STAGECOACH FUNDS INC /AK/, 485APOS, 1997-09-25

STAGECOACH FUNDS INC /AK/
485APOS, 1997-09-25

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<PAGE>

As filed with the Securities and Exchange Commission
on September 25, 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. 34

And

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]

Amendment No. 35 [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>

If appropriate, check the following box:

[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended. The Rule 24f-2 Notice for
the fiscal period ending September 30, 1996, was filed with the Securities and
Exchange Commission on November 27, 1996. The Rule 24f-2 Notice for the fiscal
period ending March 31, 1997, was filed with the Securities and Exchange
Commission on May 29, 1997.
<PAGE>

EXPLANATORY NOTE
----------------

This Post-Effective Amendment to the Registration Statement (the
"Amendment") of Stagecoach Funds, Inc. (the "Company") is being filed to
register five new funds of the Company, namely, Class A, Class B and Class C
shares of the Index Allocation Fund; Class A and Class C shares of the Variable
Rate Government Fund; and single class shares of the Overland Express Sweep
Fund, Short-Term Government-Corporate Income Fund and Short-Term Municipal
Income Fund (the "Funds"). This Amendment does not affect the Registration
Statement for any of the Company's other funds.

The Funds are being created to facilitate the proposed reorganization of
certain portfolios of Overland Express Funds, Inc. ("Overland"), another
open-end management investment company, with and into the corresponding Funds of
the Company pursuant to an Agreement and Plan of Consolidation providing for the
transfer of the assets and stated liabilities of the Overland portfolios to the
Company's Funds.
<PAGE>

STAGECOACH FUNDS, INC.
----------------------
Cross Reference Sheet
---------------------
<TABLE>
<CAPTION>
Form N-1A Item Number
- ---------------------

Part A Prospectus Captions
- ------ -------------------
<S> <C>
1 Cover Page
2 Prospectus Summary
Summary of Fund Expenses
Explanation of Tables
3 Financial Highlights
4 The Fund(s) and Management
Prospectus Appendix - Additional Investment Policies
5 How the Fund(s) Work(s)
The Fund(s) and Management
Management, Distribution and Servicing Fees
6 The Fund(s) and Management; Investing in the Fund(s)
7 Investing in the Fund(s)
Dividend and Capital Gain Distributions; Taxes
8 Investing in the Fund(s); 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 General
13 Investment Restrictions
Additional Permitted Investment Activities; SAI Appendix
14 Management
15 Management
16 Management
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 - Distribution Plan(s), Servicing Plan(s)
22 Performance Calculations
23 Financial Information
</TABLE>

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.
<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

[LOGO OF STAGECOACH FUNDS APPEARS HERE]

------------------------------------
PROSPECTUS

------------------------------------

INDEX ALLOCATION FUND

December 12, 1997
<PAGE>

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION

DATED SEPTEMBER 25, 1997

STAGECOACH FUNDS(R)
INDEX ALLOCATION FUND

Stagecoach Funds, Inc. (the "Company") is an open-end management investment
company. This Prospectus contains information about Class A, Class B and Class
C shares offered in one of the Company's Funds -- the INDEX ALLOCATION FUND
(the "Fund").

The INDEX ALLOCATION FUND seeks to earn over the long term a high level of
total investment return (that is, income and capital appreciation combined),
consistent with the assumption of reasonable risk, by pursuing an "asset
allocation" strategy whereby its investments are allocated, based on changes in
market conditions, among three asset classes -- common stocks in the Standard
& Poor's Index of 500 Stocks (the "S&P Index"), U.S. Treasury bonds and money
market instruments. The Fund is an index allocation fund and is NOT an index
fund.

Please read this Prospectus and retain it for future reference. It is designed
to provide you with important information and to help you decide if the Fund's
goals match your own. A Statement of Additional Information ("SAI"), dated
December 12, 1997 has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. The SAI is
available free of charge by writing to Stagecoach Funds, Inc., c/o Stagecoach
Shareholder Services, Wells Fargo Bank, N.A., P.O. Box 7066, San Francisco, CA
94120-7066, or by calling the Company at 1-800-222-8222. If you hold shares in
an IRA, please call 1-800-BEST-IRA (1-800-237-8472) for information or
assistance.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THESE AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK"), BARCLAYS GLOBAL
FUND ADVISORS ("BGFA") OR ANY OF THEIR RESPECTIVE AFFILIATES. SUCH SHARES ARE
NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC"), THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL.

WELLS FARGO BANK IS THE FUND'S INVESTMENT ADVISER AND ADMINISTRATOR, AND IS
COMPENSATED FOR PROVIDING THE FUND WITH CERTAIN OTHER SERVICES. BGFA SERVES AS
SUB-ADVISER TO THE FUND AND BARCLAYS GLOBAL INVESTORS, N.A. ("BGI") SERVES AS
CUSTODIAN TO THE FUND. STEPHENS INC., WHICH IS NOT AFFILIATED WITH WELLS FARGO
BANK, BGFA OR ANY OF THEIR RESPECTIVE AFFILIATES, IS THE SPONSOR, CO-ADMINIS-
TRATOR AND DISTRIBUTOR FOR THE FUND.
PROSPECTUS DATED DECEMBER 12, 1997
PROSPECTUS
<PAGE>

Table of Contents

-------

<TABLE>
<S> <C>
Prospectus Summary 1
Summary of Fund Expenses 5
Explanation of Tables 7
Financial Highlights 9
How the Fund Works 12
The Fund and Management 16
Investing in the Fund 18
Dividend and Capital Gain Distributions 27
How to Redeem Shares 28
Additional Shareholder Services 32
Management, Distribution and Servicing Fees 35
Taxes 39
Prospectus Appendix -- Additional Investment Policies A-1
</TABLE>

PROSPECTUS i
<PAGE>

Prospectus Summary

The Fund provides you with a convenient way to invest in various portfolios
of securities selected and supervised by professional management. The
following provides you with summary information about the Fund. For more
information, please refer to the identified Prospectus sections and generally
to the Fund's Prospectus and SAI.

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The INDEX ALLOCATION FUND seeks to earn over the long term a high level of
total investment return (that is, income and capital appreciation combined),
consistent with the assumption of reasonable risk, by pursuing an "asset
allocation" strategy whereby its investments are allocated, based on changes
in market conditions, among three asset classes -- common stocks
representative of the S&P Index, bonds representative of the Lehman Brothers
20+ Treasury Bond Index and high-quality money market instruments. The Fund
seeks to maximize its long-term investment results by shifting its investments
periodically among the various asset classes to attempt to achieve a return
that is superior to an investment in any single asset class. The Fund does not
attempt to replicate the performance of a single index and is NOT an index
fund.

See "How the Fund Works," "Prospectus Appendix -- Additional Investment
Policies" and the SAI for further information on investments.

Q. WHAT ARE SOME OF THE POTENTIAL RISKS ASSOCIATED WITH THIS TYPE OF
INVESTMENT?

A. Investments in the Fund are not bank deposits or obligations of Wells
Fargo Bank, Barclays Global Fund Advisors or Barclays Global Investors, are
not insured by the Federal Deposit Insurance Corporation ("FDIC") and are not
insured or guaranteed against loss of principal. When the value of the
securities that the Fund owns declines, so does the value of your Fund shares.
Therefore, you should be prepared to accept some risk with the money you
invest in the Fund.

The stock investments of the Fund are subject to equity market risk. Equity
market risk is the possibility that common stock prices will fluctuate or
decline over short or even extended periods. The U.S. stock market tends to be
cyclical, with periods when stock prices generally rise and periods when
prices generally decline. Throughout 1997, the stock market, as measured by
the S&P 500 Index and other commonly used indices, has been trading at or
close to record levels. There can be no guarantee that these performance
levels will continue. The portfolio debt instruments of the Fund are subject
to credit and interest rate risk. Credit risk is the risk that issuers of the
debt instruments in which the Fund invests may default on the payment of
principal and/or interest. Interest-rate risk is the risk that increases in
market interest rates may

1 PROSPECTUS
<PAGE>

adversely affect the value of the debt instruments in which the Fund invests.
The value of the Fund's portfolio debt instruments generally changes inversely
to market interest rates.

Because the Fund may shift its investment allocations significantly from time
to time, its performance may differ from funds which invest in one asset class
or from funds with a stable mix of assets. Further, shifts among asset classes
may result in relatively high turnover and transaction (i.e., brokerage
commission) costs. Portfolio turnover also can generate short-term capital
gains tax consequences. During those periods in which a high percentage of the
Fund's portfolio is invested in long-term bonds, the Fund's exposure to
interest-rate risk will be greater because the longer maturity of such
securities means they are generally more sensitive to changes in market
interest rates than shorter-term securities. As with all mutual funds, there
can be no assurance that the Fund will achieve its investment objective. See
"How the Fund Works -- Investment Objectives and Policies", "How the Fund
Works -- Risk Factors" and "Prospectus Appendix -- Additional Investment
Policies" below, and "Additional Permitted Investment Activities" in the SAI
for further information about the Fund's investments and related risks.

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as the investment adviser to the Fund, manages your
investments. Wells Fargo Bank also provides administrative, transfer agency and
dividend disbursing agency services to the Fund. In addition, Wells Fargo Bank
is a shareholder servicing agent and a selling agent for the Fund. BGFA serves
as sub-adviser to the Fund and receives compensation from Wells Fargo Bank for
its sub-advisory services. See "Management of the Fund."

Q. HOW DO I INVEST?

A. You may invest by purchasing shares of the Fund at the public offering
price, which is the net asset value ("NAV") plus any applicable sales charge.
Class A shares are subject to a maximum front-end sales charge of 4.50%. Class
B shares that are redeemed within six years of purchase are subject to a
maximum contingent deferred sales charge of 5.00% of the lesser of NAV at
purchase or NAV at redemption. After six years, the Class B shares
automatically convert to Class A shares. Class C shares that are redeemed
within one year of purchase are subject to a maximum contingent deferred sales
charge of 1.00% of the lesser of NAV at purchase or NAV at redemption. Front-
end or contingent-deferred sales charges may, in certain cases, be waived or
reduced. You may open an account by investing at least $1,000 and may add to
your account by making additional investments of at least $100, although
certain exceptions to these minimums may be available. Shares may be purchased
by wire, by mail or by an automatic investment feature called the AutoSaver
Plan on any day the New York Stock Exchange is open. See "Investing in the
Fund." For more details, contact Stephens (the

PROSPECTUS 2
<PAGE>

Fund's sponsor and distributor), a shareholder servicing agent or a selling
agent (such as Wells Fargo Bank).

Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?

A. Dividends of the Fund are declared and distributed quarterly. Any capital
gains are distributed by the Fund at least annually. Dividend and capital gain
distributions are automatically reinvested in Fund shares at NAV without a
sales charge unless you elect to receive distributions in cash. You may also
elect to reinvest dividends in shares of certain other funds in the Stagecoach
Family of Funds with which you have an established account that has met the
applicable minimum initial investment requirement. Investment income available
for distribution to holders of a class of shares is reduced by the class
expenses payable on behalf of those shares. See "Dividend and Capital Gain
Distributions" and "Additional Shareholder Services."

Q. HOW MAY I REDEEM SHARES?

A. You may redeem shares by telephone, by letter or by an automatic feature
called the Systematic Withdrawal Plan on any day the Fund is open for business.
Contingent-deferred sales charges may be charged upon redemption of Class B and
Class C shares. The Company does not charge a fee for redemption of Class A
shares. In addition, the Company reserves the right to impose charges for
wiring redemption proceeds. See "How To Redeem Shares" and "How to Purchase
Shares -- Contingent Deferred Sales Charges -- Class B and Class C shares." For
more details, contact Stephens, a shareholder servicing agent or a selling
agent (such as Wells Fargo Bank).

Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?

A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or rate.
Some of the permissible investments described in this Prospectus, such as
buying and selling options and futures and entering into currency exchange
contracts or swap agreements, are considered derivatives. Some derivatives may
be more sensitive than direct securities to changes in interest rates or sudden
market moves. Some derivatives also may be susceptible to fluctuations in yield
or value due to their structure or contract terms. If the Fund's adviser judges
market conditions incorrectly, the use of certain derivatives could result in a
loss regardless of the adviser's intent in using the derivatives.

Q. WHAT STEPS DOES THE FUND TAKE TO CONTROL DERIVATIVES- RELATED RISKS?

A. Wells Fargo Bank and BGFA use a variety of internal risk management
procedures to ensure that derivatives use is consistent with the Fund's
investment objective, does not expose the Fund to undue risks and is closely
monitored. These

3 PROSPECTUS
<PAGE>

procedures include providing periodic reports to the Board of Directors
concerning the use of derivatives. Derivatives use by the Fund also is subject
to broadly applicable investment policies. For example, the Fund may not invest
more than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor may
the Fund use certain derivatives without establishing adequate "cover" in
compliance with SEC rules limiting the use of leverage. For more information on
the Fund's investment activities, see "How the Fund Works" and "Prospectus
Appendix -- Additional Investment Policies."

PROSPECTUS 4
<PAGE>

Summary of Fund Expenses

SHAREHOLDER TRANSACTION EXPENSES
CLASS A SHARES

<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage of offering
price).............................................................. 4.50%
Maximum Sales Charge on Reinvested Dividends......................... None
Maximum Sales Charge Imposed on Redemptions.......................... None
Redemption Fees...................................................... None
Exchange Fees........................................................ None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
CLASS A SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
Management Fee......................................................... 0.70%
Rule 12b-1 Fee/1/...................................................... 0.25%
Other Expenses (after waivers or reimbursements)/2/.................... 0.36%
-----
TOTAL FUND OPERATING EXPENSES (after waivers or reimbursements)/3/..... 1.31%
=====
</TABLE>
--------------
/1/ Class A shares are subject to either a 0.25% Rule 12b-1 Fee or a 0.25%
Administrative Servicing Fee. In no case will a shareholder be charged
both 12b-1 and Administrative Servicing Fees, and Total Fund Operating
Expenses will not be greater than the amounts shown above because of the
combination of such fees. See "Distribution Plans" and "Class A
Administrative Servicing Plan."
/2/ Other Expenses (before waivers or reimbursements) would be 0.49%.
/3/ Total Fund Operating Expenses (before waivers or reimbursements) would
be 1.44%.

EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment in the Fund's
Class A shares, 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>
Class A Shares............................... $58 $85 $114 $196
</TABLE>

5 PROSPECTUS
<PAGE>

SHAREHOLDER TRANSACTION EXPENSES
CLASS B SHARES

<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage of offering
price).............................................................. None
Maximum Sales Charge on Reinvested Dividends......................... None
Maximum Sales Charge Imposed on Redemptions.......................... 5.00%
Redemption Fees...................................................... None
Exchange Fees........................................................ None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
CLASS B SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
Management Fee......................................................... 0.70%
Rule 12b-1 Fee......................................................... 0.75%
Other Expenses (after waivers or reimbursements)/1/.................... 0.65%
-----
TOTAL FUND OPERATING EXPENSES (after waivers or reimbursements)/2/..... 2.10%
=====
</TABLE>
--------------
/1/ Other Expenses (before waivers or reimbursements) would be 0.75%.
/2/ Total Fund Operating Expenses (before waivers or reimbursements) would
be 2.20%.

EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment in the Fund's
Class B shares, assuming (A) a 5% annual return and (B) redemption at the
end of each time period indicated:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class B Shares............................... $71 $96 $133 $243
</TABLE>

You would pay the following expenses on a $1,000 investment in the Fund's
Class B shares, assuming a 5% annual return and no redemption:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class B Shares............................... $21 $66 $113 $243
</TABLE>

PROSPECTUS 6
<PAGE>

SHAREHOLDER TRANSACTION EXPENSES
CLASS C SHARES

<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage of offering
price).............................................................. None
Maximum Sales Charge on Reinvested Dividends......................... None
Maximum Sales Charge Imposed on Redemptions
Redemption during year 1............................................ 1.00%
Redemption after year 1............................................. 0.00%
Redemption Fees...................................................... None
Exchange Fees........................................................ None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
CLASS C SHARES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
Management Fee......................................................... 0.70%
Rule 12b-1 Fee......................................................... 0.75%
Other Expenses (after waivers or reimbursements)/1/.................... 0.60%
-----
TOTAL FUND OPERATING EXPENSES (after waivers or reimbursements)/2/..... 2.05%
=====
</TABLE>
--------------
/1/Other Expenses (before waivers or reimbursements) would be 0.75%.
/2/Total Fund Operating Expenses (before waivers or reimbursements) would
be 2.20%.

EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment in the Fund's
Class C shares, assuming (A) a 5% annual return and (B) redemption at the
end of each time period indicated:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class C Shares............................... $31 $64 $110 $238
</TABLE>

You would pay the following expenses on a $1,000 investment in the Fund's
Class C shares, assuming a 5% annual return and no redemption:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class C Shares............................... $21 $64 $110 $238
</TABLE>

Explanation of Tables

The purpose of the foregoing tables is to help you understand the various
costs and expenses that a shareholder in the Fund will pay directly or
indirectly. You may purchase Fund shares directly from the Company or through
Wells Fargo Bank or other institutions that have developed various account
products through which Fund shares may be purchased, and for which customers
may be charged a fee. The tables do not reflect any charges that may be imposed
by Wells Fargo Bank or another institution directly on certain customer
accounts in connection with an investment in the Fund.

7 PROSPECTUS
<PAGE>

SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell Fund
shares. You are subject to a front-end sales charge on purchases of the Fund's
Class A shares and may be subject to a contingent-deferred sales charge on the
Fund's Class B or Class C shares if you redeem such shares within a specified
period. The Company reserves the right to impose a charge for wiring redemption
proceeds. In certain instances, you may qualify for a reduction or waiver of
the front-end sales charge. There are no exchange fees. See "Investing in the
Fund -- Sales Charges."

