<PAGE> 1
As filed with the Securities and Exchange Commission
on May 15, 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. 31
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 32 [X]
(Check appropriate box or boxes)
______________________
STAGECOACH FUNDS, INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
______________________
Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster 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.
<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 National Tax-Free Money Market Trust of the Company. This
Amendment does not affect the Registration Statement for the Company's other
Funds.
<PAGE> 4
Cross Reference Sheet
NATIONAL TAX-FREE MONEY MARKET TRUST
<TABLE>
<CAPTION>
Form N-1A Item Number
<S> <C>
Part A 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
Dividends 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
Servicing Plan
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
[LOGO]
----------
PROSPECTUS
----------
NATIONAL TAX-FREE MONEY MARKET TRUST
AUGUST 1, 1997
<PAGE> 6
STAGECOACH FUNDS(R)
NATIONAL TAX-FREE MONEY MARKET TRUST
Stagecoach Funds, Inc. (the "Company") is an open-end management investment
company. This Prospectus contains information about one fund of the Stagecoach
Family of Funds -- the NATIONAL TAX-FREE MONEY MARKET TRUST (the "Fund").
The NATIONAL TAX-FREE MONEY MARKET TRUST seeks to obtain a high level of income
exempt from federal income tax, while preserving capital and liquidity. The
Fund seeks to achieve this objective by investing in high-quality, U.S.
dollar-denominated money market instruments, primarily municipal obligations.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
CONSTANT $1.00 NET ASSET VALUE PER SHARE.
Please read this Prospectus before investing and retain it for future
reference. It is designed to provide you with important information and to help
you decide if the Fund's goals match your own. A Statement of Additional
Information ("SAI"), dated August 1, 1997, containing additional information
about the Fund has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. The SAI is
available without 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 800-260-5969.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THESE AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
WELLS FARGO BANK IS THE INVESTMENT ADVISER AND ADMINISTRATOR AND PROVIDES THE
FUND WITH CERTAIN OTHER SERVICES FOR WHICH IT IS COMPENSATED. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE FUND'S
SPONSOR, CO- ADMINISTRATOR AND DISTRIBUTOR.
PROSPECTUS DATED AUGUST 1, 1997
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 1
SUMMARY OF FUND EXPENSES 3
EXPLANATION OF TABLES 4
HOW THE FUND WORKS 4
THE FUND AND MANAGEMENT 7
INVESTING IN THE FUND 8
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 10
HOW TO REDEEM SHARES 11
MANAGEMENT AND SERVICING FEES 12
TAXES 14
PROSPECTUS APPENDIX - ADDITIONAL INVESTMENT POLICIES A-1
</TABLE>
<PAGE> 8
PROSPECTUS SUMMARY
The Fund provides investors with a convenient way to invest in a portfolio
of securities selected and supervised by professional management. The following
provides summary information about the Fund. For more information, please refer
specifically to the identified Prospectus sections and generally to the Fund's
Prospectus and SAI.
Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A. The Fund seeks to obtain a high level of income exempt from federal income
tax, while preserving capital and liquidity. The Fund seeks to achieve
this objective by investing in high-quality, U.S. dollar-denominated money
market instruments, primarily municipal obligations. Under normal market
conditions, substantially all of the Fund's assets are invested in
municipal obligations that are exempt from federal income tax. The Fund
invests in securities with remaining maturities not exceeding 397 days (13
months), as determined in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act"). See "How the Funds
Work--Investment Objectives and Policies" and "Prospectus
Appendix--Additional Investment Policies" for further information on
investments.
Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?
A. Investments in the Fund are not bank deposits or obligations of Wells Fargo
Bank and are not insured by the Federal Deposit Insurance Corporation
("FDIC"), nor are they insured or guaranteed against loss of principal.
Therefore, investors should be willing to accept some risk with money
invested in the Fund. Although the Fund seeks to maintain a stable net
asset value of $1.00 per share, there is no assurance that it will be able
to do so. The Fund may not achieve as high a level of current income as
other mutual funds that do not limit their investment to the high credit
quality instruments in which the Fund invests. As with all mutual funds,
there can be no assurance that the Fund will achieve its investment
objective. See "How the Funds Work--Risk Factors" and "Additional
Permitted Investment Activities" in the SAI for further information about
the Funds' investments and related risks.
Q. WHO MANAGES MY INVESTMENTS?
A. Wells Fargo Bank, as the Fund's investment adviser, manages the Fund's
investments. Wells Fargo Bank also provides the Fund with administrative,
transfer agency, dividend disbursing agency, and custodial services. In
addition, Wells Fargo Bank is a shareholder servicing agent and a selling
agent for the Fund. See "The Fund and Management" and "Management and
Servicing Fees" for further information.
1 PROSPECTUS
<PAGE> 9
Q. HOW DO I INVEST?
A. Qualified investors may invest by purchasing Fund shares at the net
asset value per share without a sales charge ("NAV"). Qualified investors
include customers ("Customers") who maintain qualified accounts with the
trust division of Wells Fargo Bank or an affiliate of Wells Fargo Bank (a
"Bank"). Customers may include individuals, trusts, partnerships and
corporations. Purchases are effected through the Customer's account with a
Bank under the terms of the Customer's account agreement with the Bank.
Investors wishing to purchase Fund shares should contact their account
representatives. Shares of the Fund may not be suitable investments for
tax-exempt institutions or tax-exempt retirement plans, since such
investors generally would not benefit from the tax-exempt status of the
Fund's dividends. See "Investing in the Fund" for additional information.
Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?
A. Dividends are declared daily and distributed monthly, and any capital gains
are distributed at least annually. All distributions are automatically
reinvested in additional shares of the Fund at NAV. Shareholders also may
elect to receive distributions in cash. See "Dividend and Capital Gain
Distributions" for additional information.
Q. HOW MAY I REDEEM SHARES?
A. You may redeem your shares at NAV, without charge by the Company. Fund
shares held by a Bank on behalf of its Customers must be redeemed under the
terms of the Customer's account agreement with the Bank. Banks are
responsible for transmitting redemption requests to the Company and
crediting their Customers' accounts. The Company reserves the right to
impose charges for wiring redemption proceeds. See "Investing in the Fund
-- Redemption of Shares."
2 PROSPECTUS
<PAGE> 10
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge on Purchases (as a percentage of
offering price) .............................................................................. None
Maximum Sales Charge on Reinvested Distributions ............................................... None
Maximum Sales Charge on Redemptions ............................................................ None
Exchange Fees .................................................................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management Fee (after waivers or reimbursements)(1) ............................................ 0.00%
Rule 12b-1 Fee(2)............................................................................... 0.00%
Other Expenses (after waivers or reimbursements)(3) ............................................ 0.20%
TOTAL FUND OPERATING EXPENSES (after waivers or
reimbursements)(4) ........................................................................... 0.20%
</TABLE>
- ------------
(1) Management Fees (before waivers or reimbursements) would be payable at a
maximum annual rate of 0.25%.
(2) The Fund has adopted a defensive distribution plan under Rule 12b-1 of the
Investment Company Act of 1940 ("the 1940 Act"), which does not result in
any added expenses to the Fund.
(3) Other Expenses (before waivers or reimbursements) would be 0.50%.
(4) Total Fund Operating Expenses (before waivers or reimbursements) would be
0.75%.
Note: The table does not reflect any charges that may be imposed by Wells
Fargo Bank or another Bank directly on certain customer accounts in connection
with an investment in the Fund.
EXAMPLE OF EXPENSES
You would pay the following expenses on a $1,000 investment in the Fund,
assuming a 5% annual return and redemption at the end of each time period
indicated:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
National Tax-Free Money Market Trust $2 $6 $11 $26
</TABLE>
3 PROSPECTUS
<PAGE> 11
EXPLANATION OF TABLES
The purpose of the above tables is to help a shareholder understand the
various costs and expenses that an investor in the Fund will pay directly or
indirectly.
SHAREHOLDER TRANSACTION EXPENSES are charges incurred when an investor buys
or sells Fund shares. Fund shares are sold with no shareholder transaction
expenses imposed by the Company. However, the Company reserves the right to
impose a charge for wiring redemption proceeds.
ANNUAL FUND OPERATING EXPENSES for Fund shares are based on applicable
contract amounts restated to reflect voluntary fee waivers and expense
reimbursements that are expected to continue to reduce expenses during the
Company's current year, except that "Other Expenses" is based on estimated
amounts for the current year. Any waivers or reimbursements would reduce the
Fund's total expenses. There can be no assurance that waivers or reimbursements
will continue. For more complete descriptions of the various costs and expenses
you can expect to incur as an investor in the Fund, please see "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%. The 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.
HOW THE FUND WORKS
INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objectives and
related policies of the Fund.
The Fund seeks to obtain a high level of income exempt from federal
income tax while preserving capital and liquidity. This investment objective
is fundamental and cannot be changed without shareholder approval. The Fund
seeks to achieve its objective by investing in high-quality, short-term U.S.
dollar-denominated money market instruments, primarily municipal obligations
with remaining maturities not exceeding thirteen (13) months.
Wells Fargo Bank, as investment adviser to the Fund, pursues the
Fund's objective by investing (under normal market conditions) substantially
all of the Fund's assets in the following types of municipal obligations that
pay interest which is exempt from federal income tax: bonds, notes and
commercial paper issued by or on behalf of states, territories, and possessions
of the United States (including the District of Columbia) and their political
subdivisions, agencies, instrumentalities (including government-sponsored
enterprises) and authorities, the interest on which, in the opinion of counsel
to the issuer or bond counsel, is exempt from federal income tax.
4 PROSPECTUS
<PAGE> 12
These municipal obligations and the taxable investments described below may
bear interest at rates that are not fixed ("floating- and variable-rate
instruments").
The Fund may temporarily invest some of its assets in cash reserves or
certain high-quality, taxable money market instruments, or may engage in other
investment activities as described in this Prospectus. The Fund may elect to
invest temporarily up to 20% of its net assets in certain permitted taxable
investments, including cash reserves, U.S. Government obligations, obligations
of domestic banks, commercial paper, taxable municipal obligations and
repurchase agreements. The Fund also may invest in U.S. dollar-denominated
obligations of foreign banks and foreign securities. Such temporary
investments most likely would be made when there is an unexpected or abnormal
level of investor purchases or redemptions of interests in the Fund or because
of unusual market conditions. The income from these temporary investments and
investment activities may be subject to federal income tax. However, as stated
above, Wells Fargo Bank seeks to invest substantially all of the Fund's assets
in securities exempt from such tax.
As a matter of fundamental policy which can not be changed without
shareholder approval, at least 80% of the net assets of the Fund are invested
(under normal market conditions) in municipal obligations that pay interest
which is exempt from federal income tax and is not subject to the federal
alternative minimum tax. However, as a matter of general operating policy, the
Fund seeks to invest substantially all of its assets in such municipal
obligations. The Fund's investment adviser may rely either on the opinion of
counsel to the issuer of the municipal obligations or bond counsel regarding
the tax treatment of these obligations. In addition, the Fund may invest 25%
or more of its assets in municipal obligations that are related in such a way
that an economic, business or political development or change affecting one
such obligation would also affect the other obligations; for example, the Fund
may own different municipal obligations which pay interest based on the
revenues of similar types of projects.
Additional information about the Fund's investment activities is
contained in the "Prospectus Appendix-- Additional Investment Policies."
RISK FACTORS
Investments in the Fund are not bank deposits or obligations of Wells Fargo
Bank and are not insured by the FDIC, nor are they insured or guaranteed
against loss of principal. Therefore, investors should be willing to accept
some risk with money invested in the Fund. Although the Fund seeks to maintain
a stable net asset value of $1.00 per share, there is no assurance that it will
be able to do so. The Fund may not achieve as high a level of current income as
other mutual funds that do not limit their investment to the high credit
quality instruments in which the Fund invests. The Fund may invest in illiquid
securities (including restricted securities) which 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 the Fund. The portfolio debt instruments of
the Fund are subject to credit risk. Credit risk is the risk that issuers of
the debt instruments in which the Fund invests may default on the payment of
5 PROSPECTUS
<PAGE> 13
principal and/or interest and affect the value of an investment in the Fund. As
with all mutual funds, there can be no assurance that the Fund will achieve its
investment objective.
The Fund, under the 1940 Act, must comply with certain investment criteria
designed to provide liquidity, reduce risk, and allow the Fund to maintain a
stable net asset value of $1.00 per share. The Fund's dollar-weighted average
portfolio maturity must not exceed 90 days. Any security that the Fund
purchases must have a remaining maturity of not more than 397 days. In
addition, any security that the Fund purchases must present minimal credit
risks and be of high quality (i.e., be rated in the top two rating categories
by the requisite NRSROs or, if unrated, determined to be of comparable quality
to such rated securities). These determinations are made by Wells Fargo Bank,
as the Fund's investment adviser, under guidelines adopted by the Company's
Board of Directors.
