with applicable laws and the rules and regulations of the Securities and
Exchange Commission, including but not limited to the record-
5
<PAGE> 6
keeping requirements of Section 31(a) of the 1940 Act and the rules thereunder,
with respect to the services contemplated by this Agreement. Such records
shall be deemed to be the property of the Company and will be made available,
at the Company's request, for inspection and use by the Company,
representatives of the Company and governmental authorities. The Shareholder
Servicing Agent agrees that, for so long as it retains any records hereunder,
it will meet all reporting requirements pursuant to the 1940 Act and applicable
to the Shareholder Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing
Agent shall maintain accurate and complete records with respect to services
performed by the Shareholder Servicing Agent in connection with the purchase
and redemption of Class B Shares through the Distributor. Such records shall
be maintained in a form reasonably acceptable to the Company and in compliance
with the requirements of Rules 17a-3 and 17a-4 under the Securities Exchange
Act of 1934, as amended, pursuant to which any dealer of Class B Shares must
maintain certain records. All such records maintained by the Shareholder
Servicing Agent shall be the property of the Distributor and will be made
available for inspection and use by the Company or the Distributor upon the
request of either. The Shareholder Servicing Agent shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Company and the Distributor copies of, all
reports and undertakings as may be reasonably requested by the Company or the
Distributor in order to comply with such rules. If so requested by the
Distributor, the Shareholder Servicing Agent shall confirm to the Distributor
its obligations under this Section 10.2 by a writing reasonably satisfactory to
the Distributor.
10.3 Identification, Etc. of Records. The Company shall
from time to time instruct the Shareholder Servicing Agent in writing as to,
and the Company and the Shareholder Servicing Agent shall periodically review,
the records to be maintained and the procedures to be followed by the
Shareholder Servicing Agent in complying with the foregoing Sections 10.1 and
10.2 and Section 8 to the extent it relates to record-keeping required under
federal securities laws and regulations. Notwithstanding the provisions of
Section 8, the Shareholder Servicing Agent shall be entitled to rely on such
instructions.
10.4 Transfer of Customer Data. In the event this
Agreement is terminated or a successor to the Shareholder Servicing Agent is
appointed, the Shareholder Servicing Agent shall, at the expense of the
Company, transfer to such successor as the Company may designate a certified
list of the beneficial owners of Class B Shares serviced by the Shareholder
Servicing Agent (with name, address and tax identification or Social Security
number), a complete record of the account of each such shareholder and the
status thereof, and all other relevant books, records, correspondence, and
other data established or maintained by the Shareholder Servicing Agent under
this Agreement. In the event this Agreement is terminated, the Shareholder
Servicing Agent will use its best efforts to cooperate in the orderly transfer
of such duties and responsibilities to the successor, including assistance in
the establishment of books, records and other data by the successor.
10.5 Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 10 shall survive the
termination of this Agreement for the
6
<PAGE> 7
shorter of a period of six years or that minimum period required by applicable
rules or regulations of the Securities and Exchange Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in
this Section 10 shall be construed to mean that the Shareholder Servicing Agent
would, by virtue of its role hereunder, be required under applicable law to
maintain the records required to be maintained by it under this Section 10, but
it is understood that the Shareholder Servicing Agent has agreed to do so in
order to enable the Company and the Distributor to comply with laws and
regulations applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy
Records. Anything in this Section 10 to the contrary notwithstanding, except
to the extent otherwise prohibited by law, the Shareholder Servicing Agent
shall have the right to copy, maintain and use any records maintained by the
Shareholder Servicing Agent pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not
be liable or responsible for delays or errors by reason of circumstances beyond
its reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent.
The Company will indemnify and hold the Shareholder Servicing Agent harmless
from all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) from any claim, demand, action or suit
(collectively, "Claims") (a) arising in connection with misstatements or
omissions in the Fund's prospectus, actions or inactions by the Company or any
of its agents or contractors or the performance of the Shareholder Servicing
Agent's obligations hereunder and (b) not resulting from (i) the bad faith or
negligence of the Shareholder Servicing Agent, its officers, employees or
agents, or (ii) any breach of applicable law by the Shareholder Servicing
Agent, its officers, employees or agents, or (iii) any action of the
Shareholder Servicing Agent, its officers, employees or agents which exceeds
the legal authority of the Shareholder Servicing Agent or its authority
hereunder, or (iv) any error or omission of the Shareholder Servicing Agent,
its officers, employees or agents with respect to the purchase, redemption and
transfer of Customers' Class B Shares or the Shareholder Servicing Agent's
verification or guarantee of any Customer signature. Notwithstanding anything
herein to the contrary, the Company will indemnify and hold the Shareholder
Servicing Agent harmless from any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) resulting from any
Claim as a result of its acting in accordance with any written instructions
reasonably believed by the Shareholder Servicing Agent to have been executed by
any person duly authorized by the Company, or as a result of acting in reliance
upon any instrument or stock certificate reasonably believed by the Shareholder
Servicing Agent to have been genuine and signed, countersigned or executed by a
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<PAGE> 8
person duly authorized by the Company, excepting only the gross negligence or
bad faith of the Shareholder Servicing Agent.