ANNUAL FUND OPERATING EXPENSES for the Fund, except as indicated below, are
based on applicable contract amounts and amounts incurred during the most
recent fiscal year by the predecessor portfolio to the Fund. On December 12,
1997, the Index Allocation Fund of Overland Express Funds, Inc. was reorganized
as the Stagecoach Index Allocation Fund. The Overland Fund is sometimes
referred to herein as the "predecessor portfolio". Where indicated, the amounts
shown under Annual Fund Operating Expenses have been adjusted to reflect
voluntary fee waivers or reimbursements that are expected to continue to reduce
expenses during the current year. Wells Fargo Bank and Stephens at their sole
discretion may waive or reimburse all or a portion of their respective fees
charged to, or expenses paid by, the Fund. Any waivers or reimbursements would
reduce the Fund's total expenses. The amounts shown for the Class B shares are
based on contract amounts, except that "Other Expenses" are based on estimated
amounts expected to be in effect during the current fiscal year. Long-term
shareholders of the Fund could pay more in sales charges than the economic
equivalent of the maximum distribution-related charges applicable to mutual
funds sold by members of the National Association of Securities Dealers Inc.
("NASD"). For more complete descriptions of the various costs and expenses you
can expect to incur as a shareholder in the Fund, please see "Investing in the
Fund -- How To Buy Shares" and "Management and Servicing Fees."

EXAMPLE OF EXPENSES is a hypothetical illustration of the expenses associated
with a $1,000 investment over stated periods, based on the expenses in the
above tables and an assumed annual rate of return of 5%. This annual rate of
return should not be considered an indication of actual or expected performance
of the Fund nor a representation of past or future expenses; actual expenses
and returns may be greater or lesser than those shown.

Additional information regarding the Fund's expenses is included under "The
Fund and Management" and "Management, Distribution and Servicing Fees" and in
the SAI.

PROSPECTUS 8
<PAGE>

Financial Highlights

The following information has been derived from the Financial Highlights in
the audited financial statements for the year ended December 31, 1996 and the
unaudited financial statements for the six-month period ended June 30, 1997,
for the predecessor portfolio to the Fund. This information is provided to
assist you in evaluating the Fund's historical performance. The audited
financial statements were audited by KPMG Peat Marwick LLP. The audited
financial statements and the independent auditor's report thereon for the year
ended December 31, 1996 are incorporated by reference into the SAI. In
addition, the unaudited financial statements for the six-month period ended
June 30, 1997 also are incorporated by reference into the SAI. This information
should be read in conjunction with the predecessor portfolio's audited 1996
financial statements and unaudited 1997 semi-annual financial statements and
the notes thereto. The SAI has been incorporated by reference into this
Prospectus. Financial information for the Class B shares is not available since
the class had not yet commenced operations during the periods shown.

9 PROSPECTUS
<PAGE>

INDEX ALLOCATION FUND
FOR A CLASS A SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988/1/
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $13.99 $13.76 $10.67 $11.90 $11.45 $11.95 $10.31 $10.39 $10.17 $10.00
Income from investment
operations:
Net investment income.. 0.18 0.29 0.28 0.31 0.30 0.47 0.57 0.63 0.67 0.28
Net realized and
unrealized gain (loss)
on investments......... 1.70 2.02 3.42 (0.39) 1.12 0.36 1.51 0.10 0.33 0.18
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.............. 1.88 2.31 3.70 (0.08) 1.42 0.83 2.08 0.73 1.00 0.46
Less distributions:
Dividends from net
investment income...... (0.18) (0.29) (0.28) (0.31) (0.30) (0.63) (0.44) (0.61) (0.63) (0.27)
Distributions from net
realized gain.......... 0.00 (1.79) (0.33) (0.84) (0.67) (0.70) 0.00 (0.20) (0.15) (0.02)
Total from
distributions........... (0.18) (2.08) (0.61) (1.15) (0.97) (1.33) (0.44) (0.81) (0.78) (0.29)
------ ------- ------- ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. $15.69 $13.99 $13.76 $10.67 $11.90 $11.45 $11.95 $10.31 $10.39 $10.17
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (not
annualized)/2/.......... 13.52% 17.04% 34.71% (0.68%) 12.54% 7.44% 20.69% 7.08% 10.23% 4.60%
Ratios/supplemental
data:
Net assets, end of
period (000)........... $72,691 $60,353 $52,007 $40,308 $53,124 $41,165 $38,663 $27,689 $23,814 $13,220
Number of shares
outstanding (000)...... 4,633 4,313 3,778 3,779 4,465 3,596 3,235 2,686 2,293 1,300
Ratios to average net
assets (annualized):
Ratio of expenses to
average net assets..... 1.29% 1.31% 1.30% 1.30% 1.36% 1.25% 1.38% 1.59% 1.76% 1.76%
Ratio of net investment
income to average net
assets................. 2.49% 2.06% 2.07% 2.41% 2.64% 4.08% 5.23% 6.01% 6.44% 4.69%
Portfolio turnover..... 36% 67% 47% 50% 53% 38% 18% 94% 62% 200%
Average commission rate
paid/3/................ $0.0341 $0.0227 N/A N/A N/A N/A N/A N/A N/A N/A
Ratio of expenses to
average net assets
prior to waived fees
and reimbursed
expenses............... 1.35% 1.44% 1.35% 1.38% 1.47% 1.71% 1.56% 1.74% 2.37% 3.02%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses............... 2.43% 1.93% 2.02% 2.33% 2.53% 3.62% 5.05% 5.86% N/A N/A
</TABLE>

PROSPECTUS 10
<PAGE>

INDEX ALLOCATION FUND
FOR A CLASS C SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993/1/
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $17.42 $17.10 $13.26 $14.75 $15.00
Income from investment
operations:
Net investment income......... 0.15 0.22 0.20 0.25 0.07
Net realized and unrealized
gain (loss) on investments... 2.12 2.54 4.24 (0.45) 0.61
------ ------ ------ ------ ------
Total from investment
operations.................... 2.27 2.76 4.44 (0.20) 0.68
Less distributions:
Dividends from net investment
income....................... (0.15) (0.22) (0.20) (0.25) (0.10)
Distributions from net
realized gain................ 0.00 (2.22) (0.40) (1.04) (0.83)
Total from distributions....... (0.15) (2.44) (0.60) (1.29) (0.93)
------ ------ ------ ------ ------
Net asset value, end of
period....................... $19.54 $17.42 $17.10 $13.26 $14.75
====== ====== ====== ====== ======
Total Return (not
annualized)/2/................ 13.08% 16.37% 33.72% (1.38)% 4.56%
Ratios/supplemental data:
Net assets, end of period
(000)........................ $33,278 $24,655 $16,075 $ 9,798 $8,996
Number of shares outstanding
(000)........................ 1,703 1,415 940 739 610
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets................... 2.04% 2.05% 2.05% 2.01% 0.96%
Ratio of net investment income
to average net assets........ 1.75% 1.35% 1.30% 1.75% 0.53%
Portfolio turnover............ 36% 67% 47% 50% 53%
Average commission rate
paid/3/...................... $0.0341 $0.0227 N/A N/A N/A
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses..................... 2.11% 2.20% 2.17% 2.20% 1.12%
Ratio of net investment income
to average net assets prior
to waived fees and reimbursed
expenses..................... 1.68% 1.20% 1.18% 1.56% 0.37%
</TABLE>
- --------------
/1/ The Class A shares of the Index Allocation Fund commenced operations as the
shares of the Overland Asset Allocation Fund on April 7, 1988. The Class C
shares of the Fund commenced operations as the Class D shares of the
Overland Asset Allocation Fund on July 1, 1993. The predecessor portfolio
changed its name to "Index Allocation Fund" in February of 1997.
/2/ Total returns do not include any sales charges.
/3/ For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary from period to period
and fund to fund depending on the mix of trades executed in various markets
where trading practices and commission rate structures may differ.

11 PROSPECTUS
<PAGE>

How The Fund Works

INVESTMENT OBJECTIVES AND POLICIES

Set forth below is a description of the investment objective and related
policies of the Fund. As with all mutual funds, there is no assurance that the
Fund will achieve its investment objective.

The Fund seeks to earn over the long term a high level of total investment
return (that is, income and capital appreciation combined), consistent with the
assumption of reasonable risk, by pursuing an "asset allocation" strategy
whereby its investments are allocated, based on changes in market conditions,
among three asset classes --common stocks in the S&P Index, U.S. Treasury bonds
and money market instruments./1/

The Index Allocation Fund is a diversified portfolio. Under normal market
conditions, it allocates at least 65% of its portfolio to stocks representative
of the S&P Index, bonds representative of the Lehman Brothers 20+ Treasury Bond
Index (the "LBT Bond Index"), or a combination of both indices. The LBT Bond
Index is an unmanaged index comprised of U.S. Treasury securities with
remaining maturities of twenty years or more. The portion of the Fund's
portfolio allocated to bonds is invested so as to replicate the performance
characteristics of the LBT Bond Index. The Fund also may allocate a portion of
its portfolio to money market instruments. Whenever more than 20% of the Fund's
portfolio is allocated to money market instruments, such instruments will
consist of U.S. Treasury bills and/or a broadly diversified range of money
market instruments. The Fund allocates its investments among common stocks
representative of the S&P Index, bonds representative of the LBT Index and
money market instruments and is therefore an index allocation fund. It does not
attempt to replicate the performance of a single index and is NOT an index
fund.

The Fund's allocation strategy is based upon the premise that, from time to
time, certain asset classes are more attractive long-term investments than
others and, accordingly, that timely shifts among common stocks, U.S. Treasury
bonds with maturities of 20 to 30 years and money market instruments, as
determined by their relative over-valuation or under-valuation, can produce
superior investment returns.

To the extent the Fund's assets are allocated to replicate the S&P Index or
the LBT Bond Index (each, an "Index"), the Fund will attempt to maintain under
normal market conditions a correlation of at least 95% between the total return
of such assets (before fees and expenses) and the total return of the relevant
Index. The Fund's sub-

- --------------
/1/ The S&P Index is an unmanaged index of stocks comprised of 500 industrial,
financial, utility and transportation companies. "Standard & Poor's(R)",
"S&P(R)", "S&P 500(R)" and "Standard & Poor's 500(R)" are trademarks of
McGraw-Hill, Inc. and have been licensed. The Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes
no representation regarding the advisability of investing in the Fund.

PROSPECTUS 12
<PAGE>

adviser will monitor the correlation of the Fund's portfolio to the relevant
Index and will adjust the Fund's portfolio to the extent necessary to maintain
at least a 95% correlation to such Index. If a particular industry grows to
represent more than 25% of the S&P Index, the Fund may, consistent with its
concentration policy (as set forth in its SAI) continue to invest in all
industry components of the S&P Index.

In an attempt to more closely replicate the total return of the portfolio
assets allocated to replicate an Index, the Index Allocation Fund may engage in
the purchase and sale of options, futures contracts and related instruments,
and may participate in interest rate and index swaps. Each of these
transactions involves risks to the Fund. See "Additional Permitted Investment
Activities" in the Fund's SAI.

Use of Investment Model. BGFA, as sub-adviser to the Fund, uses a proprietary
investment model to determine the appropriate mix of asset classes within the
Fund's portfolio in accordance with the investment objective, policies and
restrictions set forth herein and in the Fund's SAI. The investment model was
originally developed in 1973 and is continually refined and updated. As of
January 1, 1997, investments totaling approximately $32 billion were managed by
BGFA and its affiliates using this investment model. The investment model
analyzes extensive financial data from numerous sources, and, based on such
data, recommends a portfolio among common stocks, U.S. Treasury bonds and money
market instruments.

The principal financial data used by BGFA in connection with the investment
model currently are: (i) consensus estimates of the earnings, dividends and
payout ratios on a broad cross-section of common stocks as reported by
independent financial reporting services that survey over 1,000 Wall Street
analysts; (ii) the estimated current yield to maturity on new long-term
corporate bonds rated AA" by Standard & Poor's Corporation ("S&P") or on long-
term U.S. Treasury bonds; (iii) the present yield on money market instruments;
(iv) the historical standard statistical deviation in investment return for
each class of assets; and (v) the historical standard statistical correlation
of investment return among the various asset classes.

The investment model has broad latitude to allocate and reallocate the assets
in the Fund's portfolio. The investment model recommends allocations among each
asset class in 5% increments only. Any reallocation will be implemented in
accordance with trading policies that have been designed to take advantage of
market opportunities and to reduce transaction costs. Notwithstanding any
recommendation of the investment model to the contrary, the Fund generally
maintains at least that portion of its assets in money market instruments
reasonably considered necessary to meet redemption requirements. The Fund's
investments are compared from time to time to the investment model's
recommendations. Recommended reallocations are implemented subject to BGFA's
assessment of current economic conditions and investment opportunities. BGFA
may change from time to time the criteria and methods it uses to implement the
recommendations of the model. The overall management of the Fund is

13 PROSPECTUS
<PAGE>

based on the recommendations of the investment model, and no person is
primarily responsible for recommending the mix of asset classes in the Fund's
portfolio or the mix of securities within the asset classes. Decisions relating
to the investment model are made by BGFA's investment committee.

RISK FACTORS

Investments in the Fund are not bank deposits or obligations of Wells Fargo
Bank, are not insured by the FDIC and are not insured against loss of
principal. When the value of the securities that the Fund owns declines, so
does the value of your Fund shares. You should be prepared to accept some risk
with the money you invest in the Fund.

The portfolio equity securities of the Fund are subject to equity market risk.
Equity market risk is the risk that stock prices will fluctuate or decline over
short or even extended periods. For the first quarter of 1997, the stock
market, as measured by the S&P 500 Index and other commonly used indices, was
trading at or close to record levels. There can be no guarantee that these
performance levels will continue. The portfolio debt instruments of the Fund is
subject to credit and interest-rate risk. Credit risk is the risk that issuers
of the debt instruments in which the Fund invests may default on the payment of
principal and/or interest. Interest-rate risk is the risk that increases in
market interest rates may adversely affect the value of the debt instruments in
which the Fund invests and hence the value of your investment in the Fund.

The market value of the Fund's investment in fixed-income securities will
change in response to various factors, such as changes in interest rates and
the financial strength of each issuer. During periods of falling interest
rates, the value of fixed-income securities generally rises. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. Debt securities with longer maturities, which tend to produce higher
yields, are subject to potentially greater price fluctuation than obligations
with shorter maturities. Fluctuations in the market value of fixed income
securities can be reduced, but not eliminated, by variable and floating rate
features.

Securities rated in the fourth highest rating category are regarded by S&P as
having an adequate capacity to pay interest and repay principal, but changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make such repayments. Moody's considers such securities as
having speculative characteristics. Subsequent to its purchase by the Fund, an
issue of securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Fund. Securities rated below
the fourth highest rating category (sometimes called "junk bonds") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's credit-worthiness. The market prices of
these securities may fluctuate more than higher quality securities and may
decline significantly in periods of general economic difficulty.

PROSPECTUS 14
<PAGE>

Illiquid securities, which may include certain restricted securities, may be
difficult to sell promptly at an acceptable price. Certain restricted
securities may be subject to legal restrictions on resale. Delay or difficulty
in selling securities may result in a loss or be costly to the Fund.

The adviser may use certain derivative investments or techniques, such as
buying and selling options and futures contracts and entering into currency
exchange contracts or swap agreements, to adjust the risk and return
characteristics of the Fund's investments. Derivatives are financial
instruments whose value is derived, at least in part, from the price of another
security or a specified asset, index or rate. Some derivatives may be more
sensitive than direct securities to changes in interest rates or sudden market
moves. Some derivatives also may be susceptible to fluctuations in yield,
duration or value due to their structure or contract terms. If the adviser
judges market conditions incorrectly, the use of certain derivatives could
result in a loss, regardless of the adviser's intent in using the derivatives.

There is, of course, no assurance that the Fund will achieve its investment
objective or be successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of investment products. See
"Prospectus Appendix -- Additional Investment Policies" and the SAI for further
information about investment policies and risks.

PERFORMANCE

Fund performance may be advertised from time to time in terms of average
annual total return and cumulative total return. Performance figures are based
on historical results and are not intended to indicate future performance.
Performance figures are calculated separately for each class of shares of the
Fund.

Average annual total return of a class of shares is based on the overall
dollar or percentage change in value of a hypothetical investment in shares of
the class and assumes that all dividends and capital-gain distributions
attributable to such class are reinvested at NAV in shares of that class. The
standardized average annual total return, as calculated for Class A shares,
assumes that you have paid the maximum sales charge and, as calculated for
Class B or Class C shares, assumes that you have paid the maximum applicable
contingent deferred sales charge on your hypothetical investment. Cumulative
total return is calculated similarly except that the return figure is
aggregated over the relevant period instead of annualized.

In addition to presenting standardized performance figures, the Fund also may
present nonstandardized performance figures, including distribution rates. For
example, the performance figure of the shares of a class or Fund may be
calculated on the basis of an investment at the net asset value per share or at
net asset value per share plus a reduced sales charge (see "Investing in the
Fund -- How To Buy Shares") rather than the public offering price per share. In
this case, the figure might not reflect the effect of the sales charge that you
may have paid.

15 PROSPECTUS
<PAGE>

Because of differences in the fees and/or expenses borne by Class B and Class
C shares of the Fund, the net performance quotations on such shares can be
expected, at any given time, to be lower than the net performance quotations on
Class A shares. Standardized performance quotations are computed separately for
each class of shares.