The Fund seeks to reduce risk by investing its assets in securities of
various issuers. As such, the Fund is considered to be diversified for purposes
of the 1940 Act. In addition, the Fund emphasizes safety of principal and high
credit quality. In particular, the internal investment policies of the Fund's
investment adviser, Wells Fargo Bank, prohibit the purchase for the Fund of
many types of floating-rate derivative securities that are considered
potentially volatile. The following types of derivative securities ARE NOT
permitted investments for the Fund:
# capped floaters (on which interest is not paid when market rates move
above a certain level);
# leveraged floaters (whose interest rate reset provisions are based on
a formula that magnifies changes in interest rates);
# range floaters (which do not pay any interest if market interest rates
move outside of a specified range);
# dual index floaters (whose interest rate reset provisions are tied to
more than one index so that a change in the relationship between these
indices may result in the value of the instrument falling below face
value); and
# inverse floaters (which reset in the opposite direction of their
index).
Additionally, the Fund may not invest in securities whose interest
rate reset provisions are tied to an index that materially lags short-term
interest rates, such as Cost of Funds Index floaters. The Fund may only invest
in floating-rate securities that bear interest at a rate that resets quarterly
or more frequently and that resets based on changes in standard money market
rate indices such as U.S. Treasury bills, London Interbank Offered Rate or
LIBOR, the prime rate, published commercial paper rates, federal funds rates,
Public Securities Associates floaters or JJ Kenney index floaters.
Generally, securities in which the Fund invests will not earn as high
a yield as securities of longer maturity and/or of lesser quality that are more
subject to market volatility. The Fund
6 PROSPECTUS
<PAGE> 14
attempts to maintain the value of its shares at a constant $1.00 per share,
although there can be no assurance that the Fund will always be able to do so.
See "Prospectus Appendix - Additional Investment Policies" and the SAI for
further information about the Fund's investment policies and risks.
PERFORMANCE
The performance of the Fund may be advertised from time to time in
terms of current yield, effective yield, and average annual total return. In
addition, the Fund's performance may be advertised in terms of tax-equivalent
yield or effective tax-equivalent yield. Performance figures are based on
historical results and are not intended to indicate future performance.
Yield refers to the income generated by an investment in the Fund over
a specified period (usually 7 days), expressed as an annual percentage rate.
Effective yield is calculated similarly but assumes reinvestment of the income
earned from the Fund. Because of the effects of compounding, effective yields
are slightly higher than yields. The tax-equivalent and effective
tax-equivalent yields assume that a stated income tax rate has been applied to
determine the tax-equivalent figures.
Average annual total return is based on the overall dollar or
percentage change of an investment in the Fund and assumes the investment is at
NAV and all dividends and distributions are also reinvested at NAV in shares of
the Fund.
In addition to presenting these standardized performance calculations,
at times, the Fund may also present non-standard performance figures, such as
yields and effective yields for a 30-day period or, in sales literature,
distribution rates.
Additional performance information is contained in the SAI under
"Performance Calculations" and in the Annual Report, which are available upon
request without charge by calling the Company at 1-800-260-5969 or by writing
the Company at the address shown on the front cover of the Prospectus.
THE FUND AND MANAGEMENT
The Fund is one fund in 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. For information on another fund, please call
Stagecoach Shareholder Services at 1-800-260-5969 or write the Company at the
address shown on the front cover of the Prospectus.
The Company's Board of Directors supervises the funds' activities and
monitors their contractual arrangements with various service providers.
Although the Company is not required to hold annual shareholder meetings,
special meetings may be required for purposes such as electing or removing
Directors, approving advisory contracts and changing the Fund's investment
objective or fundamental investment policies. All shares of the Company have
equal voting rights
7 PROSPECTUS
<PAGE> 15
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). A shareholder of record of the Fund is 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 serves as the Fund's investment adviser, administrator,
transfer and dividend disbursing agent and custodian. In addition, Wells Fargo
Bank serves as a shareholder servicing agent and as a selling agent for the
Fund. Wells Fargo Bank, one of the largest banks in the United States, was
founded in 1852 and is the oldest bank in the western United States. As of
April 1, 1997, Wells Fargo Bank provided investment advisory services for
approximately $57 billion of assets of individuals, trusts, estates and
institutions. Wells Fargo Bank also serves as the investment adviser or
sub-adviser to other separately managed series of the Company, and to five
other registered, open-end, management investment companies which consist of
several separately managed investment portfolios. Wells Fargo Bank, a wholly
owned subsidiary of Wells Fargo & Company, is located at 420 Montgomery Street,
San Francisco, California 94104.
-----------------------------------------------
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
Contract and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such statutes, regulations and judicial or
administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any such services, it is expected that new
agreements would be proposed or entered into with another entity or entities
qualified to perform such services.
INVESTING IN THE FUND
SHARE VALUE
The price of a Fund share is its "net asset value" or NAV. The NAV of
shares of the Fund is computed by adding the value of its portfolio investments
plus cash and other assets, deducting liabilities and then dividing the result
by the number of Fund shares outstanding. All expenses, including fees paid to
the investment adviser and co-administrators, are accrued daily and taken into
account for the purposes of computing NAV, which is expected to fluctuate
daily. As noted
8 PROSPECTUS
<PAGE> 16
above, the Fund seeks to maintain a constant $1.00 NAV share price, although
there is no assurance that it will be able to do so.
Fund shares may be purchased on any day the Fund is open (a "Business
Day"). The Fund is open Monday through Friday and is closed on weekends and
federal bank holidays.
Wells Fargo Bank calculates the Fund's NAV as of 9:00 a.m. (Pacific time)
each Business Day. All transaction orders are processed at the NAV next
determined after the order is received.
The Fund's portfolio investments are valued on the basis of amortized cost.
This valuation method is based on the receipt of a steady rate of payment from
the date of purchase until maturity rather than actual changes in market value.
The Company's Board of Directors believes that this valuation method accurately
reflects fair value.
HOW TO BUY SHARES
Shares of the Fund are sold without a sales load on a continuous basis to
Customers who maintain qualified accounts with the trust division of a Bank.
Customers may include individuals, trusts, partnerships and corporations. All
share purchases are effected through a Customer's account at a Bank through
procedures established in connection with the requirements of the account, and
confirmations of share purchases and redemptions are sent to the Bank involved.
A Bank (or its nominee) is normally the holder of record of Fund shares acting
on behalf of its Customers and reflects its Customers' beneficial ownership of
shares in the account statements provided to its Customers. The exercise of
voting rights and the delivery to Customers of shareholder communications from
the Fund is governed by a Customer's account agreement with a Bank. Investors
wishing to purchase shares of the Fund should contact their account
representatives or call 1-800-260-5969.
Purchase orders for shares in the Fund must be received by the Fund by 9:00
a.m. (Pacific time) on a Business Day. Payment for such shares must also be
made in federal funds or other funds immediately available to the Custodian no
later than 9:00 a.m. (Pacific time) on the same Business Day that the purchase
order is received. Orders for the purchase of shares are executed at the NAV
per share (the "public offering price") next determined after receipt of both
an order and payment in proper order. The Fund has no minimum initial or
subsequent investment requirement, although a Bank may impose certain minimum
Customer account requirements.
Each Bank is responsible for transmitting orders for purchases by Customers
and delivering required funds on a timely basis. If funds are not received
within the period described above, the order will be canceled, notice thereof
will be given, and the Bank will be responsible for any loss to the Fund or its
shareholders. A Bank may charge certain account fees depending on the type of
account the investor has established. Payment for shares of the Fund may, at
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.
9 PROSPECTUS
<PAGE> 17
The Company reserves the right to reject any purchase order. Payment for
orders which are not received will be returned after prompt inquiry. The
issuance of shares is recorded on the books of the Fund, and share certificates
are not issued.
Shares of a tax-free fund such as the Fund may not be suitable investments
for tax-exempt institutions or tax-deferred retirement plans, since such
investors would not benefit from the exempt status of the Funds' dividends.
For additional information on tax-deferred accounts, please contact a
shareholder servicing agent or selling agent or call 1-800-260-5969. In
addition, Fund shares are not available in all states.
STATEMENTS AND REPORTS
If a Bank is the recordholder for an investor's account, the Bank sends the
investor a monthly account statement after the end of each month in which there
has been a transaction that affects the share balance or Fund account
registration. Every January, investors will be provided a statement, which is
also filed with the IRS, with tax information for the previous year to assist
in tax return preparation. At least twice a year, investors receive financial
statements from the Fund.
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
Dividends from net investment income are declared daily payable to
shareholders of record as of 9:00 a.m. (Pacific time). If your purchase order
is received before 9:00 a.m. on any Business Day, you begin earning dividends
on the day your purchase order is effective and continue to earn dividends
through the day prior to the date you redeem such shares. Dividends for a
Saturday, Sunday or Holiday are credited on the preceding Business Day. If you
redeem shares before a dividend payment date, any dividends credited to you are
paid on the following dividend payment date unless you have redeemed all of the
shares in your account, in which case you receive your accrued dividends
together with your redemption proceeds. The Fund distributes any capital gains
at least annually. The Fund does not make distributions from net realized
securities gains unless capital loss carryovers, if any, have been utilized or
have expired.
Dividends declared in a month generally are distributed on the last
Business Day of that month. All dividend and capital gain distributions are
reinvested automatically in additional shares of the Fund at NAV or, at the
option of the investor, paid in cash. In all cases, distributions will be made
in a manner that is consistent with the provisions of the 1940 Act.
HOW TO REDEEM SHARES
Redemption requests are effected at the NAV per share next determined after
receipt of a redemption request in good order by the Company. Shares held by a
Bank on behalf of its
10 PROSPECTUS
<PAGE> 18
Customers must be redeemed in accordance with instructions and limitations
pertaining to the Customer's accounts at the Bank. The Bank is 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 Fund shares normally are wired to the redeeming Bank 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 Fund 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 it is not
reasonably practicable or (b) it is not reasonably practicable for the Fund to
fairly 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 a Fund.
To be accepted by the Company, a letter requesting redemption must include:
(i) the Fund's name and account registration from which the 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 Fund shares are made in cash, except that the commitment
to redeem shares in cash extends only to redemption requests made by an
investor 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. In the case of redemption requests by
investors 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 Fund's
securities are valued. If the recipient were to sell such securities, the
investor might incur brokerage charges.
11 PROSPECTUS
<PAGE> 19
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. Wells Fargo Bank also furnishes the Board of Directors with periodic
reports on the Fund's investment strategies and performance. For these
services, Wells Fargo Bank is entitled to a monthly investment advisory fee at
the annual rate of 0.25% of the Fund's average daily net assets, and may waive
such fee in whole or in part. Any such waiver will reduce the Fund's expenses
and, accordingly, have a favorable impact on the Fund's yield. 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.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank also serves as the Fund's custodian and transfer and
dividend disbursing agent. Under the Custody Agreement, the Fund may, at times,
borrow money from Wells Fargo Bank as needed to satisfy temporary liquidity
needs. Wells Fargo Bank charges interest on such overdrafts at a rate
determined pursuant to the Fund's Custody Agreement. Wells Fargo Bank performs
its custodial and transfer and dividend disbursing agency services at 525
Market Street, San Francisco, California 94105.
SHAREHOLDER SERVICING AGENTS
The Fund has adopted a servicing plan and entered into a related shareholder
servicing agreement with Wells Fargo Bank and may enter into similar agreements
with other Banks ("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 servicing
with respect to Fund shares, which include, without limitation, aggregating and
transmitting shareholder orders for purchases, exchanges and redemptions;
maintaining shareholder accounts and records; 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 the
annual rate of up to 0.20% of the average daily net assets attributable to the
shares owned of record or beneficially by investors with whom the Shareholder
Servicing Agent maintains a servicing relationship. In no case shall payments
exceed any maximum amount that may be deemed applicable under applicable laws,
regulations or rules, including the Conduct Rules of the National Association
of Securities Dealers ("NASD Rules").
A Shareholder Servicing Agent also may impose certain conditions and/or
fees on its customers, subject to the terms of this Prospectus, in addition to
or different from those imposed by the Fund, such as requiring a higher minimum
initial investment or payment of a separate fee for additional services. Each
Shareholder Servicing Agent has agreed 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.
12 PROSPECTUS
<PAGE> 20
ADMINISTRATOR AND CO-ADMINISTRATOR
Subject to the overall supervision of the Company's Board of Directors,
Wells Fargo Bank as Administrator and Stephens as Co-administrator, 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 and officers who are affiliated
with Stephens. For these administrative services, Wells Fargo Bank and Stephens
are entitled to receive a monthly fee at the annual rate of 0.04% and 0.02%,
respectively, of the Fund's average daily net assets. Wells Fargo Bank and
Stephens may delegate certain of their respective administrative duties to
sub-administrators.