In any case in which the Company may be asked to indemnify or hold
the Shareholder Servicing Agent harmless, the Company shall be advised of all
pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and notify the Company
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company. The Company shall have the
option to defend the Shareholder Servicing Agent against any Claim which may be
the subject of indemnification hereunder. In the event that the Company elects
to defend against such Claim, the defense shall be conducted by counsel chosen
by the Company and reasonably satisfactory to the Shareholder Servicing Agent.
The Shareholder Servicing Agent may retain additional counsel at its expense.
Except with the prior written consent of the Company, the Shareholder Servicing
Agent shall not confess any Claim or make any compromise in any case in which
the Company will be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Company. Without limiting
the rights of the Company under applicable law, the Shareholder Servicing Agent
will indemnify and hold the Company harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any Claim (a) resulting from (i) the bad faith or negligence of the Shareholder
Servicing Agent, its officers, employees or agents, or (ii) any breach of
applicable law by the Shareholder Servicing Agent, its officers, employees or
agents, or (iii) any action of the Shareholder Servicing Agent, its officers,
employees or agents which exceeds the legal authority of the Shareholder
Servicing Agent or its authority hereunder, or (iv) any error or omission of
the Shareholder Servicing Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Class B Shares or the
Shareholder Servicing Agent's verification or guarantee of any Customer
signature, and (b) not resulting from the Shareholder Servicing Agent's actions
in accordance with written instructions reasonably believed by the Shareholder
Servicing Agent to have been executed by any person duly authorized by the
Company, or in reliance upon any instrument or stock certificate reasonably
believed by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company.
In any case in which the Shareholder Servicing Agent may be asked
to indemnify or hold the Company harmless, the Shareholder Servicing Agent
shall be advised of all pertinent facts concerning the situation in question
and the Company shall use reasonable care to identify and notify the
Shareholder Servicing Agent promptly concerning any situation which presents or
appears likely to present a claim for indemnification against the Shareholder
Servicing Agent. The Shareholder Servicing Agent shall have the option to
defend the Company against any Claim which may be the subject of
indemnification hereunder. In the event that the Shareholder Servicing Agent
elects to defend against such Claim, the defense shall be conducted by counsel
chosen by the Shareholder Servicing Agent and satisfactory to the Company. The
Company may retain additional counsel at its expense. Except with the prior
written consent of the Shareholder Servicing Agent, the Company shall not
confess any Claim or make any compromise in any case in which the Shareholder
Servicing Agent will be asked to indemnify the Company.
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<PAGE> 9
12.3 Survival of Indemnities. The indemnities granted
by the parties in this Section 12 shall survive the termination of this
Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if mailed to
such party at the address of such party set forth in the preamble of this
Agreement or at such other address as such party may have designated by written
notice to the other.
15. Further Assurances. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
16. Implementation and Duration of Agreement. This Agreement
is effective upon a "vote of a majority of the outstanding voting securities"
(as defined in the 1940 Act) and approval by the Company's Board of Directors,
and of the Directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Fund's Distribution Plan (the "Plan"), this Agreement, or
any other agreement related to such Plan, including the Fund's Amended
Distribution Agreement, cast in person at a meeting called for the purpose of
voting on this Agreement. Subject to Section 17, this Agreement shall continue
in effect for a period of more than one year from the date hereof so long as
such continuance is specifically approved at least annually by a vote of
Company's Board of Directors, in the manner described above.
17. Termination. This Agreement may be terminated by the
Company, without the payment of any penalty, at any time upon not more than 60
days' nor less than 30 days' notice, by a vote of a majority of the Board of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Plan, this Agreement or any other agreement related to
such Plan, including the Amended Distribution Agreement, or by "a vote of a
majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund. The Shareholder Servicing Agent may terminate this Agreement upon
not more than 60 days' nor less than 30 days' notice to the Company.
Notwithstanding anything herein to the contrary, but except as provided in
Section 20 of this Agreement, this Agreement may not be assigned and shall
terminate automatically without notice to either party upon any assignment.
Upon termination hereof, the Fund shall pay such compensation as may be due the
Shareholder Servicing Agent as of the date of such termination.
18. Changes; Amendments. This Agreement may be supplemented or
amended only by written instrument signed by both parties, but may not be
amended to increase materially the maximum amount payable without approval of
"a vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund, and all material amendments must be approved in the
manner described in Section 16.