Additional information about the performance of the Fund is contained in the
SAI under "Performance Calculations" and in the Annual Report, which may be
obtained free of charge by calling the Company at 1-800-222-8222 or by writing
the Company at the address on the inside front cover of the Prospectus.

The Fund and Management

THE FUND

The Fund is one of the funds in the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991 and currently
offers shares of more than twenty-five other Funds. Each class of shares
represents an equal, proportionate interest in the Fund with other shares of
the same class. Shareholders of each class bear their pro rata portion of the
Fund's operating expenses except for certain class-specific expenses (e.g., any
state securities registration fees, shareholder servicing fees or distribution
fees that may be paid under Rule 12b-1) that are allocated to a particular
class and, accordingly, may affect performance. For information on another fund
or a class of shares, please call Stagecoach Shareholder Services at 1-800-222-
8222 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 distribution plans, and changing a fund's investment
objective or fundamental investment policies. All shares of the Company have
equal voting rights and will be voted in the aggregate, rather than by fund or
class, unless otherwise required by law (such as when the voting matter affects
only one fund or class). As a Fund shareholder, you are entitled to one vote
for each share you own and fractional votes for fractional shares you own. See
"Management" in the SAI for more information on the Company's Directors and
Officers. A more detailed description of the voting rights and attributes of
the shares is contained under "Capital Stock" in the SAI.

MANAGEMENT

Wells Fargo Bank is the investment adviser to the Fund. In addition, Wells
Fargo Bank serves as the Fund's administrator, transfer and dividend disbursing
agent and is a shareholder servicing agent and selling agent. Wells Fargo Bank,
one of the largest

PROSPECTUS 16
<PAGE>

banks in the United States, was founded in 1852 and is the oldest bank in the
western United States. As of August 1, 1997, Wells Fargo Bank and its
affiliates provided investment advisory services for approximately $57 billion
of assets of individuals, trusts, estates and institutions. Wells Fargo Bank
also serves as investment adviser to the other separately managed funds of the
Company, and as investment adviser or sub-adviser to other registered, open-
end, management investment companies. Wells Fargo Bank, a wholly-owned
subsidiary of Wells Fargo & Company, is located at 420 Montgomery Street, San
Francisco, California 94104.

PORTFOLIO MANAGEMENT

The allocation of investments within the Fund's portfolio is based solely on
the recommendation of the investment model. No person is primarily responsible
for recommending the mix of asset classes held by the Fund or the mix of
securities within any such asset class. Decisions relating to the Investment
Model are made by various BGFA investment committees.

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 for the Fund and other accounts
managed by Wells Fargo Bank, Wells Fargo Bank undertakes to allocate those
transaction costs among the participants equitably. 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. In addition, the Fund, in accordance with its investment
objective, may invest in stock of Wells Fargo & Company so long as Wells Fargo
& Company is included in the S&P 500 Index.

-----------------------

Morrison & Foerster LLP, counsel to the Company and special counsel to Wells
Fargo Bank and BGFA, has advised the Company, Wells Fargo Bank and BGFA that
they and their affiliates may perform the services contemplated by the Advisory
Contracts and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and that future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such statutes, regulations and judicial or
administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any such services, it is expected that new
agreements would be proposed or entered into with another entity or entities
qualified to perform such services.

17 PROSPECTUS
<PAGE>

Investing in the Fund

OPENING AN ACCOUNT

You can buy Fund shares in one of the ways described below. You must complete
and sign an Account Application to open an account. Additional documentation
may be required from corporations, associations and certain fiduciaries. Do not
mail cash. If you have any questions or need extra forms, please call 1-800-
222-8222.

After an application has been processed and an account has been established,
subsequent purchases of different funds of the Company under the same umbrella
account do not require the completion of additional applications. A separate
application must be processed for each different umbrella account number (even
if the registration is the same). Call the number on your confirmation
statement to obtain information about what is required to change registration.

To invest in the Fund through tax-deferred retirement plans, please contact a
shareholder servicing agent or a selling agent to receive information and the
required separate application. See "Tax-Deferred Retirement Plans" below.

The Company or Stephens may make the Prospectus available in an electronic
format. Upon receipt of a request from you or your representative, the Company
or Stephens will transmit or cause to be transmitted promptly, without charge,
a paper copy of the electronic Prospectus.

SHARE VALUE

The value of a share of the Fund or class is its "net asset value" or NAV.
Wells Fargo Bank calculates the NAV of the Fund on each day the Fund is open as
of the close of regular trading on the New York Stock Exchange ("NYSE")
(referred to hereafter as "the close of the NYSE"), which is currently 1:00
p.m. (Pacific time). The Fund is open for business on each day the NYSE is open
for trading (a "Business Day"). The NAV per share for each class of shares is
computed by dividing the value of the Fund's assets allocable to a particular
class, less the liabilities charged to that class, by the total number of
outstanding shares of the class. All expenses are accrued daily and taken into
account for purposes of computing NAV, which is expected to fluctuate daily.
Shares may be purchased on any day the Fund is open for business.

Except for debt obligations with remaining maturities of 60 days or less,
which are valued at amortized cost, the Fund's other assets are valued at
current market prices, or if such prices are not readily available, at fair
value as determined in good faith by the Company's Board of Directors. Prices
used for such valuations may be provided by independent pricing services.

PROSPECTUS 18
<PAGE>

HOW TO BUY SHARES

Fund shares are offered continuously at the applicable offering price (NAV
plus any applicable sales charges) next determined after a purchase order is
received in the form specified for the purchase method being used, as described
in the following sections. Payment for shares purchased through a selling agent
(as defined below) is not due from the selling agent until the settlement date,
which is normally three Business Days after the order is placed. The selling
agent is responsible for forwarding payment for shares being purchased to the
Fund promptly. Payment must accompany orders placed directly through the
transfer agent.

Payments for Fund shares are invested in full and fractional shares of the
Fund (or class) at the applicable offering price. If shares are purchased by a
check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. In
addition, the Company may hold payment on any redemption until reasonably
satisfied that your investments made by check have been collected (which may
take up to 10 days).

The minimum initial investment is generally $1,000. The minimum investment
amounts, however, are $100 through the AutoSaver Plan (described below) and
$250 for any tax-deferred retirement account for which Wells Fargo Bank serves
as trustee or custodian under a prototype trust approved by the Internal
Revenue Service ("IRS") (a "Plan Account"). Generally, all subsequent
investments must be made in amounts of $100 or more. Where Fund shares are
acquired in exchange for shares of another fund in the Stagecoach Family of
Funds, the minimum initial investment amount applicable to the shares being
exchanged generally carries over. If the value of your investment in the shares
of the fund from which you are exchanging has been reduced below the minimum
initial investment amount by changes in market conditions or sales charges (and
not by redemptions), then you may carry over the lesser amount into the Fund.
Plan Accounts that invest in the Fund through Wells Fargo ExpressInvest(TM)
(available to certain Wells Fargo tax-deferred retirement plans) are not
subject to the minimum initial or subsequent investment amount requirements. In
addition, the minimum initial or subsequent purchase amount requirements may be
waived or lowered for investments effected on a group basis by certain entities
and their employees, such as pursuant to a payroll deduction or other
accumulation plan. If you have questions regarding purchases of shares, please
call 1-800-222-8222. If you have questions regarding ExpressInvest(TM), please
call 1-800-237-8472. For additional information on tax-deferred accounts,
please refer to the section "How to Buy Shares" under Tax-Deferred Retirement
Plans or contact a shareholder servicing agent or selling agent.

SALES CHARGES

Set forth below is a Front-end Sales Charge Schedule listing the front-end
sales charges applicable to purchases of Class A shares of the Fund. As shown
below, reductions in the rate of front-end sales charges ("Volume Discounts")
are available as

19 PROSPECTUS
<PAGE>

you purchase additional shares (contingent-deferred sales charges applicable to
Class B and Class C shares are described below). You should consider the front-
end sales charge information set forth below and the other information
contained in this Prospectus when making your investment decisions.

FRONT-END SALES CHARGE SCHEDULE --
CLASS A SHARES

<TABLE>
<CAPTION>
FRONT-END FRONT-END DEALER
SALES CHARGE SALES CHARGE ALLOWANCE
AS % OF AS % OF NET AS % OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000............... 4.50% 4.71% 4.00%
$50,000 up to $99,999........... 4.00 4.17 3.55
$100,000 up to $249,999......... 3.50 3.63 3.13
$250,000 up to $499,999......... 2.50 2.56 2.00
$500,000 up to $999,999......... 2.00 2.04 1.75
$1,000,000 and over............. 0.00 0.00 1.00
</TABLE>

If Class A shares are purchased through a selling agent, Stephens reallows the
portion of the front-end sales charge shown above as the Dealer Allowance.
Stephens also compensates selling agents for sales of Class B shares and Class
C shares and is then reimbursed out of Rule 12b-1 Fees and contingent-deferred
sales charges applicable to such shares. When shares are purchased directly
through the transfer agent and no selling agent is involved with the purchase,
the entire sales charge is paid to Stephens.

A selling agent or shareholder servicing agent and any other person entitled
to receive compensation for selling or servicing shares may receive different
compensation for selling or servicing Class A shares as compared with Class B
or Class C shares of the same fund.

REDUCED SALES CHARGES -- CLASS A SHARES

Discounts described below pertaining to reduced sales charge for Class A
shares are based on your holdings or purchases of shares on which you have paid
or will pay a front-end sales charge. Because Class B and Class C shares do not
assess a front-end sales charge, the amount of Class B or Class C shares you
hold is not considered in determining any Volume Discount.

Volume Discounts

The Volume Discounts described in the Front-end Sales Charge Schedule are
available to you based on the combined dollar amount you invest in shares
(including the Fund's Class A shares) of one or more of the Company's funds
which assess a front-end sales charge (the "Load Funds").

PROSPECTUS 20
<PAGE>

Right of Accumulation

The Right of Accumulation allows you to combine the amount you invest in the
Fund's Class A shares with the total NAV of shares in other Load Funds to
determine reduced front-end sales charges in accordance with the above Front-
end Sales Charge Schedule. In addition, you also may combine the total NAV of
shares that you currently have invested in any other mutual fund that assesses
a front-end sales charge and is advised or sub-advised by Wells Fargo Bank and
sponsored by Stephens. For example, if you own Class A shares of the Load Funds
with an aggregate NAV of $90,000 and you invest an additional $20,000 in Class
A shares of another Load Fund, the front-end sales charge on the additional
$20,000 investment would be 3.50% of the offering price. To obtain the
discount, you must provide sufficient information at the time of your purchase
to verify that your purchase qualifies for the reduced front-end sales charge.
Confirmation of the order is subject to such verification. The Right of
Accumulation may be modified or discontinued at any time without prior notice
with respect to all subsequent shares purchased.

Letter of Intent

A Letter of Intent allows you to purchase shares of a Load Fund over a 13-
month period at a reduced front-end sales charge based on the total amount of
Class A shares you intend to purchase plus the total NAV of shares in the Load
Funds that you already own. Each investment in shares of a Load Fund that you
make during the period may be made at the reduced front-end sales charge that
is applicable to the total amount you intend to invest. If you do not invest
the total amount within the period, you must pay the difference between the
higher front-end sales charge rate that would have been applied to the
purchases you made and the reduced front-end sales charge rate you have paid.
The minimum initial investment for a Letter of Intent is 5% of the total amount
you intend to purchase, as specified in the Letter. Shares of the Load Fund you
purchased equal to 5% of the total amount you intend to invest will be held in
escrow and, if you do not pay the difference within 20 days following the
mailing of a request, a sufficient amount of escrowed shares will be redeemed
for payment of the additional front-end sales charge. Dividends and capital
gains paid on such shares held in escrow are reinvested in additional Fund
shares.

Reinvestment

You may reinvest proceeds from a redemption of Class A shares in Class A
shares of the Fund or shares of another of the Company's funds registered in
your state of residence at NAV, without a front-end sales charge, within 120
days after your redemption. However, if the other investment portfolio charges
a front-end sales charge that is higher than the front-end sales charge that
you paid in connection with the Class A shares you redeemed, you must pay the
difference between the dollar amount of the two front-end sales charges. You
may reinvest at this NAV price up to the total amount of your redemption
proceeds. A written purchase order for the shares must be

21 PROSPECTUS
<PAGE>

delivered to the Company, a selling agent, a shareholder servicing agent, or
the transfer agent at the time of reinvestment.

Reductions for Families or Fiduciaries

Reductions in front-end sales charges apply to purchases by a single "person,"
including an individual, members of a family unit, consisting of a husband,
wife and children under the age of 21 purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust estate.

Reductions for Qualified Groups

Reductions in front-end sales charges also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate
dollar amount of Class A shares purchased by all members of the qualified
group. For purposes of this paragraph, a qualified group consists of a
"company," as defined in the 1940 Act, which has been in existence for more
than six months and which has a primary purpose other than acquiring shares of
the Fund at a reduced sales charge, and "related parties" of such company. For
purposes of this paragraph, a "related party" of a company is: (i) any
individual or other company who directly or indirectly owns, controls or has
the power to vote 5% or more of the outstanding voting securities of such
company; (ii) any other company of which such company directly or indirectly
owns, controls or has the power to vote 5% or more of its outstanding voting
securities; (iii) any other company under common control with such company;
(iv) any executive officer, director or partner of such company or of a related
party; and (v) any partnership of which such company is a partner. Investors
seeking to rely on their membership in a qualified group to purchase shares at
a reduced sales load must provide evidence satisfactory to the transfer agent
of the existence of a bona fide qualified group and their membership therein.

Waivers for Certain Parties

PROSPECTUS 22
<PAGE>

addition, Class A shares may be purchased without payment of a front-end sales
charge with proceeds from a required minimum distribution from any Individual
Retirement Account ("IRA"), Simplified Employee Pension Plan or other self-
directed retirement plan for which Wells Fargo Bank serves as trustee, provided
that the proceeds are invested in the Fund within 30 days of such distribution
and such distribution is required as a result of reaching age 70 1/2.

Class A Shares may be purchased without a front-end sales charge by the
following types of investors when the trades are placed through an omnibus
account maintained with the Fund by a broker/dealer -- trust companies;
deferred compensation plans and the trusts used to finance these plans;
investment advisers and financial planners who charge a management, consulting
or other fee for their services and who place trades on their own behalf if the
clients' accounts are linked to the master account of such investment adviser
or financial planner on the books and records of the broker/dealer.

CONTINGENT-DEFERRED SALES CHARGE -- CLASS B AND CLASS C SHARES

Class B and Class C shares may be subject to a contingent-deferred sales
charge ("CDSC"). A CDSC is an amount you pay if you redeem your shares within a
specific period. The CDSC will be equal to a percentage of the lesser of the
NAV of such shares at the time of purchase or the NAV of such shares at
redemption.

Except as described below, if you purchase Class B shares and redeem such
shares within six years of the date of purchase the Class B shares are subject
to a CDSC as follows:

<TABLE>
<CAPTION>
REDEMPTION WITHIN: 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS
------------------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDSC -- Class B: 5% 4% 3% 3% 2% 1%
</TABLE>

Class C shares redeemed within one year of receipt of a purchase order for
such shares will be subject to a contingent-deferred sales charge equal to
1.00% of an amount equal to the lesser of the NAV of your Class C shares at the
time of purchase or the NAV of your Class C shares at redemption.

Contingent-deferred sales charges are not imposed on amounts representing
increases in NAV above the NAV at the time of purchase and are not assessed on
Class B or Class C shares purchased through reinvestment of dividends or
capital gain distributions.

The amount of any contingent-deferred sales charge, if any, paid upon
redemption of Class B or Class C shares is determined in a manner designed to
result in the lowest sales charge rate being assessed. When a redemption
request is made, Class B or Class C shares acquired pursuant to the
reinvestment of dividends and capital-gain distributions are considered to be
redeemed first. After this, such shares are considered redeemed on a first-in,
first-out basis so that Class B or Class C shares, as applicable,

23 PROSPECTUS
<PAGE>

held for a longer period of time are considered redeemed prior to more recently
acquired Class B or Class C shares. For a discussion of the interaction between
the optional Exchange Privilege and contingent-deferred sales charges see
"Additional Shareholder Services -- Exchange Privilege."

Contingent-deferred sales charges are waived on redemptions of Class B or
Class C shares (i) following the death or disability (as defined in the
Internal Revenue Code of 1986, as amended (the "Code")) of a shareholder, (ii)
to the extent that the redemption represents a scheduled distribution from an
IRA or other retirement plan to a shareholder who has reached age 59 1/2, (iii)
effected pursuant to the Company's right to liquidate a shareholder's account
if the aggregate NAV of the shareholder's account is less than the minimum
account size, or (iv) in connection with the combination of the Company with
any other registered investment company by a merger, acquisition of assets, or
any other transaction.

In deciding whether to purchase Class A, Class B or Class C shares, you should
compare the fees assessed on Class A shares (including front-end sales charges)
against those assessed on Class B and Class C shares (including potential
contingent-deferred sales charges and higher Rule 12b-1 fees than Class A
shares) in light of the amount to be invested and the anticipated time that the
shares will be owned. If your purchase amount would qualify you for a reduced
sales charge on Class A shares, you should consider carefully whether you would
pay lower fees ultimately on Class A, Class B or Class C shares. See "Investing
In The Fund -- Sales Charges" for information on reduced sales charges for
Class A shares.

You may buy shares on any Business Day by any of the methods described below.
The Company reserves the right to reject any purchase order or suspend sales at
any time. Payment for orders that are not received is returned after prompt
inquiry. The issuance of shares is recorded on the Company's books, and share
certificates are not issued.

INITIAL PURCHASES BY WIRE

1.Complete an Account Application.

