<PAGE> 1
LOGO
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PROSPECTUS
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ASSET ALLOCATION FUND
U.S. GOVERNMENT ALLOCATION FUND
April 29, 1996
<PAGE> 2
STAGECOACH FUNDS(R)
ASSET ALLOCATION FUND
U.S. GOVERNMENT ALLOCATION FUND
Stagecoach Funds, Inc. (the "Company") is an open-end series investment
company. This Prospectus contains information about two funds in the Stagecoach
Family of Funds - the ASSET ALLOCATION FUND and U.S. GOVERNMENT ALLOCATION FUND
(each a "Fund" and, collectively, the "Funds"). Two classes of shares of each
Fund (each, a "Class") are described in this Prospectus - Class A Shares and
Class B Shares.
EACH FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS
ASSETS IN A SEPARATE PORTFOLIO (EACH, A "MASTER PORTFOLIO") OF MASTER INVESTMENT
TRUST ("MIT"), AN OPEN-END, MANAGEMENT INVESTMENT COMPANY, RATHER THAN IN A
PORTFOLIO OF SECURITIES AND, AS SUCH, MAY BE CONSIDERED A FEEDER FUND IN A
MASTER/FEEDER STRUCTURE. EACH MASTER PORTFOLIO HAS THE SAME INVESTMENT OBJECTIVE
AS THE FUND BEARING THE CORRESPONDING NAME. THEREFORE, EACH FUND'S INVESTMENT
EXPERIENCE CORRESPONDS DIRECTLY WITH THAT OF THE MASTER PORTFOLIO IN WHICH IT
INVESTS. INTERESTS IN A MASTER PORTFOLIO MAY BE PURCHASED ONLY BY OTHER
INVESTMENT COMPANIES OR ACCREDITED INVESTORS.
The ASSET ALLOCATION FUND seeks to earn over the long term a high level of
total return, including net realized and unrealized capital gains and net
investment income, consistent with reasonable risk. See "How the Funds
Work -- Investment Objective and Policies" and "How the Funds
Work -- Master-Feeder Structure."
The U.S. GOVERNMENT ALLOCATION FUND seeks to achieve over the long term a high
level of total return, including net realized and unrealized capital gains and
net investment income, consistent with reasonable risk. See "How the Funds
Work -- Investment Objective and Policies" and "How the Funds
Work -- Master-Feeder Structure."
Please read this Prospectus and retain it for future reference. It is designed
to provide you with important information and to help you decide if a Fund's
goals meet your own. A Statement of Additional Information ("SAI"), dated April
29, 1996, for the Funds has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated by reference. The SAI for each Fund is
available free of charge by writing to Stagecoach Funds, Inc., c/o Stagecoach
Shareholder Services, Wells Fargo Bank, N.A., P.O. Box 7066, San Francisco, CA
94120-7066 or by calling the Company at 1-800-222-8222. If you hold shares in an
IRA, please call 1-800-BEST-IRA (1-800-237-8472) for information or assistance.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THESE AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") , BZW
BARCLAYS GLOBAL INVESTORS, N.A. OR ANY OF THEIR AFFILIATES. SUCH SHARES ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
PROSPECTUS DATED APRIL 29, 1996
PROSPECTUS
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The ASSET ALLOCATION FUND seeks to achieve its objective by investing in the
Asset Allocation Master Portfolio, which pursues an "asset allocation" strategy
of allocating and reallocating its investments among three asset
classes - common stocks, U.S. Treasury bonds, and money market instruments. The
Fund is designed for investors with investment horizons of at least five years.
See "How the Funds Work -- Investment Objective and Policies" and "How the Funds
Work -- Master-Feeder Structure."
The U.S. GOVERNMENT ALLOCATION FUND seeks to achieve its objective by
investing in the U.S. Government Allocation Master Portfolio, which pursues a
strategy of allocating and reallocating its investments among three classes of
debt securities - long-term U.S. Treasury bonds, intermediate-term U.S. Treasury
notes, and short-term money market instruments - at least 65% of which will be
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The Fund is designed for investors with investment horizons
of at least five years. See "How the Funds Work -- Investment Objective and
Policies" and "How the Funds Work -- Master-Feeder Structure."
The Master Portfolios are advised by Wells Fargo Bank. BZW Barclays Global
Fund Advisors ("BGFA"), an affiliate of Barclays Bank PLC ("Barclays") which is
not affiliated with Wells Fargo Bank, serves as sub-adviser to the Master
Portfolios. Wells Fargo Bank also serves as the Funds' transfer and dividend
disbursing agent, and is a Shareholder Servicing Agent and a Selling Agent (each
as defined below). BZW Barclays Global Investors, N.A. ("BGI") serves as the
Funds' and the Master Portfolios' custodian. Stephens Inc. ("Stephens") is the
Funds' sponsor and administrator and serves as the distributor of the Funds'
shares.
THE MASTER PORTFOLIOS' INVESTMENTS (EXCEPT AS NOTED UNDER "HOW THE FUNDS
WORK - INVESTMENT OBJECTIVES AND POLICIES" AND "PROSPECTUS APPENDIX - ADDITIONAL
INVESTMENT POLICIES") ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR
ANY FEDERAL AGENCY OR INSTRUMENTALITY.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND PROVIDES CERTAIN OTHER SERVICES
TO THE FUNDS AND THE MASTER PORTFOLIOS, FOR WHICH IT IS COMPENSATED.
BGFA IS THE SUB-ADVISER AND BGFA AND BGI PROVIDE CERTAIN OTHER
SERVICES TO THE FUNDS AND THE MASTER PORTFOLIO, FOR WHICH
THEY ARE COMPENSATED. STEPHENS, WHICH IS NOT AFFILIATED
WITH WELLS FARGO BANK, BGFA OR BGI, IS THE SPONSOR
AND DISTRIBUTOR FOR THE FUNDS.
PROSPECTUS
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TABLE OF CONTENTS
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PROSPECTUS SUMMARY 1
SUMMARY OF FUND EXPENSES 5
FINANCIAL HIGHLIGHTS 9
HOW THE FUNDS WORK 15
THE FUNDS AND MANAGEMENT 22
INVESTING IN THE FUNDS 24
DIVIDENDS 35
HOW TO REDEEM SHARES 36
ADDITIONAL SHAREHOLDER SERVICES 40
MANAGEMENT, DISTRIBUTION AND SERVICING FEES 43
TAXES 47
PROSPECTUS APPENDIX - ADDITIONAL INVESTMENT POLICIES A-1
PROSPECTUS
<PAGE> 5
PROSPECTUS SUMMARY
The Funds provide you with a convenient way to invest in a portfolio of
securities selected and supervised by professional management. The following
provides you with summary information about the Funds. For more information,
please refer specifically to the identified Prospectus sections and generally to
the Prospectus and SAI for each Fund.
Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
A. The ASSET ALLOCATION FUND'S investment objective is to seek over the long
term a high level of total return, including net realized and unrealized
capital gains and net investment income, consistent with reasonable risk.
The Fund seeks to achieve this objective by investing all of its assets in
the Asset Allocation Master Portfolio. The Asset Allocation Master Portfolio
has an identical investment objective. The Master Portfolio attempts to
achieve this objective by pursuing an "asset allocation" strategy by
allocating its investments among three asset classes - common stocks, U.S.
Treasury bonds and money market instruments. The Fund is designed for
investors with investment horizons of at least five years. See "How the
Funds Work" and "Prospectus Appendix -- Additional Investment Policies."
The U.S. GOVERNMENT ALLOCATION FUND'S investment objective is to seek over
the long term a high level of total return, including net realized and
unrealized capital gains and net investment income, consistent with
reasonable risk. The Fund seeks to achieve this objective by investing all
of its assets in the U.S. Government Allocation Master Portfolio. The U.S.
Government Allocation Master Portfolio has an identical investment
objective. The Master Portfolio attempts to achieve this objective by
pursuing a strategy of allocating and reallocating its investments among
three classes of debt securities: long-term U.S. Treasury bonds,
intermediate-term U.S. Treasury notes and short-term money market
instruments. Under normal market conditions, at least 65% of such Master
Portfolio's total assets will be invested in obligations that are issued or
guaranteed by the U.S. Government, its agencies or instrumentalities,
including government-sponsored enterprises ("U.S. Government obligations").
The Fund is designed for investors with investment horizons of at least five
years. See "How the Funds Work" and "Prospectus Appendix -- Additional
Investment Policies."
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank is investment adviser to the Master Portfolios. BFGA serves
as sub-adviser to the Master Portfolios and provides advisory assistance
using certain computer-based asset allocation models. The Company has not
retained the services of a separate investment adviser for the Funds because
each Fund invests all of its assets in the corresponding Master Portfolio.
Wells Fargo Bank provides the Funds with transfer agency and dividend
disbursing agency services. BGI provides the
1 PROSPECTUS
<PAGE> 6
Funds and the Master Portfolios with custodial services. In addition, Wells
Fargo Bank is a Shareholder Servicing Agent and a Selling Agent under
Selling Agreements with Stephens, the Funds' distributor. See "The Funds and
Management" and "Management, Distribution and Servicing Fees."
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?
A. An investment in shares of the Funds (or the Master Portfolios) is not
insured against loss of principal. When the value of the securities
attributable to a Fund declines, so does the value of your shares of the
Fund. Therefore, you should be prepared to accept some risk with the money
you invest in a Fund. Since the investment risks associated with an
investment in each Fund correspond to those of the Master Portfolio in which
such Fund invests, the following is a summary of certain of the risks
associated with an investment in the Master Portfolios. Because each Master
Portfolio may shift its investment allocations significantly from time to
time, its performance and that of the corresponding Fund may differ from
funds which invest in one asset class or from funds with a stable mix of
assets. Further, shifts among asset classes may result in relatively high
portfolio turnover rates, which may, in turn, result in increased brokerage
and transaction costs, and/or increased short-term capital gains or losses.
The portfolio debt instruments of the Master Portfolios are subject to
interest rate risk and credit risk. Interest rate risk is the risk that
increases in market interest rates may adversely affect the value of the
instruments in which a Master Portfolio invests and hence the value of your
investment in the Fund which invests in such Master Portfolio. The value of
instruments held by the Master Portfolios generally changes inversely to
changes in market interest rates. During those periods in which a high
percentage of the portfolio of a Master Portfolio is invested in long-term
bonds, its exposure to interest rate risk will be greater because the longer
maturity of those instruments means they generally are more sensitive to
interest rate fluctuations than shorter-term debt instruments. Credit risk
is the risk that the issuer of a debt instrument is unable, due to financial
constraints, to make timely payments on its outstanding obligations. The
portfolio equity investments of the Master Portfolios are subject to equity
market risk. Equity market risk is the risk that common stock prices will
fluctuate or decline over short or even extended periods. The U.S. stock
market tends to be cyclical, with periods when stock prices generally rise
and periods when prices generally decline. Although each Fund's investment
experience will correspond directly to the investment experience of the
Master Portfolio in which it invests, to the extent other funds invest in
the Master Portfolio, their performance may differ from that of the Fund due
to different expense levels.
As with all mutual funds, there can be no assurance that the Funds or the
corresponding Master Portfolio will achieve their investment objectives.
Investors should be prepared to accept that risk, as well as the risk that a
Fund may under-
PROSPECTUS 2
<PAGE> 7
perform (over the short and/or long term) one or more of the three classes
of securities in which the corresponding Master Portfolio invests.
Q. HOW DO I INVEST IN THE FUND?
A. You may invest in the Fund by purchasing shares of a Fund at their public
offering price, which is the net asset value ("NAV") per share 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 NAV at purchase or NAV at redemption. In some cases, such
as for investments by certain fiduciary or retirement accounts, the
front-end sales charge may be waived. 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, with certain exceptions. Shares may be purchased by wire, by mail or
by an automatic investment feature called the AutoSaver Plan on any day the
New York Stock Exchange is open. See "Investing in the Funds." For more
details, contact Stephens (the Funds' Sponsor and Distributor), a
Shareholder Servicing Agent or a Selling Agent (such as Wells Fargo Bank).
Q. HOW WILL I RECEIVE DIVIDENDS AND ANY CAPITAL GAINS?
A. Dividends from net investment income of the Asset Allocation Fund are
declared quarterly and dividends from the net investment income of the U.S.
Government Allocation Fund are declared daily. Dividends paid by each Fund
are automatically reinvested in additional shares of the same class of the
respective Fund at NAV without a sales charge unless you elect to receive
dividends in cash. You may also elect to reinvest dividends of the Funds in
shares of the same class of another multi-class fund or in shares of certain
other funds in the Stagecoach Family of Funds with which you have an
established account that has met the applicable minimum initial investment
requirement. Any capital gains will be distributed at least annually in the
same manner. The net investment income available for distribution to holders
of Class B Shares will be reduced by the amount of the higher Rule 12b-1 Fee
payable on behalf of the Class B Shares. Class B Shares automatically
convert into Class A Shares of the same Fund six years after the end of the
month in which they were acquired. See "Dividends" and "Additional
Shareholder Services."
Q. HOW MAY I REDEEM SHARES?
A. You may redeem your shares by telephone, by letter or by an automatic
feature called the Systematic Withdrawal Plan on any day the New York Stock
Exchange is open. Contingent deferred sales charges may be charged upon
redemption of Class B Shares. In addition, the Company reserves the right
to impose charges for wiring redemption proceeds. See "How To Redeem
Shares" and "How to Purchase Shares - Contingent Deferred Sales Charges -
Class B Shares." For more details,
3 PROSPECTUS
<PAGE> 8
contact Stephens, a Shareholder Servicing Agent or a Selling Agent (such as
Wells Fargo Bank).
Q. WHAT ARE DERIVATIVES AND DO THE FUNDS AND THE MASTER PORTFOLIOS USE THEM?
A. Some of the permissible investments described throughout this Prospectus are
considered "derivative" securities because their values are derived, at
least in part, from the prices of other securities or specified assets,
indices or rates. For example, the futures contracts and options on futures
contracts that the Master Portfolios may purchase are considered
derivatives. The Master Portfolios may purchase or sell these contracts or
options as substitutes for comparable market positions in the underlying
securities. Certain of the floating- and variable-rate instruments in which
the Master Portfolios may invest also can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in
interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or
contract terms.
Q. WHAT STEPS DO THE FUNDS AND MASTER PORTFOLIOS TAKE TO CONTROL
DERIVATIVES-RELATED RISKS?
A. Wells Fargo Bank and BGFA (as investment adviser and as sub-adviser to the
Master Portfolios) use a variety of internal risk management procedures to
ensure that derivatives use is consistent with both the Master Portfolios'
and the Funds' investment objectives, does not expose either the Master
Portfolios or the Funds to undue risks and is closely monitored. These
procedures include providing periodic reports to the Boards of Trustees and
Directors concerning the use of derivatives. The use of derivatives is also
subject to broadly applicable investment policies. For example, each Master
Portfolios may not invest more than a specified percentage of its assets in
"illiquid securities," including those derivatives that do not have active
secondary markets. In addition, the Master Portfolios may not use
derivatives without establishing adequate "cover" in compliance with SEC
rules limiting the use of leverage. For additional information, see
"Appendix -- Additional Investment Policies."
PROSPECTUS 4
<PAGE> 9
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
FOR CLASS A SHARES
<TABLE>
<CAPTION>
ASSET ALLOCATION U.S. GOVERNMENT
FUND ALLOCATION FUND
---------------- ---------------
<S> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)................ 4.50% 4.50%
Sales Charge Imposed on
Reinvested Dividends.............. None None
Sales Charge Imposed on
Redemptions....................... None None
Exchange Fees......................... None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES(1)
FOR CLASS A SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
U.S.
