<PAGE> 1
As filed with the Securities and Exchange Commission
on May 30, 1997
Registration No. 33-42927; 811-6419
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
[X]
Post-Effective Amendment No. 32
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 33
(Check appropriate box or boxes)
----------------------
STAGECOACH FUNDS, INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
----------------------
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant [ ] on _________ pursuant
to Rule 485(b), or to Rule 485(b)
[ ] 60 days after filing pursuant [ ] on _________ pursuant
to Rule 485(a)(1), or to Rule 485(a)(1)
[X] 75 days after filing pursuant [ ] on ___________pursuant
to Rule 485(a)(2), or to Rule 485(a)(2)
<PAGE> 2
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Rule 24f-2
Notice for the fiscal period ending September 30, 1996, was filed with the
Securities and Exchange Commission on November 27, 1996. The Rule 24f-2 Notice
for the fiscal period ending March 31, 1997, was filed with the Securities and
Exchange Commission on or about May 28, 1997.
<PAGE> 3
EXPLANATORY NOTE
This Post-Effective Amendment to the Registration Statement
(the "Amendment") of Stagecoach Funds, Inc. (the "Company") is being filed to
register the International Equity Fund of the Company. This Amendment does not
affect the Registration Statement for any of the Company's other Funds.
<PAGE> 4
Cross Reference Sheet
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Form N-1A Item Number
<S> <C>
Part A - Class A and Class B Prospectus Captions
1 Cover Page
2 Prospectus Summary
Summary of Fund Expenses
3 Not Applicable
4 The Fund and Management
Prospectus Appendix - Additional Investment
Policies
5 How the Fund Works
The Fund and Management
Management, Distribution and Servicing Fees
6 The Fund and Management
Investing in the Fund
7 Investing in the Fund
Dividend and Capital Gain Distributions
Taxes
8 Investing in the Fund
Additional Shareholder Services
How to Redeem Shares
9 Not Applicable
Part A - Institutional Class Prospectus Captions
1 Cover Page
2 Prospectus Summary
Summary of Fund Expenses
3 Not Applicable
4 The Fund and Management
Prospectus Appendix - Additional Investment
Policies
5 How the Fund Works
The Fund and Management
Management and Servicing Fees
6 The Fund and Management
Investing in the Fund
7 Investing in the Fund
Dividend and Capital Gain Distributions
Taxes
8 Investing in the Fund
Additional Shareholder Services
How to Redeem Shares
9 Not Applicable
Part B Statement of Additional Information Captions
10 Cover Page
11 Table of Contents
12 Capital Stock; Other
13 Investment Restrictions
Additional Permitted Investment Activities
SAI Appendix
14 Management
15 Management
16 Management
Distribution Plans
Fund Expenses
Independent Auditors
17 Portfolio Transactions
18 Capital Stock; Other
19 Determination of Net Asset Value
Additional Purchase and Redemption Information
20 Federal Income Taxes
21 Management
22 Performance Calculations
23 Financial Information
Part C Other Information
24-32 Information required to be included in Part C is
set forth under the appropriate Item, so numbered,
in Part C of this Document.
</TABLE>
<PAGE> 5
PROSPECTUS
INTERNATIONAL EQUITY FUND
CLASS A AND CLASS B
August __, 1997
<PAGE> 6
STAGECOACH FUNDS(R)
INTERNATIONAL EQUITY FUND
CLASS A AND CLASS B
Stagecoach Funds, Inc. (the "Company") is an open-end management
investment company. This Prospectus contains information about Class A and
Class B shares offered in the INTERNATIONAL EQUITY FUND (the "Fund") of the
Stagecoach Family of Funds.
The International Equity Fund seeks to earn total return (with an
emphasis on capital appreciation) over the long term, by investing primarily in
equity securities of non-U.S. companies.
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
the Fund's goals match your own. A Statement of Additional Information
("SAI"), dated August __, 1997, has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated by reference into this Prospectus. The
SAI is available free of charge by writing to Stagecoach Funds, Inc., c/o
Stagecoach Shareholder Services, Wells Fargo Bank, N.A., P.O. Box 7066, San
Francisco, CA 94120-7066, or by calling the Company at 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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY
OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND
INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND ADMINISTRATOR, AND IS
COMPENSATED FOR PROVIDING THE FUND WITH CERTAIN OTHER SERVICES. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE
CO-ADMINISTRATOR AND DISTRIBUTOR FOR THE FUND.
PROSPECTUS DATED AUGUST __, 1997
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . 1
Summary of Fund Expenses . . . . . . . . . . . . . . . . . . . . 4
How the Fund Works . . . . . . . . . . . . . . . . . . . . . . . 7
The Fund and Management . . . . . . . . . . . . . . . . . . . . . 11
Investing in the Fund . . . . . . . . . . . . . . . . . . . . . . 13
Dividend and Capital Gain Distributions . . . . . . . . . . . . . 22
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . 22
Additional Shareholder Services . . . . . . . . . . . . . . . . . 27
Management, Distribution and Servicing Fees . . . . . . . . . . . 29
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Prospectus Appendix--Additional Investment Policies . . . . . . . A-1
</TABLE>
i
<PAGE> 8
PROSPECTUS SUMMARY
The Fund provides you with a convenient way to invest in a portfolio
of securities selected and supervised by professional management. The
following provides you with summary information about the Fund. For more
information, please refer to the identified Prospectus sections and generally
to this Prospectus and the Fund's SAI.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The International Equity Fund seeks to earn total return (with an
emphasis on capital appreciation) over the long term, by investing
primarily in equity securities of non-U.S. companies. The Fund
pursues its objective by investing its assets primarily in a portfolio
of common stocks, preferred stocks, warrants, convertible securities
and other securities of issuers located and operating in countries
other than the United States. Other eligible investments for the Fund
include, for example, American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and similar securities, as well as
securities of other investment companies.
See "How the Fund Works," "Prospectus Appendix--Additional Investment
Policies" and the SAI for further information on investments.
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?
A. An investment in the Fund is not insured against loss of principal.
When the value of the securities that the Fund owns declines, so does
the value of your shares of the Fund. Therefore, you should be
prepared to accept some risk with the money you invest in the Fund.
Moreover, because the Fund invests in foreign securities, you should
be prepared to accept the special risks associated with foreign
investing. These risks include, among others, fluctuations in
currency exchange rates, political risks, such as expropriation or
nationalization of assets, war and possible imposition of foreign
taxes and exchange control and currency restrictions. In addition to
these special risks, the portfolio equity and debt securities held by
the Fund also are subject to the risks commonly associated with any
investment in such securities. For example, the portfolio equity
securities of the Fund are subject to equity market risk. Equity
market risk is the risk that stock prices will fluctuate or decline
over short or even extended periods. Further, the portfolio debt
instruments of the Fund are, generally, subject to credit and
interest-rate risk. Credit risk is the risk that issuers of the debt
instruments in which the Fund invests may default on the payment of
principal and/or interest. Interest-rate risk is the risk that
increases in market interest rates may adversely affect the value of
the debt instruments in which the Fund invests and hence the value of
your investment in the Fund. As with all mutual funds, there can be
no assurance that the Fund will achieve its investment objective. See
"How the Fund Works--Investment Objective and Policies," "How the Fund
Works--Risk Factors" and "Prospectus Appendix -- Additional Investment
Policies" below and
1
<PAGE> 9
"Additional Permitted Investment Activities" in the SAI for further
information about the Fund's investments and related risks.
Q. WHO MANAGES MY INVESTMENT?
A. Wells Fargo Bank, as the Fund's investment adviser, manages your
investment. Wells Fargo Bank also provides administrative, transfer
and dividend disbursing agency services to the Fund. In addition,
Wells Fargo Bank is a shareholder servicing agent and a selling agent
and provides certain of these services to the Fund. See "The Fund's
and Management" and "Management, Distribution and Servicing Fees."
Q. HOW DO I INVEST?
A. You may invest by purchasing shares of the Fund at its public offering
price, which is the net asset value ("NAV") plus any applicable sales
charge. Class A shares are subject to a maximum front-end sales
charge of 5.25%. Class B shares that are redeemed within six years of
purchase are, generally, subject to a contingent deferred sales
charge. 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, although certain
exceptions to these minimums may be available. Shares may be purchased
by wire, by mail or by an automatic investment feature called the
AutoSaver Plan on any day the New York Stock Exchange is open. See
"Investing in the Fund." For more details, contact Stephens (the Fund's
distributor), a shareholder servicing agent or a selling agent (such
as Wells Fargo Bank).
Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?
A. Dividends of the International Equity Fund are declared and
distributed annually. Any capital gains are distributed by the Fund
at least annually. Dividend and capital gain distributions are
automatically reinvested in shares of the same class of the Fund
without a sales charge unless you elect to receive distributions in
cash. You may also elect to reinvest dividends 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. Investment income available for distribution
to holders of a class of shares is reduced by the class expenses
payable on behalf of those shares. See "Dividend and Capital Gain
Distributions" and "Additional Shareholder Services."
2
<PAGE> 10
Q. HOW MAY I REDEEM SHARES?
A. You may redeem shares by telephone, by letter or by an automatic
feature called the Systematic Withdrawal Plan on any day the Fund is
open for business. Contingent deferred sales charges may be charged
upon redemption of Class B shares. The Company does not charge a fee
for redemption of Class A shares. In addition, the Company reserves
the right to impose charges for wiring redemption proceeds. See "How
To Redeem Shares" and "How to Purchase Shares--Contingent Deferred
Sales Charges--Class B shares." For more details, contact Stephens, a
shareholder servicing agent or a selling agent (such as Wells Fargo
Bank).
Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least
in part, from the price of another security or a specified asset,
index or rate. Some of the permissible investments described in this
Prospectus, such as buying and selling foreign currency futures and
entering into forward foreign currency contracts, are considered
derivatives. However, Wells Fargo Bank will use such derivatives only
when it deems appropriate and only for limited purposes, such as to
reduce currency risk or gain exposure to specific markets. Some
derivatives may be more sensitive than direct securities to changes in
interest rates, exchange rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield, duration
or value due to their structure or contract terms.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES- RELATED RISKS?
A. Wells Fargo Bank uses a variety of internal risk management procedures
to ensure that derivatives use is consistent with the Fund's
investment objective, does not expose the Fund to undue risks and is
closely monitored. These procedures include providing periodic
reports to the Board of Directors concerning the use of derivatives.
Derivatives use by the Fund also is subject to broadly applicable
investment policies. For example, the 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
the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage. For more
information on the Fund's investment activities, see "How the Fund
Works" and "Prospectus Appendix-- Additional Investment Policies."
3
<PAGE> 11
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
CLASS A SHARES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 5.25%
Maximum Sales Load Imposed on
Reinvested Dividends None
Maximum Deferred Sales Load None
Exchange Fees None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
CLASS A SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management Fee 1.00%
Rule 12b-1 Fee 0.25%
Other Expenses (1) 0.50%
-----
TOTAL FUND OPERATING EXPENSES (1) 1.75%
</TABLE>
(1)
EXAMPLE OF EXPENSES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses
on a $1,000 investment in Class A shares
of the Fund, assuming a 5% annual
return and redemption at the end of
each time period indicated $ 69 $105
---- ----
</TABLE>
4
<PAGE> 12
SHAREHOLDER TRANSACTION EXPENSES
CLASS B SHARES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage
of offering price) None
Maximum Sales Load Imposed on
Reinvested Dividends None
Maximum Deferred Sales Load (as a
percentage of the lesser of NAV at time of
purchase or NAV at time of redemption) 5.00%
Exchange Fees None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
CLASS B SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management Fee 1.00%
Rule 12b-1 Fee 0.75%
Other Expenses (1) 0.50%
-----
TOTAL FUND OPERATING
EXPENSES (1) 2.25%
</TABLE>
(1)
EXAMPLE OF EXPENSES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses
on a $1,000 investment in Class B shares
of the Fund, assuming a 5% annual
return and redemption at the end of
each time period indicated $ 73 $100
You would pay the following expenses
on a $1,000 investment in Class B
shares of the Fund, assuming a 5%
annual return and no redemption: $ 23 $ 70
</TABLE>
5
<PAGE> 13
EXPLANATION OF TABLES
The purpose of the foregoing tables is to help you understand the
various costs and expenses that a shareholder in the Fund will pay directly or
indirectly. You may purchase Fund shares directly from the Company or through
Wells Fargo Bank or other institutions that have developed various account
products through which Fund shares may be purchased, and for which customers
may be charged a fee. The tables do not reflect any charges that may be
imposed by Wells Fargo Bank or another institution directly on certain customer
accounts in connection with an investment in the 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
the Fund's Class A shares and may be subject to a contingent deferred sales
charge on the Fund's Class B shares if you redeem such shares within a
specified period. 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. There are no exchange fees. See
"Investing in the Fund--Sales Charges."
ANNUAL FUND OPERATING EXPENSES for the Fund, except as indicated
above, are based on applicable contract amounts and amounts the Fund expects to
incur during its first fiscal year. [THESE AMOUNTS HAVE BEEN ADJUSTED TO
REFLECT VOLUNTARY FEE WAIVERS OR REIMBURSEMENTS THAT ARE EXPECTED TO REDUCE
EXPENSES DURING THE CURRENT YEAR.] The amounts shown under "Management Fee"
and "Rule 12b-1 Fee" are based on applicable contract amounts. The amount
shown under "Other Expenses" for the Fund is based on estimated amounts
expected to be in effect during the first fiscal year. Wells Fargo Bank and
Stephens at their sole discretion may waive or reimburse all or a portion of
their respective fees charged to, or expenses paid by, the Fund. Any waivers
or reimbursements would reduce the Fund's total expenses.
Long-term shareholders of the Fund could pay more in sales charges
than the economic equivalent of the maximum front-end sales charges applicable
to mutual funds sold by members of the National Association of Securities
Dealers, Inc. ("NASD"). For more complete descriptions of the various costs
and expenses you can expect to incur as a shareholder in the Fund, please see
"Investing in the Fund--How To Buy Shares" and "Management and Servicing Fees."
EXAMPLE OF EXPENSES is a hypothetical illustration of the expenses
associated with a $1,000 investment over stated periods, based on the expenses
in the above tables 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 the Fund nor a representation of past or future expenses; actual
expenses and returns may be greater or lesser than those shown.
6
<PAGE> 14
HOW THE FUND WORKS
INVESTMENT OBJECTIVE AND POLICIES
The International Equity Fund seeks to earn total return (with an
emphasis on capital appreciation) over the long term, by investing primarily in
equity securities of non-U.S. companies. In seeking to achieve its objective,
the Fund intends to invest at least 80% of its assets in a diversified
portfolio of equity securities of companies located or operating in major
non-U.S. countries and developing regions of the world. It is expected that
securities held in the Fund will ordinarily be traded on a stock exchange or
other market (such as an over-the-counter market) in the country in which the
issuer is principally based, but also may be traded in other countries
including, in many cases, the United States. Equity securities in the
portfolio will include, among others, common stocks, preferred stocks,
warrants, convertible instruments, ADRs, GDRs and similar securities, as well
as securities of other investment companies.
As adviser to the Fund, Wells Fargo Bank intends to apply a
fundamentals-driven/value-oriented stock selection process, identifying
companies with an above-average potential for long-term growth. Several key
fundamental criteria are considered, such as a company's distinguishable
franchise on a local, regional or global basis; a history of effective
management demonstrated by expanding revenues and earnings growth; prudent
financial and accounting policies; and an ability to capitalize on a changing
business environment. Valuation factors based on historical and forecast data
also are employed to determine the relative attractiveness of the security. It
is expected that the average market capitalization of issuers represented in
the Fund's portfolio will be US$10 billion or more. The Fund may, however,
invest in equity securities of issuers with market capitalization as low as
US$250 million.
The Fund intends to allocate its assets among a variety of countries,
regions and industry sectors, investing in a minimum of five countries
exclusive of the United States. In allocating among countries, regions and
industry sectors, factors such as economic growth prospects, monetary and
fiscal policies, political stability, currency trends, market liquidity and
investor sentiment are considered. The Fund may invest up to 50% of its total
assets in any one country, and up to 25% of its total assets in securities of
issuers located and operating primarily in emerging market countries. Emerging
market countries include those financial markets associated with "emerging"
countries as considered by the International Bank for Reconstruction and
Development, the International Finance Corporation, and the international
financial community. There are presently over 130 countries that may be
considered "emerging." Of this number, however, only approximately 30
countries currently are considered viable investment areas. As countries
develop, additional markets may open to foreign investors.
The International Equity Fund may temporarily hold cash or purchase
short-term instruments to the extent appropriate to maintain adequate liquidity
for redemption requests or other cash management needs. The short-term
instruments that the Fund may purchase include U.S. Treasury bills, shares of
money market mutual funds and repurchase agreements. In addition, when, in the
opinion of Wells Fargo Bank, abnormal market or economic conditions
7
<PAGE> 15
warrant, the Fund may, for temporary defensive purposes, hold cash, short term
instruments and debt or equity securities of U.S. and non-U.S. issuers without
limitation.
Although Wells Fargo Bank generally does not intend to hedge the
Fund's foreign currency exposure, it reserves the right to hedge by purchasing
or selling foreign currency futures and forward foreign currency contracts.
Because the Fund will be investing in securities of non-U.S. issuers,
investment risk and certain fees (such as custodial, securities transaction,
and securities registration fees) may be higher than the fees incurred by funds
investing solely in U.S. securities. For a description of these and other
risks and considerations, see "Risk Factors" below.
Wells Fargo Bank anticipates that most of the Fund's investments will
be long-term in character. However, the Fund's portfolio turnover rate will be
impacted by market and other conditions and will not serve to limit the
discretion of Wells Fargo Bank if it believes portfolio changes are
appropriate. It is anticipated that the Fund's portfolio turnover rate will
not exceed 100% under normal market conditions.
There can be no assurance that the Fund, which is a diversified
portfolio, will achieve its investment objective. The Fund's investment
objective is not a fundamental policy of the Fund and therefore may be changed
by the Company's Board of Directors without shareholder approval. A more
complete description of the Fund's investments and investment activities is
contained in "Prospectus Appendix -- Additional Investment Policies" and in the
SAI.
RISK FACTORS
The International Equity Fund is intended for investors who are
seeking long-term capital appreciation and who are prepared to accept the risks
associated with investing in foreign securities markets. Foreign securities
held by the Fund, including for this purpose ADRs, GDRs and similar securities,
involve special risks and considerations not typically associated with
investing in U.S. companies. These risks include differences in accounting,
auditing and financial reporting standards; generally higher commission rates
on foreign portfolio transactions; the possibility of nationalization,
expropriation or confiscatory taxation; adverse changes in investment or
exchange control regulations (which may include suspension of the ability to
transfer currency from a country); and political, social and monetary or
diplomatic developments that could affect U.S. investments in foreign
countries. There may be less publicly available information about a foreign
company than about a U.S. company and information that is available may be less
reliable. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and
volume than domestic securities and, therefore, may exhibit greater price
volatility. Additional costs associated with an investment in foreign
securities may include higher custodial fees than apply to domestic custodial
arrangements and transaction costs of foreign currency conversions. Changes in
foreign exchange rates also will affect the value of securities denominated or
quoted in currencies other than the U.S. dollar. The Fund's performance may be
affected either unfavorably or favorably by fluctuations in the relative rates
of exchange between the currencies of different nations, by exchange control
regulations and by
8
<PAGE> 16
indigenous economic and political developments. Transactions in foreign
securities may be subject to less efficient settlement practices. Moreover,
foreign securities trading practices, including those involving securities
settlement where Fund assets may be released prior to receipt of payment, may
expose a Fund to increased risk in the event of a failed trade or the
insolvency of a foreign broker-dealer. Finally, in the event of litigation
relating to a portfolio investment, the Fund may encounter substantial
difficulties in obtaining and enforcing judgments against non-U.S. resident
individuals and corporations. Investors should carefully consider the
appropriateness of foreign investing in light of their financial objectives and
goals.
Because foreign securities ordinarily are denominated in currencies
other than the U.S. dollar (as are some securities of U.S. issuers), changes in
foreign currency exchange rates will affect the Fund's net asset value, the
value of dividends and interest earned, gains and losses realized on the sale
of securities and net investment income and capital gains, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of Fund assets denominated in that
currency will increase; correspondingly, if the value of a foreign currency
declines against the U.S. dollar, the value of Fund assets denominated in that
currency will decrease. The exchange rates between the U.S. dollar and other
currencies are determined by supply and demand in the currency exchange
markets, international balances of payments, speculation and other economic and
political conditions. In addition, some foreign currency values may be
volatile and there is the possibility of governmental controls on currency
exchange or governmental intervention in currency markets. Any of these
factors could adversely affect the Fund.
Further, there are special risks involved in investing in issuers in
emerging market countries. Most emerging market countries are heavily
dependent on international trade, and some are especially vulnerable to
recessions in other countries. Some of these countries are also sensitive to
world commodity prices and may be subject to political and social
uncertainties. The currencies of certain emerging countries, and therefore the
value of securities denominated in such currencies, may be more volatile than
currencies of developed countries. Many investments in emerging markets can be
considered speculative, and their prices can be much more volatile than in the
more developed nations of the world. This difference reflects the greater
uncertainties of investing in less established markets and economies. In
addition, the financial markets of emerging markets countries are generally
less well capitalized and thus securities of issuers based in such countries
may be less liquid. Further, such markets may be vulnerable to high inflation
and interest rates.
In addition to the risks associated with investments in foreign
securities, the Fund's portfolio equity securities are subject to the risks
commonly associated with any investment in equity securities. For example, the
portfolio equity securities of the Fund are subject to equity market risk.
Equity market risk is the risk that stock prices will fluctuate or decline over
short or extended periods. Further, because the Fund may, under certain
limited circumstances, invest in debt securities, the portion of the Fund's
portfolio so invested will, generally, be subject to credit and interest-rate
risk. Credit risk is the risk that issuers of the debt instruments in which
the Fund invests may default on the payment of principal and/or interest.
Interest-rate risk is the risk that increases in market interest rates may
adversely affect the value of the debt instruments in which
9
<PAGE> 17
the Fund invests and hence the value of your investment in the Fund. The
market value of the Fund's investment in fixed-income securities will change in
response to changes in interest rates and the relative financial strength of
each issuer. During periods of falling interest rates, the value of
fixed-income securities generally rises. Conversely, during periods of rising
interest rates, the value of such securities generally declines. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular security also may affect the
value of these investments. Fluctuations in the market value of fixed-income
securities subsequent to their acquisition will not affect cash income from
such securities but will be reflected in a Fund's net asset value.
Illiquid securities, which may include certain restricted securities,
may be difficult to sell promptly at an acceptable price. Certain restricted
securities may be subject to legal restrictions on resale. Delay or difficulty
in selling securities may result in a loss or be costly to a Fund.
Wells Fargo Bank may use certain derivative investments or techniques,
such as buying and selling foreign currency futures contracts and entering into
forward foreign currency contracts, to adjust the risk and return
characteristics of the Fund's portfolio. Derivatives are financial instruments
whose value is derived, at least in part, from the price of another security or
a specified asset, index or rate. Some 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. If Wells Fargo Bank judges market
conditions incorrectly, the use of certain derivatives could result in a loss,
regardless of its intent in using the derivatives.
There is, of course, no assurance that the Fund will achieve its
investment objective or be successful in preventing or minimizing the risk of
loss that is inherent in investing in particular types of investment products.
See "Prospectus Appendix--Additional Investment Policies" and the SAI for
further information about investment policies and risks.
PERFORMANCE
Fund performance may be advertised from time to time in terms of
average annual total return or cumulative total return. Performance figures
are based on historical results and are not intended to indicate future
performance. Performance figures are calculated separately for each class of
shares of the Fund.
Average annual total return is based on the overall dollar or
percentage change in value of a hypothetical investment in shares of a class
and assumes that all dividends and capital-gain distributions attributable to
such class are reinvested at NAV in shares of that class. The standardized
average annual total return, as calculated for Class A shares, assumes that you
have paid the maximum sales charge and, as calculated for Class B shares,
assumes that you have paid the maximum applicable contingent deferred sales
charge on your hypothetical investment. Cumulative total return is calculated
similarly except that the return figure is aggregated over the relevant period
instead of annualized.
10
<PAGE> 18
In addition to presenting standardized performance figures, the Fund
also may present nonstandardized performance figures, including distribution
rates. For example, the performance figure of the shares of a class may be
calculated on the basis of an investment at the net asset value per share or at
net asset value per share plus a reduced sales charge (see "Investing in the
Fund--How To Buy Shares") rather than the public offering price per share. In
this case, the figure might not reflect the effect of the sales charge that you
may have paid.
Additional information about the performance of the Fund is contained
in the SAI under "Performance Calculations" and will be in the Company's next
Annual Report, dated approximately May 1998, which may be obtained free of
charge by calling the Company at 1-800-222-8222 or by writing the Company at
the address on the inside front cover of the Prospectus.
THE FUND AND MANAGEMENT
THE FUND
The Fund is one of twenty-seven funds offered by the Stagecoach Family
of Funds. The Company was organized as a Maryland corporation on September 9,
1991. Most of the Company's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, a class subject to a contingent-deferred sales charge, that are offered
to retail investors. Certain of the Company's funds also are authorized to
issue other classes of shares, which are sold primarily to institutional
investors at NAV. Each class of shares represents an equal, proportionate
interest in a Fund with other shares of the same class. Shareholders of each
class bear their pro rata portion of a Fund's operating expenses except for
certain class-specific expenses that are allocated to a particular class and,
accordingly, may affect performance. Please contact Stagecoach Shareholder
Services at 1-800-222-8222 if you would like additional information about
investment options in the Stagecoach Family of Funds.
The Company's Board of Directors supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Although
the Company is not required to hold annual shareholder meetings, special
meetings may be required for purposes such as electing or removing Directors,
approving advisory contracts and distribution plans, and changing the fund's
investment objective or fundamental investment policies. All shares of the
Company have equal voting rights and are 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). All shareholders of record are
entitled to one vote for each share owned 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.
MANAGEMENT
Wells Fargo Bank is the investment adviser to the Fund. In addition,
Wells Fargo Bank serves as the Fund's administrator, transfer and dividend
disbursing agent and is a shareholder
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<PAGE> 19
servicing agent and selling agent. 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 March 31, 1997, Wells Fargo Bank and its affiliates
provided investment advisory services for approximately $57 billion of assets
of individuals, trusts, separately-managed estates and institutions. Wells
Fargo Bank also serves as investment adviser to the other funds 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.
PORTFOLIO MANAGERS
Ms. Katherine Schapiro is primarily responsible for the day-to-day
management of the Fund. She joined Wells Fargo Bank in August 1992, where she
directs international equity investment strategy. Ms. Schapiro currently
manages a number of international equity portfolios. Ms. Schapiro also manages
equity and balanced portfolios for institutions and individuals through Wells
Capital Management, a wholly-owned subsidiary of Wells Fargo Bank, and serves
on the Equity Strategy Committee. Prior to joining Wells Fargo Bank, Ms.
Schapiro was a vice president and fund manager for Newport Pacific Management,
an international investment advisory firm. Ms. Schapiro is a graduate of
Stanford University, is a Chartered Financial Analyst and is on the board of
directors of the Security Analysts of San Francisco.
Ms. Stacey Ho is a co-manager for the Fund. Ms. Ho analyzes foreign
equity securities and manages other equity portfolios for Wells Fargo Bank and
Wells Capital Management as part of its International Equity-Style Team. Prior
to joining Wells Fargo Bank this year, Ms. Ho was employed by Clemente Capital
Management where she had responsibility for Asian equities and was a member of
an international and emerging markets portfolio management team. Ms. Ho was
employed by Clemente Capital Management from 1995 through late 1996. From 1990
to 1995, Ms. Ho was employed by Edison International where her responsibilities
included managing a Japan equity portfolio, a U.S. equity portfolio, and the
domestic equity managers for Edison International's pension fund. Ms. Ho has a
BS in Civil Engineering from San Diego State University and a MS in
Environmental Engineering from Stanford University. She received her MBA from
UCLA. Ms. Ho is currently working toward her Chartered Financial Analyst
designation.
_______________________________________
Morrison & Foerster LLP, counsel to the Company and special counsel to
Wells Fargo Bank, has advised the Company and Wells Fargo Bank that Wells Fargo
Bank and its 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
decisions in this regard 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
12
<PAGE> 20
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.
INVESTING IN THE FUND
OPENING AN ACCOUNT
You can buy Fund shares in one of the 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,
please 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 Fund through tax-deferred retirement plans, please
contact a shareholder servicing agent or a selling agent to receive information
and the required separate application. See "Tax-Deferred Retirement Plans"
below.
The Company or Stephens may make the Prospectus available in an
electronic format. Upon receipt of a request from you or your representative,
the Company or Stephens will transmit or cause to be transmitted promptly,
without charge, a paper copy of the electronic Prospectus.
SHARE VALUE
The value of a share of each class of the Fund is its "net asset
value" or NAV. Wells Fargo Bank calculates the NAV of each class of shares of
the Fund on each day the Fund is open as of the close of regular trading on the
New York Stock Exchange ("NYSE") (referred to hereafter as "the close of the
NYSE"), which is currently 1:00 p.m. (Pacific time). The Fund is open for
business on each day the NYSE is open for trading (a "Business Day"). The NAV
per share for each class of shares is calculated by dividing the value of the
Fund's assets allocable to a particular class, less the liabilities charged to
that class, by the total number of outstanding shares of the class. All
expenses are accrued daily and taken into account for purposes of calculating
NAV, which is expected to fluctuate daily. Shares may be purchased on any day
the Fund is open for business. Due to timing differences, the NAV may not be
calculated using closing values on all exchanges.
The Fund's 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.
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<PAGE> 21
HOW TO BUY SHARES
Fund shares are offered continuously at the applicable offering price
(NAV plus any applicable sales charges) 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 (as defined below) is not due from the selling agent until the
settlement date, which is normally three Business Days after the order is
placed. The selling agent is responsible for forwarding payment for shares
being purchased to the Fund promptly. Payment must accompany orders placed
directly through the transfer agent.
Payments for Fund shares are invested in full and fractional shares of
the Fund (or class) at the applicable offering price. If shares are purchased
by a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. In
addition, the Company 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 is generally $1,000. The minimum
investment amounts, however, are $100 through the AutoSaver Plan (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, all 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. 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 by redemptions), then you may carry over the lesser amount
into one of the Funds. Plan Accounts that invest in the Fund through Wells
Fargo ExpressInvest (available to certain Wells Fargo tax-deferred retirement
plans) are not subject to the minimum initial or subsequent investment amount
requirements. In addition, the minimum initial or subsequent purchase amount
requirements may be waived or lowered for investments effected on a group basis
by certain entities and their employees, such as pursuant to a payroll
deduction or other accumulation plan. If you have questions regarding
purchases of shares, please call 1-800-222-8222. If you have 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 or selling agent.
SALES CHARGES
Set forth below is a Front-end Sales Charge Schedule listing the
front-end sales charges applicable to purchases of Class A shares. As shown
below, reductions in the rate of front-end sales charges ("Volume Discounts")
are available as you purchase additional shares (contingent-deferred sales
charges applicable to Class B shares are described below). You should
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<PAGE> 22
consider the front-end sales charge information set forth below and the other
information contained in this Prospectus when making your investment decisions.
FRONT-END SALES CHARGE SCHEDULE
CLASS A SHARES
<TABLE>
<CAPTION>
FRONT-END FRONT-END DEALER
SALES CHARGE SALES CHARGE ALLOWANCE
AS % OF AS % OF NET AS % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
------------------ ------------ ------------ ---------
<S> <C> <C> <C>
Less than $50,000 5.25% 5.54% 4.75%
$50,000 up to $99,999 4.50 4.71 3.75
$100,000 up to $249,999 3.50 3.63 2.75
$250,000 up to $499,999 2.50 2.56 2.00
$500,000 up to $999,999 2.00 2.04 1.75
$1,000,000 and over(1) 0.00 0.00 1.00
</TABLE>
(1) Class A shares purchased in amounts of $1,000,000 or more that are
redeemed within one year from the receipt of a purchase order for such
shares are subject to a contingent deferred sales charge of 1.00% of
the dollar amount equal to the lesser of the NAV at the time of
purchase or the NAV of such shares at the time of redemption.
If Class A shares are purchased through a selling agent, Stephens
reallows the portion of the front-end sales charge shown above as the Dealer
Allowance. Stephens also compensates selling agents for sales of Class B
shares and is then reimbursed out of Rule 12b-1 Fees and contingent-deferred
sales charges applicable to such shares. When shares are purchased directly
through the transfer agent and no selling agent is involved with the purchase,
the entire sales charge is paid to Stephens.
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 of the same fund.
REDUCED SALES CHARGES--CLASS A SHARES
Discounts described below pertaining to reduced sales charge for Class
A shares are based on your holdings or purchases of shares on which you have
paid or will pay a front-end sales charge. Because Class B shares do not
assess a front-end sales charge, the amount of Class B shares you hold is not
considered in determining any Volume Discount.
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<PAGE> 23
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
(including the Fund's Class A shares) of one or more of the Company's funds
which assess a front-end sales charge (the "Load Funds").
Right of Accumulation
The Right of Accumulation allows you to combine the amount you invest
in the Fund's Class A shares with the total NAV of shares in other 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 that you currently have invested in any other mutual fund that
assesses a front-end sales charge and is advised or sub-advised by Wells Fargo
Bank and distributed 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 another Load Fund, the front-end sales charge on
the additional $20,000 investment would be 3.50% of the offering price. To
obtain the 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 shares of a Load 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 in the
Load Funds that you already own. Each investment in shares of a Load Fund that
you make during the period may be made at the reduced front-end sales charge
that is applicable to the total amount you intend to invest. If you do not
invest the total amount within the period, you must pay the difference between
the higher front-end sales charge rate that would have been applied to the
purchases you made and the reduced front-end sales charge rate you have paid.
The minimum initial investment for a Letter of Intent is 5% of the total amount
you intend to purchase, as specified in the Letter. Shares of the Load Fund
you purchased equal to 5% of the total amount you intend to invest will be held
in escrow and, if you do not pay the difference within 20 days following the
mailing of a request, a sufficient amount of escrowed shares will be redeemed
for payment of the additional front-end sales charge. Dividends and capital
gains paid on such shares held in escrow are reinvested in additional Fund
shares.
Reinvestment
You may reinvest proceeds from a redemption of Class A shares in Class
A shares of the Fund or shares of another of the Company's funds registered in
your state of residence, 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 front-end sales charge that you
16
<PAGE> 24
paid in connection with the Class A shares you 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 your 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.
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 without payment of a front-end sales charge, to
the extent that: (i) you are investing proceeds from a redemption of shares of
another open-end investment company on which you paid a front-end sales charge,
and (ii) such redemption occurred within thirty (30) days prior to the date of
the purchase order. You must notify the Fund and/or the transfer agent at the
time you place such purchase order of your eligibility for the waiver of
front-end sales charges and provide satisfactory evidence thereof (e.g., a
confirmation of the redemption and the sales charges paid).
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 "related parties" of such company. For
purposes of this paragraph, a "related party" of a company is: (i) any
individual or other company who directly or indirectly owns, controls or has
the power to vote 5% percent or more of the outstanding voting securities of
such company; (ii) any other company of which such company directly or
indirectly owns, controls or has the power to vote 5% or more of its
outstanding voting securities; (iii) any other company under common control
with such company; (iv) any executive officer, director or partner of such
company or of a related party; and (v) any partnership of which such company is
a partner. Investors seeking to rely on their membership in a qualified group
to purchase shares at a reduced sales load must provide evidence satisfactory
to the transfer agent of the existence of a bona fide qualified group and their
membership therein.
Waivers for Certain Parties
Class A shares of the Fund may be purchased without a front-end sales
charge by: directors, officers and employees (and their respective spouses,
parents, children, siblings,
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<PAGE> 25
grandparents, grandchildren, father-in-law, mother-in-law, brothers-in-law,
sisters-in-law, aunts, uncles, nieces, and nephews; herein, "relatives") of the
Company, Stephens, its affiliates and of other broker/dealers that have entered
into agreements with Stephens to sell such shares. Class A shares of the Fund
also may be purchased without a front-end sales charge by present and retired
directors, officers and employees (and their relatives) of Wells Fargo Bank and
its affiliates if Wells Fargo Bank and/or the respective affiliates agree.
Such shares also may be purchased at such price by employee benefit and thrift
plans for such persons and by any investment advisory, trust or other fiduciary
account (other than an individual retirement account) that is maintained,
managed or advised by Wells Fargo Bank, Stephens or their affiliates.
Class A shares of the Fund may be purchased without a front-end sales
charge by the following types of investors when the trades are placed through
an omnibus account maintained with the Fund by a broker/dealer---trust
companies; deferred compensation plans and the trusts used to fund these plans;
investment advisers and financial planners who charge a management, consulting
or other fee for their services and who place trades on their own behalf or on
behalf of their clients; and clients of such investment advisers or financial
planners who place trades on their own behalf if the clients' accounts are
linked to the master account of such investment adviser or financial planner on
the books and records of the broker/dealer.
CONTINGENT-DEFERRED SALES CHARGE--CLASS B SHARES
Class B shares may be subject to a contingent-deferred sales charge
("CDSC"). A CDSC is an amount you pay if you redeem your shares within a
specified period. The CDSC will be equal to a percentage of the lesser of the
NAV of your shares at the time of purchase or the NAV of your shares at
redemption.
Except as described below, if you purchase Class B shares and redeem
such shares within six years of the date of purchase, the Class B shares are
subject to a CDSC as follows:
<TABLE>
<CAPTION>
REDEMPTION WITHIN: 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS
- ------------------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDSC: 5% 4% 3% 3% 2% 1%
</TABLE>
Contingent-deferred sales charges are not imposed on amounts
representing increases in NAV above the NAV at the time of purchase and are not
assessed on Class B shares purchased through reinvestment of dividends or
capital-gain distributions. Class B shares automatically convert into Class A
shares of the Fund six years after the end of the month in which such Class B
shares were acquired.
The amount of any 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
18
<PAGE> 26
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 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) in light of the
amount to be invested and the time that you anticipate owning the shares. If
your purchase amount 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 on Class B shares. See "Investing In The
Fund--Sales Charges" for information on reduced sales charges for Class A
shares.
You may buy shares 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 Class B)
Account Name(s): Name(s) in which to be registered
Account Number: (if investing into an existing account)
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<PAGE> 27
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.
2. Mail the Account Application and a check for $1,000 or more payable to
"Stagecoach Funds (International Equity Fund) (designate Class A or
Class B)," to the address set forth in "Initial Purchases by Wire."
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 your Fund account on a monthly basis. To
participate in the AutoSaver Plan, you must specify an amount ($100 or more) to
be withdrawn automatically by the transfer agent on a monthly basis from an
account with a bank that is designated in your Account Application and 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 generally 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. Certain restrictions may apply to shares
held in a brokerage account. The transfer agent requires a minimum of ten (10)
Business Days to implement your AutoSaver Plan purchases. If you hold shares
through a brokerage account, your AutoSaver Plan will comply with the terms of
your brokerage agreement. There are no separate fees charged to you by the
Fund for participating in the AutoSaver Plan.
You may change your investment amount, the date on which your
AutoSaver Purchase is effected, suspend purchases or terminate your election at
any time by providing notice to the transfer agent at least five (5) Business
Days prior to any scheduled transaction.
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<PAGE> 28
TAX-DEFERRED RETIREMENT PLANS
You may be entitled to invest in the Fund through a Plan Account or
other tax-deferred retirement plan. Contact a shareholder servicing agent or a
selling agent (such as Wells Fargo Bank) for materials describing Plan Accounts
available through it, and the benefits, provisions, and fees of such Plan
Accounts. The minimum initial investment amount for Fund shares acquired
through a Plan Account is $250 (the minimum initial investment amount is not
applicable if you participate in ExpressInvest through a Plan Account).
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 the Fund account is opened. You should ask
your shareholder servicing agent or selling agent about the investment options
available to your tax-deferred retirement plan, since some of the funds in the
Stagecoach Family of Funds may be unavailable as options. Moreover, certain
features described herein, such as the AutoSaver Plan and the Systematic
Withdrawal Plan, may not be available to individuals or entities who invest
through a tax-deferred retirement plan.
ADDITIONAL PURCHASES
You may make additional purchases of $100 or more by instructing the
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
(International Equity Fund) (designate Class A or Class B)" to the address set
forth under "Initial Purchases by Wire." Write your Fund account number on the
check and include the detachable stub from your Statement of Account or a
letter providing your Fund account number.
PURCHASES THROUGH SELLING AGENTS
You may place a purchase order for shares of the Fund through a
broker/dealer or financial institution that has entered into a selling
agreement with Stephens, as the Fund's Distributor ("Selling Agent"). If your
order is placed by the close of the NYSE, the purchase order is executed on the
same day if the order is received by the transfer agent before the close of
business. If your purchase order is received by a Selling Agent after the
close of the NYSE or by the transfer agent after the close of business, then
your purchase order is executed on the next Business Day following the day your
order is placed. The Selling Agent is responsible for the prompt transmission
of your purchase order to the Company. Because payment for shares of the Fund
is not due until settlement date, the Selling Agent might benefit from the
temporary use of your payment. A financial institution that acts as a Selling
Agent, shareholder servicing agent or in certain other capacities may be
required to register as a dealer pursuant to applicable state securities laws,
which may differ from federal law and any interpretations expressed herein.
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<PAGE> 29
PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS
Purchase orders for Fund shares 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 is executed on the next Business
Day following the day your order is received. The Shareholder Servicing Agent
is responsible for the prompt transmission of your purchase order to the
transfer agent.
STATEMENTS AND REPORTS
The Company, or a Shareholder Servicing Agent on its behalf, typically
sends you a confirmation or statement of your account after every transaction
that affects your share balance or your Fund account registration. Every
January, you will be provided a statement with tax information for the previous
year to assist you in tax return preparation. At least twice a year, you will
receive financial statements.
DIVIDEND AND CAPITAL
GAIN DISTRIBUTIONS
The Fund intends to distribute annually dividends of substantially all
of its net investment income. The Fund distributes any realized net capital
gains at least annually. You have several options for receiving dividend and
capital gain distributions. They are discussed under "Additional Shareholder
Services--Dividend and Capital Gain Distribution Options."
Dividend and capital gain distributions have the effect of reducing
the NAV per share by the amount distributed. Although distributions paid to
you on newly issued shares shortly after your purchase would represent, in
substance, a return of your capital, the distributions would ordinarily be
taxable to you. All expenses that are attributable to a particular class also
may affect the relative dividends and/or capital gains distributions of Class A
and Class B shares.
HOW TO REDEEM SHARES
You may redeem Fund shares on any Business Day. Your shares are
redeemed at the NAV next calculated after the Company has received your
redemption request in proper form. The Company ordinarily remits redemption
proceeds, net of any contingent deferred sales charge applicable with respect
to Class B shares (the "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
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<PAGE> 30
which an emergency exists as a result of which (a) disposal by the Fund of
securities owned by it is not reasonably practicable or (b) it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of security holders of the Fund. In addition,
the Company 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. In addition, the Fund
reserves the right to impose charges for wiring redemption proceeds.
All redemptions of shares generally are made in cash, except that the
commitment to redeem shares in cash extends only to redemption requests made by
each Fund shareholder during any 90-day period of up to the lesser of $250,000
or 1% of the net asset value of the Fund at the beginning of such period. This
commitment is irrevocable without the prior approval of the SEC and is a
fundamental policy of the Fund that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Directors reserves the right to have the Fund make
payment, in whole or in part, in securities or other assets, in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the securities of the Fund are
valued. If the recipient were to sell such securities, he or she would incur
brokerage costs in converting such securities to cash.
Due to the high cost of maintaining Fund accounts with small balances,
the Company reserves the right to close your account and send you the proceeds
if the balance falls below the applicable minimum balance because of a
redemption (including a redemption of shares of the Fund after an investor has
made only the applicable minimum initial investment). However, you will be
given 30 days' notice to make an additional investment to increase your account
balance to $1,000 or more. Plan Accounts are not subject to minimum Fund
account balance requirements. For a discussion of applicable minimum balance
requirements, see "Investing in the Fund--How To Buy Shares."
REDEMPTIONS BY TELEPHONE
Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline the
privileges. Telephone redemption privileges authorize the transfer agent to
act on telephone instructions from any person representing himself or herself
to be the investor and reasonably believed by the transfer agent to be genuine.
The Company requires the transfer agent to employ reasonable procedures, such
as requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Company and the
transfer agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Company nor the transfer agent will be liable for
following telephone instructions reasonably believed to be genuine.
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<PAGE> 31
REDEMPTIONS BY MAIL
1. Write a letter of instruction. Indicate the class, if applicable, and
the dollar amount or number of Fund shares you want to redeem. Refer
to your Fund account number and give your taxpayer identification
number ("TIN"), which generally is your social security or employer
identification number.
2. Sign the letter in exactly the same way the account is registered. If
there is more than one owner of the shares, all must sign.