2. Instruct the wiring bank to transmit the specified amount in federal funds
($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund) (Designate Class)
Account Name(s): Name(s) in which to be registered
Account Number: (if investing into an existing account)

PROSPECTUS 24
<PAGE>

3. A completed Account Application should be mailed, or sent by telefacsimile
with the original subsequently mailed, to the following address immediately
after the funds are wired, and must be received and accepted by the transfer
agent before an account can be opened:

Wells Fargo Bank, N.A.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-546-0280

4. Share purchases are effected at the public offering price or, in the case of
Class B or Class C shares, at the NAV next determined after the Account
Application is received and accepted.

INITIAL PURCHASES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more payable to
"Stagecoach Funds (Name of Fund -- Designate Class)," to the address set
forth in "Initial Purchases by Wire."

3. Share purchases are effected at the public offering price or, in the case of
Class B or Class C shares, at the NAV next determined after the Account
Application is received and accepted.

AUTOSAVER PLAN PURCHASES

The Company's AutoSaver Plan provides you with a convenient way to establish
and automatically add to your Fund account on a monthly basis. To participate
in the AutoSaver Plan, you must specify an amount ($100 or more) to be
withdrawn automatically by the transfer agent on a monthly basis from an
account with a bank that is designated in your Account Application and is
approved by the transfer agent ("Approved Bank Account"). You may open an
Approved Bank Account with Wells Fargo Bank. The transfer agent withdraws and
uses this amount to purchase specified Fund shares on your behalf generally on
or about the day that you have selected or, if you have not selected a day, on
or about the 20th day of each month. Certain restrictions may apply to shares
held in a brokerage account. The transfer agent requires a minimum of ten (10)
Business Days to implement your AutoSaver Plan purchases. If you hold shares
through a brokerage account, your AutoSaver Plan will comply with the terms of
your brokerage agreement. There are no separate fees charged to you by the Fund
for participating in the AutoSaver Plan.

You may change your investment amount, the date on which your AutoSaver
Purchase is effected, suspend purchases or terminate your election at any time
by

25 PROSPECTUS

<PAGE>

providing notice to the transfer agent at least five (5) Business Days prior to
any scheduled transaction.

TAX-DEFERRED RETIREMENT PLANS

You may be entitled to invest in the Fund through a Plan Account or other tax-
deferred retirement plan. Contact a shareholder servicing agent or a selling
agent (such as Wells Fargo Bank) for materials describing Plan Accounts
available through it, and the benefits, provisions, and fees of such Plan
Accounts. The minimum initial investment amount for Fund shares acquired
through a Plan Account is $250 (the minimum initial investment amount is not
applicable if you participate in ExpressInvest through a Plan Account).

Application materials for opening a tax-deferred retirement plan can be
obtained from a shareholder servicing agent or a selling agent. Return your
completed tax-deferred retirement plan application to your shareholder
servicing agent or a selling agent for approval and processing. If your tax-
deferred retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. You should ask your
shareholder servicing agent or selling agent about the investment options
available to your tax-deferred retirement plan, since some of the funds in the
Stagecoach Family of Funds may be unavailable as options. Moreover, certain
features described herein, such as the AutoSaver Plan and the Systematic
Withdrawal Plan, may not be available to individuals or entities who invest
through a tax-deferred retirement plan.

ADDITIONAL PURCHASES

You may make additional purchases of $100 or more by instructing the Fund's
transfer agent to debit your Approved Bank Account, by wire by instructing the
wiring bank to transmit the specified amount as directed above for initial
purchases, or by mail with a check payable to "Stagecoach Funds (Name of Fund-
Designate Class)" to the address set forth under "Initial Purchases by Wire."
Write your Fund account number on the check and include the detachable stub
from your Statement of Account or a letter providing your Fund account number.

PURCHASES THROUGH SELLING AGENTS

You may place a purchase order for shares of the Fund through a broker/dealer
or financial institution that has entered into a selling agreement with
Stephens, as the Fund's Distributor ("Selling Agent"). If your order is placed
by the close of the NYSE, the purchase order is executed on the same day if the
order is received by the transfer agent before the close of business. If your
purchase order is received by a Selling Agent after the close of the NYSE or by
the transfer agent after the close of business, then your purchase order is
executed on the next Business Day following the day your order is

PROSPECTUS 26
<PAGE>

placed. The Selling Agent is responsible for the prompt transmission of your
purchase order to the Company. Because payment for shares of the Fund is not
due until settlement date, the Selling Agent might benefit from the temporary
use of your payment. A financial institution that acts as a Selling Agent,
shareholder servicing agent or in certain other capacities may be required to
register as a dealer pursuant to applicable state securities laws, which may
differ from federal law and any interpretations expressed herein.

PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS

Purchase orders for Fund shares may be transmitted to the transfer agent
through any entity that has entered into a shareholder servicing agreement with
the Fund ("Shareholder Servicing Agent"), such as Wells Fargo Bank. See
"Management, Distribution and Servicing Fees -- Shareholder Servicing Agent."
The Shareholder Servicing Agent may transmit a purchase order to the transfer
agent, on your behalf, including a purchase order for which payment is to be
transferred from your Approved Bank Account or wired from a financial
institution. If your order is transmitted by the Shareholder Servicing Agent,
on your behalf, to the transfer agent before the close of the NYSE, the
purchase order generally will be executed on the same day. If your Shareholder
Servicing Agent transmits your purchase order to the transfer agent after the
close of the NYSE, then your order generally is executed on the next Business
Day following the day your order is received. The Shareholder Servicing Agent
is responsible for the prompt transmission of your purchase order to the
transfer agent.

STATEMENTS AND REPORTS

The Company, or a Shareholder Servicing Agent on its behalf, typically sends
you a confirmation or statement of your account after every transaction that
affects your share balance or your Fund account registration. Every January,
you will be provided a statement with tax information for the previous year to
assist you in tax return preparation. At least twice a year, you will receive
financial statements.

Dividend And Capital Gain Distributions

The Fund intends to declare and distribute quarterly dividends of
substantially all of its net investment income. The Fund distributes any
capital gains at least annually. You have several options for receiving
dividend and capital gain distributions. They are discussed under "Additional
Shareholder Services -- Dividend and Capital Gain Distribution Options."

Dividend and capital gain distributions have the effect of reducing the NAV
per share by the amount distributed. Although distributions paid to you on
newly issued shares

27 PROSPECTUS
<PAGE>

shortly after your purchase would represent, in substance, a return of your
capital, the distributions would ordinarily be taxable to you. All expenses
that are attributable to a particular class also may affect the relative
dividends and/or capital gains distributions of such class.

Dividends for a Saturday, Sunday or Holiday are declared payable to
shareholders of record as of the preceding Business Day. You have several
options for receiving dividend and capital gain distributions. They are
discussed under "Additional Shareholder Services -- Dividend and Capital Gain
Distribution Options" below.

How To Redeem Shares

You may redeem Fund shares on any Business Day. Your shares are redeemed at
the NAV next calculated after the Company has received your redemption request
in proper form. The Company ordinarily remits redemption proceeds, net of any
contingent deferred sales charge applicable with respect to Class B or Class C
shares (the "redemption proceeds"), within seven days after your redemption
order is received in proper form, unless the SEC permits a longer period under
extraordinary circumstances. Such extraordinary circumstances could include a
period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practicable or (b) it is
not reasonably practicable for the Fund fairly to determine the value of its
net assets, or a period during which the SEC by order permits deferral of
redemptions for the protection of security holders of such Fund. In addition,
the Company may hold payment on your redemptions until reasonably satisfied
that your investments made by check have been collected (which can take up to
10 days from the purchase date). To ensure acceptance of your redemption
request, please follow the procedures described below. In addition, the Fund
reserves the right to impose charges for wiring redemption proceeds.

All redemptions of shares generally are made in cash, except that the
commitment to redeem shares in cash extends only to redemption requests made by
each Fund shareholder during any 90-day period of up to the lesser of $250,000
or 1% of the net asset value of the Fund at the beginning of such period. This
commitment is irrevocable without the prior approval of the SEC and is a
fundamental policy of the Fund that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Directors reserves the right to have the Fund make
payment, in whole or in part, in securities or other assets, in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the securities of the Fund are
valued. If the recipient were to sell such securities, he or she would incur
brokerage costs in converting such securities to cash.

PROSPECTUS 28
<PAGE>

Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close your account and send you the proceeds if
the balance falls below the applicable minimum balance because of a redemption
(including a redemption of shares of the Fund after an investor has made only
the applicable minimum initial investment). However, you will be given 30
days' notice to make an additional investment to increase your account balance
to $1,000 or more. Plan Accounts are not subject to minimum Fund account
balance requirements. For a discussion of applicable minimum balance
requirements, see "Investing in the
Fund -- How To Buy Shares."

REDEMPTIONS BY TELEPHONE

Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline the
privileges. Telephone redemption privileges authorize the transfer agent to
act on telephone instructions from any person representing himself or herself
to be the investor and reasonably believed by the transfer agent to be
genuine. The Company requires the transfer agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Company and the transfer agent may be liable for any losses due to
unauthorized or fraudulent instructions. Neither the Company nor the transfer
agent will be liable for following telephone instructions reasonably believed
to be genuine.

REDEMPTIONS BY MAIL

1. Write a letter of instruction. Indicate the class, if applicable, and the
dollar amount or number of Fund shares you want to redeem. Refer to your
Fund account number and give your taxpayer identification number ("TIN"),
which generally is your social security or employer identification number.

2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all must sign.

3. Signature guarantees are not required for redemption requests unless
redemption proceeds of $5,000 or more are to be paid to someone other than
you at your address of record or your Approved Bank Account, or other
unusual circumstances exist which cause the transfer agent to determine
that a signature guarantee is necessary or prudent to protect against
unauthorized redemption requests. If required, a signature must be
guaranteed by an "eligible guarantor institution," which includes a
commercial bank that is an FDIC member, a trust company, a member firm of a
domestic stock exchange, a savings association, or a credit union that is
authorized by its charter to provide a signature guarantee. Signature
guarantees by notaries public are not acceptable. Further documentation may
be requested from corporations, administrators, executors, personal
representatives, trustees or custodians.

29 PROSPECTUS
<PAGE>

4. Mail your letter to the transfer agent at the address set forth under
"Investing in the Fund -- Initial Purchases by Wire."

Unless other instructions are given in proper form, a check for your net
redemption proceeds is sent to your address of record.

EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE

You may request an expedited redemption of shares of the Fund by letter, in
which case your receipt of redemption proceeds, but not the Fund's receipt of
your redemption request, is expedited. In addition, you also may request an
expedited redemption of shares of the Fund by telephone on any Business Day, in
which case both your receipt of redemption proceeds and the Fund's receipt of
your redemption request is expedited. You may request expedited redemption by
telephone only if the total value of the shares redeemed is $100 or more.

You may request expedited redemption by telephone by calling the transfer
agent at the telephone number listed on your transaction confirmation or by
calling 1-800-222-8222.

You may request expedited redemption by mail by mailing your expedited
redemption request to the transfer agent at the mailing address set forth under
"Investing in the Fund -- Initial Purchases by Wire."

Upon request, net redemption proceeds of your expedited redemptions of $5,000
or more, net of any contingent deferred sales charge applicable with respect to
Class B or Class C shares, are wired or credited to an Approved Bank Account
designated in your Account Application or wired to the Selling Agent designated
in your Account Application. The Company reserves the right to impose a charge
for wiring redemption proceeds. When proceeds of your expedited redemption are
to be paid to someone else, to an address other than that of record, or to your
Approved Bank Account or Selling Agent that you have not predesignated in your
Account Application, your expedited redemption request must be made by letter
and the signature(s) on the letter may be required to be guaranteed, regardless
of the amount of the redemption. If your expedited redemption request is
received by the transfer agent by the close of the NYSE on a Business Day, your
redemption proceeds are transmitted to your Approved Bank Account or Selling
Agent on the next Business Day (assuming your investment check has cleared as
described above), absent extraordinary circumstances. Such extraordinary
circumstances could include those described above as potentially delaying
redemptions and also could include situations involving an unusually heavy
volume of wire transfer orders on a national or regional basis or communication
or transmittal delays that could cause a brief delay in the wiring or crediting
of funds. A check for net redemption proceeds is mailed to your address of
record or, at your election, credited to your Approved Bank Account.

PROSPECTUS 30
<PAGE>
During periods of drastic economic or market activity or changes, you may
experience problems implementing an expedited redemption by telephone. In the
event you are unable to reach the transfer agent by telephone, you should
consider using overnight mail to implement an expedited redemption. The Company
reserves the right to modify or terminate the expedited telephone redemption
privilege at any time.

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides you with a convenient way to
have Fund shares redeemed from your account and the net redemption proceeds
distributed to you on a monthly basis. You may participate in the Systematic
Withdrawal Plan only if you have a Fund account valued at $10,000 or more as of
the date of your election to participate, your dividends and capital-gain
distributions are being reinvested automatically, and you are not participating
in the AutoSaver Plan at any time while participating in the Systematic
Withdrawal Plan. You specify an amount ($100 or more) to be distributed by
check to your address of record or deposited in your Approved Bank Account. The
transfer agent redeems sufficient shares and mails or deposits your net
redemption proceeds as instructed on or about the fifth Business Day prior to
the end of each month. There are no separate fees charged to you by the Company
for participating in the Systematic Withdrawal Plan. However, you should not
participate in the Systematic Withdrawal Plan if you also are purchasing shares
of the Fund subject to a sales charge.

It may take up to ten (10) days after receipt of your request to establish
your participation in the Systematic Withdrawal Plan. You may change your
withdrawal amount, suspend withdrawals or terminate your election at any time
by notifying the transfer agent at least five (5) Business Days prior to any
scheduled transaction. Your participation in the Systematic Withdrawal Plan is
terminated automatically if your Fund account is closed, or, in some cases, if
your Approved Bank Account is closed.

REDEMPTIONS THROUGH SELLING AGENTS

If your redemption order is received by a Selling Agent before the close of
the NYSE and received by the transfer agent before the close of business on the
same day, the order is executed at the NAV determined as of the close of the
NYSE on that day. If your redemption order is received by a Selling Agent after
the close of the NYSE, or is not received by the transfer agent prior to the
close of business, your order is executed at the NAV determined as of the close
of the NYSE on the next Business Day. The Selling Agent is responsible for the
prompt transmission of your redemption order to the Company.

Unless you have made other arrangements with the Selling Agent, and the
transfer agent has been informed of such arrangements, net redemption proceeds
of a redemption order made by you through a Selling Agent are credited to your
Approved

31 PROSPECTUS
<PAGE>

Bank Account. If no such account is designated, a check for the net redemption
proceeds are mailed to your address of record or, if such address is no longer
valid, the net proceeds are credited to your account with the Selling Agent.
You may request a check from the Selling Agent or elect to retain the net
redemption proceeds in such account. The Selling Agent may charge you a service
fee. In addition, it may benefit from the use of your redemption proceeds until
the check it issues to you has cleared or until such proceeds have been
disbursed or reinvested on your behalf.

REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS

You may request a redemption of shares of the Fund through your Shareholder
Servicing Agent. Any redemption request made by telephone through your
Shareholder Servicing Agent must redeem shares with a total value equal to $100
or more. If your redemption order is transmitted by the Shareholder Servicing
Agent, on your behalf, to the transfer agent before the close of the NYSE, the
redemption order is executed at the NAV determined as of the close of the NYSE
on that day. If your Shareholder Servicing Agent transmits your redemption
order to the transfer agent after the close of the NYSE, then your order is
executed on the next Business Day following the date your order is received.
The Shareholder Servicing Agent is responsible for the prompt transmission of
your redemption order to the Company.

Unless you have made other arrangements with your Shareholder Servicing Agent,
and the transfer agent has been informed of such arrangements, net redemption
proceeds of a redemption order made by you through your Shareholder Servicing
Agent are credited to your Approved Bank Account. If no such account is
designated, a check for the net redemption proceeds is mailed to your address
of record or, if such address is no longer valid, the net redemption proceeds
are credited to your account with your Shareholder Servicing Agent or to
another account designated in your agreement with your Shareholder Servicing
Agent. The shareholder servicing agent may charge you a fee. In addition, the
shareholder servicing agent may benefit from the use of proceeds credited to
your account until any check it issues to you has cleared or until such
proceeds have been disbursed or reinvested on your behalf.

Additional Shareholder Services

The Company offers you a number of optional services. As noted above, you can
take advantage of the AutoSaver Plan, Tax-Deferred Retirement Plans, the
Systematic Withdrawal Plan and Expedited Redemptions by Letter and Telephone.
In addition, you have several dividend and distribution payment options and an
exchange privilege, which are described below. If you have questions about the
distribution options available to you, please call 1-800-222-8222.

PROSPECTUS 32

<PAGE>

DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS

When you fill out your Account Application, you can choose from the following
distribution options listed below.

A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of your
dividend and capital gain distributions in additional shares of the same class
of the Fund which paid such dividends or capital gain distributions.
Distributions declared in a month generally are reinvested in additional shares
at NAV on the last business day of such month. You are assigned this option
automatically if you make no choice on your Account Application.

B. The FUND PURCHASE OPTION lets you use your dividend and/or capital-gain
distributions from the Fund to purchase, at NAV, shares of another fund in the
Stagecoach Family of Funds with which you have an established account that has
met the applicable minimum initial investment requirement. Distributions paid
on Class A, B or C shares may be invested in Class A, B or C shares,
respectively, of another fund, in Retail shares of a fund offered by another
investment company in the Stagecoach Family of Funds, in Class A shares of the
Government Money Market Mutual, Money Market Mutual, National Tax-Free Money
Market Mutual, Prime Money Market Mutual or Treasury Money Market Mutual Funds
or in shares of the California Tax-Free Money Market Mutual Fund (collectively,
the "Money Market Mutual Funds"). Distributions paid on Class A shares may also
be invested in shares of a non-money market fund with a single class of shares
(a "single class fund"). Distributions paid on Class B or Class C shares may
not be invested in shares of a single class fund.