ASSET GOVERNMENT
ALLOCATION ALLOCATION
FUND FUND
------------- --------------
<S> <C> <C> <C> <C>
Management Fee.................................. 0.37% 0.50%
Rule 12b-1 Fee.................................. 0.05% 0.05%
Other Expenses
Shareholder Servicing Fee................... 0.30% 0.30%
Administrative Fee.......................... 0.03% 0.03%
Miscellaneous Expenses (after waivers or
reimbursements)(2)........................ 0.09% 0.16%
----- -----
Total Other Expenses (after waivers or
reimbursements)(2)............................ 0.42% 0.49%
----- -----
TOTAL FUND OPERATING
EXPENSES (after waivers or
reimbursements)(2)........................ 0.84% 1.04%
</TABLE>
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<TABLE>
<C> <S>
(1) Annual Fund Operating Expenses summarize expenses charged at
the Fund and Master Portfolio levels. Other mutual funds may
invest in the Master Portfolios and such other funds' expenses
and, correspondingly, investment returns may differ from those
of the Funds.
(2) Absent waivers or reimbursements, the percentages shown above
under "Miscellaneous Expenses", "Total Other Expenses" and
"Total Fund Operating Expenses" would be 0.19%, 0.52% and
1.07%, respectively, for the Class A Shares of the U.S.
Government Allocation Fund.
</TABLE>
5 PROSPECTUS
<PAGE> 10
<TABLE>
<CAPTION>
EXAMPLE OF EXPENSES --
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Class A Shares of a
Fund, assuming (A) a 5% annual return and
(B) redemption at the end of each time
period indicated:
Asset Allocation Fund..................... $ 53 $71 $ 89 $144
U.S. Government Allocation Fund........... $ 55 $77 $ 100 $166
</TABLE>
SHAREHOLDER TRANSACTION EXPENSES
FOR CLASS B SHARES
<TABLE>
<CAPTION>
ASSET ALLOCATION U.S. GOVERNMENT
FUND ALLOCATION FUND
---------------- ---------------
<S> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)............. None None
Sales Charge Imposed on
Reinvested Dividends........... None None
Maximum Sales Charge Imposed on
Redemptions.................... 3.00% 3.00%
Exchange Fees...................... None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES(1)
FOR CLASS B SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
U.S.
ASSET GOVERNMENT
ALLOCATION ALLOCATION
FUND FUND
------------- --------------
<S> <C> <C> <C> <C>
Management Fee............................ 0.37% 0.50%
Rule 12b-1 Fee............................ 0.70% 0.70%
Other Expenses
Shareholder Servicing Fee............. 0.30% 0.30%
Administrative Fee.................... 0.03% 0.03%
Miscellaneous Expenses (after waivers
or reimbursements)(2)............... 0.13% 0.12%
----- -----
Total Other Expenses (after waivers or
reimbursements)(2)...................... 0.46% 0.45%
----- -----
TOTAL FUND OPERATING
EXPENSES (after waivers or
reimbursements)(2).................. 1.53% 1.65%
</TABLE>
- -------------------------------
<TABLE>
<C> <S>
(1) Annual Fund Operating Expenses summarize expenses charged at the
Fund and Master Portfolio levels. Other mutual funds may invest in
the Master Portfolios and such other funds' expenses and,
correspondingly, investment returns may differ from those of the
Funds.
(2) Absent waivers and reimbursements, "Miscellaneous Expenses",
"Total Other Expenses" and "Total Fund Operating Expenses" would
be 0.36%, 0.69% and 1.76%, respectively, for the Class B Shares of
the Asset Allocation Fund and 0.83%, 1.16% and 2.36%,
respectively, for the Class B Shares of the U.S. Government
Allocation Fund.
</TABLE>
PROSPECTUS 6
<PAGE> 11
EXAMPLE OF EXPENSES -- CLASS B SHARES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Class B Shares of a
Fund, assuming (A) a 5% annual return and
(B) redemption at the end of each time
period indicated:
Asset Allocation Fund............ $ 46 $58 $83 $147
U.S. Government Allocation
Fund........................... $ 47 $62 $90 $165
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Class B Shares of a
Fund, assuming a 5% annual return but no
redemption:
Asset Allocation Fund............ $ 16 $48 $83 $147
U.S. Government Allocation
Fund........................... $ 17 $52 $90 $165
</TABLE>
EXPLANATION OF TABLES
The purpose of the foregoing tables is to help you understand 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. The tables do not reflect any charges that may be imposed by
Wells Fargo Bank directly on its customer accounts in connection with an
investment in a Fund.
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell Fund
shares. You are subject to a front-end sales charge on purchases of Class A
Shares of the Funds and may be subject to a contingent deferred sales charge on
Class B Shares if you sell such shares within a specified period. See "Investing
in the Funds - Sales Charges." The Company reserves the right to impose a charge
for wiring redemption proceeds. In certain instances, you may qualify for a
reduction or waiver of the front-end sales charge. See "Investing in the
Funds - Sales Charges."
ANNUAL FUND OPERATING EXPENSES for the Funds are based on amounts incurred
during the most recent fiscal year and reflect voluntary fee waivers and expense
reimbursements that are expected to continue to reduce expenses during the
current
7 PROSPECTUS
<PAGE> 12
fiscal year. Wells Fargo Bank and Stephens, at their sole discretion, may waive
or reimburse all or a portion of the respective fees charged to, or expenses
paid by, a Fund and/or Master Portfolio. Any waivers or reimbursements would
reduce a Fund's total expenses. There can be no assurances that waivers or
reimbursements will continue. The Funds could pay more in sales charges than the
economic equivalent of the maximum front-end sales charges applicable to mutual
funds sold by members of the National Association of Securities Dealers Inc.
("NASD"). For more complete descriptions of the various costs and expenses you
can expect to incur as an investor in each Fund, please see the Prospectus
sections captioned "Investing in the Funds - How To Buy Shares" and "Management,
Distribution and Servicing Fees."
EXAMPLE OF EXPENSES is a hypothetical example which illustrates the expenses
associated with a $1,000 investment in Class A Shares or Class B Shares over
stated periods, based on the expenses in the respective tables above and an
assumed annual rate of return of 5%. This annual rate of return should not be
considered an indication of actual or expected performance of a Fund. In
addition, the example should not be considered a representation of past or
future expenses; and actual expenses and returns may be greater or lesser than
those shown.
With regard to the combined fees and expenses of the Funds and their
corresponding Master Portfolios, the Company's Board of Directors has considered
whether various costs and benefits of investing all of such Funds' assets in a
corresponding Master Portfolio rather than directly in a portfolio of securities
would be more or less than if each such Fund invested in portfolio securities
directly. The Company's Board of Directors believes that the aggregate per share
expenses of the Funds will be less than or approximately equal to the expenses
incurred by such Funds if the Funds invested directly in the type of securities
held by their corresponding Master Portfolios.
PROSPECTUS 8
<PAGE> 13
FINANCIAL HIGHLIGHTS
The following information, for each of the five years in the period ending
December 31, 1995, has been derived from the Financial Highlights in the Funds'
1995 annual financial statements. The financial statements are incorporated by
reference into the SAI for each Fund. Except for periods ending prior to January
1, 1992, which were audited by other auditors whose report dated February 19,
1992 expressed an unqualified opinion on this information, the financial
statements have been audited by KPMG Peat Marwick LLP, independent auditors,
whose report dated February 14, 1996 also is incorporated by reference into the
SAI. This information should be read in conjunction with the Funds' 1995 annual
financial statements and notes thereto. The SAI has been incorporated by
reference into this Prospectus.
ASSET ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992 1991*
--------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.73 $ 18.80 $ 17.89 $17.65 $14.45
Income from investment
operations:
Net investment income........ 0.74 0.77 0.77 0.87 0.92
Net realized and unrealized
capital
gain/(loss) on
investments................. 4.07 (1.31) 1.88 0.31 2.28
-------- -------- ---------- --------- ---------
Total from investment
operations.................. 4.81 (0.54) 2.65 1.18 3.20
Less distributions:
Dividends from net investment
income...................... (0.74) (0.77) (0.77) (0.87) 0.00
Distributions from net
realized gain............... (0.06) (0.76) (0.97) (0.07) 0.00
-------- -------- ---------- --------- ---------
Total from distributions..... (0.80) (1.53) (1.74) (0.94) 0.00
Net asset value, end of
period...................... $ 20.74 $ 16.73 $ 18.80 $ 17.89 $ 17.65
======== ======== ========== ========= =========
Total return (not
annualized)**............... 29.18% (2.82)% 15.00% 7.00% 22.13%
Ratios/supplemental data:
Net assets, end of period
(000)....................... $1,077,935 $896,943 $1,048,667 $542,226 $367,251
Number of shares outstanding,
end of period (000)......... 51,962 53,618 55,790 30,303 20,811
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets(1)............... 0.84% 0.84% 0.86% 0.95% 0.95%
Ratio of net investment
income to average net
assets(2)................... 3.81% 4.30% 4.20% 5.22% 5.88%
Portfolio turnover........... 15% 49% 40% 5% 25%
- -------------------------------------------------------------------------------------------------
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses...... N/A N/A 0.86% 0.97% N/A
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses................. N/A N/A 4.20% 5.20% N/A
</TABLE>
- ---------------
* The financial information for the fiscal periods prior to, and including,
1991 is based on the financial information for the Asset Allocation Fund
("IRA Asset Allocation Fund") of the Wells Fargo Investment Trust for
Retirement Programs ("Trust") which was reorganized into the Asset Allocation
Fund on January 2, 1992.
** Total returns do not include any sales charges.
9 PROSPECTUS
<PAGE> 14
ASSET ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1990* 1989* 1988* 1987* 1986*+
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 13.42 $ 12.00 $ 10.93 $ 10.07 $ 10.00
Income from investment
operations:
Net investment income.......... 0.91 0.93 0.72 0.72 0.07
Net realized and unrealized
capital
gain/(loss) on investments... 0.12 0.49 0.35 0.14 0.00
-------- -------- -------- -------- ---------
Total from investment
operations................... 1.03 1.42 1.07 0.86 0.07
Less distributions:
Dividends from net investment
income....................... 0.00 0.00 0.00 0.00 0.00
Distributions from net realized
gain......................... 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- ---------
Total from distributions....... 0.00 0.00 0.00 0.00 0.00
Net asset value, end of
period....................... $ 14.45 $ 13.42 $ 12.00 $ 10.93 $ 10.07
======== ======== ======== ======== =========
Total return (not
annualized)**................ 7.68% 11.83% 9.79% 8.54% 0.70%
Ratios/supplemental data:
Net assets, end of period
(000)........................ $261,881 $229,211 $172,326 $111,025 $ 1,600
Number of shares outstanding,
end of period (000).......... 18,124 17,078 14,362 10,158 159
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets(1)................ 0.96% 1.02% 1.00% 1.04% 0%
Ratio of net investment income
to average net assets(2)..... 6.59% 7.35% 6.23% 6.79% 0.29%
Portfolio turnover............. 88% 117% 94% 81% 0%
- ------------------------------------------------------------------------------------------
(1) Ratio of expenses to
average net assets prior to
waived fees and reimbursed
expenses................... N/A N/A N/A N/A N/A
(2) Ratio of net investment
income to average net
assets prior to waived fees
and reimbursed expenses.... N/A N/A N/A N/A N/A
</TABLE>
- ---------------
* The financial information for the fiscal periods prior to, and including,
1991 is based on the financial information for the Asset Allocation Fund
("IRA Asset Allocation Fund") of the Wells Fargo Investment Trust for
Retirement Programs ("Trust") which was reorganized into the Asset Allocation
Fund on January 2, 1992.
+ The Fund commenced operations on November 13, 1986.
** Total returns do not include any sales charges.
PROSPECTUS 10
<PAGE> 15
ASSET ALLOCATION FUND
FOR A CLASS B SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR
ENDED
DEC. 31,
1995*
---------
<S> <C>
Net asset value, beginning of period.............................. $ 10.00
Income from investment operations:
Net investment income............................................. 0.22
Net realized and unrealized capital
gain/(loss) on investments...................................... 2.53
-------
Total from investment operations.................................. 2.75
Less distributions:
Dividends from net investment income.............................. (0.22)
Distributions from net realized gain.............................. (0.03)
-------
Total from distributions.......................................... (0.25)
Net asset value, end of period.................................... $ 12.50
=======
Total return (not annualized)**................................... 27.72%
Ratios/supplemental data:
Net assets, end of period (000)................................... $26,271
Number of shares outstanding, end of period (000)................. 2,101
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)........................ 1.53%
Ratio of net investment income to average net assets(2)........... 2.71%
Portfolio turnover................................................ 15%
- -----------------------------------------------------------------------------
(1) Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses....................................... 1.76%
(2) Ratio of net investment income to average net assets prior to
waived fees and reimbursed expenses........................... 2.48%
</TABLE>
- ---------------
* Class B Shares commenced operations on January 1, 1995
** Total returns do not include any sales charges.
11 PROSPECTUS
<PAGE> 16
U.S. GOVERNMENT ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993 1992 1991*
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 13.76 $ 15.71 $ 15.41 $ 15.41 $ 13.14
Income from investment operations:
Net investment income............. 0.79 0.87 0.96 0.87 0.94
Net realized and unrealized
capital gain/(loss) on
investments...................... 1.22 (1.95) 1.69 0.04 1.33
Total from investment
operations....................... 2.01 (1.08) 2.65 0.91 2.27
Less distributions:
Dividends from net investment
income........................... (0.79) (0.87) (0.96) (0.87) 0.00
Distributions from net realized
gain............................. 0.00 0.00 (1.39) (0.04) 0.00
Total from distributions.......... (0.79) (0.87) (2.35) (0.91) 0.00
Net asset value, end of period.... $ 14.98 $13.76 $ 15.71 $ 15.41 $ 15.41
Total return (not annualized)**... 14.91% (6.99)% 17.46% 6.30% 17.21%
Ratios/supplemental data:
Net assets, end of period (000)... $135,577 $140,066 $283,206 $127,504 $ 30,098
Number of shares outstanding, end
of period
(000)............................ 9,048 10,177 18,031 8,272 1,954
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets(1)........................ 1.04% 1.01% 0.99% 1.00% 1.01%
Ratio of net investment income to
average net assets(2)............ 5.41% 5.94% 5.92% 6.06% 6.77%
Portfolio turnover................ 292% 112% 150% 33% 147%
- ----------------------------------------------------------------------------------------
(1) Ratio of expenses to average net
assets prior to waived
fees and reimbursed expenses... 1.07% 1.08% 1.02% 1.08% N/A
(2) Ratio of net investment income
to average net assets prior to
waived fees and reimbursed
expenses....................... 5.38% 5.87% 5.89% 5.98% N/A
- ---------------
* The financial information for the fiscal periods prior to, and including, 1991 is based on
the financial information for the Fixed Income Strategy Fund ("IRA Fixed Income Strategy
Fund") of the Trust which was reorganized into the U.S. Government Allocation Fund on January
2, 1992.
+ The Fund commenced operations on March 31, 1987.