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<PAGE> 10
19. Limitation of Liability. The Shareholder Servicing Agent
hereby agrees that obligations assumed by the Company pursuant to this
Agreement shall be limited in all cases to the Fund and its assets and that the
Shareholder Servicing Agent shall not seek satisfaction of any such obligations
from the Board of Directors or any individual Director of the Company or from
the assets of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The
Shareholder Servicing Agent may, with the written approval of the Company (such
approval not to be unreasonably withheld or delayed), subcontract for the
performance of the Shareholder Servicing Agent's obligations hereunder with any
one or more persons, including but not limited to any one or more persons which
is an affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder Servicing Agent shall be as fully responsible to the Company for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.
21. Authority to Vote. The Company hereby confirms that,
nothing contained in the Articles of Incorporation of the Company would
preclude the Shareholder Servicing Agent, at any meeting of shareholders of the
Company or of the Fund, from voting any Class B Shares held in accounts
serviced by the Shareholder Servicing Agent and which are otherwise not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all Class B Shares otherwise represented at
the meeting in person or by proxy and held in accounts serviced by the
Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The
Company hereby agrees that it will comply with all laws and regulations
applicable to the Fund's operations and the Shareholder Servicing Agent agrees
that it will comply with all laws and regulations applicable to providing the
services contemplated hereby.
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<PAGE> 11
22.1 Miscellaneous. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
California. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
STAGECOACH FUNDS, INC. on behalf of
the Aggressive Growth Fund (Class B Shares)
By: /s/ R. H. Blank, Jr.
----------------------------------------
Name: Richard H. Blank, Jr.
--------------------------------------
Title: Chief Operating Officer
-------------------------------------
WELLS FARGO BANK, N.A.
By: /s/ Vito P. Limitone
----------------------------------
Name: Vito P. Limitone
--------------------------------
Title: Senior Vice President
-------------------------------
By: /s/ Elizabeth Gottfried
----------------------------------
Name: Elizabeth Gottfried
--------------------------------
Title: Vice President
-------------------------------
11
<PAGE> 1
Ex-99.B9(b)(xx)
SHAREHOLDER SERVICING AGREEMENT
(Class A Shares)
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
February 16, 1996, is made by and between Stagecoach Funds, Inc. ("Company"), a
Maryland corporation having its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, on behalf of the Aggressive Growth Fund
("Fund"), and Wells Fargo Bank, N.A., 525 Market Street, Suite 1900, San
Francisco, California 94163, as shareholder servicing agent hereunder
("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, Class A shares of common stock (.001 par value) of the
Fund (hereinafter "Class A Shares") may be purchased or redeemed through a
broker/dealer or financial institution which has entered into a shareholder
servicing agreement with the Company on behalf of the Fund; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate
purchases and redemptions of Class A Shares by its customers (the "Customers")
and wishes to act as the Customers' agent in performing certain administrative
functions in connection with transactions in Class A Shares from time to time
for the account of the Customers and to provide related services to the
Customers in connection with their investments in the Fund; and
WHEREAS, it is in the best interest of the Fund to make the
services of the Shareholder Servicing Agent available to the Customers who,
from time to time, become shareholders of the Fund;
NOW THEREFORE, the Company, on behalf of the Fund, and the
Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent
shall be responsible for performing shareholder account administrative and
servicing functions, which shall include, without limitation:
<PAGE> 2
(a) answering Customer inquiries regarding
account status and history, the manner in
which purchases, exchanges and redemptions of
Class A Shares may be effected;
(b) assisting Customers in designating and
changing dividend options, account
designations and addresses;
(c) providing necessary personnel and facilities
to establish and maintain Customer accounts
and records;
(d) assisting in processing purchase, redemption
and exchange transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with
Customer orders to purchase or redeem shares;
(g) verifying and guaranteeing Customer
signatures in connection with redemption and
exchange orders and transfers and changes in
Customer accounts with banks which are
designated in a Fund Account Application and
which are approved by the Fund's Transfer
Agent;
(h) furnishing (either separately or on an
integrated basis with other reports sent to a
Customer by the Shareholder Servicing Agent)
monthly and year-end statements and
confirmations of purchases, redemptions and
exchanges;
(i) furnishing, on behalf of the Class A Shares
of the Fund, proxy statements, annual
reports, updated prospectuses and other
communications to Customers;
(j) receiving, tabulating and sending to the Fund
proxies executed by Customers; and
(k) providing such other related services, and
necessary personnel and facilities to provide
all of the shareholder services contemplated
hereby, in each case, as the Company or a
Customer may reasonably request.
2.2 Standard of Services. All services to be rendered
by the Shareholder Servicing Agent hereunder shall be performed in a
professional, competent and timely manner. Any detailed operating standards
and procedures to be followed by the Shareholder Servicing Agent in performing
the services described above shall be determined from time to time by
2
<PAGE> 3
agreement between the Shareholder Servicing Agent and the Company. The Company
acknowledges that the Shareholder Servicing Agent's ability to perform on a
timely basis certain of its obligations under this Agreement depends upon the
Fund's timely delivery of certain materials and/or information to the
Shareholder Servicing Agent. The Company agrees to use its best efforts to
provide, or cause to be provided, such materials to the Shareholder Servicing
Agent in a timely manner.