SPONSOR AND DISTRIBUTOR
Stephens is the Company's sponsor and 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 under
which Stephens acts as agent for the Fund for the sale of its shares and may
enter into selling agreements with other agents ("Selling Agents") that wish to
make available shares of the Fund to their respective customers.
Stephens has established a 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.
Financial institutions acting as Shareholder Servicing Agents or Selling
Agents, or in certain other capacities, may be required to register as dealers
pursuant to applicable state securities laws which may differ from federal law
and any interpretations expressed herein.
13 PROSPECTUS
<PAGE> 21
DEFENSIVE 12B-1 PLAN
The Fund has adopted a "defensive" Distribution Plan under Rule 12b-1
of the 1940 Act (the "Plan"). The Plan reflects that, to the extent any fees
paid pursuant to the Servicing Plan are deemed to be "primarily intended to
result in the sale of shares" of the Fund, such fees are approved pursuant to
the Plan. The Plan will not result in any separate payment of fees by the
Fund.
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, each fund of the Company bears all
costs of its operations, including its pro rata portion of Company expenses
such as fees and expenses of its independent auditors, 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, including the Fund, 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
Dividends distributed from the Fund's net interest income from tax-exempt
securities will not be subject to federal income taxes. Such dividends will
also be exempt from California personal income tax to the extent such dividends
are attributable to instruments that pay interest which would be exempt from
California personal income taxes, if such instruments were held directly by an
individual. Dividends attributable to the Fund's interest income from taxable
securities and net short-term capital gains, if any, and capital gain
distributions will be taxable when paid, whether you take such distributions in
cash or have them automatically reinvested in additional Fund shares. However,
such distributions declared in October, November, and December and distributed
by the following January will be taxable as if they were paid by December 31.
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
SAIs. In certain circumstances, U.S. residents may also be subject to
withholding taxes. See "Federal Income Taxes -- Backup Withholding" in the
SAI.
14 PROSPECTUS
<PAGE> 22
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 and California tax considerations generally affecting the
Fund and its 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.
Additional tax considerations, including the federal alternative minimum tax,
are discussed in the SAI.
15 PROSPECTUS
<PAGE> 23
PROSPECTUS APPENDIX --
ADDITIONAL INVESTMENT POLICIES
FUND INVESTMENTS
Set forth below is a description of certain permissible investments and
investment policies of the Fund. Additional information about the Fund's
investments is contained in the Fund's SAI.
The Fund may invest in the following:
(i) certain municipal obligations;
(ii) certain U.S. Government obligations;
(iii) negotiable certificates of deposit, fixed time deposits,
bankers' acceptances or other obligations of U.S. banks
(including foreign branches) that have more than $1 billion
in total assets at the time of investment and are members of
the Federal Reserve System or are examined by the Comptroller
of the Currency or whose deposits are insured by the FDIC:
(iv) commercial paper rated at the date of purchase P-1 by Moody's
or "A-1+" or "A-1" by S&P;
(v) certain floating- and variable-rate instruments;
(vi) certain repurchase agreements;
(vii) foreign bank obligations; and
(viii) certain securities issued by other investment companies.
Municipal Obligations
The Fund may invest in various types of municipal obligations.
Municipal bonds generally have a maturity at the time of issuance of up to 40
years. Medium-term municipal notes are generally issued in anticipation of the
receipt of tax funds, of the proceeds of bond placements, or of other revenues.
The ability of an issuer to make payments on notes is therefore especially
dependent on such tax receipts, proceeds from bond sales or other revenues, as
the case may be. Municipal commercial paper is a debt obligation with a stated
maturity of 270 days or less that is issued to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term debt. From
time to time, the Fund may invest 25% or more of the current value of its total
assets in certain "private activity bonds," such as pollution control bonds;
provided,
A-1 PROSPECTUS
<PAGE> 24
however, that such investments will be made only to the extent they are
consistent with the Fund's fundamental policy of investing, under normal
circumstances, at least 80% of its net assets in municipal obligations that are
exempt from federal income tax and not subject to the federal alternative
minimum tax.
The Fund will invest in the following municipal obligations with
remaining maturities not exceeding 13 months:
(i) long-term municipal bonds rated at the date of purchase "Aa"
or better by Moody's or "AA" or better by S&P;
(ii) municipal notes rated at the date of purchase "MIG 1" or "MIG
2" (or "VMIG 1" or "VMIG 2" in the case of an issue having a
variable rate with a demand feature) by Moody's or "SP-1+"
"SP-1" or "SP-2" by S&P; and
(iii) short-term municipal commercial paper rated at the date of
purchase "P-1" by Moody's or "A-1+", or "A-1" or "A-2" by
S&P.
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
Subject to the limitations set forth below and in the 1940 Act, the Fund may
invest in securities of other investment companies. For temporary investments,
the Fund may invest in shares of other open-end investment companies that
invest exclusively in high-quality short-term securities subject to the limits
set forth under Section 12 of the 1940 Act, provided however, that any such
company has a policy of investing, under normal market conditions, at least 80%
of its net assets in obligations that are exempt from federal income tax and
are not subject to the federal alternative minimum tax. Such investment
companies can be expected to charge management fees and other operating
expenses that would be in addition to those charged to the Fund; however,
A-2 PROSPECTUS
<PAGE> 25
Wells Fargo Bank has undertaken to waive its advisory fees with respect to that
portion of the Fund's assets so invested, except when such purchase is part of
a plan of merger, consolidation, reorganization or acquisition.
Floating- and Variable-Rate Instruments
The Fund may purchase debt instruments with interest rates that are
periodically adjusted at specified intervals or whenever a benchmark rate or
index changes. These adjustments generally limit the increase or decrease in
the amount of interest received on the debt instruments. The floating- and
variable-rate instruments that the Fund may purchase include certificates of
participation in such instruments. Floating- and variable-rate instruments are
subject to interest-rate risk and credit risk.
Repurchase Agreements
The Fund may enter into repurchase transactions in which the seller of a
security to the Fund agrees to repurchase that security from the Fund a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The 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.
Letters of Credit
Certain of the debt obligations, certificates of participation, commercial
paper and other short-term obligations which the Fund is permitted to purchase
may be backed by an unconditional and irrevocable letter of credit of a bank,
savings and loan association or insurance company which assumes the obligation
for payment of principal and interest in the event of default by the issuer.
Letter of credit-backed investments must, in the opinion of Wells Fargo Bank,
be of investment quality comparable to other permitted investments of the Fund.
Foreign Obligations
The Fund may invest up to 25% of its assets in high-quality, short-term
debt obligations of foreign branches of U.S. banks or U.S. branches of foreign
banks that are denominated in and pay interest in U.S. dollars. Investments in
foreign obligations involve certain considerations that are not typically
associated with investing in domestic obligations. There may be less publicly
available information about a foreign issuer than about a domestic issuer.
Foreign issuers also are not subject to the same uniform accounting, auditing
and financial reporting standards or governmental supervision as domestic
issuers. In addition, with respect to certain foreign countries, taxes may be
withheld at the source under foreign income tax laws, and there is a
possibility of expropriation or confiscatory taxation, political or social
instability or diplomatic
A-3 PROSPECTUS
<PAGE> 26
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.
Taxable Investments
Pending the investment of proceeds from the sale of shares of the Fund
or proceeds from sales of portfolio securities or in anticipation of
redemptions or to maintain a "defensive" posture when, in the opinion of Wells
Fargo Bank, as investment adviser, it is advisable to do so because of market
conditions, the Fund may elect to invest temporarily up to 20% of the current
value of its net assets in cash reserves, including the following taxable
high-quality money market instruments: (i) U.S. Government obligations; (ii)
negotiable certificates of deposit, bankers' acceptances and fixed time
deposits and other obligations of domestic banks (including foreign branches)
that have more than $1 billion in total assets at the time of investment and
are members of the Federal Reserve System or are examined by the Comptroller of
the Currency or whose deposits are insured by the FDIC; (iii) commercial paper
rated at the date of purchase "P-1" by Moody's or "A-1+" or "A-1" by S&P; (iv)
certain repurchase agreements; and (v) high-quality municipal obligations, the
income from which may or may not be exempt from federal income taxes.
Moreover, the Fund may invest temporarily more than 20% of its total
assets in such securities and in high-quality, short-term municipal obligations
the interest on which is not exempt from federal income taxes to maintain a
temporary defensive posture or in an effort to improve after-tax yield to the
Fund's shareholders when, in the opinion of Wells Fargo Bank, as investment
adviser, it is advisable to do so because of unusual market conditions.
Illiquid Securities
Certain securities may be sold only pursuant to certain legal
restrictions, and may be difficult to sell. The Fund may not hold more than
10% of the value of its net assets in securities that are illiquid or such
lower percentage as may be required by the states in which the Fund sells its
shares. Repurchase agreements and time deposits that do not provide for
payment to the Fund within seven days after notice, guaranteed investment
contracts and some commercial paper issued in reliance upon the exemption in
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act") (other
than variable amount master demand notes with maturities of nine months or
less), are subject to the limitation on illiquid securities. In addition,
interests in privately arranged loans may be subject to this limitation.
If otherwise consistent with its investment objective and policies,
the Fund may purchase securities which are not registered under the 1933 Act
but which can be sold to "qualified institutional buyers" in accordance with
Rule 144A under the 1933 Act. Any such security will not be considered
illiquid so long as it is determined by the Company's Board of Directors,
acting under guidelines approved and monitored by the Company's Board, that an
adequate trading market exists for that security.
A-4 PROSPECTUS
<PAGE> 27
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objective, as set forth in the "How the Funds
Work--Investment Objective and Policies" section, is fundamental. Accordingly,
such investment objective and policies may not be changed without approval by
the vote of the holders of a majority of the Fund's outstanding voting
securities, as described under "Capital Stock" in the SAI. In addition, any
fundamental investment policy may not be changed without such shareholder
approval. If the Company's Board of Directors determines, however, that the
Fund's investment objective can best be achieved by a substantive change in a
nonfundamental investment policy or strategy, the Company's Board may make such
a change without shareholder approval and will disclose any such material
changes in the then-current prospectus.
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 (a) municipal securities (for the purposes of this
restriction, private activity bonds and notes shall not be deemed municipal
securities if the payments of principal and interest on such bonds and notes is
the ultimate responsibility of non-governmental entities), (b) U.S. Government
obligations, and (c) certain obligations of domestic banks; (ii) issue senior
securities, except as permitted by applicable law; and (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, with respect to 75% of its total assets, more
than 5% of the value of the Fund's total assets would be invested in the
securities of any one issuer or, with respect to 100% of its total assets the
Fund's ownership would be more than 10% of the outstanding voting securities of
such issuer.
As matters of non-fundamental policy the Fund may: (i) borrow from
banks up to 10% of the current value of its net assets only for temporary
purposes in order to meet redemptions, and these borrowings may be secured by
the pledge of up to 10% of the current value of its net assets (but investments
by the Fund may not be purchased while any such outstanding borrowing in excess
of 5% of its net assets exists); (ii) not make loans, except to the extent
permitted by applicable law; (iii) invest up to 10% of the current value of its
net assets in securities that are illiquid by virtue of the absence of a
readily available market or the existence of legal or contractual restrictions
on resale and fixed time deposits that are subject to withdrawal penalties and
that have maturities of more than seven days; and (iv) invest up to 10% of the
current value of its net assets in repurchase agreements having maturities of
more than seven days, and restricted securities (which include securities that
must be registered under the 1933 Act before they may be offered to the
public).
A-5 PROSPECTUS
<PAGE> 28
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE> 29
[LOGO]
P.O. Box 7066
San Francisco, CA 94120-7066
STAGECOACH MONEY MARKET FUNDS:
- are NOT FDIC insured
- are NOT deposits or obligations of Wells Fargo Bank
- are NOT guaranteed by Wells Fargo Bank
- involve investment risk, including possible loss of
principal
- seek to maintain a stable net asset value of $1.00 per
share, however, there can be no assurance that a fund [LOGO]
will meet this goal. Yields will vary with market conditions.
[LOGO]
PRINTED ON RECYCLED PAPER
<PAGE> 30
STAGECOACH FUNDS, INC.
Telephone: 1-800-260-5969
STATEMENT OF ADDITIONAL INFORMATION
Dated August 1, 1997
NATIONAL TAX-FREE MONEY MARKET TRUST
__________________________________
Stagecoach Funds, Inc. (the "Company") is an open-end, series
investment company. This Statement of Additional Information ("SAI") contains
information about one fund in the Stagecoach Family of funds -- the NATIONAL
TAX-FREE MONEY MARKET TRUST (the "Fund"). The Fund offers a single class of
shares. 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 Fund's Prospectus dated August 1, 1997. All terms used in this SAI
that are defined in the Prospectus will have the meanings assigned in the
Prospectus. A copy of the Prospectus may be obtained without charge by writing
Stephens Inc. ("Stephens"), the Company's sponsor, co-administrator and
distributor, at 111 Center Street, Little Rock, Arkansas 72201 or calling the
Transfer Agent at the telephone number indicated above.