** Total returns do not include any sales charges.
</TABLE>
PROSPECTUS 12
<PAGE> 17
U.S. GOVERNMENT ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1990* 1989* 1988* 1987*+
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..... $ 12.49 $ 11.05 $ 10.34 $ 10.00
Income from investment operations:
Net investment income.................... 0.92 0.93 0.87 0.64
Net realized and unrealized capital
gain/(loss)
on investments......................... (0.27) 0.51 (0.16) (0.30)
------- ------- ------- -------
Total from investment operations......... 0.65 1.44 0.71 0.34
Less distributions:
Dividends from net investment income..... 0.00 0.00 0.00 0.00
Distributions from net realized gain..... 0.00 0.00 0.00 0.00
------- ------- ------- -------
Total from distributions................. 0.00 0.00 0.00 0.00
Net asset value, end of period........... $ 13.14 $ 12.49 $ 11.05 $ 10.34
======= ======= ======= =======
Total return (not annualized)**.......... 5.20% 13.03% 6.87% 3.50%
Ratios/supplemental data:
Net assets, end of period (000).......... $19,777 $14,367 $10,330 $ 7,469
Number of shares outstanding, end of
period
(000).................................. 1,505 1,151 935 722
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets(1).............................. 1.03% 1.05% 0.99% 0.99%
Ratio of net investment income to average
net
assets(2).............................. 7.34% 7.90% 8.04% 6.33%
Portfolio turnover....................... 558% 17% 42% 21%
- ---------------------------------------------------------------------------------------
(1) Ratio of expenses to average net
assets prior to waived fees and
reimbursed expenses.................. N/A N/A N/A N/A
(2) Ratio of net investment income to
average net assets prior to waived
fees and reimbursed expenses........... N/A N/A N/A N/A
- ---------------
* The financial information for the fiscal periods prior to, and including, 1991 is
based on the financial information for the Fixed Income Strategy Fund ("IRA Fixed
Income Strategy Fund") of the Trust which was reorganized into the U.S. Government
Allocation Fund on January 2, 1992.
+ The Fund commenced operations on March 31, 1987.
** Total returns do not include any sales charges.
</TABLE>
13 PROSPECTUS
<PAGE> 18
U.S. GOVERNMENT ALLOCATION FUND
FOR A CLASS B SHARE OUTSTANDING AS SHOWN
<TABLE>
<CAPTION>
YEAR
ENDED
DEC. 31,
1995*
--------
<S> <C>
Net asset value, beginning of period......................................... $10.00
Income from investment operations:
Net investment income (loss)................................................. 0.49
Net realized and unrealized capital gain/(loss) on investments............... 0.91
-----
Total from investment operations............................................. 1.40
Less distributions:
Dividends from net investment income......................................... (0.49)
Distributions from net realized gain......................................... 0.00
------
Total from distributions..................................................... (0.49)
Net asset value, end of period............................................... $10.91
======
Total return (not annualized)**.............................................. 14.11%
Ratios/supplemental data:
Net assets, end of period (000).............................................. $4,077
Number of shares outstanding, end of period
(000)....................................................................... 374
Ratios to average net assets (annualized):
Ratio of expenses to average net assets(1)................................... 1.65%
Ratio of net investment income to average net assets(2)...................... 4.31%
Portfolio turnover........................................................... 292%
- ---------------------------------------------------------------------------------------
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses....................................................... 2.36%
(2) Ratio of net investment income to
average net assets prior to waived fees and reimbursed expenses........... 3.60%
- ---------------
* Class B shares commenced operations on January 1, 1995.
+ The Fund commenced operations on March 31, 1987.
** Total returns do not include any sales charges.
</TABLE>
PROSPECTUS 14
<PAGE> 19
HOW THE FUNDS WORK
INVESTMENT OBJECTIVE AND POLICIES
ASSET ALLOCATION FUND
The Asset Allocation Fund's investment objective is to seek over the long term
a high level of total return, including net realized and unrealized capital
gains and net investment income, consistent with reasonable risk. This
investment objective is fundamental and cannot be changed without shareholder
approval. The Fund seeks to achieve its investment objective by investing all of
its assets in the Asset Allocation Master Portfolio, which has the same
fundamental objective as the Fund. As with all mutual funds, there can be no
assurance that the Fund or the Master Portfolio, which is a diversified
portfolio, will achieve their investment objectives. The Master Portfolio seeks
to achieve its objective by pursuing an asset allocation strategy. This strategy
is based upon the premise that asset classes from time to time are undervalued
or overvalued relative to each other by the market and that undervalued asset
classes represent relatively better long-term, risk-adjusted investment
opportunities. Timely, low-cost shifts among common stocks, U.S. Treasury bonds
and money market instruments (as determined by their perceived relative
overvaluation or undervaluation) can therefore produce attractive investment
returns. Using this strategy, BGFA regularly determines the appropriate mix of
asset classes and the portfolio of the Master Portfolio is periodically adjusted
to achieve this mix.
In determining the recommended mix, BGFA uses an investment model (an
"Investment Model" or "Model") developed over the past 17 years, which is
presently used as a basis for managing large employee benefit trust funds and
other institutional accounts. The Model, which is proprietary to BGFA, analyzes
extensive financial data from numerous sources and recommends a portfolio
allocation among common stocks, U.S. Treasury bonds and money market
instruments. As further described in the "Prospectus Appendix - Additional
Investment Policies," BGFA implements the Model's recommendations and monitors
the performance of the Model based on its assessment of current economic
conditions and investment opportunities.
The allocation of investments within the portfolio of the Master Portfolio is
based solely on the recommendation of the Investment Model. No person is
primarily responsible for recommending the mix of asset classes held by the
Master Portfolio or the mix of securities within any such asset class. Decisions
relating to the Investment Model are made by various BGFA investment committees.
At any given time, substantially all of the Master Portfolio's assets may be
invested in a single asset class and the relative allocation among the asset
classes may shift significantly from time to time. The Master Portfolio may use
stock index futures and
15 PROSPECTUS
<PAGE> 20
options thereon, and interest rate futures and options thereon, as a substitute
for a comparable market position in the underlying securities.
The Asset Allocation Master Portfolio's assets will be invested as follows:
Stock Investments. In making its stock investments, the Master Portfolio
invests in the common stocks which comprise the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index")* using, to the extent feasible, the same
weighting formula used by that index. The Master Portfolio does not individually
select common stocks on the basis of traditional investment analysis.
Bond Investments. The Master Portfolio purchases U.S. Treasury bonds with
maturities greater than 20 years. The bond portion of the portfolio of the
Master Portfolio is generally managed to attain an average maturity of between
22 and 28 years for the U.S. Treasury bonds held. This form of debt instrument
has been selected by BGFA because of the relatively low transaction costs of
buying and selling U.S. Treasury bonds and because of the low default risk
associated with such instruments.
Money Market Investments. The money market instrument portion of the portfolio
of the Master Portfolio generally will be invested in high-quality money market
instruments, including U.S. Government obligations, obligations of domestic and
foreign banks, short-term corporate debt instruments and repurchase agreements.
A more complete description of the Model, certain trading policies relating to
the implementation of the model's recommendations, and the Master Portfolio's
investments is contained in the "Prospectus Appendix -- Additional Investment
Policies" and in the SAI.
U.S. GOVERNMENT ALLOCATION FUND
The U.S. Government Allocation Fund's investment objective is to seek over the
long term a high level of total return, including net realized and unrealized
capital gains and net investment income, consistent with reasonable risk. This
investment objective is fundamental and cannot be changed without shareholder
approval. The Fund seeks to achieve its investment objective by investing all of
its assets in the U.S. Government Allocation Master Portfolio. The U.S.
Government Allocation Master Portfolio has the same fundamental objective as the
Fund. As with all mutual funds, there can be no
- ---------------
* The S&P 500 Index is an unmanaged index of stocks comprised of 500
companies, including industrial, financial, utility and transportation
companies. "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)" and "Standard &
Poor's 500" are trademarks of McGraw-Hill, Inc. Neither the Asset Allocation
Master Portfolio nor the Asset Allocation Fund is sponsored, endorsed, sold
or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the Fund or Master
Portfolio.
PROSPECTUS 16
<PAGE> 21
assurance that the Fund or the Master Portfolio will achieve their investment
objectives. The Master Portfolio seeks to achieve its objective by pursuing a
strategy of allocating and reallocating its investments among the following
three classes of debt instruments: long-term U.S. Treasury bonds,
intermediate-term U.S. Treasury notes, and short-term money market instruments.
This strategy is based upon the premise that these asset classes from time to
time are overvalued or undervalued relative to each other by the market and that
undervalued asset classes represent relatively better long-term investment
opportunities. Timely, low-cost shifts among such securities (as determined by
their perceived relative overvaluation or undervaluation) can therefore produce
attractive long-term investment returns. Using this strategy, BGFA regularly
determines the recommended mix of asset classes and the portfolio of the Master
Portfolio is periodically adjusted to achieve this mix. Under normal market
conditions, the Master Portfolio will invest at least 65% of the value of its
total assets in U.S. Government obligations.
In determining the recommended mix, BGFA uses an investment model (also, an
"Investment Model" or "Model") which is presently used as a basis for managing
large employee benefit trust funds and other institutional accounts. The
Investment Model, which is proprietary to BGFA, analyzes risk, correlation and
expected return data and recommends a portfolio allocation among the three
classes of debt instruments. As further described in the "Prospectus
Appendix - Additional Investment Policies," BGFA implements the Model's
recommendations and monitors the performance of the Model based on its
assessment of current economic conditions and investment opportunities. The
allocation of investments within the portfolio of the Master Portfolio is based
solely on the recommendation of the Investment Model. No person is primarily
responsible for recommending the mix of asset classes held by the Master
Portfolio or the mix of securities within any such asset class. Decisions
relating to the Investment Model are made by various BGFA investment committees.
At any given time, substantially all of the Master Portfolio's assets may be
invested in a single asset class and the relative allocation among the asset
classes may shift significantly from time to time. The Master Portfolio is not
designed to profit from short-term market changes. Instead, it is designed for
investors with investment horizons of five years and greater.
The U.S. Government Allocation Fund's assets will be invested and reinvested
in the following types of debt instruments:
Long-Term Investments. The Master Portfolio purchases U.S. Treasury bonds with
maturities greater than 20 years. This portion of the portfolio of the Master
Portfolio is generally managed to attain an average maturity of between 22 and
28 years.
Intermediate-Term Investments. The Master Portfolio purchases U.S. Treasury
notes with maturities generally ranging from 5 to 7 years. This portion of the
portfolio of the Master Portfolio is generally managed to attain an average
maturity of approximately 6 years.
17 PROSPECTUS
<PAGE> 22
Short-Term Investments. The Master Portfolio purchases short-term money market
instruments with remaining maturities of one year or less. This portion of the
portfolio of the Master Portfolio may be invested in various types of short-term
money market instruments, including U.S. Government obligations, commercial
paper, bankers' acceptances, certificates of deposit, fixed time deposits, and
repurchase agreements. Obligations of both domestic and foreign banks may be
included.
U.S. Government obligations have been selected by Wells Fargo Bank as the
Master Portfolio's principal investments because of their relatively low
purchase and sale transaction costs and because of the low default risk
associated with them (i.e., they are issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities, including
government-sponsored enterprises). The Master Portfolio may use interest rate
futures and options thereon as a substitute for a comparable market position in
the underlying securities.
A key component of the U.S. Government Allocation model is a set of
assumptions concerning expected risk and return and investor attitudes toward
risk, which are incorporated into the allocation decision. The principal inputs
of financial data to the model currently are: (i) yields on 90-day U.S. Treasury
bills, 5-year U.S. Treasury notes and 30-year U.S. Treasury bonds; (ii) the
expected statistical standard deviation in investment returns for each class of
fixed income instrument; and (iii) the expected statistical correlation of
investment return among the various classes of fixed income instruments. Using
these and other data, the model is run daily to determine the recommended
allocation. The model's recommendations are presently implemented in 10%
increments. Because the Master Portfolio may shift its investment allocations
significantly from time to time, its performance may differ from funds which
invest in one asset class or from funds with a constant mix of assets.
A more complete description of the Model and the Master Portfolio's
investments and investment activities is contained in the "Prospectus
Appendix -- Additional Investment Policies" and in the SAI.
MASTER/FEEDER STRUCTURE
As of April 29, 1996, the Funds converted to feeder funds in a master/feeder
structure. Accordingly, each of the Funds invests all of its assets in the
corresponding Master Portfolio, which has the same investment objective as the
Fund. See, "The Funds -- Investment Objectives and Policies." MIT is organized
as a trust under the laws of the State of Delaware. See "General
Information -- Description of the Company." In addition to selling its shares to
the corresponding Fund, each of the Master Portfolios may sell its shares to
certain other mutual funds or accredited investors. Information regarding
additional options, if any, for investment in shares of any of the Master
Portfolios is available from Stephens and may be obtained by calling
1-800-643-9691. The expenses and, correspondingly, the returns of other
investment options in MIT may differ from those of the Funds.
PROSPECTUS 18
<PAGE> 23
The Board of Directors believes that, if other investors invest their assets
in the Master Portfolios, certain economic efficiencies may be realized with
respect to each of the Master Portfolios. For example, fixed expenses that
otherwise would have been borne solely by one of the Funds would be spread
across a larger asset base provided by more than one fund investing in the
corresponding Master Portfolios. Each of the Funds and other entities investing
(if any) in the corresponding Master Portfolios would each be liable for all
obligations of such Master Portfolios. However, the risk of one of the Funds
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and MIT itself is unable
to meet its obligations. Accordingly, the Company's Board of Directors believes
that neither the Funds nor their respective shareholders will be adversely
affected by reason of investing the Funds' assets in the respective Master
Portfolios. However, if there is no other investor in the Master Portfolios, the
economic efficiencies (e.g., spreading fixed expenses across a larger asset
base) that the Company's Board believes should be available through investment
in the Master Portfolios may not be fully achieved. In addition, given the
relatively novel nature of the master/feeder structure, accounting and
operational difficulties could occur.
The Master Portfolios' investment objectives and other fundamental policies,
which are substantially the same as those of either of the corresponding Funds,
cannot be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940 (the "1940 Act")) of the Master Portfolios'
outstanding voting shares. Whenever either of the Funds, as a Master Portfolios'
shareholder, is requested to vote on matters pertaining to any fundamental
policy of the Master Portfolios, the Fund will hold a meeting of its
shareholders to consider such matters and the Fund will cast its votes in
proportion to the votes received from Fund shareholders. Each Fund will vote
Master Portfolio shares for which it receives no voting instructions in the same
proportion as the votes received from Fund shareholders. In addition, certain
policies of each Master Portfolio that are non-fundamental can be changed by
vote of a majority of MIT's Trustees without a shareholder vote. If a Master
Portfolio's investment objective or policies are changed, the corresponding Fund
could subsequently change its objective or policies to correspond to those of
the Master Portfolios or the Fund could redeem its Master Portfolios' shares and
either seek a new investment company with a substantially matching objective in
which to invest or retain its own investment adviser to manage the Fund's
portfolio in accordance with its objective. In the latter case, the Fund's
inability to find a substitute investment company in which to invest or
equivalent management services could adversely affect shareholders' investments
in the Fund. A Fund's investment objective and other fundamental policies cannot
be changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. Each Fund will provide
shareholders with 30 days' written notice prior to the implementation of any
change in the investment objective of the Fund or its corresponding Master
Portfolio, to the extent possible. See "Investment Objective and Policies" and
"Prospectus Appendix -- Additional Investment Policies" for
19 PROSPECTUS
<PAGE> 24
additional information regarding the Funds' and the Master Portfolios'
investment objective and policies and "The Funds and Management" and
"Management, Distribution and Servicing Fees" for additional information
regarding the Funds' and the Master Portfolios' expenses and management.
Additional information regarding the officers and directors/trustees of the
Company and MIT is located in Fund's SAI under "Management."
PRINCIPAL INVESTMENT RISKS
An investment in shares of the Funds (and the Master Portfolios) is not
insured against loss of principal. When the value of the securities attributable
to a Fund declines, so does the value of your shares of the Fund. Therefore, you
should be prepared to accept some risk with the money you invest in a Fund. The
investment characteristics and, therefore, investment risks associated with an
investment in each Fund correspond to those of the Master Portfolio in which
such Fund invests. Because each Master Portfolio may shift its investment
allocations significantly from time to time, the performance of the Master
Portfolio and its corresponding Fund may differ from funds which invest in one
asset class or from funds with a stable mix of assets. Further, shifts among
asset classes may result in relatively high portfolio turnover rates, which may,
in turn, result in increased brokerage and transaction costs, and/or increased
short-term capital gains or losses.