2.3 Investments through Distributor. The Company and
the Shareholder Servicing Agent hereby agree that all purchases of Class A
Shares effected by the Shareholder Servicing Agent on behalf of its Customers
shall be effected by it through Stephens Inc. ("Distributor") in its capacity
as the Fund's principal underwriter.
3. Fees.
3.1 Fees from the Fund. In consideration of the
services described in Section 2 hereof and the incurring of expenses in
connection therewith, the Shareholder Servicing Agent shall receive a fee to be
paid in arrears periodically or on a periodic basis to be agreed upon by the
Company and the Shareholder Servicing Agent from time to time (but in no event
less frequently than semi-annually) determined by a formula based upon the
number of accounts serviced by the Shareholder Servicing Agent during the
period for which payment is being made, the level of assets or activity in such
accounts during such period, and/or the expenses incurred by the Shareholder
Servicing Agent. In no event will such fees exceed 0.25%, on an annualized
basis, of the average daily net assets of the Fund represented by Class A
Shares owned of record by the Shareholder Servicing Agent on behalf of the
Customers during the period for which payment is being made. For purposes of
determining the fees payable to the Shareholder Servicing Agent hereunder, the
per share value of the Class A Shares' net assets shall be computed in the
manner specified in the Class A Shares' then- current prospectus.
Notwithstanding the foregoing, if applicable laws, regulations or rules impose
a maximum fee amount (a "cap") on Class A Shares with respect to shareholder
servicing fees and/or fees for distribution-related services, the amount
payable hereunder shall be reduced to an amount which, when considered in
conjunction with the fees payable by the Fund for the Class A Shares'
distribution-related activities, is the maximum amount payable to the
Shareholder Servicing Agent under applicable laws, regulations or rules. The
above fee constitutes all fees to be paid to the Shareholder Servicing Agent by
the Fund or the Company with respect to the shareholder services contemplated
hereby.
3.2 Fees from Customers. It is agreed that the
Shareholder Servicing Agent may impose certain conditions on Customers, subject
to the terms of the Fund's then-current prospectus, in addition to or different
from those imposed by the Fund, such as requiring a minimum initial investment
or the payment of additional fees directly by the Customer for additional
services offered by the Shareholder Servicing Agent to the Customer; provided,
however, that the Shareholder Servicing Agent may not charge customers any
direct fee which would constitute a "sales load" within the meaning of Section
2(a)(35) of the Investment Company Act of 1940, as amended (the "1940 Act").
The Shareholder Servicing Agent shall bill Customers directly for any such
additional fees. In the event the Shareholder Servicing Agent
3
<PAGE> 4
charges Customers such additional fees, it shall notify the Company in advance
and make appropriate prior written disclosure (such disclosure to be in
accordance with all applicable laws) to Customers of any such additional fees
charged directly to the Customer. To the extent required by applicable rules
and regulations of the Securities and Exchange Commission, the Company shall
make written disclosure of the fees paid or to be paid by the Fund to the
Shareholder Servicing Agent pursuant to Section 3.1 of this Agreement. In no
event shall the Shareholder Servicing Agent have recourse or access, as
Shareholder Servicing Agent or otherwise, to the assets in the Customer's
account, except to the extent expressly authorized by law or by such Customer,
or to any assets of the Fund or the Company, for payment of any additional
direct fees referred to in this Section 3.2
4. Information Pertaining to the Shares. The Shareholder
Servicing Agent and its officers, employees and agents are not authorized to
make any representations concerning the Company, the Fund or Class A Shares to
Customers or prospective Customers, excepting only accurate communication of
any information provided by or on behalf of any administrator of the Company or
the Fund or any distributor of Class A Shares or information contained in the
Class A Shares' then-current prospectus. In furnishing such information
regarding the Company, the Fund or Class A Shares, the Shareholder Servicing
Agent shall act as agent for the Customer only and shall have no authority to
act as agent for the Company, the Fund or the Class A Shares. Advance copies
or proofs of all materials which are proposed to be circulated or disseminated
by the Shareholder Servicing Agent to Customers or prospective Customers and
which identify or describe the Company, the Fund or Class A Shares shall be
provided to the Company at least 10 days prior to such circulation or
dissemination (unless the Company consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Company shall have given written notice to
the Shareholder Servicing Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Company
liable for the use (as opposed to the accuracy) of any information about the
Company, the Fund or Class A Shares which is disseminated by the Shareholder
Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company
shall not use the name of the Shareholder Servicing Agent, or any of its
affiliates or subsidiaries, in any prospectus, sales literature or other
materials relating to the Company, the Fund or Class A Shares in a manner not
approved by the Shareholder Servicing Agent prior thereto in writing; provided,
however, that the approval of the Shareholder Servicing Agent shall not be
required for any use of its name which merely refers in accurate and factual
terms to its appointment hereunder or which is required by the Securities and
Exchange Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided, further, that in no
event shall such approval be unreasonably withheld or delayed.