3. Signature guarantees are not required for redemption requests unless
redemption proceeds of $5,000 or more are to be paid to someone other
than you at your address of record or your 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 address set forth under
"Investing in the Fund--Initial Purchases by Wire."
Unless other instructions are given in proper form, a check for your
net redemption proceeds is sent to your address of record.
EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE
You may request an expedited redemption of shares of the Fund by
letter, in which case your receipt of redemption proceeds, but not the Fund's
receipt of your redemption request, is expedited. In addition, you also may
request an expedited redemption of shares of the Fund by telephone on any
Business Day, in which case both your receipt of redemption proceeds and the
Fund's receipt of your redemption request is 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.
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 Fund--Initial Purchases by Wire."
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<PAGE> 32
Upon request, net redemption proceeds of your expedited redemptions of
$5,000 or more are wired or credited to an Approved Bank Account designated in
your Account Application or wired to the Selling Agent designated in your
Account Application. The Company reserves the right to impose a charge for
wiring redemption proceeds. When proceeds of your expedited redemption are to
be paid to someone else, to an address other than that of record, or to your
Approved Bank Account 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 are transmitted to your Approved Bank Account or Selling
Agent on the next Business Day (assuming your investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for net redemption proceeds 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
Company reserves the right to modify or terminate the expedited telephone
redemption privilege at any time.
SYSTEMATIC WITHDRAWAL PLAN
The Company's Systematic Withdrawal Plan provides you with a
convenient way to have Fund shares redeemed from your account and the net
redemption proceeds distributed to you on a monthly basis. You may participate
in the Systematic Withdrawal Plan only if you have the 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 Company for participating in the Systematic Withdrawal
Plan. However, you should not participate in the Systematic Withdrawal Plan if
you also are purchasing shares of a Fund 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.
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<PAGE> 33
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 is executed at the NAV determined as of the
close of the NYSE on that day. If your redemption order is received by a
Selling Agent after the close of the NYSE, or is not received by the transfer
agent prior to the close of business, your order is executed at the NAV
determined as of the close of the NYSE on the next Business Day. The Selling
Agent is responsible for the prompt transmission of your redemption order to
the Company.
Unless you have made other arrangements with the Selling Agent, and
the transfer agent has been informed of such arrangements, net redemption
proceeds of a redemption order made by you through a Selling Agent are credited
to your Approved Bank Account. If no such account is designated, a check for
the net redemption proceeds are mailed to your address of record or, if such
address is no longer valid, the net proceeds are credited to your account with
the Selling Agent. You may request a check from the Selling Agent or elect to
retain the net redemption proceeds in such account. The Selling Agent may
charge you a service fee. In addition, it may benefit from the use of your
redemption proceeds until the check it issues to you has cleared or until such
proceeds have been disbursed or reinvested on your behalf.
REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS
You may request a redemption of shares of the Fund through your
Shareholder Servicing Agent. Any redemption request made by telephone through
your Shareholder Servicing Agent must redeem shares with a total value equal to
$100 or more. If your redemption order is transmitted by the Shareholder
Servicing Agent, on your behalf, to the transfer agent before the close of the
NYSE, the redemption order is executed at the NAV determined as of the close of
the NYSE on that day. If your Shareholder Servicing Agent transmits your
redemption order to the transfer agent after the close of the NYSE, then your
order is executed on the next Business Day following the date your order is
received. The Shareholder Servicing Agent is responsible for the prompt
transmission of your redemption order to the Company.
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 is mailed
to your address of record or, if such address is no longer valid, the net
redemption proceeds are credited to your account with your Shareholder
Servicing Agent or to another account designated in your agreement with your
Shareholder Servicing Agent. 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.
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<PAGE> 34
ADDITIONAL SHAREHOLDER SERVICES
The Company offers you a number of optional services. As noted above,
you can take advantage of the AutoSaver Plan, Tax-Deferred Retirement Plans,
the Systematic Withdrawal Plan and Expedited Redemptions by Letter and
Telephone. In addition, you have several dividend and distribution payment
options and an exchange privilege, which are described below. If you have
questions about the distribution options available to you, please call
1-800-222-8222.
DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS
When you fill out your Account Application, you can choose from the
following distribution options listed below.
A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of
your dividend and capital gain distributions in additional shares of the same
class of the Fund which paid such dividends or capital gain distributions.
Distributions declared in a month generally are reinvested in additional shares
at NAV on the last business day of such month. You are assigned this option
automatically if you make no choice on your Account Application.
B. The FUND PURCHASE OPTION lets you use your dividend and/or
capital-gain distributions from the Fund to purchase, at NAV, shares of another
fund in the Stagecoach Family of Funds with which you have an established
account that has met the applicable minimum initial investment requirement.
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 a fund
offered by another investment company in the Stagecoach Family of Funds, in
Class A shares of the Government Money Market Mutual, Money Market Mutual,
Prime Money Market Mutual or Treasury Money Market Mutual Funds or in shares of
the California Tax-Free Money Market Mutual or National Tax-Free Money Market
Mutual Funds (collectively, the "Money Market Mutual Funds"). Distributions
paid on Class A shares may also be invested in shares of a non-money market
fund with a single class of shares (a "single class fund"). 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 dividend
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 Fund's dividend disbursing agent, the distribution is reinvested in your
Fund account at the NAV next determined after the distribution has been
returned. Your Automatic Clearing House Option is then converted automatically
to the Automatic Reinvestment Option.
D. The CHECK PAYMENT OPTION lets you receive a check for all dividend
and capital gain distributions, which generally is mailed either to your
designated address or your Approved Bank Account shortly following declaration.
If the U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, those checks are reinvested in your Fund account at
the NAV next determined after the earlier of the date the checks have been
returned to the Fund's
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<PAGE> 35
dividend disbursing agent or the date six months after the payment of such
distribution. Your Check Payment Option is then converted automatically to the
Automatic Reinvestment Option.
The Company forwards moneys to the dividend disbursing agent so that
it may issue you distribution checks under the Check Payment Option. The
dividend disbursing agent may benefit from the temporary use of such moneys
until these checks clear. The Company takes reasonable efforts to locate
investors whose checks are returned or uncashed after six months.
EXCHANGE PRIVILEGE
The exchange privilege is a convenient way to buy shares in another
fund of the Stagecoach Family of Funds to respond to changes in your investment
needs. You can exchange between the various funds as follows:
<TABLE>
<CAPTION>
EXCHANGE BETWEEN YES NO
- ---------------- --- --
<S> <C> <C>
Class A shares and a Money Market Mutual Fund X
Class A shares and Class A shares X
Class B shares and a Money Market Mutual Fund X
Class B shares and Class B shares X
Class A shares of a non-Money Market Mutual
Fund and Class B shares X
</TABLE>
Important factors that you should consider:
o You will need to read the prospectus of the fund into which
you want to exchange.
o Every exchange is a redemption of shares of one fund and a
purchase of shares of another fund.
o You must exchange at least the minimum initial purchase amount
of the fund you are redeeming, unless your balance has fallen
below that amount due to market conditions or you have already
met the minimum initial purchase amount of the fund you are
purchasing.
o If you exchange Class A shares, you will need to pay any
difference between a load that you have already paid and the
load that you are subject to in the new fund (less the
difference between any load already paid under the maximum 3%
load schedule and the maximum 4.50% schedule).
o You will not pay a contingent deferred sales charge on any
exchange from Class B shares into other Class B shares or a
Money Market Mutual Fund. The new shares will continue to age
while they are in the new fund and will be charged the
contingent deferred sales charge applicable to the original
shares upon redemption.
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<PAGE> 36
o If you exchange Class A or Class B shares for shares of a
Money Market Mutual Fund, you may not re-exchange shares of
the Money Market Mutual Fund for shares other than the
original exchanged class.
o The Company may limit the number of times shares may be
exchanged or may reject any telephone exchange order. Subject
to limited exceptions, the Company will notify you 60 days
before discontinuing or modifying the exchange privilege.
You may exchange shares by writing the Transfer Agent or, if you have
telephone privileges, you may call the Transfer Agent. Exchanges are subject
to the procedures and conditions applicable to purchasing and redeeming shares.
CONVERSION
Class B shares 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 the Fund and, consequently, will no longer be subject to
the higher Rule 12b-1 Fees applicable to Class B shares. Such conversion is on
the basis of the relative NAV of the two Classes, without the imposition of any
sales charge or other charge except that the lower Rule 12b-1 Fees applicable
to Class A shares shall thereafter be applied to such converted shares.
Because the per share NAV of the Class A shares may be higher than that of the
Class B shares at the time of conversion, a shareholder may receive fewer Class
A shares than the number of Class B shares converted, although the dollar value
will be the same. Reinvestments of dividend and capital gain distributions on
Class B shares are considered new purchases for purposes of the conversion
feature.
If a shareholder effects one or more exchanges among Class B shares of
any Fund or among shares of a Money Market Mutual Fund during the six-year
period, and exchanges back into Class B shares, the holding period for shares
so exchanged is counted toward the six-year period, and any Class B shares held
at the end of six years are converted into Class A shares.
MANAGEMENT, DISTRIBUTION AND
SERVICING FEES
INVESTMENT ADVISER
Subject to the overall supervision of the Company's Board of
Directors, Wells Fargo Bank, as the Fund's investment adviser provides
investment guidance and policy direction in connection with the management of
the Fund's assets and furnishes the Company's Board of Directors with periodic
reports on the Fund's investment strategies and performance.
For its services as investment adviser to the International Fund,
Wells Fargo Bank is entitled to monthly investment advisory fees at the annual
rate of 1.00% of the Fund's average daily net assets. From time to time, Wells
Fargo Bank may waive its advisory fees in whole or in part. Any such waiver
will reduce expenses of the Funds, and, accordingly, have a favorable
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<PAGE> 37
impact on the Fund's performance. From time to time, the Fund, consistent with
its investment objective, policies and restrictions, may invest in securities
of companies with which Wells Fargo Bank has a lending relationship.
TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank serves as the Fund's transfer and dividend disbursing
agent. Wells Fargo Bank performs its transfer and dividend disbursing agency
services at 525 Market Street, San Francisco, California 94105.
CUSTODIAN
Investors Bank & Trust Company ("IBT") has been retained to act as
custodian for the Fund. IBT performs its duties as custodian as well as
certain fund accounting services at 89 South Street, Boston, Massachusetts
02111.
SHAREHOLDER SERVICING AGENT
The Fund has entered into a shareholder servicing agreement with Wells
Fargo Bank on behalf of each class, 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
administrative services with respect to Fund shares, which include aggregating
and transmitting shareholder orders for purchases, exchanges and redemptions;
maintaining shareholder accounts and records, aggregating and placing purchase,
exchange and redemption transactions, and providing such other related services
as the Company or a shareholder may reasonably request. For these services, a
Shareholder Servicing Agent is entitled to receive a fee at an annual rate of
up to (i) 0.25% of the average daily net assets attributable to the shares of
the Class A or Class B shares. In no event will the fees paid exceed the
maximum amount payable to the Shareholder Servicing Agent under applicable
laws, regulations or rules, including the Conduct Rules of the NASD ("NASD
Rules").
Shareholder Servicing Agents also may impose certain conditions on
their customers, subject to the terms of this Prospectus, in addition to or
different from those imposed by the Company, such as requiring a higher minimum
initial investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of a Fund and to notify them
in writing at least 30 days before it imposes any transaction fees.
ADMINISTRATOR AND CO-ADMINISTRATOR
Subject to the overall supervision of the Company's Board of
Directors, Wells Fargo Bank and Stephens as administrator and co-administrator,
respectively, provide the Fund with administrative services, including general
supervision of the Fund's operation, coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and the
state securities commissions, preparation of proxy statements and shareholder
reports, and general
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<PAGE> 38
supervision of data compilation in connection with preparing periodic reports
to the Company's Directors and officers. Wells Fargo Bank and Stephens also
furnish office space and certain facilities to conduct the Fund's business, and
Stephens compensates the Company's Directors, officers and employees who are
affiliated with Stephens. For these administrative services, Wells Fargo Bank
and Stephens are entitled to receive monthly fees at the annual rates of 0.06%
and 0.04%, respectively, of the Fund's average daily net assets. Wells Fargo
Bank and Stephens may delegate certain of their administrative duties to
sub-administrators.
DISTRIBUTOR
Stephens is the Fund's co-administrator and distributes the Fund's
shares. Stephens is a full service broker/dealer and investment advisory firm
located at 111 Center Street, Little Rock, Arkansas 72201. Stephens and its
predecessor have been providing securities and investment services for more
than 60 years. Additionally, 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.
Stephens, as the principal underwriter of the Fund within the meaning
of the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens is responsible for distributing shares of the Fund.
The Company also has adopted a Distribution Plan on behalf of each class of
shares under the SEC's Rule 12b-1 ("Plans"). Under the Class A Plan the 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 paying on an annual basis up to 0.25% of
the average daily net assets attributable to such shares. Under the Class B
Plan, the 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 Plan
provides for payments, on an annual basis, of up to 0.75% of the average daily
net assets of the Fund. Other distribution-related services may include, among
other services, costs and expenses for advertisements, sales literature, direct
mail or any other form of advertising; expenses of sales employees or agents of
the Distributor, including salary, commissions, travel and related expenses;
payments to broker/dealers and financial institutions for services in
connection with the distribution of shares, including promotional incentives
and fees calculated with reference to the average daily net asset value of
shares held by shareholders who have a brokerage or other service relationship
with the broker/dealer or other institution receiving such fees; and other
similar services as the Directors determine to be reasonably calculated to
result in the sale of a Fund's shares.
In addition, the Plans contemplate that, to the extent any fees
payable pursuant to a shareholder servicing agreement (discussed above) are
deemed to be for distribution-related services, such payments are approved and
payable pursuant to the Plans, subject to any limits under applicable law,
regulations or rules, including the NASD Rules. Financial institutions acting
as Selling Agents, Shareholder Servicing Agents or in certain other capacities
may be required to register as dealers pursuant to applicable state securities
laws which may differ from federal law and any interpretations expressed
herein.
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<PAGE> 39
The Distribution Agreement provides that Stephens shall act as agent
for the Fund for the sale of its shares, and may enter into selling agreements
with Selling Agents that wish to make available shares of the Fund to its
customers. The Fund 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
the 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.
Stephens has established a cash and non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Company's 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 or the cash value of a non-cash
compensation item.
FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive their
respective fees in whole or in part and reimburse expenses payable to others.
Any such waivers or reimbursements will reduce the Fund's expenses and,
accordingly, have a favorable impact on the Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, the Fund bears all costs of
its operations, including its pro rata portion of Company expenses such as fees
and expenses of its independent auditors and legal counsel, and compensation of
the Company's directors who are not affiliated with the adviser, administrator
or any of their affiliates; advisory, transfer agency, custody and
administration fees; and any extraordinary expenses. Expenses attributable to
each fund or class are charged against the assets of the fund or class.
General expenses of the Company are allocated among all of the funds of the
Company in a manner proportionate to the net assets of each fund, on a
transactional basis, or on such other basis as the Company's Board of Directors
deems equitable.
TAXES
Distributions from the Fund's net investment income and net short-term
capital gains, if any, are designated as dividend distributions and taxable to
the Fund's shareholders as ordinary income. Distributions from the Fund's net
long-term capital gains are designated as capital gain distributions and
taxable to the Fund's shareholders as long-term capital gains. In general,
your distributions will be taxable when paid, whether you take such
distributions in cash or have them automatically reinvested in additional Fund
shares. However, distributions declared in October, November, and December and
distributed by the following January will be taxable as if they were paid by
December 31.
If more than 50% in value of the Fund's total assets at the close of
its taxable year consist of securities of non-U.S. corporations, the Fund will
be eligible to file an election with the Internal
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<PAGE> 40
Revenue Service pursuant to which shareholders of the Fund must (a) include
their respective pro rata portions of such withholding taxes in their Federal
income tax returns as gross income, (b) treat such amounts as foreign taxes
paid by them, and (c) either deduct such amounts in computing their taxable
incomes or use these amounts as foreign tax credits against their federal
income taxes. The Fund expects to meet the eligibility requirements for filing
this election because of its substantial investment in securities of non-U.S.
issuers and intends to make the election.
Your redemptions (including redemptions in-kind) and exchanges of Fund
shares will ordinarily result in a taxable capital gain or loss, depending on
the amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the cost of your shares. See "Federal Income Taxes--Disposition
of Fund Shares" in the SAI.
Foreign shareholders may be subject to different tax treatment,
including withholding taxes. See "Federal Income Taxes--Foreign Shareholders"
in the SAI. In certain circumstances, U.S. residents may also be subject to
withholding taxes. See "Federal Income Taxes--Backup Withholding" in the SAI.
The foregoing discussion regarding taxes is based on tax laws which
were in effect as of the date of this Prospectus and summarizes only some of
the important federal tax considerations generally affecting the Funds and
their shareholders. It is not intended as a substitute for careful tax
planning; you should consult your tax advisor with respect to your specific tax
situation as well as with respect to foreign, state and local taxes. Further
federal tax considerations are discussed in the SAI for the Fund.
33
<PAGE> 41
PROSPECTUS APPENDIX--
ADDITIONAL INVESTMENT POLICIES
FUND INVESTMENTS
Set forth below is a description of certain investments and additional
investment policies for the Fund.
Temporary Investments
The Fund may hold a certain portion of its assets in cash or
short-term investments in order to maintain adequate liquidity for redemption
requests or other cash management needs or for temporary defensive purposes
during periods of unusual market volatility. The short-term investments that
the Fund may purchase include, among other things, U.S. government obligations,
shares of money market mutual funds, repurchase agreements, obligations of
domestic banks and short-term obligations of foreign banks, corporations and
other entities. See "Additional Permitted Investment Activities" in the SAI
for additional information.
U.S. Government Obligations
The Fund may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government obligations").
Payment of principal and interest on U.S. Government obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the
U.S. Government will provide financial support to its agencies or
instrumentalities where it is not obligated to do so. In addition, U.S.
Government obligations are subject to fluctuations in market value due to
fluctuations in market interest rates. As a general matter, the value of debt
instruments, including U.S. Government obligations, declines when market
interest rates increase and rises when market interest rates decrease. Certain
types of U.S. Government obligations are subject to fluctuations in yield or
value due to their structure or contract terms.
Other Investment Companies
The Fund may invest in shares of other open-end, management investment
companies. The Fund may purchase shares of exchange-listed, closed-end funds.
The Fund also may invest in investment companies that are designed to replicate
the composition and performance of a particular index. For example, World
Equity Benchmark Shares (commonly known as "WEBS") are exchange traded shares
of open-end investment companies designed to replicate the composition and
performance of publicly traded issuers in particular foreign countries.
Investments in index baskets involve the same risks associated with a direct
investment in the types of securities included in the baskets.
A-1
<PAGE> 42
Repurchase Agreements
The Fund may enter into repurchase transactions in which the seller of
a security to a Fund agrees to repurchase that security from such Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. A Fund may enter into repurchase agreements only with respect to
securities that could otherwise be purchased by the Fund, and all repurchase
transactions must be collateralized. The Fund may incur a loss on a repurchase
transaction if the seller defaults and the value of the underlying collateral
declines or is otherwise limited or if receipt of the security or collateral is
delayed. The Fund may participate in pooled repurchase agreement transactions
with other funds advised by Wells Fargo Bank. See "Additional Permitted
Investment Activities" in the SAI for additional information.
Foreign Obligations and Securities
The foreign securities in which the Fund may invest include common
stocks, preferred stocks, warrants, convertible securities and other securities
of issuers organized under the laws of countries other than the United States.
Such securities also include equity interests in foreign investment funds or
trusts, real estate investment trust securities and any other equity or
equity-related investment whether denominated in foreign currencies or U.S.
dollars.
The Fund also may invest in foreign securities through American
Depositary Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"), European
Depositary Receipts ("EDRs"), International Depositary Receipts ("IDRs") and
Global Depositary Receipts ("GDRs") or other similar securities convertible
into securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs (sponsored or unsponsored) are receipts typically issued by a
U.S. bank or trust company and traded on a U.S. stock exchange, and CDRs are
receipts typically issued by a Canadian bank or trust company that evidence
ownership of underlying foreign securities. Issuers of unsponsored ADRs are
not contractually obligated to disclose material information in the U.S. and,
therefore, such information may not correlate to the market value of the
unsponsored ADR. EDRs and IDRs are receipts typically issued by European banks
and trust companies, and GDRs are receipts issued by either a U.S. or non-U.S.
banking institution, that evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for
use in Europe.
In addition, for temporary defensive purposes, the Fund may invest in
fixed income securities of non-U.S. governmental and private issuers. Such
investments may include bonds, notes, debentures and other similar debt
securities, including convertible securities. For a more complete discussion
of these securities, see the SAI.
A-2
<PAGE> 43
Emerging Markets
The Fund may invest up to 25% of its assets in equity securities of
companies in "emerging markets." Emerging markets are those financial markets
associated with emerging market countries as considered by the International
Bank for Reconstruction and Development (more commonly referred to as the World
Bank), the International Finance Corporation, and the international financial
community. Wells Fargo Bank may invest in those emerging markets that have a
relatively low gross national product per capita, compared to the world's major
economies, and which exhibit potential for rapid economic growth. The adviser
believes that investment in equity securities of emerging market issuers offers
significant potential for long-term capital appreciation.
There are special risks involved in investing in emerging market
countries. Most are heavily dependent on international trade, and some are
especially vulnerable to recessions in other countries. Many of these
countries are also sensitive to world commodity prices. Some countries may
still have obsolete financial systems, economic problems or archaic legal
systems. The currencies of certain emerging market countries, and therefore
the value of securities denominated in such currencies, may be more volatile
than currencies of developed countries. In addition, many of these nations are
experiencing political and social uncertainties. Many investments in emerging
markets can be considered speculative, and their prices can be much more
volatile than in the more developed nations of the world. This difference
reflects the greater uncertainties of investing in less established markets and
economies. The financial markets of emerging markets countries are generally
less well capitalized and thus securities of issuers based in such countries
may be less liquid. Further, such markets may be vulnerable to high inflation
and interest rates.
Hedging and Related Strategies
The Fund may attempt to protect the U.S. dollar equivalent value of
one or more of its investments (hedge) by purchasing and selling foreign
currency futures contracts and by purchasing and selling currencies on a spot
(i.e., cash) or forward basis. Foreign currency futures contracts are
bilateral agreements pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of a specified type of currency at a specified
future time and at a specified price. Although such futures contracts by their
terms call for actual delivery or acceptance of currency, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery. A forward currency contract involves an obligation to
purchase or sell a specific currency at a specified future date, which may be
any fixed number of days from the contract date agreed upon by the parties, at
a price set at the time the contract is entered into.
The Fund may enter into forward currency contracts for the purchase or
sale of a specified currency at a specified future date either with respect to
specific transactions or with respect to portfolio positions. For example, the
Fund may enter into a forward currency contract to sell an amount of a foreign
currency approximating the value of some or all of the Fund's securities
denominated in such currency. The Fund may use forward contracts in one
currency or a basket of currencies to hedge against fluctuations in the value
of another currency when Wells Fargo
A-3
<PAGE> 44
Bank anticipates there will be a correlation between the two and may use
forward currency contracts to shift the Fund's exposure to foreign currency
fluctuations from one country to another. The purpose of entering into these
contracts is to minimize the risk to the Fund from adverse changes in the
relationship between the U.S. dollar and foreign currencies.
Wells Fargo Bank might not employ any of the strategies described
above, and there can be no assurance that any strategy used will succeed. If
Wells Fargo incorrectly forecasts exchange rates, market values or other
economic factors in utilizing a strategy for the Fund, the Fund might have been
in a better position had it not might have been in a better position had it not
hedged at all. The use of these strategies involves certain special risks,
including (1) the fact that skills needed to use hedging instruments are
different from those needed to select the Fund's securities, (2) possible
imperfect correlation, or even no correlation, between price movements of
hedging instruments and price movements of the investments being hedged, (3)
the fact that, while hedging strategies can reduce the risk of loss, they can
also reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in hedged investments and (4) the possible inability
of the Fund to purchase or sell a portfolio security at a time that otherwise
would be favorable for it to do so, or the possible need for the Fund to sell a
portfolio security at a disadvantageous time, due to the need for the Fund to
maintain "cover" or to segregate securities in connection with hedging
transactions and the possible inability of a Fund to close out or to liquidate
its hedged position.
New financial products and risk management techniques continue to be
developed. The Fund may use these instruments and techniques to the extent
consistent with its investment objectives and regulatory and tax
considerations.
Warrants
The Fund may invest no more than 5% of its net assets at the time of
purchase in warrants (other than those that have been acquired in units or
attached to other securities). Warrants represent rights to purchase
securities at a specific price valid for a specific period of time. The prices
of warrants do not necessarily correlate with the prices of the underlying
securities. The Fund may only purchase warrants on securities in which the
Fund may invest directly.
Money Market Instruments
The Fund may invest in the following types of high quality money
market instruments that have remaining maturities not exceeding one year: (i)
U.S. Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by
the FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by
Moody's or "A-1" or "A-1+" by S&P, or, if unrated, of comparable quality as
determined by Wells Fargo Bank, as investment adviser; and (iv) repurchase
agreements. The Fund also may invest in short-term U.S. dollar-denominated
obligations of foreign banks (including U.S. branches) that at the time of
investment: (i) have
A-4
<PAGE> 45
more than $10 billion, or the equivalent in other currencies, in total assets;
(ii) are among the 75 largest foreign banks in the world as determined on the
basis of assets; (iii) have branches or agencies in the United States; and (iv)
in the opinion of Wells Fargo Bank, as investment adviser, are of comparable
quality to obligations of U.S. banks which may be purchased by the Fund.
Forward Commitments, When-Issued Purchases and Delay-Delivery Transactions
The Fund may purchase or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment
basis involve a risk of loss if the value of the security to be purchased
declines, or the value of the security to be sold increases, before the
settlement date. Although a Fund will generally purchase securities with the
intention of acquiring them, a Fund may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the adviser.
Privately Issued Securities (Rule 144A)
The Fund may invest in privately issued securities which may be resold
in accordance with Rule 144A under the Securities Act of 1933 ("Rule 144A
Securities"). Rule 144A Securities are restricted securities which are not
publicly traded. Accordingly, the liquidity of the market for specific Rule
144A Securities may vary. Delay or difficulty in selling such securities may
result in a loss to the Fund. Privately issued securities that are determined
by Wells Fargo Bank to be "illiquid" are subject to the Fund's policy of not
investing more than 15% of its net assets in illiquid securities.
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objective, as set forth in "How the Fund
Works--Investment Objective and Policies," is not fundamental; that is, it may
be changed without approval by the vote of the holders of a majority of the
Fund's outstanding voting securities, as described under "Capital Stock" in the
SAI for the Fund.
Fundamental Investment Policies
As matters of fundamental policy, the Fund may not: (i) purchase the
securities of issuers conducting their principal business activity in the same
industry if, immediately after the purchase and as a result thereof, the value
of the Fund's investments in that industry would be 25% or more of the current
value of the Fund's total assets, provided that there is no limitation with
respect to investments in obligations of the United States Government, its
agencies or instrumentalities; (ii) issue senior securities, except as
permitted by applicable law; (iii) purchase securities of any issuer (except
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities, including government-sponsored enterprises, ) if, as a
result, 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 hold more than 10% of the
outstanding voting securities of such issuer, except that up to
A-5
<PAGE> 46
25% of the value of the Fund's total assets may be invested without regard to
these limitations; or (iv) borrow money, except as permitted by applicable law.
Certain Non-Fundamental Investment Policies
As a matter of nonfundamental policy, the Fund may invest up to 15% of
the current value of its net assets in illiquid securities. For these
purposes, illiquid securities include, among others, (a) securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale, (b) fixed time deposits that are subject to
withdrawal penalties and that have maturities of more than seven days and (c)
repurchase agreements not terminable within seven days.
Illiquid securities shall not include securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act") that
have been determined to be liquid by the adviser, pursuant to guidelines
established by the Company's Board of Directors, or commercial paper that is
sold under Section 4(2) of the 1933 Act that (i) is not traded flat or in
default as to interest or principal, and (ii) is rated in one of the two
highest categories by at least two NRSROs and the adviser, pursuant to
guidelines established by the Company's Board of Directors, has determined the
commercial paper to be liquid or (iii) is rated in one of the two highest
categories by one NRSRO and the adviser, pursuant to guidelines established by
the Company's Board of Directors.
A-6
<PAGE> 47
Advised by WELLS FARGO BANK, N.A.
Distributed by Stephens Inc., Member NYSE/SIPC
NOT FDIC INSURED
<PAGE> 48
P.O. Box 7066
San Francisco, CA 94120-7066
STAGECOACH FUNDS:
o are NOT insured by the FDIC or U.S. Government
o are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the Bank
o involve investment risk, including possible loss of principal
Printed on Recycled Paper SCFO72(8/97)
<PAGE> 49
P.O. Box 7066
San Francisco, CA 94120-7066 BULK RATE
U.S. POSTAGE
PAID
DALLAS, TEXAS
Permit No. 1808
STAGECOACH FUNDS:
o are NOT insured by the FDIC or U.S. Government
o are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the Bank
o involve investment risk, including possible loss of principal
SCFO72 8/97
<PAGE> 50
PROSPECTUS
INTERNATIONAL EQUITY FUND
INSTITUTIONAL CLASS
August __, 1997
<PAGE> 51
STAGECOACH FUNDS(R)
INTERNATIONAL EQUITY FUND
INSTITUTIONAL CLASS
Stagecoach Funds, Inc. (the "Company") is an open-end management
investment company. This Prospectus contains information about Institutional
Class shares offered in the INTERNATIONAL EQUITY FUND (the "Fund") of the
Stagecoach Family of Funds.
The International Equity Fund seeks to earn total return (with an
emphasis on capital appreciation) over the long term, by investing primarily in
equity securities of non-U.S. companies.
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
the Fund's goals match your own. A Statement of Additional Information
("SAI"), dated August __, 1997, has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated by reference into this Prospectus. The
SAI is available free of charge by writing to Stagecoach Funds, Inc., c/o
Stagecoach Shareholder Services, Wells Fargo Bank, N.A., P.O. Box 7066, San
Francisco, CA 94120-7066, or by calling the Company at 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.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY
OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND
INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND ADMINISTRATOR, AND IS
COMPENSATED FOR PROVIDING THE FUND WITH CERTAIN OTHER SERVICES. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE
CO-ADMINISTRATOR AND DISTRIBUTOR FOR THE FUND.
PROSPECTUS DATED AUGUST __, 1997
<PAGE> 52
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Summary of Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . 4
How the Fund Works . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Fund and Management . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investing in the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dividend and Capital Gain Distributions . . . . . . . . . . . . . . . . . 16
Management and Servicing Fees . . . . . . . . . . . . . . . . . . . . . . 17
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Prospectus Appendix--Additional Investment Policies . . . . . . . . . . . A-1
</TABLE>
i
<PAGE> 53
PROSPECTUS SUMMARY
The Fund provides you with a convenient way to invest in a portfolio
of securities selected and supervised by professional management. The
following provides you with summary information about the Fund. For more
information, please refer to the identified Prospectus sections and generally
to this Prospectus and the Fund's SAI.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The International Equity Fund seeks to earn total return (with an
emphasis on capital appreciation) over the long term, by investing
primarily in equity securities of non-U.S. companies. The Fund
pursues its objective by investing its assets primarily in a portfolio
of common stocks, preferred stocks, warrants, convertible securities
and other securities of issuers located and operating in countries
other than the United States. Other eligible investments for the Fund
include, for example, American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and similar securities, as well as
securities of other investment companies.
See "How the Fund Works," "Prospectus Appendix--Additional Investment
Policies" and the SAI for further information on investments.
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?
A. An investment in the Fund is not insured against loss of principal.
When the value of the securities that the Fund owns declines, so does
the value of your shares of the Fund. Therefore, you should be
prepared to accept some risk with the money you invest in the Fund.
Moreover, because the Fund invests in foreign securities, you should
be prepared to accept the special risks associated with foreign
investing. These risks include, among others, fluctuations in
currency exchange rates, political risks, such as expropriation or
nationalization of assets, war and possible imposition of foreign
taxes and exchange control and currency restrictions. In addition to
these special risks, the portfolio equity and debt securities held by
the Fund also are subject to the risks commonly associated with any
investment in such securities. For example, the portfolio equity
securities of the Fund are subject to equity market risk. Equity
market risk is the risk that stock prices will fluctuate or decline
over short or even extended periods. Further, the portfolio debt
instruments of the Fund are, generally, subject to credit and
interest-rate risk. Credit risk is the risk that issuers of the debt
instruments in which the Fund invests may default on the payment of
principal and/or interest. Interest-rate risk is the risk that
increases in market interest rates may adversely affect the value of
the debt instruments in which the Fund invests and hence the value of
your investment in the Fund. As with all mutual funds, there can be
no assurance that the Fund will achieve its investment objective. See
"How the Fund Works--Investment Objective and Policies," "How the Fund
Works--Risk Factors" and "Prospectus Appendix -- Additional Investment
Policies" below and
1
<PAGE> 54
"Additional Permitted Investment Activities" in the SAI for further
information about the Fund's investments and related risks.
Q. WHO MANAGES MY INVESTMENT?
A. Wells Fargo Bank, as the Fund's investment adviser, manages your
investment. Wells Fargo Bank also provides administrative, transfer
and dividend disbursing agency services to the Fund. In addition,
Wells Fargo Bank is a shareholder servicing agent and a selling agent
and provides certain of these services to the Fund. See "The Fund's
and Management" and "Management, Distribution and Servicing Fees."
Q. HOW DO I INVEST?
A. Qualified investors may invest by purchasing Institutional Class
shares of the Fund at the net asset value per share without a sales
charge ("NAV"). Qualified investors include certain customers of
affiliate, franchise or correspondent banks of Wells Fargo & Company
and other selected institutions ("Institutions"). Customers may
include individuals, trusts, partnerships and corporations. Purchases
are effected through the customer's account with the Institution under
the terms of the customer's account agreement with the Institution.
Investors wishing to purchase the Fund's Institutional Class shares
should contact their account representatives. The minimum initial
purchase amount on Institutional Class shares is $2 million and the
minimum subsequent purchase amount on such shares is $25,000.
Investors in various fiduciary accounts and certain other investors
are not subject to minimum initial or subsequent purchase amount
requirements. See "Investing in the Fund" for additional information.
Q. HOW MAY I REDEEM SHARES?
A. Investors may redeem shares at NAV, without charge by the Company.
Institutional Class shares held by an Institution on behalf of its
customers must be redeemed under the terms of the customer's account
agreement with the Institution. Institutions are responsible for
transmitting redemption requests to the Company and crediting their
customers' accounts. The Company reserves the right to impost charges
for wiring redemption proceeds. See "Investing in the Fund --
Redemption of Institutional Class Shares."
Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?
A. Dividends of the International Equity Fund are declared and
distributed annually. Any capital gains are distributed by the Fund
at least annually. Dividend and capital gain distributions are
automatically reinvested in shares of the Institutional Class of the
Fund without a sales charge unless shareholders elect to receive
distributions in cash. Shareholders may also elect to reinvest
dividends in shares of certain other funds in the Stagecoach Family of
Funds with which they have an established account that has met the
applicable minimum initial investment requirement. Investment income
available for
2
<PAGE> 55
distribution to holders of Institutional Class shares is reduced by
the class expenses payable on behalf of those shares. See "Dividend
and Capital Gain Distributions" and "Additional Shareholder Services."
Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?
A. Derivatives are financial instruments whose value is derived, at least
in part, from the price of another security or a specified asset,
index or rate. Some of the permissible investments described in this
Prospectus, such as buying and selling foreign currency futures and
entering into forward foreign currency contracts, are considered
derivatives. However, Wells Fargo Bank will use such derivatives only
when it deems appropriate and only for limited purposes, such as to
reduce currency risk or gain exposure to specific markets. Some
derivatives may be more sensitive than direct securities to changes in
interest rates, exchange rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield, duration
or value due to their structure or contract terms.
Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES- RELATED RISKS?
A. Wells Fargo Bank uses a variety of internal risk management procedures
to ensure that derivatives use is consistent with the Fund's
investment objective, does not expose the Fund to undue risks and is
closely monitored. These procedures include providing periodic
reports to the Board of Directors concerning the use of derivatives.
Derivatives use by the Fund also is subject to broadly applicable
investment policies. For example, the 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
the Fund use certain derivatives without establishing adequate "cover"
in compliance with SEC rules limiting the use of leverage. For more
information on the Fund's investment activities, see "How the Fund
Works" and "Prospectus Appendix--Additional Investment Policies."
3
<PAGE> 56
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
INSTITUTIONAL CLASS SHARES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) None
Maximum Sales Load Imposed on
Reinvested Dividends None
Maximum Deferred Sales Load None
Exchange Fees None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
INSTITUTIONAL CLASS SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management Fee 1.00%
Rule 12b-1 Fee 0.00%
Other Expenses (1) 0.40%
-----
TOTAL FUND OPERATING EXPENSES (1) 1.40%
</TABLE>
(1)
EXAMPLE OF EXPENSES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses
on a $1,000 investment in Institutional Class
shares of the Fund, assuming a 5% annual
return and redemption at the end of
each time period indicated $ 14 $ 44
---- ----
</TABLE>
4
<PAGE> 57
EXPLANATION OF TABLES
The purpose of the foregoing tables is to help you understand the
various costs and expenses that a shareholder in the Fund will pay directly or
indirectly.
SHAREHOLDER TRANSACTION EXPENSES are charges investors pay when buying
or selling Fund shares. Institutional Class shares are sold with no
shareholder transaction charges imposed by the Company. The Company reserves
the right to impose a charge for wiring redemption proceeds. There are no
exchange fees.
ANNUAL FUND OPERATING EXPENSES for the Fund, except as indicated
above, are based on applicable contract amounts and amounts the Fund expects to
incur during its first fiscal year. [THESE AMOUNTS HAVE BEEN ADJUSTED TO
REFLECT VOLUNTARY FEE WAIVERS OR REIMBURSEMENTS THAT ARE EXPECTED TO REDUCE
EXPENSES DURING THE CURRENT YEAR.] The amounts shown under "Management Fee"
and "Rule 12b-1 Fee" are based on applicable contract amounts. The amount
shown under "Other Expenses" for the Fund is based on estimated amounts
expected to be in effect during the first fiscal year. Wells Fargo Bank and
Stephens at their sole discretion may waive or reimburse all or a portion of
their respective fees charged to, or expenses paid by, the Fund. Any waivers
or reimbursements would reduce the Fund's total expenses. For more complete
descriptions of the various costs and expenses you can expect to incur as a
shareholder in the Fund, please see "Investing in the Fund--How To Buy Shares"
and "Management and Servicing Fees."
EXAMPLE OF EXPENSES is a hypothetical illustration of the expenses
associated with a $1,000 investment over stated periods, based on the expenses
in the above tables 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 the Fund nor a representation of past or future expenses; actual
expenses and returns may be greater or less than those shown.
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HOW THE FUND WORKS
INVESTMENT OBJECTIVE AND POLICIES
The International Equity Fund seeks to earn total return (with an
emphasis on capital appreciation) over the long term, by investing primarily in
equity securities of non-U.S. companies. In seeking to achieve its objective,
the Fund intends to invest at least 80% of its assets in a diversified
portfolio of equity securities of companies located or operating in major
non-U.S. countries and emerging markets of the world. It is expected that
securities held in the Fund will ordinarily be traded on a stock exchange or
other market (such as an over-the-counter market) in the country in which the
issuer is principally based, but also may be traded in other countries
including, in many cases, the United States. Equity securities in the
portfolio will include, among others, common stocks, preferred stocks,
warrants, convertible instruments, ADRs, GDRs and similar securities, as well
as securities of other investment companies.
As adviser to the Fund, Wells Fargo Bank intends to apply a
fundamentals-driven/value-oriented stock selection process, identifying
companies with an above-average potential for long-term growth. Several key
fundamental criteria are considered, such as a company's distinguishable
franchise on a local, regional or global basis; a history of effective
management demonstrated by expanding revenues and earnings growth; prudent
financial and accounting policies; and by an ability to capitalize on a
changing business environment. Valuation factors based on historical and
forecast data also are employed to determine the relative attractiveness of the
security. It is expected that the average market capitalization of issuers
represented in the Fund's portfolio will be US$10 billion or more. The Fund
may, however, invest in equity securities of issuers with market capitalization
as low as US$250 million.
The Fund intends to allocate its assets among a variety of countries,
regions and industry sectors, investing in a minimum of five countries
exclusive of the United States. In allocating among countries, regions and
industry sectors, factors such as economic growth prospects, monetary and
fiscal policies, political stability, currency trends, market liquidity and
investor sentiment are considered. The Fund may invest up to 50% of its total
assets in any one country and up to 25% of its total assets in securities of
issuers located and operating primarily in emerging market countries. Emerging
market countries include those financial markets associated with "emerging"
countries as considered by the International Bank for Reconstruction and
Development, the International Finance Corporation, and the international
financial community. There are presently over 130 countries that may be
considered "emerging." Of this number, however, only approximately 30
countries currently are considered viable investment areas. As countries
develop, additional markets may open to foreign investors.
The International Equity Fund may temporarily hold cash or purchase
short-term instruments to the extent appropriate to maintain adequate liquidity
for redemption requests or other cash management needs. The short-term
instruments that the Fund may purchase include U.S. Treasury bills, shares of
money market mutual funds and repurchase agreements. In addition, when, in the
opinion of Wells Fargo Bank, abnormal market or economic conditions
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warrant, the Fund may, for temporary defensive purposes, hold cash, short term
instruments and debt or equity securities of U.S. and non-U.S. issuers without
limitation.
Although Wells Fargo Bank generally does not intend to hedge the
Fund's foreign currency exposure, it reserves the right to hedge by purchasing
or selling foreign currency futures and forward foreign currency contracts.
Because the Fund will be investing in securities of non-U.S. issuers,
investment risk and certain fees (such as custodial, securities transaction,
and securities registration fees) may be higher than the fees incurred by funds
investing solely in U.S. securities. For a description of these and other
risks and considerations, see "Risk Factors" below.
Wells Fargo Bank anticipates that most of the Fund's investments will
be long-term in character. However, the Fund's portfolio turnover rate will be
impacted by market and other conditions and will not serve to limit the
discretion of Wells Fargo Bank if it believes portfolio changes are
appropriate. It is anticipated that the Fund's portfolio turnover rate will
not exceed 100% under normal market conditions.
There can be no assurance that the Fund, which is a diversified
portfolio, will achieve its investment objective. The Fund's investment
objective is not a fundamental policy of the Fund and therefore may be changed
by the Company's Board of Directors without shareholder approval. A more
complete description of the Fund's investments and investment activities is
contained in "Prospectus Appendix--Additional Investment Policies" and in the
SAI.
RISK FACTORS
The International Equity Fund is intended for investors who are
seeking long-term capital appreciation and who are prepared to accept the risks
associated with investing in foreign securities markets. Foreign securities
held by the Fund, including for this purpose ADRs, GDRs and similar securities,
involve special risks and considerations not typically associated with
investing in U.S. companies. These risks include differences in accounting,
auditing and financial reporting standards; generally higher commission rates
on foreign portfolio transactions; the possibility of nationalization,
expropriation or confiscatory taxation; adverse changes in investment or
exchange control regulations (which may include suspension of the ability to
transfer currency from a country); and political, social and monetary or
diplomatic developments that could affect U.S. investments in foreign
countries. There may be less publicly available information about a foreign
company than about a U.S. company and information that is available may be less
reliable. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and
volume than domestic securities and, therefore, may exhibit greater price
volatility. Additional costs associated with an investment in foreign
securities may include higher custodial fees than apply to domestic custodial
arrangements and transaction costs of foreign currency conversions. Changes in
foreign exchange rates also will affect the value of securities denominated or
quoted in currencies other than the U.S. dollar. The Fund's performance may be
affected either unfavorably or favorably by fluctuations in the relative rates
of exchange between the currencies of different nations, by exchange control
regulations and by
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indigenous economic and political developments. Transactions in foreign
securities may be subject to less efficient settlement practices. Moreover,
foreign securities trading practices, including those involving securities
settlement where Fund assets may be released prior to receipt of payment, may
expose a Fund to increased risk in the event of a failed trade or the
insolvency of a foreign broker-dealer. Finally, in the event of litigation
relating to a portfolio investment, the Fund may encounter substantial
difficulties in obtaining and enforcing judgments against non-U.S. resident
individuals and corporations. Investors should carefully consider the
appropriateness of foreign investing in light of their financial objectives and
goals.
Because foreign securities ordinarily are denominated in currencies
other than the U.S. dollar (as are some securities of U.S. issuers), changes in
foreign currency exchange rates will affect the Fund's net asset value, the
value of dividends and interest earned, gains and losses realized on the sale
of securities and net investment income and capital gains, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of Fund assets denominated in that
currency will increase; correspondingly, if the value of a foreign currency
declines against the U.S. dollar, the value of Fund assets denominated in that
currency will decrease. The exchange rates between the U.S. dollar and other
currencies are determined by supply and demand in the currency exchange
markets, international balances of payments, speculation and other economic and
political conditions. In addition, some foreign currency values may be
volatile and there is the possibility of governmental controls on currency
exchange or governmental intervention in currency markets. Any of these
factors could adversely affect the Fund.