The portfolio debt instruments of the Master Portfolios are subject to
interest rate risk and credit risk. Interest rate risk is the risk that
increases in market interest rates may adversely affect the value of the
instruments in which a Master Portfolio invests and hence the value of your
investment in the Fund which invests in such Master Portfolio. The value of
instruments held by the Master Portfolios generally changes inversely to changes
in market interest rates. During those periods in which a high percentage of the
portfolio of a Master Portfolio is invested in long-term bonds, its exposure to
interest rate risk will be greater because the longer maturity of those
instruments means they generally are more sensitive to interest rate
fluctuations than shorter-term debt instruments. Credit risk is the risk that
the issuer of a debt instrument is unable, due to financial constraints, to make
timely payments on its outstanding obligations. The portfolio equity investments
of the Master Portfolios are subject to equity market risk. Equity market risk
is the risk that common stock prices will fluctuate or decline over short or
even extended periods. The U.S. stock market tends to be cyclical, with periods
when stock prices generally rise and periods when prices generally decline.
Although each Fund's investment experience will correspond directly to the
investment experience of the Master Portfolio in which it invests, to the extent
other funds invest in the Master Portfolio, their performance may differ from
that of the Fund due to different expense levels.
As with all mutual funds, there can be no assurance that the Funds Master
Portfolios will achieve their investment objectives. Investors should be
prepared to accept that
PROSPECTUS 20
<PAGE> 25
risk, as well as the risk that a Fund may under-perform (over the short and/or
long term) one or more of the three classes of securities in which the
corresponding Master Portfolio invests.
PERFORMANCE
The performance of each class of shares of the Asset Allocation Fund may be
advertised in terms of average annual total return. The performance of each
class of shares of the U.S. Government Allocation 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.
Each Fund's performance corresponds directly to the investment performance of
the corresponding Master Portfolio.
Average annual total return of the shares of a class of a Fund is based on the
overall dollar or percentage change in value of a hypothetical investment in the
class and assumes that all dividends and capital gain distributions are
reinvested in shares of that class. Yield of the shares of each class is
calculated by dividing the net investment income per class share earned during a
specified period (usually 30 days) by net asset value per share, on the last day
of such period and annualizing the result. In addition to presenting a
standardized total return, at times, each class also may present nonstandardized
total returns, yield information and distribution rates.
Because of differences in the fees and/or expenses borne by Class B Shares of
the Funds, the net performance quotations on such shares can be expected, at any
given time, to be lower than the net performance quotations on Class A Shares.
Standardized performance quotations are computed separately for Class A Shares
and Class B Shares.
Additional information about the performance of each Fund is contained in the
Annual Report for each Fund. The Annual Reports may be obtained free of charge
by calling the Company at 1-800-222-8222.
21 PROSPECTUS
<PAGE> 26
THE FUNDS AND MANAGEMENT
The Funds are two of the funds in the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991, and currently
offers shares of the following series: the Aggressive Growth, 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, and
Short-Intermediate U.S. Government Income 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 a Fund's investment objective or
fundamental investment policies. All shares of the Company have equal voting
rights and will be voted in the aggregate, rather than by series or class,
unless otherwise required by law (such as when the voting matter affects only
one series or class). As a shareholder of a Fund, you receive one vote for each
share you own and fractional votes for fractional shares owned. A more detailed
description of the voting rights and attributes of the shares is contained in
the "Capital Stock" section of the SAI.
MASTER PORTFOLIO INVESTMENT ADVISER AND SUB-ADVISER
Wells Fargo Bank is the Master Portfolios' investment adviser. In addition,
Wells Fargo Bank is the Funds' transfer and dividend disbursing agent, a
Shareholder Servicing Agent and a Selling Agent under Selling Agreements with
the Funds' 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 April 1, 1996, Wells Fargo Bank and its affiliates provided investment
advisory services for approximately $56 billion of assets of individuals,
trusts, estates and institutions. Wells Fargo Bank also serves as the investment
adviser to the other separately managed funds (or the master portfolios in which
such funds invest) of the Company, and as investment adviser or sub-adviser to
five other registered, open-end management investment companies. Wells Fargo
Bank, a wholly owned subsidiary of Wells Fargo & Company, is located at 420
Montgomery Street, San Francisco, California 94104.
As investment adviser, Wells Fargo Bank, subject to the overall supervision of
the Board of Trustees, provides guidance and policy direction in connection with
the management of the Master Portfolios' assets. Wells Fargo Bank also furnishes
the Board of Trustees with periodic reports on the Master Portfolios' investment
strategies and performance.
BGFA, located at 45 Fremont Street, San Francisco, California 94105, serves as
sub-adviser to the Master Portfolios. BGFA is a wholly owned subsidiary of BGI
and an indirect subsidiary of Barclays Bank PLC. As of January 1, 1996, BGFA and
its affiliates
PROSPECTUS 22
<PAGE> 27
provided investment advisory services for over $220 billion of assets. BGFA was
created by the reorganization of Wells Fargo Nikko Investment Advisors
("WFNIA"), a former affiliate of Wells Fargo Bank, with and into an affiliate of
Wells Fargo Institutional Trust Company, N.A. BGFA also serves as the
sub-adviser to one other portfolio of MIT, and as investment adviser or
sub-adviser to five other registered, open-end, management investment companies.
Pursuant to a Sub-Investment Advisory Agreement, BFGA, subject to the
supervision and approval of Wells Fargo Bank, provides investment advisory
assistance and the day-to-day management of the Master Portfolio's assets,
subject to the overall authority of MIT's Board of Trustees and in conformity
with Delaware law and the stated policies of the Master Portfolio.
Morrison & Foerster LLP, counsel to the Company and MIT and special counsel to
Wells Fargo Bank and BGFA, has advised the Company, MIT, Wells Fargo Bank and
BGFA that Wells Fargo Bank and BGFA and their respective affiliates may perform
the services contemplated by the Advisory Contracts and this 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, including the Glass-Steagall
Act, and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such statutes,
regulations and judicial or administrative decisions or interpretations, could
prevent such entities from continuing to perform, in whole or in part, such
services. If any such entity were prohibited from performing any such services,
it is expected that new agreements would be proposed or entered into with
another entity or entities qualified to perform such services.
Stephens is the Funds' sponsor and administrator, and distributes the Funds'
shares. Stephens is a full service broker/dealer and investment advisory firm
located at 111 Center Street, Little Rock, Arkansas 72201. Stephens and its
predecessor have been providing securities and investment services for more than
60 years. Additionally, they have been providing discretionary portfolio
management services since 1983. Stephens currently manages investment portfolios
for pension and profit sharing plans, individual investors, foundations,
insurance companies and university endowments.
23 PROSPECTUS
<PAGE> 28
INVESTING IN THE FUNDS
OPENING AN ACCOUNT
You can buy shares in either Fund in one of the several ways described below.
You must complete and sign an Account Application to open an account. Additional
documentation may be required from corporations, associations and certain
fiduciaries. Do not mail cash. If you have any questions or need extra forms,
you may call 1-800-222-8222.
After an application has been processed and an account has been established,
subsequent purchases of different funds of the Company under the same umbrella
account do not require the completion of additional applications. A separate
application must be processed for each different umbrella account number (even
if the registration is the same). Call the number on your confirmation statement
to obtain information about what is required to change registration.
To invest in the Funds through a tax-deferred retirement plan, please contact
a Shareholder Servicing Agent or a Selling Agent to receive information and the
required separate application. See "Tax-Deferred Retirement Plans" below.
The Company or Stephens may make the Prospectus available in an electronic
format. Upon request, the Company or Stephens will transmit or cause to be
transmitted promptly, without charge, a paper copy of the electronic Prospectus.
SHARE VALUE
The value of a share of a class of the Funds is its NAV. Wells Fargo Bank
calculates the NAV of each class of the Funds each Business Day as of the close
of regular trading on the New York Stock Exchange (referred to hereafter as "the
close of the NYSE"), which is currently 1:00 p.m. (Pacific time). The NAV of a
share of each class of the Asset Allocation Fund or U.S. Government Allocation
Fund is the value of total net assets attributable to such class divided by the
number of outstanding shares of that class. The value of the net assets per
class is determined daily by adjusting the net assets per class at the beginning
of the day by the value of each class's shareholder activity, net investment
income and net realized and unrealized gains or losses for that day. Net
investment income is calculated each day for each class by attributing to each
class a pro rata share of daily income and common expenses, and by assigning
class-specific expenses to each class as appropriate. The NAV of each class is
expected to fluctuate daily.
The Funds are open for business each day the NYSE is open for trading
("Business Day"). Currently, the NYSE is closed on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day
PROSPECTUS 24
<PAGE> 29
(each a "Holiday"). When any Holiday falls on a weekend, the NYSE is closed on
the weekday immediately before or after such Holiday.
Except for debt obligations with remaining maturities of 60 days or less,
which are valued at amortized cost, the Funds' other assets are valued at
current market prices, or if such prices are not readily available, at fair
value as determined in good faith by the Company's Board of Directors. Prices
used for such valuations may be provided by independent pricing services.
HOW TO BUY SHARES
Shares of each Fund are offered continuously at the applicable offering price
(the NAV plus the applicable sales charge) next determined after a purchase
order is received in the form specified for the purchase method being used, as
described in the following sections. Payment for shares purchased through a
Selling Agent will not be due from the Selling Agent until the settlement date.
The settlement date normally is three Business Days after the order is placed.
It is the responsibility of the Selling Agent to forward payment for shares
being purchased to a Fund promptly. Payment must accompany orders placed
directly through the Transfer Agent.
Payments for shares of each class of a Fund will be invested in full and
fractional shares of such class at the applicable offering price. If shares are
purchased by a check which does not clear, the Company reserves the right to
cancel the purchase and hold the investor responsible for any losses or fees
incurred. In addition, the Funds may hold payment on any redemption until
reasonably satisfied that your investments made by check have been collected
(which may take up to 10 days).
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-deferred 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. Where Fund shares are
acquired in exchange for shares of another fund in the Stagecoach Family of
Funds, the minimum initial investment amount applicable to the shares being
exchanged generally carries over. However, if the value of your investment in
the shares you are exchanging has been reduced below the minimum initial
investment amount by changes in market conditions or sales charges (and not by
redemptions), you may carry over the lesser amount into one of the Funds. 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, please call
1-800-222-8222. If you have any questions regarding ExpressInvest please call
1-800-237-8472. 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.
25 PROSPECTUS
<PAGE> 30
Federal regulations require that an investor provide a certified Taxpayer
Identification Number ("TIN") upon opening or reopening an account. See "Taxes"
for further information concerning this requirement. Failure to furnish a
certified TIN to the Company could subject the investor to a penalty imposed by
the IRS.
SALES CHARGES
Set forth below is a Front-end Sales Charge Schedule listing the front-end
sales charges applicable to purchases of Class A Shares of the Funds. As shown
below, reductions in the rate of front-end sales charges ("Volume Discounts")
are available as you purchase additional shares (other than Class B Shares). You
should consider the front-end sales charge information set forth below and the
other information contained in this Prospectus when making your investment
decisions.
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 which 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 such shares at the time of
redemption (the "NAV Amount"). See "Investing in the Funds - Contingent Deferred
Sales Charges - Class B Shares."
A Selling Agent or Shareholder Servicing Agent and any other person entitled
to receive compensation for selling or servicing shares may receive different
compensation for selling or servicing Class A Shares as compared with Class B
Shares.
If Class A Shares are purchased through a Selling Agent, Stephens reallows the
portion of the front-end sales charge shown above as the Dealer Allowance.
Stephens also compensates Selling Agents for sales of Class B Shares, and is
then reimbursed out of applicable Rule 12b-1 fees and contingent deferred sales
charges applicable to such
PROSPECTUS 26
<PAGE> 31
shares. In addition, Stephens has established a non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Funds may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. When shares are purchased directly
through the Transfer Agent and no Selling Agent is involved with the purchase,
the entire front-end sales charge is paid to Stephens.
REDUCED SALES CHARGE
Volume Discounts
The Volume Discounts described in the Front-end Sales Charge Schedule are
available to you based on the combined dollar amount you invest in shares of one
or more of the Company's funds which assess a front-end sales charge (the "Load
Funds"). Since Class B Shares are not subject to front-end sales charges, you
may not consider the amount of any Class B Shares you hold in determining any
Volume Discount.
Right of Accumulation
The Right of Accumulation allows you to combine the amount you invest in Class
A Shares of a Fund with the total NAV of shares (other than Class B Shares) in
any of the Load Funds to determine reduced front-end sales charges in accordance
with the above Front-end Sales Charge Schedule. In addition, you also may
combine the total NAV of shares (other than Class B Shares) which you currently
have invested in any other mutual fund that assesses a front-end sales charge
and is advised by Wells Fargo Bank and sponsored by Stephens. For example, if
you own Class A Shares of the Load Funds with an aggregate NAV of $90,000 and
you invest an additional $20,000 in Class A Shares of a Fund, the front-end
sales charge on the additional $20,000 investment would be 3.50% of the
applicable offering price. To obtain such discount, you must provide sufficient
information at the time of your purchase to verify that your purchase qualifies
for the reduced front-end sales charge. Confirmation of the order is subject to
such verification. The Right of Accumulation may be modified or discontinued at
any time without prior notice with respect to all subsequent shares purchased.
Letter of Intent
A Letter of Intent allows you to purchase Class A Shares of a Fund over a
13-month period at a reduced front-end sales charge based on the total amount of
Class A Shares you intend to purchase plus the total NAV of shares (other than
Class B Shares) in any of the Load Funds you already own. Each investment in
Class A Shares that you make during the period may be made at the reduced
front-end sales charge that is applicable to the total amount you intend to
invest. If you do not invest the total amount within the period, you must pay
the difference between the higher front-end sales charge rate that would have
been applied to the purchases you made and the reduced sales charge rate
27 PROSPECTUS
<PAGE> 32
you have paid. The minimum initial investment for a Letter of Intent is 5% of
the total amount you intend to purchase, as specified in the Letter. Shares of a
Fund equal to 5% of the amount you intend to invest will be held in escrow and,
if you do not pay the difference within 20 days following the mailing of a
request, a sufficient amount of escrowed shares will be redeemed for payment of
the additional front-end sales charge. Dividend and capital gains paid on such
shares held in escrow will be reinvested in additional Fund shares.
Reinvestment
You may reinvest proceeds from a redemption of Class A Shares in Class A
Shares of a Fund or in shares of another of the Company's funds registered in
your state of residence at NAV, without a front-end sales charge, within 120
days after your redemption. However, if the other investment portfolio charges a
front-end sales charge that is higher than the sales load that you have paid in
connection with the Class A Shares you have redeemed, you must pay the
difference between the dollar amount of the two front-end sales charges. You may
reinvest at this NAV price up to the total amount of the redemption proceeds. A
written purchase order for the shares must be delivered to the Company, a
Selling Agent, a Shareholder Servicing Agent, or the Transfer Agent at the time
of reinvestment.
If you realized a gain on your redemption, your reinvestment would not alter
the amount of any federal capital gains tax you pay on the gain. If you realized
a loss on your redemption, your reinvestment may cause some or all of the loss
to be disallowed as a tax deduction, depending on the number of shares you
purchase by reinvestment, whether those shares are in the same Fund as those
redeemed, and the period of time that elapses after the redemption. For tax
purposes, however, the amount disallowed is added to the cost of the shares you
acquire upon the reinvestment.
Reductions for Families or Fiduciaries
Reductions in front-end sales charges apply to purchases by a single "person,"
including an individual, members of a family unit, consisting of a husband, wife
and children under the age of 21 purchasing securities for their own account, or
a trustee or other fiduciary purchasing for a single fiduciary account or single
trust estate.