6. Use of the Name of the Fund or the Company. The
Shareholder Servicing Agent shall not use the name of the Fund, the Company or
Class A Shares on any checks, bank drafts, bank statements or forms for other
than internal use in a manner not approved by the Company prior thereto in
writing; provided, however, that the approval of the Company shall not
4
<PAGE> 5
be required for the use of the Company's name or the Fund's name in connection
with communications permitted by Section 4 hereof or (subject to Section 4, to
the extent the same may be applicable) for any use of the Company's name or the
Fund's name which merely identifies the Company or the Fund, as the case may be
in connection with the Shareholder Servicing Agent's role hereunder or which is
required by the Securities and Exchange Commission or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
7. Security. The Shareholder Servicing Agent represents and
warrants that to the best of its knowledge, the various procedures and systems
which it has implemented (including provision for twenty-four hours a day
restricted access) with regard to safeguarding from loss or damage attributable
to fire, theft or any other cause the Company's records and other data within
its possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Company shall from time to time specify
the types of records and other data of the Company to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent
shall comply with all applicable federal and state laws and regulations,
including securities laws. The Shareholder Servicing Agent represents and
warrants to the Company that the performance of all its obligations hereunder
will comply with all applicable laws and regulations, the provisions of its
charter documents and by-laws and all material contractual obligations binding
upon the Shareholder Servicing Agent. The Shareholder Servicing Agent
furthermore undertakes that it will promptly, after the Shareholder Servicing
Agent becomes so aware, inform the Company of any change in applicable laws or
regulations (or interpretations thereof) or in its charter or by-laws or
material contracts which would prevent or impair full performance of any of its
obligations hereunder.
9. Reports. To the extent requested by the Company from time
to time, but at least quarterly, the Shareholder Servicing Agent will provide
the Treasurer of the Company with a written report of the amounts expended by
the Shareholder Servicing Agent pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keeping.
10.1 Section 31(a). The Shareholder Servicing Agent
shall maintain records in a form acceptable to the Company and in compliance
with applicable laws and the rules and regulations of the Securities and
Exchange Commission, including but not limited to the record-
5
<PAGE> 6
keeping requirements of Section 31(a) of the 1940 Act and the rules thereunder,
with respect to the services contemplated by this Agreement. Such records
shall be deemed to be the property of the Company and will be made available,
at the Company's request, for inspection and use by the Company,
representatives of the Company and governmental authorities. The Shareholder
Servicing Agent agrees that, for so long as it retains any records hereunder,
it will meet all reporting requirements pursuant to the 1940 Act and applicable
to the Shareholder Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing
Agent shall maintain accurate and complete records with respect to services
performed by the Shareholder Servicing Agent in connection with the purchase
and redemption of Class A Shares through the Distributor. Such records shall
be maintained in a form reasonably acceptable to the Company and in compliance
with the requirements of Rules 17a-3 and 17a-4 under the Securities Exchange
Act of 1934, as amended, pursuant to which any dealer of Class A Shares must
maintain certain records. All such records maintained by the Shareholder
Servicing Agent shall be the property of the Distributor and will be made
available for inspection and use by the Company or the Distributor upon the
request of either. The Shareholder Servicing Agent shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Company and the Distributor copies of, all
reports and undertakings as may be reasonably requested by the Company or the
Distributor in order to comply with such rules. If so requested by the
Distributor, the Shareholder Servicing Agent shall confirm to the Distributor
its obligations under this Section 10.2 by a writing reasonably satisfactory to
the Distributor.
10.3 Identification, Etc. of Records. The Company shall
from time to time instruct the Shareholder Servicing Agent in writing as to,
and the Company and the Shareholder Servicing Agent shall periodically review,
the records to be maintained and the procedures to be followed by the
Shareholder Servicing Agent in complying with the foregoing Sections 10.1 and
10.2 and Section 8 to the extent it relates to record-keeping required under
federal securities laws and regulations. Notwithstanding the provisions of
Section 8, the Shareholder Servicing Agent shall be entitled to rely on such
instructions.
10.4 Transfer of Customer Data. In the event this
Agreement is terminated or a successor to the Shareholder Servicing Agent is
appointed, the Shareholder Servicing Agent shall, at the expense of the
Company, transfer to such successor as the Company may designate a certified
list of the beneficial owners of Class A Shares serviced by the Shareholder
Servicing Agent (with name, address and tax identification or Social Security
number), a complete record of the account of each such shareholder and the
status thereof, and all other relevant books, records, correspondence, and
other data established or maintained by the Shareholder Servicing Agent under
this Agreement. In the event this Agreement is terminated, the Shareholder
Servicing Agent will use its best efforts to cooperate in the orderly transfer
of such duties and responsibilities to the successor, including assistance in
the establishment of books, records and other data by the successor.