Further, there are special risks involved in investing in issuers in
emerging market countries. Most emerging market countries are heavily
dependent on international trade, and some are especially vulnerable to
recessions in other countries. Some of these countries are also sensitive to
world commodity prices and may be subject to political and social
uncertainties. The currencies of developing countries, and therefore the value
of securities denominated in such currencies, may be more volatile than
currencies of developed countries. Many investments in emerging markets can be
considered speculative, and their prices can be much more volatile than in the
more developed nations of the world. This difference reflects the greater
uncertainties of investing in less established markets and economies. In
addition, the financial markets of emerging market countries are generally less
well capitalized and thus securities of issuers based in such countries may be
less liquid. Further, such markets may be vulnerable to high inflation and
interest rates.
In addition to the risks associated with investments in foreign
securities, the Fund's portfolio equity securities are subject to the risks
commonly associated with any investment in equity securities. For example, the
portfolio equity securities of the Fund are subject to equity market risk.
Equity market risk is the risk that stock prices will fluctuate or decline over
short or extended periods. Further, because the Fund may, under certain
limited circumstances, invest in debt securities, the portion of the Fund's
portfolio so invested will, generally, be subject to credit and interest-rate
risk. Credit risk is the risk that issuers of the debt instruments in which
the Fund invests may default on the payment of principal and/or interest.
Interest-rate risk is the risk that increases in market interest rates may
adversely affect the value of the debt instruments in which
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the Fund invests and hence the value of your investment in the Fund. The
market value of the Fund's investment in fixed-income securities will change in
response to changes in interest rates and the relative financial strength of
each issuer. During periods of falling interest rates, the value of
fixed-income securities generally rises. Conversely, during periods of rising
interest rates, the value of such securities generally declines. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular security also may affect the
value of these investments. Fluctuations in the market value of fixed-income
securities subsequent to their acquisition will not affect cash income from
such securities but will be reflected in a Fund's net asset value.
Illiquid securities, which may include certain restricted securities,
may be difficult to sell promptly at an acceptable price. Certain restricted
securities may be subject to legal restrictions on resale. Delay or difficulty
in selling securities may result in a loss or be costly to a Fund.
Wells Fargo Bank may use certain derivative investments or techniques,
such as buying and selling foreign currency futures contracts and entering into
forward foreign currency contracts, to adjust the risk and return
characteristics of the Fund's portfolio. Derivatives are financial instruments
whose value is derived, at least in part, from the price of another security or
a specified asset, index or rate. Some 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. If Wells Fargo Bank judges market
conditions incorrectly, the use of certain derivatives could result in a loss,
regardless of its intent in using the derivatives.
There is, of course, no assurance that the Fund will achieve its
investment objective or be successful in preventing or minimizing the risk of
loss that is inherent in investing in particular types of investment products.
See "Prospectus Appendix--Additional Investment Policies" and the SAI for
further information about investment policies and risks.
PERFORMANCE
Fund performance may be advertised from time to time in terms of
average annual total return or cumulative total return. Performance figures
are based on historical results and are not intended to indicate future
performance. Performance figures are calculated separately for each class of
shares of the Fund.
Average annual total return of the Institutional Class shares is based
on the overall dollar or percentage change in value of a hypothetical
investment in the Institutional Class shares and assumes that all dividends and
capital-gain distributions attributable to such class are reinvested at NAV in
shares of the class. Cumulative total return is calculated similarly except
that the return figure is aggregated over the relevant period instead of
annualized.
In addition to presenting standardized performance figures, the Fund
also may present nonstandardized performance figures, including distribution
rates. Because of the differences in
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the fees and/or expenses borne by shares of each class of the Fund the
performance figures of one class of shares can be expected, a any given time,
to vary from the performance figures for the other classes of the Fund.
Additional information about the performance of the Fund is contained
in the SAI under "Performance Calculations" and will be in the Company's next
Annual Report, dated approximately May 1998, which may be obtained free of
charge by calling the Company at 1-800-222-8222 or by writing the Company at
the address on the inside front cover of the Prospectus.
THE FUND AND MANAGEMENT
THE FUND
The Fund is one of twenty-seven funds offered by the Stagecoach Family
of Funds. The Company was organized as a Maryland corporation on September 9,
1991. Most of the Company's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, a class subject to a contingent-deferred sales charge, that are offered
to retail investors. Certain of the Company's funds also are authorized to
issue other classes of shares, which are sold primarily to institutional
investors at NAV. Each class of shares represents an equal, proportionate
interest in a Fund with other shares of the same class. Shareholders of each
class bear their pro rata portion of a Fund's operating expenses except for
certain class-specific expenses that are allocated to a particular class and,
accordingly, may affect performance. Please contact Stagecoach Shareholder
Services at 1-800-222-8222 if you would like additional information about
investment options in the Stagecoach Family of Funds.
The Company's Board of Directors supervises the Fund's activities and
monitors its contractual arrangements with various service providers. Although
the Company is not required to hold annual shareholder meetings, special
meetings may be required for purposes such as electing or removing Directors,
approving advisory contracts and distribution plans, and changing the fund's
investment objective or fundamental investment policies. All shares of the
Company have equal voting rights and are 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). All shareholders of record are
entitled to one vote for each share owned 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.
MANAGEMENT
Wells Fargo Bank is the investment adviser to the Fund. In addition,
Wells Fargo Bank serves as the Fund's administrator, transfer and dividend
disbursing agent and is a shareholder servicing agent and selling agent. 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 March 31, 1997,
Wells Fargo Bank and its affiliates provided investment advisory services for
approximately $57 billion of assets of individuals, trusts, separately-managed
estates and institutions. Wells
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Fargo Bank also serves as investment adviser to the other funds 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.
PORTFOLIO MANAGERS
Ms. Katherine Schapiro is primarily responsible for the day-to-day
management of the Fund. She joined Wells Fargo Bank in August 1992, where she
directs international equity investment strategy. Ms. Schapiro currently
manages a number of international equity portfolios. Ms. Schapiro also manages
equity and balanced portfolios for institutions and individuals through Wells
Capital Management, a wholly-owned subsidiary of Wells Fargo Bank, and serves
on the Equity Strategy Committee. Prior to joining Wells Fargo Bank, Ms.
Schapiro was a vice president and fund manager for Newport Pacific Management,
an international investment advisory firm. Ms. Schapiro is a graduate of
Stanford University, is a Chartered Financial Analyst and is on the board of
directors of the Security Analysts of San Francisco.
Ms. Stacey Ho is a co-manager for the Fund. Ms. Ho analyzes foreign
equity securities and manages other equity portfolios for Wells Fargo Bank and
Wells Capital Management as part of its International Equity-Style Team. Prior
to joining Wells Fargo Bank this year, Ms. Ho was employed by Clemente Capital
Management where she had responsibility for Asian equities and was a member of
an international and emerging markets portfolio management team. Ms. Ho was
employed by Clemente Capital Management from 1995 through late 1996. From 1990
to 1995, Ms. Ho was employed by Edison International where her responsibilities
included managing a Japan equity portfolio, a U.S. equity portfolio, and the
domestic equity managers for Edison International's pension fund. Ms. Ho has a
BS in Civil Engineering from San Diego State University and a MS in
Environmental Engineering from Stanford University. She received her MBA from
UCLA. Ms. Ho is currently working toward her Chartered Financial Analyst
designation.
_______________________________________
Morrison & Foerster LLP, counsel to the Company and special counsel to
Wells Fargo Bank, has advised the Company and Wells Fargo Bank that Wells Fargo
Bank and its 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
decisions in this regard 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.
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INVESTING IN THE FUND
PURCHASE OF INSTITUTIONAL CLASS SHARES
The minimum initial purchase amount on Institutional Class shares is
$2 million and the minimum subsequent purchase amount on such shares is
$25,000. Investors in various fiduciary accounts and certain other investors
are not subject to minimum initial or subsequent purchase amount requirements.
Institutional Class shares of the Fund are sold at NAV (without a
sales charge) on a continuous basis primarily to certain customers
("Customers") of affiliate, franchise or correspondent banks of Wells Fargo &
Company and other selected institutions (previously defined as Institutions).
Customers may include individuals, trusts, partnerships and corporations. Share
purchases are effected through a Customer's account at an Institution under the
terms of the Customer's account agreement with the Institution, and
confirmations of share purchases and redemptions are sent by the Funds to the
Institution involved. Institutions (or their nominees), acting on behalf of
their Customers, normally are the holders of record of Institutional Class
shares. Customers' beneficial ownership of Institutional Class shares is
reflected in the account statements provided by Institutions to their
Customers. The exercise of voting rights and the delivery to Customers of
shareholder communications from the Funds is governed by the Customers' account
agreements with an Institution. Investors wishing to purchase Institutional
Class shares of the Funds should contact their account representatives.
Institutional Class shares may be purchased on any day the Fund is
open. The Fund is open for business each day the New York Stock Exchange
("NYSE") is open for trading (a "Business Day"). Institutional Class shares of
the Fund are sold at the NAV per share next determined after a purchase order
has become effective. Purchase orders placed by an Institution for
Institutional Class shares in the Fund must be received by the Company by 1:00
p.m. (Pacific time) on any Business Day. Payment for such shares may be made
by Institutions in federal funds or other funds immediately available to the
custodian no later than 1:00 p.m. (Pacific time) on the next Business Day
following the receipt of the purchase order.
Institutions are responsible for transmitting orders for purchases by
their Customers and delivering required funds on a timely basis. If funds are
not received within the periods described above, the order will be canceled,
notice thereof will be given, and the Institution will be responsible for any
loss to the Fund or its shareholders. Institutions may charge certain account
fees depending on the type of account the investor has established with the
Institution. In addition, an Institution may receive fees from the Fund with
respect to the investments of its Custodian as described under "Management and
Servicing Fees." Payment for Institutional Class shares of the Fund may, in
the discretion of the investment adviser, be made in the form of securities
that are permissible investments for the Fund. For further information see
"Additional Purchase and Redemption Information" in the SAI.
The Company reserves the right to reject any purchase order or to
suspend sales at any time. Payment for orders that are not received will be
returned after prompt inquiry. The
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issuance of Institutional Class shares is recorded on the Company's books, and
share certificates are not issued.
The Company or Stephens may make the Prospectus available in an
electronic format. Upon receipt of a request from an investor or the
investor's representative, the Company or Stephens will transmit or cause to be
transmitted promptly, without charge, a paper copy of the electronic
Prospectus.
SHARE VALUE
The value of a share of each class of the Fund is its "net asset
value" or NAV. Wells Fargo Bank calculates the NAV of each class of shares of
the Fund on each day the Fund is open as of the close of regular trading on the
New York Stock Exchange ("NYSE") (referred to hereafter as "the close of the
NYSE"), which is currently 1:00 p.m. (Pacific time). The Fund is open for
business on each day the NYSE is open for trading (a "Business Day"). The NAV
per share for each class of shares is calculated by dividing the value of the
Fund's assets allocable to a particular class, less the liabilities charged to
that class, by the total number of outstanding shares of the class. All
expenses are accrued daily and taken into account for purposes of calculating
NAV, which is expected to fluctuate daily. Shares may be purchased on any day
the Fund is open for business. Due to timing differences, the NAV may not be
calculated using closing values on all exchanges.
The Fund's 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.
WIRE INSTRUCTIONS -- DIRECT PURCHASES BY INSTITUTIONS
1. Complete an Account Application.
2. Instruct the wiring bank to transmit the specified amount in federal
funds to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund) (designate Institutional Class)
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:
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Wells Fargo Bank, N.A.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the NAV next determined after the
Account Application is received and accepted.
STATEMENTS AND REPORTS
Institutions (or their nominees) typically send investors a
confirmation or statement of the account after every transaction that affects
their share balance or the Fund account registration. Every January, you will
be provided a statement with tax information for the previous year to assist
you in tax return preparation. At least twice a year, shareholders receive
financial statements.
REDEMPTION OF INSTITUTIONAL CLASS SHARES
Redemption requests are effected at the NAV per share next determined
after receipt of a redemption request in good order by the Company.
Institutional Class shares held by an Institution on behalf of its Customers
must be redeemed in accordance with instructions and limitations pertaining to
the Customer's accounts at the Institution. Institutions are responsible for
transmitting redemption requests to the Company and crediting its Customers'
accounts with the redemption proceeds on a timely basis. The redemption
proceeds for Institutional Class shares of the Fund normally are wired to the
redeeming Institution the following Business Day after receipt of the request
by the Company. The Company reserves the right to delay the wiring of
redemption proceeds for up to seven days after it receives a redemption order
if, in the judgment of the investment adviser, an earlier payment could
adversely affect the Funds or unless the SEC permits a longer period under
extraordinary circumstances. Such extraordinary circumstances could include a
period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by them is not reasonably practicable or (b) it is
not reasonably practicable for the Fund to fairly determine the value of their
net assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of security holders of the Fund.
With respect to shareholders who do not have a relationship with an
Institution, shares of the Fund may be redeemed by writing or calling the Fund
directly at the address and phone number shown on the first page of the
Prospectus. When Institutional Class shares are redeemed directly from the
Fund, the Fund ordinarily send the proceeds by check to the shareholder at the
address of record on the next Business Day unless payment by wire is requested.
The Fund may take up to seven days to make payment, although this will not be
the customary practice. Also, if the NYSE is closed (or when trading is
restricted) or any reason other than the customary weekend or holiday closing
or if an emergency condition as determined by the SEC merits such action, the
Fund may suspend redemptions or postpone payment dates.
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To be accepted by the Fund, a letter requesting redemption must
include: (i) the Fund's name and account registration from which the
Institutional Class shares are being redeemed; (ii) the account number; (iii)
the amount to be redeemed; (iv) the signatures of all registered owners; and
(v) a signature guarantee by any eligible guarantor institution. An "eligible
guarantor institution" 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.
All redemptions of Institutional Class shares of the Fund are made in
cash, except that the commitment to redeem Institutional Class shares in cash
extends only to redemption requests made by each Fund shareholder during any
90-day period of up to the lesser of $250,000 or 1% of the NAV of the Fund at
the beginning of such period. This commitment is irrevocable without the prior
approval of the SEC and is a fundamental policy of the Fund that may not be
changed without shareholder approval. In the case of redemption requests by
shareholders in excess of such amounts, the Board of Directors reserves the
right to have the Fund make payment, in whole or in part, in securities or
other assets, in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing shareholders.
In this event, the securities would be valued in the same manner as the
securities of the Fund are valued. If the recipient were to sell such
securities, the investor would incur brokerage costs in converting such
securities to cash.
REDEMPTIONS BY TELEPHONE
Telephone redemption or exchange privileges authorize the transfer
agent to act on telephone instructions from any person representing himself or
herself to be the investor and reasonably believed by the transfer agent to be
genuine. The Company requires the transfer agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Company and the transfer agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Company nor the transfer agent will be
liable for following telephone instructions reasonably believed to be genuine.
EXCHANGES
The Fund offers a convenient way to exchange Institutional Class
shares in the Fund for Institutional Class shares in another fund of the
Company. Before engaging in an exchange transaction, an investor should read
carefully the Prospectus describing the fund into which the exchange will
occur, which is available without charge and can be obtained by writing or by
calling the Company at the address or phone number listed on the first page of
the Prospectus. A shareholder may not exchange Institutional Class shares of
one fund for Institutional Class shares of another fund if Institutional Class
shares of both funds are not qualified for sale in the state of
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the shareholder's residence. The Company may terminate or amend the terms of
the exchange privilege at any time.
Exchange transactions are effected through a Customer's account at an
Institution under the terms of the Customer's account agreement with the
Institution, and confirmations of share exchanges are sent by the Fund to the
Institution involved. Institutions (or their nominees), acting on behalf of
their Customers, normally are the holders of record of Institutional Class
shares. Institutions are responsible for transmitting orders for exchanges to
the Company on a timely basis. Investors should receive written confirmation
of the exchange from the Institution within a few days of the completion of the
transaction. In addition, customers' exchange transactions are generally
reflected in the account statements provided by Institutions to their
Customers. Investors wishing to exchange Institutional Class shares of the
Fund for Institutional Class shares of another fund should contact their
account representatives. Investors with questions may call the Company at
1-800-260-5969.
A new account opened by exchange must be established with the same
name(s), address and social security number as the existing account. All
exchanges are made at the NAV of the respective funds next determined following
receipt of the request by the Company in good order.
To exchange Institutional Class shares, or if you have any questions,
simply call the Company at 1-800-260-5969. A shareholder of record should be
prepared to give the telephone representative the following information: (i)
the account number, social security or taxpayer identification number and
account registration; (ii) the name of the fund from and the fund into which
the transfer is to occur; and (iii) the dollar or share amount of the exchange.
The conversation may be recorded to protect shareholders and the Company.
Telephone exchanges are available unless the shareholder of record has declined
the privilege on the Purchase Application.
In addition, Institutional Class shares of the Fund may be exchanged
for the Fund's Class A shares in connection with the distribution of assets
held in a qualified trust, agency or custodial account maintained with the
trust department of a Wells Fargo Bank or another bank, trust company or thrift
institution, or in other cases where Institutional Class shares are not held in
such qualified accounts. Similarly, Class A shares may be exchanged for the
Fund's Institutional Class shares if the shares are to be held in such a
qualified trust, agency or custodial account. These exchanges are made at the
respective NAVs of the Institutional Class shares next determined after the
exchange request is received by the Company.
DIVIDEND AND CAPITAL
GAIN DISTRIBUTIONS
The Fund intends to distribute quarterly dividends of substantially
all of its net investment income. The Fund distributes any realized net
capital gains at least annually.
Dividend and capital gain distributions have the effect of reducing
the NAV per share by the amount distributed. Although distributions paid on
newly issued shares shortly after a
16
<PAGE> 69
purchase would represent, in substance, a return of capital, the distributions
would be attributable to net investment income, or capital-gain and,
accordingly, would be taxable to you. All expenses that are attributable to a
particular class also may affect the relative dividends and/or capital gain
distributions of Institutional Class shares.
MANAGEMENT AND SERVICING FEES
INVESTMENT ADVISER
Subject to the overall supervision of the Company's Board of
Directors, Wells Fargo Bank, as the Fund's investment adviser provides
investment guidance and policy direction in connection with the management of
the Fund's assets and furnishes the Company's Board of Directors with periodic
reports on the Fund's investment strategies and performance.
For its services as investment adviser to the International Fund,
Wells Fargo Bank is entitled to monthly investment advisory fees at the annual
rate of 1.00% of the Fund's average daily net assets. From time to time, Wells
Fargo Bank may waive its advisory fees in whole or in part. Any such waiver
will reduce expenses of the Funds, and, accordingly, have a favorable impact on
the Fund's performance. From time to time, the Fund, consistent with its
investment objective, policies and restrictions, may invest in securities of
companies with which Wells Fargo Bank has a lending relationship.
TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank serves as the Fund's transfer and dividend disbursing
agent. Wells Fargo Bank performs its transfer and dividend disbursing agency
services at 525 Market Street, San Francisco, California 94105.
CUSTODIAN
Investors Bank & Trust Company ("IBT") has been retained to act as
custodian for the Fund. IBT performs its duties as custodian, as well as
certain fund accounting services, at 89 South Street, Boston, Massachusetts
02111.
INSTITUTIONS AND SHAREHOLDER SERVICING AGENT
The Fund has entered into a shareholder servicing agreement with Wells
Fargo Bank on behalf of the Institutional Class, and may enter into similar
agreements with other Institutions ("Shareholder Servicing Agents"). Under
such agreements, Shareholder Servicing Agents (including Wells Fargo Bank)
agree, as agents for their customers, to provide shareholder administrative and
liaison services with respect to Fund shares, which include, without
limitation, aggregating and transmitting shareholder orders for purchases,
exchanges and redemptions; maintaining shareholder accounts and records,
aggregating and placing purchase, exchange and redemption transactions, and
providing such other related services as the Company or a shareholder may
reasonably request. For these services, a Shareholder Servicing Agent is
entitled
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<PAGE> 70
to receive a fee at an annual rate of up to (i) 0.25% of the average daily net
assets attributable to the Institutional Class shares. In no event will the
fees paid exceed the maximum amount payable to the Shareholder Servicing Agent
under applicable laws, regulations or rules, including the Conduct Rules of the
NASD ("NASD Rules").
Shareholder Servicing Agents also may impose certain conditions on
their customers, subject to the terms of this Prospectus, in addition to or
different from those imposed by the Company, such as requiring a higher minimum
initial investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of the Fund and to notify
them in writing at least 30 days before it imposes any transaction fees.
ADMINISTRATOR AND CO-ADMINISTRATOR
Subject to the overall supervision of the Company's Board of
Directors, Wells Fargo Bank and Stephens as administrator and co-administrator,
respectively, provide the Fund with administrative services, including general
supervision of the Fund's operation, coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and the
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Company's Directors and officers. Wells
Fargo Bank and Stephens also furnish office space and certain facilities to
conduct the Fund's business, and Stephens compensates the Company's Directors,
officers and employees who are affiliated with Stephens. For these
administrative services, Wells Fargo Bank and Stephens are entitled to receive
monthly fees at the annual rates of 0.06% and 0.04%, respectively, of the
Fund's average daily net assets. Wells Fargo Bank and Stephens may delegate
certain of their administrative duties to sub-administrators.
DISTRIBUTOR
Stephens is the Fund's co-administrator and distributes the Fund's
shares. Stephens is a full service broker/dealer and investment advisory firm
located at 111 Center Street, Little Rock, Arkansas 72201. Stephens and its
predecessor have been providing securities and investment services for more
than 60 years. Additionally, 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.
Stephens, as the principal underwriter of the Fund within the meaning
of the 1940 Act, has entered into a Distribution Agreement with the Company
pursuant to which Stephens acts as agent for the Funds for the sale of their
shares and may enter into selling agreements with other agents ("Selling
Agents") that wish to make available shares of the Funds to their respective
customers.
Stephens has established a cash and non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the Company's funds may earn additional
18
<PAGE> 71
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 or the cash value of a non-cash compensation item.
Financial institutions acting as Shareholder Servicing Agents, Selling
Agents, or in certain other capacities, may be required to register as dealers
pursuant to applicable state securities laws which may differ from federal law
and any interpretations expressed herein.
FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive their
respective fees in whole or in part and reimburse expenses payable to others.
Any such waivers or reimbursements will reduce the Fund's expenses and,
accordingly, have a favorable impact on the Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, the Fund bears all costs of
its operations, including its pro rata portion of Company expenses such as fees
and expenses of its independent auditors and legal counsel, and compensation of
the Company's directors who are not affiliated with the adviser, administrator
or any of their affiliates; advisory, transfer agency, custody and
administration fees; and any extraordinary expenses. Expenses attributable to
each fund or class are charged against the assets of the fund or class.
General expenses of the Company are allocated among all of the funds of the
Company in a manner proportionate to the net assets of each fund, on a
transactional basis, or on such other basis as the Company's Board of Directors
deems equitable.
TAXES
Distributions from the Fund's net investment income and net short-term
capital gains, if any, are designated as dividend distributions and taxable to
the Fund's shareholders as ordinary income. Distributions from the Fund's net
long-term capital gains are designated as capital gain distributions and
taxable to the Fund's shareholders as long-term capital gains. In general,
your distributions will be taxable when paid, whether you take such
distributions in cash or have them automatically reinvested in additional Fund
shares. However, distributions declared in October, November, and December and
distributed by the following January will be taxable as if they were paid by
December 31.
If more than 50% in value of the Fund's total assets at the close of
its taxable year consist of securities of non-U.S. corporations, the Fund will
be eligible to file an election with the Internal Revenue Service pursuant to
which shareholders of the Fund must (a) include their respective pro rata
portions of such withholding taxes in their Federal income tax returns as gross
income, (b) treat such amounts as foreign taxes paid by them, and (c) either
deduct such amounts in computing their taxable incomes or use these amounts as
foreign tax credits against their federal income taxes. The Fund expects to
meet the eligibility requirements for filing this election because of its
substantial investment in securities of non-U.S. issuers and intends to make
the election.
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<PAGE> 72
Your redemptions (including redemptions in-kind) and exchanges of Fund
shares will ordinarily result in a taxable capital gain or loss, depending on
the amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the cost of your shares. See "Federal Income Taxes--Disposition
of Fund Shares" in the SAI.
Foreign shareholders may be subject to different tax treatment,
including withholding taxes. See "Federal Income Taxes--Foreign Shareholders"
in the SAI. In certain circumstances, U.S. residents may also be subject to
withholding taxes. See "Federal Income Taxes--Backup Withholding" in the SAI.
The foregoing discussion regarding taxes is based on tax laws which
were in effect as of the date of this Prospectus and summarizes only some of
the important federal tax considerations generally affecting the Funds and
their shareholders. It is not intended as a substitute for careful tax
planning; you should consult your tax advisor with respect to your specific tax
situation as well as with respect to foreign, state and local taxes. Further
federal tax considerations are discussed in the SAI for the Fund.
20
<PAGE> 73
PROSPECTUS APPENDIX--
ADDITIONAL INVESTMENT POLICIES
FUND INVESTMENTS
Set forth below is a description of certain investments and additional
investment policies for the Fund.
Temporary Investments
The Fund may hold a certain portion of its assets in cash or
short-term investments in order to maintain adequate liquidity for redemption
requests or other cash management needs or for temporary defensive purposes
during periods of unusual market volatility. The short-term investments that
the Fund may purchase include, among other things, U.S. government obligations,
shares of money market mutual funds, repurchase agreements, obligations of
domestic banks and short-term obligations of foreign banks, corporations and
other entities. See "Additional Permitted Investment Activities" in the SAI
for additional information.
U.S. Government Obligations
The Fund may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government obligations").
Payment of principal and interest on U.S. Government obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the
U.S. Government will provide financial support to its agencies or
instrumentalities where it is not obligated to do so. In addition, U.S.
Government obligations are subject to fluctuations in market value due to
fluctuations in market interest rates. As a general matter, the value of debt
instruments, including U.S. Government obligations, declines when market
interest rates increase and rises when market interest rates decrease. Certain
types of U.S. Government obligations are subject to fluctuations in yield or
value due to their structure or contract terms.
Other Investment Companies
The Fund may invest in shares of other open-end, management investment
companies. The Fund may purchase shares of exchange-listed, closed-end funds.
The Fund also may invest in investment companies that are designed to replicate
the composition and performance of a particular index. For example, World
Equity Benchmark Shares (commonly known as "WEBS") are exchange traded shares
of open-end investment companies designed to replicate the composition and
performance of publicly traded issuers in particular foreign countries.
Investments in index baskets involve the same risks associated with a direct
investment in the types of securities included in the baskets.
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Repurchase Agreements
The Fund may enter into repurchase transactions in which the seller of
a security to a Fund agrees to repurchase that security from such Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. A Fund may enter into repurchase agreements only with respect to
securities that could otherwise be purchased by the Fund, and all repurchase
transactions must be collateralized. The Fund may incur a loss on a repurchase
transaction if the seller defaults and the value of the underlying collateral
declines or is otherwise limited or if receipt of the security or collateral is
delayed. The Fund may participate in pooled repurchase agreement transactions
with other funds advised by Wells Fargo Bank. See "Additional Permitted
Investment Activities" in the SAI for additional information.
Foreign Obligations and Securities
The foreign securities in which the Fund may invest include common
stocks, preferred stocks, warrants, convertible securities and other securities
of issuers organized under the laws of countries other than the United States.
Such securities also include equity interests in foreign investment funds or
trusts, real estate investment trust securities and any other equity or
equity-related investment whether denominated in foreign currencies or U.S.
dollars.
The Fund also may invest in foreign securities through American
Depositary Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"), European
Depositary Receipts ("EDRs"), International Depositary Receipts ("IDRs") and
Global Depositary Receipts ("GDRs") or other similar securities convertible
into securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs (sponsored or unsponsored) are receipts typically issued by a
U.S. bank or trust company and traded on a U.S. stock exchange, and CDRs are
receipts typically issued by a Canadian bank or trust company that evidence
ownership of underlying foreign securities. Issuers of unsponsored ADRs are
not contractually obligated to disclose material information in the U.S. and,
therefore, such information may not correlate to the market value of the
unsponsored ADR. EDRs and IDRs are receipts typically issued by European banks
and trust companies, and GDRs are receipts issued by either a U.S. or non-U.S.
banking institution, that evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for
use in Europe.
In addition, for temporary defensive purposes, the Fund may invest in
fixed income securities of non-U.S. governmental and private issuers. Such
investments may include bonds, notes, debentures and other similar debt
securities, including convertible securities. For a more complete discussion
of these securities, see the SAI.
A-2
<PAGE> 75
Emerging Markets
The Fund may invest up to 25% of its assets in equity securities of
companies in "emerging markets." Emerging markets are those financial markets
associated with emerging market countries as considered by the International
Bank for Reconstruction and Development (more commonly referred to as the World
Bank), the International Finance Corporation, and the international financial
community. Wells Fargo Bank may invest in those emerging markets that have a
relatively low gross national product per capita, compared to the world's major
economies, and which exhibit potential for rapid economic growth. The adviser
believes that investment in equity securities of emerging market issuers offers
significant potential for long-term capital appreciation.
There are special risks involved in investing in emerging market
countries. Most are heavily dependent on international trade, and some are
especially vulnerable to recessions in other countries. Many of these
countries are also sensitive to world commodity prices. Some countries may
still have obsolete financial systems, economic problems or archaic legal
systems. The currencies of certain emerging market countries, and therefore
the value of securities denominated in such currencies, may be more volatile
than currencies of developed countries. In addition, many of these nations are
experiencing political and social uncertainties. Many investments in emerging
markets can be considered speculative, and their prices can be much more
volatile than in the more developed nations of the world. This difference
reflects the greater uncertainties of investing in less established markets and
economies. The financial markets of emerging markets countries are generally
less well capitalized and thus securities of issuers based in such countries
may be less liquid. Further, such markets may be vulnerable to high inflation
and interest rates.
Hedging and Related Strategies
The Fund may attempt to protect the U.S. dollar equivalent value of
one or more of its investments (hedge) by purchasing and selling foreign
currency futures contracts and by purchasing and selling currencies on a spot
(i.e., cash) or forward basis. Foreign currency futures contracts are
bilateral agreements pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of a specified type of currency at a specified
future time and at a specified price. Although such futures contracts by their
terms call for actual delivery or acceptance of currency, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery. A forward currency contract involves an obligation to
purchase or sell a specific currency at a specified future date, which may be
any fixed number of days from the contract date agreed upon by the parties, at
a price set at the time the contract is entered into.
The Fund may enter into forward currency contracts for the purchase or
sale of a specified currency at a specified future date either with respect to
specific transactions or with respect to portfolio positions. For example, the
Fund may enter into a forward currency contract to sell an amount of a foreign
currency approximating the value of some or all of the Fund's securities
denominated in such currency. The Fund may use forward contracts in one
currency or a basket of currencies to hedge against fluctuations in the value
of another currency when Wells Fargo
A-3
<PAGE> 76
Bank anticipates there will be a correlation between the two and may use
forward currency contracts to shift the Fund's exposure to foreign currency
fluctuations from one country to another. The purpose of entering into these
contracts is to minimize the risk to the Fund from adverse changes in the
relationship between the U.S. dollar and foreign currencies.
Wells Fargo Bank might not employ any of the strategies described
above, and there can be no assurance that any strategy used will succeed. If
Wells Fargo incorrectly forecasts exchange rates, market values or other
economic factors in utilizing a strategy for the Fund, the Fund might have been
in a better position had it not might have been in a better position had it not
hedged at all. The use of these strategies involves certain special risks,
including (1) the fact that skills needed to use hedging instruments are
different from those needed to select the Fund's securities, (2) possible
imperfect correlation, or even no correlation, between price movements of
hedging instruments and price movements of the investments being hedged, (3)
the fact that, while hedging strategies can reduce the risk of loss, they can
also reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in hedged investments and (4) the possible inability
of the Fund to purchase or sell a portfolio security at a time that otherwise
would be favorable for it to do so, or the possible need for the Fund to sell a
portfolio security at a disadvantageous time, due to the need for the Fund to
maintain "cover" or to segregate securities in connection with hedging
transactions and the possible inability of a Fund to close out or to liquidate
its hedged position.
New financial products and risk management techniques continue to be
developed. The Fund may use these instruments and techniques to the extent
consistent with its investment objectives and regulatory and tax
considerations.
Warrants
The Fund may invest no more than 5% of its net assets at the time of
purchase in warrants (other than those that have been acquired in units or
attached to other securities). Warrants represent rights to purchase
securities at a specific price valid for a specific period of time. The prices
of warrants do not necessarily correlate with the prices of the underlying
securities. The Fund may only purchase warrants on securities in which the
Fund may invest directly.
Money Market Instruments
The Fund may invest in the following types of high quality money
market instruments that have remaining maturities not exceeding one year: (i)
U.S. Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by
the FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by
Moody's or "A-1" or "A-1+" by S&P, or, if unrated, of comparable quality as
determined by Wells Fargo Bank, as investment adviser; and (iv) repurchase
agreements. The Fund also may invest in short-term U.S. dollar-denominated
obligations of foreign banks (including U.S. branches) that at the time of
investment: (i) have
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more than $10 billion, or the equivalent in other currencies, in total assets;
(ii) are among the 75 largest foreign banks in the world as determined on the
basis of assets; (iii) have branches or agencies in the United States; and (iv)
in the opinion of Wells Fargo Bank, as investment adviser, are of comparable
quality to obligations of U.S. banks which may be purchased by the Fund.
Forward Commitments, When-Issued Purchases and Delay-Delivery Transactions
The Fund may purchase or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment
basis involve a risk of loss if the value of the security to be purchased
declines, or the value of the security to be sold increases, before the
settlement date. Although a Fund will generally purchase securities with the
intention of acquiring them, a Fund may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the adviser.
Privately Issued Securities (Rule 144A)
The Fund may invest in privately issued securities which may be resold
in accordance with Rule 144A under the Securities Act of 1933 ("Rule 144A
Securities"). Rule 144A Securities are restricted securities which are not
publicly traded. Accordingly, the liquidity of the market for specific Rule
144A Securities may vary. Delay or difficulty in selling such securities may
result in a loss to the Fund. Privately issued securities that are determined
by Wells Fargo Bank to be "illiquid" are subject to the Fund's policy of not
investing more than 15% of its net assets in illiquid securities.
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objective, as set forth in "How the Fund
Works--Investment Objective and Policies," is not fundamental; that is, it may
be changed without approval by the vote of the holders of a majority of the
Fund's outstanding voting securities, as described under "Capital Stock" in the
SAI for the Fund.
Fundamental Investment Policies
As matters of fundamental policy, the Fund may not: (i) purchase the
securities of issuers conducting their principal business activity in the same
industry if, immediately after the purchase and as a result thereof, the value
of the Fund's investments in that industry would be 25% or more of the current
value of the Fund's total assets, provided that there is no limitation with
respect to investments in obligations of the United States Government, its
agencies or instrumentalities; (ii) issue senior securities, except as
permitted by applicable law; (iii) purchase securities of any issuer (except
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities, including government-sponsored enterprises, ) if, as a
result, 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 hold more than 10% of the
outstanding voting securities of such issuer, except that up to
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<PAGE> 78
25% of the value of the Fund's total assets may be invested without regard to
these limitations; or (iv) borrow money, except as permitted by applicable law.
Non-Fundamental Investment Policies
As a matter of nonfundamental policy, the Fund may invest up to 15% of
the current value of its net assets in illiquid securities. For these
purposes, illiquid securities include, among others, (a) securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale, (b) fixed time deposits that are subject to
withdrawal penalties and that have maturities of more than seven days and (c)
repurchase agreements not terminable within seven days.
Illiquid securities shall not include securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act") that
have been determined to be liquid by the adviser, pursuant to guidelines
established by the Company's Board of Directors, or commercial paper that is
sold under Section 4(2) of the 1933 Act that (i) is not traded flat or in
default as to interest or principal, and (ii) is rated in one of the two
highest categories by at least two NRSROs and the adviser, pursuant to
guidelines established by the Company's Board of Directors, has determined the
commercial paper to be liquid or (iii) is rated in one of the two highest
categories by one NRSRO and the adviser, pursuant to guidelines established by
the Company's Board of Directors.
A-6
<PAGE> 79
Advised by WELLS FARGO BANK, N.A.
Distributed by Stephens Inc., Member NYSE/SIPC
NOT FDIC INSURED
<PAGE> 80
P.O. Box 7066
San Francisco, CA 94120-7066
STAGECOACH FUNDS:
o are NOT insured by the FDIC or U.S. Government
o are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the Bank
o involve investment risk, including possible loss of principal
Printed on Recycled Paper SCF072 (8/97)
<PAGE> 81
P.O. Box 7066
San Francisco, CA 94120-7066 BULK RATE
U.S. POSTAGE
PAID
DALLAS, TEXAS
Permit No. 1808
STAGECOACH FUNDS:
o are NOT insured by the FDIC or U.S. Government
o are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the Bank
o involve investment risk, including possible loss of principal
SCF072 8/97
<PAGE> 82
STAGECOACH FUNDS, INC.
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated August ___, 1997
INTERNATIONAL EQUITY FUND
CLASS A, CLASS B, AND INSTITUTIONAL CLASS
-------------------------------
Stagecoach Funds, Inc. is an open-end series investment company.
This Statement of Additional Information ("SAI") contains information about a
fund in the Stagecoach Family of Funds -- the INTERNATIONAL EQUITY FUND (the
"Fund"). This SAI relates to Class A, Class B and Institutional Class shares
offered by the Fund. The investment objective of the Fund is described in its
Prospectus under "How the Fund Works -- Investment Objective and Policies."
This SAI is not a prospectus and should be read in conjunction
with the Prospectus dated August __, 1997, for the Fund. All terms used in this
SAI that are defined in the Fund's Prospectus will have the meaning assigned in
such Prospectus. A copy of the Prospectus for the Fund may be obtained without
charge by writing to Stephens Inc., the Company's co-administrator and
distributor, at 111 Center Street, Little Rock, Arkansas 72201 or calling the
Transfer Agent at the telephone number indicated above.
----------------------------------
<PAGE> 83
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Investment Restrictions................................................... 1
Additional Permitted Investment
Activities.............................................................. 2
Management................................................................ 11
Distribution Plans........................................................ 15
Performance Calculations.................................................. 16
Determination of Net Asset Value.......................................... 20
Additional Purchase and Redemption Information............................ 21
Portfolio Transactions.................................................... 22
Fund Expenses............................................................. 24
Federal Income Taxes...................................................... 24
Capital Stock............................................................. 29
Other..................................................................... 30
Independent Auditors...................................................... 31
Financial Information..................................................... 31
SAI Appendix.............................................................. A-1
</TABLE>
<PAGE> 84
INVESTMENT RESTRICTIONS
Fundamental Investment Policies. The Fund is subject to the
following investment restrictions, all of which are fundamental policies; that
is, they may not be changed without approval by the vote of the holders of a
majority of the Fund's outstanding voting securities, as described under
"Capital Stock":
The Fund may not:
(1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and
as a result thereof, the value of the Fund's investments in that industry would
be 25% or more of the current value of the Fund's total assets, provided that
there is no limitation with respect to investments in obligations of the United
States Government, its agencies or instrumentalities;
(2) issue senior securities, except as permitted by applicable law;
(3) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities,
including government-sponsored enterprises) if, as a result, more than 5% of
the value of the Fund's total assets would be invested in the securities of any
one issuer or the Fund would hold more than 10% of the outstanding voting
securities of such issuer, except that up to 25% of the Fund's total assets may
be invested without regard to these limitations;
(4) borrow money, except as permitted by applicable law.
Non-Fundamental Investment Policies. The Fund is subject to the
following non-fundamental policies which may be changed by a majority vote of
the Board of Directors without shareholder approval:
The Fund may not:
(1) purchase or sell real estate or real estate limited partnerships
(other than securities secured by real estate or interests therein or
securities issued by companies that invest in real estate or interests
therein);
(2) purchase securities on margin (except for short-term credits
necessary for the clearance of transactions) or make short sales of securities;
(3) underwrite securities of other issuers, except to the extent
that the purchase of securities directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Fund's investment program may be deemed to be an
underwriting;
(4) make investments for the purpose of exercising control or
management;
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<PAGE> 85
(5) borrow money, except that the Fund may borrow from banks up to
10% of the current value of its net assets for temporary purposes (but
investments may not be purchased while any such outstanding borrowings exceed
5% of its net assets);
(6) make loans, except as permitted by applicable law;
(7) write, purchase or sell puts, calls, straddles, spreads or
any combination thereof, except on such conditions as may be set forth in the
Fund's Prospectus and Statement of Additional Information;
(8) purchase or sell commodities or commodities contracts, except
that the Fund may, on such conditions as may be set forth in the Fund's
Prospectus and Statement of Additional Information, purchase, sell or enter
into futures contracts, foreign currency forward contracts, options on futures
contracts, foreign currency forward contracts, foreign currency options, or any
interest rate, securities-related or foreign currency-related hedging
instrument, subject to compliance with any applicable provisions of the federal
securities or commodities laws;
(9) invest more than 15% of the Fund's net assets in securities that
are illiquid.
In addition, the Fund may invest in shares of other open-end,
management investment companies, subject to the limitations of Section 12(d)(1)
of the 1940 Act.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Unrated and Downgraded Investments. The Fund may purchase
instruments that are not rated by a Nationally Recognized Statistical Rating
Organization ("NRSRO") if, in the opinion of Wells Fargo Bank, such obligations
are of investment quality comparable to other rated investments that are
permitted to be purchased by the Fund. After purchase by the Fund, a security
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. Neither event will require a sale of such security by
the Fund. To the extent the ratings given by an NRSRO, such as Moody's Investor
Service Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"), change as a
result of changes in such organizations or their rating systems, the Fund will
attempt to use comparable ratings as standards for investments in accordance
with the investment policies contained in its Prospectus and in this SAI. The
ratings of Moody's and S&P are more fully described in the SAI Appendix.
Letters of Credit. Certain of the debt obligations (including
certificates of participation, commercial paper and other short-term
obligations) which the Fund may purchase may be backed by an unconditional and
irrevocable letter of credit of a bank, savings and loan association or
insurance company which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Only banks, savings and loan
associations and insurance companies which, in the opinion of Wells Fargo Bank,
are of comparable quality to issuers of other permitted investments of the Fund
may be used for letter of credit-backed investments.
2
<PAGE> 86
When-Issued Securities. Certain of the securities in which the
Fund may invest will be purchased on a when-issued basis, in which case
delivery and payment normally take place within 120 days after the date of the
commitment to purchase. The Fund only will make commitments to purchase
securities on a when-issued basis with the intention of actually acquiring the
securities, but may sell them before the settlement date if it is deemed
advisable. When-issued securities are subject to market fluctuation, and no
income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed-upon purchase price, in which
case there could be an unrealized loss at the time of delivery. The Fund
currently does not intend to invest more than 5% of its assets in when-issued
securities during the coming year.
The Fund will segregate cash, U.S. Government obligations or
other high-quality debt instruments in an amount at least equal in value to the
Fund's commitments to purchase when-issued securities. If the value of these
assets declines, the Fund will segregate additional liquid assets on a daily
basis so that the value of the segregated assets is equal to the amount of such
commitments.
Foreign Obligations. Investments in foreign obligations involve
certain considerations that are not typically associated with investing in
domestic obligations. There may be less publicly available information about a
foreign issuer than about a domestic issuer. Foreign issuers also are not
generally subject to uniform accounting, auditing and financial reporting
standards or governmental supervision comparable to those applicable to
domestic issuers. In addition, with respect to certain foreign countries, 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.
From time to time, investments in other investment companies may
be the most effective available means by which the Funds may invest in
securities of issuers in certain countries. Investment in such investment
companies may involve the payment of management expenses and, in connection
with some purchases, sales loads, and payment of substantial premiums above the
value of such companies' portfolio securities. At the same time, the Fund would
continue to pay its own management fees and other expenses. The Fund may invest
in these investment funds and in registered investment companies subject to the
provisions of the Investment Company Act of 1940 (`1940 Act'). Such investment
funds or investment companies may be `passive foreign investment companies' (as
described in `Taxes' below) and may result in special federal income tax
consequences.
Investment income on certain foreign securities in which the Fund
may invest may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax
3
<PAGE> 87
treaties between the United States and foreign countries, however, may reduce
or eliminate the amount of foreign taxes to which the Fund would be subject.