Waivers for Investments of Proceeds From Other Investments
Purchases may be made at NAV, without a front-end sales charge, to the extent
that: (i) you are investing proceeds from a redemption of (a) shares of another
open-end investment company, (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
PROSPECTUS 28
<PAGE> 33
evidence thereof (e.g., a confirmation of the redemption and the sales charges
paid). Front-end sales charges will not be waived to the extent the investment
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 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of a Fund at a
reduced sales charge, and the "related parties" of such company. For purposes of
this paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote 5% or
more of the outstanding voting securities of such company; (ii) any other
company of which such company directly or indirectly owns, controls or has the
power to vote 5% or more of its outstanding voting securities; (iii) any other
company under common control with such company; (iv) any executive officer,
director or partner of such company or of a related party; and (v) any
partnership of which such company is a partner. Investors seeking to rely on
their membership in a qualified group to purchase shares at a reduced sales load
must provide evidence satisfactory to the Transfer Agent of the existence of a
bona fide qualified group and their membership therein.
Waivers for Certain Parties
Class A Shares of a Fund may be purchased at NAV, without a front-end sales
charge, by directors, officers and employees (and their spouses, parents,
children and siblings) of the Company, Stephens, its affiliates and Selling
Agents. Class A Shares of a Fund also may be purchased at NAV, without a
front-end sales charge, by present and retired directors, officers and employees
(and their spouses, parents, children and siblings) of Wells Fargo Bank and its
affiliates if Wells Fargo Bank and/or the respective affiliates agree. Class A
Shares of a Fund also may be purchased at NAV, without a front-end sales charge,
by employee benefit and thrift plans for such persons and by any investment
advisory, trust or other fiduciary account, including certain Plan Accounts,
that are maintained, managed or advised by Wells Fargo Bank or its affiliates
("Fiduciary Accounts"). In addition, you may purchase Class A Shares of a Fund
at NAV, without a front-end sales charge, with proceeds from a required minimum
distribution from any Individual Retirement Account ("IRA"), Simplified Employee
Pension Plan or other self-directed retirement plan for which Wells Fargo Bank
serves as trustee, provided that the proceeds are invested in the Funds within
30 days of such distribution and such distribution is required as a result of
reaching age 70 1/2.
29 PROSPECTUS
<PAGE> 34
CONTINGENT DEFERRED SALES CHARGES - CLASS B SHARES
Class B Shares of the Funds may be subject to contingent deferred sales
charges but are not subject to front-end sales charges. Class B Shares which are
redeemed within one, two, three or four years from the receipt of a purchase
order for such shares will be subject to a contingent deferred sales charge
equal to 3.00%, 2.00%, 1.00% and 1.00%, respectively, of the dollar amount equal
to the lesser of the NAV at the time of purchase of the shares being redeemed or
the NAV of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
NAV above the NAV at the time of purchase. Contingent deferred sales charges
will not be assessed on Class B Shares purchased through reinvestment of
dividends or capital gain 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 a Fund (i) following the death or disability (as defined in the Internal
Revenue Code of 1986, as amended (the "Code")) of a shareholder, (ii) to the
extent that the redemption represents a scheduled distribution from an
individual retirement account or other retirement plan to a shareholder who has
reached age 59 1/2, (iii) effected pursuant to the Company's right to liquidate
a shareholder's account if the aggregate NAV of the shareholder's account is
less than the minimum account size, or (iv) in connection with the combination
of the Company with any other registered investment company by a merger,
acquisition of assets, or by any other transaction.
In deciding whether to purchase Class A or Class B Shares, you should compare
the fees assessed on Class A Shares (including front-end sales charges) against
those assessed on Class B Shares (including potential contingent deferred sales
charges and higher Rule 12b-1 fees than Class A Shares) in light of the amount
to be invested and the anticipated time that the shares will be owned. If your
purchase order would qualify you for a reduced sales charge on Class A Shares,
you should consider carefully whether you would pay lower fees ultimately on
Class A Shares or Class B Shares. See "Investing in the Funds -- Sales Charges"
for information on reduced sales charges for Class A Shares.
PROSPECTUS 30
<PAGE> 35
You may buy shares of the Funds on any Business Day by any of the methods
described below. The Company reserves the right to reject any purchase order or
suspend sales at any time. Payment for orders that are not received is returned
after prompt inquiry. The issuance of shares is recorded on the Company's books,
and share certificates are not issued.
INITIAL PURCHASES BY WIRE
1. Complete an Account Application.
2. Instruct the wiring bank to transmit the specified amount in federal funds
($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund) (designate Class A or B)
Account Name(s): Name(s) in which to be registered
Account Number: (if investing into an existing account)
3. A completed Account Application should be mailed, or sent by telefacsimile
with the original subsequently mailed, to the following address immediately
after the funds are wired and must be received and accepted by the Transfer
Agent before an account can be opened:
Wells Fargo Bank, N.A.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the public offering price or, in the case of
Class B Shares, at the NAV next determined after the Account Application is
received and accepted.
INITIAL PURCHASES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $1,000 or more payable to
"Stagecoach Funds (Name of Fund) (designate Class A or B)," to the address
above.
31 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 Account"). You may open an Approved Bank
Account with Wells Fargo Bank. The Transfer Agent withdraws and uses this amount
to purchase specified Fund shares on your behalf on or about the day that you
have selected or, if you have not selected a day, on or about the 20th day of
each month. The Transfer Agent requires a minimum of ten (10) Business Days to
implement your AutoSaver Plan purchases. There are no separate fees charged to
you by the Fund for participating in the AutoSaver Purchase Plan.
You may change your investment amount or the date on which your AutoSaver
Purchase is effected, suspend purchases or terminate your election at any time
by providing notice to the Transfer Agent at least five (5) Business Days prior
to any scheduled transaction.
TAX-DEFERRED RETIREMENT PLANS
You may be entitled to invest in the Funds through a Plan Account or other
tax-deferred retirement plan. Contact a Shareholder Servicing Agent (such as
Wells Fargo Bank) or a Selling Agent for materials describing Plan Accounts
available through it, and 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 through a Plan Account).
Pursuant to the Internal Revenue Code of 1986 (the "Code"), individuals who
are not active participants (and who do not have a spouse who is an active
participant) in certain types of retirement plans ("qualified retirement plans")
may deduct contributions to an IRA, up to specified limits. Investment earnings
in the IRA will be tax-deferred until withdrawn, at which time the individual
may be in a lower tax bracket.
The maximum annual deductible contribution to an IRA for individuals under age
70 1/2 is 100% of includible compensation up to a maximum of (i) $2,000 for
single individuals; (ii) $4,000 for a married couple when both spouses earn
income; and (iii) $2,250 when one spouse earns, or elects for IRA purposes to be
treated as earning, no income (together, the "IRA contribution limits").
PROSPECTUS 32
<PAGE> 37
The IRA deduction is also available for single individual taxpayers and
married couples who are active participants in qualified retirement plans but
who have adjusted gross incomes which do not exceed certain specified limits. If
their adjusted gross income exceeds these limits, the amount of the deductible
contribution is 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 known as a "SEP-IRA", through a Shareholder
Servicing Agent. 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 federal
regulations in effect as of the date of this Prospectus and summarizes only some
of the important federal tax considerations generally affecting IRA
contributions made by individuals or their employers. It is not intended as a
substitute for careful tax planning. Investors should consult their tax advisors
with respect to their specific tax situations as well as with respect to state
and local taxes. Further federal tax information is contained under the heading
"Taxes" in this Prospectus and in the SAI.
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.
33 PROSPECTUS
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ADDITIONAL PURCHASES
You may make additional purchases of $100 or more by instructing a Fund's
Transfer Agent to debit your Approved Bank Account, by wire by instructing the
wiring bank to transmit the specified amount as directed above for initial
purchases, or by mail with a check payable to "Stagecoach Funds (Name of Fund)
(designate Class A or B)" to the address set forth in "Initial Purchases by
Wire". Write your Fund account number on the check and include the detachable
stub from your Statement of Account or a letter providing your Fund account
number.
PURCHASES THROUGH SELLING AGENTS
You may place a purchase order for Class A or Class B Shares of a Fund through
a broker/dealer or financial institution which has entered into a Selling
Agreement with Stephens, as the Funds' Distributor ("Selling Agent"). If your
order is placed by the close of the NYSE, the purchase order generally will be
executed on the same day if the order is received by the Transfer Agent before
the close of business. If your purchase order is received by a Selling Agent
after the close of the NYSE or by the Transfer Agent after the close of
business, then your purchase order will be executed on the next Business Day
following the day your order is placed. The Selling Agent is responsible for the
prompt transmission of your purchase order to the Fund. Because payment for
shares of the Funds will not be due until settlement date, the Selling Agent
might benefit from temporary use of your payment.
PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS
Purchase orders for Class A or Class B Shares of the Funds may be transmitted
to the Transfer Agent through any entity that has entered into a Shareholder
Servicing Agreement with the Fund ("Shareholder Servicing Agent"), such as Wells
Fargo Bank. See "Management, 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 your Approved Bank Account or wired from a financial
institution. If your order is transmitted by the Shareholder Servicing Agent, on
your behalf, to the Transfer Agent before the close of the NYSE, the purchase
order generally will be executed on the same day. If your Shareholder Servicing
Agent transmits your purchase order to the Transfer Agent after the close of the
NYSE, then your order generally will be executed on the next Business Day
following the day your order is received. The Shareholder Servicing Agent is
responsible for the prompt transmission of your purchase order to the Transfer
Agent.
PROSPECTUS 34
<PAGE> 39
STATEMENTS AND REPORTS
The Funds, or a Shareholder Servicing Agent on their behalf, will typically
send you a confirmation or statement of your account after every transaction
that affects your share balance or your Fund account registration. A statement
with tax information for the previous year will be mailed to you by January 31
of each year, and also will be filed with the IRS. At least twice a year, you
will receive financial statements.
DIVIDENDS
The Asset Allocation Fund intends to declare a quarterly dividend and the U.S.
Government Allocation Fund intends to declare a daily dividend of substantially
all of their respective net investment income to shareholders of record.
Dividends declared by the U.S. Government Allocation Fund in a month generally
are paid on the last Business Day of each month to shareholders of record. With
regard to the U.S. Government Allocation Fund, dividends for a Saturday, Sunday
or Holiday are declared payable to shareholders of record as of the preceding
Business Day. The Funds will distribute any capital gains at least annually. You
have several options for receiving dividends and capital gain distributions.
They are discussed under "Additional Shareholder Services - Dividend and
Distribution Options."
Dividends and capital gain distributions will have the effect of reducing the
NAV per share by the amount distributed. Although such dividends and
distributions paid to you on newly issued shares shortly after your purchase
would represent, in substance, a return of your capital, the dividends and
distributions 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 gain distributions of Class A Shares and Class
B Shares.
35 PROSPECTUS
<PAGE> 40
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares in a Fund on any Business Day.
Your shares will be redeemed at the NAV next calculated after the Funds have
received your redemption request in proper form. Redemption proceeds may be more
or less than the amount invested and, therefore, a redemption may result in a
gain or loss for federal and state income tax purposes. The Funds ordinarily
will remit redemption proceeds, net of any contingent deferred sales charge
applicable with respect to Class B Shares (the "net redemption proceeds"),
within seven days after your redemption order is received in proper form, unless
the SEC permits a longer period under extraordinary circumstances. Such
extraordinary circumstances could include a period during which an emergency
exists as a result of which (a) disposal by a Fund of securities owned by it is
not reasonably practicable or (b) it is not reasonably practicable for a Fund
fairly to determine the value of its net assets, or a period during which the
SEC by order permits deferral of redemptions for the protection of security
holders of such Fund. In addition, a Fund may hold payment on your redemptions
until reasonably satisfied that your investments made by check have been
collected (which can take up to 10 days from the purchase date). To ensure
acceptance of your redemption request, please follow the procedures described
below. Although it is not the Funds' current intention, the Funds may make
payment of redemption proceeds in securities if conditions warrant, subject to
regulation by some state securities commissions. In addition, the Funds reserve
the right to impose charges for wiring redemption proceeds.
Due to the high cost of maintaining Fund accounts with small balances, the
Funds reserve the right to close your account and send you the proceeds if the
balance falls below the applicable minimum balance because of a redemption
(including a redemption of shares of a Fund after an investor has made only the
applicable minimum initial investment). However, you will be given 30 days'
notice to make an additional investment to increase your account balance to an
amount equal to or greater than the applicable minimum balance. Plan Accounts
are not subject to minimum Fund account balance requirements. For a discussion
of applicable minimum balance requirements, see "Investing in the Funds - How To
Buy Shares."
REDEMPTIONS BY TELEPHONE
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline the
privileges. Telephone redemption privileges authorize the Transfer Agent to act
on telephone instructions from any person representing himself or herself to be
the investor and reasonably believed by the Transfer Agent to be genuine. The
Company will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Company and the Transfer
Agent may be liable for any losses due to
PROSPECTUS 36
<PAGE> 41
unauthorized or fraudulent instructions. Neither the Company nor the Transfer
Agent will be liable for following telephone instructions reasonably believed to
be genuine.
REDEMPTIONS BY MAIL
1. Write a letter of instruction. Indicate the class and the dollar amount or
number of Fund shares you want to redeem. Refer to your Fund account number
and give your social security or taxpayer identification number (where
applicable).
2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all must sign.
3. Signature guarantees are not required for redemption requests unless
redemption proceeds of $5,000 or more are to be paid to someone other than
yourself at your address of record or your Approved Bank Account, or other
unusual circumstances exist which cause the Transfer Agent to determine that
a signature guarantee is necessary or prudent to protect against unauthorized
redemption requests. If required, a signature must be guaranteed by an
"eligible guarantor institution," which includes a commercial bank that is an
FDIC member, a trust company, a member firm of a domestic stock exchange, a
savings association, or a credit union that is authorized by its charter to
provide a signature guarantee. Signature guarantees by notaries public are
not acceptable. Further documentation may be requested from corporations,
administrators, executors, personal representatives, trustees or custodians.
4. Mail your letter to the Transfer Agent at the mailing address set forth under
"Investing in the Funds - Initial Purchases by Wire."
Unless other instructions are given in proper form, a check for your net
redemption proceeds is sent to your address of record.
EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE
You may request an expedited redemption of shares of a Fund by letter, in
which case your receipt of redemption proceeds, but not the Fund's receipt of
your redemption request, would be expedited. In addition, you also may request
an expedited redemption of shares of a Fund by telephone on any Business Day, in
which case both your receipt of redemption proceeds and the Fund's receipt of
your redemption request would be expedited. You may request expedited redemption
by telephone only if the total value of the shares redeemed is $100 or more.
You may request expedited redemption by telephone by calling the Transfer
Agent at the telephone number listed on your transaction confirmation or by
calling 1-800-222-8222.
37 PROSPECTUS
<PAGE> 42
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 your Approved Bank Account or wired to the
Selling Agent designated in your Account Application. The Company reserves the
right to impose a charge for wiring redemption proceeds. When proceeds of your
expedited redemption are to be paid to someone else, to an address other than
that of record, or to an account with an Approved Bank or Selling Agent that you
have not predesignated in your Account Application, your expedited redemption
request must be made by letter and the signature(s) on the letter may be
required to be guaranteed, regardless of the amount of the redemption. If your
expedited redemption request is received by the Transfer Agent by the close of
the NYSE on a Business Day, your redemption proceeds will be transmitted to your
designated account with an Approved Bank or Selling Agent on the next Business
Day (assuming your investment check has cleared as described above), absent
extraordinary circumstances. Such extraordinary circumstances could include
those described above as potentially delaying redemptions and also could include
situations involving an unusually heavy volume of wire transfer orders on a
national or regional basis or communication or transmittal delays that could
cause a brief delay in the wiring or crediting of funds. A check for the net
redemption proceeds is mailed to your address of record or, at your election,
credited to your Approved Bank Account.