10.5 Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 10 shall survive the
termination of this Agreement for the
6
<PAGE> 7
shorter of a period of six years or that minimum period required by applicable
rules or regulations of the Securities and Exchange Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in
this Section 10 shall be construed to mean that the Shareholder Servicing Agent
would, by virtue of its role hereunder, be required under applicable law to
maintain the records required to be maintained by it under this Section 10, but
it is understood that the Shareholder Servicing Agent has agreed to do so in
order to enable the Company and the Distributor to comply with laws and
regulations applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy
Records. Anything in this Section 10 to the contrary notwithstanding, except
to the extent otherwise prohibited by law, the Shareholder Servicing Agent
shall have the right to copy, maintain and use any records maintained by the
Shareholder Servicing Agent pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not
be liable or responsible for delays or errors by reason of circumstances beyond
its reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent.
The Company will indemnify and hold the Shareholder Servicing Agent harmless
from all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) from any claim, demand, action or suit
(collectively, "Claims") (a) arising in connection with misstatements or
omissions in the Fund's prospectus, actions or inactions by the Company or any
of its agents or contractors or the performance of the Shareholder Servicing
Agent's obligations hereunder and (b) not resulting from (i) the bad faith or
negligence of the Shareholder Servicing Agent, its officers, employees or
agents, or (ii) any breach of applicable law by the Shareholder Servicing
Agent, its officers, employees or agents, or (iii) any action of the
Shareholder Servicing Agent, its officers, employees or agents which exceeds
the legal authority of the Shareholder Servicing Agent or its authority
hereunder, or (iv) any error or omission of the Shareholder Servicing Agent,
its officers, employees or agents with respect to the purchase, redemption and
transfer of Customers' Class A Shares or the Shareholder Servicing Agent's
verification or guarantee of any Customer signature. Notwithstanding anything
herein to the contrary, the Company will indemnify and hold the Shareholder
Servicing Agent harmless from any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) resulting from any
Claim as a result of its acting in accordance with any written instructions
reasonably believed by the Shareholder Servicing Agent to have been executed by
any person duly authorized by the Company, or as a result of acting in reliance
upon any instrument or stock certificate reasonably believed by the Shareholder
Servicing Agent to have been genuine and signed, countersigned or executed by a
7
<PAGE> 8
person duly authorized by the Company, excepting only the gross negligence or
bad faith of the Shareholder Servicing Agent.
In any case in which the Company may be asked to indemnify or hold
the Shareholder Servicing Agent harmless, the Company shall be advised of all
pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and notify the Company
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company. The Company shall have the
option to defend the Shareholder Servicing Agent against any Claim which may be
the subject of indemnification hereunder. In the event that the Company elects
to defend against such Claim, the defense shall be conducted by counsel chosen
by the Company and reasonably satisfactory to the Shareholder Servicing Agent.
The Shareholder Servicing Agent may retain additional counsel at its expense.
Except with the prior written consent of the Company, the Shareholder Servicing
Agent shall not confess any Claim or make any compromise in any case in which
the Company will be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Company. Without limiting
the rights of the Company under applicable law, the Shareholder Servicing Agent
will indemnify and hold the Company harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any Claim (a) resulting from (i) the bad faith or negligence of the Shareholder
Servicing Agent, its officers, employees or agents, or (ii) any breach of
applicable law by the Shareholder Servicing Agent, its officers, employees or
agents, or (iii) any action of the Shareholder Servicing Agent, its officers,
employees or agents which exceeds the legal authority of the Shareholder
Servicing Agent or its authority hereunder, or (iv) any error or omission of
the Shareholder Servicing Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Class A Shares or the
Shareholder Servicing Agent's verification or guarantee of any Customer
signature, and (b) not resulting from the Shareholder Servicing Agent's actions
in accordance with written instructions reasonably believed by the Shareholder
Servicing Agent to have been executed by any person duly authorized by the
Company, or in reliance upon any instrument or stock certificate reasonably
believed by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company.
In any case in which the Shareholder Servicing Agent may be asked
to indemnify or hold the Company harmless, the Shareholder Servicing Agent
shall be advised of all pertinent facts concerning the situation in question
and the Company shall use reasonable care to identify and notify the
Shareholder Servicing Agent promptly concerning any situation which presents or
appears likely to present a claim for indemnification against the Shareholder
Servicing Agent. The Shareholder Servicing Agent shall have the option to
defend the Company against any Claim which may be the subject of
indemnification hereunder. In the event that the Shareholder Servicing Agent
elects to defend against such Claim, the defense shall be conducted by counsel
chosen by the Shareholder Servicing Agent and satisfactory to the Company. The
Company may retain additional counsel at its expense. Except with the prior
written consent of the Shareholder Servicing Agent, the Company shall not
confess any Claim or make any compromise in any case in which the Shareholder
Servicing Agent will be asked to indemnify the Company.