C. The AUTOMATIC CLEARING HOUSE OPTION permits you to have dividend and
capital gain distributions deposited in your Approved Bank Account. In the
event your Approved Bank Account is closed and such distribution is returned to
the Fund's dividend disbursing agent, the distribution is reinvested in your
Fund account at the NAV next determined after the distribution has been
returned. Your Automatic Clearing House Option is then converted automatically
to the Automatic Reinvestment Option.

D. The CHECK PAYMENT OPTION lets you receive a check for all dividend and
capital gain distributions, which generally is mailed either to your designated
address or your Approved Bank Account shortly following declaration. If the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, those checks are reinvested in your Fund account at
the NAV next determined after the earlier of the date the checks have been
returned to the Fund's dividend disbursing agent or the date six months after
the payment of such distribution. Your Check Payment Option is then converted
automatically to the Automatic Reinvestment Option.

The Company forwards moneys to the dividend disbursing agent so that it may
issue you distribution checks under the Check Payment Option. The dividend
disbursing

33 PROSPECTUS
<PAGE>

agent may benefit from the temporary use of such moneys until these checks
clear. The Company takes reasonable efforts to locate investors whose checks
are returned or uncashed after six months.

EXCHANGE PRIVILEGE

The exchange privilege is a convenient way to buy shares in another fund of
the Stagecoach Family of Funds to respond to changes in your investment needs.
You can exchange between the various funds as follows:

<TABLE>
<CAPTION>
EXCHANGES BETWEEN YES NO
----------------- --- ---
<S> <C> <C>
Class A, B or C shares and a Money Market Mutual Fund............... X
Class A shares and Class A shares................................... X
Class B shares and Class B shares................................... X
Class C shares and Class C shares................................... X
Class A shares of a non-Money Market Mutual Fund and Class B or
C shares.......................................................... X
Class B shares and Class C shares................................... X
</TABLE>

Important factors that you should consider:

. You will need to read the prospectus of the fund into which you want to
exchange.

. Every exchange is a redemption of shares of one fund and a purchase of
shares of another fund. The redemption may produce a gain or loss for
federal income tax purposes.

. You must exchange the minimum initial purchase amount of the fund you are
redeeming, unless your balance has fallen below that amount due to market
conditions or you have already met the minimum initial purchase amount of
the fund you are purchasing.

. If you exchange Class A shares, you will need to pay any difference
between a load that you have already paid and the load that you are
subject to in the new fund (LESS THE DIFFERENCE BETWEEN ANY LOAD ALREADY
PAID UNDER THE MAXIMUM 3% LOAD SCHEDULE AND THE MAXIMUM 4.50% SCHEDULE).

. You will not pay a contingent deferred sales charge on any exchange from
Class B or Class C shares into other Class B shares or Class C shares,
respectively, or a Money Market Mutual Fund. The new shares will continue
to age while they are in the new fund and will be charged the contingent
deferred sales charge applicable to the original shares upon redemption.

. If you exchange Class A , B or C shares for shares of a Money Market
Mutual Fund, you may not re-exchange shares of the Money Market Mutual
Fund for shares other than the original exchanged class.

PROSPECTUS 34
<PAGE>

. The Company may limit the number of times shares may be exchanged or may
reject any telephone exchange order. Subject to limited exceptions, the
Company will notify you 60 days before discontinuing or modifying the
exchange privilege.

You may exchange shares by writing the Transfer Agent or, if you have
telephone privileges, you may call the Transfer Agent. Exchanges are subject to
the procedures and conditions applicable to purchasing and redeeming shares.

CONVERSION -- CLASS B SHARES

Class B shares that have been outstanding for six years after the end of the
month in which the shares were initially purchased automatically convert to
Class A shares of the Fund and, consequently, will no longer be subject to the
higher Rule 12b-1 Fees applicable to Class B shares. Such conversion is on the
basis of the relative NAV of the two Classes, without the imposition of any
sales charge or other charge except that the lower Rule 12b-1 Fees applicable
to Class A shares shall thereafter be applied to such converted shares. Because
the per share NAV of the Class A shares may be higher than that of the Class B
shares at the time of conversion, a shareholder may receive fewer Class A
shares than the number of Class B shares converted, although the dollar value
will be the same. Reinvestments of dividends and distributions on Class B
shares are considered new purchases for purposes of the conversion feature.

If a shareholder effects one or more exchanges among Class B shares of any
Fund or among shares of a Money Market Mutual Fund during the six-year period,
and exchanges back into Class B shares, the holding period for shares so
exchanged is counted toward the six-year period, and any Class B shares held at
the end of six years are converted into Class A shares. The conversion feature
does not apply to Class C shares.

Management, Distribution and Servicing Fees

INVESTMENT ADVISER

Wells Fargo Bank provides investment guidance and policy direction in
connection with the daily portfolio management of the Fund. Wells Fargo Bank
also furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund. For its services as investment adviser,
Wells Fargo Bank is entitled to receive a monthly advisory fee at the annual
rate of 0.70% of the Fund's average daily net assets up to $500 million and
0.60% of average daily net assets in excess of $500 million.

Wells Fargo Bank has engaged BGFA to provide sub-advisory services to the
Fund. BGFA is located at 45 Fremont Street, San Francisco, California 94105.
BGFA is a wholly

35 PROSPECTUS
<PAGE>

owned subsidiary of BGI and an indirect subsidiary of Barclays Bank PLC
("Barclays"). As of January 1, 1997, BGFA and its affiliates provided
investment advisory services for over $410 billion of assets. Wells Fargo Bank
pays BGFA for its sub-advisory services an annual fee equal to $60,000 plus a
monthly fee at the annual rate of 0.20% of the Fund's average daily net assets.

Advisory Fees Paid

For the year ended December 31, 1996, Wells Fargo Bank was paid 0.70% of the
predecessor portfolio's average daily net assets as compensation for its
services as investment adviser. For the same period, Wells Fargo Bank paid BGFA
0.20% of the predecessor portfolio's average daily net assets as compensation
for its services as sub-adviser.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

BGI serves as the Fund's custodian. BGI, located at 45 Fremont Street, San
Francisco, California 94105, is a special purpose trust company that is owned
indirectly by Barclays. BGFA is a wholly owned subsidiary of BGI. Wells Fargo
Bank has been retained to act as the Fund's transfer and dividend disbursing
agent. Its principal place of business is 420 Montgomery Street, San Francisco,
California 94104 and its transfer and dividend disbursing agency activities are
managed at 525 Market Street, San Francisco, California 94105.

ADMINISTRATIVE SERVICING AGENTS -- CLASS A

The Company has adopted a Shareholder Administrative Servicing Plan (the
"Administrative Servicing Plan") on behalf of the Class A shares. Pursuant to
the Administrative Servicing Plan, the Fund may enter into administrative
servicing agreements with administrative servicing agents (which may include
Wells Fargo Bank and its affiliates) who are dealers/holders of record, or that
otherwise have a servicing relationship with the beneficial owners of the
Fund's Class A shares. Administrative servicing agents agree to perform
administrative shareholder services which may include, among other things,
maintaining an omnibus account with the Fund, aggregating and transmitting
purchase, exchange and redemption orders to the Fund's Transfer Agent,
answering customer inquiries regarding a shareholder's accounts in the Fund,
and providing such other services as the Fund or a customer may reasonably
request. Administrative servicing agents are entitled to a fee which will not
exceed 0.25%, on an annualized basis, of the average daily net assets of the
Class A shares represented by the shares owned of record or beneficially by the
customers of the administrative servicing agent during the period for which
payment is being made. In no case shall shares be sold pursuant to the Fund's
Rule 12b-1 Plan while being sold pursuant to its Administrative Servicing Plan.

PROSPECTUS 36
<PAGE>

SHAREHOLDER SERVICING AGENTS -- CLASS B AND CLASS C

The Company has adopted Shareholder Servicing Plans ("Servicing Plans") on
behalf of the Class B and Class C shares. Pursuant to the Servicing Plans, the
Fund may enter into servicing agreements with one or more shareholder servicing
agents (which may include Wells Fargo Bank and its affiliates) who agree to
provide shareholder support services, which may include responding to customer
inquiries and providing information on shareholder investments, and provide
such other related services as the Fund or a shareholder may reasonably
request. Shareholder servicing agents are entitled to receive a fee which will
not exceed, on an annualized basis for the Fund's then-current fiscal year, the
lesser of 0.25% of the average daily net asset value of the Class B and Class C
shares held of record or beneficially by such customers.

In no event will the fees paid exceed the maximum amount payable to the
administrative or shareholder servicing agent under applicable laws,
regulations or rules, including the Conduct Rules of the NASD ("NASD Rules").
Such agents also may impose certain conditions on their customers, subject to
the terms of this Prospectus, in addition to or different from those imposed by
the Company, such as requiring a higher minimum initial investment or payment
of a separate fee for additional services. Each such agent is required to agree
to disclose any fees it may directly charge its customers who are shareholders
of the Fund and to notify them in writing at least 30 days before it imposes
any transaction fees.

ADMINISTRATOR AND CO-ADMINISTRATOR

Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank and Stephens as administrator and co-administrator, respectively,
provide the Fund with administration services, including general supervision of
the Fund's operation, coordination of the other services provided to the Fund,
compilation of information for reports to the SEC and the state securities
commissions, preparation of proxy statements and shareholder reports, and
general supervision of data compilation in connection with preparing periodic
reports to the Company's Directors and officers. Wells Fargo Bank and Stephens
also furnish office space and certain facilities to conduct the Fund's
business, and Stephens compensates the Company's Directors, officers and
employees who are affiliated with Stephens. For these administrative services,
Wells Fargo Bank and Stephens are entitled to receive monthly fees at the
annual rates of 0.04% and 0.02%, respectively, of the Fund's average daily net
assets. Wells Fargo Bank and Stephens may delegate certain of their
administrative duties to sub-administrators.

Stephens previously provided substantially the same services as sole
administrator to the predecessor portfolio. For these administrative services,
Stephens was entitled to receive a monthly fee at the annual rate of 0.10% of
the predecessor portfolio's average daily net assets, decreasing to 0.05% of
the average daily net assets of the predecessor portfolio in excess of $200
million.

37 PROSPECTUS
<PAGE>

SPONSOR AND DISTRIBUTOR

Stephens is the Fund'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 pursuant
to which Stephens is responsible for distributing shares of the Fund. The
Company also has adopted a Distribution Plan on behalf of each class of shares
of the Fund under the SEC's Rule 12b-1 ("Plans"). Pursuant to the Plans, the
Company may pay to Stephens as compensation for distribution-related services
provided, or reimbursement for distribution related expenses incurred, a
monthly fee at the annual rate of 0.25% and 0.75% and 0.75%, respectively, of
the average daily net assets attributable to the Class A, Class B and Class C
shares of the Fund. The actual fee payable to Stephens shall, within such
limit, be determined from time to time by mutual agreement between the Company
and Stephens. Stephens may enter into selling agreements with one or more
selling agents under which such agents may receive compensation for
distribution-related services from Stephens, including, but not limited to,
commissions or other payments to such agents based on the average daily net
assets of Fund shares attributable to them. Stephens may retain any portion of
the total distribution fee payable hereunder to compensate it for distribution-
related services provided by it or to reimburse it for other distribution-
related expenses.

Other distribution-related services may include, among other services, costs
and expenses for advertisements, sales literature, direct mail or any other
form of advertising; expenses of sales employees or agents of the Distributor,
including salary, commissions, travel and related expenses; payments to
broker/dealers and financial institutions for services in connection with the
distribution of shares, including promotional incentives and fees calculated
with reference to the average daily net asset value of shares held by
shareholders who have a brokerage or other service relationship with the
broker/dealer or other institution receiving such fees; and other similar
services as the Directors determine to be reasonably calculated to result in
the sale of the Fund's shares.

PROSPECTUS 38
<PAGE>

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.

The Distribution Agreement provides that Stephens shall act as agent for the
Fund for the sale of Fund shares, and may enter into selling agreements with
Selling Agents that wish to make available shares of the Fund to its customers.
The Fund may participate in joint distribution activities with any of the other
funds of the Company, in which event, expenses reimbursed out of the assets of
the Fund may be attributable, in part, to the distribution-related activities
of another fund of the Company. Generally, the expenses attributable to joint
distribution activities will be allocated among the Fund and the other funds of
the Company in proportion to their relative net asset sizes, although the
Company's Board of Directors may allocate such expenses in any other manner
that it deems fair and equitable.

Stephens has established a cash and non-cash compensation program, pursuant to
which broker/dealers or financial institutions that sell shares of the
Company's funds may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise or the cash value of a non-cash
compensation item.

FUND EXPENSES

From time to time, Wells Fargo Bank and Stephens may waive their respective
fees in whole or in part and reimburse expenses payable to others. Any such
waivers or reimbursements will reduce the Fund's expenses and, accordingly,
have a favorable impact on such Fund's performance. Except for the expenses
borne by Wells Fargo Bank and Stephens, the Fund bears all costs of its
operations, including its pro rata portion of Company expenses such as fees and
expenses of its independent auditors and legal counsel, and compensation of the
Company's directors who are not affiliated with the adviser, administrator or
any of their affiliates; advisory, transfer agency, custody and administration
fees; and any extraordinary expenses. Expenses attributable to each fund or
class are charged against the assets of the fund or class. General expenses of
the Company are allocated among all of the funds of the Company in a manner
proportionate to the net assets of the Fund, on a transactional basis, or on
such other basis as the Company's Board of Directors deems equitable.

Taxes

39 PROSPECTUS
<PAGE>

shareholders may be excludable pursuant to the "dividends-received deduction"
allowable to corporate shareholders. Distributions designated by the Fund as
capital gain distributions attributable to its net capital gains may be taxable
to individual, trust and estate shareholders at preferential rates. See
"Additional Information Concerning Taxes -- Capital Gain Distributions" in the
SAI. In general, your distributions will be taxable when paid, whether you take
such distributions in cash or have them automatically reinvested in additional
Fund shares. However, distributions declared in October, November and December
and distributed by the following January will be taxable as if they were paid
by December 31.

Your redemptions (including redemptions in-kind) and exchanges of Fund shares
ordinarily will result in a taxable capital gain or loss, depending on the
amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the cost of your shares. See "Federal Income Taxes --
Disposition of Fund Shares" in the SAI.

Foreign shareholders may be subject to different tax treatment, including
withholding taxes. See "Federal Income Taxes -- Foreign Shareholders" in the
SAI. In certain circumstances, U.S. residents may also be subject to
withholding taxes. See "Federal Income Taxes -- Backup Withholding" in the SAI.

The foregoing discussion regarding taxes is based on tax laws which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal tax considerations generally affecting the 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. Further federal tax
considerations are discussed in the SAI.

PROSPECTUS 40
<PAGE>

PROSPECTUS APPENDIX -- ADDITIONAL INVESTMENT POLICIES

FUND INVESTMENTS

Set forth below is a more detailed description of the Fund's permissible
investments. For additional information, see "Additional Permitted Investment
Activities" in the SAI.

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 obligations. Floating- and variable-rate instruments are
subject to interest-rate risk and credit risk.

Loans of Portfolio Securities

The Fund may lend securities from its portfolios to brokers, dealers and
financial institutions (but not individuals) in order to increase the return on
the portfolio. The value of the loaned securities may not exceed one-third of
the Fund's total assets and loans of portfolio securities are fully
collateralized based on values that are market-to-market daily. The Fund will
not enter into any portfolio security lending arrangement having a duration of
longer than one year. The principal risk of portfolio lending is potential
default or insolvency of the borrower. In either of these cases, the Fund could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. The Fund may pay reasonable
administrative and custodial fees in connection with loans of portfolio
securities and may pay a portion of the interest or fee earned thereon to the
borrower or a placing broker. See "Additional Permitted Investment Activities"
in the SAI for additional information.

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 at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to
securities which could otherwise be purchased by the Fund, and all repurchase
agreements 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 also may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank.

A-1 PROSPECTUS
<PAGE>

Money Market Instruments

The Fund may invest in the following types of high-quality money market
instruments that have remaining maturities not exceeding one year: (i) U.S.
Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by
the FDIC; (iii) commercial paper rated at the date of purchase "P-1" by Moody's
or "A-1" or "A-1-" by S&P; (iv) certain repurchase agreements and (v) short-
term U.S. dollar-denominated obligations of foreign banks (including U.S.
branches) that at the time of investment: (i) have more than $10 billion, or
the equivalent in other currencies, in total assets; (ii) are among the 75
largest foreign banks in the world as determined on the basis of assets; (iii)
have branches or agencies in the United States; and (iv) in the opinion of
Wells Fargo Bank, as investment adviser, are of comparable quality to the
obligations of U.S. banks which may be purchased by the Fund. The Fund also may
purchase nonconvertible corporate debt securities (e.g., bonds and debentures)
with remaining maturities at the date of purchase of no more than one year that
are rated at least "Aa" by Moody's or "AA" by S&P.

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
rise when market rates decrease. Certain types of U.S. Government obligations
are subject to fluctuations in yield, duration or value due to their structure
or contract terms.

Other Investment Companies

The Fund may invest in shares of other open-end, management investment
companies provided that any such investments will be limited to temporary
investments

PROSPECTUS A-2
<PAGE>

in shares of unaffiliated investment companies. Wells Fargo Bank will waive its
advisory fees for that portion of the Fund's assets so invested, except when
such purchase is part of a plan of merger, consolidation, reorganization or
acquisition. The Fund may also purchase shares of exchange-listed closed-end
funds.