__________________________________
<PAGE> 31
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Permitted Investment Activities . . . . . . . . . . . . . . . . . 5
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Performance Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 16
Additional Purchase and Redemption Information . . . . . . . . . . . . . . . 17
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Fund Expenses............................ . . . . . . . . . . . . . . . . . . 21
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
2
<PAGE> 32
INVESTMENT RESTRICTIONS
Fundamental Investment Policies. The Fund is subject to the
following investment restrictions, all of which are fundamental policies.
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 (i) municipal securities
(for the purpose of this restriction, private activity bonds and notes shall
not be deemed municipal securities if the payments of principal and interest on
such bonds or notes is the ultimate responsibility of non-governmental
issuers), (ii) obligations of the United States Government, its agencies or
instrumentalities, and (iii) the obligations of domestic banks (for the purpose
of this restriction, domestic bank obligations do not include obligations of
U.S. branches of foreign banks or obligations of foreign branches of U.S.
banks);
(2) issue senior securities, except as permitted by applicable
law; or
(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, with respect to
75% of its total assets, more than 5% of the value of the Fund's total assets
would be invested in the securities of any one issuer or, with respect to 100%
of its total assets the Fund's ownership would be more than 10% of the
outstanding voting securities of such issuer;
With regard to fundamental investment restriction number (1)
above, the Fund intends to reserve freedom of action to have in excess of 25%
of the value of the respective total assets invested in obligations of the
banking industry. Regarding this fundamental concentration policy, the Fund
may hold in excess of 25% of the value of the assets in obligations of the
banking industry to the extent that the Fund holds obligations with such credit
enhancements as letters of credit issued by domestic bank issuers, which will
be considered to be obligations of domestic banks. The SEC staff's position is
that the exclusion with respect to banks may only be applied to domestic banks.
For this purpose, the staff also takes the position that U.S. branches of
foreign banks and foreign branches of domestic banks may, if certain conditions
are met, be treated as "domestic banks". The Company currently intends to
consider only obligations of "domestic banks" to be within the exclusion with
respect to bank obligations.
Fundamental investment restriction number (3), above, is less
restrictive than Rule 2a-7 of the 1940 Act. Nonetheless, it is an operating
policy of the Fund to comply with Rule 2a-7.
Non-Fundamental Investment Policies. The Fund is subject to the
following non-fundamental policies:
3
<PAGE> 33
The Fund may not:
(1) purchase or sell real estate or real estate limited
partnerships (other than municipal obligations or other securities secured by
real estate or interests therein or securities issued by companies that invest
in real estate or interests therein);
(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 municipal securities or other permitted investments
directly from the issuer thereof or from an underwriter for an issuer and the
later disposition of such securities in accordance with the Fund's investment
program may be deemed to be an underwriting;
(4) make investments for the purpose of exercising control or
management;
(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 only in
order to meet redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of its net assets (but investments may not be
purchased while any such outstanding borrowings exceed 5% of its net assets);
(6) make loans, except to the extent permitted by applicable law;
(7) write, purchase or sell puts, calls, options, warrants or any
combination thereof, except that the Fund may purchase securities with put
rights in order to maintain liquidity;
(8) purchase securities of issuers who, with their predecessors,
have been in existence less than three years, unless the securities are fully
guaranteed or insured by the U.S. Government, a state, commonwealth,
possession, territory, the District of Columbia or by an entity in existence at
least three years, or the securities are backed by the assets and revenues of
any of the foregoing if, by reason thereof, the value of its aggregate
investments in such securities will exceed 5% of its total assets.
(9) purchase securities of unseasoned issuers, including their
predecessors, which have been in operation for less than three years, and
equity securities of issuers which are not readily marketable if, by reason
thereof, the value of the Fund's aggregate investment in such classes of
securities will exceed 5% of its total assets.
As a matter of general operating policy, the Fund may invest in
shares of other open-end, management investment companies, subject to the
limitations of Section 12(d)(1) of the 1940 Act, provided that any such
purchases will be limited to temporary investments in shares of unaffiliated
investment companies. However, the Fund's investment adviser will waive its
advisory fees for that portion of the Fund's assets so invested, except when
such purchase is part
4
<PAGE> 34
of a plan of merger, consolidation, reorganization or acquisition. These
unaffiliated investment companies must have a fundamental investment policy of
investing at least 80% of their net assets in obligations that are exempt from
federal income taxes and are not subject to the federal alternative minimum
tax.
As a matter of general operating policy, the Fund reserves the
right to invest up to 10% of the current value of its net assets in fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, repurchase agreements maturing in more than seven days,
illiquid securities and restricted securities. However, as long as the Fund's
shares are registered for sale in a state that imposes a lower limit on the
percentage of a fund's assets that may be so invested, the Fund will comply
with such lower limit. The Fund presently is limited to investing 10% of its
net assets in such securities due to limits applicable in several states.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Unrated and Downgraded Investments. The Fund may purchase
instruments that are not rated if, in the opinion of Wells Fargo Bank, such
obligations are of comparable quality to other rated investments that are
permitted to be purchased by the Fund. The Fund may purchase unrated
instruments only if they are purchased in accordance with the procedures of the
Fund adopted by the Company's Board of Directors in accordance with Rule 2a-7
under the 1940 Act. 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,
provided that when a security ceases to be rated, the Company's Board of
Directors determines that such security presents minimal credit risks and,
provided further that, when a security rating is downgraded below the eligible
quality for investment or no longer presents minimal credit risks, the Board
finds that the sale of such security would not be in the Fund's best interest.
To the extent the ratings given by Moody's or S&P may change as a result of
changes in such organizations or their rating systems, the Fund will attempt to
use comparable ratings as standards for investments in accordance with the
investment policies contained in the Fund's 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
municipal securities, 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,
provided that the Company's Board approves or ratifies such investments.
5
<PAGE> 35
Loans of Portfolio Securities. The Fund may lend securities from
its portfolio to brokers, dealers and financial institutions (but not
individuals) if cash, U.S. Government obligations or other high-quality debt
obligations equal to at least 100% of the current market value of the
securities loaned (including accrued interest thereon) plus the interest
payable to the Fund with respect to the loan is maintained with the Fund. In
determining whether or not to lend a security to a particular broker, dealer or
financial institution, the Fund's investment adviser considers all relevant
facts and circumstances, including the size, creditworthiness and reputation of
the broker, dealer, or financial institution. Any loans of portfolio
securities are fully collateralized based on values that are marked to market
daily. The Fund will not enter into any portfolio security lending arrangement
having a duration longer than one year. Any securities that the Fund receives
as collateral do not become part of the Fund's portfolio at the time of the
loan and, in the event of a default by the borrower, the Fund will, if
permitted by law, dispose of such collateral except for such part thereof that
is a security in which the Fund is permitted to invest. During the time
securities are on loan, the borrower will pay the Fund any accrued income on
those securities, and the Fund may invest the cash collateral and earn
additional income or receive an agreed-upon fee from a borrower that has
delivered cash-equivalent collateral. The Fund will not lend securities having
a value that exceeds one-third of the current value of its total assets. Loans
of securities by the Fund are subject to termination at the Fund's or the
borrower's option. The Fund may pay reasonable administrative and custodial
fees in connection with a securities loan and may pay a negotiated portion of
the interest or fee earned with respect to the collateral to the borrower or
the placing broker. Borrowers and placing brokers are not permitted to be
affiliated, directly or indirectly, with the Company, the investment adviser or
the distributor.
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. The Fund may
invest up to 25% of its assets in foreign obligations.
Obligations of foreign banks and foreign branches of U.S. banks
involve somewhat different investment risks from those affecting obligations of
U.S. banks, including the possibilities that liquidity could be impaired
because of future political and economic developments, that the obligations may
be less marketable than comparable obligations of U.S. banks, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized, that foreign
governmental restrictions (such as foreign exchange controls) may be adopted
which might adversely affect the payment of principal and interest on those
obligations and that the selection of those obligations may be more difficult
because there may be less publicly available information concerning foreign
banks or the accounting, auditing and financial reporting standards, practices
and requirements applicable to
6
<PAGE> 36
foreign banks may differ from those applicable to U.S. banks. In that
connection, foreign banks are not subject to examination by any U.S. Government
agency or instrumentality.
Municipal Bonds. The Fund may invest in municipal bonds. As
discussed in the Fund's Prospectus, the two principal classifications of
municipal bonds are "general obligation" and "revenue" bonds. Municipal bonds
are debt obligations issued to obtain Fund for various public purposes,
including the construction of a wide range of public facilities such as
bridges, highways, housing, hospitals, mass transportation, schools, streets,
and water and sewer works. Other purposes for which municipal bonds may be
issued include the refunding of outstanding obligations and obtaining Fund for
general operating expenses or to loan to other public institutions and
facilities. Industrial development bonds are a specific type of revenue bond
backed by the credit and security of a private user. Certain types of
industrial development bonds are issued by or on behalf of public authorities
to obtain Fund to provide privately-operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit, port or
parking facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity, or sewage or solid waste
disposal. The Fund may not invest 25% or more of its assets in industrial
development bonds. Assessment bonds, wherein a specially created district or
project area levies a tax (generally on its taxable property) to pay for an
improvement or project may be considered a variant of either category. There
are, of course, other variations in the types of municipal bonds, both within a
particular classification and between classifications, depending on numerous
factors.
Municipal Notes. Municipal notes include, but are not limited to,
tax anticipation notes ("TANs"), bond anticipation notes ("BANs"), revenue
anticipation notes ("RANs") and construction loan notes. Notes sold as interim
financing in anticipation of collection of taxes, a bond sale or receipt of
other revenues are usually general obligations of the issuer.
TANs. An uncertainty in a municipal issuer's capacity to raise
taxes as a result of such things as a decline in its tax base or a rise in
delinquencies could adversely affect the issuer's ability to meet its
obligations on outstanding TANs. Furthermore, some municipal issuers mix
various tax proceeds into a general fund that is used to meet obligations other
than those of the outstanding TANs. Use of such a general fund to meet various
obligations could affect the likelihood of making payments on TANs.
BANs. The ability of a municipal issuer to meet its obligations
on its BANs is primarily dependent on the issuer's adequate access to the
longer term municipal bond market and the likelihood that the proceeds of such
bond sales will be used to pay the principal of, and interest on, BANs.
RANs. A decline in the receipt of certain revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.
7
<PAGE> 37
The values of outstanding municipal securities will vary as a
result of changing market evaluations of the ability of their issuers to meet
the interest and principal payments (i.e., credit risk). Such values also will
change in response to changes in the interest rates payable on new issues of
municipal securities (i.e., market risk). Should such interest rates rise, the
values of outstanding securities, including those held in the Fund's portfolio,
will decline and (if purchased at par value) sell at a discount. If interests
rates fall, the values of outstanding securities will generally increase and
(if purchased at par value) sell at a premium. Changes in the value of
municipal securities held in the Fund's portfolio arising from these or other
factors will cause changes in the net asset value per share of the Fund.
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.
8
<PAGE> 38
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
--------------------- -------------------- -------------------------------
<S> <C> <C>
Jack S. Euphrat, 74 Director Private Investor
415 Walsh Road
Atherton, CA 94207
*R. Greg Feltus, 45 Director, Chairman and Senior Vice President of Stephens;
President Manager 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, 54 Director T.B. Rose Faculty FellowBusiness,
321 Beechcliff Court Wake Forest University Calloway
Winston-Salem, NC 27104 School of Business and Accountancy;
Associate Professor of Finance of the
School of Business and Accounting at
Wake Forest University since 1983.
Joseph N. Hankin, 55 Director President Westchester Community College
75 Grasslands Road since 1971; President of Hartfor Junior
Valhalla, NY 105951971; College from 1967 to 1971; Adjunct
Hartford Professor of Columbia University
Teachers College since 1976.
*W. Rodney Hughes, 70 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 78 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 52 Director Private Investor; Real Estate
10 Legrae Street Developer; Chairman of Renaissance
Charleston, SC 29401 Properties Ltd.; President of Morse
Investment Corporation; and
Co-Managing Partner of Main Street
Ventures.
Richard H. Blank, Jr., 40 Chief Operating Associate of Financial Services Group
Officer,Secretary of Stephens; Director of Stephens
and Treasurer Sports Management Inc.; and Director
of Capo Inc.