Foreign Currency Transactions. The Fund's investments in foreign
securities involve currency risks. The U.S. dollar value of a foreign security
tends to decrease when the value of the U.S. dollar rises against the foreign
currency in which the security is denominated, and tends to increase when the
value of the U.S. dollar falls against such currency. To attempt to minimize
risks to the Fund from adverse changes in the relationship between the U.S.
dollar and foreign currencies, the Fund may engage in foreign currency
transactions on a spot (i.e., cash) basis and may purchase or sell forward
foreign currency exchange contracts ("forward contracts"). The Fund may also
purchase and sell foreign currency futures contracts (see "Purchase and Sale of
Currency Futures Contracts"). A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date that is
individually negotiated and privately traded by currency traders and their
customers.
Forward contracts establish an exchange rate at a future date.
These contracts are transferable in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers.
A forward contract generally has no deposit requirement, and is traded at a net
price without commission. The Fund will direct its custodian, to the extent
required by applicable regulations, to segregate high grade liquid assets in an
amount at least equal to its obligations under each forward contract. Neither
spot transactions nor forward contracts eliminate fluctuations in the prices of
the Fund's portfolio securities or in foreign exchange rates, or prevent loss
if the prices of these securities should decline.
The Fund may enter into a forward contract, for example, when it
enters into a contract for the purchase or sale of a security denominated in a
foreign currency in order to "lock in" the U.S. dollar price of the security (a
"transaction hedge"). In addition, when Wells Fargo Bank believes that a
foreign currency may suffer a substantial decline against the U.S. dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency, or when Wells Fargo Bank believes that
the U.S. dollar may suffer a substantial decline against the foreign currency,
it may enter into a forward purchase contract to buy that foreign currency for
a fixed dollar amount (a "position hedge").
The Fund may, in the alternative, enter into a forward contract
to sell a different foreign currency for a fixed U.S. dollar amount where Wells
Fargo Bank believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a decline in the
U.S. dollar value of the currency in which the fund securities are denominated
(a "cross-hedge").
Foreign currency hedging transactions are an attempt to protect
the Fund against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time
4
<PAGE> 88
they tend to limit any potential gain that might be realized should the value
of the hedged currency increase. The precise matching of the forward contract
amount and the value of the securities involved will not generally be possible
because the future value of these securities in foreign currencies will change
as a consequence of market movements in the value of those securities between
the date the forward contract is entered into and date it matures.
The Fund's custodian will, to the extent required by applicable
regulations, segregate cash, U.S. Government securities or other high-quality
debt securities having a value equal to the aggregate amount of the Fund's
commitments under forward contracts entered into with respect to position
hedges and cross-hedges. If the value of the segregated securities declines,
additional cash or securities will be segregated on a daily basis so that the
value of the segregated securities will equal the amount of the Fund's
commitments with respect to such contracts.
The cost to the Fund of engaging in currency transactions varies
with factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because transactions in currency
exchange usually are conducted on a principal basis, no fees or commissions are
involved. Wells Fargo Bank considers on an ongoing basis the creditworthiness
of the institutions with which the Fund enters into foreign currency
transactions. The use of forward currency exchange contracts does not eliminate
fluctuations in the underlying prices of the securities, but it does establish
a rate of exchange that can be achieved in the future. If a devaluation
generally is anticipated, the Fund may not be able to contract to sell the
currency at a price above the devaluation level it anticipates.
Foreign Currency Futures Contracts.
In General. A foreign currency futures contract is an agreement
between two parties for the future delivery of a specified currency at a
specified time and at a specified price. A "sale" of a futures contract means
the contractual obligation to deliver the currency at a specified price on a
specified date, or to make the cash settlement called for by the contract.
Futures contracts have been designed by exchanges which have been designated
"contract markets" by the Commodity Futures Trading Commission ("CFTC") and
must be executed through a brokerage firm, known as a futures commission
merchant, which is a member of the relevant contract market. Futures contracts
trade on these markets, and the exchanges, through their clearing
organizations, guarantee that the contracts will be performed as between the
clearing members of the exchange.
While futures contracts based on currencies do provide for the
delivery and acceptance of a particular currency, such deliveries and
acceptances are very seldom made. Generally, a futures contract is terminated
by entering into an offsetting transaction. A Fund will incur brokerage fees
when it purchases and sells futures contracts. At the time such a purchase or
sale is made, a Fund must provide cash or money market securities as a deposit
known as "margin." The initial deposit required will vary, but may be as low as
2% or less of a contract's face value. Daily thereafter, the futures contract
is valued through a process known as "marking to market," and a Fund that
engages in futures transactions may receive or be required to pay "variation
margin" as the futures contract becomes more or less valuable.
5
<PAGE> 89
Purchase and Sale of Currency Futures Contracts. In order to
hedge its portfolio and to protect it against possible variations in foreign
exchange rates pending the settlement of securities transactions, the Fund may
buy or sell currency futures contracts. If a fall in exchange rates for a
particular currency is anticipated, the Fund may sell a currency futures
contract as a hedge. If it is anticipated that exchange rates will rise, a Fund
may purchase a currency futures contract to protect against an increase in the
price of securities denominated in a particular currency a Fund intends to
purchase. These futures contracts will be used only as a hedge against
anticipated currency rate changes.
A currency futures contract sale creates an obligation by a Fund,
as seller, to deliver the amount of currency called for in the contract at a
specified futures time for a special price. A currency futures contract
purchase creates an obligation by a Fund, as purchaser, to take delivery of an
amount of currency at a specified future time at a specified price. Although
the terms of currency futures contracts specify actual delivery or receipt, in
most instances the contracts are closed out before the settlement date without
the making or taking of delivery of the currency. Closing out of a currency
futures contract is effected by entering into an offsetting purchase or sale
transaction.
In connection with transactions in foreign currency futures, a
Fund will be required to deposit as "initial margin" an amount of cash or
short-term government securities equal to from 5% to 8% of the contract amount.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the broker to reflect changes in the value of the futures contract.
Risk Factors Associated with Futures Transactions. The effective
use of futures strategies depends on, among other things, the Fund's ability to
terminate futures positions at times when Wells Fargo Bank deems it desirable
to do so. Although the Fund will not enter into a futures position unless Wells
Fargo Bank believes that a liquid secondary market exists for such future,
there is no assurance that the Fund will be able to effect closing transactions
at any particular time or at an acceptable price. The Fund generally expects
that its futures transactions will be conducted on recognized U.S. and foreign
securities and commodity exchanges.
Futures markets can be highly volatile and transactions of this
type carry a high risk of loss. Moreover, a relatively small adverse market
movement with respect to these transactions may result not only in loss of the
original investment but also in unquantifiable further loss exceeding any
margin deposited.
The use of futures involves the risk of imperfect correlation
between movements in futures prices and movements in the price of currencies
which are the subject of the hedge. The successful use of futures strategies
also depends on the ability of Wells Fargo Bank to correctly forecast interest
rate movements, currency rate movements and general stock market price
movements.
In addition to the foregoing risk factors, the following sets
forth certain information regarding the potential risks associated with the
Fund's futures transactions.
6
<PAGE> 90
Risk of Imperfect Correlation. The Fund's ability effectively to
hedge currency risk through transactions in foreign currency futures depends on
the degree to which movements in the value of the currency underlying such
hedging instrument correlate with movements in the value of the relevant
securities held by the Fund. If the values of the securities being hedged do
not move in the same amount or direction as the underlying currency, the
hedging strategy for a Fund might not be successful and the Fund could sustain
losses on its hedging transactions which would not be offset by gains on its
portfolio. It is also possible that there may be a negative correlation between
the currency underlying a futures contract and the portfolio securities being
hedged, which could result in losses both on the hedging transaction and the
fund securities. In such instances, a Fund's overall return could be less than
if the hedging transactions had not been undertaken.
Under certain extreme market conditions, it is possible that the
Fund will not be able to establish hedging positions, or that any hedging
strategy adopted will be insufficient to completely protect the Fund.
A Fund will purchase or sell futures contracts only if, in Wells
Fargo Bank's judgment, there is expected to be a sufficient degree of
correlation between movements in the value of such instruments and changes in
the value of the relevant portion of the Fund's portfolio for the hedge to be
effective. There can be no assurance that Wells Fargo Bank's judgment will be
accurate.
Potential Lack of a Liquid Secondary Market. The ordinary spreads
between prices in the cash and futures markets, due to differences in the
natures of those markets, are subject to distortions. First, all participants
in the futures market are subject to initial deposit and variation margin
requirements. This could require a Fund to post additional cash or cash
equivalents as the value of the position fluctuates. Further, rather than
meeting additional variation margin requirements, investors may close futures
contracts through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity of the
futures market may be lacking. Prior to exercise or expiration, a futures
position may be terminated only by entering into a closing purchase or sale
transaction, which requires a secondary market on the exchange on which the
position was originally established. While the Fund will establish a futures
position only if there appears to be a liquid secondary market therefor, there
can be no assurance that such a market will exist for any particular futures
contract at any specific time. In such event, it may not be possible to close
out a position held by the Fund, which could require the Fund to purchase or
sell the instrument underlying the position, make or receive a cash settlement,
or meet ongoing variation margin requirements. The inability to close out
futures positions also could have an adverse impact on the Fund's ability
effectively to hedge its securities, or the relevant portion thereof.
The liquidity of a secondary market in a futures contract may be
adversely affected by "daily price fluctuation limits" established by the
exchanges, which limit the amount of fluctuation in the price of a contract
during a single trading day and prohibit trading beyond such limits once they
have been reached. The trading of futures contracts also is subject to the risk
of trading halts, suspensions, exchange or clearing house equipment failures,
government intervention, insolvency of the brokerage firm or clearing house or
other disruptions of normal trading activity,
7
<PAGE> 91
which could at times make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
Trading and Position Limits. Each contract market on which
futures contracts are traded has established a number of limitations governing
the maximum number of positions which may be held by a trader, whether acting
alone or in concert with others. Wells Fargo Bank does not believe that these
trading and position limits will have an adverse impact on the hedging
strategies regarding the Fund's investments.
Regulations on the Use of Futures Contracts. Regulations of the
CFTC require that the Fund enter into transactions in futures contracts for
hedging purposes only, in order to assure that they are not deemed to be a
"commodity pool" under such regulations. In particular, CFTC regulations
require that all short futures positions be entered into for the purpose of
hedging the value of investment securities held by the Fund, and that all long
futures positions either constitute bona fide hedging transactions, as defined
in such regulations, or have a total value not in excess of an amount
determined by reference to certain cash and securities positions maintained for
the Fund, and accrued profits on such positions. In addition, the Fund may not
purchase or sell such instruments if, immediately thereafter, the sum of the
amount of initial margin deposits on its existing futures positions and
premiums paid for options on futures contracts would exceed 5% of the market
value of the Fund's total assets.
When the Fund purchases a futures contract, an amount of cash or
cash equivalents or high quality debt securities will be segregated with the
Fund's custodian so that the amount so segregated, plus the initial deposit and
variation margin held in the account of its broker, will at all times equal the
value of the futures contract, thereby insuring that the use of such futures is
unleveraged.
The Fund's ability to engage in the hedging transactions
described herein may be limited by the current federal income tax requirement
that a Fund derive less than 30% of its gross income from the sale or other
disposition of stock or securities held for less than three months. The Fund
may also further limit their ability to engage in such transactions in response
to the policies and concerns of various Federal and state regulatory agencies.
Such policies may be changed by vote of the Board of Directors.
Wells Fargo Bank uses a variety of internal risk management
procedures to ensure that derivatives use is consistent with the Fund's
investment objective, does not expose the Fund to undue risk and is closely
monitored. These procedures include providing periodic reports to the Board of
Directors concerning the use of derivatives.
Privately Issued Securities. The Fund may invest in privately
issued securities, including those which may be resold only in accordance with
Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"). Rule 144A
Securities are restricted securities and will not be publicly traded.
Accordingly, the liquidity of the market for specific Rule 144A Securities may
vary. The Company's investment adviser, pursuant to guidelines established by
the Board of Directors of the Company will evaluate the liquidity
characteristics of each Rule 144A Security
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<PAGE> 92
proposed for purchase by the Fund on a case-by-case basis and will consider the
following factors, among others, in their evaluation: (1) the frequency of
trades and quotes for the Rule 144A Security; (2) the number of dealers willing
to purchase or sell the Rule 144A Security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the Rule 144A Security;
and (4) the nature of the Rule 144A Security and the nature of the marketplace
trades (e.g., the time needed to dispose of the Rule 144A Security, the method
of soliciting offers and the mechanics of transfer). The Fund does not intend
to invest more than 15% of its net assets in privately issued securities or
illiquid Rule 144A Securities during the coming year.
Investment in Warrants. The Fund may invest no more than 5% of
its net assets at the time of purchase in warrants (other than those that have
been acquired in units or attached to other securities). Warrants represent
rights to purchase securities at a specific price valid for a specific period
of time. The prices of warrants do not necessarily correlate with the prices of
the underlying securities. The Fund may only purchase warrants on securities in
which it may invest directly.
As the prospectus provides, the Fund may, under certain
circumstances, engage in the following investment activities:
Foreign Fixed Income Securities. The Fund may invest in foreign
fixed income securities, including:
Foreign Private Debt. The Fund may invest in fixed income
securities of private issuers, provided that they are rated, at the time of
investment, within the top four rating categories by an NRSRO or determined to
be of equivalent quality by Wells Fargo Bank. Fixed income securities in which
the Fund may invest include, without limitation, corporate bonds, notes,
debentures and other similar corporate debt securities, including convertible
securities. In addition, such securities may or may not have warrants attached.
For a discussion of the risks associated with investing in foreign securities,
see "Risk Factors" in the Prospectus.
Foreign Sovereign Debt. The Fund may invest in debt securities or
obligations of foreign governments and their political subdivisions or agencies
(`Sovereign Debt') provided that they are rated, at the time of investment,
within the top four rating categories by an NRSRO or determined to be of
equivalent quality by Wells Fargo Bank. Investments in Sovereign Debt involves
special risks. The issuer of the debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
and/or interest when due in accordance with the terms of such debt, and the
Fund may have limited legal recourse in the event of a default.
Sovereign Debt differs from debt obligations issued by private
entities in that, generally, remedies for defaults must be pursued in the
courts of the defaulting party. Legal recourse is therefore somewhat
diminished. Political conditions, especially a sovereign entity's willingness
to meet the terms of its debt obligations, are of considerable significance.
Also, there can be no assurance that the holders of commercial bank debt issued
by the same sovereign entity
9
<PAGE> 93
may not contest payments to the holders of Sovereign Debt in the event of
default under commercial bank loan agreements.
A sovereign debtor's willingness or ability to repay principal
and interest due in a timely manner may be affected by, among other factors,
its cash flow situation, the extent of its foreign reserves, the availability
of sufficient foreign exchange on the date a payment is due, the relative size
of the debt service burden to the economy as a whole, the sovereign debtor's
policy toward principal international lenders and the political constraints to
which a sovereign debtor may be subject. Increased protectionism on the part of
a country's trading partners, or political changes in those countries, could
also adversely affect its exports. Such events could diminish a country's trade
account surplus, if any, or the credit standing of a particular local
government or agency.
The occurrence of political, social or diplomatic changes in one
or more of the countries issuing Sovereign Debt could adversely affect the
Fund's investments. Political changes or a deterioration of a country's
domestic economy or balance of trade may affect the willingness of countries to
service their Sovereign Debt. While Wells Fargo Bank manages the Fund's
portfolio in a manner that is intended to minimize the exposure to such risks,
there can be no assurance that adverse political changes will not cause the
Fund to suffer a loss of interest or principal on any of its holdings.
Brady Bonds. The Fund may invest a portion of its assets in Brady
Bonds, which are securities created through the exchange of existing commercial
bank loans to sovereign entities for new obligations in connection with debt
restructurings. Brady Bonds may be collateralized or uncollateralized and are
issued in various currencies (primarily the U.S. dollar). Brady bonds are not
considered U.S. government securities.
U.S. dollar-denominated, collateralized Brady Bonds, which may be
fixed rate par bonds or floating rate discount bonds, are generally
collateralized in full as to principal by U.S. Treasury zero coupon bonds
having the same maturity as the Brady Bonds. Interest payments on these Brady
Bonds generally are collateralized on a one-year or longer rolling-forward
basis by cash or securities in an amount that, in the case of fixed rate bonds,
is equal to at least one year of interest payments or, in the case of floating
rate bonds, initially is equal to at least one year's interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter. Certain Brady Bonds are entitled to "value recovery
payments" in certain circumstances, which in effect constitute supplemental
interest payments but generally are not collateralized. Brady Bonds are often
viewed as having three or four valuation components: (i) the collateralized
repayment of principal at final maturity; (ii) the collateralized interest
payments; (iii) the uncollateralized interest payments; and (iv) any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constitute the "residual risk").
Brady Bonds involve various risk factors including the history of
defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in
which the Fund may invest will not be subject to
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<PAGE> 94
restructuring arrangements or to requests for new credit, which may cause the
Fund to suffer a loss of interest or principal on any of its holdings.
MANAGEMENT
The following information supplements and should be read in
conjunction with the section in the prospectus entitled "The Fund and
Management." The principal occupations during the past five years of the
Directors and principal executive Officer of the Company are listed below. The
address of each, unless otherwise indicated, is 111 Center Street, Little Rock,
Arkansas 72201. Directors deemed to be "interested persons" of the Company for
purposes of the 1940 Act are indicated by an asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>
Jack S. Euphrat, 75 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 46 Director, Executive Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens Insurance
Services Inc.;
Senior Vice President of
Stephens Sports Management Inc.;
and President of Investor
Brokerage Insurance Inc.
Thomas S. Goho, 55 Director Associate Professor,
321 Beechcliff Court Business, Calloway
Winston-Salem, NC 27104 School of Business and
Accountancy, Wake Forest
University, since September 1982.
</TABLE>
11
<PAGE> 95
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>
Joseph N. Hankin, 57 Director President, Westchester
75 Grasslands Road Community College since
Valhalla, N.Y. 10595 1971; Adjunct Professor
(appointed as of September 6, 1996) of Columbia University
Teachers College since 1976.
*W. Rodney Hughes, 70 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 79 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 53 Director Private Investor;
10 Legrae Street President of Morse
Charleston, SC 29401 Investment Corporation.
Richard H. Blank, Jr., 41 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>
12
<PAGE> 96
COMPENSATION TABLE
<TABLE>
<CAPTION>
Year Ended
March 31, 1997
--------------
Aggregate Total
Compensation Compensation
from from Registrant
Name and Position Registrant and Fund Complex
- ----------------- ------------ ----------------
<S> <C> <C>
Jack S. Euphrat $11,250 $33,750
Director
*R. Greg Feltus $-0- $-0-
Director
Thomas S. Goho $11,250 $33,750
Director
Joseph N. Hankin $ 8,750 $26,250
Director
*Zoe Ann Hines $ -0- $ -0-
Director
(resigned as of September 6, 1996)
*W. Rodney Hughes $ 9,250 $27,750
Director
Robert M. Joses $11,250 $33,750
Director
*J. Tucker Morse $ 9,250 $27,750
Director
</TABLE>
Directors of the Company are compensated annually by the Company
and by all the registrants in the Fund complex they serve as indicated above
and also are reimbursed for all out-of-pocket expenses relating to attendance
at board meetings. The Company, Overland Express Funds, Inc., Stagecoach Trust,
Life & Annuity Trust and Master Investment Trust are considered to be members
of the same fund complex as such term is defined in Form N-1A under the 1940
Act (the "Wells Fargo Fund Complex"). MasterWorks Funds Inc., Master Investment
Portfolio, and Managed Series Investment Trust together form a separate fund
complex (the "BGFA Fund Complex"). Each of the Directors and Officers of the
Company serves in the identical capacity as directors and officers or as
trustees and/or officers of each registered open-end management
13
<PAGE> 97
investment company in both the Wells Fargo and BGFA Fund Complexes, except for
Joseph N. Hankin, who only serves the aforementioned members of the Wells Fargo
Fund Complex, and Zoe Ann Hines, who only serves the aforementioned members of
the BGFA Fund Complex. The Directors are compensated by other companies and
trusts within the Fund complex for their services as directors/trustees to such
companies and trusts. Currently the Directors do not receive any retirement
benefits or deferred compensation from the Company or any other member of the
Fund complex. [AS OF THE DATE OF THIS SAI, DIRECTORS AND OFFICERS OF THE
COMPANY AS A GROUP BENEFICIALLY OWNED LESS THAN 1% OF THE OUTSTANDING SHARES OF
ANY CLASS OF ANY FUND OF THE COMPANY.]
INVESTMENT ADVISER. The Fund is advised by Wells Fargo Bank
pursuant to an Advisory Contract. The Advisory Contract provide that Wells
Fargo Bank shall furnish to the Fund investment guidance and policy direction
in connection with the daily portfolio management of the Fund. Pursuant to the
Advisory Contract, Wells Fargo Bank furnishes to the Board of Directors
periodic reports on the investment strategy and performance of the Fund. Wells
Fargo Bank has agreed to provide to the Fund, among other things, money market
security and fixed-income research, analysis and statistical and economic data
and information concerning interest rate and security market trends, portfolio
composition, and credit conditions. For its services as investment adviser to
the Fund, Wells Fargo Bank is entitled to receive a fee equal to an annual rate
of 1.00% of the average daily net assets of the Fund.
The Advisory Contract will continue in effect for more than two
years from its effective date provided the continuance is approved annually (i)
by the holders of a majority of the Fund's outstanding voting securities or by
the Company's Board of Directors and (ii) by a majority of the Directors of the
Company who are not parties to the Advisory Contract or "interested persons"
(as defined in the 1940 Act) of any such party. The Advisory Contract may be
terminated on 60 days' written notice by either party and will terminate
automatically if assigned.
ADMINISTRATOR AND CO-ADMINISTRATOR. The Company has retained
Wells Fargo Bank as Administrator and Stephens Inc. ("Stephens") as
Co-Administrator on behalf of the Fund. The Administration Agreement between
Wells Fargo Bank and the Fund, and the Co-Administration Agreement among Wells
Fargo Bank, Stephens and the Fund, state that Wells Fargo Bank and Stephens
shall provide as administrative services, among other things: (i) general
supervision of the operation of the Fund, including coordination of the
services performed by the Fund's investment adviser, transfer agent, custodian,
shareholder servicing agent(s), independent public accountants and legal
counsel, regulatory compliance, including the compilation of information for
documents such as reports to, and filings with, the SEC and state securities
commissions; and preparation of proxy statements and shareholder reports for
the Fund; and (ii) general supervision relative to the compilation of data
required for the preparation of periodic reports distributed to the Company's
officers and Board of Directors. Wells Fargo Bank and Stephens also furnish
office space and certain facilities required for conducting the business of the
Fund together with ordinary clerical and bookkeeping services. Stephens pays
the compensation of the Company's Directors, officers and employees who are
affiliated with Stephens. The
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Administrator and Co-Administrator are entitled to receive a monthly fee of
0.06% and 0.04%, respectively, of the average daily net assets of the Fund.
DISTRIBUTOR. As discussed in the Fund's prospectus under the
heading "Management and Servicing Fees," Stephens serves as the Fund's
distributor.
SHAREHOLDER SERVICING AGENT. As discussed in the Fund's
prospectus under the heading "Shareholder Servicing Agent," the Fund has
entered into a shareholder servicing agreement with Wells Fargo Bank.
TRANSFER AND DIVIDEND DISBURSING AGENT. Wells Fargo Bank has been
retained to act as transfer and dividend disbursing agent for the Fund. For its
services as transfer and dividend disbursing agent for the Fund's Class A and B
shares, Wells Fargo Bank is entitled to receive monthly payments at the annual
rate of 0.14% of the Fund's average daily net assets for Class A and B shares.
For its services as transfer and dividend disbursing agent for the Fund's
Institutional Class shares, Wells Fargo Bank is entitled to receive monthly
payments at the annual rate of 0.06% of the Fund's average daily net assets for
Institutional Class shares. For as long as the Fund's assets remain under $20
million, the Fund will not be charged any transfer agency fees.
CUSTODIAN. Investors Bank & Trust Company ("IBT") has been
retained to act as custodian for the Fund. The custodian, among other things,
maintains a custody account or accounts in the name of the Fund; receives and
delivers all assets for the Fund upon purchase and upon sale or maturity;
collects and receives all income and other payments and distributions on
account of the assets of the Fund and pays all expenses of the Fund. For its
services as custodian, IBT receives an asset-based fee and transaction charges
from the Fund.
DISTRIBUTION PLANS
As indicated in the Fund's Prospectus, the Fund has adopted
distribution plans (a "Plan") under Section 12(b) of the 1940 Act and Rule
12b-1 thereunder (the "Rule"). The Plan for the Class A shares of the Fund, as
adopted by the Company's Board of Directors on April 29, 1997, including a
majority of the Directors who were not "interested persons" (as defined in the
1940 Act) of the Fund and who had no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan (the
"Qualified Directors"). The Plan for the Class B shares of the Fund was adopted
by the Company's Board of Directors, including a majority of the Qualified
Directors, also on April 29, 1997.
The Plan in effect for the Class A shares of the Fund allows the
Fund to 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 shareholders of the Fund by paying on an annual basis
up to 0.25% of the Fund's average daily net assets attributable to Class A
shares. The Plans for all share classes provide for the reimbursement of actual
expenses and compensation. The Plan for the Class B shares allows the Fund to
defray all or part of the cost of printing prospectuses and other promotional
materials and of delivering materials to prospective shareholders by paying on
an annual basis up to 0.75% of the average daily net assets attributable to the
Class B shares of the
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<PAGE> 99
Fund. In addition, each Plan contemplates that to the extent any fees payable
pursuant to a Shareholder Servicing Agreement are deemed to be for
distribution-related services, rather than shareholder services, such payments
are approved and payable pursuant to such Plan.
Each Plan will continue in effect from year to year if such
continuance is approved by a majority vote of both the Directors of the Company
and the Qualified Directors. Any agreements related to the Plans ("Agreements")
also must be approved by majority vote of the Directors and the Qualified
Directors. Such Agreements will terminate automatically if assigned. The Fund
may terminate such Agreements at any time, without payment of any penalty, by a
vote of a majority of outstanding voting securities of the Class of shares
affected by such Agreement. The amounts payable under each Plan may not be
increased materially without the approval of a majority of the voting
securities of each Class of the Fund affected by such Agreement. Material
amendments to a Plan may not be made except by affirmative vote of a majority
of both the Directors of the Company and the Qualified Directors.
Each Plan requires that the Treasurer of the Company shall
provide to the Directors, and the Directors shall review, at least quarterly, a
written report of the amounts expended (and purposes therefor) under the Plan.
The Rule also requires that the selection and nomination of Directors who are
not "interested persons" of the Company be made by such disinterested
directors.
PERFORMANCE CALCULATIONS
The Fund may advertise certain total return information computed
in the manner described in its Prospectus. As and to the extent required by the
SEC, an average annual compound rate of return ("T") will be computed by using
the redeemable value at the end of a specified period ("ERV") of a hypothetical
initial investment in a Class of shares ("P") over a period of years ("n")
according to the following formula: P(1+T)n = ERV. In addition, the Fund, at
times, also may calculate total return based on net asset value per share of
each Class (rather than the public offering price), in which case the figures
would not reflect the effect of any sales charges that would have been paid by
an investor, or based on the assumption that a sales charge other than the
maximum sales charge (reflecting a Volume Discount) was assessed, provided that
total return data derived pursuant to the calculation described above also are
presented.
The Fund may advertise the cumulative total return on each class
of shares. Cumulative total return of shares is computed on a per share basis
and assumes the reinvestment of dividends and distributions. Cumulative total
return of shares generally is expressed as a percentage rate which is
calculated by combining the income and principal changes for a specified period
and dividing by the net asset value per share at the beginning of the period.
Advertisements may include the percentage rate of total return of shares or may
include the value of a hypothetical investment in shares at the end of the
period which assumes the application of the percentage rate of total return.
In addition to the above performance information, the Fund may
also advertise the cumulative total return of the Fund for one-month,
three-month, six-month, and year-to-date
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<PAGE> 100
periods. The cumulative total return for such periods is based on the overall
percentage change in value of a hypothetical investment in the Fund, assuming
all Fund dividends and capital gain distributions are reinvested, without
reflecting the effect of any sales charge that would be paid by an investor,
and is not annualized.
Investors should recognize that changes in the net asset values
of shares of each Class of the Fund will affect the yield of each such Class
for any specified period, and such changes should be considered together with
the yield of each Class in ascertaining the total return for the period to
shareholders. Yield information for each Class of shares of the Fund may be
useful in reviewing the Fund's performance and for providing a basis for
comparison with investment alternatives. The yield of each Class of the Fund,
however, may not be comparable to the yields from investment alternatives
because of differences in the foregoing variables and differences in the
methods used to value portfolio securities, compute expenses and calculate
yield.
From time to time and only to the extent the comparison is
appropriate for a Class of shares of the Fund, the Company may quote the
performance or price-earning ratio of a Class of shares in advertising and
other types of literature as compared to the performance of the Morgan Stanley
Capital International EAFE (Europe, Australia, Far East) Index, Morgan Stanley
Capital International EMF (Emerging Markets Free) Index, Morgan Stanley Capital
International EAFE/EMF Index, Lipper International Equity Fund Index, 1-YEAR
Treasury Bill Rate, S&p Index, The Dow Jones Industrial Average, The Lehman
Brothers 20+ Years Treasury Index, The Lehman Brothers 5-7 Year Treasury Index,
Ibc/donoghue's Money Fund Averages, Real Estate Investment Averages (As
Reported By The National Association Of Real Estate Investment Trusts), Gold
Investment Averages (Provided By The World Gold Council), Bank Averages (Which
Is Calculated From Figures Supplied By The U.s. League Of Savings Institutions
Based On Effective Annual Rates Of Interest On Both Passbook And Certificate
Accounts), Average Annualized Certificate Of Deposit Rates (From The Federal
Reserve G-13 Statistical Releases Or The Bank Rate Monitor), The Salomon One
Year Treasury Benchmark Index, The Consumer Price Index (As Published By The
U.s. Bureau Of Labor Statistics), Ten Year U.s. Government Bond Average, S&p's
Corporate Bond Yield Averages, Schabacter Investment Management Indices,
Salomon Brothers High Grade Bond Index, Lehman Brothers Long-term High Quality
Government/corporate Bond Index, other managed or unmanaged indices or
performance data of bonds, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual funds on overall performance or other criteria.
The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices. The performance of a class of shares of the Fund
also may be compared to the performance of other mutual funds having similar
objectives. This comparative performance could be expressed as a ranking
prepared by Lipper Analytical Services, Inc., CDA Investment Technologies,
Inc., Bloomberg Financial Markets or Morningstar, Inc., independent services
which monitor the performance of mutual funds. The performance of a Class of
shares of the Fund will be calculated by relating net asset value per share at
the beginning of a stated period to the net asset value of the investment,
assuming reinvestment of all gains, distributions and dividends paid, at the
end of the period. Any such comparisons may be useful to investors who wish to
compare the past performance of a Class of shares of the Fund with that of its
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<PAGE> 101
competitors. Of course, past performance cannot be a guarantee of future
results. The Company also may include, from time to time, a reference to
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer. General mutual fund statistics provided by the Investment Company
Institute may also be used.
In addition, the Company also may use, in advertisements and
other types of literature, information and statements: (1) showing that bank
savings accounts offer a guaranteed return of principal and a fixed rate of
interest, but no opportunity for capital growth; and (2) describing Wells Fargo
Bank, and its affiliates and predecessors, as one of the first investment
managers to advise investment accounts using asset allocation and index
strategies. The Company also may include in advertising and other types of
literature information and other data from reports and studies prepared by the
Tax Foundation, including information regarding federal and state tax levels
and the related "Tax Freedom Day."
From time to time the Company may reprint, reference or otherwise
use material from magazines, newsletters, newspapers and books including, but
not limited to the Wall Street Journal, Money Magazine, Barrons, Kiplingers,
Business Week, Fortune, Forbes, the San Francisco Chronicle, the San Jose
Mercury News, The New York Times, the Los Angeles Times, the Boston Globe, the
Washington Post, the Chicago Sun-Times, Investor Business Daily, Worth, Bank
Investor, American Banker, Smart Money, the 100 Best Mutual Funds (Adams
Publishing), Morningstar, Lipper Financial Data Services, or Value Line.
The Company also may disclose in sales literature, information,
and statements the distribution rate on the shares of each class of the Fund.
Distribution rate, which may be annualized, is the amount determined by
dividing the dollar amount per share of the most recent dividend by the most
recent NAV or maximum offering price per share as of a date specified in the
sales literature. Distribution rate will be accompanied by the standard 30-day
yield as required by the SEC.
The Company may also disclose in advertising and other types of
literature, information and statements the average credit quality of the Fund's
portfolio, or categories of investments therein, as of a specified date or
period. Average credit quality is calculated on a dollar weighted average basis
based on ratings assigned each issue or issuer, as the case may be, by S&P
and/or Moody's. In the event one rating agency does not rate the issue or
issuer, as the case may be, in the same tier as the other agency, the highest
rating is used in the calculation.
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for the Fund: (i) the Consumer Price Index may be
used to assess the real rate of return from an investment in the Fund; (ii)
other government statistics, including, but not limited to, The Survey of
Current Business, may be used to illustrate investment attributes of the Fund
or the general economic, business, investment, or financial environment in
which the Fund operates; (iii) the effect of tax-deferred compounding on the
investment returns of a Class of Fund shares, or on returns in general, may be
illustrated by graphs, charts, etc., where such graphs or charts would compare,
at
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<PAGE> 102
various points in time, the return from an investment in a Class of Fund shares
(or returns in general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates) with the return
on a taxable basis; and (iv) the sectors or industries in which the Fund
invests may be compared to relevant indices of stocks or surveys (e.g., S&P
Industry Surveys) to evaluate the Fund's historical performance or current or
potential value with respect to the particular industry or sector.
The Company also may include, from time to time, a reference to
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer.
The Company also may discuss in advertising and other types of
literature that the Fund has been assigned a rating by an NRSRO, such as
Standard & Poor's Corporation. Such rating would assess the creditworthiness of
the investments held by the Fund. The assigned rating would not be a
recommendation to purchase, sell or hold the Fund's shares since the rating
would not comment on the market price of the Fund's shares or the suitability
of the Fund for a particular investor. In addition, the assigned rating would
be subject to change, suspension or withdrawal as a result of changes in, or
unavailability of, information relating to the Fund or its investments. The
Company may compare the Fund's performance with other investments which are
assigned ratings by NRSROs. Any such comparisons may be useful to investors who
wish to compare the Fund's past performance with other rated investments.
From time to time, the Fund may use the following statements, or
variations thereof, in advertisements and other promotional materials: "Wells
Fargo Bank, as a Shareholder Servicing Agent for the Stagecoach Funds, provides
various services to its customers that are also shareholders of the Funds.
These services may include access to Stagecoach Funds' account information
through Automated Teller Machines (ATMs), the placement of purchase and
redemption requests for shares of the Funds through ATMs and the availability
of combined Wells Fargo Bank and Stagecoach Funds account statements."
The Company may disclose, in advertising and other types of
literature, information and statements regarding performance and rankings of
the investment management services of Wells Fargo Bank. The Company may also
disclose in advertising and other types of sales literature the assets and
categories of assets under management by Wells Fargo Bank. As of December 31,
1996, Wells Fargo Bank and its affiliates provided investment advisory services
for approximately $54 billion of assets of individuals, trusts, estates and
institutions and $20 billion of mutual fund assets.
The Company may disclose in advertising and other types of
literature that investors can open and maintain Sweep Accounts over the
Internet or through other electronic channels (collectively, "Electronic
Channels"). Such advertising and other literature may discuss the investment
options available to investors, including the types of accounts and any
applicable fees. Such advertising and other literature may disclose that Wells
Fargo Bank is the first major bank to offer an on-line application for a mutual
fund account that can be filled out completely through Electronic Channels.
Advertising and other literature may disclose that Wells Fargo Bank may
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maintain Web sites, pages or other information sites accessible through
Electronic Channels (an "Information Site") and may describe the contents and
features of the Information Site and instruct investors on how to access the
Information Site and open a Sweep Account. Advertising and other literature may
also disclose the procedures employed by Wells Fargo Bank to secure information
provided by investors, including disclosure and discussion of the tools and
services for accessing Electronic Channels. Such advertising or other
literature may include discussions of the advantages of establishing and
maintaining a Sweep Account through Electronic Channels and testimonials from
Wells Fargo Bank customers or employees and may also include descriptions of
locations where product demonstrations may occur. The Company may also disclose
the ranking of Wells Fargo Bank as one of the largest money managers in the
United States.
DETERMINATION OF NET ASSET VALUE
The Fund determines net asset value per share separately for each
Class of shares as of the close of regular trading (currently 1:00 p.m.,
Pacific time) on the NYSE on each Business Day, which is defined as each Monday
through Friday when the NYSE is open. Currently, the NYSE is closed on the
observance of the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Securities that are listed on U.S. and foreign stock exchanges
are valued at the last sale price on the day the securities are valued or,
lacking any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are generally
valued on the exchange considered by Wells Fargo Bank as the primary market.
Securities traded in the over-the-counter ("OTC") market and listed on the
NASDAQ Stock Market (`NASDAQ') are valued at the last trade price on NASDAQ at
1:00 p.m., Pacific time; other OTC securities, and U.S. Government securities,
are valued at the last quoted bid price (other than short-term investments that
mature in 60 days or less which are valued as described further below). To the
extent that the Fund holds lower rated corporate debt securities, it should be
recognized that judgment often plays a greater role than is the case with
respect to securities for which a broader range of dealer quotations and
last-sale information is available. All investments quoted in foreign
currencies will be valued daily in U.S. dollars on the basis of the foreign
currency exchange rate prevailing at the time such valuation is determined by
the Fund's custodian. Money market instruments maturing in 60 days or less are
valued at amortized cost. Futures contracts will be marked to market daily at
their respective settlement prices determined by the relevant exchange. These
prices are not necessarily final closing prices, but are intended to represent
prices prevailing during the final 30 seconds of the trading day. In all cases,
bid prices will be furnished by a reputable independent pricing service
approved by the Board of Directors. Prices provided by an independent pricing
service may be determined without exclusive reliance on quoted prices and may
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. Securities and assets for
which current market quotations are not readily available are valued at fair
value as determined in good faith by the Company's Board of Directors and in
accordance with procedures adopted by the Directors.
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Foreign currency exchange rates are generally determined prior to
the close of regular trading on the NYSE. Occasionally events affecting the
value of foreign investments and such exchange rates occur between the time at
which they are determined and the close of trading on the NYSE, which events
would not be reflected in the computation of the Fund's net asset value on that
day. If events materially affecting the value of such investments or currency
exchange rates occur during such time period, the investments will be valued at
their fair value as determined in good faith by or under the direction of the
Fund's Board of Directors. The foreign currency exchange transactions of the
Fund conducted on a spot (i.e., cash) basis are valued at the spot rate for
purchasing or selling currency prevailing on the foreign exchange market. This
rate under normal market conditions differs from the prevailing exchange rate
in an amount generally less than one-tenth of one percent due to the costs of
converting from one currency to another.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund may be purchased on any day the Fund is open
for business. The Fund is open for business each day the NYSE is open for
trading (a "Business Day"). Currently, the NYSE is closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday falls
on a weekend, the NYSE typically is closed on the weekday immediately before or
after such Holiday.
Payment for shares may, in the discretion of the adviser, be made
in the form of securities that are permissible investments for the Fund as
described in the Prospectuses. For further information about this form of
payment please contact Stephens. In connection with an in-kind securities
payment, the Fund will require, among other things, that the securities be
valued on the day of purchase in accordance with the pricing methods used by
the Fund and that the Fund receives satisfactory assurances that (i) it will
have good and marketable title to the securities received by it; (ii) that the
securities are in proper form for transfer to the Fund; and (iii) adequate
information will be provided concerning the basis and other matters relating to
the securities.
Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than customary weekend and holiday closings, or during
which trading is restricted, or during which as determined by the SEC by rule
or regulation) an emergency exists as a result of which disposal or valuation
of portfolio securities is not reasonably practicable, or for such periods as
the SEC may permit.
The Company may suspend redemption rights or postpone redemption
payments for such periods as are permitted under the 1940 Act. The Company may
also redeem shares involuntarily or make payment for redemption in securities
or other property if it appears appropriate to do so in light of the Company's
responsibilities under the 1940 Act.
In addition, the Company may redeem shares involuntarily to
reimburse the Fund for any losses sustained by reason of the failure of a
shareholders to make full payment for shares
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<PAGE> 105
purchased or to collect any charge relating to a transaction effected for the
benefit of a shareholder which is applicable to shares of the Fund as provided
from time to time in the Prospectus.
PORTFOLIO TRANSACTIONS
The Company has no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Company's Board of Directors, Wells Fargo Bank is
responsible for the Fund's portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best results taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
dealer's risk in positioning the securities involved. While Wells Fargo Bank
generally seeks reasonably competitive spreads or commissions, the Fund will
not necessarily be paying the lowest spread or commission available.
Except in the case of debt securities purchased by the Fund,
purchases and sales of securities usually will be agency transactions effected
through a securities exchange and on which a commission will be paid to the
servicing broker. Portfolio securities may be purchased or sold from or to
dealers serving as market makers for the securities at a net price. The Fund
also may purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, money market
securities are traded on a net basis and do not involve brokerage commissions.
The cost of executing the Fund's portfolio securities transactions will consist
primarily of brokerage commissions, dealer spreads and underwriting
commissions. Under the 1940 Act, persons affiliated with the Company are
prohibited from dealing with the Company as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the SEC or an exemption is otherwise available.
Purchases and sales of equity securities on domestic securities
exchanges are effected through brokers who charge a negotiated commission for
their services. Orders may be directed to any broker including, to the extent
and in the manner permitted by applicable law, Stephens or Wells Fargo
Securities Inc. In the domestic over-the-counter markets, securities are
generally traded on a "net" basis with dealers acting as principal for their
own accounts without a stated commission, although the price of the security
usually includes a profit to the dealer. In underwritten offerings, securities
are purchased at a fixed price that includes an amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
The Fund will not deal with Stephens, Wells Fargo Bank or their affiliates in
any transaction in which any of them acts as principal without an exemptive
order from the SEC or unless an exemption is otherwise available.
The Fund anticipates that brokerage transactions involving
securities traded in foreign markets will be conducted primarily on the
principal exchanges of such countries. Transactions on foreign exchanges are
usually subject to fixed commissions that are generally higher than negotiated
commissions on U.S. transactions, although each Fund will endeavor to achieve
the best net results in effecting its portfolio transactions. There is
generally less government
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supervision and regulation of exchanges and brokers in foreign countries than
in the United States.
In assessing the best overall terms available for any
transaction, Wells Fargo Bank considers factors deemed relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Wells Fargo Bank may cause the Fund to pay a
broker/dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker/dealer for
effecting the same transaction, provided that Wells Fargo Bank determines in
good faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker/dealer, viewed in terms
of either the particular transaction or the overall responsibilities of Wells
Fargo Bank. Such brokerage and research services might consist of reports and
statistics relating to specific companies or industries, general summaries of
groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the stock, bond, and government securities markets and the
economy.
Supplementary research information so received is in addition to,
and not in lieu of, services required to be performed by Wells Fargo Bank and
does not reduce the advisory fees payable by the Fund. The Board of Directors
will periodically review the commissions paid by the Fund to consider whether
the commissions paid over representative periods of time appear to be
reasonable in relation to the benefits inuring to the Fund. It is possible that
certain of the supplementary research or other services received will primarily
benefit one or more other investment companies or other accounts for which
investment discretion is exercised. Conversely, the Fund may be the primary
beneficiary of the research or services received as a result of portfolio
transactions effected for such other account or investment company.
Under Section 28(e) of the Securities Exchange Act of 1934, an
adviser shall not be "deemed to have acted unlawfully or to have breached its
fiduciary duty" solely because under certain circumstances it has caused the
account to pay a higher commission than the lowest available. To obtain the
benefit of Section 28(e), an adviser must make a good faith determination that
the commissions paid are "reasonable in relation to the value of the brokerage
and research services provided . . . viewed in terms of either that particular
transaction or its overall responsibilities with respect to the accounts as to
which it exercises investment discretion and that the services provided by a
broker provide an adviser with lawful and appropriate assistance in the
performance of its investment decision-making responsibilities." Accordingly,
the price to the Fund in any transaction may be less favorable than that
available from another broker/dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Broker/dealers utilized by Wells Fargo Bank may furnish
statistical, research and other information or services which are deemed by
Wells Fargo Bank to be beneficial to the Fund's investment programs. Research
services received from brokers supplement Wells Fargo Bank's own research and
may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with
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respect to U.S. and foreign economies, securities, markets, specific industry
groups and individual companies; information on political developments;
portfolio management strategies; performance information on securities and
information concerning prices of securities; and information supplied by
specialized services to Wells Fargo Bank and to the Company's Directors with
respect to the performance, investment activities and fees and expenses of
other mutual funds. Such information may be communicated electronically, orally
or in written form. Research services may also include the providing of
equipment used to communicate research information, the arranging of meetings
with management of companies and the providing of access to consultants who
supply research information.