Futures Contracts and Options Transactions

A futures transaction involves a firm agreement to buy or sell a commodity or
financial instrument at a particular price on a specified future date, while an
option transaction generally involves a right, which may or may not be
exercised, to buy or sell a commodity or financial instrument at a particular
price on a specified future date. Futures contracts and options are
standardized and exchange-traded, where the exchange serves as the ultimate
counterparty for all contracts. Consequently, the primary credit risk on
futures contracts is the creditworthiness of the exchange. Futures contracts,
however, are subject to market risk (i.e., exposure to adverse price changes).

Although the Fund intends to purchase or sell futures contracts only if there
is an active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit
has been reached in a particular contract, no trades may be made that day at a
price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the Fund to
substantial losses. If it is not possible, or the Fund determines not to close
a futures position in anticipation of adverse price movements, the Fund will be
required to make daily cash payments of variation margin.

An option on a futures contract gives the purchaser the right, in return for
the premium paid, to assume a position in a futures contract (a long position
if the option is a call and a short position if the option is a put) at a
specified exercise price at any time during the option exercise period. The
writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by both the writer and the holder of
the option will be accompanied by delivery of the accumulated cash balance in
the writer's futures margin account in the amount by which the market price of
the futures contract, at exercise, exceeds (in the case of a call) or is less
than (in the case of a put) the exercise price of the option on the futures
contract.

Stock Index Options. The Fund may purchase put and call options on stock
indices. The Fund may sell call options on stock indices. The Fund may purchase
and

A-3 PROSPECTUS
<PAGE>

write call and put options on stock indices only as a substitute for comparable
market positions in the underlying securities. The aggregate premiums paid on
all options purchased by the Fund may not exceed 20% of the Fund's total assets
and the value of the options written may not exceed 10% of the value of the
Fund's total assets.

The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in a the Fund's portfolio correlate
with price movements of the stock index selected. Because the value of an index
option depends upon movements in the level of the index rather than the price
of a particular stock, whether the Fund will realize a gain or loss from
purchasing or writing stock index options depends upon movements in the level
of stock prices in the stock market generally or, in the case of certain
indices, in an industry or market segment, rather than movements in the price
of particular stock. When the Fund writes an option on a stock index, the Fund
will place in a segregated account with the Fund's custodian cash or liquid
securities in an amount at least equal to the market value of the underlying
stock index and will maintain the account while the option is open or otherwise
will cover the transaction.

Stock Index Futures and Options on Stock Index Futures. The Fund may invest in
stock index futures and options on stock index futures as a substitute for a
comparable market position in the underlying securities. A stock index future
obligates the seller to deliver (and the purchaser to take), effectively, an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock index at the close of the last trading day of the
contract and the price at which the agreement is made. No physical delivery of
the underlying stocks in the index is made. With respect to stock indices that
are permitted investments, the Fund intends to purchase and sell futures
contracts on the stock index for which it can obtain the best price with
consideration also given to liquidity.

Interest-Rate Futures Contracts and Options on Interest-Rate Futures
Contracts. The Fund may invest in interest-rate futures contracts and options
on interest-rate futures contracts as a substitute for a comparable market
position in the underlying securities. The Fund may also sell options on
interest-rate futures contracts as part of closing purchase transactions to
terminate its options positions. No assurance can be given that such closing
transactions can be effected or as to the degree of correlation between price
movements in the options on interest-rate futures and price movements in the
Fund's portfolio securities which are the subject of the transaction.

Interest-Rate and Index Swaps. The Fund may enter into interest-rate and index
swaps in pursuit of its investment objective. Interest-rate swaps involve the
exchange by the Fund with another party of its commitments to pay or receive
interest (for example, an exchange of floating-rate payments for fixed-rate
payments). Index swaps involve the exchange by the Fund with another party of
cash flows based upon the performance of

PROSPECTUS A-4
<PAGE>

an index of securities or a portion of an index of securities that usually
include dividends or income. In each case, the exchange commitments can involve
payments to be made in the same currency or in different currencies. The Fund
will usually enter into swaps on a net basis. In so doing, the two payment
streams are netted out, with the Fund receiving or paying, as the case may be,
only the net amount of the two payments. If the Fund enters into a swap, it
will maintain a segregated account on a gross basis, unless the contract
provides for a segregated account on a net basis. If there is a default by the
other party to such a transaction, the Fund will have contractual remedies
pursuant to the agreements related to the transaction.

The use of interest-rate and index swaps is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio security transactions. There is no limit, except as
provided below, on the amount of swap transactions that may be entered into by
the Fund. These transactions generally do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps generally is limited to the net amount of payments
that the Fund is contractually obligated to make. There is also a risk of a
default by the other party to a swap, in which case the Fund may not receive
net amount of payments that the Fund contractually is entitled to receive. The
Fund may invest up to 10% of its net assets in interest-rate and index swaps.

Short-Term Corporate Debt Instruments

The Fund may invest in commercial paper (including variable amount master
demand notes), which refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes.

The Fund also may invest in nonconvertible corporate debt securities (e.g.,
bonds and debentures) with no more than one year remaining to maturity at the
date of settlement. The Fund will invest only in such corporate bonds and
debentures that are rated at the time of purchase at least "Aa" by Moody's or
"AA" by S&P.

Temporary Investments

The Fund may hold a certain portion of its assets in cash or short-term
investments in order to maintain adequate liquidity for redemption requests or
other cash management needs or for temporary defensive purposes during periods
of unusual market volatility. The short-term investments that the Fund may
purchase include,

A-5 PROSPECTUS
<PAGE>

among other things, U.S. government obligations, shares of other mutual funds,
repurchase agreements, obligations of domestic banks and short-term obligations
of foreign banks, corporations and other entities. See "Additional Permitted
Investment Activities" in the SAI for additional information.

INVESTMENT POLICIES AND RESTRICTIONS

The Fund's investment objective, as set forth in "How the Fund Works --
Investment Objective and Policies," is fundamental; that is, it may not be
changed without approval by the vote of the holders of a majority of the Fund's
outstanding voting securities, as described under "Capital Stock" in the SAI.
If the 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 may make such change without
shareholder approval and will disclose any such material changes in the then-
current Prospectus.

Fundamental Investment Policies

As matters of fundamental policy, the Fund may: (i) 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 borrowing exists); (ii) make loans of portfolio
securities; (iii) invest up to 10% of the current value of its net assets in
repurchase agreements having maturities of more than seven days, restricted
securities and illiquid securities; and (iv) 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.

PROSPECTUS A-6
<PAGE>

STAGECOACH FUNDS(R)

Advised by WELLS FARGO BANK, N.A.
Sponsored/Distributed by
Stephens Inc., Member NYSE/SIPC

NOT FDIC INSURED
<PAGE>

STAGECOACH FUNDS(R)
P.O. Box 7066
San Francisco, CA 94120-7066

STAGECOACH FUNDS:
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. are NOT insured by the FDIC or U.S. Government
. are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the
Bank
. involve investment risk, including possible loss of principal

[LOGO OF RECYCLED PAPER APPEARS HERE]
Printed on Recycled Paper SC 77 P (12/97)
<PAGE>

STAGECOACH FUNDS(R) BULK RATE
P.O. Box 7066 U.S. POSTAGE
San Francisco, CA 94120-7066 PAID
DALLAS, TEXAS
Permit No. 1808

STAGECOACH FUNDS:
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. are NOT insured by the FDIC or U.S. Government
. are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the
Bank
. involve investment risk, including possible loss of principal

<PAGE>

[LOGO OF STAGECOACH FUNDS APPEARS HERE]

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PROSPECTUS
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OVERLAND EXPRESS SWEEP FUND

December 12, 1997
<PAGE>
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION

DATED SEPTEMBER 25, 1997

STAGECOACH FUNDS(R)
OVERLAND EXPRESS SWEEP FUND

Stagecoach Funds, Inc. (the "Company") is an open-end management investment
company. This Prospectus contains information about the single class of shares
offered by one of the Company's Funds -- the OVERLAND EXPRESS SWEEP FUND (the
"Fund").

The OVERLAND EXPRESS SWEEP FUND seeks to provide investors with a high level
of current income, while preserving capital and liquidity. The Fund seeks to
maintain a stable net asset value of $1.00 per share. The Fund seeks to achieve
its investment objective by investing in high-quality, short-term instruments.

Shares of the Fund are offered only to customers of certain financial
institutions that have entered into Shareholder Servicing Agreements with the
Company on behalf of the Fund ("Servicing Agents"). Servicing Agents will
automatically invest, or "sweep," customer funds into shares of the Fund. As
further described below, Wells Fargo Bank, N.A. ("Wells Fargo Bank") will serve
as a Servicing Agent, and will receive certain fees pursuant to a Shareholder
Servicing Agreement. Wells Fargo Bank also has entered into a Selling Agreement
with Stephens Inc. ("Stephens") pursuant to which it will receive certain fees.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS 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 December 12, 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 1-800-222-8222. If you hold shares in an IRA, please
call 1-800-BEST-IRA for information or assistance.

FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

WELLS FARGO BANK IS THE FUND'S INVESTMENT ADVISER AND ADMINISTRATOR AND IS
COMPENSATED FOR PROVIDING THE FUND WITH CERTAIN OTHER SERVICES. STEPHENS, WHICH
IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE FUND'S SPONSOR, CO-
ADMINISTRATOR AND DISTRIBUTOR.

PROSPECTUS DATED DECEMBER 12, 1997
PROSPECTUS
<PAGE>

Table of Contents

-------

<TABLE>
<S> <C>
Prospectus Summary 1
Summary of Fund Expenses 3
Explanation of Tables 3
Financial Highlights 4
How the Fund Works 6
The Fund and Management 9
Investing in the Fund 10
Dividend and Capital Gain Distributions 12
Management, Distribution and Servicing Fees 13
Taxes 16
Prospectus Appendix -- Additional Investment Policies A-1
</TABLE>

PROSPECTUS i
<PAGE>

Prospectus Summary

The Fund provides you with a convenient way to invest in a portfolio of
securities selected and supervised by professional management. The following
provides you with summary information about the Fund. For more information,
please refer to the identified Prospectus sections and generally to the
Prospectus and SAI.

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The Fund seeks to provide investors with a high level of current income,
while preserving capital and liquidity. The Fund seeks to achieve its
investment objective by investing in high-quality, short-term instruments,
including obligations of the U.S. Government, its agencies, or
instrumentalities (including government-sponsored enterprises), certain short-
term debt obligations of U.S. banks and U.S. branches of foreign banks, high-
quality commercial paper, and certain repurchase agreements and floating- and
variable-rate instruments. The Fund seeks to maintain a stable net asset value
of $1.00 per share. See "Investment Objective and Policies."

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 FDIC, nor are they insured or guaranteed
against loss of principal. Therefore, you 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 invest. As with all mutual funds, there can be no
assurance that the Fund will achieve its investment objective. See "How the
Fund Works -- Investment Objective and Policies -- Risk Factors" below and
"Additional Permitted Investment Activities" in the SAI for further information
about the Fund's investments and related risks.

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as the Fund's investment adviser, manages your
investments. Wells Fargo Bank also provides the Fund with administration,
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, Distribution and
Servicing Fees."

Q. HOW DO I INVEST?

A. Shares of the Fund may be purchased on any day the Fund is open through a
Servicing Agent that has entered into a Shareholder Servicing Agreement with
the Company. There are no sales loads for purchasing shares of the Fund. There
is no minimum initial purchase or subsequent purchase amount applicable to Fund
shares. See "Purchase and Redemption of Shares."

1 PROSPECTUS
<PAGE>

Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?

A. Dividends are declared daily and are paid monthly. Any capital gains are
distributed at least annually. Investment income available for distribution to
holders of a class of shares is reduced by the class expenses payable on behalf
of those shares. See "Dividend and Capital Gain Distributions" and "Additional
Shareholder Services."

Q. HOW MAY I REDEEM SHARES?

A. Shares may be redeemed on any day the Fund is open for trading upon request
to a Servicing Agent. Proceeds of redemptions are credited to the Servicing
Agent's shareholder account with the Fund. The Fund imposes no redemption fees.
See "Purchase and Redemption of Shares."

PROSPECTUS 2
<PAGE>

Summary of Fund Expenses

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price)............................................................... None
Maximum Sales Charge on Reinvested Distributions...................... None
Maximum Sales Charge on Redemptions................................... None
Redemption Fees....................................................... None
Exchange Fees......................................................... None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<S> <C>
Management Fee.......................................................... 0.45%
Rule 12b-1 Fee.......................................................... 0.30%
Other Expenses.......................................................... 0.49%
-----
TOTAL FUND OPERATING EXPENSES........................................... 1.24%
=====
</TABLE>

EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment in the Fund,
assuming (A) a 5% annual return and (B) redemption at the end of each time
period indicated:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$13 $39 $68 $150
</TABLE>

Explanation of Tables

The purpose of the foregoing tables is to help you understand the various
costs and expenses that a shareholder in the Fund will pay directly or
indirectly. There are no sales loads or redemption fees charged by the Fund.
The tables do not reflect any charges that may be imposed by Servicing Agents
for services related to those provided under Shareholder Servicing Agreements
in connection with an investment in the Fund.

SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell Fund
shares. There are no Shareholder Transaction Expenses for the Fund. However,
the Company reserves the right to impose a charge for wiring redemption
proceeds.

ANNUAL FUND OPERATING EXPENSES are based on applicable contract amounts for
"Management Fee" and "Rule 12b-1 Fee" and estimated amounts for "Other
Expenses" expected to be in effect during the current fiscal year. On December
12, 1997, the Overland Sweep Fund of Overland Express Funds, Inc. was
reorganized as the Overland Express Sweep Fund of the Company. The Overland
Fund is sometimes

3 PROSPECTUS
<PAGE>

referred to herein as the "predecessor portfolio." Wells Fargo Bank and
Stephens may voluntarily waive or reimburse all or a portion of their
respective fees charged to, or expenses paid by, the Fund. Any waivers or
reimbursements would reduce the Fund's total expenses. There is no assurance
that such waivers or reimbursements would continue. Long-term shareholders of
the Fund could pay more in distribution-related charges than the economic
equivalent of the maximum front-end sales charges applicable to mutual funds
sold by members of the National Association of Securities Dealers, Inc.
("NASD").

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.

Additional information regarding the Fund's expenses is included under "The
Fund and Management" and "Management, Distribution and Servicing Fees" and in
the SAI.

Financial Highlights

The following information has been derived from the Financial Highlights in
the audited financial statements for the year ended December 31, 1996 and the
unaudited financial statements for the six-month period ended June 30, 1997,
for the predecessor portfolio to the Fund. This information is provided to
assist you in evaluating the Fund's historical performance. The audited
financial statements were audited by KPMG Peat Marwick LLP. The audited
financial statements and the independent auditor's report thereon for the year
ended December 31, 1996 are incorporated by reference into the SAI. In
addition, the unaudited financial statements for the six-month period ended
June 30, 1997 also are incorporated by reference into the SAI. This information
should be read in conjunction with the predecessor portfolio's audited 1996
financial statements and unaudited 1997 semi-annual financial statements and
the notes thereto. The SAI has been incorporated by reference into this
Prospectus. During the periods shown, the predecessor portfolio invested all of
its assets in a master portfolio with the same investment objective and bore a
pro rata share of the corresponding master portfolio's expenses.

PROSPECTUS 4
<PAGE>

OVERLAND EXPRESS SWEEP FUND
FOR A SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993 1992 1991/1/
----------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income.. 0.02 0.04 0.05 0.03 0.02 0.03 0.01
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.02) (0.04) (0.05) (0.03) (0.02) (0.03) (0.01)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
Total return (not
annualized)............ 2.15% 4.29% 4.80% 3.11% 1.97% 2.31% 0.93%
Ratios/supplemental
data:
Net assets, end of
period (000).......... $2,076,137 $2,002,725 $1,209,183 $812,559 $528,072 $253,617 $14,010
Number of shares
outstanding, end of
period (000).......... 2,076,710 2,003,292 1,209,183 812,559 528,072 253,628 14,010
Ratios to average net
assets (annualized)/2/:
Ratio of expenses to
average net assets.... 1.25% 1.24% 1.25% 1.25% 1.25% 1.24% 1.23%
Ratio of net investment
income to average net
assets................ 4.31% 4.20% 4.70% 2.92% 1.67% 2.20% 3.46%
Ratio of expenses to
average net assets
prior to waived fees
and reimbursed
expenses.............. 1.26% 1.26% 1.28% 1.33% 1.31% 1.51% 6.92%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses.............. 4.30% 4.18% 4.67% 2.84% 1.61% 1.93% (2.23)%
</TABLE>
- -------------
/1/The Fund commenced operations on October 1, 1991, as the Overland
Sweep Fund of Overland Express Funds, Inc.
/2/These ratios include expenses charged to the Master Portfolio.

5 PROSPECTUS
<PAGE>

How The Fund Works

INVESTMENT OBJECTIVE AND POLICIES

Set forth below is a description of the investment objective and related
policies of the Fund. The Fund seeks to maintain a dollar-weighted average
portfolio maturity of 90 days or less. There can be no assurance that the
Fund's investment objective will be achieved or that the Fund will be able to
maintain a net asset value of $1.00 per share. A more complete description of
the Fund's investments and investment activities is contained in "Prospectus
Appendix -- Additional Investment Policies" and the SAI.

The OVERLAND EXPRESS SWEEP FUND seeks to provide investors with a high level
of current income, while preserving capital and liquidity. The Fund seeks to
achieve its investment objective by investing in U.S. dollar-denominated
securities with remaining maturities not exceeding thirteen months, as defined
under the Investment Company Act of 1940 (the "1940 Act").