8
<PAGE> 9
12.3 Survival of Indemnities. The indemnities granted
by the parties in this Section 12 shall survive the termination of this
Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if mailed to
such party at the address of such party set forth in the preamble of this
Agreement or at such other address as such party may have designated by written
notice to the other.
15. Further Assurances. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
16. Implementation and Duration of Agreement. This Agreement
is effective upon a "vote of a majority of the outstanding voting securities"
(as defined in the 1940 Act) and approval by the Company's Board of Directors,
and of the Directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Fund's Distribution Plan (the "Plan"), this Agreement, or
any other agreement related to such Plan, including the Fund's Amended
Distribution Agreement, cast in person at a meeting called for the purpose of
voting on this Agreement. Subject to Section 17, this Agreement shall continue
in effect for a period of more than one year from the date hereof so long as
such continuance is specifically approved at least annually by a vote of
Company's Board of Directors, in the manner described above.
17. Termination. This Agreement may be terminated by the
Company, without the payment of any penalty, at any time upon not more than 60
days' nor less than 30 days' notice, by a vote of a majority of the Board of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Plan, this Agreement or any other agreement related to
such Plan, including the Amended Distribution Agreement, or by "a vote of a
majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Fund. The Shareholder Servicing Agent may terminate this Agreement upon
not more than 60 days' nor less than 30 days' notice to the Company.
Notwithstanding anything herein to the contrary, but except as provided in
Section 20 of this Agreement, this Agreement may not be assigned and shall
terminate automatically without notice to either party upon any assignment.
Upon termination hereof, the Fund shall pay such compensation as may be due the
Shareholder Servicing Agent as of the date of such termination.
18. Changes; Amendments. This Agreement may be supplemented or
amended only by written instrument signed by both parties, but may not be
amended to increase materially the maximum amount payable without approval of
"a vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund, and all material amendments must be approved in the
manner described in Section 16.
9
<PAGE> 10
19. Limitation of Liability. The Shareholder Servicing Agent
hereby agrees that obligations assumed by the Company pursuant to this
Agreement shall be limited in all cases to the Fund and its assets and that the
Shareholder Servicing Agent shall not seek satisfaction of any such obligations
from the Board of Directors or any individual Director of the Company or from
the assets of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The
Shareholder Servicing Agent may, with the written approval of the Company (such
approval not to be unreasonably withheld or delayed), subcontract for the
performance of the Shareholder Servicing Agent's obligations hereunder with any
one or more persons, including but not limited to any one or more persons which
is an affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder Servicing Agent shall be as fully responsible to the Company for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.
21. Authority to Vote. The Company hereby confirms that,
nothing contained in the Articles of Incorporation of the Company would
preclude the Shareholder Servicing Agent, at any meeting of shareholders of the
Company or of the Fund, from voting any Class A Shares held in accounts
serviced by the Shareholder Servicing Agent and which are otherwise not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all Class A Shares otherwise represented at
the meeting in person or by proxy and held in accounts serviced by the
Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The
Company hereby agrees that it will comply with all laws and regulations
applicable to the Fund's operations and the Shareholder Servicing Agent agrees
that it will comply with all laws and regulations applicable to providing the
services contemplated hereby.
10
<PAGE> 11
22.1 Miscellaneous. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
California. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
STAGECOACH FUNDS, INC. on behalf of
the Aggressive Growth Fund (Class A Shares)
By: /s/ R.H. Blank, Jr.
---------------------------------------
Name: Richard H. Blank, Jr.
-------------------------------------
Title: Chief Operating Officer
------------------------------------
WELLS FARGO BANK, N.A.
By: /s/Vito P. Limitone
-------------------------
Name: Vito P. Limitone
-------------------------
Title: Senior Vice President
-----------------------
By: /s/Elizabeth Gottfried
-------------------------
Name: Elizabeth Gottfried
-------------------------
Title: Vice President
-----------------------
11
<PAGE> 1
EX-99.B10
February 28, 1996 (202) 887-1500
Stagecoach Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of the
Aggressive Growth Fund of Stagecoach Funds, Inc.
Ladies/Gentlemen:
We refer to Post-Effective Amendment No. 20 and Amendment No. 21
to the Registration Statement on Form N-1A (SEC File Nos. 33-42927 and
811-6419) (the "Registration Statement") of Stagecoach Funds, Inc.(the
"Company") relating to the registration of an indefinite number of shares of
common stock of the Aggressive Growth Fund of the Company (collectively, the
"Shares").
We have been requested by the Company to furnish this opinion as
Exhibit 10 to the Registration Statement.