The outside research assistance is useful to Wells Fargo Bank
since the brokers utilized by Wells Fargo Bank as a group tend to follow a
broader universe of securities and other matters than the staff of Wells Fargo
Bank can follow. In addition, this research provides Wells Fargo Bank with a
diverse perspective on financial markets. Research services which are provided
to Wells Fargo Bank by brokers are available for the benefit of all accounts
managed or advised by Wells Fargo Bank. It is the opinion of Wells Fargo Bank
that this material is beneficial in supplementing their research and analysis;
and, therefore, it may benefit the Fund by improving the quality of Wells Fargo
Bank's investment advice. The advisory fee paid by the Fund is not reduced
because Wells Fargo Bank receives such services.
FUND EXPENSES
Except for the expenses borne by Wells Fargo Bank and Stephens,
the Company bears all costs of its operations, including the compensation of
its Directors who are not affiliated with Stephens or Wells Fargo Bank or any
of their affiliates; advisory, shareholder servicing and administration fees;
payments pursuant to any Plan; interest charges; taxes; fees and expenses of
its independent accountants, legal counsel, transfer agent and dividend
disbursing agent; expenses of redeeming shares; expenses of preparing and
printing prospectuses (except the expense of printing and mailing prospectuses
used for promotional purposes, unless otherwise payable pursuant to a Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio transactions; fees and expenses of
its custodian, including those for keeping books and accounts and calculating
the NAV per share of the Fund; expenses of shareholders' meetings; expenses
relating to the issuance, registration and qualification of Fund shares;
pricing services, and any extraordinary expenses. Expenses attributable to the
Fund are charged against the Fund's assets. General expenses of the Company are
allocated among all of the funds of the Company, including the Fund, in a
manner proportionate to the net assets of the Fund, on a transactional basis,
or on such other basis as the Company's Board of Directors deems equitable.
FEDERAL INCOME TAXES
In General. The following information supplements and should be
read in conjunction with Prospectus sections entitled "Dividend and Capital
Gain Distributions" and "Taxes." The
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<PAGE> 108
Prospectus of the Fund describes generally the tax treatment of distributions
by the Fund. This section of the SAI includes additional information concerning
federal income taxes.
The Company intends to qualify the Fund as a regulated investment
company under Subchapter M of the Code as long as such qualification is in the
best interest of the Fund's shareholders. The Fund will be treated as a
separate entity for tax purposes and thus the provisions of the Code applicable
to regulated investment companies will generally be applied to the Fund, rather
than to the Company as a whole. In addition, net capital gains, net investment
income, and operating expenses will be determined separately for the Fund.
Qualification as a regulated investment company under the Code
requires, among other things, that (a) the Fund derive at least 90% of its
annual gross income from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities or options
thereon; (b) the Fund derive less than 30% of its gross income from gains from
the sale or other disposition of securities or options thereon held for less
than three months; and (c) the Fund diversify its holdings so that, at the end
of each quarter of the taxable year, (i) at least 50% of the market value of
the Fund's assets is represented by cash, government securities and other
securities limited in respect of any one issuer to an amount not greater than
5% of the Fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in
the securities of any one issuer (other than U.S. Government obligations and
the securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses. As a regulated investment company, the
Fund will not be subject to federal income tax on its net investment income and
net capital gains distributed to its shareholders, provided that it distributes
to its shareholders at least 90% of its net investment income earned in each
year. The Fund intends to pay out substantially all of its net investment
income and net realized capital gains (if any) for each year.
A 4% nondeductible excise tax will be imposed on the Fund to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. The Fund will either actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.
Income and dividends received by the Fund from sources within
foreign countries may be subject to withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. The Fund expects to be eligible for and make an
election to "pass through" foreign tax credits to its shareholders.
Federal Income Tax Rates. As of the printing of this SAI, the
maximum individual tax rate applicable to ordinary income is 39.6% (marginal
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual marginal tax rate applicable
to net capital gains is 28%; and the maximum corporate tax rate applicable to
ordinary income and net capital gains is 35% (except that to eliminate the
benefit of lower marginal corporate income tax rates, corporations which have
taxable income in excess of $100,000
25
<PAGE> 109
for a taxable year will be required to pay an additional amount of income tax
of up to $11,750 and corporations which have taxable income in excess of
$15,000,000 for a taxable year will be required to pay an additional amount of
tax of up to $100,000). Naturally, the amount of tax payable by an individual
or corporation will be affected by a combination of tax laws covering, for
example, deductions, credits, deferrals, exemptions, sources of income and
other matters.
Capital Gain Distributions. To the extent that the Fund
recognizes net long-term capital gains during a taxable year, the Fund intends
to distribute such gains at least annually and these distributions will be
taxable to Fund shareholders as long-term capital gains, regardless of how long
a shareholder has held Fund shares. Such distributions will be designated as
capital gain distributions in a written notice mailed by the Fund to the
shareholders not later than 60 days after the close of the Fund's taxable year.
Disposition of Fund Shares. If a shareholder receives a
designated capital gain distribution (to be treated by the shareholder as a
long-term capital gain) with respect to any Fund share and such Fund share is
held for six months or less, then (unless otherwise disallowed) any loss on the
sale or exchange of that Fund share will be treated as a long-term capital loss
to the extent of the designated capital gain distribution.
If a shareholder exchanges or otherwise disposes of Fund shares
within 90 days of having acquired such shares and if, as a result of having
acquired those shares, the shareholder subsequently pays a reduced sales charge
on a new purchase of shares of the Fund or of a different regulated investment
company, the sales charge previously incurred acquiring the Fund's shares shall
not be taken into account (to the extent such previous sales charges do not
exceed the reduction in sales charges on the new purchase) for the purpose of
determining the amount of gain or loss on the disposition, but will be treated
as having been incurred in the acquisition of such other shares. Also, any loss
realized on a redemption or exchange of shares of the Fund will be disallowed
to the extent that substantially identical shares are acquired within the
61-day period beginning 30 days before and ending 30 days after the shares are
disposed of.
Taxation of Fund Investments. Gains or losses on sales of
portfolio securities by the Fund will generally be long-term capital gains or
losses if the securities have been held by it for more than one year, except in
certain cases such as where the Fund acquires a put or writes a call thereon.
Gains recognized on the disposition of a debt obligation (including tax-exempt
obligations purchased after April 30, 1993) purchased by the Fund at a market
discount (generally at a price less than its principal amount) will be treated
as ordinary income to the extent of the portion of market discount which
accrued during the period of time the Fund held the debt obligation, unless the
Fund elects to accrue market discount in its ordinary income during the term in
which it holds the debt obligations. Other gains or losses on the sale of
portfolio securities will generally be short-term capital gains or losses.
If an option written by the Fund lapses or is terminated through
a closing transaction, such as a repurchase by the Fund of the option from its
holder, the Fund will realize a short-term capital gain or loss, depending on
whether the premium income is greater or less than the amount paid by the Fund
in the closing transaction. Some realized capital losses may be deferred if
they
26
<PAGE> 110
result from a position which is part of a "straddle," discussed below. If
securities are sold by the Fund pursuant to the exercise of a call option
written by it, the Fund will add the premium received to the sale price of the
securities delivered in determining the amount of gain or loss on the sale. If
securities are purchased by the Fund pursuant to the exercise of a put option
written by it, the Fund will subtract the premium received from its cost basis
in the securities purchased. The requirement that the Fund derive less than 30%
of its gross income from gains from the sale of securities held for less than
three months may limit the Fund's ability to write options.
The amount of any gain or loss realized by a Fund on closing out
certain regulated futures contracts will generally result in a realized capital
gain or loss for tax purposes. Such regulated futures contracts held at the end
of each taxable year will be required to be "marked to market" for federal
income tax purposes pursuant to Section 1256 of the Code. In this regard, such
regulated futures contracts will be deemed to have been sold at market value.
Sixty percent (60%) of any net gain or loss recognized on these deemed sales
and sixty percent (60%) of any net realized gain or loss from any actual sales,
generally will be treated as long-term capital gain or loss, and the remaining
forty percent (40%) will be treated as short-term capital gain or loss.
Transactions that qualify as designated hedges are excepted from the "marked to
market" and "60%/40%" rules. Certain currency transactions are subject to
Section 988 of the Code pursuant to which gains or losses thereon are generally
computed separately and treated as ordinary income or losses. Although the Fund
may engage in transactions subject to Section 988 of the Code, the Fund will
attempt to monitor Section 988 transactions to avoid an adverse tax impact.
Offsetting positions held by a regulated investment company
involving certain financial forward, futures or options contracts may be
considered, for tax purposes, to constitute "straddles." "Straddles" are
defined to include "offsetting positions" in actively traded personal property.
The tax treatment of "straddles" is governed by Section 1092 of the Code which,
in certain circumstances, overrides or modifies the provisions of Section 1256.
If a regulated investment company were treated as entering into
"straddles" by reason of its engaging in certain financial forward, futures or
option contracts, such straddles could be characterized as "mixed straddles" if
the futures, forwards, or options comprising a part of such straddles were
governed by Section 1256 of the Code. The regulated investment company may make
one or more elections with respect to "mixed straddles." Depending upon which
election is made, if any, the results with respect to the regulated investment
company may differ. Generally, to the extent the straddle rules apply to
positions established by the regulated investment company, losses realized by
the regulated investment company may be deferred to the extent of unrealized
gain in any offsetting positions. Moreover, as a result of the straddle and the
conversion transaction rules, short-term capital loss on straddle positions may
be recharacterized as long-term capital loss, and long-term capital gain may be
characterized as short-term capital gain or ordinary income.
If the Fund purchases shares in a "passive foreign investment
company" ("PFIC"), the Fund may be subject to federal income tax and an
interest charge imposed by the IRS upon certain distributions from the PFIC or
the Fund's disposition of its PFIC shares. If the Fund invests in a PFIC, the
Fund intends to make an available election to mark-to-market its interest in
PFIC
27
<PAGE> 111
shares. Under the election, the Fund will be treated as recognizing at the end
of each taxable year the excess, if any, of the fair market value of its
interest in PFIC shares over its basis in such shares. Although such excess
will be taxable to the Fund as ordinary income notwithstanding any
distributions by the PFIC, the Fund will not be subject to federal income tax
or the interest charge with respect to its interest in the PFIC.
Foreign Shareholders. Under the Code, distributions of net
investment income by the Fund to a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or a lower treaty rate). Withholding will not apply if a
dividend paid by the Fund to a foreign shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. Distributions of net long-term capital gains are not
subject to tax withholding, but, in the case of a foreign shareholder who is a
nonresident alien individual, such distributions ordinarily will be subject to
U.S. income tax at a rate of 30% if the individual is physically present in the
U.S. for more than 182 days during the taxable year.
Backup Withholding. The Company may be required to withhold,
subject to certain exemptions, at a rate of 31% ("backup withholding") on
dividends, capital gain distributions, and redemption proceeds (including
proceeds from exchanges and redemptions in kind) paid or credited to an
individual Fund shareholder, unless a shareholder certifies that the Taxpayer
Identification Number ("TIN") provided is correct and that the shareholder is
not subject to backup withholding, or the IRS notifies the Company that the
shareholder's TIN is incorrect or the shareholder is subject to backup
withholding. Such tax withheld does not constitute any additional tax imposed
on the shareholder, and may be claimed as a tax payment on the shareholder's
federal income tax return. An investor must provide a valid TIN upon opening or
reopening an account. Failure to furnish a valid TIN to the Company could
subject the investor to penalties imposed by the IRS.
Other Matters. Investors should be aware that the investments to
be made by the Fund may involve sophisticated tax rules that may result in
income or gain recognition by the Fund without corresponding current cash
receipts. Although the Fund will seek to avoid significant noncash income, such
noncash income could be recognized by the Fund, in which case the Fund may
distribute cash derived from other sources in order to meet the minimum
distribution requirements described above.
The foregoing discussion and the discussions in the Prospectus
applicable to each shareholder address only some of the federal tax
considerations generally affecting investments in the Fund. Each investor is
urged to consult his or her tax advisor regarding specific questions as to
federal, state or local taxes and foreign taxes.
28
<PAGE> 112
CAPITAL STOCK
The Fund is one of the funds of the Stagecoach Family of Funds.
The Company was organized as a Maryland corporation on September 9, 1991 and
currently offers shares of twenty-six other funds.
Most of the Company's funds are authorized to issue multiple
classes of shares, one class generally subject to a front-end sales charge and,
in some cases, a class subject to a contingent-deferred sales charge, that are
offered to retail investors. Certain of the Company's funds also are authorized
to issue other classes of shares, which are sold primarily to institutional
investors. Each class of shares in the Fund represents an equal, proportionate
interest in the Fund with other shares of the same class. Shareholders of each
class bear their pro rata portion of the fund's operating expenses, except for
certain class-specific expenses (e.g., any state securities registration fees,
shareholder servicing fees or distribution fees that may be paid under Rule
12b-1) that are allocated to a particular class. Please contact Stagecoach
Shareholder Services at 1-800-222-8222 if you would like additional information
about other funds or classes of shares offered.
The Fund has three classes of shares -- Class A Shares, Class B
Shares and Institutional Class Shares. With respect to matters affecting one
Class but not another, shareholders vote as a Class. Subject to the foregoing,
all shares of the Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by
law or where the matter involved only affects one series. For example, a change
in the Fund's fundamental investment policy affects only one series and would
be voted upon only by shareholders of the Fund involved. Additionally, approval
of an advisory contract, since it affects only one Fund, is a matter to be
determined separately by Series. Approval by the shareholders of one Series is
effective as to that Series whether or not sufficient votes are received from
the shareholders of the other Series to approve the proposal as to those
Series. As used in the Prospectus of the Fund and in this SAI, the term
"majority," when referring to approvals to be obtained from shareholders of a
Class of shares of the Fund, means the vote of the lesser of (i) 67% of the
shares of the Class represented at a meeting if the holders of more than 50% of
the outstanding shares of the Class are present in person or by proxy, or (ii)
more than 50% of the outstanding shares of the Class of the Fund. As used in
the Prospectus of the Fund and in this SAI, the term "majority," when referring
to approvals to be obtained from shareholders of the Fund, means the vote of
the lesser of (i) 67% of the shares of the Fund represented at a meeting if the
holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy, or (ii) more than 50% of the outstanding shares of the
Fund. The term "majority," when referring to the approvals to be obtained from
shareholders of the Company as a whole, means the vote of the lesser of (i) 67%
of the Company's shares represented at a meeting if the holders of more than
50% of the Company's outstanding shares are present in person or by proxy, or
(ii) more than 50% of the Company's outstanding shares. Shareholders are
entitled to one vote for each full share held and fractional votes for
fractional shares held.
The Company may dispense with an annual meeting of shareholders
in any year in which it is not required to elect Directors under the 1940 Act.
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<PAGE> 113
Each share represents an equal proportional interest in the Fund
with each other share in the same Class of shares and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared in the discretion of the Directors. In the event of
the liquidation or dissolution of the Company, shareholders of the Fund are
entitled to receive the assets attributable to the Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular investment portfolio that are available for distribution in such
manner and on such basis as the Directors in their sole discretion may
determine.
Shareholders are not entitled to any preemptive rights. All
shares, when issued, will be fully paid and non-assessable by the Company.
Set forth below is the name, address and share ownership of each
person known by the Company to have beneficial or record ownership of 5% or
more of a class of the Fund or 5% or more of the voting securities of the Fund
as a whole.
5% OWNERSHIP AS OF AUGUST 1, 1997
NAME AND CLASS; TYPE PERCENTAGE PERCENTAGE
ADDRESS OF OWNERSHIP OF CLASS OF FUND
-------- ------------ ---------- ----------
Wells Fargo Bank, N.A. Class A ______% ______%
P.O. Box 63015 Beneficially
San Francisco, CA Owned
94163
Wells Fargo Bank, N.A. Class B _______% ________%
P.O. Box 63015 Beneficially
San Francisco, CA Owned
94163
Wells Fargo Bank, N.A. Institutional _______% ________%
P.O. Box 63015 Class
San Francisco, CA Beneficially
94163 Owned
For purposes of the 1940 Act, any person who owns directly or
through one or more controlled companies more than 25% of the voting securities
of a company is presumed to "control" such company. Accordingly, to the extent
that a shareholder identified in the foregoing table is identified as the
beneficial holder of more than 25% of a class, or is identified as the holder
of record of more than 25% of a class and has voting and/or investment powers,
it may be presumed to control such class.
OTHER
The Registration Statement, including the Prospectus for each
Fund, the SAI and the exhibits filed therewith, may be examined at the office
of the U.S. Securities and Exchange Commission ("SEC") in Washington, D.C.
Statements contained in a Prospectus or the SAI as to the contents of any
contract or other document referred to herein or in a Prospectus are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
30
<PAGE> 114
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent
auditors for the Company. KPMG Peat Marwick LLP provides audit services, tax
return preparation and assistance and consultation in connection with review of
certain SEC filings. KPMG Peat Marwick LLP's address is Three Embarcadero
Center, San Francisco, California 94111.
FINANCIAL STATEMENTS
At least semi-annually, the Company will furnish the shareholders
of the Fund with financial statements for the Fund.
31
<PAGE> 115
SAI APPENDIX
The following is a description of the ratings given by Moody's
and S&P to corporate bonds and commercial paper.
Corporate Bonds
Moody's: The four highest ratings for corporate bonds are "Aaa,"
"Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of the "best quality"
and carry the smallest amount of investment risk. Bonds rated "Aa" are of "high
quality by all standards," but margins of protection or other elements make
long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds rated "A"
possess many favorable investment attributes and are considered to be upper
medium grade obligations. Bonds rated "Baa" are considered to be medium grade
obligations; interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds have
speculative characteristics as well. Moody's applies numerical modifiers: 1, 2
and 3 in each rating category from "Aa" through "Baa" in its rating system. The
modifier 1 indicates that the security ranks in the higher end of its category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end.
S&P: The four highest ratings for corporate bonds are "AAA,"
"AA," "A" and "BBB." Bonds rated "AAA" have the highest ratings assigned by S&P
and have an extremely strong capacity to pay interest and repay principal.
Bonds rated "AA" have a "very strong capacity to pay interest and repay
principal" and differ "from the highest rated issued only in small degree."
Bonds rated "A" have a "strong capacity" to pay interest and repay principal,
but are "somewhat more susceptible" to adverse effects of changes in economic
conditions or other circumstances than bonds in higher rated categories. Bonds
rated "BBB" are regarded as having an "adequate capacity" to pay interest and
repay principal, but changes in economic conditions or other circumstances are
more likely to lead to a "weakened capacity" to make such repayments. The
ratings from "AA" to "BBB" may be modified by the addition of a plus or minus
sign to show relative standing within the category.
Corporate Commercial Paper
Moody's: The highest rating for corporate commercial paper is
"P-1" (Prime-1). Issuers rated "P-1" have a "superior capacity for repayment of
short-term promissory obligations." Issuers rated "P-2" (Prime-2) "have a
strong capacity for repayment of short-term promissory obligations," but
earnings trends, while sound, will be subject to more variation.
S&P: The "A-1" rating for corporate commercial paper indicates
that the "degree of safety regarding timely payment is either overwhelming or
very strong." Commercial paper with "overwhelming safety characteristics" will
be rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
A-1
<PAGE> 116
STAGECOACH FUNDS, INC.
SEC REGISTRATION NOS. 33-42927; 811-6419
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
With respect to the Aggressive Growth, Arizona Tax-Free, Asset
Allocation, Balanced, California Tax-Free Bond, California
Tax-Free Income, California Tax-Free Money Market Mutual,
Corporate Stock, Diversified Income, Equity Value, Ginnie Mae,
Government Money Market Mutual, Growth and Income, Intermediate
Bond, Money Market Mutual, Money Market Trust, National Tax-Free,
National Tax-free Money Market Mutual, Oregon Tax-Free, Prime
Money Market Mutual, Short-Intermediate U.S. Government Income,
Small Cap, Treasury Money Market Mutual and U.S. Government
Allocation Funds, the portfolio of investments, audited financial
statements and independent auditors' report for the fiscal period
ended September 30, 1996 are incorporated in the respective
statements of additional information for such Funds by reference
to the Company's Annual Reports, as filed with the SEC on December
9, 1996.
With respect to the Asset Allocation, Capital Appreciation,
Corporate Stock, Small Cap, Tax-Free Money Market and U.S.
Government Allocation Master Portfolios of Master Investment
Trust, the portfolio of investments, audited financial statements
and independent auditors' report for the fiscal period ended
September 30, 1996 are incorporated in the respective statements
of additional information for such Funds by reference to the
Company's Annual Reports as filed with the SEC on December 9,
1996.
With respect to the International Equity Fund and National Tax
Free Money Market Trust, the financial statements for such Funds
will be incorporated by reference in their respective statements
of additional information when available.
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
1 - Amended and Restated Articles of Incorporation dated November 22, 1995, incorporated by
reference to Post-Effective Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
2 - By-Laws, incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement, filed May 15, 1997.
3 - Not Applicable
4 - Not Applicable
</TABLE>
C-1
<PAGE> 117
<TABLE>
<S> <C>
5(a)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
5(a)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on behalf of the Asset
Allocation Fund, incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.
5(b)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the U.S. Government
Allocation Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
5(b)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on behalf of the U.S.
Government Allocation Fund, incorporated by reference to Post-Effective Amendment No. 21
to the Registration Statement, filed February 29, 1996.
5(c) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
5(d) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Bond
Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
5(e) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
5(f) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
5(g)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
5(g)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on behalf of the Corporate
Stock Fund, incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.
5(h) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the Registration
Statement, filed May 1, 1992.
5(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-Free
Income Fund, incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement, filed September 10, 1992.
5(j) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
5(k) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Arizona Tax-Free Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
</TABLE>
C-2
<PAGE> 118
<TABLE>
<S> <C>
5(l) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Balanced Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(m) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Equity Value Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(n) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Government Money Market
Mutual Fund, incorporated by reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
5(o) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Intermediate Bond Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(p) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Money Market Trust Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(q) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the National Tax-Free Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(r) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Oregon Tax-Free Fund,
incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(s) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Prime Money Market Mutual
Fund, incorporated by reference to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(t) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of the Treasury Money Market
Mutual Fund, incorporated by reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
5(u) - Form of Advisory Contract with Wells Fargo Bank, N.A. on behalf of the California Tax-
Free Money Market Trust, incorporated by reference to Post-Effective Amendment No. 28 to
the Registration Statement, filed December 3, 1996.
5(v) - Form of Advisory Contract with Wells Fargo Bank, N.A. on behalf of the National Tax-Free
Money Market Trust, filed herewith.
5(w) - Form of Advisory Contract with Wells Fargo Bank, N.A. on behalf of the International
Equity Fund, filed herewith.
6(a) - Amended Distribution Agreement with Stephens Inc., incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
</TABLE>
C-3
<PAGE> 119
<TABLE>
<S> <C>
6(b) - Selling Agreement with Wells Fargo Bank, N.A. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 2 to the Registration Statement, filed April
17, 1992.
7 - Not Applicable
8(a) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on behalf of the
Asset Allocation Fund, incorporated by reference to Post-Effective Amendment No. 2 to
the Registration Statement, filed April 17, 1992.
8(b) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on behalf of the
U.S. Government Allocation Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
8(c) - Custody Agreement with Wells Fargo Institutional Trust Company, N.A. on behalf of the
Corporate Stock Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
8(d) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
8(e) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free Bond
Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
8(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
8(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
8(h) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Money Market Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the Registration
Statement, filed May 1, 1992.
8(i) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the California Tax-Free
Income Fund, incorporated by reference to Post-Effective Amendment No. 17 to the
Registration Statement, filed November 29, 1995.
8(j) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
8(k) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-Effective Amendment No. 8 to
the Registration Statement, filed February 10, 1994.
8(l) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 24 to the
Registration Statement, filed April 29, 1996.
</TABLE>
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<PAGE> 120
<TABLE>
<S> <C>
8(m) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of the Aggressive Growth Fund,
incorporated by reference to Post-Effective Amendment No. 20 to the Registration
Statement, filed February 28, 1996.
8(n) - Form of Custody Agreement with Wells Fargo Bank on behalf of the Arizona Tax-Free,
Balanced, Equity Value, Government Money Market Mutual, Intermediate Bond, Money Market
Trust, National Tax-Free, Oregon Tax-Free, Prime Money Market Mutual and Treasury Money
Market Mutual Funds, incorporated by reference to Post-Effective Amendment No. 25 to the
Registration Statement, filed June 17, 1996.
9(a)(i) - Administration Agreement with Stephens Inc. on behalf of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(a)(ii) - Administration Agreement with Stephens Inc. on behalf of the U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(a)(iii) - Administration Agreement with Stephens Inc. on behalf of the California Tax-Free Bond
Fund, incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(a)(iv) - Administration Agreement with Stephens Inc. on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
9(a)(v) - Administration Agreement with Stephens Inc. on behalf of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(a)(vi) - Administration Agreement with Stephens Inc. on behalf of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(a)(vii) - Administration Agreement with Stephens Inc. on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(a)(viii) - Administration Agreement with Stephens Inc. on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3 to the Registration
Statement, filed May 1, 1992.
9(a)(ix) - Administration Agreement with Stephens Inc. on behalf of the California Tax-Free Income
Fund, incorporated by reference to Post-Effective Amendment No. 4 to the Registration
Statement, filed September 10, 1992.
9(a)(x) - Administration Agreement with Stephens Inc. on behalf of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 4 to the Registration
Statement, filed September 10, 1992.
9(a)(xi) - Administration Agreement with Stephens Inc. on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-Effective Amendment No. 8 to
the Registration Statement, filed February 10, 1994.
</TABLE>
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<TABLE>
<S> <C>
9(a)(xii) - Administration Agreement with Stephens Inc. on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 19 to the
Registration Statement, filed December 18, 1995.
9(a)(xiii) - Administration Agreement with Stephens Inc. on behalf of the Aggressive Growth Fund,
incorporated by reference to Post-Effective Amendment No. 19 to the Registration
Statement, filed December 18, 1995.
9(a)(xiv) - Administration Agreement with Stephens Inc. on behalf of the Arizona Tax-Free, Balanced,
California Tax-Free Money Market Trust, Equity Value, Government Money Market Mutual,
Intermediate Bond, Money Market Trust, National Tax-Free, Oregon Tax-Free, Prime Money
Market Mutual and Treasury Money Market Mutual Funds, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement, filed January 31, 1997.
9(b) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the Funds, filed herewith.
9(c)(i) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the California
Tax-Free Money Market Mutual Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
9(c)(ii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Corporate
Stock Fund, incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
9(c)(iii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Money
Market Mutual Fund, incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement, filed May 1, 1992.
9(c)(iv) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the California
Tax-Free Income Fund, incorporated by reference to Post-Effective Amendment No. 17 to
the Registration Statement, filed November 29, 1995.
9(c)(v) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Short-
Intermediate U.S. Government Income Fund, incorporated by reference to Post-Effective
Amendment No. 8 to the Registration Statement, filed February 10, 1994.
9(c)(vi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the National
Tax-Free Money Market Mutual Fund, incorporated by reference to Post-Effective
Amendment No. 24 to the Registration Statement, filed April 29, 1996.
9(c)(vii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the Asset Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(viii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the California Tax-Free Bond Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
</TABLE>
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<TABLE>
<S> <C>
9(c)(ix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the Diversified Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(x) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the Ginnie Mae Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the Growth and Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the U.S. Government Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xiii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class B
Shares of the Aggressive Growth Fund, incorporated by reference to Post-Effective
Amendment No. 20 to the Registration Statement, filed February 28, 1996.
9(c)(xiv) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the
Class A Shares of the Asset Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xv) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the
Class A Shares of the California Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xvi) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the
Class A Shares of the Diversified Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xvii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the
Class A Shares of the Ginnie Mae Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xviii) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the
Class A Shares of the Growth and Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xix) - Amended Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the
Class A Shares of the U.S. Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xx) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf of the Class A
Shares of the Aggressive Growth Fund, incorporated by reference to
</TABLE>
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<TABLE>
<S> <C>
Post-Effective Amendment No. 20 to the Registration Statement, filed February 28, 1996.
9(d)(i) - Servicing Plan on behalf of the National Tax-Free Money Market Mutual Fund, incorporated
by reference to Post-Effective Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
9(d)(ii) - Servicing Plan on behalf of the Class B Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(iii) - Servicing Plan on behalf of the Class B Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(iv) - Servicing Plan on behalf of the Class B Shares of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(v) - Servicing Plan on behalf of the Class B Shares of the Ginnie Mae Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(d)(vi) - Servicing Plan on behalf of the Class B Shares of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(vii) - Servicing Plan on behalf of the Class B Shares of the U.S. Government Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(viii) - Servicing Plan on behalf of the Class A Shares of the Aggressive Growth Fund,
incorporated by reference to Post-Effective Amendment No. 19 to the Registration
Statement, filed December 18, 1995.
9(d)(ix) - Servicing Plan on behalf of the Class B Shares of the Aggressive Growth Fund,
incorporated by reference to Post-Effective Amendment No. 19 to the Registration
Statement, filed December 18, 1995.
9(d)(x) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the Class A
Shares of the Arizona Tax-Free, Balanced, Equity Value, Government Money Market Mutual,
Intermediate Bond, International Equity, National Tax-Free, Oregon Tax-Free, Prime Money
Market Mutual, Small Cap and Treasury Money Market Mutual Funds, filed herewith.
9(d)(xi) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the Class B
Shares of the Arizona Tax-Free, Balanced, Equity Value, Intermediate Bond, International
Equity, National Tax-Free, Oregon Tax-Free and Small Cap Funds, filed herewith.
9(d)(xii) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the
Institutional Class Shares of the Aggressive Growth, Arizona Tax-Free, Balanced,
California Tax-Free Bond, California Tax-Free Income, Equity Value, Ginnie Mae, Growth
and Income, Intermediate Bond, International Equity, Money Market Mutual, National Tax-
Free, Oregon Tax-Free, Prime Money
</TABLE>
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<TABLE>
<S> <C>
Market Mutual, Short-Intermediate Government, Small Cap and Treasury Money Market Mutual
Funds, filed herewith.
9(d)(xiii) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the Service
Class Shares of the Prime Money Market Mutual and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 25 to the Registration
Statement, filed June 17, 1996.
9(d)(xiv) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the Money Market
Trust and California Tax-Free Money Market Trust, incorporated by reference to Post-
Effective Amendment No. 28 to the Registration Statement, filed December 3, 1996.
9(d)(xv) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the Class E
Shares of the Treasury Money Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement, filed January 23, 1997.
9(e) - Cross Indemnification Agreement, incorporated by reference to Post-Effective Amendment
No. 11 to the Registration Statement of Stagecoach Inc., filed July 27, 1994.
10 - Opinion and Consent of Counsel, filed herewith.
11 - Not Applicable
12 - Not Applicable
13 - Investment letter, incorporated by reference to Item 24(b) of Pre-Effective Amendment
No. 1 to the Registration Statement, filed November 29, 1991.
14 - Not Applicable
15(a)(i) - Distribution Plan on behalf of the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
15(a)(ii) - Distribution Plan on behalf of the Corporate Stock Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement, filed April 17, 1992.
15(a)(iii) - Distribution Plan on behalf of the Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 3 to the Registration Statement, filed May 1, 1992.
15(a)(iv) - Distribution Plan on behalf of the California Tax-Free Income Fund, incorporated by
reference to Post-Effective Amendment No. 4 to the Registration Statement, filed
September 10, 1992.
15(a)(v) - Distribution Plan on behalf of the Short-Intermediate U.S. Government Income Fund,
incorporated by reference to Post-Effective Amendment No. 8 to the Registration
Statement, filed February 10, 1994.
</TABLE>
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<TABLE>
<S> <C>
15(a)(vi) - Distribution Plan on behalf of the National Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
15(a)(vii) - Distribution Plan on behalf of the California Tax-Free Money Market Trust, incorporated
by reference to Post-Effective Amendment No. 28 to the Registration Statement, filed
December 3, 1996.
15(b)(i) - Distribution Plan on behalf of the Class B Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(b)(ii) - Distribution Plan on behalf of the Class B Shares of the California Tax-Free Bond Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(b)(iii) - Distribution Plan on behalf of the Class B Shares of the Diversified Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(b)(iv) - Distribution Plan on behalf of the Class B Shares of the Ginnie Mae Fund, incorporated
by reference to Post-Effective Amendment No. 15 to the Registration Statement, filed
May 1, 1995.
15(b)(v) - Distribution Plan on behalf of the Class B Shares of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(b)(vi) - Distribution Plan on behalf of the Class B Shares of the U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(b)(vii) - Distribution Plan on behalf of the Class B Shares of the Aggressive Growth Fund,
incorporated by reference to Post-Effective Amendment No. 19 to the Registration
Statement, filed December 18, 1995.
15(b)(viii) - Distribution Plan on behalf of the Class B Shares of the Arizona Tax-Free, Balanced,
Equity Value, Intermediate Bond, International Equity, National Tax-Free, Oregon Tax-
Free and Small Cap Funds, filed herewith.
15(c)(i) - Amended Distribution Plan on behalf of the Class A Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(c)(ii) - Amended Distribution Plan on behalf of the Class A Shares of the California Tax-Free
Bond Fund, incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
15(c)(iii) - Amended Distribution Plan on behalf of the Class A Shares of the Diversified Income
Fund, incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(c)(iv) - Amended Distribution Plan on behalf of the Class A Shares of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
</TABLE>
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<TABLE>
<S> <C>
15(c)(v) - Amended Distribution Plan on behalf of the Class A Shares of the Growth and Income Fund,
incorporated by reference to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(c)(vi) - Amended Distribution Plan on behalf of the Class A Shares of the U.S. Government
Allocation Fund, incorporated by reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
15(c)(vii) - Distribution Plan on behalf of the Class A Shares of the Aggressive Growth Fund,
incorporated by reference to Post-Effective Amendment No. 19 to the Registration
Statement, filed December 18, 1995.
15(c)(viii) - Distribution Plan on behalf of the Class A Shares of the Arizona Tax-Free, Balanced,
Equity Value, Government Money Market Mutual, Intermediate Bond, International Equity,
National Tax-Free, Oregon Tax-Free, Prime Money Market Mutual, Small Cap and Treasury
Money Market Mutual Funds, filed herewith.
15(d) - Distribution Plan on behalf of the Class E Shares of the Treasury Money Market Mutual
Fund, incorporated by reference to Post-Effective Amendment No. 29, filed January 23,
1997.
16 - Schedules for Computation of Performance Data, incorporated by reference to Post-
Effective Amendment No. 15, filed May 1, 1995.
17 - See Exhibit 27.
18 - Rule 18f-3 Multi-Class Plan, as amended, filed herewith.
19 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat, Thomas S. Goho, Joseph N. Hankin, W. Rodney
Hughes, Robert M. Joses and J. Tucker Morse, filed herewith.
27 - Financial Data Schedules, incorporated by reference to the Form N-SAR for the period
ended September 30, 1996, filed December 9, 1996.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
As of April 1, 1997, the Asset Allocation, Corporate Stock and
U.S. Government Allocation Funds each owned approximately 99% of the
outstanding beneficial interests of the Asset Allocation, Corporate Stock and
U.S. Government Allocation Master Portfolios, respectively, of Master
Investment Trust ("MIT"). As of April 1, 1997, the Aggressive Growth, National
Tax-Free Money Market Mutual and Small Cap Funds owned approximately 33%, 22%
and 89% of the outstanding beneficial interests of the Capital Appreciation,
Tax-Free Money Market and Small Cap Master Portfolios, respectively, of MIT.
As such, each Fund could be considered a "controlling person" (as such term is
defined in the 1940 Act) of the corresponding Master Portfolio.
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Item 26. Number of Holders of Securities
As of April 1, 1997 the number of record holders of each class of
Securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
Class A* Class B Institutional
------- ------- -------------
Class
-----
<S> <C> <C> <C>
Aggressive Growth Fund 1,577 1,682 N/A
Arizona Tax-Free Fund 224 4 7
Asset Allocation Fund 11,145 4,806 N/A
Balanced Fund 1,864 27 126
California Tax-Free Bond Fund 8,751 1,026 46
California Tax-Free Income Fund 3,438 N/A 3
California Tax-Free Money Market Mutual Fund 11,798 N/A N/A
California Tax-Free Money Market Trust 0 N/A N/A
Corporate Stock Fund 1,153 N/A N/A
Diversified Income Fund 11,612 2,039 N/A
Equity Value Fund 1,222 221 123
Ginnie Mae Fund 3,314 652 90
Government Money Market Mutual Fund 187 N/A N/A
Growth and Income Fund 12,292 1,793 32
Intermediate Bond Fund 148 21 7
Money Market Mutual Fund 12,298 2** 6
Money Market Trust 7 N/A N/A
National Tax-Free Fund 124 3 5
National Tax-Free Money Market Mutual Fund 22 N/A N/A
Oregon Tax-Free Fund 733 9 6
</TABLE>
* For purposes of this chart, shares of single class Funds are included
under the designation "Class A"
** Designates the number of Class S recordholders.
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<TABLE>
<S> <C> <C> <C>
Prime Money Market Mutual 290 4*** 46
Short-Intermediate U.S. Government Income Fund 201 N/A 65
Small Cap Fund 186 198 11
Treasury Money Market Mutual Fund 83 4*** 254
1****
U.S. Government Allocation Fund 1,509 239 N/A
</TABLE>
*** Designates the number of Service Class recordholders
**** Designates the number of Class E recordholders.
Item 27. Indemnification
The following paragraphs of Article VIII of the Registrant's
Articles of Incorporation provide:
(h) The Corporation shall indemnify (1) its Directors and
Officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by law,
and (2) its other employees and agents to such extent as shall be
authorized by the Board of Directors or the Corporation's By-Laws and be
permitted by law. The foregoing rights of indemnification shall not be
exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary
to carry out these indemnification provisions and is expressly empowered
to adopt, approve and amend from time to time such By-Laws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of these Articles
of Incorporation of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal. Nothing contained herein
shall be construed to authorize the Corporation to indemnify any Director
or officer of the Corporation against any liability to the Corporation or
to any holders of securities of the Corporation to which he is subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. Any
indemnification by the Corporation shall be consistent with the
requirements of law, including the 1940 Act.
(i) To the fullest extent permitted by Maryland
statutory and decisional law and the 1940 Act, as amended or interpreted,
no Director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided, however,
that nothing herein shall be construed to protect any Director or officer
of the Corporation against any liability to which such Director or
officer would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his office. No amendment, modification or repeal of
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<PAGE> 129
this Article VIII shall adversely affect any right or protection of a
Director or officer that exists at the time of such amendment,
modification or repeal.
Item 28. Business and Other Connections of Investment Adviser.
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, currently serves as investment adviser to
several of the Registrant's investment portfolios and to certain other
registered open-end management investment companies. Wells Fargo Bank's
business is that of a national banking association with respect to which it
conducts a variety of commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or
executive officers of Wells Fargo Bank, except those set forth below, is or has
been at any time during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain executive officers also hold various positions with and engage in
business for Wells Fargo & Company. Set forth below are the names and principal
businesses of the directors and executive officers of Wells Fargo Bank who are
or during the past two fiscal years have been engaged in any other business,
profession, vocation or employment of a substantial nature for their own
account or in the capacity of director, officer, employee, partner or trustee.
All the directors of Wells Fargo Bank also serve as directors of Wells Fargo &
Company.
<TABLE>
<S> <C>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, McGee, Willis & Greene
Director 455 Market Street
San Francisco, CA 94105
Director of Armstrong World Industries, Inc.
5037 Patata Street
South Gate, CA 90280
Director of Eastman Chemical Corporation
12805 Busch Place
Santa Fe Springs, CA 90670
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
Michael R. Bowlin Chairman of the Board of Directors, Chief Executive Officer,
Director Chief Operating Officer and President of
Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060
</TABLE>
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<PAGE> 130
<TABLE>
<S> <C>
Edward Carson Chairman of the Board and Chief Executive Officer of
Director First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road
Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
Director of Terra Industries, Inc.
1321 Mount Pisgah Road
Walnut Creek, CA 94596
William S. Davilla President (Emeritus) and a Director of
Director The Vons Companies, Inc.
618 Michillinda Ave.
Arcadia, CA 91007
Director of Pacific Gas & Electric Company
788 Taylorville Road
Grass Valley, CA 95949
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Company
P.O. Box 1000
Lebec, CA 93243
Director of The Bakersfield Californian
1707 I Street
P.O. Box 440
Bakersfield, CA 93302
Trustee of Whittier College
13406 East Philadelphia Ave.
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Board of Wells Fargo & Company
Directors 420 Montgomery Street
San Francisco, CA 94105
</TABLE>
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<TABLE>
<S> <C>
Director of Phelps Dodge Corporation
2600 North Central Ave.
Phoenix, AZ 85004
Director of Safeway, Inc.
4th and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Professor (Emeritus) of Accounting
Director Graduate School of Business at Stanford University
MBA Admissions Office
Stanford, CA 94305
Director of Bailard Biehl & Kaiser
Real Estate Investment Trust, Inc.
2755 Campus Dr.
San Mateo, CA 94403
Director of Boise Cascade Corporation
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Enron Corporation
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc
175 Ghent Road
Fairlawn, OH 44333
.
Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108
Thomas L. Lee Chairman and Chief Executive Officer of
Director The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622
Director of Calmat Co.
501 El Charro Road
Pleasanton, CA 94588
</TABLE>
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<TABLE>
<S> <C>
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Ellen Newman President of Ellen Newman Associates
Director 323 Geary Street
Suite 507
San Francisco, CA 94102
Chair (Emeritus) of the Board of Trustees
University of California at San Francisco Foundation
250 Executive Park Blvd.
Suite 2000
San Francisco, CA 94143
Director of the California Chamber of Commerce
1201 K Street
12th Floor
Sacremento, CA 95814
Philip J. Quigley Chairman, President and Chief Executive Officer of
Director Pacific Telesis Group
130 Kearney Street
Rm. 3700
San Francisco, CA 94108
Carl E. Reichardt Director of Columbia/HCA Healthcare Corporation
Director One Park Plaza
Nashville, TN 37203
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Retired Chairman of the Board of Directors
and Chief Executive Officer of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Donald B. Rice President and Chief Executive Officer of Teledyne, Inc.
Director 2049 Century Park East
Los Angeles, CA 90067
</TABLE>
C-17
<PAGE> 133
<TABLE>
<S> <C>
Retired Secretary of the Air Force
Director of Vulcan Materials Company
One MetroPlex Drive
Birmingham, AL 35209
Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
Director 44141 Yucca Avenue
Lancaster, CA 93534
Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310
Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201
Director of Northrop Grumman Corp.
1840 Century Park East
Los Angeles, CA 90067
Director of Outboard Marine Corporation
100 SeaHorse Drive
Waukegan, IL 60085
Director of Pacific Enterprises
555 West Fifth Street
Suite 2900
Los Angeles, CA 90031
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Retired Chairman of the Board and Chief Executive Officer of
Director Martin Lockheed Corp
6801 Rockledge Drive
Bethesda, MD 20817
Director of Edison International
and Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770
</TABLE>
C-18
<PAGE> 134
<TABLE>
<S> <C>
Director of First Interstate
633 West Fifth Street
Los Angeles, CA 90071
Chang-Lin Tien Chancellor of the University of California at Berkeley
Director Berkeley, CA 94720
Director of Raychem Corporation
300 Constitution Drive
Menlo Park, CA 94025
John A. Young President, Chief Executive Officer and Director
Director of Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 9434
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
Director of Lucent Technologies
25 John Glenn Drive
Amherst, NY 14228
Director of Novell, Inc.
11300 West Olympic Blvd.
Los Angeles, CA 90064
Director of Shaman Pharmaceuticals Inc.
213 East Grand Ave. South
San Francisco, CA 94080
William F. Zuendt President of Wells Fargo & Company
President 420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corporation
5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of the California Chamber of Commerce
</TABLE>
Prior to May 1, 1996, Barclays Global Fund Advisors ("BGFA"), a
wholly-owned subsidiary of Barclays Global Investors, N.A. ("BGI", formerly,
Wells Fargo Institutional Trust Company), served as sub-adviser to the Asset
Allocation, Corporate Stock and U.S. Government Allocation Funds of the Company
and to certain other open-end management investment companies. As of May 1,
1996, BGFA no longer served as sub-adviser to the Asset Allocation,
C-19
<PAGE> 135
Corporate Stock and U.S. Government Allocation Funds. As of this date, BGFA
served as sub-adviser to the corresponding Asset Allocation, U.S. Government
Allocation and Corporate Stock Master Portfolios of Master Investment Trust, in
which such funds invest substantially all of their assets.
The directors and officers of BGFA consist primarily of persons
who during the past two years have been active in the investment management
business of the former sub-adviser to the Registrant, Wells Fargo Nikko
Investment Advisors ("WFNIA") and, in some cases, the service business of BGI.