The Fund may invest in U.S. Government obligations, obligations of domestic
and foreign banks, commercial paper, certain floating- and variable-rate
instruments, repurchase agreements and certain short-term, U.S. dollar-
denominated obligations of domestic branches of foreign banks.

As a matter of fundamental policy, the Fund may 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 may not be
purchased while any such outstanding borrowing in excess of 5% of its net
assets exists). As a matter of fundamental policy, the Fund may not invest more
than 25% of its assets (i.e., concentrate) in any particular industry,
excluding U.S. Government obligations and obligations of domestic banks.

As a matter of non-fundamental policy, the Fund may invest up to 10% of the
current value of its net assets in repurchase agreements having maturities of
more than seven days, illiquid securities, and fixed time deposits that are
subject to withdrawal penalties and that have maturities of more than seven
days.

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

PROSPECTUS 6
<PAGE>

investment to the high credit quality instruments in which the Fund invests.
Illiquid securities, which may include certain restricted securities, may be
difficult to sell promptly at an acceptable price. Certain restricted
securities may be subject to legal restrictions on resale. Delay or difficulty
in selling securities may result in a loss or be costly to a Fund. As with all
mutual funds, there can be no assurance that the Fund will achieve its
investment objective.

The portfolio debt instruments of the Fund are subject to credit and interest-
rate risk. Credit risk is the risk that issuers of the debt instruments in
which the Fund invests may default on the payment of principal and/or interest.
Interest-rate risk is the risk that increases in market interest rates may
adversely affect the value of the debt instruments in which the Fund invests
and hence the value of your investment in the Fund.

The Fund, under 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, Fund purchases must present minimal credit risks and be of the
highest quality (i.e., be rated in the top rating category by the requisite
NRSROs or, if unrated, determined to be of comparable quality to such rated
securities by the Fund's 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. In addition, the Fund emphasizes safety of principal and high credit
quality. In particular, the internal investment policies of the Fund's
investment adviser prohibits 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

7 PROSPECTUS
<PAGE>

Cost of Funds Index ("COFI") floaters. The Fund may invest only in variable or
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 ("LIBOR"),
the prime rate, published commercial paper rates, federal funds rates, Public
Securities Associates ("PSA") 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 attempts to maintain the value of its shares at
a constant $1.00 per share, although there can be no assurance that it will
always be able to do so. See "Prospectus Appendix -- Additional Investment
Policies" and the SAI for further information about investment policies and
risks.

PERFORMANCE

The performance of the Fund may be advertised from time to time in terms of
current yield, effective yield or average annual total return. Performance
figures are based on historical results and are not intended to indicate future
performance. Performance figures are calculated separately for each class of
shares of the Fund.

Yield refers to the income generated by an investment in the Fund's class 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.

Average annual return of a class of shares is based on the overall dollar or
percentage change of an investment in the Fund's class and assumes the
investment is at NAV and all dividends and distributions attributable to a
class are also reinvested at NAV in shares of the class.

In addition to presenting these standardized performance calculations, at
times, the Fund also may present nonstandard performance figures, such as
yields and effective yields for a 30-day period or, in sales literature,
distribution rates. Because of the differences in the fees and/or expenses
borne by shares of each class of the Fund, the performance figures on such
shares can be expected, at any given time, to vary from the performance figures
for other classes of the Fund.

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 1-800-222-8222 or by writing the
Company at the address shown on the front cover of the Prospectus.

PROSPECTUS 8
<PAGE>

The Fund And Management

THE FUND

The Fund is one of the funds in the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991 and currently
offers shares of more than twenty-five other funds. For information on another
fund or a class of shares, please call Stagecoach Shareholder Services at 1-
800-222-8222 or write the Company at the address shown on the front cover of
the Prospectus.

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 of 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
August 1, 1997, Wells Fargo Bank and its affiliates provided investment
advisory services for approximately $57 billion of assets of individuals,
trusts, estates and institutions. Wells Fargo Bank also serves as investment
adviser to other separately managed funds of the Company, and as investment
adviser or sub-adviser to separately managed funds of other registered, open-
end, management investment companies. Wells Fargo Bank, a wholly owned
subsidiary of Wells Fargo & Company, is located at 420 Montgomery Street, San
Francisco, California 94104.

Wells Fargo Bank deals, trades and invests for its own account in the types of
securities in which the Fund's may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by a
Fund. Wells Fargo Bank has informed the Company that in making its investment
decisions it does not obtain or use material inside information in its
possession. Purchase and sale orders of the securities held by the Fund may be
combined with those of other accounts that Wells Fargo Bank manages or advises,
and for which it has brokerage placement

9 PROSPECTUS
<PAGE>

authority, in the interest of seeking the most favorable overall net results.
When Wells Fargo Bank determines that a particular security should be bought or
sold for the Fund and other accounts managed by Wells Fargo Bank, Wells Fargo
Bank undertakes to allocate those transaction costs among the participants
equitably. From time to time, the Fund, to the extent consistent with its
investment objective, policies and restrictions, may invest in securities of
companies with which Wells Fargo Bank has a lending relationship.

-----------------------

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

Shares of the Fund are offered exclusively to customers of Servicing Agents
who have entered into a Shareholder Servicing Agreement with the Company on
behalf of the Fund. The Shareholder Servicing Agreements contemplate that
customers of a Servicing Agent will have entered into agency agreements with
such Servicing Agent whereby the Servicing Agent is authorized to invest
certain amounts maintained by the customer in an account with the Servicing
Agent in shares of the Fund through a single account in the name of the
Servicing Agent on behalf of its customers.

Shares of the Fund may be purchased on any day the Fund is open for business
(a "Business Day"). The Fund is open Monday through Friday and is closed on
weekends and federal bank holidays. On any day the trading markets for both
U.S. government securities and money market instruments close early, the Fund
will close early. On these days, the NAV calculation time and the dividend,
purchase and redemption cut-off times discussed below may be earlier than 9:00
a.m. (Pacific time).

PROSPECTUS 10
<PAGE>

SHARE VALUE

Net asset value per share for the Fund is determined by Wells Fargo Bank on
each Business Day. The Fund is open Monday through Friday and is closed
weekends and standard New York Stock Exchange holidays.

The net asset value per share of the Fund is determined by dividing the value
of the total assets of the Fund, less all of its liabilities by the total
number of outstanding shares of the Fund. The net asset value of the Fund is
determined as of 9:00 a.m. and 1:00 p.m. (Pacific time) each Business Day. It
is anticipated that the net asset value of each share of the Fund will remain
constant at $1.00, although there is no assurance that the Fund will maintain a
stable net asset value.

The Fund uses the amortized cost method to value its portfolio securities. The
amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity, generally without
regard to the impact of fluctuating interest rates on the market value of the
security.

PURCHASE OF SHARES

Fund shares are offered continuously at the net asset value next determined
after a purchase order is received by the Servicing Agent. The Servicing Agent
is responsible for the prompt transmission of the purchase order to the Fund.
The net asset value is expected to remain constant at $1.00. No sales loads are
imposed.

Shares of the Fund may be purchased on any Business Day. There is no minimum
initial or subsequent purchase amount applicable to Fund shares. The Company
reserves the right to reject any purchase order for Fund shares. All amounts
accepted will be invested in full and fractional shares. Inquiries regarding
purchases and redemptions may be directed to the Company at 1-800-222-8222 or
at the address on the back cover of the Prospectus.

HOW TO REDEEM SHARES

Shares may be redeemed at their next determined net asset value after the
Servicing Agent has received a redemption order. The Servicing Agent is
responsible for the prompt transmission of the redemption order to the Fund.
The Company does not charge redemption fees. Proceeds of redemptions will be
credited to the Servicing Agent's shareholder account with the Fund.

The Shareholder Servicing Agent may charge you a service fee. In addition, it
may benefit from the use of your redemption proceeds until any check it issues
to you has cleared or until such proceeds have been disbursed or reinvested on
your behalf.

11 PROSPECTUS
<PAGE>

STATEMENTS AND REPORTS

The Company, or a Shareholder Servicing Agent on its behalf, typically sends
you a monthly statement of your Fund account after every month in which there
has been a transaction that affects your share balance or your Fund account
registration. Every January, you will be provided a statement, which is also
filed with the IRS, with tax information for the previous year to assist you in
tax return preparation. At least twice a year, the Company's financial
statements are mailed to shareholders of record.

Dividend and Capital Gain Distributions

The Net Income (as defined below) of the Fund is allocated daily to all
investors of record as of 9:00 a.m. (Pacific time) on each day that Wells Fargo
Bank is open (a "Bank Business Day").

Dividends of the Fund declared in, and attributable to, any month are paid on
the last Business Day of the month and generally are mailed early in the
following month. Shareholders of the Fund who redeem shares prior to a dividend
payment date will be entitled to all dividends declared but unpaid prior to
redemption on such shares on the next dividend payment date.

The net income of the Fund (from the time of the immediately preceding
determination thereof) consists of (i) all income accrued, less the
amortization of any premium, on the assets of the Fund, less (ii) all actual
and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles. Interest income includes discount earned
(including both original issue and market discount) on discount paper accrued
ratably to the date of maturity and any net realized short-term gains or losses
on the assets of the Fund.

Dividends and any capital gain distributions paid by the Fund will be
reinvested in additional shares of the Fund at net asset value and credited to
an investor's account on the payment date.

Since the net income of the Fund is declared as a dividend each time it is
determined, the net asset value per share of the Fund is expected to remain
constant at $1.00 per share immediately after each such determination and
dividend declaration.

Net Income for a Saturday, Sunday or Holiday are declared payable to
shareholders of record as of the preceding Business Day. You have several
options for receiving dividend and capital gain distributions. They are
discussed under "Additional Shareholder Services -- Dividend and Capital Gain
Distribution Options" below.

PROSPECTUS 12
<PAGE>

Management, Distribution and Servicing Fees

INVESTMENT ADVISER

Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank, as the Fund's investment adviser, provides investment guidance and
policy direction in connection with the management of the Fund's assets. The
adviser also furnishes the Board of Directors with periodic reports on the
Fund's investment strategies and performance. For these services, the adviser
is entitled to a monthly investment advisory fee at the annual rate of 0.45% of
the average daily net assets of the Fund. 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. For the year ended December 31, 1996, Wells Fargo Bank was paid
at the annual rate of 0.25% of the average daily net assets of the predecessor
portfolio's Master Portfolio as compensation for its services as investment
adviser.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank serves as the Fund's custodian and transfer and dividend
disbursing agent. Under the Custody Agreement with Wells Fargo Bank, 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 AGENT

The Company has entered into a Shareholder Servicing Agreement on behalf of
the Fund with Wells Fargo Bank, and may enter into such Agreements with one or
more other financial institutions which desire to act as Servicing Agents.
Pursuant to each such Shareholder Servicing Agreement, the Servicing Agent, as
agent for its customers, will, among other things: automatically invest cash
balances maintained in customer accounts with the Servicing Agent into the
Fund, and redeem shares out of the Fund, in the amounts specified pursuant to
agency agreements between the Servicing Agent and its customers; maintain a
single shareholder account for the benefit of its customers with the Fund;
provide sub-accounting services to monitor and account for its customers'
beneficial ownership of shares of the Fund held in the Servicing Agent's
shareholder account; answer customer inquiries regarding account status and
history, purchases and redemptions of shares of the Fund, Fund performance and
certain other matters pertaining to the Fund; assist its customers in
designating and changing account designations and addresses; process Fund
purchase and redemption transactions;

13 PROSPECTUS
<PAGE>

forward and receive funds in connection with purchases or redemptions of shares
of the Fund; provide periodic statements showing a customer's subaccount
balance; furnish (either separately or on an integrated basis with other
reports sent to a customer by the Servicing Agent) monthly statements and
confirmations of purchases and redemptions of Fund shares in the Servicing
Agent's shareholder account on behalf of the customer; forward to its customers
proxy statements, annual reports, updated prospectuses and other communications
from the Fund to shareholders as required; receive, tabulate and forward to the
Company proxies executed by or on behalf of its customers with respect to
meetings of shareholders of the Fund; and provide such other related services,
and necessary personnel and facilities to provide all of the shareholder
services contemplated by the Shareholder Servicing Agreement, in each case, as
the Company or a customer of the Servicing Agent may reasonably request. All
purchases and redemptions are effected through Stephens as the Fund's
Distributor.

For providing these services, each Servicing Agent is entitled to receive a
fee from the Fund, which may be paid periodically, of up to 0.30%, on an
annualized basis, of the average daily net assets of the Fund represented by
shares owned of record by the Servicing Agent on behalf of its customers, or an
amount which, when considered in conjunction with amounts payable pursuant to
the Fund's Distribution Agreement, equals the maximum amount payable to the
Servicing Agent under applicable laws, regulations or rules, whichever is less.
A Servicing Agent also may impose certain conditions on its customers, subject
to the terms of this Prospectus, in addition to or different from those imposed
by the Fund, such as requiring a minimum initial investment or the payment of
additional fees for additional services offered to the customer. The exercise
of voting rights and the delivery to customers of shareholder communications
will be governed by the customers' agency agreements with the Servicing Agent.
The Servicing Agent has agreed to forward to its customers who are shareholders
of the Fund appropriate prior written disclosure of any fees that it may charge
them directly and to provide written notice at least 15 days prior to
imposition of any transaction fees.

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 administration 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

PROSPECTUS 14
<PAGE>

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.

Stephens previously provided substantially the same services as sole
administrator to the predecessor portfolio and was entitled to receive a
monthly fee from the Fund at an annual rate of 0.025% of its average daily net
assets.

SPONSOR AND DISTRIBUTOR

Stephens, 111 Center Street, Little Rock, Arkansas 72201, 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. Stephens and its
predecessor have been providing securities and investment services for more
than sixty years, including 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.

The Company's Board of Directors has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act on behalf of the Fund. Pursuant to
the Plan, the Company may pay to Stephens as compensation for distribution-
related services provided, or reimbursement for distribution related expenses
incurred, a monthly fee at the annual rate of 0.30% of the Fund's average daily
net assets. The actual fee payable to Stephens shall, within such limit, be
determined from time to time by mutual agreement between the Company and
Stephens. Stephens may enter into selling agreements with one or more selling
agents under which such agents may receive compensation for distribution-
related services from Stephens, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. Stephens may retain any portion of the total
distribution fee payable hereunder to compensate it for distribution-related
services provided by it or to reimburse it for other distribution-related
expenses.

Distribution-related expenses include the cost of preparing and printing
prospectuses and other promotional materials and of delivering prospectuses and
those materials to prospective shareholders. Distribution-related services may
include, among other services, costs and expenses for advertisements, sales
literature, direct mail or any other form of advertising; expenses of sales
employees or agents of the Distributor, including salary, commissions, travel
and related expenses; payments to broker/dealers and financial institutions for
services in connection with the distribution of shares, including promotional
incentives and fees calculated with reference to the average daily net asset
value of shares held by shareholders who have a brokerage or other service
relationship with the broker/dealer or other institution receiving such fees;
and other similar services as the Directors determine to be reasonably
calculated to result in the sale of a Fund's shares.

15 PROSPECTUS
<PAGE>

Stephens has entered into a Selling Agreement with Wells Fargo Bank, pursuant
to which Wells Fargo Bank will receive periodic payments based on the average
daily net assets of Fund shares attributable to its customers.

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 the Company expenses
such as fees and expenses of its independent auditors and legal counsel, and
compensation of the Company's directors who are not affiliated with the
adviser, administrator or any of their affiliates; advisory, transfer agency,
custody and administration fees, and any extraordinary expenses. Expenses
attributable to each fund or class are charged against the assets of the fund
or class. General expenses of the Company are allocated among all of the funds
of the Company, 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

Distributions from the Fund's net investment income and net short-term capital
gains, if any, are designated as dividend distributions and taxable to the
Fund's shareholders as ordinary income. Distributions from the Fund's net
capital gains, if any, are designated as capital gain distributions and may be
taxable to the Fund's individual, trust and estate shareholders at preferential
rates. See "Additional Information Concerning Taxes -- Capital Gain
Distributions" in the SAI. In general, your distributions will be taxable when
paid whether you take such distributions in cash or have them automatically
reinvested in additional Fund shares. Distributions declared in October,
November, and December and distributed by the following January will be taxable
as if they were paid by December 31.

PROSPECTUS 16

<PAGE>

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:

(i) obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities (including government-sponsored enterprises);

(ii) negotiable certificates of deposit, fixed time deposits, bankers'
acceptances or other short-term 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;

(iii) commercial paper rated at the date of purchase Prime-1 by Moody's
Investors Service, Inc. ("Moody's") or "A-1" or better by Standard &
Poor's Ratings Group ("S&P");

(iv) commercial paper unrated at the date of purchase but secured by a
letter of credit from a U.S. bank that meets the above criteria for
investment;

(v) certain floating- and variable-rate instruments;

(vi) certain repurchase agreements; and

(vii) short-term, U.S. dollar-denominated obligations of domestic
branches of foreign banks that at the time of investment have more than
$10 billion, or the equivalent in other currencies, in total assets.

Under the 1940 Act, the Fund is classified as "diversified."

Money Market Instruments

Money market instruments consist of: (a) short-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) ("U.S. Government obligations"); (b)
negotiable certificates of deposit, bankers' acceptances and fixed time
deposits and other short-term obligations of domestic banks (including foreign
branches) that have more than $1 billion in total assets at the time of the
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; (c)
commercial paper rated at the date of purchase "Prime-1" by Moody's or "A-1-"
or "A-1" by S&P, or, if unrated, of comparable quality as determined by
Wells Fargo Bank; (d) certain repurchase agreements; and (e) short-term U.S.
dollar-

A-1 PROSPECTUS
<PAGE>

denominated obligations of foreign banks (including U.S. branches) that at the
time of investment; (i) have more than $10 billion, or the equivalent in other
currencies, in total assets; (ii) are among the 75 largest foreign banks in the
world as determined on the basis of assets; and (iii) have branches or agencies
in the United States.