</TABLE>
9
<PAGE> 39
COMPENSATION TABLE
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from
Name and Position from Registrant Registrant and Fund Complex
----------------- --------------- ---------------------------
<S> <C> <C>
Jack S. Euphrat $10,500 $31,500
Director
*R. Greg Feltus 0 0
Director
Thomas S. Goho 10,500 31,500
Director
*Zoe Ann Hines 0 0
Director
(resigned September 6, 1996)
Joseph N. Hankin 500 1,500
Director
*W. Rodney Hughes 8,750 26,250
Director
Robert M. Joses 10,500 31,500
Director
*J. Tucker Morse 8,750 26,250
Director
</TABLE>
Directors of the Company are compensated annually by the Company
and by all the registrants in each 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
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, after September 6, 1996, only serves the
aforementioned members of the BGFA Fund Complex. The Directors are compensated
by other companies and trusts within a 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 each fund complex.
10
<PAGE> 40
As of the date of this SAI, Directors and Officers of the Company
as a group beneficially owned less than 1% of the outstanding shares of the
Company.
INVESTMENT ADVISER. The Fund is advised by Wells Fargo Bank
pursuant to an Advisory Contract. The Advisory Contract provides 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 Company's Board of
Directors periodic reports on the investment strategy and performance of the
Fund. Wells Fargo Bank has agreed to provide to the Fund with, among other
things, money market security and fixed-income research, analysis and
statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the Fund's portfolio. Wells Fargo Bank is entitled to receive a
monthly fee at the annual rate of 0.25% of the Fund's average daily net assets
for providing investment advisory services.
The Advisory Contract will continue in effect for more than two
years provided the continuance is approved annually (i) by the holders of a
majority of the 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 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, Stephens and the Fund,
state that Wells Fargo 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
Administrator and Co-Administrator are entitled to receive a monthly fee of
0.04% and 0.02%, respectively, of the average daily net assets of the Fund.
SPONSOR AND DISTRIBUTOR. As discussed in the Fund's prospectus
under the heading "Management and Servicing Fees," Stephens serves as the
Fund's sponsor and distributor.
11
<PAGE> 41
SHAREHOLDER SERVICING AGENT. As discussed in the Fund's
prospectus under the heading "Shareholder Servicing Agent," the Fund has
entered into shareholder servicing agreements with Wells Fargo Bank. See
"Servicing Plan" in this SAI.
CUSTODIAN. Wells Fargo Bank has been retained to act as
custodian for the Fund, pursuant to a Custody Agreement with the Company on
behalf of 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, Wells
Fargo Bank is entitled to receive fees as follows: a net asset charge at the
annual rate of 0.0167%, payable monthly, plus specified transaction charges.
Wells Fargo Bank also will provide portfolio accounting services under the
Custody Agreement for a fee calculated as follows: a monthly base fee of $2,000
plus a net asset fee at the annual rate of 0.070% of the first $50,000,000 of a
Fund's average daily net assets, 0.045% of the next $50,000,000, and 0.020% of
the average daily net assets in excess of $100,000,000.
TRANSFER AND DIVIDEND DISBURSING AGENT. Wells Fargo Bank has been
retained to act as transfer and dividend disbursing agent for the Fund,
pursuant to an Agency Agreement with the Company on behalf of the Fund. For
its services as transfer and dividend disbursing agent for the Fund, Wells
Fargo Bank is entitled to receive monthly payments at the annual rate of 0.02%
of the Fund's average daily net assets.
UNDERWRITING COMMISSIONS. The Fund does not charge any front-end
sales loads or contingent deferred sales charges in connection with the
purchase and redemption of its shares, and therefore pays no underwriting
commissions to the Distributor.
DEFENSIVE 12B-1 PLAN. The Fund has entered into a "defensive"
Distribution Plan under Rule 12b-1 of the 1940 Act (the "Plan"). The Plan
reflects that, to the extent any fees paid pursuant to the servicing plan are
deemed to be "primarily intended to result in the sale of shares" of the Fund,
such fees are approved pursuant to the Plan. The Plan will not result in any
separate payment of fees by the Fund.
SERVICING PLAN
As indicated in the prospectus, the Company's Board of Directors,
adopted a Servicing Plan ("Servicing Plan") and related form of Shareholder
Servicing Agreement on April 28, 1997, with respect to the Fund. The Board of
Directors included a majority of the Directors who were not "interested
persons" (as defined in the Act) of the Fund and who had no direct or indirect
financial interest in the operation of the Servicing Plan or in any agreement
related to the Servicing Plan (the "Servicing Plan Non-Interested Directors").
Under the Servicing Plan and pursuant to the shareholder servicing
agreements, the Fund may pay one or more servicing agents, as compensation for
performing certain services, a
12
<PAGE> 42
fee at an annual rate of up to 0.20% of the average daily net assets of the
Fund's shares attributable to the servicing agent's customers. The actual fee
payable to servicing agents is determined, within such limits, from time to
time by mutual agreement between the Company and each servicing agent and will
not exceed the maximum service fees payable by mutual funds sold by members of
the NASD under the NASD Rules.
The Servicing Plan continues in effect from year to year if such
continuance is approved by a majority vote of both the Directors of the Company
and the Servicing Plan Non-Interested Directors. Any form of servicing
agreement related to the Servicing Plan also must be approved by such vote of
the Directors and the Servicing Plan Non-Interested Directors. Servicing
agreements may be terminated at any time, without payment of any penalty, by
vote of a majority of the Servicing Plan Non-Interested Directors. No material
amendment to the Servicing Plans may be made except by a majority of both the
Directors of the Company and the Servicing Plan Non-Interested Directors.
The Servicing Plan requires that the administrator shall provide
to the Directors, and the Directors shall review, at least quarterly, a written
report of the amounts expended (and purposes therefor) under the Servicing
Plan.
PERFORMANCE CALCULATIONS
The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Determination of Net
Asset Value" and "Performance Data."
The Fund may, from time to time, include its yield or effective
yield in advertisements or reports to shareholders or prospective investors.
YIELD. Yield for the Fund is calculated based on the net changes,
exclusive of capital changes, over a seven-day period, in the value of a
hypothetical pre-existing account having a balance of one share at the
beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/7) with the
resulting yield figure carried to at least the nearest hundredth of one
percent. Tax-equivalent yield for the Fund is computed by dividing that
portion of the yield of the Fund which is tax-exempt by one minus a stated
income tax rate and adding the product to that portion, if any, of the yield of
the Fund that is not tax-exempt.
Effective yield and effective tax-equivalent yield for the Fund
are calculated by determining the net change, or tax-equivalent assumed net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding one, raising the sum to a power
equal to 365 divided by seven, and subtracting one from the result.
13
<PAGE> 43
The yield for the Fund will fluctuate from time to time, unlike
bank deposits or other investments that pay a fixed yield for a stated period
of time, and does not provide a basis for determining future yields since it is
based on historical data. Yield is a function of portfolio quality,
composition, maturity and market conditions as well as the expenses allocated
to the Fund.
Yield information for the Fund may be useful in reviewing the
performance of Fund shares and for providing a basis for comparison with
investment alternatives. The Fund's yield, however, may not be comparable to
the yields from investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities,
compute expenses and calculate yield.
PERFORMANCE COMPARISONS. From time to time and only to the extent
the comparison is appropriate, the Company may quote the performance or
price-earning ratio of the Fund in advertising and other types of literature as
compared to the performance of the S&P Index, the Dow Jones Industrial Average,
the Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury
Index, 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 World Gold Council), Bank Averages (which are
calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), other managed or unmanaged indices or
performance data of bonds, municipal securities, stocks or government
securities (including data provided by Ibbotson Associates), or by other
services, companies, publications or persons who monitor mutual Fund 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 the Fund also may be compared to that of other mutual Fund 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 Fund. The Fund's performance will be
calculated by relating net asset value per share at the beginning of a stated
period to the net asset value of the investment, assuming reinvestment of all
gains distributions and dividends paid, at the end of the period. The Fund's
comparative performance will be based on a comparison of yields, as described
above, or total return, as reported by Lipper, Survey Publications, Donoghue or
Morningstar, Inc.
Any such comparisons may be useful to investors who wish to
compare past performance of the Fund with that of 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.
14
<PAGE> 44
The Company also may use the following information in
advertisements and other types of literature, only to the extent the
information is appropriate for the Fund: (i) the Consumer Price Index may be
used to assess the real rate of return from an investment in the Fund; (ii)
other government statistics, including, but not limited to, The Survey of
Current Business, may be used to illustrate investment attributes of the Fund
or the general economic, business, investment, or financial environment in
which the Fund operates; (iii) the effect of tax-deferred compounding on the
investment returns of the Fund, or on returns in general, may be illustrated by
graphs, charts, etc., where such graphs or charts would compare, at various
points in time, the return from an investment in a Fund (or returns in general)
on a tax-deferred basis (assuming reinvestment of capital gains and dividends
and assuming one or more tax rates) with the return on a taxable basis; and
(iv) the sectors or industries in which a Fund invests may be compared to
relevant indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate
a Fund's historical performance or current or potential value with respect to
the particular industry or sector.
In addition, the Company also may use, in advertisements and other
types of literature, information and statements: (1) showing that bank savings
accounts offer a guaranteed return of principal and a fixed rate of interest,
but no opportunity for capital growth; and (2) describing Wells Fargo Bank,
and its affiliates and predecessors, as one of the first investment managers to
advise investment accounts using asset allocation and index strategies. The
Company also may include in advertising and other types of literature
information and other data from reports and studies prepared by the Tax
Foundation, including information regarding federal and state tax levels and
the related "Tax Freedom Day."
The Company also may discuss in advertising and other types of
literature that a Fund has been assigned a rating by a nationally recognized
statistical rating organization ("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 Fund, provides
various services to its customers that are also shareholders of the Fund.
These services may include access to Stagecoach Fund's account information
through Automated Teller Machines (ATMs), the placement of purchase and
redemption requests for shares of the Fund through ATMs and the availability of
combined Wells Fargo Bank and Stagecoach Fund account statements."
15
<PAGE> 45
The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
("WCM" formerly, Wells Fargo Investment Management) a subsidiary of Wells Fargo
Bank, is listed in the top 100 by Institutional Investor magazine in its July
1996 survey "America's Top 300 Money Managers." This survey ranks money
managers in several asset categories. The Company also may disclose in
advertising and other types of sales literature the assets and categories of
assets under management by a fund's investment adviser or sub-adviser and the
total amount of assets and mutual fund assets managed by Wells Fargo Bank. As
of April 1, 1997, Wells Fargo Bank and its affiliates provided investment
Advisory services for approximately $57 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
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 following information supplements and should be read in
conjunction with the Prospectus section under "Purchase of Shares."
Expenses and fees, including advisory fees, are accrued daily and
are taken into account for the purpose of determining the net asset value of a
Fund's shares.
Net asset value per Fund share is determined by the Custodian on
each Business Day, as described in the Prospectus for the Fund.
As indicated under "Investing In The Fund -- Share Price" in the
Prospectus, the Fund uses the amortized cost method to determine the value of
its portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The
amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity, regardless of the
impact of
16
<PAGE> 46
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
that the Fund would receive if the security were sold. During these periods
the yield to a shareholder may differ somewhat from that which could be
obtained from a similar fund that uses a method of valuation based upon market
prices. Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in a lower value of the Fund's portfolio on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from investment in a fund using solely
market values, and existing Fund shareholders would receive correspondingly
less income. The converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, the Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities (as defined in Rule 2a-7) of thirteen months or less and invest only
in those high-quality securities that are determined by the Board of Directors
to present minimal credit risks. The maturity of an instrument is generally
deemed to be the period remaining until the date when the principal amount
thereof is due or the date on which the instrument is to be redeemed. However,
Rule 2a-7 provides that the maturity of an instrument may be deemed shorter in
the case of certain instruments, including certain variable and floating rate
instruments subject to demand features. Pursuant to the Rule, the Board has
established procedures designed to stabilize, to the extent reasonably
possible, the Fund's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Fund's portfolio
holdings by the Board of Directors, at such intervals as it may deem
appropriate, to determine whether the Fund's net asset value calculated by
using available market quotations deviates from $1.00 per share based on
amortized cost. The extent of any deviation will be examined by the Board of
Directors. If such deviation exceeds 1/2 of 1%, the Board will promptly
consider what action, if any, will be initiated. In the event the Board
determines that a deviation exists that may result in material dilution or
other unfair results to investors or existing shareholders, the Board will take
such corrective action as it regards as necessary and appropriate, including
the sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity, withholding dividends or
establishing a net asset value per share by using available market quotations.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund may be purchased on any day the Fund is open for
business, provided Wells Fargo Bank also is open for business (a "Business
Day"). Currently, Wells Fargo Bank is closed on New Year's Day, President's
Day, Martin Luther King Day, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day (each a
"Holiday"). When any Holiday falls on a weekend, the Fund 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
17
<PAGE> 47
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
shareholder to make full payment for shares 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
Purchases and sales of debt securities generally are principal
transactions. Debt securities normally are purchased or sold from or to
dealers serving as market makers for the securities at a net price. Debt
securities may also be purchased in underwritten offerings or directly from the
issuer. Generally, municipal obligations and taxable money market securities
are traded on a net basis and do not involve brokerage commissions. The cost
of executing transactions in debt securities consists primarily of dealer
spreads and underwriting commissions. Under the 1940 Act, persons affiliated
with the Fund are prohibited from dealing with the Fund as a principal in the
purchase and sale of securities unless an exemptive order allowing such
transactions is obtained from the SEC or an exemption is otherwise available.