With the exception of Irving Cohen, each of the directors and executive
officers of BGFA will also have substantial responsibilities as directors
and/or officers of BGI. To the knowledge of the Registrant, except as set
forth below, none of the directors or executive officers of BGFA is or has been
at any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ---------------- --------------------------------
<S> <C>
Frederick L.A. Grauer Co-Chairman and Director of BGFA and BGI
co-Chairman and Director 45 Fremont Street, San Francisco, CA 94105
Patricia Dunn Co-Chairman and Director of BGFA and BGI
Co-Chairman and Director 45 Fremont Street, San Francisco, CA 94105
Irving Cohen Chief Financial Officer and Chief Operating Officer of Barclays Bank
Director PLC, New York Branch and Chief Operating Officer of Barclays Group, Inc.
(USA); previously, Chief Financial Officer of Barclays de Zoete Wedd
Securities Inc. (1994) 222 Broadway, New York, NY 10038
Andrea M. Zolberti Chief Financial Officer of BGFA and BGI
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
</TABLE>
Prior to January 1, 1996 Wells Fargo Nikko Investment Advisors
("WFNIA") served as sub-adviser to the Asset Allocation, Corporate Stock and
U.S. Government Allocation Funds of the Company and as adviser or sub-adviser
to various other open-end management investment companies. For additional
information, see "The Funds and Management" in the Prospectus and "Management"
in the Statement of Additional Information of such Funds. For information as to
the business, profession, vocation or employment of a substantial nature of
each of the officers and management committees of WFNIA, reference is made to
WFNIA's Form ADV and Schedules A and D filed under the Investment Advisers Act
of 1940, File No. 801-36479, incorporated herein by reference.
C-20
<PAGE> 136
Item 29. Principal Underwriters.
(a) Stephens Inc., distributor for the Registrant, does not
presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for Overland Express Funds,
Inc., MasterWorks Funds, Inc. (formerly, Stagecoach Inc.) Stagecoach Trust,
Nations Fund, Inc., Nations Fund Trust, Nations Fund Portfolios, Inc., Nations
Life Goal Funds, Inc. and Nations Institutional Reserves (formerly, The Capitol
Mutual Funds), and is the exclusive placement agent for Master Investment
Trust, Managed Series Investment Trust, Life & Annuity Trust and Master
Investment Portfolio, all of which are registered open-end management
investment companies, and has acted as principal underwriter for Nations
Government Income Term Trust 2003, Inc., Nations Government Income Term Trust
2004, Inc., and Nations Managed Balanced Target Maturity Fund, Inc., which are
closed-end management investment companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens Inc. with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940 (file No. 501-15510).
(c) Not Applicable.
Item 30. Location of Accounts and Records.
(a) The Registrant maintains accounts, books and other
documents required by Section 31(a) of the Investment Company Act of 1940 and
the rules thereunder (collectively, "Records") at the offices of Stephens Inc.,
111 Center Street, Little Rock, Arkansas 72201.
(b) Wells Fargo Bank maintains all Records relating to its
services as investment adviser, administrator and custodian and transfer and
dividend disbursing agent at 525 Market Street, San Francisco, California
94105.
(c) WFNIA and Wells Fargo Institutional Trust Company, N.A.
maintain all Records relating to their services as sub-adviser and custodian,
respectively, for the period prior to January 1, 1996, at 45 Fremont Street,
San Francisco, California 94105.
(d) BGFA and BGI maintain all Records relating to their
services as sub-adviser and custodian, respectively, for the period beginning
January 1, 1996 at 45 Fremont Street, San Francisco, California 94105.
(e) Stephens maintains all Records relating to its services as
sponsor, co-administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.
C-21
<PAGE> 137
Item 31. Management Services.
Other than as set forth under the captions "The Fund and
Management" in the Prospectuses constituting Part A of this Registration
Statement and "Management" in the Statement of Additional Information
constituting Part B of this Registration Statement, the Registrant is not a
party to any management-related service contract.
Item 32. Undertakings.
(a) Not Applicable.
(b) Registrant undertakes to file a Post-Effective Amendment,
using financial statements for the International Equity
Fund which need not be certified, within four to six months
from the later of the effective date of this Registration
Statement or the Fund's commencement of operations.
(c) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of its most current
annual report to shareholders, upon request and without
charge.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the provisions set forth above in response to Item 27,
or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue
C-22
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Amendment to its Registration Statement on Form N-1A to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Little Rock, State
of Arkansas on the 29th day of May, 1997.
STAGECOACH FUNDS, INC.
By /s/ Richard H. Blank, Jr.
------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement on Form N-1A has been signed below by
the following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Director, Chairman and President
------------------------- (Principal Executive Officer)
(R. Greg Feltus)
/s/ RICHARD H. BLANK, JR. Secretary and Treasurer
------------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)
* Director
-------------------------
(Jack S. Euphrat)
* Director
-------------------------
(Thomas S. Goho)
* Director
-------------------------
(Joseph N. Hankin)
* Director
-------------------------
(W. Rodney Hughes)
* Director
-------------------------
(Robert M. Joses)
* Director
-------------------------
(J. Tucker Morse)
*By /s/ RICHARD H. BLANK, JR.
-------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
May 29, 1997
</TABLE>
<PAGE> 139
STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
EX-99.B5(v) -Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the National Tax-Free Money Market Trust
EX-99.B5(w) -Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the International Equity Fund
EX-99.B9(b) -Agency Agreement with Wells Fargo Bank, N.A. on behalf of
the Funds
EX-99.B9(d)(x) -Class A Servicing Plan and form of Shareholder Servicing
Agreement
EX-99.B9(d)(xi) -Class B Servicing Plan and form of Shareholder Servicing
Agreement
EX-99.B9(d)(xii) -Institutional Class Servicing Plan and form of Shareholder
Servicing Agreement
EX-99.B10 -Opinion and Consent of Counsel
EX-99.B15(b)(viii)-Class B Distribution Plan
EX-99.B15(c)(viii)-Class A Distribution Plan
EX-99.B18 -Rule 18f-3 Multi-Class Plan, as amended
EX-99.B19 -Powers of Attorney
</TABLE>
<PAGE> 1
EXHIBIT 99.B5(v)
FORM OF ADVISORY CONTRACT
NATIONAL TAX-FREE MONEY MARKET TRUST
a portfolio of
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
____________, 1997
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94163
Dear Sirs:
This will confirm the agreement between the undersigned (the
"Company"), on behalf of the National Tax-Free Money Market Trust (the "Fund"),
and Wells Fargo Bank, N.A. (the "Adviser") as follows:
1. The Company is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios
(the "Funds"). The Company proposes to engage in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objective and restrictions specified in the Company's currently
effective prospectus and the currently effective statement of additional
information incorporated by reference therein relating to the Fund and the
Company (such prospectus and such statement of additional information being
collectively referred to as the "Prospectus") included in the Company's
Registration Statement, as amended from time to time (the "Registration
Statement"), filed by the Company under the Investment Company Act of 1940 (the
"Act") and the Securities Act of 1933. Copies of the documents referred to in
the preceding sentence have been furnished to the Adviser. Any amendments to
those documents shall be furnished to the Adviser promptly.
2. The Company is engaging the Adviser to manage the investing and
reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an Administration Agreement
with the Adviser and a Co-Administration Agreement with Stephens Inc. (the
"Administrators") on behalf of the Fund, the Company has engaged the
Administrators to provide the administrative services specified therein.
3. (a) The Adviser shall make investments for the account of the Fund
in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Company's Prospectus,
the Act and the provisions of the Internal Revenue Code relating to regulated
investment companies, subject to policy decisions adopted by the Company's
Board of Directors. The Adviser shall advise the Company's officers and Board
of Directors, at such times
<PAGE> 2
as the Company's Board of Directors may specify, of investments made for the
Fund and shall, when requested by the Company's officers or Board of Directors,
supply the reasons for making particular investments.
(b) The Adviser shall provide to the Company investment guidance
and policy direction in connection with its daily management of the Fund's
portfolio, including oral and written research, analysis, advice, statistical
and economic data and information and judgments, and shall furnish to the
Company's Board of Directors periodic reports on the investment strategy and
performance of the Fund and such additional reports and information as the
Company's Board of Directors and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing
all materials relating to the Fund prepared by it, or prepared at its request,
other than such costs relating to proxy statements, prospectuses, shareholder
reports and other materials distributed to existing or prospective shareholders
on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Company understands that the Adviser, in rendering its
services to the Fund hereunder, may engage a sub-adviser to provide certain
sub-advisory services pursuant to a separate sub-advisory contract. The
Adviser will not seek to amend any sub-advisory contract to materially alter
the obligations of the parties unless the Adviser gives the Company at least 60
days' prior written notice thereof.
5. Except as provided in each of the advisory contracts and
administration agreements on behalf of the Company's Funds, each Fund of the
Company shall bear all costs of its operations, except to the extent that such
costs are identified as attributable to a specific class of a Fund ("Class
Expenses"), including the Fund's pro-rata portion of the compensation of the
Company's directors who are not affiliated with the Adviser, the Administrator
or any of their affiliates; advisory and administration fees; governmental
fees; interest charges; taxes; fees and expenses of its independent auditors,
legal counsel, transfer agent and dividend disbursing agent; expenses of
redeeming shares; expenses of preparing and printing any stock certificates,
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; travel expenses of directors, officers and employees; office
supplies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio securities transactions; fees and
expenses of any custodian, including those for keeping books and accounts and
calculating the net asset value per share of the Fund; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of shares of the Fund; expenses relating to any pricing services;
organizational expenses; and any extraordinary expenses; except that Class
Expenses, such as payments related to a servicing plan or distribution-related
expenses pursuant to a Rule 12b-1 Plan, i.e., a plan of distribution of the
Company adopted on behalf of a class of shares of the Fund pursuant to Rule
12b-1 under the Act, or other such expenses as determined in accordance with
the Company's Rule 18f-3 Plan, shall be borne by the applicable class of the
Fund. Expenses attributable to one or more, but not
2
<PAGE> 3
all, of the Company's Funds are charged against the assets of the relevant
Funds. General expenses of the Company are allocated among the Funds in a
manner proportionate to the net assets of each Fund, on a transactional basis,
or on such other basis as the Board of Directors deems equitable.
6. The Adviser shall give the Company the benefit of the Adviser's
best judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Company
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Adviser against any liability to the Company or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties under
this contract or by reason of reckless disregard of its obligations and duties
hereunder.
7. In consideration of the services to be rendered by the Adviser
under this contract, the Company shall pay the Adviser a monthly fee on the
first business day of each month, at the annual rate of 0.25% of the average
daily value (as determined on each day that such value is determined for the
Fund at the time set forth in the Prospectus for determining net asset value
per share) of the Fund's net assets during the preceding month. If the fee
payable to the Adviser pursuant to this paragraph 7 begins to accrue before the
end of any month or if this contract terminates before the end of any month,
the fee for the period from the effective date to the end of that month or from
the beginning of that month to the termination date, respectively, shall be
prorated according to the proportion that the period bears to the full month in
which the effectiveness or termination occurs. For purposes of calculating
each such monthly fee, the value of the Fund's net assets shall be computed in
the manner specified in the Prospectus and the Company's Articles of
Incorporation for the computation of the value of the Fund's net assets in
connection with the determination of the net asset value of Fund shares.
8. If in any fiscal year the total expenses of the Fund incurred by,
or allocated to, the Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized
in accordance with generally accepted accounting principles, extraordinary
expenses and amounts accrued or paid under a Rule 12b-1 Plan of the Fund, but
including the fees provided for in paragraph 7 and those provided for pursuant
to the Fund's Administration Agreements ("includible expenses"), exceed the
most restrictive expense limitation applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations may be raised
or lowered from time to time, the Adviser shall waive or reimburse that portion
of the excess derived by multiplying the excess by a fraction, the numerator of
which shall be the percentage at which the excess portion attributable to the
fee payable pursuant to this agreement is calculated under paragraph 7 hereof,
and the denominator of which shall be the sum of such percentage plus the
percentage at which the excess portion attributable to the fee payable pursuant
to the Fund's Administration Agreements is calculated (the "Applicable Ratio"),
but only to the extent of the fee hereunder for the fiscal year. If the fees
payable under this agreement and/or the Fund's Administration Agreements
contributing to such excess portion are calculated at more than one percentage
rate, the Applicable Ratio shall be calculated separately on the basis of, and
applied separately to, the portions of the fees calculated at the different
rates. At the end of each month of the Company's fiscal year, the Company
shall review the includible expenses
3
<PAGE> 4
accrued during that fiscal year to the end of the period and shall estimate the
contemplated includible expenses for the balance of that fiscal year. If as a
result of that review and estimation it appears likely that the includible
expenses will exceed the limitations referred to in this paragraph 8 for a
fiscal year with respect to the Fund, the monthly fee set forth in paragraph 7
payable to the Adviser for such month shall be reduced, subject to a later
adjustment, by an amount equal to the Applicable Ratio times the pro rata
portion (prorated on the basis of the remaining months of the fiscal year,
including the month just ended) of the amount by which the includible expenses
for the fiscal year are expected to exceed the limitations provided for in this
paragraph 8. For purposes of computing the excess, if any, over the most
restrictive applicable expense limitation, the value of the Fund's net assets
shall be computed in the manner specified in the last sentence of paragraph 7,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Company's fiscal year.
9. This contract shall become effective on its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote
of a majority of the Fund's outstanding voting securities (as defined in the
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this contract or "interested persons" (as defined in the
Act) of any such party. This contract may be terminated at any time by the
Company, without the payment of any penalty, by a vote of a majority of the
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Adviser or by the Adviser, at any time after the second anniversary of
the effective date of this contract, on 60 days' written notice to the Company.
This contract shall terminate automatically in the event of its assignment (as
defined in the Act).
10. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
11. The Adviser and the Company each agree that the words
"Stagecoach," which comprise a component of the Company's name, is a property
right of the parent of the Adviser. The Company agrees and consents that: (i)
it will use the words "Stagecoach" as a component of its corporate name, the
name of any class, or both and for no other purpose; (ii) it will not grant to
any third party the right to use the words "Stagecoach" for any purpose; (iii)
the Adviser or any corporate affiliate of the Adviser may use or grant to
others the right to use the words "Stagecoach," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or
for any commercial purpose, other than a grant of such right to another
registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is
no longer acting as investment adviser to any class, the Company shall, upon
request by the Adviser, promptly take such action as may be necessary to change
its corporate name to one not containing the words "Stagecoach" and following
such change, shall not use the words "Stagecoach," or any combination thereof,
as a part of its
4
<PAGE> 5
corporate name or for any other commercial purpose, and shall use its best
efforts to cause its directors, officers, and shareholders to take any and all
actions that the Adviser may request to effect the foregoing and to reconvey to
the Adviser any and all rights to such words.
12. This contract shall be governed by and construed in accordance
with the laws of the State of California.
If the foregoing correctly sets forth the agreement between the
Company and the Adviser, please so indicate by signing and returning to the
Company the enclosed copy hereof.
Very truly yours,
STAGECOACH FUNDS, INC.,
on behalf of the
National Tax-Free Money Market Trust
By:
-----------------------
Name:
---------------------
Title:
--------------------
ACCEPTED as of the date
set forth above:
WELLS FARGO BANK, N.A.
By:
-----------------------
Name:
---------------------
Title:
--------------------
By:
-----------------------
Name:
---------------------
Title:
--------------------
5
<PAGE> 1
EXHIBIT-99.B5(w)
FORM OF
ADVISORY CONTRACT
INTERNATIONAL EQUITY FUND
a portfolio of
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
____________, 1997
Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94163
Dear Sirs:
This will confirm the agreement between the undersigned (the
"Company"), on behalf of the International Equity Fund (the "Fund"), and Wells
Fargo Bank, N.A. (the "Adviser") as follows:
1. The Company is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios
(the "Funds"). The Company proposes to engage in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objective and restrictions specified in the Company's currently
effective prospectus and the currently effective statement of additional
information incorporated by reference therein relating to the Fund and the
Company (such prospectus and such statement of additional information being
collectively referred to as the "Prospectus") included in the Company's
Registration Statement, as amended from time to time (the "Registration
Statement"), filed by the Company under the Investment Company Act of 1940 (the
"Act") and the Securities Act of 1933. Copies of the documents referred to in
the preceding sentence have been furnished to the Adviser. Any amendments to
those documents shall be furnished to the Adviser promptly.
2. The Company is engaging the Adviser to manage the investing and
reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an Administration Agreement
with the Adviser and a Co-Administration Agreement with Stephens Inc. on behalf
of the Fund, the Company has engaged the Administrators to provide the
administrative services specified therein.
3. (a) The Adviser shall make investments for the account of the Fund
in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Company's Prospectus,
the Act and the provisions of the Internal Revenue Code relating to
<PAGE> 2
regulated investment companies, subject to policy decisions adopted by the
Company's Board of Directors. The Adviser shall advise the Company's officers
and Board of Directors, at such times as the Company's Board of Directors may
specify, of investments made for the Fund and shall, when requested by the
Company's officers or Board of Directors, supply the reasons for making
particular investments.
(b) The Adviser shall provide to the Company investment guidance
and policy direction in connection with its daily management of the Fund's
portfolio, including oral and written research, analysis, advice, statistical
and economic data and information and judgments, and shall furnish to the
Company's Board of Directors periodic reports on the investment strategy and
performance of the Fund and such additional reports and information as the
Company's Board of Directors and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing
all materials relating to the Fund prepared by it, or prepared at its request,
other than such costs relating to proxy statements, prospectuses, shareholder
reports and other materials distributed to existing or prospective shareholders
on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Company understands that the Adviser, in rendering its
services to the Fund hereunder, may engage a sub-adviser to provide certain
sub-advisory services pursuant to a separate sub-advisory contract. The
Adviser will not seek to amend any sub-advisory contract to materially alter
the obligations of the parties unless the Adviser gives the Company at least 60
days' prior written notice thereof.
5. Except as provided in each of the advisory contracts and
administration agreements on behalf of the Company's Funds, each Fund of the
Company shall bear all costs of its operations, except to the extent that such
costs are identified as attributable to a specific class of a Fund ("Class
Expenses"), including the Fund's pro-rata portion of the compensation of the
Company's directors who are not affiliated with the Adviser, the Administrator
or any of their affiliates; advisory and administration fees; governmental
fees; interest charges; taxes; fees and expenses of its independent auditors,
legal counsel, transfer agent and dividend disbursing agent; expenses of
redeeming shares; expenses of preparing and printing any stock certificates,
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; travel expenses of directors, officers and employees; office
supplies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio securities transactions; fees and
expenses of any custodian, including those for keeping books and accounts and
calculating the net asset value per share of the Fund; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of shares of the Fund; expenses relating to any pricing services;
organizational expenses; and any extraordinary expenses; except that Class
Expenses, such as payments related to a servicing plan or distribution-related
expenses pursuant to a Rule 12b-1 Plan, i.e., a plan of distribution of the
2
<PAGE> 3
Company adopted on behalf of a class of shares of the Fund pursuant to Rule
12b-1 under the Act, or other such expenses as determined in accordance with
the Company's Rule 18f-3 Plan, shall be borne by the applicable class of the
Fund. Expenses attributable to one or more, but not all, of the Company's
Funds are charged against the assets of the relevant Funds. General expenses
of the Company are allocated among the Funds in a manner proportionate to the
net assets of each Fund, on a transactional basis, or on such other basis as
the Board of Directors deems equitable.
6. The Adviser shall give the Company the benefit of the Adviser's
best judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Company
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Adviser against any liability to the Company or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties under
this contract or by reason of reckless disregard of its obligations and duties
hereunder.
7. In consideration of the services to be rendered by the Adviser
under this contract, the Company shall pay the Adviser a monthly fee on the
first business day of each month, at the annual rate of 0.50% of the average
daily value (as determined on each day that such value is determined for the
Fund at the time set forth in the Prospectus for determining net asset value
per share) of the Fund's net assets during the preceding month. If the fee
payable to the Adviser pursuant to this paragraph 7 begins to accrue before the
end of any month or if this contract terminates before the end of any month,
the fee for the period from the effective date to the end of that month or from
the beginning of that month to the termination date, respectively, shall be
prorated according to the proportion that the period bears to the full month in
which the effectiveness or termination occurs. For purposes of calculating
each such monthly fee, the value of the Fund's net assets shall be computed in
the manner specified in the Prospectus and the Company's Articles of
Incorporation for the computation of the value of the Fund's net assets in
connection with the determination of the net asset value of Fund shares.
8. If in any fiscal year the total expenses of the Fund incurred by,
or allocated to, the Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized
in accordance with generally accepted accounting principles, extraordinary
expenses and amounts accrued or paid under a Rule 12b-1 Plan of the Fund, but
including the fees provided for in paragraph 7 and those provided for pursuant
to the Fund's Administration Agreements ("includible expenses"), exceed the
most restrictive expense limitation applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations may be raised
or lowered from time to time, the Adviser shall waive or reimburse that portion
of the excess derived by multiplying the excess by a fraction, the numerator of
which shall be the percentage at which the excess portion attributable to the
fee payable pursuant to this agreement is calculated under paragraph 7 hereof,
and the denominator of which shall be the sum of such percentage plus the
percentage at which the excess portion attributable to the fee payable pursuant
to the Fund's Administration Agreements is calculated (the "Applicable Ratio"),
but only to the extent of the fee hereunder for the fiscal year. If the fees
payable under this agreement
3
<PAGE> 4
and/or the Fund's Administration Agreements contributing to such excess portion
are calculated at more than one percentage rate, the Applicable Ratio shall be
calculated separately on the basis of, and applied separately to, the portions
of the fees calculated at the different rates. At the end of each month of the
Company's fiscal year, the Company shall review the includible expenses accrued
during that fiscal year to the end of the period and shall estimate the
contemplated includible expenses for the balance of that fiscal year. If as a
result of that review and estimation it appears likely that the includible
expenses will exceed the limitations referred to in this paragraph 8 for a
fiscal year with respect to the Fund, the monthly fee set forth in paragraph 7
payable to the Adviser for such month shall be reduced, subject to a later
adjustment, by an amount equal to the Applicable Ratio times the pro rata
portion (prorated on the basis of the remaining months of the fiscal year,
including the month just ended) of the amount by which the includible expenses
for the fiscal year are expected to exceed the limitations provided for in this
paragraph 8. For purposes of computing the excess, if any, over the most
restrictive applicable expense limitation, the value of the Fund's net assets
shall be computed in the manner specified in the last sentence of paragraph 7,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Company's fiscal year.
9. This contract shall become effective on its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote
of a majority of the Fund's outstanding voting securities (as defined in the
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this contract or "interested persons" (as defined in the
Act) of any such party. This contract may be terminated at any time by the
Company, without the payment of any penalty, by a vote of a majority of the
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Adviser or by the Adviser, at any time after the second anniversary of
the effective date of this contract, on 60 days' written notice to the Company.
This contract shall terminate automatically in the event of its assignment (as
defined in the Act).
10. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
11. The Adviser and the Company each agree that the words
"Stagecoach," which comprise a component of the Company's name, is a property
right of the parent of the Adviser. The Company agrees and consents that: (i)
it will use the words "Stagecoach" as a component of its corporate name, the
name of any class, or both and for no other purpose; (ii) it will not grant to
any third party the right to use the words "Stagecoach" for any purpose; (iii)
the Adviser or any corporate affiliate of the Adviser may use or grant to
others the right to use the words "Stagecoach," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or
for any commercial purpose, other than a grant of such right to another
4
<PAGE> 5
registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is
no longer acting as investment adviser to any class, the Company shall, upon
request by the Adviser, promptly take such action as may be necessary to change
its corporate name to one not containing the words "Stagecoach" and following
such change, shall not use the words "Stagecoach," or any combination thereof,
as a part of its corporate name or for any other commercial purpose, and shall
use its best efforts to cause its directors, officers, and shareholders to take
any and all actions that the Adviser may request to effect the foregoing and to
reconvey to the Adviser any and all rights to such words.
12. This contract shall be governed by and construed in accordance
with the laws of the State of California without giving effect to the choice of
law provisions thereof.
If the foregoing correctly sets forth the agreement between the
Company and the Adviser, please so indicate by signing and returning to the
Company the enclosed copy hereof.
Very truly yours,
STAGECOACH FUNDS, INC.,
on behalf of the International Equity Fund
By:
--------------------------
Name:
------------------------
Title:
-----------------------
ACCEPTED as of the date
set forth above:
WELLS FARGO BANK, N.A.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
By:
-------------------------
Name:
-----------------------
Title:
----------------------
5
<PAGE> 1
EXHIBIT-99.B9(b)
AGENCY AGREEMENT
This agreement is made and entered into as of this 1st day of
February, 1997 (the "Agreement"), by and between Stagecoach Funds, Inc., a
registered management investment company incorporated in the State of Maryland
(the "Company"), and Wells Fargo Bank, N.A., ("Agent"), for transfer agency and
dividend disbursing agency services as follows:
I. SERVICES.
A. Appointment of Agent. The Company hereby appoints Agent as
its transfer and dividend disbursing agent for the Funds (each, a "Fund" and
collectively, the "Funds") listed in Appendix A, as such Appendix may be
amended from time to time, and Agent accepts such appointment.
B. Description of Services. As consideration for the
compensation hereinafter described in Section I (C), Agent agrees to provide
each Fund with the facilities and services described and set forth on Appendix
B attached hereto and incorporated herein by reference.
C. Compensation. As consideration for the services described
in Section I (B), above, the Company shall pay to Agent, on behalf of each
Fund, fees at the rates specified on Appendix A.
II. EXPENSES. Agent shall be responsible for expenses incurred by it
pursuant to this Agreement and shall not be reimbursed for expenses incurred in
connection with the performance of services under this Agreement.
III. TERM. This Agreement shall become effective as of the date first
above written and shall continue until terminated pursuant to its provisions.
IV. INSURANCE. Agent agrees to procure and maintain such fidelity
bond coverage as may be required by the Investment Company Act of 1940 (the
"1940 Act"), in the amounts and with such deductibles as are required by or
permitted under the 1940 Act, as it may be amended from time to time.
V. REGISTRATION AND COMPLIANCE.
A. Agent represents that it is registered as a transfer agent
with the Securities and Exchange Commission ("SEC") pursuant to Section 17A of
the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations promulgated thereunder, and Agent agrees to maintain said
registration current and comply with all of the requirements of the Exchange
Act, rules and regulations during the term of this Agreement.
B. The Company represents that it is a diversified management
investment company registered with the SEC in accordance with the 1940 Act and
the rules and regulations promulgated thereunder. The Company is authorized to
offer and sell its shares pursuant to the 1940 Act, the Securities Act of 1933,
as amended ("1933 Act"), and the rules and regulations promulgated thereunder.
The Company will furnish Agent with a list of those jurisdictions in the United
States and elsewhere in which it is authorized to offer and sell its shares to
the general public and will maintain the currency of such list by amendment.
The Company agrees promptly to advise Agent of any change in or limitation upon
its authority to carry on business as an investment company pursuant to the
1940 Act, the Exchange Act and the 1933 Act and the statutes, rules and
regulations of each and every jurisdiction to which it is subject.
<PAGE> 2
VI. DOCUMENTATION. The Company and Agent shall each supply to the
other upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles of incorporation, bylaws, codes of ethics, registration statements,
permits, financial reports, third party audits, certificates of authority,
computer tapes and related items.
VII. PROPRIETARY INFORMATION. It is agreed that all records and
documents, excepting computer data processing programs and any related
documentation used or prepared by, or on behalf of Agent for the performance of
its services hereunder, are the property of the Company and shall be open to
audit or inspection by the Company or its agents during the normal business
hours of Agent; shall be maintained in a manner designed to preserve the
confidentiality thereof and to comply with applicable federal and state laws
and regulations; and shall, in whole or any specified part, be surrendered to
the Company or its duly authorized agents upon receipt by Agent of reasonable
notice of and request therefor.
VIII. INDEMNITY. The Company, on behalf of the Funds, shall indemnify
and hold Agent harmless against any losses, claims, damages, liabilities or
expenses (including reasonable attorney's fees and expenses) resulting from any
claim, demand, action or suit brought by any person other than the Company
(including a shareholder naming the Company as a party) and not resulting from
Agent's bad faith, willful misfeasance, reckless disregard of its obligations
and duties, gross negligence or breach of this Agreement, and arising out of,
or in connection with:
A. Agent's performance hereunder;
B. Any error or omission in any record (including but not
limited to magnetic tapes, computer printouts, hard copies and microfilm or
microfiche copies) delivered, or caused to be delivered, by the Company to
Agent in connection with this Agreement;
C. Bad faith, willful misfeasance, reckless disregard of its
obligations and duties or negligence of the Company, or Agent's acting upon any
instructions reasonably believed by it to have been properly executed or
communicated by any person duly authorized by the Company;
D. Agent's acting in reliance upon advice given by counsel for
Agent or upon advice reasonably believed by it to have been given by counsel
for the Company; or
E. Agent's acting in reliance upon any instrument reasonably
believed by it to have been genuine and signed, countersigned or executed by
the proper person(s) in accordance with the currently effective certificate(s)
of authority delivered to Agent by the Company.
In the event that Agent requests the Company to indemnify or hold
it harmless hereunder, agent shall use its best efforts to inform the Company
of the relevant facts concerning the matter in question. Agent shall use
reasonable care to identify and promptly notify the Company concerning any
matter which presents, or appears likely to present, a claim for
indemnification against the Company or the Funds.
The Company shall have the election of defending Agent against any
claim which may be the subject of indemnification hereunder. In the event the
Company so elects, it will so notify Agent and thereupon the Company shall take
over defense of the claim, and (if so requested by the Company) Agent shall
incur no further legal or other expenses related thereto for which it would be
entitled to indemnity hereunder; provided, however, that nothing herein
contained shall prevent Agent from retaining, at its own expense, counsel to
defend any claim. Except with the Company's prior consent, Agent shall in no
event
2
<PAGE> 3
confess any claim or make any compromise in any matter in which the Company
will be asked to indemnify or hold harmless hereunder.
IX. LIABILITY
A. Damages. Agent shall not be liable to the Company, or any
third party, for punitive, exemplary, indirect, special or consequential
damages (even if Agent has been advised of the possibility of such damages)
arising from its obligations and the services provided under this Agreement,
including but not limited to loss of profits, loss of use of the shareholder
accounting system, cost of capital and expenses of substitute facilities,
programs or services.
B. Force Majeure. Anything in this Agreement to the contrary
notwithstanding, Agent shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts
or civil or military authority, national emergencies, work stoppage, fire,
flood, catastrophe, earthquake, acts of God, insurrection, war, riot, data
processing and communications downtime (where such downtime occurs for reasons
other than Agent's gross negligence or willful misconduct) or interruption of
power supply.
X. AMENDMENT. This Agreement and the Appendices attached hereto and
made a part hereof may be amended at any time, with or without shareholder
approval (except as otherwise required by law), in writing signed by each of
the parties hereto. Any change in the Company's registration statements or
other documents of compliance or in the forms relating to any plan, program or
service offered by its current prospectus which would require a change in
Agent's obligations hereunder shall be subject to Agent's approval, which
approval shall not be unreasonably withheld.
XI. TERMINATION. This Agreement may be terminated by either party
without cause upon one hundred twenty (120) days' prior written notice to the
other, and at any time for cause in the event that such cause remains
unremedied for more than thirty (30) days after receipt by the other party of
written specification of such cause.
In the event the Company designates a successor to any of Agent's
obligations hereunder, Agent shall, at the expense and pursuant to the
direction of the Company, transfer promptly to such successor all relevant
books, records and other data of the Company in the possession or under the
control of Agent.
XII. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall continue
in full force and effect.
XIII. APPLICABLE LAW. This Agreement shall be subject to and construed
in accordance with the laws of the State of California without giving effect to
the choice of law provisions thereof.
XIV. ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement constitutes the entire and complete agreement of the parties hereto
relating to the subject matter hereof and supersedes and merges all prior
contracts and discussions between the parties.
XV. COUNTERPARTS. This Agreement may be executed in one or more
counterparts; all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
3
<PAGE> 4
STAGECOACH FUNDS, INC. WELLS FARGO BANK, N.A.
By: /s/Richard H. Blank, Jr. By: /s/Elizabeth Gottfried
--------------------------- ---------------------------
Name: Richard H. Blank, Jr. Name: Elizabeth Gottfried
------------------------- -------------------------
Title: Chief Operating Officer Title: Vice President
------------------------ ------------------------
By: /s/James Nolan
-------------------
Name: James Nolan
-----------------
Title: Vice President
----------------
Approved: January 16, 1997
4
<PAGE> 5
APPENDIX A
Name of Fund
Aggressive Growth Fund
Arizona Tax-Free Fund
Asset Allocation Fund
Balanced Fund
California Tax-Free Bond Fund
California Tax-Free Income Fund
Corporate Stock Fund
Diversified Income Fund
Equity Value Fund
Ginnie Mae Fund
Growth and Income Fund
Intermediate Bond Fund
International Equity Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Short-Intermediate U.S. Government Income Fund
Small Cap Fund
U.S. Government Allocation Fund
5
<PAGE> 6
Fees will be payable by the above-referenced Funds on each
indicated Class of shares as listed below. The fees are expressed as a
percentage of average daily net assets of each Class. Funds with a single
class of shares are herein considered Class A shares.
<TABLE>
<CAPTION>
Class Rate
- ----- ----
<S> <C>
Class A 0.14%
Class B 0.14%
Institutional Class 0.06%
</TABLE>
Name of Fund
California Tax-Free Money Market Mutual Fund
California Tax-Free Money Market Trust
Government Money Market Mutual Fund
Money Market Mutual Fund
Money Market Trust
National Tax-Free Money Market Mutual Fund
National Tax-Free Money Market Trust
Prime Money Market Mutual Fund
Treasury Money Market Mutual Fund
Fees will be payable by the above-referenced money market Funds on
each indicated Class of shares as listed below. The fees are expressed as a
percentage of average daily net assets of each Class. Funds with a single
class of shares are herein considered Class A shares, other than the California
Tax-Free Money Market Trust, Money Market Trust and National Tax-Free Money
Market Trust, which are herein considered Institutional Class shares.
<TABLE>
<CAPTION>
Class Rate
- ----- ----
<S> <C>
Class A 0.10%
Class S 0.10%
Class E 0.02%
Institutional Class 0.02%
Service Class 0.02%
</TABLE>
Approved: January 16, 1997
Approved as Amended: April 29, 1997
6
<PAGE> 7
APPENDIX B
SCHEDULE OF SERVICES
A. Maintaining shareholder accounts, including processing of new
accounts.
B. Posting address changes and other file maintenance for shareholder
accounts.
C. Posting all transactions to the shareholder file, including:
- Direct purchase
- Wire order purchases
- Direct redemptions
- Telephone redemption
- Wire order redemption
- Direct exchanges
- Dividend payments
- Dividend reinvestments
- Telephone exchanges
- Transfers
- Certificate issuances
- Certificate deposits.
D. Preparing daily reconciliations of shareholder processing to money
movement instructions.
E. Issuing all checks and stopping and replacing checks.
F. Mailing confirmations and checks.
G. Performing certain of the Funds' other mailings, including:
- Dividend and capital gain distributions
- 1099/year-end shareholder reporting
- Daily confirmations
- Furnish certified list of shareholders (hard copy of microfilm).
H. Maintaining and retrieving all required past history for
shareholders and providing research capabilities as follows:
- Daily monitoring of all processing activity to verify back-up
documentation
- Providing exception reports
- Microfilming
- Storing, retrieving and archiving records in accordance with
Rules 31a-1, 31a-2, and 31a-3 under the 1940 Act.
I. Reporting and remitting as necessary for state escheat requirements.
7
<PAGE> 8
J. Answering all service-related inquiries from shareholders and
others, including:
- General and Policy Inquiries (research and resolve problems)
- Fund yield inquiries
- Taking shareholder processing requests and account maintenance
changes as described above.
K. Responding to shareholder inquiries (research and resolve problems),
including:
- Initiate shareholder account reconciliation proceedings when
appropriate
- Notify shareholder of bounced investment checks
- Initiate proceedings regarding lost certificates
- Respond to customer complaints.
8
<PAGE> 1
EXHIBIT-99.B9(d)(x)
STAGECOACH FUNDS, INC.
SERVICING PLAN
CLASS A SHARES
Section 1. Each of the proper officers of Stagecoach Funds, Inc. (the
"Company") is authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based substantially on the form attached hereto
as Exhibit A or any other form duly approved by the Company's Board of
Directors ("Agreements") with broker/dealers, banks and other financial
institutions that are dealers of record or holders of record or which have a
servicing relationship with the beneficial owners of Class A shares ("Servicing
Agents") of the Company's Funds listed on the attached Appendix (each a
"Fund"). Pursuant to such Agreements, Servicing Agents shall provide support
services as set forth therein to their clients who beneficially own Class A
shares of the Fund in consideration of a fee, computed monthly in the manner
set forth in the Fund's then current prospectus, at an annual rate of up to
0.25% of the average daily net asset value of the Class A shares beneficially
owned by or attributable to such clients. The Company's distributor,
administrator and adviser and their respective affiliates are eligible to
become Servicing Agents and to receive fees under this Servicing Plan. All
expenses incurred by the Fund in connection with the Agreements and the
implementation of this Servicing Plan shall be borne entirely by the holders of
the Class A shares of the Fund.
Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Servicing Agents. The Company's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Company shall not be obligated to execute, any Agreement
with any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the Company's
administrator shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.
Section 4. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940, as amended, and rules and
regulations thereunder, of Class A shares of the Fund and a majority of the
Directors of the Company, including a majority of the Qualified Directors,
pursuant to a vote cast in person at a meeting or meetings called for the
purpose of voting on the approval of the Plan, or on the date the Fund
commences operations, if such date is later.
Section 5. Unless sooner terminated, this Servicing Plan (and each
related agreement) shall continue in effect for a period of one year from its
date of approval and shall continue thereafter for successive annual periods,
provided that such Plan is not
1
<PAGE> 2
specifically terminated by a majority of the Board of Directors, including a
majority of the Directors who are not "interested persons," as defined in the
Investment Company Act of 1940, of the Company and have no direct or indirect
financial interest in the operation of this Servicing Plan or in any Agreement
related to this Servicing Plan (the "Disinterested Directors") cast in person
at a meeting called for the purpose of voting on such approval.
Section 6. This Servicing Plan may be amended at any time with
respect to the Fund by the Company's Board of Directors, provided that any
material amendment of the terms of this Servicing Plan (including a material
increase of the fee payable hereunder) shall become effective only upon the
approvals set forth in Section 5.
Section 7. This Servicing Plan is terminable at any time with respect
to the Fund by vote of a majority of the Disinterested Directors.
Section 8. While this Servicing Plan is in effect, the selection and
nomination of the Disinterested Directors shall be committed to the discretion
of such Disinterested Directors.
Section 9. Notwithstanding anything herein to the contrary, the Fund
shall not be obligated to make any payments under this Plan that exceed the
maximum amounts payable under Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Directors for a period of not less than six years.
Dated: April 25, 1996
2
<PAGE> 3
APPENDIX
Arizona Tax-Free Fund
Balanced Fund
Equity Value Fund
Government Money Market Mutual Fund
Intermediate Bond Fund
International Equity Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Prime Money Market Mutual Fund
Treasury Money Market Mutual Fund
Small Cap Fund
Approved: April 25, 1996
Approved As Amended: August 29, 1996 and April 29, 1997
3
<PAGE> 4
FORM OF
SHAREHOLDER SERVICING AGREEMENT
(Class A shares)
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
_________, 1997, is made by and between Stagecoach Funds, Inc. ("Company"), a
Maryland corporation having its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, on behalf of the Funds listed in the
attached Appendix (each, a "Fund"), and [ ] as shareholder servicing agent
hereunder ("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, Class A shares of common stock (.001 par value) of each
Fund (hereinafter "Class A shares") may be purchased or redeemed through a
broker/dealer or financial institution which has entered into a shareholder
servicing agreement with the Company on behalf of a Fund; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate
purchases and redemptions of Class A shares by its customers (the "Customers")
and wishes to act as the Customers' agent in performing certain administrative
functions in connection with transactions in Class A shares from time to time
for the account of the Customers and to provide related services to the
Customers in connection with their investments in a Fund; and
WHEREAS, it is in the best interest of a Fund to make the services
of the Shareholder Servicing Agent available to the Customers who, from time to
time, become shareholders of the Fund;
NOW THEREFORE, the Company, on behalf of the Funds, and the
Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees
to perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent
shall be responsible for performing shareholder administrative and liaison
services, which shall include, without limitation:
(a) answering Customer inquiries regarding
account status and history, the manner in which purchases, exchanges and
redemptions of Class A shares may be effected;
(b) assisting Customers in designating and
changing dividend options, account designations and addresses;
(c) providing necessary personnel and facilities
to establish and maintain Customer accounts and records;
1
<PAGE> 5
(d) aggregating and transmitting purchase,
redemption and exchange transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with
Customer orders to purchase or redeem shares;
(g) verify and guarantee Customer signatures in
connection with redemption and exchange orders and transfers and changes in
Customer accounts with a bank which is designated in the Account Application
and which is approved by the Company's Transfer Agent;
(h) furnishing (either separately or on an
integrated basis with other reports sent to a Customer by the Shareholder
Servicing Agent) monthly and year-end statements and confirmations of
purchases, redemptions and exchanges;
(i) furnishing, on behalf of Class A shares of a
Fund, proxy statements, annual reports, updated prospectuses and other
communications to Customers;
(j) receiving, tabulating and sending to the
Company proxies executed by Customers; and
(k) providing such other related services, and
necessary personnel and facilities to provide all of the shareholder services
contemplated hereby, in each case, as the Company or a Customer may reasonably
request.
2.2 Standard of Services. All services to be rendered
by the Shareholder Servicing Agent hereunder shall be performed in a
professional, competent and timely manner. Any detailed operating standards
and procedures to be followed by the Shareholder Servicing Agent in performing
the services described above shall be determined from time to time by agreement
between the Shareholder Servicing Agent and the Company. The Company
acknowledges that the Shareholder Servicing Agent's ability to perform on a
timely basis certain of its obligations under this Agreement depends upon a
Fund's timely delivery of certain materials and/or information to the
Shareholder Servicing Agent. The Company agrees to use its best efforts to
provide, or cause to be provided, such materials to the Shareholder Servicing
Agent in a timely manner.
2.3 Investments through Distributor. The Company and
the Shareholder Servicing Agent hereby agree that all purchases of Class A
shares effected by the Shareholder Servicing Agent on behalf of its Customers
shall be effected by it through Stephens Inc. ("Distributor") in its capacity
as the Funds' principal underwriter.
3. Fees.
3.1 Fees from the Funds. In consideration of the
services described in Section 2 hereof and the incurring of expenses in
connection therewith, the Shareholder Servicing Agent shall receive a fee to be
paid in arrears periodically or on a periodic basis to be agreed upon by the
Company and the Shareholder Servicing Agent from time to time (but in no event
less frequently than semi-annually) determined by a formula based upon the
number of accounts serviced by the Shareholder Servicing Agent during the
period for which payment is being made, the level of assets or activity in such
accounts during
2
<PAGE> 6
such period, and/or the expenses incurred by the Shareholder Servicing Agent.
In no event will such fees exceed [0.25%], on an annualized basis, of the
average daily net assets of a Fund represented by Class A shares owned of
record by the Shareholder Servicing Agent on behalf of the Customers during the
period for which payment is being made. For purposes of determining the fees
payable to the Shareholder Servicing Agent hereunder, the per share value of
the Class A shares of a Fund's net assets shall be computed in the manner
specified in the Fund's then-current prospectus. Notwithstanding the
foregoing, if applicable laws, regulations or rules impose a maximum fee amount
(a "cap") on a Fund's Class A shares with respect to shareholder servicing fees
and/or fees for distribution-related services, the amount payable hereunder
shall be reduced to an amount which, when considered in conjunction with fees,
if any, payable by a Fund for the Class A shares' distribution-related
activities, is the maximum amount payable to the Shareholder Servicing Agent
under applicable laws, regulations or rules. Notwithstanding anything herein
to the contrary, the Company shall not be obligated to make any payments under
this Agreement that exceed the maximum amounts payable under Article III,
Section 26 of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. The above fee constitutes all fees to be paid to the
Shareholder Servicing Agent by the Company under this plan with respect to the
shareholder services contemplated hereby.
3.2 Fees from Customers. It is agreed that the
Shareholder Servicing Agent may impose certain conditions on Customers, subject
to the terms of the Funds' then-current prospectus, in addition to or different
from those imposed by the Company, such as requiring a minimum initial
investment or the payment of additional fees directly by the Customer for
additional services offered by the Shareholder Servicing Agent to the Customer;
provided, however, that the Shareholder Servicing Agent may not charge
customers any direct fee which would constitute a "sales load" within the
meaning of Section 2(a)(35) of the Investment Company Act of 1940, as amended
(the "1940 Act"). The Shareholder Servicing Agent shall bill Customers
directly for any such additional fees. In the event the Shareholder Servicing
Agent charges Customers such additional fees, it shall notify the Company in
advance and make appropriate prior written disclosure (such disclosure to be in
accordance with all applicable laws) to Customers of any such additional fees
charged directly to the Customer. To the extent required by applicable rules
and regulations of the Securities and Exchange Commission, the Company shall
make written disclosure of the fees paid or to be paid on behalf of a Fund 's
Class A shares to the Shareholder Servicing Agent pursuant to Section 3.1 of
this Agreement. In no event shall the Shareholder Servicing Agent have
recourse or access, as Shareholder Servicing Agent or otherwise, to the assets
in the Customer's account, except to the extent expressly authorized by law or
by such Customer, or to any assets of a Fund or the Company, for payment of any
additional direct fees referred to in this Section 3.2.