We have examined such records, documents, instruments,
certificates of public officials and of the Company, made such inquiries of the
Company, and examined such questions of law as we have deemed necessary for the
purpose of rendering the opinion set forth herein. We have also verified with
the Company's transfer agent the maximum number of shares issued by the Company
during fiscal year 1995. We have assumed the genuineness of all signatures and
the authenticity of all items submitted to us as originals and the conformity
with originals of all items submitted to us as copies.
<PAGE> 2
Based upon and subject to the foregoing, we are of the opinion
that:
The issuance and sale of the Shares by the Company have been duly
and validly authorized by all appropriate action, and assuming delivery by sale
or in accord with the Fund's dividend reinvestment plan in accordance with the
description set forth in the Registration Statement, as amended, the Shares
will be legally issued, fully paid and nonassessable by the Company.
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
reference to our firm under the caption "Legal Counsel" in the Prospectus and
the description of advice rendered by our firm under the heading "Management"
in the Statement of Additional Information, both of which are included as part
of the Registration Statement.
Very truly yours,
/s/ Morrison & Foerster LLP
MORRISON & FOERSTER LLP
<PAGE> 1
EX-99.B 11
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Stagecoach Funds, Inc.:
We consent to the incorporation by reference in the Stagecoach Funds,
Inc. Post-Effective Amendment No. 20 to the Registration Statement Number
33-42927 on Form N-1A under the Securities Act of 1933 and Amendment No. 21 to
the Registration Statement Number 811-6419 on form N-1A under the Investment
Company Act of 1940 of our report dated February 14, 1996, on the financial
statements and financial highlights of the Strategic Growth Fund (one of the
funds comprising Overland Express Funds, Inc.) for the year ended December 31,
1995, which report has been included in the Statement of Additional
Information.
We also consent to the reference to our Firm under the heading
"Financial Highlights" in the Prospectus and "Independent Auditors" in the
Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
San Francisco, California
February 27, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 121
<NAME> STRATEGIC GROWTH FUND CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 74,443,570
<INVESTMENTS-AT-VALUE> 85,689,549
<RECEIVABLES> 292,666
<ASSETS-OTHER> 72,804
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86,055,019
<PAYABLE-FOR-SECURITIES> 468,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 243,799
<TOTAL-LIABILITIES> 712,549
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,306,393
<SHARES-COMMON-STOCK> 3,508,125
<SHARES-COMMON-PRIOR> 2,012,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1,105,810
<ACCUMULATED-NET-GAINS> 1,940,229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,245,979
<NET-ASSETS> 59,016,086
<DIVIDEND-INCOME> 132,455
<INTEREST-INCOME> 186,812
<OTHER-INCOME> 0
<EXPENSES-NET> (925,589)
<NET-INVESTMENT-INCOME> (606,322)
<REALIZED-GAINS-CURRENT> 10,895,873
<APPREC-INCREASE-CURRENT> 8,601,611
<NET-CHANGE-FROM-OPS> 18,891,162
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (6,182,997)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,168,399
<NUMBER-OF-SHARES-REDEEMED> 965,246
<SHARES-REINVESTED> 292,301
<NET-CHANGE-IN-ASSETS> 43,263,312
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 32,912
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 302,821
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 983,085
<AVERAGE-NET-ASSETS> 60,870,385
<PER-SHARE-NAV-BEGIN> 13.29
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 5.66
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.82
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 124
<NAME> STRATEGIC GROWTH FUND CLASS D
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 74,443,570
<INVESTMENTS-AT-VALUE> 85,689,549
<RECEIVABLES> 292,666
<ASSETS-OTHER> 72,804
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86,055,019
<PAYABLE-FOR-SECURITIES> 468,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 243,799
<TOTAL-LIABILITIES> 712,549
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,955,679
<SHARES-COMMON-STOCK> 1,266,478
<SHARES-COMMON-PRIOR> 927,153
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1,105,810
<ACCUMULATED-NET-GAINS> 1,940,229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,245,979
<NET-ASSETS> 26,326,384
<DIVIDEND-INCOME> 132,455
<INTEREST-INCOME> 186,812
<OTHER-INCOME> 0
<EXPENSES-NET> (925,589)
<NET-INVESTMENT-INCOME> (606,322)
<REALIZED-GAINS-CURRENT> 10,895,873
<APPREC-INCREASE-CURRENT> 8,601,611
<NET-CHANGE-FROM-OPS> 18,891,162
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (2,772,646)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 552,068
<NUMBER-OF-SHARES-REDEEMED> 301,590
<SHARES-REINVESTED> 88,848
<NET-CHANGE-IN-ASSETS> 43,263,312
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 32,912
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 302,821
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 983,085
<AVERAGE-NET-ASSETS> 60,870,385
<PER-SHARE-NAV-BEGIN> 16.54
<PER-SHARE-NII> (0.16)
<PER-SHARE-GAIN-APPREC> 6.99
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.58)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.79
<EXPENSE-RATIO> 2.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