During periods of drastic economic or market activity or changes, you may
experience problems implementing an expedited redemption by telephone. In the
event you are unable to reach the Transfer Agent by telephone, you should
consider using overnight mail to implement an expedited redemption. The Funds
reserve the right to modify or terminate the expedited telephone redemption
privilege at any time.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides you with a convenient way to
redeem Fund shares from your account and have the net redemption proceeds
distributed to you on a monthly basis. You may participate in the Systematic
Withdrawal Plan only if you have a Fund account valued at $10,000 or more as of
the date of your election to participate, your dividends and capital gain
distributions are being reinvested automatically and you are not participating
in the AutoSaver Plan at any time while participating in the Systematic
Withdrawal Plan. You specify an amount ($100 or more) to be distributed by check
to your address of record or deposited in your Approved Bank Account. The
Transfer Agent redeems sufficient shares and mails or deposits your net
redemption proceeds as instructed on or about the fifth Business Day prior to
the end of each month. There are no separate fees charged to you by the Funds
for participating in the Systematic Withdrawal Plan. However, you should not
PROSPECTUS 38
<PAGE> 43
participate in the Systematic Withdrawal Plan if you also are purchasing shares
of a fund that is subject to a sales charge.
It may take up to ten (10) days after receipt of your request to establish
your participation in the Systematic Withdrawal Plan. You may change your
withdrawal amount, suspend withdrawals or terminate your election at any time by
notifying the Transfer Agent at least five (5) Business Days prior to any
scheduled transaction. Your participation in the Systematic Withdrawal Plan is
terminated automatically if your Fund account is closed or, in some cases, if
your Approved Bank Account is closed.
REDEMPTIONS THROUGH SELLING AGENTS
If your redemption order is received by a Selling Agent before the close of
the NYSE and received by the Transfer Agent before the close of business on the
same day, the order will be executed at the NAV determined as of the close of
the NYSE on that day. If your redemption order is received by a Selling Agent
after the close of the NYSE, or not received by the Transfer Agent prior to the
close of business, your order will be executed at the NAV determined as of the
close of the NYSE on the next Business Day. The Selling Agent is responsible for
the prompt transmission of your redemption order to the Funds.
Unless you have made other arrangements with the Selling Agent, and the
Transfer Agent has been informed of such arrangements, net redemption proceeds
of a redemption order made by you through a Selling Agent will be credited to
your Approved Bank Account. If no such account is designated, a check for the
net redemption proceeds will be mailed to your address of record or, if such
address is no longer valid, the net redemption proceeds will be credited to your
account with the Selling Agent. You may request a check from the Selling Agent
or elect to retain the net redemption proceeds in such account. The Selling
Agent may charge you a service fee. In addition, the Selling Agent may benefit
from the use of your redemption proceeds until the check it issues to you has
cleared or until such proceeds have been disbursed or reinvested on your behalf.
REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS
You may request a redemption of shares of a Fund through your Shareholder
Servicing Agent. Any redemption request made by telephone through your
Shareholder Servicing Agent must redeem shares with a total value equal to $100
or more. If your redemption order is transmitted by the Shareholder Servicing
Agent, on your behalf, to the Transfer Agent before the close of the NYSE, the
redemption order will be executed at the NAV determined as of the close of the
NYSE on that day. If your Shareholder Servicing Agent transmits your redemption
order to the Transfer Agent after the close of the NYSE, then your order will be
executed on the next Business Day following the date your order is received. The
Shareholder Servicing Agent is responsible for the prompt transmission of your
redemption order to the Funds.
39 PROSPECTUS
<PAGE> 44
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 your Approved Bank Account. If no such account is
designated, a check for the net redemption proceeds will be mailed to your
address of record or, if such address is no longer valid, the net redemption
proceeds will be credited to your account with your Shareholder Servicing Agent
or to another account designated in your agreement with your Shareholder
Servicing Agent. The Shareholder Servicing Agent may charge you a fee. In
addition, the Shareholder Servicing Agent may benefit from the use of proceeds
credited to your account until any check it issues to you has cleared or until
such proceeds have been disbursed or reinvested on your behalf.
ADDITIONAL SHAREHOLDER SERVICES
In addition to the optional services described above, the Funds offer you
several dividend and distribution payment options and an exchange privilege,
which are described below. If you have any questions about the dividend and
distribution payment options available to you, please call 1-800-222-8222.
DIVIDEND AND DISTRIBUTION OPTIONS
When you fill out your Account Application, you can choose from the following
dividend and distribution options:
A. The Automatic Reinvestment Option provides for the reinvestment of your
dividends and capital gain distributions in additional shares of the same class
of the Fund which paid such dividends or capital gain distributions. Dividends
and distributions declared in a month generally are reinvested at NAV on the
last Business Day of such month. You are assigned this option automatically if
you make no choice on your Account Application.
B. The Fund Purchase Option lets you use your dividends and/or capital gain
distributions from the Funds to purchase, at NAV, shares of another fund in the
Stagecoach Family of Funds with which you have an established account that has
met the applicable minimum initial investment requirement. Dividends and
distributions paid on Class A or Class B Shares may be invested in Class A or
Class B Shares, respectively, of another fund, in Retail Shares of another fund,
in Class A Shares of the Money Market Mutual Fund or in shares of the National
Tax-Free Money Market Mutual Fund or California Tax-Free Money Market Mutual
Fund (the Money Market Mutual Fund (Class A Shares), National Tax-Free Money
Market Mutual Fund and California Tax-Free 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 of
the Stagecoach Family of Funds with a single class of shares
PROSPECTUS 40
<PAGE> 45
(a "single class fund"). Dividends and distributions paid on Class B Shares may
not be invested in shares of a single class fund.
C. The Automatic Clearing House Option permits you to have dividends and
capital gain distributions deposited in your Approved Bank Account. In the event
your Approved Bank Account is closed and such distribution is returned to the
Funds' dividend disbursing agent, the distribution will be reinvested in your
Fund account at the NAV next determined after the distribution has been
returned. Your Automatic Clearing House Option will be converted to the
Automatic Reinvestment Option.
D. The Check Payment Option lets you receive a check for all dividends and/or
capital gain distributions, which is mailed either to your designated address or
your designated Approved Bank shortly following declaration. If the U.S. Postal
Service cannot deliver such checks, or if such checks remain uncashed for six
months, those checks will be reinvested in your Fund account at the NAV next
determined after the earlier of the date the checks have been returned to the
dividend disbursing agent or the date six months after the payment of such
dividend or distribution. Your Check Payment Option will be converted to the
Automatic Reinvestment Option.
The Company takes reasonable efforts to locate investors whose checks are
returned or uncashed after six months.
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 other funds of the Stagecoach Family of Funds that are registered
in your state of residence in order to respond to changes in your investment and
savings goal or in market conditions. Class A and Class B Shares of the Funds
may be exchanged for Class A and Class B Shares, respectively, of another fund
or for shares of one of the Money Market Mutual Funds. Class A Shares may also
be exchanged for shares of a single-class fund or for Retail Shares of another
fund. Before making an exchange from a Fund into another fund advised by Wells
Fargo Bank, please observe the following:
- Obtain and carefully read the prospectus of the fund into which you want to
exchange.
- If you exchange into another fund with a front-end sales charge, you must
pay the difference between that fund's sales charge and any sales charge you
already have paid in connection with the shares you are exchanging.
- If you exchange Class B Shares for Class B Shares of another fund or for
shares of one of the Money Market Mutual Funds a contingent deferred sales
charge will not be imposed upon the exchange.
41 PROSPECTUS
<PAGE> 46
- 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
federal income tax purposes. A confirmation of each exchange transaction
will be sent to you.
- The dollar amount of shares you exchange generally must meet the minimum
initial and/or subsequent investment amounts of the fund from which you are
exchanging. If the value of your investment in the shares of the fund from
which you are exchanging has been reduced below the minimum initial
investment amount by changes in market conditions or sales charges (and not
be redemptions), you may carry over the lesser amount into the shares you
acquire.
- 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 or for
shares of one of the Money Market Mutual Funds, 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 one of the other Money Market Mutual Funds.
The procedures applicable to Fund share redemptions also apply to Fund share
exchanges.
To exchange shares, write the Transfer Agent at the mailing address under
"Investing in the Funds - Initial Purchases by Wire" or (unless you have
specifically declined telephone exchange privileges) call the Transfer Agent at
the telephone number listed on your transaction confirmation, or contact your
Shareholder Servicing Agent or Selling Agent. The procedures applicable to
telephone redemptions, including the discussion regarding the responsibility for
the authenticity of telephone instructions, are also applicable to telephone
exchange requests. See "How to Redeem Shares - Expedited Redemptions by Letter
and Telephone."
PROSPECTUS 42
<PAGE> 47
CONVERSION
Class B Shares of a Fund that have been outstanding for six years after the
end of the month in which the shares were initially purchased automatically
convert to Class A Shares of such Fund and, consequently, will no longer be
subject to the higher Rule 12b-1 fees applicable to Class B Shares. Such
conversion will be on the basis of the relative net asset values of the two
Classes, without the imposition of any sales charge or other charge except that
the lower Rule 12b-1 Fees applicable to Class A Shares shall thereafter be
applied to such converted shares. Because the per share net asset value of the
Class A Shares may be higher than that of the Class B Shares at the time of
conversion, a shareholder may receive fewer Class A Shares than the number of
Class B Shares converted, although the dollar value will be the same.
Reinvestments of dividends and distributions on Class B Shares will be
considered new purchases for purposes of the conversion feature. A conversion
should not produce a gain or loss for federal tax purposes.
If a shareholder effects one or more exchanges among Class B Shares of any
fund or among shares of the Money Market Mutual Funds 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 will be converted into Class A Shares.
MANAGEMENT, DISTRIBUTION AND SERVICING FEES
INVESTMENT ADVISER
Subject to the overall supervision of MIT's Board of Trustees, Wells Fargo
Bank, as the Master Portfolios' investment adviser, provides investment guidance
and policy direction in connection with the management of the Master Portfolios'
assets. Wells Fargo Bank also furnishes the Board of Trustees with periodic
reports on the Master Portfolios' investment strategy and performance.
For these services, Wells Fargo Bank is entitled to a monthly advisory fee at
the annual rate of 0.50% of the first $250 million of each Master Portfolio's
average daily net assets, 0.40% of the next $250 million, and 0.30% of the
average daily net assets in excess of $500 million. From time to time, Wells
Fargo Bank may waive its fees in whole or in part. Any such waiver will reduce
the expenses of the Master Portfolios and the Funds and, accordingly, have a
favorable impact on the performance of the Master Portfolios and the Funds.
Wells Fargo Bank has delegated certain advisory responsibilities to BGFA.
Nevertheless, Wells Fargo Bank has retained authority over the management of
each
43 PROSPECTUS
<PAGE> 48
Master Portfolio, and the investment and disposition of each Master Portfolio's
assets, and Wells Fargo Bank may reject any investment recommendations or
decisions for a Master Portfolio if Wells Fargo Bank determines that such
recommendations or decisions are not consistent with the best interests of the
Master Portfolio. Wells Fargo Bank pays BGFA for its sub-advisory services
annual fees equal to 0.20% of the average daily net assets of the Asset
Allocation Master Portfolio and $40,000 plus 0.15% of the average daily net
assets of the U.S. Government Allocation Master Portfolio.
Prior to the Funds' conversion to master/feeder structure, Wells Fargo Bank
provided investment advisory services directly to the Funds. For its services as
investment adviser, Wells Fargo Bank was entitled to receive a monthly fee at
the annual rate of 0.50% of the first $250 million of each Fund's average daily
net assets, 0.40% of the next $250 million, and 0.30% of each Fund's average
daily net assets in excess of $500 million. WFNIA, the sub-adviser to the Funds
prior to January 1, 1996, was entitled to receive from Wells Fargo Bank annual
sub-advisory fees equal to 0.20% of the average daily net assets of the Asset
Allocation Fund and $40,000 plus 0.15% of the average daily net assets of the
U.S. Government Allocation Fund. For the year ended December 31, 1995, the
Company paid an amount equal to 0.37% of the average daily net assets of the
Asset Allocation Fund and 0.50% of the average daily net assets of the U.S.
Government Allocation Fund to Wells Fargo Bank for its services as investment
adviser to such Funds. For the year ended December 31, 1995, Wells Fargo Bank
paid an amount equal to 0.20% of the average daily net assets of the Asset
Allocation Fund and 0.18% of the average daily net assets of the U.S. Government
Allocation Fund to WFNIA for its services as sub-adviser to such Funds.
From time to time, each of the Funds, consistent with its investment
objectives, policies and restrictions, may invest in securities of companies
with which Wells Fargo Bank or BGI has a lending relationship.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
BGI serves as the custodian to the Funds and Master Portfolios. BGI, located
at 45 Fremont Street, San Francisco, California 94105, is a special purpose
trust company that is owned indirectly by Barclays Bank PLC. BGFA is a wholly
owned subsidiary of BGI.
Wells Fargo Bank serves as the Funds' transfer and dividend disbursing agent.
Wells Fargo Bank performs the transfer and dividend disbursing agency activities
at 525 Market Street, San Francisco, California 94105.
SHAREHOLDER SERVICING AGENT
The Funds have entered into Shareholder Servicing Agreements with Wells Fargo
Bank on behalf of each class of Shares of the Funds, and may enter into similar
agreements with other entities. Under such agreements, Shareholder Servicing
Agents (including Wells Fargo Bank) agree, as agents for their customers, to
provide various
PROSPECTUS 44
<PAGE> 49
administrative services with respect to Fund shares, such as maintaining
shareholder accounts and records, assisting shareholders with purchases,
exchanges and redemptions and to provide such other related services as the
Company or a shareholder may reasonably request. For these services, a
Shareholder Servicing Agent receives a fee, as calculated on an annualized basis
for each Fund's then-current fiscal year, up to (1) 0.30% of the average daily
net assets attributable to the Class A or Class B Shares, as the case may be,
owned during the period for which payment is being made by investors with whom
the Shareholder Servicing Agent maintains a servicing relationship, or (2) an
amount which equals the maximum amount payable to the Shareholder Servicing
Agent under applicable laws, regulations or rules, including the Rules of Fair
Practice of the NASD ("NASD Rules"). In no event will the portion of such fees
that constitutes a "service fee," as that term is used by the NASD, exceed 0.25%
of the average NAV attributable to the Class A or Class B Shares of each Fund.
The Funds understand that a Shareholder Servicing Agent also may impose
certain conditions on its customers, subject to the terms of this Prospectus, in
addition to or different from those imposed by the Funds, such as requiring a
higher minimum initial investment or payment of a separate fee for additional
services. Each Shareholder Servicing Agent will be required to agree to disclose
any fees it may directly charge its customers who are shareholders of a Fund and
to notify them in writing at least 30 days before it imposes any transaction
fees.
SPONSOR, ADMINISTRATOR AND DISTRIBUTOR
Stephens, located at 111 Center Street, Little Rock, Arkansas, 72201, serves
as the Company's and MIT's administrator pursuant to separate Administration
Agreements with the Company and MIT, subject to the overall supervision of the
Board of Directors of the Company and the Board of Trustees of MIT,
respectively. Under the Administration Agreement with the Company, Stephens
provides the Funds with administrative services, including general supervision
of each Fund's operation, coordination of the other services provided to each
Fund, compilation of information for reports to the SEC and the state securities
commissions, preparation of proxy statements and shareholder reports, and
general supervision of data compilation in connection with preparing periodic
reports to the Company's Directors and officers. Stephens also furnishes office
space and certain facilities to conduct each Fund's business, and compensates
the Company's Directors, officers and employees who are affiliated with
Stephens. For these services, Stephens is entitled to receive from each Fund a
monthly fee at the annual rate of 0.03% of each Fund's average daily net assets
from each of the Funds. Stephens does not receive a separate administration fee
from the Master Portfolios. From time to time, Stephens may waive its fees from
a Fund in whole or in part. Any such waiver will reduce a Fund's expenses and,
accordingly, have a favorable impact on such Fund's performance.