4. Information Pertaining to the Shares. The Shareholder
Servicing Agent and its officers, employees and agents are not authorized to
make any representations concerning the Company, a Fund or the Class A shares
to Customers or prospective Customers, excepting only accurate communication of
any information provided by or on behalf of any administrator of the Company or
a Fund or any distributor of the Class A shares or information contained in the
Funds' then-current prospectus. In furnishing such information regarding the
Company, a Fund or the Class A shares, the Shareholder Servicing Agent shall
act as agent for the Customer only and shall have no authority to act as agent
for the Company, a Fund or the Class A shares. Advance copies or proofs of all
materials which are proposed to be circulated or disseminated by the
Shareholder Servicing Agent to Customers or prospective Customers and which
identify or describe the Company, a Fund or the Class A shares shall be
provided to the Company at least 10 days prior to such circulation or
dissemination (unless the Company consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Company shall have given written notice to
the Shareholder Servicing Agent of any objection thereto.
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<PAGE> 7
Nothing in this Section 4 shall be construed to make the Company
liable for the use (as opposed to the accuracy) of any information about the
Company, a Fund or Class A shares which is disseminated by the Shareholder
Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company
shall not use the name of the Shareholder Servicing Agent, or any of its
affiliates or subsidiaries, in any prospectus, sales literature or other
materials relating to the Company, a Fund or Class A shares in a manner not
approved by the Shareholder Servicing Agent prior thereto in writing; provided,
however, that the approval of the Shareholder Servicing Agent shall not be
required for any use of its name which merely refers in accurate and factual
terms to its appointment hereunder or which is required by the Securities and
Exchange Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided, further, that in no
event shall such approval be unreasonably withheld or delayed.
6. Use of the Name of a Fund or the Company. The Shareholder
Servicing Agent shall not use the name of a Fund, the Company or Class A shares
on any checks, bank drafts, bank statements or forms for other than internal
use in a manner not approved by the Company prior thereto in writing; provided,
however, that the approval of the Company shall not be required for the use of
the Company's name or a Fund's name in connection with communications permitted
by Section 4 hereof or (subject to Section 4, to the extent the same may be
applicable) for any use of the Company's name or a Fund's name which merely
identifies the Company or the Fund, as the case may be in connection with the
Shareholder Servicing Agent's role hereunder or which is required by the
Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; provided,
further, that in no event shall such approval be unreasonably withheld or
delayed.
7. Security. The Shareholder Servicing Agent represents and
warrants that to the best of its knowledge, the various procedures and systems
which it has implemented (including provision for twenty-four hours a day
restricted access) with regard to safeguarding from loss or damage attributable
to fire, theft or any other cause the Company's records and other data within
its possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Company shall from time to time specify
the types of records and other data of the Company to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent
shall comply with all applicable federal and state laws and regulations,
including securities laws. The Shareholder Servicing Agent represents and
warrants to the Company that the performance of all its obligations hereunder
will comply with all applicable laws and regulations, the provisions of its
charter documents and by-laws and all material contractual obligations binding
upon the Shareholder Servicing Agent. The Shareholder Servicing Agent
furthermore undertakes that it will promptly, after the Shareholder Servicing
Agent becomes so aware, inform the Company of any change in applicable laws or
regulations (or interpretations thereof) or in its charter or by-laws or
material contracts which would prevent or impair full performance of any of its
obligations hereunder.
9. Reports. To the extent requested by the Company from time
to time, but at least quarterly, the Shareholder Servicing Agent will provide
the Treasurer of the Company with a written report of the amounts expended by
the Shareholder Servicing Agent pursuant to this Agreement and the purposes
4
<PAGE> 8
for which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keeping.
10.1 Section 31(a). The Shareholder Servicing Agent
shall maintain records in a form acceptable to the Company and in compliance
with applicable laws and the rules and regulations of the Securities and
Exchange Commission, including but not limited to the record-keeping
requirements of Section 31(a) of the 1940 Act and the rules thereunder, with
respect to the services contemplated by this Agreement. Such records shall be
deemed to be the property of the Company and will be made available, at the
Company's request, for inspection and use by the Company, representatives of
the Company and governmental authorities. The Shareholder Servicing Agent
agrees that, for so long as it retains any records hereunder, it will meet all
reporting requirements pursuant to the 1940 Act and applicable to the
Shareholder Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing
Agent shall maintain accurate and complete records with respect to services
performed by the Shareholder Servicing Agent in connection with the purchase
and redemption of Class A shares through the Distributor. Such records shall
be maintained in a form reasonably acceptable to the Company and in compliance
with the requirements of Rules 17a-3 and 17a-4 under the Securities Exchange
Act of 1934, as amended, pursuant to which any dealer of the Class A shares
must maintain certain records. All such records maintained by the Shareholder
Servicing Agent shall be the property of the Distributor and will be made
available for inspection and use by the Company or the Distributor upon the
request of either. The Shareholder Servicing Agent shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Company and the Distributor copies of, all
reports and undertakings as may be reasonably requested by the Company or the
Distributor in order to comply with such rules. If so requested by the
Distributor, the Shareholder Servicing Agent shall confirm to the Distributor
its obligations under this Section 10.2 by a writing reasonably satisfactory to
the Distributor.
10.3 Identification, Etc. of Records. The Company shall
from time to time instruct the Shareholder Servicing Agent in writing as to,
and the Company and the Shareholder Servicing Agent shall periodically review,
the records to be maintained and the procedures to be followed by the
Shareholder Servicing Agent in complying with the foregoing Sections 10.1 and
10.2 and Section 8 to the extent it relates to record-keeping required under
federal securities laws and regulations. Notwithstanding the provisions of
Section 8, the Shareholder Servicing Agent shall be entitled to rely on such
instructions.
10.4 Transfer of Customer Data. In the event this
Agreement is terminated or a successor to the Shareholder Servicing Agent is
appointed, the Shareholder Servicing Agent shall, at the expense of the
Company, transfer to such successor as the Company may designate a certified
list of the beneficial owners of Class A shares of the Company serviced by the
Shareholder Servicing Agent (with name, address and tax identification or
Social Security number), a complete record of the account of each such
shareholder and the status thereof, and all other relevant books, records,
correspondence, and other data established or maintained by the Shareholder
Servicing Agent under this Agreement. In the event this Agreement is
terminated, the Shareholder Servicing Agent will use its best efforts to
cooperate in the orderly transfer of such duties and responsibilities to the
successor, including assistance in the establishment of books, records and
other data by the successor.
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<PAGE> 9
10.5 Survival of Record-Keeping Obligations. The
record-keeping obligations imposed in this Section 10 shall survive the
termination of this Agreement for the shorter of a period of six years or that
minimum period required by applicable rules or regulations of the Securities
and Exchange Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in
this Section 10 shall be construed to mean that the Shareholder Servicing Agent
would, by virtue of its role hereunder, be required under applicable law to
maintain the records required to be maintained by it under this Section 10, but
it is understood that the Shareholder Servicing Agent has agreed to do so in
order to enable the Company and the Distributor to comply with laws and
regulations applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy
Records. Anything in this Section 10 to the contrary notwithstanding, except
to the extent otherwise prohibited by law, the Shareholder Servicing Agent
shall have the right to copy, maintain and use any records maintained by the
Shareholder Servicing Agent pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not
be liable or responsible for delays or errors by reason of circumstances beyond
its reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent.
The Company will indemnify and hold the Shareholder Servicing Agent harmless
from all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) from any claim, demand, action or suit
(collectively, "Claims") (a) arising in connection with misstatements or
omissions in the Funds' prospectus, actions or inactions by the Company or any
of its agents or contractors or the performance of the Shareholder Servicing
Agent's obligations hereunder and (b) not resulting from (i) the bad faith or
negligence of the Shareholder Servicing Agent, its officers, employees or
agents, or (ii) any breach of applicable law by the Shareholder Servicing
Agent, its officers, employees or agents, or (iii) any action of the
Shareholder Servicing Agent, its officers, employees or agents which exceeds
the legal authority of the Shareholder Servicing Agent or its authority
hereunder, or (iv) any error or omission of the Shareholder Servicing Agent,
its officers, employees or agents with respect to the purchase, redemption and
transfer of Customers' Class A shares or the Shareholder Servicing Agent's
verification or guarantee of any Customer signature. Notwithstanding anything
herein to the contrary, the Company will indemnify and hold the Shareholder
Servicing Agent harmless from any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) resulting from any
Claim as a result of its acting in accordance with any written instructions
reasonably believed by the Shareholder Servicing Agent to have been executed by
any person duly authorized by the Company, or as a result of acting in reliance
upon any instrument or stock certificate reasonably believed by the Shareholder
Servicing Agent to have been genuine and signed, countersigned or executed by a
person duly authorized by the Company, excepting only the gross negligence or
bad faith of the Shareholder Servicing Agent.
In any case in which the Company may be asked to indemnify or hold
the Shareholder Servicing Agent harmless, the Company shall be advised of all
pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and notify the Company
6
<PAGE> 10
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company. The Company shall have the
option to defend the Shareholder Servicing Agent against any Claim which may be
the subject of indemnification hereunder. In the event that the Company elects
to defend against such Claim, the defense shall be conducted by counsel chosen
by the Company and reasonably satisfactory to the Shareholder Servicing Agent.
The Shareholder Servicing Agent may retain additional counsel at its expense.
Except with the prior written consent of the Company, the Shareholder Servicing
Agent shall not confess any Claim or make any compromise in any case in which
the Company will be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Company. Without limiting
the rights of the Company under applicable law, the Shareholder Servicing Agent
will indemnify and hold the Company harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any Claim (a) resulting from (i) the bad faith or negligence of the Shareholder
Servicing Agent, its officers, employees or agents, or (ii) any breach of
applicable law by the Shareholder Servicing Agent, its officers, employees or
agents, or (iii) any action of the Shareholder Servicing Agent, its officers,
employees or agents which exceeds the legal authority of the Shareholder
Servicing Agent or its authority hereunder, or (iv) any error or omission of
the Shareholder Servicing Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Class A shares or the
Shareholder Servicing Agent's verification or guarantee of any Customer
signature, and (b) not resulting from the Shareholder Servicing Agent's actions
in accordance with written instructions reasonably believed by the Shareholder
Servicing Agent to have been executed by any person duly authorized by the
Company, or in reliance upon any instrument or stock certificate reasonably
believed by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company.
In any case in which the Shareholder Servicing Agent may be asked
to indemnify or hold the Company harmless, the Shareholder Servicing Agent
shall be advised of all pertinent facts concerning the situation in question
and the Company shall use reasonable care to identify and notify the
Shareholder Servicing Agent promptly concerning any situation which presents or
appears likely to present a claim for indemnification against the Shareholder
Servicing Agent. The Shareholder Servicing Agent shall have the option to
defend the Company against any Claim which may be the subject of
indemnification hereunder. In the event that the Shareholder Servicing Agent
elects to defend against such Claim, the defense shall be conducted by counsel
chosen by the Shareholder Servicing Agent and satisfactory to the Company. The
Company may retain additional counsel at its expense. Except with the prior
written consent of the Shareholder Servicing Agent, the Company shall not
confess any Claim or make any compromise in any case in which the Shareholder
Servicing Agent will be asked to indemnify the Company.
12.3 Survival of Indemnities. The indemnities granted
by the parties in this Section 12 shall survive the termination of this
Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to
either party shall be in writing and shall be deemed sufficient if mailed to
such party at the address of such party set forth in the preamble of this
Agreement or at such other address as such party may have designated by written
notice to the other.
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<PAGE> 11
15. Further Assurances. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
16. Implementation and Duration of Agreement. This Agreement
is effective upon the date first written below and shall continue in effect for
a period of more than one year from the date hereof so long as the Servicing
Plan and related form of agreement or this Agreement is not specifically
terminated by a vote of the Company's Board of Directors and of the Directors
who are not "interested persons" of the Company (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of the
Servicing Plan (the "Plan"), this Agreement, or any other agreement related to
such Plan, cast in person at a meeting called for the purpose of voting on this
Agreement.
17. Termination. This Agreement may be terminated by the
Company, without the payment of any penalty, at any time upon not more than 60
days' nor less than 30 days' notice, by a vote of a majority of the Board of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Plan, this Agreement or any other agreement related to
such Plan, including the Amended Distribution Agreement, or by "a vote of a
majority of the outstanding voting securities" (as defined in the 1940 Act) of
a Fund's Class A shares. The Shareholder Servicing Agent may terminate this
Agreement upon not more than 60 days' nor less than 30 days' notice to the
Company. Either party may assign this Agreement provided that such party
obtain the prior written consent of the other party. Upon termination hereof,
a Fund shall pay such compensation as may be due the Shareholder Servicing
Agent as of the date of such termination.
18. Changes; Amendments. This Agreement may be supplemented or
amended only by written instrument signed by both parties, but may not be
amended to increase materially the maximum amount payable without approval of
"a vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of a Fund's Class A shares, and all material amendments must be
approved in the manner described in Section 16.
19. Limitation of Liability. The Shareholder Servicing Agent
hereby agrees that obligations assumed by the Company pursuant to this
Agreement shall be limited in all cases to a Fund and its assets and that the
Shareholder Servicing Agent shall not seek satisfaction of any such obligations
from the Board of Directors or any individual Director of the Company or from
the assets of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The
Shareholder Servicing Agent may, with the written approval of the Company (such
approval not to be unreasonably withheld or delayed), subcontract for the
performance of the Shareholder Servicing Agent's obligations hereunder with any
one or more persons, including but not limited to any one or more persons which
is an affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder Servicing Agent shall be as fully responsible to the Company for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.
21. Authority to Vote. The Company hereby confirms that
nothing contained in the Articles of Incorporation of the Company would
preclude the Shareholder Servicing Agent, at any meeting of shareholders of the
Company or of a Fund, from voting any Class A shares held in accounts serviced
by the Shareholder Servicing Agent and which are otherwise not represented in
person or by proxy at the meeting, proportionately in accordance with the votes
cast by holders of all Class A shares otherwise represented at the meeting in
person or by proxy and held in accounts serviced by the Shareholder Servicing
Agent.
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<PAGE> 12
22. Compliance with Laws and Policies; Cooperation. The
Company hereby agrees that it will comply with all laws and regulations
applicable to a Fund's operations and the Shareholder Servicing Agent agrees
that it will comply with all laws and regulations applicable to providing the
services contemplated hereby.
22.1 Miscellaneous. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
California. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
STAGECOACH FUNDS, INC. on behalf of the
Funds listed in the attached Appendix
By:
------------------------------
Name: Richard H. Blank, Jr.
--------------------------
Title: Chief Operating Officer,
-------------------------
Secretary and Treasurer
-------------------------
WELLS FARGO BANK, N.A.
By:
---------------------
Name:
-------------------
Title:
------------------
By:
---------------------
Name:
-------------------
Title:
------------------
9
<PAGE> 13
APPENDIX
Arizona Tax-Free Fund
Balanced Fund
Equity Value Fund
Government Money Market Mutual Fund
Intermediate Bond Fund
International Equity Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Prime Money Market Mutual Fund
Short-Intermediate U.S. Government Income Fund
Treasury Money Market Mutual Fund
Small Cap Fund
Approved: April 25, 1996
Approved As Amended: August 29, 1996 and April 29, 1997
10
<PAGE> 1
EXHIBIT 99.B9(d)(xi)
STAGECOACH FUNDS, INC.
SERVICING PLAN
CLASS B SHARES
Section 1. Each of the proper officers of Stagecoach Funds, Inc. (the
"Company") is authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based substantially on the form attached hereto
as Exhibit A or any other form duly approved by the Company's Board of
Directors ("Agreements") with broker/dealers, banks and other financial
institutions that are dealers of record or holders of record or which have a
servicing relationship with the beneficial owners of Class B shares ("Servicing
Agents") of the Company's Funds listed on the attached Appendix (each a
"Fund"). Pursuant to such Agreements, Servicing Agents shall provide support
services as set forth therein to their clients who beneficially own Class B
shares of the Fund in consideration of a fee, computed monthly in the manner
set forth in the Fund's then current prospectus, at an annual rate of up to
0.25% of the average daily net asset value of the Class B shares beneficially
owned by or attributable to such clients. The Company's distributor,
administrator and adviser and their respective affiliates are eligible to
become Servicing Agents and to receive fees under this Servicing Plan. All
expenses incurred by the Fund in connection with the Agreements and the
implementation of this Servicing Plan shall be borne entirely by the holders of
the Class B shares of the Fund.
Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Servicing Agents. The Company's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Company shall not be obligated to execute, any Agreement
with any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the Company's
administrator shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.
Section 4. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940, as amended, and rules and
regulations thereunder, of Class B shares of the Fund and a majority of the
Directors of the Company, including a majority of the Qualified Directors,
pursuant to a vote cast in person at a meeting or meetings called for the
purpose of voting on the approval of the Plan, or on the date the Fund
commences operations, if such date is later.
Section 5. Unless sooner terminated, this Servicing Plan (and each
related agreement) shall continue in effect for a period of one year from its
date of approval and shall continue thereafter for successive annual periods,
provided that such Plan is not
1
<PAGE> 2
specifically terminated by a majority of the Board of Directors, including a
majority of the Directors who are not "interested persons," as defined in the
Investment Company Act of 1940, of the Company and have no direct or indirect
financial interest in the operation of this Servicing Plan or in any Agreement
related to this Servicing Plan (the "Disinterested Directors") cast in person
at a meeting called for the purpose of voting on such approval.
Section 6. This Servicing Plan may be amended at any time with
respect to the Fund by the Company's Board of Directors, provided that any
material amendment of the terms of this Servicing Plan (including a material
increase of the fee payable hereunder) shall become effective only upon the
approvals set forth in Section 5.
Section 7. This Servicing Plan is terminable at any time with respect
to the Fund by vote of a majority of the Disinterested Directors.
Section 8. While this Servicing Plan is in effect, the selection and
nomination of the Disinterested Directors shall be committed to the discretion
of such Disinterested Directors.
Section 9. Notwithstanding anything herein to the contrary, the Fund
shall not be obligated to make any payments under this Plan that exceed the
maximum amounts payable under Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Directors for a period of not less than six years.
Dated: April 25, 1996
2
<PAGE> 3
APPENDIX
Arizona Tax-Free Fund
Balanced Fund
Equity Value Fund
Intermediate Bond Fund
International Equity Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Small Cap Fund
Approved: April 25, 1996
As Amended: August 28-29, 1996 and April 29, 1997
3
<PAGE> 4
FORM OF
SHAREHOLDER SERVICING AGREEMENT
(Class B shares)
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
________, 1997, is made by and between Stagecoach Funds, Inc. ("Company"), a
Maryland corporation having its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, on behalf of the Funds listed in the
attached Appendix (each a "Fund"), and [ ], N.A. as
shareholder servicing agent hereunder ("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, Class B shares of common stock (.001 par value) of each Fund
(hereinafter "Class B shares") may be purchased or redeemed through a
broker/dealer or financial institution which has entered into a shareholder
servicing agreement with the Company on behalf of a Fund; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate
purchases and redemptions of Class B shares by its customers (the "Customers")
and wishes to act as the Customers' agent in performing certain administrative
functions in connection with transactions in shares from time to time for the
account of the Customers and to provide related services to the Customers in
connection with their investments in a Fund; and
WHEREAS, it is in the best interest of the Fund to make the services
of the Shareholder Servicing Agent available to the Customers who, from time to
time, become shareholders of a Fund;
NOW THEREFORE, the Company, on behalf of the Funds, and the
Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees to
perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent shall be
responsible for performing shareholder administrative and liaison services
functions, which shall include, without limitation:
(a) answering Customer inquiries regarding account status and
history, the manner in which purchases, exchanges and redemptions of Class B
shares may be effected;
(b) assisting Customers in designating and changing dividend
options, account designations and addresses;
(c) providing necessary personnel and facilities to establish
and maintain Customer accounts and records;
1
<PAGE> 5
(d) assisting in aggregating and transmitting purchase,
redemption and exchange transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with Customer orders to
purchase or redeem shares;
(g) verify and guarantee Customer signatures in connection
with redemption and exchange orders and transfers and changes in Customer
accounts with a bank which is designated in the Fund Account Application and
which is approved by a Fund's Transfer Agent;
(h) furnishing (either separately or on an integrated basis
with other reports sent to a Customer by the Shareholder Servicing Agent)
monthly and year-end statements and confirmations of purchases, redemptions and
exchanges;
(i) furnishing, on behalf of the Class B shares of a Fund,
proxy statements, annual reports, updated prospectuses and other communications
to Customers;
(j) receiving, tabulating and sending to a Fund, proxies
executed by Customers; and
(k) providing such other related services, and necessary
personnel and facilities to provide all of the shareholder services
contemplated hereby, in each case, as the Company or a Customer may reasonably
request.
2.2 Standard of Services. All services to be rendered by the
Shareholder Servicing Agent hereunder shall be performed in a professional,
competent and timely manner. Any detailed operating standards and procedures
to be followed by the Shareholder Servicing Agent in performing the services
described above shall be determined from time to time by agreement between the
Shareholder Servicing Agent and the Company. The Company acknowledges that the
Shareholder Servicing Agent's ability to perform on a timely basis certain of
its obligations under this Agreement depends upon a Fund's timely delivery of
certain materials and/or information to the Shareholder Servicing Agent. The
Company agrees to use its best efforts to provide, or cause to be provided,
such materials to the Shareholder Servicing Agent in a timely manner.
2.3 Investments through Distributor. The Company and the
Shareholder Servicing Agent hereby agree that all purchases of Class B shares
effected by the Shareholder Servicing Agent on behalf of its Customers shall be
effected by it through Stephens Inc. ("Distributor") in its capacity as the
Funds' principal underwriter.
3. Fees.
3.1 Fees from the Fund. In consideration of the services
described in Section 2 hereof and the incurring of expenses in connection
therewith, the Shareholder Servicing Agent shall receive a fee to be paid in
arrears periodically or on a periodic basis to be agreed upon by the Company
and the Shareholder Servicing Agent from time to time (but in no event less
frequently than semi-annually) determined by a formula based upon the number of
accounts serviced by the Shareholder Servicing Agent
2
<PAGE> 6
during the period for which payment is being made, the level of assets or
activity in such accounts during such period, and/or the expenses incurred by
the Shareholder Servicing Agent. In no event will such fees exceed 0.25%, on
an annualized basis, of the average daily net assets of a Fund represented by
Class B shares owned of record by the Shareholder Servicing Agent on behalf of
the Customers during the period for which payment is being made. For purposes
of determining the fees payable to the Shareholder Servicing Agent hereunder,
the per share value of the Class B shares of a Fund's net assets shall be
computed in the manner specified in the Funds' then-current prospectus.
Notwithstanding the foregoing, if applicable laws, regulations or rules impose
a maximum fee amount (a "cap") on the Class B shares of a Fund with respect to
shareholder servicing fees and/or fees for distribution-related services, the
amount payable hereunder shall be reduced to an amount which, when considered
in conjunction with the fees payable by a Fund for the Class B shares'
distribution-related activities, is the maximum amount payable to the
Shareholder Servicing Agent under applicable laws, regulations or rules.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to make any payments under this Agreement that exceed the maximum
amounts payable under Article III, Section 26 of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. The above fee constitutes
all fees to be paid to the Shareholder Servicing Agent by the Class B shares of
a Fund or the Company with respect to the shareholder services contemplated
hereby.
3.2 Fees from Customers. It is agreed that the Shareholder
Servicing Agent may impose certain conditions on Customers, subject to the
terms of the Funds' then-current prospectus, in addition to or different from
those imposed by a Fund, such as requiring a minimum initial investment or the
payment of additional fees directly by the Customer for additional services
offered by the Shareholder Servicing Agent to the Customer; provided, however,
that the Shareholder Servicing Agent may not charge customers any direct fee
which would constitute a "sales load" within the meaning of Section 2(a)(35) of
the Investment Company Act of 1940, as amended (the "1940 Act"). The
Shareholder Servicing Agent shall bill Customers directly for any such
additional fees. In the event the Shareholder Servicing Agent charges
Customers such additional fees, it shall notify the Company in advance and make
appropriate prior written disclosure (such disclosure to be in accordance with
all applicable laws) to Customers of any such additional fees charged directly
to the Customer. To the extent required by applicable rules and regulations of
the Securities and Exchange Commission, the Company shall make written
disclosure of the fees paid or to be paid by a Fund to the Shareholder
Servicing Agent pursuant to Section 3.1 of this Agreement. In no event shall
the Shareholder Servicing Agent have recourse or access, as Shareholder
Servicing Agent or otherwise, to the assets in the Customer's account, except
to the extent expressly authorized by law or by such Customer, or to any assets
of the Fund or the Company, for payment of any additional direct fees referred
to in this Section 3.2
4. Information Pertaining to the shares. The Shareholder Servicing
Agent and its officers, employees and agents are not authorized to make any
representations concerning the Company, the Fund or the Class B shares to
Customers or prospective Customers, excepting only accurate communication of
any information provided by or on behalf of any administrator of the Company or
the Fund or any distributor of the Class B shares or information contained in
the Funds' then-current prospectus. In furnishing such information regarding
the Company, the Fund or the Class B shares, the Shareholder Servicing Agent
shall act as agent for the Customer only and shall have no authority to act as
agent for the Company, the Fund or the Class B shares. Advance copies or
proofs of all materials which are proposed to be circulated or disseminated by
the Shareholder Servicing Agent to Customers or prospective Customers and which
identify or describe the Company, the Fund or the Class B shares shall be
provided to the Company at least 10 days prior to such circulation or
dissemination (unless the Company consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at
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<PAGE> 7
any time after the Company shall have given written notice to the Shareholder
Servicing Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Company
liable for the use (as opposed to the accuracy) of any information about the
Company, the Fund or Class B shares which is disseminated by the Shareholder
Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company shall
not use the name of the Shareholder Servicing Agent, or any of its affiliates
or subsidiaries, in any prospectus, sales literature or other materials
relating to the Company, the Fund or Class B shares in a manner not approved by
the Shareholder Servicing Agent prior thereto in writing; provided, however,
that the approval of the Shareholder Servicing Agent shall not be required for
any use of its name which merely refers in accurate and factual terms to its
appointment hereunder or which is required by the Securities and Exchange
Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided, further, that in no
event shall such approval be unreasonably withheld or delayed.
6. Use of the Name of the Fund or the Company. The Shareholder
Servicing Agent shall not use the name of a Fund, the Company or Class B shares
on any checks, bank drafts, bank statements or forms for other than internal
use in a manner not approved by the Company prior thereto in writing; provided,
however, that the approval of the Company shall not be required for the use of
the Company's name or a Fund's name in connection with communications permitted
by Section 4 hereof or (subject to Section 4, to the extent the same may be
applicable) for any use of the Company's name or a Fund's name which merely
identifies the Company or a Fund, as the case may be in connection with the
Shareholder Servicing Agent's role hereunder or which is required by the
Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; provided,
further, that in no event shall such approval be unreasonably withheld or
delayed.
7. Security. The Shareholder Servicing Agent represents and warrants
that to the best of its knowledge, the various procedures and systems which it
has implemented (including provision for twenty-four hours a day restricted
access) with regard to safeguarding from loss or damage attributable to fire,
theft or any other cause the Company's records and other data within its
possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Company shall from time to time specify
the types of records and other data of the Company to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent shall
comply with all applicable federal and state laws and regulations, including
securities laws. The Shareholder Servicing Agent represents and warrants to
the Company that the performance of all its obligations hereunder will comply
with all applicable laws and regulations, the provisions of its charter
documents and by-laws and all material contractual obligations binding upon the
Shareholder Servicing Agent. The Shareholder Servicing Agent furthermore
undertakes that it will promptly, after the Shareholder Servicing Agent becomes
so aware, inform the Company of any change in applicable laws or regulations
(or interpretations thereof) or in its charter or by-laws or material contracts
which would prevent or impair full performance of any of its obligations
hereunder.
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<PAGE> 8
9. Reports. To the extent requested by the Company from time to
time, but at least quarterly, the Shareholder Servicing Agent will provide the
Treasurer of the Company with a written report of the amounts expended by the
Shareholder Servicing Agent pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keeping.
10.1 Section 31(a). The Shareholder Servicing Agent shall
maintain records in a form acceptable to the Company and in compliance with
applicable laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping requirements of
Section 31(a) of the 1940 Act and the rules thereunder, with respect to the
services contemplated by this Agreement. Such records shall be deemed to be
the property of the Company and will be made available, at the Company's
request, for inspection and use by the Company, representatives of the Company
and governmental authorities. The Shareholder Servicing Agent agrees that, for
so long as it retains any records hereunder, it will meet all reporting
requirements pursuant to the 1940 Act and applicable to the Shareholder
Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing Agent
shall maintain accurate and complete records with respect to services performed
by the Shareholder Servicing Agent in connection with the purchase and
redemption of Class B shares through the Distributor. Such records shall be
maintained in a form reasonably acceptable to the Company and in compliance
with the requirements of Rules 17a-3 and 17a-4 under the Securities Exchange
Act of 1934, as amended, pursuant to which any dealer of the Class B shares
must maintain certain records. All such records maintained by the Shareholder
Servicing Agent shall be the property of the Distributor and will be made
available for inspection and use by the Company or the Distributor upon the
request of either. The Shareholder Servicing Agent shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Company and the Distributor copies of, all
reports and undertakings as may be reasonably requested by the Company or the
Distributor in order to comply with such rules. If so requested by the
Distributor, the Shareholder Servicing Agent shall confirm to the Distributor
its obligations under this Section 10.2 by a writing reasonably satisfactory to
the Distributor.
10.3 Identification, Etc. of Records. The Company shall from
time to time instruct the Shareholder Servicing Agent in writing as to, and the
Company and the Shareholder Servicing Agent shall periodically review, the
records to be maintained and the procedures to be followed by the Shareholder
Servicing Agent in complying with the foregoing Sections 10.1 and 10.2 and
Section 8 to the extent it relates to record-keeping required under federal
securities laws and regulations. Notwithstanding the provisions of Section 8,
the Shareholder Servicing Agent shall be entitled to rely on such instructions.
10.4 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Shareholder Servicing Agent is appointed, the
Shareholder Servicing Agent shall, at the expense of the Company, transfer to
such successor as the Company may designate a certified list of the beneficial
owners of Class B shares of the Company serviced by the Shareholder Servicing
Agent (with name, address and tax identification or Social Security number), a
complete record of the account of each such shareholder and the status thereof,
and all other relevant books, records, correspondence, and other data
established or maintained by the Shareholder Servicing Agent under this
Agreement. In the event this
5
<PAGE> 9
Agreement is terminated, the Shareholder Servicing Agent will use its best
efforts to cooperate in the orderly transfer of such duties and
responsibilities to the successor, including assistance in the establishment of
books, records and other data by the successor.
10.5 Survival of Record-Keeping Obligations. The record-
keeping obligations imposed in this Section 10 shall survive the termination of
this Agreement for the shorter of a period of six years or that minimum period
required by applicable rules or regulations of the Securities and Exchange
Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in this
Section 10 shall be construed to mean that the Shareholder Servicing Agent
would, by virtue of its role hereunder, be required under applicable law to
maintain the records required to be maintained by it under this Section 10, but
it is understood that the Shareholder Servicing Agent has agreed to do so in
order to enable the Company and the Distributor to comply with laws and
regulations applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy Records.
Anything in this Section 10 to the contrary notwithstanding, except to the
extent otherwise prohibited by law, the Shareholder Servicing Agent shall have
the right to copy, maintain and use any records maintained by the Shareholder
Servicing Agent pursuant to this Section 10, except as otherwise prohibited by
Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not be
liable or responsible for delays or errors by reason of circumstances beyond
its reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent. The
Company will indemnify and hold the Shareholder Servicing Agent harmless from
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) from any claim, demand, action or suit
(collectively, "Claims") (a) arising in connection with misstatements or
omissions in the Funds' prospectus, actions or inactions by the Company or any
of its agents or contractors or the performance of the Shareholder Servicing
Agent's obligations hereunder and (b) not resulting from (i) the bad faith or
negligence of the Shareholder Servicing Agent, its officers, employees or
agents, or (ii) any breach of applicable law by the Shareholder Servicing
Agent, its officers, employees or agents, or (iii) any action of the
Shareholder Servicing Agent, its officers, employees or agents which exceeds
the legal authority of the Shareholder Servicing Agent or its authority
hereunder, or (iv) any error or omission of the Shareholder Servicing Agent,
its officers, employees or agents with respect to the purchase, redemption and
transfer of Customers' Class B shares or the Shareholder Servicing Agent's
verification or guarantee of any Customer signature. Notwithstanding anything
herein to the contrary, the Company will indemnify and hold the Shareholder
Servicing Agent harmless from any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) resulting from any
Claim as a result of its acting in accordance with any written instructions
reasonably believed by the Shareholder Servicing Agent to have been executed by
any person duly authorized by the Company, or as a result of acting in reliance
upon any instrument or stock certificate reasonably believed by the Shareholder
Servicing Agent to have been genuine and signed, countersigned or executed by a
person duly authorized by the Company, excepting only the gross negligence or
bad faith of the Shareholder Servicing Agent.
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In any case in which the Company may be asked to indemnify or hold the
Shareholder Servicing Agent harmless, the Company shall be advised of all
pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and notify the Company
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company. The Company shall have the
option to defend the Shareholder Servicing Agent against any Claim which may be
the subject of indemnification hereunder. In the event that the Company elects
to defend against such Claim, the defense shall be conducted by counsel chosen
by the Company and reasonably satisfactory to the Shareholder Servicing Agent.
The Shareholder Servicing Agent may retain additional counsel at its expense.
Except with the prior written consent of the Company, the Shareholder Servicing
Agent shall not confess any Claim or make any compromise in any case in which
the Company will be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Company. Without limiting the
rights of the Company under applicable law, the Shareholder Servicing Agent
will indemnify and hold the Company harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any Claim (a) resulting from (i) the bad faith or negligence of the Shareholder
Servicing Agent, its officers, employees or agents, or (ii) any breach of
applicable law by the Shareholder Servicing Agent, its officers, employees or
agents, or (iii) any action of the Shareholder Servicing Agent, its officers,
employees or agents which exceeds the legal authority of the Shareholder
Servicing Agent or its authority hereunder, or (iv) any error or omission of
the Shareholder Servicing Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Class B shares or the
Shareholder Servicing Agent's verification or guarantee of any Customer
signature, and (b) not resulting from the Shareholder Servicing Agent's actions
in accordance with written instructions reasonably believed by the Shareholder
Servicing Agent to have been executed by any person duly authorized by the
Company, or in reliance upon any instrument or stock certificate reasonably
believed by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company.
In any case in which the Shareholder Servicing Agent may be asked to
indemnify or hold the Company harmless, the Shareholder Servicing Agent shall
be advised of all pertinent facts concerning the situation in question and the
Company shall use reasonable care to identify and notify the Shareholder
Servicing Agent promptly concerning any situation which presents or appears
likely to present a claim for indemnification against the Shareholder Servicing
Agent. The Shareholder Servicing Agent shall have the option to defend the
Company against any Claim which may be the subject of indemnification
hereunder. In the event that the Shareholder Servicing Agent elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Shareholder Servicing Agent and satisfactory to the Company. The Company may
retain additional counsel at its expense. Except with the prior written
consent of the Shareholder Servicing Agent, the Company shall not confess any
Claim or make any compromise in any case in which the Shareholder Servicing
Agent will be asked to indemnify the Company.
12.3 Survival of Indemnities. The indemnities granted by the
parties in this Section 12 shall survive the termination of this Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such
party at the address of such party set forth in the
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preamble of this Agreement or at such other address as such party may have
designated by written notice to the other.
15. Further Assurances. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
16. Implementation and Duration of Agreement. This Agreement is
effective upon the date first written below and shall continue in effect for a
period of more than one year from the date hereof so long as the Servicing Plan
and related form of agreement or this Agreement is not specifically terminated
by a vote of the Company's Board of Directors and of the Directors who are not
"interested persons" of the Company (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of a Fund's Class B
Servicing Plan (the "Plan"), this Agreement, or any other agreement related to
such Plan, cast in person at a meeting called for the purpose of voting on this
Agreement.
17. Termination. This Agreement may be terminated by the Company,
without the payment of any penalty, at any time upon not more than 60 days' nor
less than 30 days' notice, by a vote of a majority of the Board of Directors of
the Company who are not "interested persons" of the Company (as defined in the
1940 Act) and have no direct or indirect financial interest in the operation of
the Plan, this Agreement or any other agreement related to such Plan, including
the Amended Distribution Agreement, or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Class B
shares of a Fund. The Shareholder Servicing Agent may terminate this Agreement
upon not more than 60 days' nor less than 30 days' notice to the Company.
Either party may assign this Agreement provided that such party obtain the
prior written consent of the other party. Upon termination hereof, a Fund
shall pay such compensation as may be due the Shareholder Servicing Agent as of
the date of such termination.
18. Changes; Amendments. This Agreement may be supplemented or
amended only by written instrument signed by both parties, but may not be
amended to increase materially the maximum amount payable without approval of
"a vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of the Class B shares of a Fund, and all material amendments must be
approved in the manner described in Section 16.
19. Limitation of Liability. The Shareholder Servicing Agent hereby
agrees that obligations assumed by the Company pursuant to this Agreement shall
be limited in all cases to a Fund and its assets and that the Shareholder
Servicing Agent shall not seek satisfaction of any such obligations from the
Board of Directors or any individual Director of the Company or from the assets
of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The Shareholder
Servicing Agent may, with the written approval of the Company (such approval
not to be unreasonably withheld or delayed), subcontract for the performance of
the Shareholder Servicing Agent's obligations hereunder with any one or more
persons, including but not limited to any one or more persons which is an
affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder Servicing Agent shall be as fully responsible to the Company for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.
21. Authority to Vote. The Company hereby confirms that nothing
contained in the Articles of Incorporation of the Company would preclude the
Shareholder Servicing Agent, at any meeting of shareholders of the Company or
of a Fund, from voting any Class B shares held in accounts serviced by the
Shareholder Servicing Agent and which are otherwise not represented in person
or by proxy at the meeting,
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<PAGE> 12
proportionately in accordance with the votes cast by holders of all Class B
shares otherwise represented at the meeting in person or by proxy and held in
accounts serviced by the Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The Company
hereby agrees that it will comply with all laws and regulations applicable to a
Fund's operations and the Shareholder Servicing Agent agrees that it will
comply with all laws and regulations applicable to providing the services
contemplated hereby.
22.1 Miscellaneous. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of
California. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
STAGECOACH FUNDS, INC. on behalf of the Funds
listed in the attached Appendix
By:
--------------------------------------------
Name: Richard H. Blank, Jr.
---------------------
Title: Chief Operating Officer,
------------------------
Secretary and Treasurer
-----------------------
WELLS FARGO BANK, N.A.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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APPENDIX
Arizona Tax-Free Fund
Balanced Fund
Equity Value Fund
Intermediate Bond Fund
International Equity Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Small Cap Fund
Approved: April 25, 1996
As Amended: August 29, 1996 and April 29, 1997
10
<PAGE> 1
EXHIBIT-99.B9(d)(xii)
STAGECOACH FUNDS, INC.
SERVICING PLAN
INSTITUTIONAL CLASS SHARES
Section 1. Each of the proper officers of Stagecoach Funds, Inc. (the
"Company") is authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based substantially on the form attached hereto
as Exhibit A or any other form duly approved by the Company's Board of
Directors ("Agreements") with broker/dealers, banks and other financial
institutions that are dealers of record or holders of record or which have a
servicing relationship with the beneficial owners of Institutional Class shares
("Servicing Agents") of the Company's Funds listed on the attached Appendix
(each a "Fund"). Pursuant to such Agreements, Servicing Agents shall provide
support services as set forth therein to their clients who beneficially own
Institutional Class shares of the Fund in consideration of a fee, computed
monthly in the manner set forth in the Fund's then current prospectus, at an
annual rate of up to 0.25% of the average daily net asset value of the
Institutional Class shares beneficially owned by or attributable to such
clients. The Company's distributor, administrator and adviser and their
respective affiliates are eligible to become Servicing Agents and to receive
fees under this Servicing Plan. All expenses incurred by the Fund in
connection with the Agreements and the implementation of this Servicing Plan
shall be borne entirely by the holders of the Institutional Class shares of the
Fund.
Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Servicing Agents. The Company's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Company shall not be obligated to execute, any Agreement
with any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the Company's
administrator shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.
Section 4. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940, as amended, and rules and
regulations thereunder, of Institutional Class shares of the Fund and a
majority of the Directors of the Company, including a majority of the Qualified
Directors, pursuant to a vote cast in person at a meeting or meetings called
for the purpose of voting on the approval of the Plan, or on the date the Fund
commences operations, if such date is later.
Section 5. Unless sooner terminated, this Servicing Plan (and each
related agreement) shall continue in effect for a period of one year from its
date of approval and
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shall continue thereafter for successive annual periods, provided that such
Plan is not specifically terminated by a majority of the Board of Directors,
including a majority of the Directors who are not "interested persons," as
defined in the Investment Company Act of 1940, of the Company and have no
direct or indirect financial interest in the operation of this Servicing Plan
or in any Agreement related to this Servicing Plan (the "Disinterested
Directors") cast in person at a meeting called for the purpose of voting on
such approval.
Section 6. This Servicing Plan may be amended at any time with
respect to the Fund by the Company's Board of Directors, provided that any
material amendment of the terms of this Servicing Plan (including a material
increase of the fee payable hereunder) shall become effective only upon the
approvals set forth in Section 5.
Section 7. This Servicing Plan is terminable at any time with respect
to the Fund by vote of a majority of the Disinterested Directors.
Section 8. While this Servicing Plan is in effect, the selection and
nomination of the Disinterested Directors shall be committed to the discretion
of such Disinterested Directors.
Section 9. Notwithstanding anything herein to the contrary, the Fund
shall not be obligated to make any payments under this Plan that exceed the
maximum amounts payable under Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Directors for a period of not less than six years.
Dated: April 25, 1996
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APPENDIX
Aggressive Growth Fund
Arizona Tax-Free Fund
Balanced Fund
California Tax-Free Bond Fund
California Tax-Free Income Fund
Equity Value Fund
Ginnie Mae Fund
Growth and Income Fund
Intermediate Bond Fund
International Equity Fund
Money Market Mutual Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Prime Money Market Mutual Fund
Short-Intermediate Government Fund
Small Cap Fund
Treasury Money Market Mutual Fund
Approved: April 25, 1996
As Amended: August 28, 1996 and April 29, 1997
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FORM OF
SHAREHOLDER SERVICING AGREEMENT
(Institutional Class shares)
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of
________, 1997 is made by and between Stagecoach Funds, Inc. ("Company"), a
Maryland corporation having its principal place of business at 111 Center
Street, Little Rock, Arkansas 72201, on behalf of the Funds listed in the
attached Appendix (each a "Fund"), and [ ] as shareholder servicing agent
hereunder ("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, Institutional Class shares of common stock (.001 par
value) of each Fund (hereinafter "Institutional Class shares") may be purchased
or redeemed through a broker/dealer or financial institution which has entered
into a shareholder servicing agreement with the Company on behalf of a Fund;
and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate
purchases and redemptions of Institutional Class shares by its customers (the
"Customers") and wishes to act as the Customers' agent in performing certain
administrative functions in connection with transactions in shares from time to
time for the account of the Customers and to provide related services to the
Customers in connection with their investments in a Fund; and
WHEREAS, it is in the best interest of a Fund to make the
services of the Shareholder Servicing Agent available to the Customers who,
from time to time, become shareholders of a Fund;
NOW THEREFORE, the Company, on behalf of a Funds, and the
Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees to
perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to Be Performed.
2.1 Types of Services. The Shareholder Servicing Agent shall be
responsible for performing shareholder administrative and liaison services,
which shall include, without limitation:
(a) answering Customer inquiries regarding account status
and history, the manner in which purchases, exchanges and redemptions of
Institutional Class shares may be effected;
(b) assisting Customers in designating and changing
dividend options, account designations and addresses;
(c) providing necessary personnel and facilities to
establish and maintain Customer accounts and records;
<PAGE> 5
(d) assisting in aggregating and transmitting purchase,
redemption and exchange transactions;
(e) arranging for the wiring of money;
(f) transferring money in connection with Customer orders to
purchase or redeem shares;
(g) verify and guarantee Customer signatures in connection
with redemption and exchange orders and transfers and changes in Customer
accounts with a bank which is designated in the Fund Account Application and
which is approved by the Fund's Transfer Agent;
(h) furnishing (either separately or on an integrated basis
with other reports sent to a Customer by the Shareholder Servicing Agent)
monthly and year-end statements and confirmations of purchases, redemptions and
exchanges;
(i) furnishing, on behalf of the Institutional Class shares of
a Fund, proxy statements, annual reports, updated prospectuses and other
communications to Customers;
(j) receiving, tabulating and sending to a Fund, proxies
executed by Customers; and
(k) providing such other related services, and necessary
personnel and facilities to provide all of the shareholder services
contemplated hereby, in each case, as the Company or a Customer may reasonably
request.