The Fund may purchase municipal obligations from underwriting
syndicates of which Stephens or Wells Fargo Bank is a member under certain
conditions in accordance with the provisions of a rule adopted under the 1940
Act and in compliance with procedures adopted by The Company's Board of
Directors. Purchase and sale orders of the securities held by the Fund may be
combined with those of other accounts that Wells Fargo Bank manages, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold
18
<PAGE> 48
for the Fund and other accounts managed by Wells Fargo Bank, Wells Fargo Bank
undertakes to allocate those transactions among the participants equitably.
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 investment decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Company to obtain the
best overall terms 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. Wells Fargo Bank
generally seeks reasonably competitive spreads or commissions.
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 Company's 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 Wells Fargo Bank exercises investment discretion. 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
19
<PAGE> 49
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
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.
SECURITIES OF REGULAR BROKER/DEALERS. As of the date of this SAI,
the Fund owned no securities of its "regular brokers or dealers" or their
parents, as defined in the Act.
PORTFOLIO TURNOVER. Because the Fund's portfolio consists of
securities with relatively short-term maturities, the Fund can expect to
experience high portfolio turnovers. A high portfolio turnover rate should not
adversely affect the Fund, however, because portfolio transactions ordinarily
will be made directly with principals on a net basis and, consequently, the
Fund usually will not incur brokerage expenses.
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
20
<PAGE> 50
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
the Fund's shares; pricing services, and any extraordinary expenses. Expenses
attributable to the Fund are charged against Fund 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 the Prospectus sections entitled "Dividend and Capital
Gain Distributions" and "Taxes." The 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 securities 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, including net
tax-exempt 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.
21
<PAGE> 51
A 4% nondeductible excise tax will be imposed on the Fund (other
than to the extent of the Fund's tax- exempt income) to the extent it does not
meet certain minimum distribution requirements by the end of each calendar
year. The Fund will either actually or be deemed to distribute 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.
Federal Income Tax Rates. As of the printing of this SAI, the
maximum individual tax rate applicable to ordinary income is 39.60% (marginal
rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual marginal tax rate applicable
to net capital gains is 28.00%; the maximum corporate tax rate applicable to
ordinary income and net capital gains is 35.00% (except that to eliminate the
benefit of lower marginal corporate income tax rates, corporations which have
taxable income in excess of $100,000 for a taxable year will be required to pay
an additional amount of income tax of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of tax of up to $100,000). Naturally, the amount of
tax payable by an individual or corporation will be affected by a combination
of tax laws covering, for example, deductions, credits, deferrals, exemptions,
sources of income and other matters.
Capital Gain Distributions. To the extent that the Fund
recognizes long-term capital gains, such gains will be distributed at least
annually and these distributions will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held Fund shares. Such
distributions will be designated as capital gain distributions in a written
notice mailed by the Fund to the shareholders not later than 60 days after the
close of the Fund's taxable year.
Other Distributions. Although dividends will be declared daily
based on the Fund's daily earnings, for federal income tax purposes, the Fund's
earnings and profits will be determined at the end of each taxable year and
will be allocated pro rata over the entire year. For federal income tax
purposes, only amounts paid out of earnings and profits will qualify as
dividends. Thus, if during a taxable year the Fund's declared dividends (as
declared daily throughout the year) exceed the Fund's net income (as determined
at the end of the year), only that portion of the year's distributions which
equals the year's earnings and profits will be deemed to have constituted a
dividend. It is expected that the Fund's net income, on an annual basis, will
equal the dividends declared during the 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. In addition, any
loss realized by a shareholder upon the sale or redemption of Fund shares held
less than six months is disallowed to the extent of any exempt-interest
dividends received thereon by the shareholder. These rules shall not apply,
however, to losses incurred under a periodic redemption plan.
22
<PAGE> 52
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 reacquired
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. Other
gains or losses on the sale of portfolio securities will be short-term capital
gains or losses.
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) 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
23
<PAGE> 53
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
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.
CAPITAL STOCK
The Fund is one 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.
The Fund offers one class of shares. 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 a fund 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 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
1-800-260-5969 if you would like additional information about other funds or
classes of shares offered.
In situations where voting by series is required by law or where
the matter involved only affects one series, shares of the Fund will be voted
by series. For example, a change in a Fund's fundamental investment policy
would be voted upon only by shareholders of the Fund involved. Additionally,
approval of an advisory contract is a matter to be determined separately by
Fund. Approval by the shareholders of one Fund is effective as to that Fund
whether or not sufficient votes are received from the shareholders of the other
investment portfolios to approve the proposal as to those investment
portfolios. As used in the Prospectus and 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.
24
<PAGE> 54
The Company may dispense with an annual meeting of shareholders in
any year in which it is not required to elect Directors under the 1940 Act.
However, the Company has undertaken to hold a special meeting of its
shareholders for the purpose of voting on the question of removal of a Director
or Directors if requested in writing by the holders of at least 10% of the
Company's outstanding voting securities, and to assist in communicating with
other shareholders as required by Section 16(c) of the 1940 Act.
Each Fund share represents an equal proportional interest in the
Fund with each other share and is entitled to such dividends and distributions
out of the income earned on the assets belonging to the Fund as are declared in
the discretion of the Directors. In the event of the liquidation or
dissolution of the Company, shareholders of a 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.
As of May 1, 1997, Stephens was the beneficial owner of 100% of
the outstanding voting securities of the Fund and, as such, could be considered
a "controlling person" of the Fund for purposes of the 1940 Act. Upon
commencement of the public offering of the Fund's shares it is expected that
Stephens will own a significantly smaller percentage of the Fund's shares and
will no longer be considered a controlling person.
OTHER
The Registration Statement, including the Prospectus of the Fund,
the SAI and the exhibits filed therewith, may be examined at the office of the
SEC in Washington, D.C. Statements contained in the Prospectus or the SAI of
the Fund as to the contents of any contract or other document 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.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent auditor
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.
25
<PAGE> 55
FINANCIAL INFORMATION
The portfolio of investments, audited financial statements and
independent auditors' reports for the Company's other funds for the fiscal
period ended September 30, 1996 are hereby incorporated by reference to the
Company's Annual Report as filed with the SEC on or about November 9, 1996.
The Company's Annual Report may be obtained by calling 1-800-260-5969.
26
<PAGE> 56
APPENDIX
The following is a description of the ratings given by Moody's and
S&P to corporate and municipal bonds, municipal notes, and corporate and
municipal commercial paper.
Corporate and Municipal Bonds
Moody's: The four highest ratings for corporate and municipal
bonds are "Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of
the "best quality" and carry the smallest amount of investment risk. Bonds
rated "Aa" are of "high quality by all standards," but margins of protection or
other elements make long-term risks appear somewhat greater than "Aaa" rated
bonds. Bonds rated "A" possess many favorable investment attributes and are
considered to be upper medium grade obligations. Bonds rated "Baa" are
considered to be medium grade obligations; interest payments and principal
security appear adequate for the present, but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well. Moody's also applies numerical modifiers
in its rating system: 1, 2 and 3 in each rating category from "Aa" through
"Baa" in its rating system. The modifier 1 indicates that the security ranks
in the higher end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end.
S&P: The four highest ratings for corporate and municipal bonds
are "AAA," "AA," "A" and "BBB." Bonds rated "AAA" have the "highest rating"
assigned by S&P and has "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 obligations
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 "adequate
protection parameters" 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 and Municipal Notes
Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG
2" or "VMIG 2" are of "high quality," with margins of protections "ample
although not as large as in the preceding group." Notes rated "MIG 3" or "VMIG
3" are of "favorable quality," with all security elements accounted for, but
lacking the strength of the preceding grades.
A-1
<PAGE> 57
S&P: The two highest ratings for corporate and municipal notes
are "SP-1" and "SP-2." The "SP-1" rating reflects a "very strong or strong
capacity to pay principal and interest." Notes issued with "overwhelming
safety characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
Corporate and Municipal Commercial Paper
Moody's: The highest rating for corporate and municipal
commercial paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior
ability for repayment of senior short-term debt obligations." Issuers rated
"P-2" (Prime- 2) "have a strong capacity for repayment of senior short-term
debt obligations," but earnings trends, while sound, will be subject to more
variation.
S&P: The "A-1" rating for corporate and municipal commercial
paper is rated "in the highest category" by S&P and "the obligor's capacity to
meet its financial commitment on the obligation is strong." The "A-1+" rating
indicates that said capacity is "extremely strong." The A-2 rating indicates
that said capacity is "satisfactory," but that corporate and municipal
commercial paper rated "A-2" is "more susceptible" to the adverse effects of
changes in economic conditions or other circumstances than commercial paper
rated in higher rating categories.
A-2
<PAGE> 58
STAGECOACH FUNDS, INC.
SEC REGISTRATION NOS. 33-42927; 811-6419
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
The portfolio of investments, audited financial statements
and independent auditors' report for the fiscal period ended
September 30, 1996 for 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 are hereby incorporated by
reference to the Company's Annual Reports, as filed with the SEC
on December 9, 1996.
The portfolio of investments, audited financial statements
and independent auditors' report for the fiscal period ended
September 30, 1996 for the Asset Allocation, Capital
Appreciation, Corporate Stock, Small Cap, Tax-Free Money Market
and U.S. Government Allocation Master Portfolios of Master
Investment Trust are hereby incorporated by reference to the
Company's Annual Reports as filed with the SEC on December 9,
1996.
(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, filed herewith.
3 - Not Applicable
4 - Not Applicable
</TABLE>
C-1
<PAGE> 59
<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.
</TABLE>
C-2
<PAGE> 60
<TABLE>
<S> <C>
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.
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.
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.
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
</TABLE>
C-3
<PAGE> 61
<TABLE>
<S> <C>
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.
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.
</TABLE>
C-4
<PAGE> 62
<TABLE>
<S> <C>
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>
C-5
<PAGE> 63
<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,
filed herewith.
9(b)(i) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the Funds,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
9(b)(ii) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the National Tax-Free
Money Market Mutual Fund, incorporated by reference to Post-Effective Amendment
No. 24 to the Registration Statement, filed April 29, 1996.
9(b)(iii) - Form of Agency Agreement with Wells Fargo Bank, N.A. on behalf of the Aggressive
Growth Fund, incorporated by reference to Post-Effective Amendment No. 19 to the
Registration Statement, filed December 18, 1995.
9(b)(iv) - Form of Amended Agency Agreement with Wells Fargo Bank, NA 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(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.
</TABLE>
C-6
<PAGE> 64
<TABLE>
<S> <C>
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.
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.
</TABLE>
C-7
<PAGE> 65
<TABLE>
<S> <C>
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
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.
</TABLE>
C-8
<PAGE> 66
<TABLE>
<S> <C>
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, 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(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, National Tax-Free and Oregon Tax-Free Funds, incorporated by reference to
Post-Effective Amendment No. 25 to the Registration Statement, filed June 17,
1996.
9(d)(xii) - Servicing Plan and Form of Shareholder Servicing Agreement on behalf of the
Institutional Class Shares of the Arizona Tax-Free, Balanced, California
Tax-Free Bond, California Tax-Free Income, Equity Value, Ginnie Mae, Growth and
Income, Intermediate Bond, Money Market Mutual, National Tax-Free, Oregon
Tax-Free, Prime Money Market Mutual, Short-Intermediate Government 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)(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
</TABLE>
C-9
<PAGE> 67
<TABLE>
<S> <C>
15(a)(i) - Distribution Plan on behalf of the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
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.
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.
</TABLE>
C-10
<PAGE> 68
<TABLE>
<S> <C>
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, National Tax-Free and Oregon Tax-Free
Funds, incorporated by reference to Post-Effective Amendment No. 25 to the
Registration Statement, filed June 17, 1996.
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.
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,
National Tax-Free and Oregon Tax-Free Funds, incorporated by reference to
Post-Effective Amendment No. 25 to the Registration Statement, filed June 17,
1996.
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(a) - Schedules for Computation of Performance Data, incorporated by reference to
Post-Effective Amendment No. 2, filed April 17, 1992.
16(b) - Schedules for Computation of Performance Data, incorporated by reference to
Post-Effective Amendment No. 15, filed May 1, 1995.
</TABLE>
C-11
<PAGE> 69
<TABLE>
<S> <C>
17 - Powers of Attorney, incorporated by reference to Initial Registration Statement,
filed September 30, 1991.