45 PROSPECTUS
<PAGE> 50
Stephens, as the principal underwriter of the Funds within the meaning of the
1940 Act, has entered into a Distribution Agreement with the Company pursuant to
which Stephens is responsible for distributing Class A and Class B Shares of the
Funds. The Company also has adopted a Distribution Plan on behalf of each Class
of shares of the Funds under the SEC's Rule 12b-1 ("Plans"). Under the Class A
Plans for each Fund, each Fund may defray all or part of the cost of preparing
and printing prospectuses and other promotional materials and of delivering
prospectuses and those materials to prospective Class A shareholders by paying
on an annual basis up to 0.05% of the average daily net assets attributable to
the Class A Shares of the Funds. The Class A Plans provide only for the
reimbursement of actual expenses. Under the Class B Plans, each Fund may defray
all or part of such costs and pay compensation to the Distributor and Selling
Agents for sales support services. The Class B Plans provide for payments, on an
annual basis, of up to 0.70% of the average daily net assets attributable to the
Class B Shares of each Fund. The Distribution Agreement provides that Stephens
shall act as agent for the Funds for the sale of their shares, and may enter
into Selling Agreements with Selling Agents that wish to make available shares
of the Funds to their respective customers. The Funds may participate in joint
distribution activities with any of the other funds of the Company, in which
event expenses reimbursed out of the assets of the Fund may be attributable, in
part, to the distribution-related activities of another fund of the Company.
Generally, the expenses attributable to joint distribution activities will be
allocated among each Fund and the other funds of the Company in proportion to
their relative net asset sizes, although the Company's Board of Directors may
allocate such expenses in any other manner that it deems fair and equitable. In
addition, Stephens has established a non-cash compensation program, pursuant to
which broker/dealers or financial institutions that sell shares of the Funds may
earn additional compensation in the form of trips to sales seminars or vacation
destinations, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
goods or merchandise.
In addition, the Plans contemplate that, to the extent any fees payable
pursuant to a Shareholder Servicing Agreement (discussed above) are deemed to be
for distribution-related services, such payments are approved and payable
pursuant to the Plans subject to any limits under applicable law, regulations or
rules, including the NASD Rules. Financial institutions acting as Selling
Agents, Shareholder Servicing Agents, or in certain other capacities may be
required to register as dealers pursuant to applicable state securities laws
which may differ from federal law and any interpretations expressed herein.
FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive their respective
fees owned by each Fund or the pro rata share of the fees owed by each Master
Portfolio in whole or in part and reimburse expenses payable to others. Any such
waivers or reimbursements will reduce a Fund's expenses and, accordingly, have a
favorable
PROSPECTUS 46
<PAGE> 51
impact on such Fund's performance. Except for the expenses borne by Wells Fargo
Bank and Stephens, the Company bears its pro rata share of all costs of its
operations, including advisory, shareholder servicing, transfer agency, custody
and administration fees, payments pursuant to any Plans, fees and expenses of
its independent auditors and legal counsel, and any extraordinary expenses.
Expenses attributable to each Fund or Class are charged against the assets of
the Fund or Class. General expenses of the Company and MIT are allocated among
all of the funds of the Company, including the Funds, or all of the portfolios
of MIT, including the Master Portfolios, in a manner proportionate to the net
assets of each fund, on a transactional basis, or on such other basis as the
Board of Directors or Trustees of the Company or MIT deems equitable.
TAXES
The company intends to qualify each Fund as a regulated investment company
under Subchapter M of the Code, as long as such qualification is in the best
interest of each Fund's shareholders. In addition, net capital gains, net
investment income and operating expenses will be determined separately for each
Fund.
By complying with the applicable provisions of the Code, and regulations
promulgated thereunder, it is expected that the Funds and the Master Portfolios
will not be subject to federal income taxes with respect to net investment
income and net realized capital gains distributed to their shareholders or
interestholders, as applicable. The Funds intend to pay out substantially all
their net investment income and net realized capital gains (if any) for each
year.
The Master Portfolios will each qualify for federal tax purposes as a
partnership. As such, each Fund will generally be deemed to own directly its
proportionate share of the assets of the Master Portfolio. Therefore, any
interest, dividends, gains or losses of the Master Portfolio will be "passed
through" to each Fund and other investors in the Master Portfolio. If the Master
Portfolio were to accrue but not distribute any interest, dividends or gains,
each Fund would be deemed to have realized and recognized its proportionate
share of interest, dividends, or gains without receipt of any corresponding
distribution. Each Master Portfolio seeks to minimize recognition by investors
of interest, dividends or gains without a corresponding distribution.
Dividends from net investment income (including net short-term capital gains,
if any) declared and paid by each Fund will be taxable as ordinary income to a
Fund's shareholders. Whether you take such dividend payments in cash or have
them automatically reinvested in additional shares, they will be taxable.
Generally, dividends and capital gain distributions are taxable to shareholders
at the time they are paid. However, dividends and capital gain 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
47 PROSPECTUS
<PAGE> 52
dividends and capital gain distributions are actually paid no later than January
31 of the following year. You may be eligible to defer the taxation of dividends
and capital gain distributions on shares of a Fund which are held under a
qualified tax-deferred retirement plan. See "Investing in the
Funds - Tax-Deferred Retirement Plans" above. Corporate shareholders of the
Asset Allocation Fund may be eligible for the dividends-received deduction on
the dividends paid by such Fund to the extent such Fund's income is derived from
certain dividends received from domestic corporations. The U.S. Government
Allocation Fund's dividends will not qualify for the dividends-received
deduction allowed to corporate shareholders. In order to qualify for the
dividends received deduction a corporate shareholder must hold the Fund shares
paying the dividends upon which such deduction is based for at least 46 days.
The Funds, or your Shareholder Servicing Agent on their behalf, will inform
you of the amount and nature of such dividends and capital gains. You should
keep all statements you receive to assist in your personal record keeping. The
Company is required to withhold, subject to certain exemptions, at a rate of 31%
on dividends, capital gain distributions, and redemption proceeds (including
proceeds from exchanges) paid or credited to individual shareholders of the
Funds if a correct taxpayer identification number, certified when required, is
not on file with the Company or the Transfer Agent. In connection with this
withholding requirement, you will be asked to certify on your Account
Application that the social security or taxpayer identification number you
provide is correct and that you are not subject to 31% backup withholding for
previous underreporting to the IRS.
Foreign shareholders may be subject to different tax treatment, including a
withholding tax. See "Federal Income Taxes -- Foreign Shareholders" in the SAIs.
The foregoing discussion regarding taxes is based on federal tax laws and
regulations which were in effect as of the date of this Prospectus and
summarizes only some of the important federal tax considerations generally
affecting a Fund and its shareholders. 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 tax information is contained in the SAI.
PROSPECTUS 48
<PAGE> 53
PROSPECTUS APPENDIX -
ADDITIONAL INVESTMENT POLICIES
FUND INVESTMENTS
ASSET ALLOCATION MODEL
BGFA compares the Asset Allocation Master Portfolio's investments daily to the
Asset Allocation Model's recommended allocation. The investment model recommends
allocations among each asset class in 10% increments only. Any recommended
reallocation will be implemented in accordance with trading policies that have
been designed to take advantage of market opportunities and to reduce
transaction costs. Under current trading policies employed by BGFA, recommended
reallocations may be implemented promptly upon receipt of recommendations or may
not be acted upon for as long as two or three months thereafter depending on
factors such as the percentage change from previous recommendations and the
consistency of recommended reallocations over a period of time. In addition, the
Asset Allocation Master Portfolio generally will invest the net proceeds from
the sale of shares of the Master Portfolio and will liquidate existing Master
Portfolio investments to meet net redemption requirements in a manner that best
allows the Master Portfolio's existing asset allocation to follow that
recommended by the Model. Notwithstanding any recommendation of the Model to the
contrary, the Asset Allocation Master Portfolio will generally maintain at least
that portion of its assets in money market instruments reasonably considered
necessary to meet redemption requirements. In general, cash maintained for
short-term liquidity needs is only invested in U.S. Treasury bills, shares of
other mutual funds and repurchase agreements. There is no requirement that the
Master Portfolio maintain positions in any particular asset class or classes.
Wells Fargo Bank and BGFA manage other portfolios which also invest in
accordance with the Asset Allocation Model. The performance of each of those
other portfolios is likely to vary among themselves and from the performance of
the Fund and the Master Portfolio. Such variation in performance is primarily
due to different equilibrium asset mix assumptions used for the various
portfolios, timing differences in the implementation of the model's
recommendations and differences in expenses and liquidity requirements.
There are 500 common stocks, including Wells Fargo & Company stock, which make
up the S&P 500 Index. S&P occasionally makes changes in the S&P 500 Index based
on its criteria for inclusion of stocks in the S&P 500 Index. The S&P 500 Index
is market-capitalization-weighted so that each stock in the S&P 500 Index
represents its proportion of the total market value of all stocks in the S&P 500
Index. In making its stock investments, the policy of the Asset Allocation
Master Portfolio is to invest its assets
A-1 PROSPECTUS
<PAGE> 54
in substantially the same stocks, and in substantially the same percentages, as
the S&P 500 Index, including Wells Fargo & Company stock.
U.S. GOVERNMENT ALLOCATION MODEL
BGFA compares the U.S. Government Allocation Master Portfolio's investments
daily to the U.S. Government Allocation Model's recommended allocation. Any
recommended reallocation will be implemented in accordance with trading policies
that have been designed to take advantage of market opportunities and to reduce
transaction costs. Under current trading policies employed by BGFA, recommended
reallocations may be implemented promptly upon receipt of recommendations or may
not be acted upon for as long as two to three months thereafter depending on
factors such as the percentage change from previous recommendations and the
consistency of recommended reallocations over a period of time. In addition, the
U.S. Government Allocation Master Portfolio generally will invest the net
proceeds from the sale of shares of the Master Portfolio and will liquidate
existing Master Portfolio investments to meet net redemption requirements in a
manner that best allows the Master Portfolio's existing asset allocation to
follow the allocation recommended by the computer Model. Notwithstanding any
recommendation of the computer model to the contrary, the Master Portfolio will
generally maintain at least that portion of its assets in money market
instruments reasonably considered necessary to meet redemption requirements. In
general, cash maintained for short-term liquidity needs is only invested in U.S.
Treasury bills, shares other mutual funds and repurchase agreements. There is no
requirement that the Master Portfolio maintain positions in any particular asset
class or classes.
BGFA manages other funds which invest in accordance with a substantially
similar version of the Model. The performance of each of those other funds is
likely to vary among themselves and from the performance of the Master
Portfolio. Such variation in performance is primarily due to timing differences
in the implementation of the Model's recommendations, differences in expenses
and liquidity requirements, and the ability of other funds to invest a higher
portion of their assets in short-term investments that may generate a higher
yield, but are not issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Although BGFA intends to use the Models as bases for its investment decisions
with respect to the Asset Allocation Master Portfolio and U.S. Government
Allocation Master Portfolio, BGFA may change from time to time the criteria and
methods it uses to implement the model's recommendations if it believes such a
change is desirable for a Master Portfolio. Nevertheless, Wells Fargo Bank has
continuing and exclusive authority over the management of the Master Portfolios,
the conduct of their affairs and the disposition of the Master Portfolios'
assets, and Wells Fargo Bank has the right to reject BGFA's investment decisions
for a Master Portfolio if Wells Fargo Bank determines that any such decision is
not consistent with the best interests of a Master Portfolio.
PROSPECTUS A-2
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Money Market Instruments and Temporary Investments
In accordance with its investment policies, the Master Portfolios will invest
varying percentages of their assets in money market instruments. In addition,
the Master Portfolios may have temporary cash balances on account of new
purchases, dividends, interest and reserves for redemptions, and which the
Master Portfolios may invest in the following high-quality money market
instruments: (i) obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, including government-sponsored enterprises ("U.S.
Government obligations"); (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "P-1" by Moody's
Investors Service, Inc. ("Moody's") or "A-1+" or "A-1" by S&P, or, if unrated,
of comparable quality as determined by Wells Fargo Bank, as investment adviser;
(iv) nonconvertible corporate debt securities (e.g., bonds and debentures) with
remaining maturities at the date of purchase of no more than one year that are
rated at least "Aa" by Moody's or "AA" by S&P; (v) repurchase agreements; and
(vi) short-term, U.S. dollar-denominated obligations of foreign banks (including
U.S. branches) that at the time of investment: (a) have more than $10 billion,
or the equivalent in other currencies, in total assets; (b) are among the 75
largest foreign banks in the world as determined on the basis of assets; (c)
have branches or agencies in the United States; and (d) in the opinion of Wells
Fargo Bank, as investment adviser, are of comparable quality to obligations of
U.S. banks which may be purchased by a Master Portfolio.
U.S. Government Obligations
U.S. Government obligations include securities issued or guaranteed as to
principal and interest by the U.S. Government and supported by the full faith
and credit of the U.S. Treasury. U.S. Treasury obligations differ mainly in the
length of their maturity. Treasury bills, the most frequently issued marketable
government securities, have a maturity of up to one year and are issued on a
discount basis. U.S. Government obligations also include securities issued or
guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees; others, by the right of
the issuer or guarantor to borrow from the U.S. Treasury; still others, by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, only by the credit of the agency
or instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government will provide
financial
A-3 PROSPECTUS
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support to its agencies or instrumentalities where it is not obligated to do so.
In addition, U.S. Government obligations are subject to fluctuations in market
value due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.
Short-Term Corporate Debt Instruments
The Master Portfolios may invest in commercial paper (including variable
amount master demand notes), which refers to short-term, unsecured promissory
notes issued by corporations to finance short-term credit needs. Commercial
paper is usually sold on a discount basis and has a maturity at the time of
issuance not exceeding nine months. Variable amount master demand notes are
demand obligations that permit the investment of fluctuating amounts at varying
market rates of interest pursuant to arrangements between the issuer and a
commercial bank acting as agent for the payee of such notes whereby both parties
have the right to vary the amount of the outstanding indebtedness on the notes.
The Master Portfolios also may invest in nonconvertible corporate debt
securities (e.g., bonds and debentures) with no more than one year remaining to
maturity at the date of settlement. The Master Portfolios will invest only in
such corporate bonds and debentures that are rated at the time of purchase at
least "Aa" by Moody's or "AA" by S&P.
Floating- and Variable-Rate Instruments
Certain of the debt instruments that the Master Portfolios may purchase bear
interest at rates that are not fixed, but vary for example, with changes in
specified market rates or indices or specified intervals. Certain of these
instruments may carry a demand feature that would permit the holder to tender
them back to the issuer at par value prior to maturity. The floating- and
variable-rate instruments that the Master Portfolios may purchase include
certificates of participation in such obligations. Wells Fargo Bank or BGFA, as
appropriate will monitor on an ongoing basis the ability of an issuer of a
demand instrument to pay principal and interest on demand. Events affecting the
ability of the issuer of a demand instrument to make payment when due may occur
between the date a Master Portfolio elects to demand payment and the date
payment is due. Such events may affect the ability of the issuer of the
instrument to make payment when due, thereby affecting a Master Portfolio's
ability to obtain payment at par. Demand instruments whose demand feature is not
exercisable within seven days may be treated as liquid, provided that an active
secondary market exists.
PROSPECTUS A-4
<PAGE> 57
Repurchase Agreements
The Master Portfolios may enter into repurchase agreements wherein the seller
of a security to a Master Portfolio agrees to repurchase that security from such
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 Portfolios may enter into repurchase
agreements only with respect to U.S. Government obligations and those securities
which are permissible investments for a Master Portfolio. All repurchase
agreements will be fully collateralized based on values that are marked to
market daily. While the maturities of the underlying securities in a repurchase
agreement transaction entered into by the Master Portfolios may be greater than
twelve months, the term of any repurchase agreement on behalf of the Master
Portfolio will always be less than twelve months. If the seller defaults and the
value of the underlying securities has declined, a Master Portfolio may incur a
loss. In addition, if bankruptcy proceedings are commenced with respect to the
seller of the security, a Master Portfolio's disposition of the security may be
delayed or limited. The Master Portfolios will enter into repurchase agreements
only with registered broker/dealers, commercial banks and other financial
institutions that meet guidelines established by MIT's Board of Trustees and are
not affiliated with the Master Portfolios' investment adviser. The Master
Portfolios may participate in pooled repurchase agreement transactions with
other funds advised by Wells Fargo Bank.