2.2 Standard of Services. All services to be rendered by the
Shareholder Servicing Agent hereunder shall be performed in a professional,
competent and timely manner. Any detailed operating standards and procedures to
be followed by the Shareholder Servicing Agent in performing the services
described above shall be determined from time to time by agreement between the
Shareholder Servicing Agent and the Company. The Company acknowledges that the
Shareholder Servicing Agent's ability to perform on a timely basis certain of
its obligations under this Agreement depends upon a Fund's timely delivery of
certain materials and/or information to the Shareholder Servicing Agent. The
Company agrees to use its best efforts to provide, or cause to be provided,
such materials to the Shareholder Servicing Agent in a timely manner.
2.3 Investments through Distributor. The Company and the
Shareholder Servicing Agent hereby agree that all purchases of Institutional
Class shares effected by the Shareholder Servicing Agent on behalf of its
Customers shall be effected by it through Stephens Inc. ("Distributor") in its
capacity as the Funds' principal underwriter.
3. Fees.
3.1 Fees from the Fund. In consideration of the services described
in Section 2 hereof and the incurring of expenses in connection therewith, the
Shareholder Servicing Agent shall receive a fee to be paid in arrears
periodically or on a periodic basis to be agreed upon by the Company and the
Shareholder Servicing Agent from time to time (but in no event less frequently
than semi-annually) determined by a formula based upon the number of accounts
serviced by the Shareholder Servicing Agent
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<PAGE> 6
during the period for which payment is being made, the level of assets or
activity in such accounts during such period, and/or the expenses incurred by
the Shareholder Servicing Agent. In no event will such fees exceed 0.25%, on an
annualized basis, of the average daily net assets of a Fund represented by
Institutional Class shares owned of record by the Shareholder Servicing Agent
on behalf of the Customers during the period for which payment is being made.
For purposes of determining the fees payable to the Shareholder Servicing Agent
hereunder, the per share value of the Institutional Class shares of a Fund's
net assets shall be computed in the manner specified in the Funds' then-current
prospectus. Notwithstanding the foregoing, if applicable laws, regulations or
rules impose a maximum fee amount (a "cap") on the Institutional Class shares
of a Fund with respect to shareholder servicing fees and/or fees for
distribution-related services, the amount payable hereunder shall be reduced to
an amount which, when considered in conjunction with the fees payable by a Fund
for the Institutional Class shares' distribution-related activities, is the
maximum amount payable to the Shareholder Servicing Agent under applicable
laws, regulations or rules. Notwithstanding anything herein to the contrary,
the Company shall not be obligated to make any payments under this Agreement
that exceed the maximum amounts payable under Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
The above fee constitutes all fees to be paid to the Shareholder Servicing
Agent by the Institutional Class shares of a Fund or the Company with respect
to the shareholder services contemplated hereby.
3.2 Fees from Customers. It is agreed that the Shareholder
Servicing Agent may impose certain conditions on Customers, subject to the
terms of the Funds' then-current prospectus, in addition to or different from
those imposed by a Fund, such as requiring a minimum initial investment or the
payment of additional fees directly by the Customer for additional services
offered by the Shareholder Servicing Agent to the Customer; provided, however,
that the Shareholder Servicing Agent may not charge customers any direct fee
which would constitute a "sales load" within the meaning of Section 2(a)(35) of
the Investment Company Act of 1940, as amended (the "1940 Act"). The
Shareholder Servicing Agent shall bill Customers directly for any such
additional fees. In the event the Shareholder Servicing Agent charges Customers
such additional fees, it shall notify the Company in advance and make
appropriate prior written disclosure (such disclosure to be in accordance with
all applicable laws) to Customers of any such additional fees charged directly
to the Customer. To the extent required by applicable rules and regulations of
the Securities and Exchange Commission, the Company shall make written
disclosure of the fees paid or to be paid by the Fund to the Shareholder
Servicing Agent pursuant to Section 3.1 of this Agreement. In no event shall
the Shareholder Servicing Agent have recourse or access, as Shareholder
Servicing Agent or otherwise, to the assets in the Customer's account, except
to the extent expressly authorized by law or by such Customer, or to any assets
of a Fund or the Company, for payment of any additional direct fees referred to
in this Section 3.2
4. Information Pertaining to the shares. The Shareholder Servicing
Agent and its officers, employees and agents are not authorized to make any
representations concerning the Company, the Fund or the Institutional Class
shares to Customers or prospective Customers, excepting only accurate
communication of any information provided by or on behalf of any administrator
of the Company or the Fund or any distributor of the Institutional Class shares
or information contained in the Funds' then-current prospectus. In furnishing
such information regarding the Company, the Fund or the Institutional Class
shares, the Shareholder Servicing Agent shall act as agent for the Customer
only and shall have no authority to act as agent for the Company, the Fund or
the Institutional Class shares. Advance copies or proofs of all materials which
are proposed to be circulated or disseminated by the Shareholder Servicing
Agent to Customers or prospective Customers and which identify or describe the
Company, the Fund or the Institutional Class shares shall be provided to the
Company at least 10 days prior to such circulation or dissemination (unless the
Company consents in writing to a shorter period), and such materials shall not
be circulated or disseminated or further circulated or disseminated at any time
after the Company shall have
3
<PAGE> 7
given written notice to the Shareholder Servicing Agent of any objection
thereto.
Nothing in this Section 4 shall be construed to make the Company
liable for the use (as opposed to the accuracy) of any information about the
Company, the Fund or Institutional Class shares which is disseminated by the
Shareholder Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. The Company shall
not use the name of the Shareholder Servicing Agent, or any of its affiliates
or subsidiaries, in any prospectus, sales literature or other materials
relating to the Company, the Fund or Institutional Class shares in a manner not
approved by the Shareholder Servicing Agent prior thereto in writing; provided,
however, that the approval of the Shareholder Servicing Agent shall not be
required for any use of its name which merely refers in accurate and factual
terms to its appointment hereunder or which is required by the Securities and
Exchange Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided, further, that in no
event shall such approval be unreasonably withheld or delayed.
6. Use of the Name of the Fund or the Company. The Shareholder
Servicing Agent shall not use the name of a Fund, the Company or Institutional
Class shares on any checks, bank drafts, bank statements or forms for other
than internal use in a manner not approved by the Company prior thereto in
writing; provided, however, that the approval of the Company shall not be
required for the use of the Company's name or the Fund's name in connection
with communications permitted by Section 4 hereof or (subject to Section 4, to
the extent the same may be applicable) for any use of the Company's name or the
Fund's name which merely identifies the Company or the Fund, as the case may be
in connection with the Shareholder Servicing Agent's role hereunder or which is
required by the Securities and Exchange Commission or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
7. Security. The Shareholder Servicing Agent represents and
warrants that to the best of its knowledge, the various procedures and systems
which it has implemented (including provision for twenty-four hours a day
restricted access) with regard to safeguarding from loss or damage attributable
to fire, theft or any other cause the Company's records and other data within
its possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Company shall from time to time specify the types
of records and other data of the Company to be safeguarded in accordance with
this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent shall
comply with all applicable federal and state laws and regulations, including
securities laws. The Shareholder Servicing Agent represents and warrants to the
Company that the performance of all its obligations hereunder will comply with
all applicable laws and regulations, the provisions of its charter documents
and by-laws and all material contractual obligations binding upon the
Shareholder Servicing Agent. The Shareholder Servicing Agent furthermore
undertakes that it will promptly, after the Shareholder Servicing Agent becomes
so aware, inform the Company of any change in applicable laws or regulations
(or interpretations thereof) or in its charter or by-laws or material contracts
which would prevent or impair full performance of any of its obligations
hereunder.
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<PAGE> 8
9. Reports. To the extent requested by the Company from time to time,
but at least quarterly, the Shareholder Servicing Agent will provide the
Treasurer of the Company with a written report of the amounts expended by the
Shareholder Servicing Agent pursuant to this Agreement and the purposes for
which such expenditures were made. Such written reports shall be in a form
satisfactory to the Company and shall supply all information necessary for the
Company to discharge its responsibilities under applicable laws and
regulations. In addition, the Shareholder Servicing Agent shall have a duty to
furnish to the Company's Board of Directors such information as may reasonably
be necessary to an informed determination of whether this Agreement should be
implemented or continued pursuant to Section 16.
10. Record Keeping.
10.1 Section 31(a). The Shareholder Servicing Agent shall
maintain records in a form acceptable to the Company and in compliance with
applicable laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping requirements of
Section 31(a) of the 1940 Act and the rules thereunder, with respect to the
services contemplated by this Agreement. Such records shall be deemed to be the
property of the Company and will be made available, at the Company's request,
for inspection and use by the Company, representatives of the Company and
governmental authorities. The Shareholder Servicing Agent agrees that, for so
long as it retains any records hereunder, it will meet all reporting
requirements pursuant to the 1940 Act and applicable to the Shareholder
Servicing Agent with respect to such records.
10.2 Rules 17a-3 and 17a-4. The Shareholder Servicing Agent shall
maintain accurate and complete records with respect to services performed by
the Shareholder Servicing Agent in connection with the purchase and redemption
of Institutional Class shares through the Distributor. Such records shall be
maintained in a form reasonably acceptable to the Company and in compliance
with the requirements of Rules 17a-3 and 17a-4 under the Securities Exchange
Act of 1934, as amended, pursuant to which any dealer of the Institutional
Class shares must maintain certain records. All such records maintained by the
Shareholder Servicing Agent shall be the property of the Distributor and will
be made available for inspection and use by the Company or the Distributor upon
the request of either. The Shareholder Servicing Agent shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Company and the Distributor copies of, all
reports and undertakings as may be reasonably requested by the Company or the
Distributor in order to comply with such rules. If so requested by the
Distributor, the Shareholder Servicing Agent shall confirm to the Distributor
its obligations under this Section 10.2 by a writing reasonably satisfactory to
the Distributor.
10.3 Identification, Etc. of Records. The Company shall from time
to time instruct the Shareholder Servicing Agent in writing as to, and the
Company and the Shareholder Servicing Agent shall periodically review, the
records to be maintained and the procedures to be followed by the Shareholder
Servicing Agent in complying with the foregoing Sections 10.1 and 10.2 and
Section 8 to the extent it relates to record-keeping required under federal
securities laws and regulations. Notwithstanding the provisions of Section 8,
the Shareholder Servicing Agent shall be entitled to rely on such instructions.
10.4 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Shareholder Servicing Agent is appointed, the
Shareholder Servicing Agent shall, at the expense of the Company, transfer to
such successor as the Company may designate a certified list of the beneficial
owners of Institutional Class shares of the Company serviced by the Shareholder
Servicing Agent (with name, address and tax identification or Social Security
number), a complete record of the account of each such shareholder and the
status thereof, and all other relevant books, records, correspondence, and
other data established or maintained by the Shareholder Servicing Agent under
this Agreement. In the
5
<PAGE> 9
event this Agreement is terminated, the Shareholder Servicing Agent will use
its best efforts to cooperate in the orderly transfer of such duties and
responsibilities to the successor, including assistance in the establishment of
books, records and other data by the successor.
10.5 Survival of Record-Keeping Obligations. The record-keeping
obligations imposed in this Section 10 shall survive the termination of this
Agreement for the shorter of a period of six years or that minimum period
required by applicable rules or regulations of the Securities and Exchange
Commission.
10.6 Obligations Pursuant to Agreement Only. Nothing in this
Section 10 shall be construed to mean that the Shareholder Servicing Agent
would, by virtue of its role hereunder, be required under applicable law to
maintain the records required to be maintained by it under this Section 10, but
it is understood that the Shareholder Servicing Agent has agreed to do so in
order to enable the Company and the Distributor to comply with laws and
regulations applicable to them.
10.7 Shareholder Servicing Agent's Rights to Copy Records.
Anything in this Section 10 to the contrary notwithstanding, except to the
extent otherwise prohibited by law, the Shareholder Servicing Agent shall have
the right to copy, maintain and use any records maintained by the Shareholder
Servicing Agent pursuant to this Section 10, except as otherwise prohibited by
Sections 4 and 6 hereof.
11. Force Majeure. The Shareholder Servicing Agent shall not be
liable or responsible for delays or errors by reason of circumstances beyond
its reasonable control, including, but not limited to, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of communication systems or power supply.
12. Indemnification.
12.1 Indemnification of the Shareholder Servicing Agent. The
Company will indemnify and hold the Shareholder Servicing Agent harmless from
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) from any claim, demand, action or suit
(collectively, "Claims") (a) arising in connection with misstatements or
omissions in the Funds' prospectus, actions or inactions by the Company or any
of its agents or contractors or the performance of the Shareholder Servicing
Agent's obligations hereunder and (b) not resulting from (i) the bad faith or
negligence of the Shareholder Servicing Agent, its officers, employees or
agents, or (ii) any breach of applicable law by the Shareholder Servicing
Agent, its officers, employees or agents, or (iii) any action of the
Shareholder Servicing Agent, its officers, employees or agents which exceeds
the legal authority of the Shareholder Servicing Agent or its authority
hereunder, or (iv) any error or omission of the Shareholder Servicing Agent,
its officers, employees or agents with respect to the purchase, redemption and
transfer of Customers' Institutional Class shares or the Shareholder Servicing
Agent's verification or guarantee of any Customer signature. Notwithstanding
anything herein to the contrary, the Company will indemnify and hold the
Shareholder Servicing Agent harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any Claim as a result of its acting in accordance with any
written instructions reasonably believed by the Shareholder Servicing Agent to
have been executed by any person duly authorized by the Company, or as a result
of acting in reliance upon any instrument or stock certificate reasonably
believed by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company, excepting
only the gross negligence or bad faith of the Shareholder Servicing Agent.
6
<PAGE> 10
In any case in which the Company may be asked to indemnify or
hold the Shareholder Servicing Agent harmless, the Company shall be advised of
all pertinent facts concerning the situation in question and the Shareholder
Servicing Agent shall use reasonable care to identify and notify the Company
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company. The Company shall have the
option to defend the Shareholder Servicing Agent against any Claim which may be
the subject of indemnification hereunder. In the event that the Company elects
to defend against such Claim, the defense shall be conducted by counsel chosen
by the Company and reasonably satisfactory to the Shareholder Servicing Agent.
The Shareholder Servicing Agent may retain additional counsel at its expense.
Except with the prior written consent of the Company, the Shareholder Servicing
Agent shall not confess any Claim or make any compromise in any case in which
the Company will be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Company. Without limiting the rights
of the Company under applicable law, the Shareholder Servicing Agent will
indemnify and hold the Company harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any Claim (a) resulting from (i) the bad faith or negligence of the Shareholder
Servicing Agent, its officers, employees or agents, or (ii) any breach of
applicable law by the Shareholder Servicing Agent, its officers, employees or
agents, or (iii) any action of the Shareholder Servicing Agent, its officers,
employees or agents which exceeds the legal authority of the Shareholder
Servicing Agent or its authority hereunder, or (iv) any error or omission of
the Shareholder Servicing Agent, its officers, employees or agents with respect
to the purchase, redemption and transfer of Customers' Institutional Class
shares or the Shareholder Servicing Agent's verification or guarantee of any
Customer signature, and (b) not resulting from the Shareholder Servicing
Agent's actions in accordance with written instructions reasonably believed by
the Shareholder Servicing Agent to have been executed by any person duly
authorized by the Company, or in reliance upon any instrument or stock
certificate reasonably believed by the Shareholder Servicing Agent to have been
genuine and signed, countersigned or executed by a person duly authorized by
the Company.
In any case in which the Shareholder Servicing Agent may be asked to
indemnify or hold the Company harmless, the Shareholder Servicing Agent shall
be advised of all pertinent facts concerning the situation in question and the
Company shall use reasonable care to identify and notify the Shareholder
Servicing Agent promptly concerning any situation which presents or appears
likely to present a claim for indemnification against the Shareholder Servicing
Agent. The Shareholder Servicing Agent shall have the option to defend the
Company against any Claim which may be the subject of indemnification
hereunder. In the event that the Shareholder Servicing Agent elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Shareholder Servicing Agent and satisfactory to the Company. The Company may
retain additional counsel at its expense. Except with the prior written consent
of the Shareholder Servicing Agent, the Company shall not confess any Claim or
make any compromise in any case in which the Shareholder Servicing Agent will
be asked to indemnify the Company.
12.3 Survival of Indemnities. The indemnities granted by the
parties in this Section 12 shall survive the termination of this Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
reasonable insurance coverage against any and all liabilities which may arise
in connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such
party at the address of such party set forth in the
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<PAGE> 11
preamble of this Agreement or at such other address as such party may have
designated by written notice to the other.
15. Further Assurances. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
16. Implementation and Duration of Agreement. This Agreement is
effective upon the date first written below and shall continue in effect for a
period of more than one year from the date hereof so long as the Servicing Plan
and related form of agreement or this Agreement is not specifically terminated
by a vote of the Company's Board of Directors and of the Directors who are not
"interested persons" of the Company (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of a Fund's
Institutional Class Servicing Plan (the "Plan"), this Agreement, or any other
agreement related to such Plan, cast in person at a meeting called for the
purpose of voting on this Agreement.
17. Termination. This Agreement may be terminated by the Company,
without the payment of any penalty, at any time upon not more than 60 days' nor
less than 30 days' notice, by a vote of a majority of the Board of Directors of
the Company who are not "interested persons" of the Company (as defined in the
1940 Act) and have no direct or indirect financial interest in the operation of
the Plan, this Agreement or any other agreement related to such Plan, including
the Amended Distribution Agreement, or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Institutional Class shares of a Fund. The Shareholder Servicing Agent may
terminate this Agreement upon not more than 60 days' nor less than 30 days'
notice to the Company. Either party may assign this Agreement provided that
such party obtain the prior written consent of the other party. Upon
termination hereof, a Fund shall pay such compensation as may be due the
Shareholder Servicing Agent as of the date of such termination.
18. Changes; Amendments. This Agreement may be supplemented or
amended only by written instrument signed by both parties, but may not be
amended to increase materially the maximum amount payable without approval of
"a vote of a majority of the outstanding voting securities" (as defined in the
1940 Act) of the Institutional Class shares of a Fund, and all material
amendments must be approved in the manner described in Section 16.
19. Limitation of Liability. The Shareholder Servicing Agent hereby
agrees that obligations assumed by the Company pursuant to this Agreement shall
be limited in all cases to a Fund and its assets and that the Shareholder
Servicing Agent shall not seek satisfaction of any such obligations from the
Board of Directors or any individual Director of the Company or from the assets
of any other portfolio or series of the Company.
20. Subcontracting by Shareholder Servicing Agent. The Shareholder
Servicing Agent may, with the written approval of the Company (such approval
not to be unreasonably withheld or delayed), subcontract for the performance of
the Shareholder Servicing Agent's obligations hereunder with any one or more
persons, including but not limited to any one or more persons which is an
affiliate of the Shareholder Servicing Agent; provided, however, that the
Shareholder Servicing Agent shall be as fully responsible to the Company for
the acts and omissions of any subcontractor as it would be for its own acts or
omissions.
21. Authority to Vote. The Company hereby confirms that nothing
contained in the Articles of Incorporation of the Company would preclude the
Shareholder Servicing Agent, at any meeting of
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<PAGE> 12
shareholders of the Company or of a Fund, from voting any Institutional Class
shares held in accounts serviced by the Shareholder Servicing Agent and which
are otherwise not represented in person or by proxy at the meeting,
proportionately in accordance with the votes cast by holders of all
Institutional Class shares otherwise represented at the meeting in person or by
proxy and held in accounts serviced by the Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The Company
hereby agrees that it will comply with all laws and regulations applicable to a
Fund's operations and the Shareholder Servicing Agent agrees that it will
comply with all laws and regulations applicable to providing the services
contemplated hereby.
22.1 Miscellaneous. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of
California. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
STAGECOACH FUNDS, INC. on behalf of the
Funds listed in the attached Appendix
By:
---------------------------------
Name: Richard H. Blank, Jr.
-------------------------------
Title: Chief Operating Officer,
Secretary and Treasurer
-----------------------------
WELLS FARGO BANK, N.A.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
9
<PAGE> 13
APPENDIX
Aggressive Growth Fund
Arizona Tax-Free Fund
Balanced Fund
California Tax-Free Bond Fund
California Tax-Free Income Fund
Equity Value Fund
Ginnie Mae Fund
Growth and Income Fund
Intermediate Bond Fund
International Equity Fund
Money Market Mutual Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Prime Money Market Mutual Fund
Short-Intermediate Government Fund
Small Cap Fund
Treasury Money Market MutualFund
Approved: April 25, 1996
As Amended: August 29,1996 and April 29, 1997
10
<PAGE> 1
EXHIBIT 99.B10
[MORRISON & FOERSTER LLP Letterhead]
May 30, 1997
Stagecoach Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of
Stagecoach Funds, Inc.
Ladies/Gentlemen:
We refer to Post-Effective Amendment No. 32 and Amendment No. 33
to the Registration Statement on Form N-1A (SEC File Nos. 33-42927 and
811-6419) (the "Registration Statement") of Stagecoach Funds, Inc. (the
"Company") relating to the registration of an indefinite number of shares of
common stock of the International Equity Fund of the Company (the "Shares").
We have been requested by the Company to furnish this opinion as
Exhibit 10 to the Registration Statement.
We have examined documents relating to the organization of the
Company and its series and the authorization and issuance of shares of its
series. We have also verified with the Company's transfer agent the maximum
number of shares issued by the Company during the six-month fiscal period ended
March 31, 1997.
Based upon and subject to the foregoing, we are of the opinion
that:
The issuance and sale of the Shares by the Company has been duly
and validly authorized by all appropriate corporate action, and assuming
delivery by sale or in accord with the Company's dividend reinvestment plan in
accordance with the description set forth in the Fund's current prospectuses
under the Securities Act of 1933, as amended, the Shares will be legally
issued, fully paid and nonassessable by the Company.
<PAGE> 2
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
reference to our firm under the caption "Legal Counsel" and the description of
advice rendered by our firm under the headings "Management, Distribution and
Servicing Fees" and "Management and Servicing Fees" in the Prospectuses,
which are included as part of the Registration Statement.
Very truly yours,
/s/Morrison & Foerster LLP
MORRISON & FOERSTER LLP
<PAGE> 1
EXHIBIT 99.B15(b)(viii)
DISTRIBUTION PLAN
(CLASS B SHARES)
WHEREAS, Stagecoach Funds, Inc. ("Company") is an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended ("Act"); and
WHEREAS, the Company desires to adopt a Distribution Plan ("Plan")
pursuant to Rule 12b-1 under the Act on behalf of the Class B shares of each
Fund listed on the attached Appendix A as it may be amended from time to time
(each, a "Fund" and collectively, the "Funds") and the Board of Directors,
including a majority of the Qualified Directors (as defined below), has
determined that there is a reasonable likelihood that adoption of the Plan will
benefit the Fund and its Class B shareholders;
NOW THEREFORE, the Fund hereby adopts the Plan in accordance with Rule
12b-1 under the Act on the following terms and conditions:
Section 1. Pursuant to the Plan, the Company may pay to Stephens Inc.
("Distributor"), as compensation for distribution-related services provided, or
reimbursement for distribution-related expenses incurred, a monthly fee at
annual rates as set forth on Appendix A. The actual fee payable to the
Distributor shall, within such limit, be determined from time to time by mutual
agreement between the Company and the Distributor. The Distributor may enter
into selling agreements with one or more selling agents under which such agents
may receive compensation for distribution-related services from the
Distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Fund shares attributable
to them. The Distributor may retain any portion of the total distribution fee
payable hereunder to compensate it for distribution-related services provided
by it or to reimburse it for other distribution-related expenses.
Section 2. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities" (as
defined below) of Class B shares of the Fund and a majority of the Directors of
the Company, including a majority of the Qualified Directors, pursuant to a
vote cast in person at a meeting or meetings called for the purpose of voting
on the approval of the Plan, or the date the Fund commences operations, if such
date is later.
Section 3. The Plan (and each related agreement) will continue in
effect for one year from its effective date, unless earlier terminated in
accordance with its terms, and will remain in effect from year to year
thereafter if such continuance is specifically approved at least annually by
vote of a majority of both (a) the Directors of the Company and (b) the
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.
<PAGE> 2
Section 4. The Company shall provide to the Company's Board of
Directors and the Directors shall review, at least quarterly, a written report
of the amounts expended by the Company under the Plan and each related
agreement and the purposes for which such expenditures were made.
Section 5. The Plan may be terminated at any time by vote of a
majority of the Qualified Directors or by vote of a majority of the outstanding
voting securities of Class B shares of the Fund.
Section 6. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Directors of the
Company and (b) the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval. Any agreement related to the Plan shall
provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified
Directors or by vote of a majority of the outstanding voting
securities of Class B shares of the Fund, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of
its "assignment" (as defined below).
Section 7. The Plan may not be amended to increase materially the
amount that may be expended by the Fund pursuant to the Plan without the
approval by a vote of a majority of the outstanding voting securities of Class
B shares of the Fund, and no material amendment to the Plan shall be made
unless approved by vote of a majority of both (a) the Directors of the Company
and (b) the Qualified Directors, cast in person at a meeting (or meetings)
called for the purpose of voting on such approval.
Section 8. While the Plan is in effect, the selection and nomination
of each Director who is not an "interested person" (as defined below) of the
Company shall be committed to the discretion of the Directors who are not
interested persons.
Section 9. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Class B shares within the context
of Rule 12b-1 under the Act, such payments shall be deemed to have been
approved pursuant to this Plan. Notwithstanding anything herein to the
contrary, the Fund shall not be obligated to make any payments under this Plan
that exceed the maximum amounts payable under Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company shall preserve copies of the Plan, each
related agreement and each report made pursuant to Section 4 hereof, for a
period of not less than six years from the date of the Plan; such agreement or
such report, as the case may be, being kept the first two years in an easily
accessible place.
2
<PAGE> 3
Section 11. As used in the Plan, (a) the terms "assignment,"
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemption as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified
Directors" shall mean the Directors of the Company who are not interested
persons of the Company and have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan.
Dated: April 25, 1996
3
<PAGE> 4
APPENDIX A
<TABLE>
<CAPTION>
Percentage of Funds
Average Daily Net Assets
<S> <C>
Arizona Tax-Free Fund 0.75%
Balanced Fund 0.75%
Equity Value Fund 0.75%
Intermediate Bond Fund 0.75%
International Equity Fund 0.75%
National Tax-Free Fund 0.75%
Oregon Tax-Free Fund 0.75%
Small Cap Fund 0.75%
</TABLE>
Approved: April 25, 1996
Approved As Amended: August 29, 1996 and April 29, 1997
4
<PAGE> 1
EXHIBIT 99.B15(c)(viii)
DISTRIBUTION PLAN
(CLASS A SHARES)
WHEREAS, Stagecoach Funds, Inc. ("Company") is an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended ("Act"); and
WHEREAS, the Company desires to adopt a Distribution Plan ("Plan")
pursuant to Rule 12b-1 under the Act on behalf of the Class A shares of each
Fund listed on the attached Appendix A as it may be amended from time to time
(each, a "Fund" and collectively, the "Funds") and the Board of Directors,
including a majority of the Qualified Directors (as defined below), has
determined that there is a reasonable likelihood that adoption of the Plan will
benefit the Fund and its Class A shareholders;
NOW THEREFORE, the Fund hereby adopts the Plan in accordance with Rule
12b-1 under the Act on the following terms and conditions:
Section 1. Pursuant to the Plan, the Company may pay to Stephens Inc.
("Distributor"), as compensation for distribution-related services provided, or
reimbursement for distribution-related expenses incurred, a monthly fee at
annual rates as set forth on Appendix A. The actual fee payable to the
Distributor shall, within such limit, be determined from time to time by mutual
agreement between the Company and the Distributor. The Distributor may enter
into selling agreements with one or more selling agents under which such agents
may receive compensation for distribution-related services from the
Distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Fund shares attributable
to them. The Distributor may retain any portion of the total distribution fee
payable hereunder to compensate it for distribution-related services provided
by it or to reimburse it for other distribution-related expenses.
Section 2. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities" (as
defined below) of Class A shares of the Fund and a majority of the Directors of
the Company, including a majority of the Qualified Directors, pursuant to a
vote cast in person at a meeting or meetings called for the purpose of voting
on the approval of the Plan, or the date the Fund commences operations, if such
date is later.
Section 3. The Plan (and each related agreement) will continue in
effect for one year from its effective date, unless earlier terminated in
accordance with its terms, and will remain in effect from year to year
thereafter if such continuance is specifically approved at least annually by
vote of a majority of both (a) the Directors of the Company and (b) the
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.
1
<PAGE> 2
Section 4. The Company shall provide to the Company's Board of
Directors and the Directors shall review, at least quarterly, a written report
of the amounts expended by the Company under the Plan and each related
agreement and the purposes for which such expenditures were made.
Section 5. The Plan may be terminated at any time by vote of a
majority of the Qualified Directors or by vote of a majority of the outstanding
voting securities of Class A shares of the Fund.
Section 6. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Directors of the
Company and (b) the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval. Any agreement related to the Plan
shall provide:
A. That such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Qualified Directors
or by vote of a majority of the outstanding voting securities of
Class A shares of the Fund, on not more than 60 days' written
notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of
its "assignment" (as defined below).
Section 7. The Plan may not be amended to increase materially the
amount that may be expended by the Fund pursuant to the Plan without the
approval by a vote of a majority of the outstanding voting securities of Class
A shares of the Fund, and no material amendment to the Plan shall be made
unless approved by vote of a majority of both (a) the Directors of the Company
and (b) the Qualified Directors, cast in person at a meeting (or meetings)
called for the purpose of voting on such approval.
Section 8. While the Plan is in effect, the selection and nomination
of each Director who is not an "interested person" (as defined below) of the
Company shall be committed to the discretion of the Directors who are not
interested persons.
Section 9. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Class A shares within the context
of Rule 12b-1 under the Act, such payments shall be deemed to have been
approved pursuant to this Plan. Notwithstanding anything herein to the
contrary, the Fund shall not be obligated to make any payments under this Plan
that exceed the maximum amounts payable under Article III, Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
Section 10. The Company shall preserve copies of the Plan, each
related agreement and each report made pursuant to Section 4 hereof, for a
period of not less than six years from the date of the Plan; such agreement or
such report, as the case may be, being kept the first two years in an easily
accessible place.
2
<PAGE> 3
Section 11. As used in the Plan, (a) the terms "assignment,"
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemption as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified
Directors" shall mean the Directors of the Company who are not interested
persons of the Company and have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan.
Dated: April 25, 1996
3
<PAGE> 4
APPENDIX A
<TABLE>
<CAPTION>
Percentage of Funds
Average Daily Net Assets
------------------------
<S> <C>
Arizona Tax-Free Fund 0.05%
Balanced Fund 0.10%
Equity Value Fund 0.10%
Government Money Market Mutual Fund 0.05%
Intermediate Bond Fund 0.05%
International Equity Fund 0.25%
National Tax-Free Fund 0.05%
Oregon Tax-Free Fund 0.05%
Prime Money Market Mutual Fund 0.05%
Treasury Money Market Mutual Fund 0.05%
Small Cap Fund 0.10%
</TABLE>
Approved: April 25, 1996
Approved As Amended: August 29, 1996 and April 29, 1997
4
<PAGE> 1
EXHIBIT 99.B18
STAGECOACH FUNDS, INC.
RULE 18f-3 MULTI-CLASS PLAN
I. INTRODUCTION.
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses among each class of shares in the separate investment
portfolios ("Funds") of Stagecoach Funds, Inc. (Registration Nos. 33-42927 and
811-6419) (the "Company"). In addition, this Rule 18f-3 Multi-Class Plan (the
"Plan") sets forth the maximum initial sales charges, contingent deferred sales
charges ("CDSCs"), Rule 12b-1 distribution fees, shareholder servicing fees,
conversion features, exchange privileges and other shareholder services
applicable to a particular class of shares of the Funds.
The Company is an open-end series investment company registered under
the 1940 Act, the shares of which are registered on Form N-1A under the
Securities Act of 1933. Upon the effective date of Rule 18f-3, the Company
hereby elects to offer multiple classes of shares of the Funds pursuant to the
provisions of Rule 18f-3 and the Plan. The Plan has been amended to reflect
the offerings of additional Funds and additional share classes.
The Company currently offers or will offer the following twenty-five
separate Funds: Aggressive Growth, Arizona Tax-Free, Asset Allocation,
Balanced, California Tax-Free Bond, California Tax-Free Income, California
Tax-Free Money Market Mutual, California Tax-Free Money Market Trust, Corporate
Stock, Diversified Income, Equity Value, Ginnie Mae, Government Money Market
Mutual, Growth and Income, Intermediate Bond, International Equity, Money
Market Mutual, Money Market Trust, National Tax-Free, National Tax-Free Money
Market Mutual, National Tax-Free Money Market Trust, Oregon Tax-Free, Prime
Money Market Mutual, Short-Intermediate U.S. Government Income, Small Cap,
Treasury Money Market Mutual, and U.S. Government Allocation Funds. The
Aggressive Growth, Asset Allocation, Corporate Stock, National Tax- Free Money
Market Mutual, Small Cap and U.S. Government Allocation Funds each invests all
of its assets in a separate portfolio (each, a "Master Portfolio") of Master
Investment Trust, an open-end investment management company, rather than
directly in a portfolio of securities. Each Master Portfolio has the same
investment objective as the Fund which invests its assets in the Master
Portfolio.
The Funds listed below are authorized to issue the following class of
shares representing interests in such Funds:
(i) Class A shares and Class B shares: Asset Allocation,
Diversified Income and U.S. Government Allocation Funds.
(ii) Class A shares and Institutional Class shares: California
Tax-Free Income and Short-Intermediate U.S. Government Income
Funds.
(iii) Class A shares, Class B shares and Institutional Class shares:
Aggressive Growth, Arizona Tax-Free, Balanced, California
Tax-Free Bond, Equity Value, Ginnie Mae, Growth and Income,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free Fund and Small Cap Funds.
(iv) Class A shares, Institutional Class shares and Service Class
shares: Prime Money Market Mutual Fund.
1
<PAGE> 2
(v) Class A, Class E, Institutional Class and Service Class
shares: Treasury Money Market Mutual Fund.
(vi) Class A shares, Class S shares and Institutional Class shares:
Money Market Mutual Fund.
All of the Company's Funds other than the California Tax-Free Money
Market Mutual Fund , California Tax-Free Money Market Trust, Corporate Stock
Fund, Money Market Trust, National Tax-Free Money Market Mutual Fund and
National Tax-Free Money Market Trust, which offer a single unnammed class of
shares and the Government Money Market Mutual Fund, which offers only Class A
shares, are collectively referred to herein as the "Multi-Class Funds". The
differences among the classes are discussed below.
II. ALLOCATION OF EXPENSES.
Pursuant to Rule 18f-3 under the 1940 Act, the Company allocates to
each class of shares of a Multi-Class Fund (i) any fees and expenses incurred
by the Fund in connection with the distribution of such class of shares under a
distribution plan adopted for such class of shares pursuant to Rule 12b-1, and
(ii) any fees and expenses incurred by the Fund under a servicing plan in
connection with the provision of shareholder administrative or liaison services
to the holders of such class of shares. In addition, pursuant to Rule 18f-3,
the Company may allocate the following fees and expenses to a particular class
of shares of a single Multi-Class Fund:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, notices,
prospectuses, reports, and proxies to current shareholders of
that class or to regulatory agencies with respect to such
class of shares;
(iii) blue sky registration or qualification fees incurred by such
class of shares;
(iv) Securities and Exchange Commission registration fees incurred
by such class of shares;
(v) the expense of administrative personnel and services as
required to support the shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to such
class of shares; and
(vii) fees of the Company's Directors incurred as result of issues
relating to such class of shares.
The initial determination of the class expenses that will be allocated
by the Company to a particular class of shares and any subsequent changes
thereto will be reviewed by the Board of Directors of the Company and approved
by a vote of the Directors of the Company, including a majority of the
Directors who are not interested persons of the Company.
2
<PAGE> 3
Income, realized and unrealized capital gains and losses, and any
expenses of a Multi-Class Fund not allocable to a particular class of the Fund
pursuant to this Plan shall be allocated to each class of the Fund based upon
the relative net asset value of that class in relation to the aggregate net
asset value of the Fund. In certain cases, Stephens, the Bank or another
service provider for a Multi-Class Fund may waive or reimburse all or a portion
of the expenses of a specific class of shares of the Multi-Class Fund. The
Board of Directors will monitor any such waivers or reimbursements to ensure
that they do not provide a means for cross-subsidization between classes.
III. CLASS ARRANGEMENTS.
The following summarizes the maximum initial sales charges, CDSCs,
Rule 12b-1 distribution fees, shareholder servicing fees, conversion features,
exchange privileges and other shareholder services applicable to a particular
class of shares of the Multi-Class Funds. Additional details and restrictions
regarding such fees and services are set forth in the relevant Fund's current
Prospectus and Statement of Additional Information.
A. CLASS A SHARES -- MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: The maximum initial sales
charge expressed as a percentage of the net asset value at
time of purchase is as follows:
5.25% Aggressive Growth, Balanced, Diversified Income,
Equity Value, Growth and Income, International Equity
and Small Cap Funds.
4.50% Asset Allocation, Arizona Tax-Free, California
Tax-Free Bond, Ginnie Mae, Intermediate Bond,
National Tax-Free, Oregon Tax-Free and U.S.
Government Allocation Funds.
3.00% California Tax-Free Income and Short-Intermediate
Government Income Funds.
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.10% of average
daily net assets attributable to Class A shares.
4. Maximum Annual Shareholder Servicing Fee: 0.30% of average
daily net assets attributable to Class A shares.
5. Conversion Features: None
6. Exchange Privileges: As described in current prospectus for
each Fund.
7. Other Class-Specific Shareholder Services: None
3
<PAGE> 4
B. CLASS B SHARES -- MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: Class B shares that are
redeemed within six years from the receipt of a purchase order
affecting such shares are subject to a CDSC equal to the
indicated percentage of the dollar amount equal to the lesser
of the net asset value ("NAV") at the time of purchase of the
Class B shares being redeemed or the NAV of such shares at the
time of redemption. No CDSC is imposed on Class B shares
purchased through reinvestment of dividends or capital gain
distributions.
<TABLE>
<CAPTION>
Redemption Within: 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years
----------------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDSC: 5% 4% 3% 3% 2% 1%
</TABLE>
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.75% of average
daily net assets attributable to Class B shares.
4. Maximum Annual Shareholder Servicing Fee: 0.30% of average
daily net assets attributable to Class B shares.
5. Conversion Features: Class B shares of a Multi-Class Fund
that have been outstanding for six years after the end of the
month in which the shares were initially purchased
automatically convert to Class A shares of such Fund and,
consequently, are no longer subject to the higher Rule 12b-1
fees applicable to Class B shares. Such conversion is on the
basis of the relative NAVs 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.
6. Exchange Privileges: As described in the current prospectus
for each Fund.
7. Other Class-Specific Shareholder Services: None
C. INSTITUTIONAL CLASS SHARES -- MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.10% of average
daily net assets attributable to Institutional Class Shares.
4. Maximum Annual Shareholder Servicing Fee: 0.25% of average
daily net assets attributable to Institutional Class shares.
5. Conversion Features: None.
6. Exchange Privileges: As described in the current prospectus
for each Fund.
4
<PAGE> 5
7. Other Class-Specific Shareholder Services: None
D. SERVICE CLASS SHARES -- MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: None
4. Maximum Annual Shareholder Servicing Fee: 0.20% of the
average daily net assets attributable to Service Class shares
5. Conversion Features: None.
6. Exchange Privileges: As described in the current prospectus
for each Fund.
7. Other Class-Specific Shareholder Services: None
E. CLASS E SHARES -- MULTI-CLASS FUNDS
1. Maximum Initial Sales Charge: None
2. Contingent Deferred Sales Charge: None
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.25% of average
daily net assets attributable to Class E shares
4. Maximum Annual Shareholder Servicing Fee: 0.25% of the
average daily net assets attributable to Service Class shares
5. Conversion Features: None.
6. Exchange Privileges: As described in the Fund's current
prospectus.
7. Other Class-Specific Shareholder Services: None
5
<PAGE> 6
IV. BOARD REVIEW.
The Board of Directors of the Company shall review the Plan as it
deems necessary. Prior to any material amendment(s) to the Plan with respect
to any Multi-Class Fund's shares, the Company's Board of Directors, including a
majority of the Directors that are not interested persons of the Company, shall
find that the Plan, as proposed to be amended (including any proposed
amendments to the method of allocating class and/or fund expenses), is in the
best interest of each class of shares of the Fund individually and the Fund as
a whole. In considering whether to approve any proposed amendment(s) to the
Plan, the Directors of the Company shall request and evaluate such information
as it considers reasonably necessary to evaluate the proposed amendment(s) to
the Plan.
Adopted: April 3, 1995
Adopted as Amended: April 25, 1996
Adopted as Amended: January 16, 1997
Adopted as Amended: April 29, 1997
6
<PAGE> 1
EXHIBIT 99.B19
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and
Robert M. Kurucza, and each of them, his true and lawful attorney-in-fact and
agent (each, an "Attorney-in Fact") with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, (i) to execute the Registration Statement of each of Life & Annuity
Trust, Master Investment Trust, Overland Express Funds, Inc., Stagecoach Funds,
Inc. and Stagecoach Trust, (each, a "Company") and any or all amendments
(including post-effective amendments) thereto and to file the same, with any
and all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commissions or
authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: October 16, 1996 /s/ Joseph N. Hankin
-------------------------- -----------------------
Joseph N. Hankin
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and
Robert M. Kurucza, and each of them, his true and lawful attorney-in-fact and
agent (each, an "Attorney-in Fact") with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, (i) to execute the Registration Statement of each of Life & Annuity
Trust, Master Investment Trust, Overland Express Funds, Inc., Stagecoach Funds,
Inc. and Stagecoach Trust, (each, a "Company") and any or all amendments
(including post-effective amendments) thereto and to file the same, with any
and all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commissions or
authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: October 24, 1996 /s/ Jack S. Euphrat
------------------- ----------------------------
Jack S. Euphrat
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr. and Robert M. Kurucza,
and each of them, his true and lawful attorney-in-fact and agent (each, an
"Attorney- in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as
he might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ R. Greg Feltus
------------------------ ----------------------------
R. Greg Feltus
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and
Robert M. Kurucza, and each of them, his true and lawful attorney-in-fact and
agent (each, an "Attorney-in Fact") with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, (i) to execute the Registration Statement of each of Life & Annuity
Trust, Master Investment Trust, Overland Express Funds, Inc., Stagecoach Funds,
Inc. and Stagecoach Trust, (each, a "Company") and any or all amendments
(including post-effective amendments) thereto and to file the same, with any
and all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commissions or
authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: October 24, 1996 /s/ Thomas S. Goho
-------------------- --------------------------
Thomas S. Goho
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and
Robert M. Kurucza, and each of them, his true and lawful attorney-in-fact and
agent (each, an "Attorney-in Fact") with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, (i) to execute the Registration Statement of each of Life & Annuity
Trust, Master Investment Trust, Overland Express Funds, Inc., Stagecoach Funds,
Inc. and Stagecoach Trust, (each, a "Company") and any or all amendments
(including post-effective amendments) thereto and to file the same, with any
and all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commissions or
authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: October 24, 1996 /s/ W. Rodney Hughes
----------------------- ----------------------
W. Rodney Hughes
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and
Robert M. Kurucza, and each of them, his true and lawful attorney-in-fact and
agent (each, an "Attorney-in Fact") with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, (i) to execute the Registration Statement of each of Life & Annuity
Trust, Master Investment Trust, Overland Express Funds, Inc., Stagecoach Funds,
Inc. and Stagecoach Trust, (each, a "Company") and any or all amendments
(including post-effective amendments) thereto and to file the same, with any
and all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commissions or
authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: October 24, 1996 /s/ Robert M. Joses
--------------------------- ----------------------
Robert M. Joses
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and
Robert M. Kurucza, and each of them, his true and lawful attorney-in-fact and
agent (each, an "Attorney-in Fact") with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, (i) to execute the Registration Statement of each of Life & Annuity
Trust, Master Investment Trust, Overland Express Funds, Inc., Stagecoach Funds,
Inc. and Stagecoach Trust, (each, a "Company") and any or all amendments
(including post-effective amendments) thereto and to file the same, with any
and all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and any state securities commissions or
authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: October 24, 1996 /s/ J. Tucker Morse
---------------------- ----------------------
J. Tucker Morse