18 - Rule 18f-3 Multi-Class Plan, incorporated by reference to Post-Effective
Amendment No. 30 to the Registration Statement, filed January 31, 1997.
</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.
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
-------------- ------------------------
Institutional
Class A* Class B 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 3,483 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
</TABLE>
* For purposes of this chart, shares of single class Funds are included under
the designation "Class A"
C-12
<PAGE> 70
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
- -------------- ------------------------
Institutional
Class A* Class B Class
------- ------- -------------
<S> <C> <C> <C>
Equity Value Fund 1,222 221 123
Ginnie Mae Fund 3,314 652 90
Government Money Market Mutual Fund 181 N/A N/A
Growth and Income Fund 12,292 1,793 32
Intermediate Bond Fund 149 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
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
Class E 1
U.S. Government Allocation Fund 1,509 239 N/A
</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.
*** Designates the number of Service Class 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
C-13
<PAGE> 71
shall not be exclusive of any other rights to which those seeking
indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and
is expressly empowered to adopt, approve and amend from time to time
such By-Laws, resolutions or contracts implementing such provisions or
such further indemnification arrangements as may be permitted by law. No
amendment of these Articles of Incorporation of the Corporation shall
limit or eliminate the right to indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or
repeal. Nothing contained herein shall be construed to authorize the
Corporation to indemnify any Director or officer of the Corporation
against any liability to the Corporation or to any holders of securities
of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office. Any indemnification by the
Corporation shall be consistent with the requirements of law, including
the 1940 Act.
(i) To the fullest extent permitted by Maryland statutory and
decisional law and the 1940 Act, as amended or interpreted, no Director
or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however,
that nothing herein shall be construed to protect any Director or
officer of the Corporation against any liability to which such Director
or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment, modification or
repeal of this Article VIII shall adversely affect any right or
protection of a Director or officer that exists at the time of such
amendment, modification or repeal.
Item 28. Business and Other Connections of Investment Adviser.
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, 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.
C-14
<PAGE> 72
<TABLE>
<S> <C>
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
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
</TABLE>
C-15
<PAGE> 73
<TABLE>
<S> <C>
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
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 at the Graduate School of Business at
Director 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
</TABLE>
C-16
<PAGE> 74
<TABLE>
<S> <C>
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
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 of the 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
Sacramento, 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
</TABLE>
C-17
<PAGE> 75
<TABLE>
<S> <C>
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
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
</TABLE>
C-18
<PAGE> 76
<TABLE>
<S> <C>
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
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
</TABLE>
C-19
<PAGE> 77
<TABLE>
<S> <C>
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, 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.
C-20
<PAGE> 78
<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.
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.
C-21
<PAGE> 79
(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.
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 which need not be certified,
within four to six months from the effective date of this
Registration Statement.
C-22
<PAGE> 80
(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-23
<PAGE> 81
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 14th 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: Richard H. Blank, Jr.
- ------------------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
May 14, 1997
</TABLE>
<PAGE> 82
STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
* EX-99.B2 * By-Laws
* EX-99.B10 * Opinion and Consent of Counsel
<PAGE> 1
EXHIBIT 99.B2
STAGECOACH FUNDS, INC.
BY-LAWS
<PAGE> 2
I N D E X
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section and Title
Article I. SHAREHOLDERS
1.1 Annual Meetings...................................................1
1.2 Special Meetings .................................................1
1.3 Place of Meetings ................................................1
1.4 Notice of Meetings ...............................................1
1.5 Quorum ...........................................................2
1.6 Votes Required ...................................................2
1.7 Proxies ..........................................................2
1.8 List of Shareholders .............................................2
1.9 Voting ...........................................................2
1.10 Action by Shareholders Other than at a
Meeting...........................................................3
Article II. BOARD OF DIRECTORS
2.2 Powers ...........................................................3
2.3 Number of Directors ..............................................3
2.4 Election of Directors ............................................3
2.5 Regular Meetings .................................................3
2.6 Special Meetings .................................................4
2.7 Notice of Meetings ...............................................4
2.8 Quorum ...........................................................4
2.9 Vacancies ........................................................4
2.10 Compensation and Expenses ........................................5
2.11 Action by Directors Other than at a
Meeting ..........................................................5
2.12 Audit Committee ..................................................5
2.13 Nominating Committee of Directors.................................5
2.14 Other Committees .................................................6
2.15 Holding of Meetings by Conference
Telephone Call ...................................................6
Article III. OFFICERS
3.1 Executive Officers ...............................................6
3.2 Chairman and Vice Chairman of the
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Board ............................................................6
3.3 President ........................................................6
3.4 Vice Presidents ..................................................7
3.5 Chief Operating Officer ..........................................7
3.6 Secretary and Assistant Secretaries ..............................7
3.7 Treasurer and Assistant Treasurers ...............................7
3.8 Subordinate Officers .............................................8
3.9 Removal ..........................................................8
Article IV. STOCK
4.1 Certificates .....................................................8
4.2 Transfers ........................................................8
4.3 Stock Ledgers ....................................................8
4.4 Record Dates .....................................................8
Article V. GENERAL PROVISIONS
5.1 Dividends ........................................................9
5.2 Checks ...........................................................9
5.3 Fiscal Year ......................................................9
5.4 Custodian ........................................................9
5.5 Seal .............................................................9
5.6 Representation of Shares ........................................10
5.7 Prohibited Transactions .........................................10
5.8 Bonds ...........................................................10
5.9 Annual Statement of Affairs .....................................10
Article VI. AMENDMENT OF BY-LAWS ................................................10
</TABLE>
ii
<PAGE> 4
BY-LAWS
OF
STAGECOACH FUNDS, INC.
(the "Corporation")
ARTICLE I
SHAREHOLDERS
Section 1.1 Annual Meetings. The Corporation is not required to hold an
annual meeting of shareholders in any year in which the election of directors
is not required to be acted upon by shareholders under the Investment Company
Act of 1940, as amended (the "1940 Act"). If such action is required to be
acted upon under the 1940 Act, then such meeting (or the first such meeting in
any year) shall be designated as the annual meeting of shareholders for that
year. Except as the Articles of Incorporation or statute provides otherwise,
any business may be considered at an annual meeting without the purpose of the
meeting having been specified in the notice. Failure to hold an annual meeting
does not invalidate the Corporation's existence or affect any otherwise valid
corporate acts.
Section 1.2 Special Meetings. At any time in the interval between annual
meetings, special meetings of the shareholders may be called by the Chairman of
the Board, if any, the President in the absence of the Chairman, the Chief
Operating Officer in the absence of the Chairman and the President, or by a
majority of the Board or by shareholders entitled to cast 10% in number of
votes by vote at a meeting or in writing with or without a meeting.
Section 1.3 Place of Meetings. Meetings of the shareholders for the
election of Directors shall be held at such place either within or without the
State of Maryland or elsewhere in the United States as shall be designated from
time to time by the Board of Directors and stated in the notice of the meeting.
Meetings of shareholders for any other purpose may be held at such time and
place, within the State of Maryland or elsewhere in the United States, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 1.4 Notice of Meetings. Not less than ten days nor more than
ninety days before the date of every shareholders' meeting, the Secretary shall
give to each shareholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting and, if the meeting is a
special meeting or notice of the purpose is required by statute, the purpose or
purposes for which the meeting is called, either by mail or by presenting it to
the shareholder personally or by leaving it at the shareholder's residence or
usual place of business. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the shareholder at his
post office address as it appears on the records of the Corporation, with
postage thereon prepaid. Notwithstanding the foregoing provision, a waiver of
notice in writing, signed by the person or persons entitled to such notice and
filed with the records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting in person or by proxy, shall be
deemed equivalent to the giving of such notice to such persons. Any meeting of
1
<PAGE> 5
shareholders, annual or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement at the meeting.
Section 1.5 Quorum. At any meeting of shareholders the presence in
person or by proxy of shareholders entitled to cast one third of the votes
thereat shall constitute a quorum; but this Section shall not affect any
requirement under statute or under the Articles for the vote necessary for the
adoption of any measure. In the absence of a quorum the shareholders present in
person or by proxy, by majority vote and without notice, may adjourn the
meeting from time to time until a quorum shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally called.
Section 1.6 Votes Required. A majority of the votes cast at a meeting of
shareholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any matter which may properly come before the
meeting, unless more than a majority of votes cast is required by statute or by
the Articles. Each outstanding share of stock shall be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders and fractional
shares shall be entitled to corresponding fractions of one vote on such
matters, except that a plurality of all the votes cast at a meeting at which a
quorum is present is sufficient to elect a Director.
Section 1.7 Proxies. A shareholder may vote the shares owned of record
by him either in person or by proxy executed in writing by the shareholder or
by the shareholder's duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy.
Every proxy shall be in writing, subscribed by the shareholder or the
shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
Section 1.8 List of Shareholders. At each meeting of shareholders, a
full, true and complete list in alphabetical order of all shareholders entitled
to vote at such meeting, certifying the number and class or series of shares
held by each, shall be made available by the Secretary.
Section 1.9 Voting. In all elections for Directors every shareholder
shall have the right to vote, in person or by proxy, the shares owned of record
by the shareholder, for as many persons as there are Directors to be elected
and for whose election the shareholder has a right to vote. At all meetings of
shareholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions regarding the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by shareholders,
present in person or by proxy, entitled to cast 10% in number of votes, or if
ordered by the chairman, the vote upon any election or question shall be taken
by ballot. Upon like demand or order, the voting shall be conducted by two
inspectors in which event the proxies and ballots shall be received, and all
questions regarding the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot, and voting need not
2
<PAGE> 6
be conducted by inspectors. Inspectors may be elected by the shareholders at
their annual meeting, to serve until the close of the next annual meeting and
their election may be held at the same time as the election of Directors. In
case of a failure to elect inspectors, or in case an inspector shall fail to
attend, or refuse or be unable to serve, the shareholders at any meeting may
choose an inspector or inspectors to act at such meeting, and in default of
such election the chairman of the meeting may appoint an inspector or
inspectors.
Section 1.10 Action by Shareholders Other than at a Meeting. Any action
required or permitted to be taken at any meeting of shareholders may be taken
without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the
records of the Corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Powers. The Board may exercise all the powers of the
Corporation, except such as are by statute or the charter or these By-Laws
conferred upon or reserved to the shareholders. The Board shall keep full and
fair accounts of its transactions.
Section 2.2 Number of Directors. The number of Directors shall be such
number as shall be fixed from time to time by vote of a majority of the
Directors; provided, however, that the number of Directors shall in no event
exceed fifteen nor be reduced to fewer than three. The tenure of office of a
Director shall not be affected by any decrease in the number of Directors made
by the Board.
Section 2.3 Election of Directors. Until the first annual meeting of
shareholders and until successors or additional Directors are duly elected and
qualify, the Board shall consist of the persons named as such in the charter.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect Directors to hold office until the
next succeeding annual meeting and until their successors are elected and
qualify. At any meeting of shareholders, duly called and at which a quorum is
present, the shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be case thereon, remove any Director or
Directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed Directors.
Section 2.4 Regular Meetings. After each meeting of shareholders at
which a Board of Directors shall have been elected, the Board so elected shall
meet for the purpose of organization and the transaction of other business. No
notice of such first meeting shall be necessary if held immediately after the
adjournment, and at the site, of such meeting of shareholders. Other regular
meetings of the Board shall be held without notice on such dates and
3
<PAGE> 7
at such places within or without the State of Maryland as may be designated
from time to time by the Board.
Section 2.5 Special Meetings. Special meetings of the Board may be
called at any time by the Chairman of the Board, the President, the Chief
Operating Officer, or the Secretary of the Corporation, or by a majority of the
Board by vote at a meeting, or in writing with or without a meeting. Such
special meetings shall be held at such place or places within or without the
State of Maryland as may be designated from time to time by the Board. In the
absence of such designation such meetings shall be held at such places as may
be designated in the Notice of Meeting.
Section 2.6 Notice of Meetings. Except as provided in Section 2.4,
notice of the place, day, and hour of all meetings shall be given to each
Director two days (or more) before the meeting, by delivering the same
personally, or by sending the same by telegraph, or by leaving the same at the
Director's residence or usual place of business, or, in the alternative, by
mailing such notice three days (or more) before the meeting, postage prepaid,
and addressed to the Director at the Director's last known business or
residence post office address, according to the records of the Corporation.
Unless required by these By-Laws or by resolution of the Board, no notice of
any meeting of the Board need state the business to be transacted thereat. No
notice of any meeting of the Board need be given to any Director who attends
or, to any Director who in writing executed and filed with the records of the
meeting either before or after the holding thereof, waives such notice. Any
meeting of the Board, regular or special, may adjourn from time to time to
reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement at the adjourned meeting.