Futures Contracts and Options Transactions - General
A futures transaction involves a firm agreement to buy or sell a commodity or
financial instrument at a particular price on a specified future date, while an
option transaction generally involves a right, which may or may not be
exercised, to buy or sell a commodity or financial instrument at a particular
price on a specified future date. Futures contacts and options are standardized
and exchange-traded, where the exchange serves as the ultimate counterparty for
all contracts. Consequently, the only credit risk on futures contracts is the
creditworthiness of the exchange. Futures contracts, however, are subject to
market risk (i.e., exposure to adverse price changes).
The Master Portfolios may trade futures contracts and options on futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange.
The Master Portfolios' futures transactions must constitute permissible
transactions pursuant to regulations promulgated by the Commodity Futures
Trading Commission. In addition, the Master Portfolios may not engage in futures
transactions if the sum of the amount of initial margin deposits and premiums
paid for unexpired options on futures contracts, other than those contracts
entered into for bona fide hedging purposes, would exceed 5% of the liquidation
value of a Master Portfolio's assets, after taking into account unrealized
profits and unrealized losses on such contracts; provided, however, that in the
case of an option on a futures contract that is in-the-money at the time of
A-5 PROSPECTUS
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purchase, the in-the-money amount may be excluded in calculating the 5%
liquidation amount. Pursuant to regulations and/or published positions of the
SEC, each Master Portfolio may be required to segregate cash, U.S. Government
obligations or other high-quality debt instruments in connection with its
futures transactions in an amount generally equal to the entire value of the
underlying commitment.
Initially, when purchasing or selling futures contracts a Master Portfolio
will be required to deposit with the Master Portfolio's custodian in the
broker's name an amount of cash or cash equivalents up to approximately 10% of
the contract amount. This amount is subject to change by the exchange or board
of trade on which the contract is traded, and members of such exchange or board
of trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract that is returned to the Master Portfolio upon
termination of the futures position, assuming all contractual obligations have
been satisfied. Subsequent payments, known as "variation margin", to and from
the broker will be made daily as the price of the index or securities underlying
the futures contract fluctuates, making the long and short positions in the
futures contract more or less valuable. At any time prior to the expiration of a
futures contract, a Master Portfolio may elect to close the position by taking
an opposite position, at the then prevailing price, thereby terminating its
existing position in the contract.
Although the Master Portfolios intend to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contracts prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting a Master
Portfolio to substantial losses. If it is not possible, or a Master Portfolio
determines not to close a futures position in anticipation of adverse price
movements, the Master Portfolio will be required to make daily cash payments of
variation margin.
An option on a futures contract gives the purchaser the right, in return for
the premium paid, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer (i.e.,
seller) of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by both the writer and the holder of the option will be
accompanied by delivery of the accumulated cash balance in the writer's futures
margin account in the amount by which the market price of the futures contract,
at exercise,
PROSPECTUS A-6
<PAGE> 59
exceeds (in the case of a call) or is less than (in the case of a put) the
exercise price of the option on the futures contract.
Stock Index Options. The Master Portfolios may purchase and write (i.e., sell)
put and call options on stock indices as a substitute for comparable market
positions in the underlying securities. A stock index fluctuates with changes in
the market values of the stocks included in the index. The aggregate premiums
paid on all options purchased may not exceed 20% of a Master Portfolio's total
assets and the value of the options written may not exceed 10% of the value of
the Master Portfolio's total assets.
The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in a Master Portfolio's portfolio
correlate with price movements of the stock index selected. Because the value of
an index option depends upon movements in the level of the index rather than the
price of a particular stock, whether a Master Portfolio will realize a gain or
loss from purchasing or writing stock index options depends upon movements in
the level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements in the
price of particular stock.
When a Master Portfolio writes an option on a stock index, the Master
Portfolio will place in a segregated account with the Master Portfolio's
custodian cash, U.S. Government obligations or other high-quality debt
instruments in an amount at least equal to the market value of the underlying
stock index and will maintain the account while the option is open or otherwise
will cover the transaction.
Stock Index Futures and Options on Stock Index Futures. Each Master Portfolio
may invest in stock index futures and options on stock index futures as a
substitute for a comparable market position in the underlying securities. A
stock index future obligates the seller to deliver (and the purchaser to take),
effectively, an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. With respect to
stock indices that are permitted investments, each Master Portfolio intends to
purchase and sell futures contracts on the stock index for which it can obtain
the best price with consideration also given to liquidity.
Interest-Rate Futures Contracts and Options on Interest-Rate Futures
Contracts. Each Master Portfolio may invest in interest-rate futures contracts
and options on interest-rate futures contracts as a substitute for a comparable
market position in the underlying securities. Each Master Portfolio may also
sell options on interest-rate futures contracts as part of closing purchase
transactions to terminate its options positions. No assurance can be given that
such closing transactions can be effected or the degree of correlation between
price movements in the options on interest rate futures and price movements in
the Master Portfolio's securities which are the subject of the transaction.
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Interest-Rate and Index Swaps. Each Master Portfolio may enter into
interest-rate and index swaps in pursuit of its investment objective.
Interest-rate swaps involve the exchange by a Master Portfolio with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments for fixed-rate payments). Index swaps
involve the exchange by the Master Portfolio with another party of cash flows
based upon the performance of an index of securities or a portion of an index of
securities that usually include dividends or income. In each case, the exchange
commitments can involve payments to be made in the same currency or in different
currencies. Each Master Portfolio will usually enter into swaps on a net basis.
In so doing, the two payment streams are netted out, with the Master Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. If a Master Portfolio enters into a swap, it will maintain a
segregated account on a gross basis, unless the contract provides for a
segregated account on a net basis. If there is a default by the other party to
such a transaction, the Master Portfolio will have contractual remedies pursuant
to the agreements related to the transaction.
The use of interest-rate and index swaps is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio security transactions. There is no limit, except as
provided below, on the amount of swap transactions that may be entered into by a
Master Portfolio. These transactions generally do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps generally is limited to the net amount of payments
that the Master Portfolio is contractually obligated to make. There is also a
risk of a default by the other party to a swap, in which case the Master
Portfolio may not receive net amount of payments that the Master Portfolio
contractually is entitled to receive.
The permissible investments described herein are considered "derivative"
securities because their value is derived, at least in part, from the price of
another security or a specified asset, index or rate. The futures contracts and
options on futures contracts that the Master Portfolios may purchase are
considered derivatives. The Master Portfolios may only purchase or sell these
contracts or options as substitutes for comparable market positions in the
underlying securities. Also, asset-backed securities issued or guaranteed by
U.S. Government agencies or instrumentalities and certain floating- and
variable-rate instruments can be considered derivatives. Some derivatives may be
more sensitive than direct securities to change 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.
Wells Fargo Bank and BGFA use a variety of internal risk management procedures
to ensure that derivatives use is consistent with a Master Portfolio's
investment objective, does not expose such Master Portfolio or corresponding
Fund to undue risk and is closely monitored. These procedures include providing
periodic reports to the Board of
PROSPECTUS A-8
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Trustees of MIT and the Board of Directors of the Company concerning the use of
derivatives.
The use of derivatives by the Master Portfolios also is subject to broadly
applicable investment policies. For example, a Fund may not invest more than a
specified percentage of its assets in "illiquid securities," including those
derivatives that do not have active secondary markets. Nor may a Master
Portfolio use certain derivatives without establishing adequate "cover" in
compliance with SEC positions regarding the use of leverage.
Loans of Portfolio Securities
The Master Portfolios may lend securities from their portfolios to brokers,
dealers and financial institutions (but not individuals) if cash, U.S.
Government obligations or other high-quality debt instruments equal to at least
100% of the current market value of the securities loan (including accrued
interest thereon) plus the interest payable to a Master Portfolio with respect
to the loan is maintained with the Master Portfolio. In determining whether to
lend a security to a particular broker, dealer or financial institution, a
Master Portfolio's investment adviser will consider all relevant facts and
circumstances, including the creditworthiness of the broker, dealer or financial
institution. Any loans of portfolio securities will be fully collateralized
based on values that are marked to market daily. The Master Portfolios will not
enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities that a Master Portfolio may receive as
collateral will not become part of the portfolio of the Master Portfolio at the
time of the loan and, in the event of a default by the borrower, the Master
Portfolio, if permitted by law, will dispose of such collateral except for such
part thereof that is a security in which the Master Portfolio is permitted to
invest. During the time securities are on loan, the borrower will pay a Master
Portfolio any accrued income on those securities, and the Master Portfolio may
invest the cash collateral and earn additional income or receive an agreed-upon
fee from a borrower that has delivered cash-equivalent collateral. Neither
Master Portfolio will lend securities having a value that exceeds one-third of
the current value of its total assets. Loans of securities by a Master Portfolio
will be subject to termination at the Master Portfolio's or the borrower's
option. The Master Portfolios may pay reasonable administrative and custodial
fees in connection with a securities loan and may pay a negotiated portion of
the interest or fee earned with respect to the collateral to the borrower or the
placing broker. Borrowers and placing brokers may not be affiliated, directly or
indirectly, with the Company, MIT, the investment adviser, or the Distributor.
Foreign Obligations
Each Master Portfolio may invest up to 25% of its respective assets in
high-quality, short-term debt obligations of foreign branches of U.S. banks or
U.S. branches of foreign banks that are denominated in and pay interest in U.S.
dollars. Investments in foreign
A-9 PROSPECTUS
<PAGE> 62
obligations involve certain considerations that are not typically associated
with investing in domestic obligations. There may be less publicly available
information about a foreign issuer than about a domestic issuer. Foreign issuers
also are not subject to the same uniform accounting, auditing and financial
reporting standards or governmental supervision as domestic issuers. In
addition, with respect to certain foreign countries, taxes may be withheld at
the source under foreign income tax laws, and there is a possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect investments in, the
liquidity of, and the ability to enforce contractual obligations with respect
to, securities of issuers located in those countries.
INVESTMENT POLICIES -- THE FUNDS
Each Fund's investment objective, as set forth in the first paragraph of the
"How The Funds Work - Investment Objectives and Policies" section, is
fundamental; that is, it may not be changed without approval by the vote of the
holders of a majority of a Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI for each Fund. In addition, any fundamental
investment policy may not be changed without such shareholder approval. If the
Board of Directors determines, however, that a Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment policy
or strategy, the Company's Board may make such change without shareholder
approval and will disclose any such material changes in the then-current
prospectus.
As matters of fundamental policy, each Fund may: (i) not purchase securities
of any issuer (except 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 such issuer or
the Fund would own more than 10% of the outstanding voting securities of such
issuer, provided that a Fund may invest all its assets in a diversified,
open-end management investment company, or a series thereof, with the same
investment objective, policies and restrictions as such Fund, without regard to
the limitations set forth in this clause (i); (ii) borrow from banks up to 20%
of the current value of its net assets for temporary purposes only in order to
meet redemptions, and these borrowings may be secured by the pledge of up to 20%
of the current value of its net assets (but investments may not be purchased
while any such outstanding borrowings exceed 5% of its net assets); (iii) make
loans of portfolio securities in accordance with its investment policies; and
(iv) not invest 25% or more of its assets (i.e., concentrate) in any particular
industry, except that (a) each Fund may invest 25% or more of its assets in
obligations of the U.S. Government, its agencies or instrumentalities, and (b)
the Asset Allocation Fund is permitted to concentrate its assets in any industry
for the same period as does the S&P 500 Index, (c) the Asset Allocation Fund's
money market investments may be invested in the banking industry and in
obligations of the U.S. Government, its agencies or instrumentalities, (d) such
investments may, from time to time, represent 25% or more of the Asset
Allocation Fund's
PROSPECTUS A-10
<PAGE> 63
total assets, and (e) each Fund may invest all of its assets in a diversified,
open-end management investment company or a series thereof, with the same
investment objective, policies and restrictions as the Fund, without regard to
these limitations. However, the Asset Allocation Fund's money market investments
in the banking industry will not represent 25% or more of its total assets
unless the SEC staff has confirmed that it does not object to the Fund reserving
freedom of action to concentrate investments in the banking industry. With
respect to paragraph (ii) above, each Fund presently does not intend to put at
risk more than 5% of its assets during the coming year. With respect to
paragraph (iii) above, the Asset Allocation Fund presently does not intend to
put at risk more than 5% of its assets during the coming year. With respect to
paragraph (i), it may be possible that the Company would own more than 10% of
the outstanding voting securities of an issuer.
As a matter of nonfundamental policy, each Fund may not invest more than 15%
of the current value of its net assets in illiquid securities, including
repurchase agreements having maturities of more than seven days.
INVESTMENT POLICIES -- THE MASTER PORTFOLIOS
As matters of fundamental policy, each Master Portfolio may: (i) not 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 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 20%
of the current value of its net assets for temporary purposes only in order to
meet redemptions, and these borrowings may be secured by the pledge of up to 20%
of the current value of its net assets (but investments may not be purchased
while any such outstanding borrowings exceed 5% of its net assets); (iii) make
loans of portfolio securities in accordance with its investment policies; and
(iv) not invest 25% or more of its assets (i.e., concentrate) in any particular
industry, except that (a) each Master Portfolio may invest 25% or more of its
assets in obligations of the U.S. Government, its agencies or instrumentalities,
and (b) the Asset Allocation Master Portfolio is permitted to concentrate its
assets in any industry for the same period as does the S&P 500 Index, (c) the
Asset Allocation Master Portfolio's money market investments may be invested in
the banking industry and in obligations of the U.S. Government, its agencies or
instrumentalities, and (d) such investments may, from time to time, represent
25% or more of the Asset Allocation Master Portfolio's total assets. However,
the Asset Allocation Master Portfolio's money market investments in the banking
industry will not represent 25% or more of its total assets unless the SEC staff
has confirmed that it does not object to the Fund reserving freedom of action to
concentrate investments in the banking industry. With respect to paragraph (ii)
above, each Master Portfolio presently does not intend to put at risk more than
5% of its assets during the coming year. With respect to paragraph (iii) above,
the Asset Allocation Master Portfolio presently does not intend to put at risk
more than 5% of its assets during
A-11 PROSPECTUS
<PAGE> 64
the coming year. With respect to paragraph (i), it may be possible that MIT
would own more than 10% of the outstanding voting securities of an issuer.
As a matter of nonfundamental policy, each Master Portfolio may not invest
more than 15% of the current value of its net assets in illiquid securities,
including repurchase agreements having maturities of more than seven days.
PROSPECTUS A-12
<PAGE> 65
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Advised by WELLS FARGO BANK, N.A. - Sponsored/Distributed by
Stephens Inc., Member NYSE/SIPC
NOT FDIC INSURED
<PAGE> 66
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<PAGE> 67
SPONSOR, DISTRIBUTOR AND ADMINISTRATOR
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
INVESTMENT ADVISER, TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, California 94120-7066
SUB-INVESTMENT ADVISER
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
CUSTODIAN
BZW Barclays Global Investors, N.A.
45 Fremont Street
San Francisco, California 94105
LEGAL COUNSEL
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
FOR MORE INFORMATION ABOUT THE FUND
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 insured by the FDIC or U.S. Government
- are NOT obligations or deposits of Wells Fargo
Bank nor guaranteed by the Bank LOGO
- involve investment risk, including possible loss
of principal
</TABLE>
LOGO SC0217 (5/96)
Printed on Recycled Paper