Section 2.7 Quorum. At all meetings of the Board, one-third of the
Directors (but in no event fewer than two Directors) shall constitute a quorum
for the transaction of business. Except in cases in which it is by statute, by
the charter or by these By-Laws otherwise provided, the vote of a majority of
such quorum at a duly constituted meeting shall be sufficient to elect and pass
any measure. In the absence of a quorum, the Directors present by majority vote
and without notice other than by announcement at the meeting may adjourn the
meeting from time to time until a quorum shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally noticed.
Section 2.8 Vacancies. Any vacancy occurring in the Board of Directors
for any cause other than by reason of an increase in the number of Directors
may be filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum. Any vacancy occurring by reason
of an increase in the number of Directors may be filled by action of a majority
of the entire Board of Directors; provided, in either case, that immediately
after filling such vacancy at least two-thirds of the Directors then holding
office shall have been elected to such office by the shareholders at an annual
or special meeting thereof. If at any time after the first annual meeting of
shareholders of the Corporation a majority of the Directors in office shall
consist of Directors elected by the Board of Directors, a meeting of the
shareholders shall be called forthwith for the purpose of electing the entire
Board of Directors, and the terms of office
4
<PAGE> 8
of the Directors then in office shall terminate upon the election and
qualification of such Board of Directors. A Director elected by the Board of
Directors or the shareholders to fill a vacancy shall be elected to hold office
until the next annual meeting of shareholders and until his successor is
elected and qualifies.
Section 2.9 Compensation and Expenses. Directors may, pursuant to
resolution of the Board, be paid fees for their services, which fees may
consist of an annual fee or retainer and/or a fixed fee for attendance at
meetings. In addition, Directors may in the same manner be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as Directors. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude
any Director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 2.10 Action by Directors Other than at a Meeting. Any action
required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of
the Board or committee.
Section 2.11 Audit Committee. The Board of Directors may by the
affirmative vote of a majority of the entire Board appoint from its members an
Audit Committee composed of two or more Directors who are not "interested
persons" (as defined in the 1940 Act) of the Corporation, as the Board may from
time to time determine. The Audit Committee shall (a) recommend independent
public accountants for selection by the Board, (b) review the scope of audit,
accounting and financial internal controls and the quality and adequacy of the
Corporation's accounting staff with the independent public accountants and such
other persons as may be deemed appropriate, (c) review with the accounting
staff and the independent public accountants the compliance of transactions of
the Corporation with Wells Fargo Bank, N.A. or any other manager or investment
adviser of the affairs of the Corporation and with any affiliate of such firm
or manager or investment adviser with the financial terms of applicable
agreements, (d) review reports of the independent public accountants and
comment to the Board when warranted, (e) report to the Board at least once each
year and at such other times as the committee deems desirable, and (f) be
directly available at all times to independent public accountants and
responsible officers of the Corporation for consultation on audit, accounting
and related financial matters.
Section 2.12 Nominating Committee of Directors. The Board of Directors
may by the affirmative vote of a majority of the entire Board appoint from its
members a Director Nominating Committee composed of two or more Directors. The
Director Nominating Committee shall recommend to the Board a slate of persons
to be nominated for election as Directors by the stockholders at each annual
meeting of stockholders and a person to be elected to fill any vacancy
occurring for any reason in the Board. Notwithstanding anything in this Section
2.12 to the contrary, so long as the Corporation has in effect one or more
plans pursuant to Rule 12b-1 under the 1940 Act, the selection and nomination
of those Directors who are not
5
<PAGE> 9
"interested persons" (as defined in the 1940 Act) shall be committed to the
discretion of such disinterested Directors.
Section 2.13 Other Committees. The Board of Directors may appoint from
among its members other committees composed of two or more of its Directors
which shall have such powers as may be delegated or authorized by the
resolution appointing them.
Section 2.14 Holding of Meetings by Conference Telephone Call. At any
regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, unless the 1940
Act specifically requires the Directors to act "in person," in which case such
term shall be construed consistent with Securities and Exchange Commission or
staff releases or interpretations.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers. The Board of Directors may choose a
Chairman of the Board and a Vice Chairman of the Board from among the
Directors, and shall choose a President, a Chief Operating Officer, a Secretary
and a Treasurer who need not be Directors. The Board of Directors may choose an
Executive Vice President, one or more Senior Vice Presidents, one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers or assistant officers, none of whom need be
a Director. Any two or more of the above-mentioned offices, except those of
President and a Secretary, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument be required by law, by the charter, by the By-Laws or by resolution
of the Board of Directors to be executed by any two or more officers. Each such
officer shall hold office until his successor shall have been duly chosen and
qualified, or until he shall have resigned or shall have been removed. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term of the Board of Directors at any regular or special meeting.
Section 3.2 Chairman and Vice Chairman of the Board. The Chairman of the
Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the shareholders at which he is present. He shall have and may
exercise such powers as are, from time to time, assigned to him by the Board of
Directors. The Vice Chairman of the Board, if one be elected, shall, when
present and in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and Directors, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Directors or
as may be required by law.
Section 3.3 President. In the absence of the Chairman or Vice Chairman
of the Board, the President shall preside at all meetings of the shareholders
and of the Board at which
6
<PAGE> 10
the President is present; shall be the chief executive officer; and in general,
shall perform all duties incident to the office of a president of a Maryland
corporation, and such other duties, as from time to time, may be assigned to
him by the Board.
Section 3.4 Vice Presidents. The Vice President or Vice Presidents,
including any Executive or Senior Vice President(s), at the request of the
President or in the President's absence or during the President's inability or
refusal to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice President, the Board may determine which one or more of
the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
Section 3.5 Chief Operating Officer. The Chief Operating Officer shall
have the authority and duties that generally pertain to such office, including,
but not limited to, those delegated by the Chairman or the President.
Section 3.6 Secretary and Assistant Secretaries. The Secretary shall
keep the minutes of the meetings of the shareholders, of the Board and of any
committees, in books provided for the purpose; shall see that all notices are
duly given in accordance with the provisions of these By-Laws or as required by
law; be custodian of the records of the Corporation; see that the corporate
seal is affixed to all documents the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so affixed may attest
the same; and in general perform all duties incident to the office of a
secretary of a Maryland corporation, and such other duties as, from time to
time, may be assigned to him by the Board, the Chairman of the Board, or the
President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board, the President or the Chairman
of the Board, shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.7 Treasurer and Assistant Treasurers. The Treasurer shall have
charge of and be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be deposited
in the name of the Corporation, all moneys or other valuable effects in such
banks, trust companies or other depositories as shall, from time to time, be
selected by the Board in accordance with Section 5.4 of these By-Laws; render
to the Chief Operating Officer, President, the Chairman of the Board and to the
Board, whenever requested, an account of the financial condition of the
Corporation; and in general, perform all the duties incident to the office of a
treasurer of a corporation, such other duties as may be assigned to him by the
Board, the President, the Chief Operating Officer or the Chairman of the Board.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board, the President, the
Chief Operating Officer or the Chairman of
7
<PAGE> 11
the Board shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.8 Subordinate Officers. The Board may from time to time
appoint such subordinate officers as it may deem desirable. Each such officer
shall hold office for such period and perform such duties as the Board, the
President, the Chief Operating Officer or the Chairman of the Board may
prescribe. The Board may, from time to time, authorize any committee or officer
to appoint and remove subordinate officers and prescribe the duties thereof.
Section 3.9 Removal. Any officer or agent of the Corporation may be
removed by the Board whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
ARTICLE IV
STOCK
Section 4.1 Certificates. In accordance with Section 2-210 of the
Maryland General Corporation Law, shareholders will not be entitled to a
certificate or certificates which represent the number of shares of stock owned
by him or her in the Corporation, unless a majority of the Board of Directors
otherwise provides by resolution. At the time of issuance of shares of stock,
the Corporation shall send, or cause to be sent, to the shareholder a written
statement of the information otherwise required on stock certificates.
Section 4.2 Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem necessary or
expedient concerning the issue, transfer and registration of shares of stock;
and may appoint transfer agents and registrars thereof. The duties of transfer
agent and registrar, if any, may be combined.
Section 4.3 Stock Ledgers. A stock ledger, containing the names and
addresses of the shareholders of the Corporation and the number of shares of
each class held by them, respectively, shall be kept by the Transfer Agent of
the Corporation. The stock ledger may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection.
Section 4.4 Record Dates. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a
determination of shareholders for any other proper purpose. Such date in any
case shall be not more than ninety days, and in case of a meeting of
shareholders, not less than ten days, prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
8
<PAGE> 12
ARTICLE V
GENERAL PROVISIONS
Section 5.1 Dividends. Dividends or distribution upon the capital stock
of the Corporation, subject to provisions of the charter, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends or distributions may be paid only in cash or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.
Before payment of any dividend or distribution there may be set aside
out of any funds of the Corporation available for dividends or distributions
such sum or sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends or distributions or for maintaining any property of the
Corporation, or for such other purpose as the Directors shall think conducive
to the interest of the Corporation, and the Directors may modify or abolish any
such reserve in the manner in which it was created.
Section 5.2 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
Section 5.3 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 5.4 Custodian. All securities and cash of the Corporation shall
be placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder). The Corporation shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of
the Custodian with respect to the cash and securities of the Corporation held
by the Board of Directors of the Corporation. The Corporation shall upon the
resignation or inability to serve of the Custodian use its best efforts to
obtain a successor custodian; require that the cash and securities owned by the
Corporation be delivered directly to the successor custodian; and in the event
that no successor custodian can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by the Corporation to
other than a successor custodian, the question whether or not the Corporation
shall be liquidated or shall function without a custodian.
Section 5.5 Seal. The Board of Directors may provide a suitable seal,
bearing the name of the Corporation, which shall be in the custody of the
Secretary. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof.
9
<PAGE> 13
Section 5.6 Representation of Shares. Any officer of the Corporation is
authorized to vote, represent and exercise for the Corporation any and all
rights incident to any shares of any corporation or other business enterprise
owned by the Corporation.
Section 5.7 Prohibited Transactions. No officer or Director of the
Corporation or of its investment adviser shall deal for or on behalf of the
Corporation with himself, as principal or agent, or with any corporation or
partnership in which he has a financial interest. This prohibition shall not
prevent: (a) officers or Directors of the Corporation from having a financial
interest in the Corporation, its principal underwriter or its investment
adviser; (b) the purchase of securities for the portfolio of the Corporation or
the sale of securities owned by the Corporation through a securities dealer,
one or more of whose partners, officers or Directors is an officer or Director
of the Corporation, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed customary brokerage
charges for such service; or (c) the employment of legal counsel, registrar,
transfer agent, dividend disbursing agent, or custodian having a partner,
officer or Director who is an officer or Director of the Corporation, provided
only customary fees are charged for services rendered to or for the benefit of
the Corporation.
Section 5.8 Bonds. The Board of Directors may require any officer, agent
or employee of the Corporation to give a bond to the Corporation, conditioned
upon the faithful discharge of his duties, with one or more sureties and in
such amount as may be satisfactory to the Board of Directors. The Board of
Directors shall, in any event, require the Corporation to provide and maintain
a bond issued by a reputable fidelity insurance company, against larceny and
embezzlement, covering each officer and employee of the Corporation who may
singly, or jointly with others, have access to securities or funds of the
Corporation, either directly or through authority to draw upon such funds, or
to direct generally the disposition of such securities, such bond or bonds to
be in such reasonable amount as a majority of the Board of Directors who are
not such officers or employees of the Corporation shall determine with due
consideration to the value of the aggregate assets of the Corporation to which
any such officer or employee may have access, or in any amount or upon such
terms as the Securities and Exchange Commission may prescribe by order, rule or
regulations.
Section 5.9 Annual Statement of Affairs. The President or the Controller
shall prepare annually a full and correct statement of the affairs of the
Corporation, to include a balance sheet and a financial statement of operations
for the preceding fiscal year. The statement of affairs shall be placed on file
at the Corporation's principal office within 120 days after the end of the
fiscal year.
ARTICLE VI
AMENDMENT OF BY-LAWS
These By-Laws of the Corporation may be altered, amended, added to or
repealed by majority vote of the shareholders or by majority vote of the entire
Board.
10
<PAGE> 1
EXHIBIT 99.B10
[MORRISON & FOERSTER LLP LETTERHEAD]
May 15, 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. 31 and Amendment No. 32 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
National Tax-Free Money Market Trust 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 upon completion of
such corporate action as is deemed necessary or appropriate, will be duly and
validly authorized by such corporate action and, assuming delivery by sale or
in accord with the dividend reinvestment plan in accordance with the
description set forth in the Fund's current prospectus 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 heading "Management and Servicing Fees"
in the Prospectus, which is included as part of the Registration Statement.
Very truly yours,
/s/Morrison & Foerster LLP
MORRISON & FOERSTER LLP