U.S. Government Obligations

U.S. Government obligations include securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Payment of principal and
interest on U.S. Government obligations may be backed by the full faith and
credit of the United States, as with Treasury bills, or may be backed solely by
the issuing or guaranteeing agency or instrumentality itself. 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, duration or value due to
their structure or contract terms.

Floating- and Variable-Rate Instruments

Certain of the debt instruments in which the Fund may invest may bear 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 pools of floating- and variable-rate
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 at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The 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.

PROSPECTUS A-2
<PAGE>

Letters of Credit

Certain of the debt obligations, certificates of participation, commercial
paper and other short-term obligations in which the Fund is permitted to invest
may be backed by an unconditional and irrevocable letter of credit of a bank,
savings and loan association or insurance company that 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 high-quality investments
of the Fund.

Foreign Obligations

The Fund may invest up to 5% of its assets in high-quality, short-term
(thirteen months or less) 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 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.

Other Investment Companies

The Fund may invest in shares of other open-end, management investment
companies provided that any such investments will be limited to temporary
investments in shares of unaffiliated investment companies. Wells Fargo Bank
will waive its advisory fees for that portion of the Fund's assets so invested,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.

Illiquid Securities

The Fund may invest in securities not registered under the Securities Act of
1933 and other securities subject to legal or other restrictions on resale.
Because such securities may be less liquid than other investments, they may be
difficult to sell promptly at an acceptable price. Delay or difficulty in
selling securities may result in a loss or be costly to the Fund.

INVESTMENT POLICIES AND RESTRICTIONS

The investment objective of the Fund may not be changed without approval of a
majority vote of the investors in the Fund. The classification of the Fund as
"diversified" may not be changed without the approval of the Fund's
shareholders.

A-3 PROSPECTUS
<PAGE>

PROSPECTUS A-4
<PAGE>

STAGECOACH FUNDS(R)
P.O. Box 7066
San Francisco, CA 94120-7066

STAGECOACH MONEY MARKET MUTUAL 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 either fund will meet this
goal. Yields and returns will vary with
market conditions.

[RECYCLED PAPER LOGO APPEARS HERE]
Printed on Recycled Paper SC 80 P (12/97)
<PAGE>

[LOGO OF STAGECOACH FUNDS APPEARS HERE]

------------------------------------
PROSPECTUS
------------------------------------

SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND

SHORT-TERM MUNICIPAL INCOME FUND

December 12, 1997
<PAGE>
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION

DATED SEPTEMBER 25, 1997

STAGECOACH FUNDS(R)
SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND
SHORT-TERM MUNICIPAL INCOME FUND

Stagecoach Funds, Inc. (the "Company") is an open-end management investment
company. This Prospectus contains information about the single class of shares
(at times, "Class A shares") offered by each of the SHORT-TERM GOVERNMENT-
CORPORATE INCOME FUND and the SHORT-TERM MUNICIPAL INCOME FUND -- (each, a
"Fund" and, collectively, the "Funds").

The SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND seeks to provide investors
with current income, while managing principal volatility.

The SHORT-TERM MUNICIPAL INCOME FUND seeks to provide investors with a high
level of income exempt from federal income taxes, while managing principal
volatility.

Please read this Prospectus before investing and retain it for future
reference. It is designed to provide you with important information and to help
you decide if a Fund's goals match your own. A Statement of Additional
Information ("SAI"), dated December 12, 1997, containing additional information
about each 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 1-800-222-8222. If you hold shares in an IRA, please
call 1-800-BEST-IRA for information or assistance.

ALTHOUGH CERTAIN PORTFOLIO INSTRUMENTS HELD BY THE FUNDS MAY BE INSURED OR
GUARANTEED BY THE UNITED STATES OR ANY FEDERAL AGENCY OR INSTRUMENTALITY,
SHARES OF THE FUNDS ARE NOT.

FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

WELLS FARGO BANK IS THE INVESTMENT ADVISER AND ADMINISTRATOR AND IS COMPENSATED
FOR PROVIDING THE FUNDS WITH CERTAIN OTHER SERVICES. STEPHENS INC.
("STEPHENS"), WHICH IS NOT AFFILIATED WITH WELLS FARGO BANK, IS THE FUNDS'
SPONSOR, CO-ADMINISTRATOR AND DISTRIBUTOR.

PROSPECTUS DATED DECEMBER 12, 1997
PROSPECTUS
<PAGE>

Table of Contents

-------

<TABLE>
<S> <C>
Prospectus Summary 1
Summary of Fund Expenses 5
Explanation of Tables 6
Financial Highlights 7
How the Funds Work 10
The Funds and Management 13
Investing in the Funds 15
Dividend and Capital Gain Distributions 24
How to Redeem Shares 24
Additional Shareholder Services 29
Management, Distribution and Servicing Fees 31
Taxes 35
Prospectus Appendix -- Additional Investment Policies A-1
</TABLE>

PROSPECTUS i
<PAGE>

Prospectus Summary

The Funds provide you with a convenient way to invest in various portfolios
of securities selected and supervised by professional management. The
following provides you with summary information about the Funds. For more
information, please refer to the identified Prospectus sections and generally
to the Prospectus and SAI.

Q. WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

A. The SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND seeks to provide investors
with current income, while managing principal volatility. The Fund seeks to
achieve its investment objective by investing primarily in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
(including government-sponsored enterprises) and in investment-grade corporate
obligations. The securities that the Fund may purchase include U.S. Treasury
bonds, notes and bills; obligations of the U.S. Government, its agencies or
instrumentalities; investment-grade corporate bonds and notes, asset-backed
securities and money market instruments.

The SHORT-TERM MUNICIPAL INCOME FUND seeks to provide investors with a high
level of income exempt from federal income taxes, while managing principal
volatility. The Fund seeks to achieve its investment objective by investing
primarily in investment-grade municipal securities. The Fund also may invest
in certain U.S. Government obligations and money market instruments.

Each Fund's investments include fixed, variable-and floating-rate
instruments. Except during temporary defensive periods, the Funds seek to
maintain a portfolio of securities with an average weighted maturity of 90
days to 2 years. Each Fund seeks to manage principal volatility by
diversifying its assets among permissible investments based, in part, on
maturity, duration or other characteristics that affect such securities'
sensitivity to changes in market interest rates.

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 a Fund are not bank deposits or obligations of Wells Fargo
Bank, are not insured by the Federal Deposit Insurance Corporation ("FDIC")
and are not insured against loss of principal. When the value of the
securities that a Fund owns declines, so does the value of your Fund shares.
You should be prepared to accept some risk with the money you invest in a
Fund.

The market value of the Funds' investments in fixed-income securities changes
in response to various factors, such as changes in market interest rates and
the financial

1 PROSPECTUS
<PAGE>

strength of each issuer. During periods of falling interest rates, the value of
fixed-income securities generally rises. Conversely, during periods of rising
interest rates, the value of such securities generally declines. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater price fluctuation than obligations with shorter
maturities. Fluctuations in the market value of fixed income securities can be
reduced, but not eliminated, by variable rate or floating rate features. In
addition, some of the asset-backed securities in which the Funds invest are
subject to extension risk. This is the risk that when interest rates rise,
prepayments of the underlying obligations slow, thereby lengthening the
duration and potentially reducing the value of these securities.

The debt securities held by the Funds also may be subject to credit risk.
Credit risk is the risk that the issuers of securities in which a Fund invests
may default in the payment of principal and/or interest. Any such defaults or
adverse changes in an issuer's financial condition or credit rating may
adversely affect the value of the Funds' portfolio securities and, hence, the
value of your investment in the Fund.

Although some of the Funds' portfolio securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
Funds' daily net asset value is based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
and instrumentalities where it is not obligated to do so. Government-sponsored
enterprises such as FNMA and FHLMC in the event of a default in payment on the
underlying mortgages which such entity is unable to satisfy.

As with all mutual funds, there is no assurance that the Funds will achieve
their investment objectives. See "How the Funds Work -- Investment Objectives
and Policies -- Risk Factors" below 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 Funds' investment adviser, manages your
investments. Wells Fargo Bank also provides administration, transfer agency,
dividend disbursing agency and custodial services to the Funds. In addition,
Wells Fargo Bank is a shareholder servicing agent and a selling agent for the
Funds. See "The Funds and Management" and "Management, Distribution and
Servicing Fees" for further information.

Q. HOW DO I INVEST?

A. You may invest by purchasing shares of a Fund at its public offering price,
which is the net asset value ("NAV") per share plus any applicable sales
charge. There is a maximum sales load of 3.00% for purchasing Fund shares.
Front-end sales charges

PROSPECTUS 2
<PAGE>

may, in certain cases, be waived or reduced. You may open an account by
investing at least $1,000 and may add to your account by making additional
investments of at least $100, although certain exceptions to these minimums may
be available. Shares may be purchased by wire, by mail or by an automatic
investment feature called the AutoSaver Plan on any day the New York Stock
Exchange is open. See "Investing in the Funds." For more details, contact
Stephens (the Funds' sponsor and distributor), a shareholder servicing agent or
a selling agent (such as Wells Fargo Bank).

Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?

A. Dividends of the Funds are declared daily and distributed monthly. Any
capital gains are distributed at least annually. Distributions paid by the
Funds are automatically reinvested in shares of the same class of the
respective Fund at NAV (without a sales charge). You may also elect to receive
dividends credited to your Wells Fargo Bank account, distributed in cash, or in
shares of certain other funds in the Stagecoach Family of Funds in which you
have an established account that meets the applicable minimum initial
investment requirement. See "Dividend and Capital Gain Distributions" and
"Additional Shareholder Services."

Q. HOW MAY I REDEEM SHARES?

A. You may redeem shares by telephone, by letter or by an automatic feature
called the Systematic Withdrawal Plan on any day the New York Stock Exchange is
open for business. The Company imposes no charge for redeeming shares. The
Company reserves the right to impose charges for wiring redemption proceeds.
See "How To Redeem Shares" for more details, or contact Stephens, a shareholder
servicing agent or a selling agent (such as Wells Fargo Bank).

Q. WHAT ARE DERIVATIVES AND DO THE FUNDS USE THEM?

A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or rate.
Some of the permissible investments described in this Prospectus, such as
floating- and variable-rate instruments, structured notes and certain U.S.
Government obligations, are considered derivatives. Some derivatives may be
more sensitive than direct securities to changes in interest rates or sudden
market moves. Some derivatives also may be susceptible to fluctuations in yield
or value due to their structure or contract terms. If a Fund's adviser judges
market conditions incorrectly, the use of certain derivatives could result in a
loss regardless of the adviser's intent in using the derivatives.

Q. WHAT STEPS DO THE FUNDS TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

A. Wells Fargo Bank, as investment adviser to the Funds, uses a variety of
internal risk management procedures to ensure that derivatives' use is
consistent with a Fund's

3 PROSPECTUS
<PAGE>

investment objective, does not expose the Fund to undue risks and is closely
monitored. These procedures include providing periodic reports to the Board of
Directors concerning the use of derivatives. Derivatives use by a Fund also is
subject to broadly applicable investment policies. For example, a Fund may not
invest more than a specified percentage of its assets in "illiquid securities,"
including derivatives that do not have active secondary markets. Nor may the
Fund use certain derivatives without establishing adequate "cover" in
compliance with SEC rules limiting the use of leverage. For more information on
the Funds' investment activities, see "How the Funds Work" and "Prospectus
Appendix -- Additional Investment Policies."

PROSPECTUS 4
<PAGE>

Summary of Fund Expenses

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT- SHORT-TERM
CORPORATE MUNICIPAL
INCOME FUND INCOME FUND
----------- -----------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................. 3.00% 3.00%
Maximum Sales Charge on Reinvested Distributions..... None None
Maximum Sales Charge on Redemptions.................. None None
Redemption Fees...................................... None None
Exchange Fees........................................ None None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT- SHORT-TERM
CORPORATE MUNICIPAL
INCOME FUND INCOME FUND
----------- -----------
<S> <C> <C>
Management Fee (after waivers or
reimbursements)/1/................................. 0.00% 0.00%
Rule 12b-1 Fee/2/................................... 0.25% 0.25%
Other Expenses (after waivers or
reimbursements)/3/................................. 0.15% 0.15%
----- -----
TOTAL FUND OPERATING EXPENSES (after waivers or
reimbursements)/4/................................. 0.40% 0.40%
===== =====
</TABLE>
--------------
/1/Management Fees (before waivers or reimbursements) would be 0.50% for
each Fund.
/2/Fund shares are subject to either a 0.25% 12b-1 Fee or a 0.25%
Administrative Servicing Fee. In no case will shareholders be assessed
both 12b-1 and Administrative Servicing Fees and Total Fund Operating
Expenses will not be greater than the amount shown above because of the
combination of such fees. See "Distribution Plans" and "Administrative
Servicing Plan".
/3/Other Expenses (before waivers or reimbursements) would be 1.10% and
0.68%, respectively.
/4/Total Fund Operating Expenses (before waivers or reimbursements) would
be 1.85% and 1.43%, respectively.

EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment in shares of a
Fund, assuming (A) a 5% annual return and (B) redemption at the end of each
time period indicated:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Short-Term Govt.-Corp. Income Fund............ $34 $42 $52 $79
Short-Term Municipal Income Fund.............. $34 $42 $52 $79
</TABLE>

5 PROSPECTUS
<PAGE>
Explanation of Tables

The purpose of the foregoing tables is to help you understand the various
costs and expenses that a shareholder in a Fund will pay directly or
indirectly. You may purchase Fund shares directly from the Company or through
Wells Fargo Bank or other institutions that have developed various account
products through which Fund shares may be purchased, and for which customers
may be charged a fee. The tables do not reflect any charges that may be imposed
by Wells Fargo Bank or another institution directly on certain customer
accounts in connection with an investment in the Funds.

SHAREHOLDER TRANSACTION EXPENSES are charges incurred when you buy or sell
Fund shares. You are subject to a front-end sales charge on purchases of Fund
shares. In certain instances, you may qualify for a reduction or waiver of the
front-end sales charge. There are no exchange fees. The Company reserves the
right to impose a charge for wiring redemption proceeds. See "Investing in the
Funds -- Sales Charges."

ANNUAL FUND OPERATING EXPENSES for each Fund are based on amounts incurred
during the most recent fiscal year by the predecessor portfolio to each Fund.
On December 12, 1997, the Short-Term Government-Corporate Income Fund and the
Short-Term Municipal Income Fund of Overland Express Funds, Inc. were
reorganized as the Stagecoach Funds of the same name. Each Overland Fund is
sometimes referred to herein as a "predecessor portfolio." Where indicated, the
amounts shown under Annual Fund Operating Expenses have been adjusted to
reflect voluntary fee waivers and expense reimbursements expected to be in
effect during the current fiscal year. [WELLS FARGO BANK AND STEPHENS EACH HAVE
AGREED TO WAIVE OR REIMBURSE ALL OR A PORTION OF THEIR RESPECTIVE FEES CHARGED
TO, OR EXPENSES PAID BY, EACH FUND THROUGH AT LEAST THE CURRENT FISCAL YEAR SO
THAT SUCH FEES DO NOT EXCEED ON AN ANNUAL BASIS 0.50% OF EACH SUCH FUND'S
AVERAGE DAILY NET ASSETS.] There is no assurance that voluntary waivers and
reimbursements will continue. Long-term shareholders of a Fund could pay more
in distribution-related charges than the economic equivalent of the maximum
front-end sales charges applicable to mutual funds sold by members of the
National Association of Securities Dealers, Inc. ("NASD").

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 annual rate of
return should not be considered an indication of actual or expected performance
of a Fund nor a representation of past or future expenses; actual expenses and
returns may be greater or lesser than those shown.

Additional information regarding the Funds' expenses is included under "The
Funds and Management" and "Management, Distribution and Servicing Fees" and in
the SAI under "Management," Distributions Plans" and "Servicing Plans."

PROSPECTUS 6
<PAGE>

Financial Highlights

The following information has been derived from the Financial Highlights
included in the audited financial statements for the year ended December 31,
1996 and the unaudited financial statements for the six-month period ended June
30, 1997, for the predecessor portfolios to the Funds. This information is
provided to assist you in evaluating the Funds' historical performance. The
audited financial statements were audited by KPMG Peat Marwick LLP. The audited
financial statements and the independent auditor's report thereon for the year
ended December 31, 1996 are incorporated by reference into the SAI. In
addition, the unaudited financial statements for the six-month period ended
June 30, 1997 also are incorporated by reference into the SAI. This information
should be read in conjunction with each predecessor portfolio's audited 1996
financial statements and unaudited 1997 semi-annual financial statements and
the notes thereto. The SAI has been incorporated by reference into this
Prospectus. During the periods shown, each predecessor portfolio invested all
of its assets in a master portfolio with the same investment objective and each
bore a pro rata share of its corresponding master portfolio's expenses.

7 PROSPECTUS
<PAGE>

SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND
FOR A SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994/1/
----------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period... $ 4.98 $ 5.02 $ 4.93 $ 5.00
Income from investment operations:
Net investment income................. 0.14 0.28 0.30 0.08
Net realized and unrealized gain
(loss) on investments................ 0.00 (0.04) 0.09 (0.07)
------ ------ ------ ------
Total from investment operations...... 0.14 0.24 0.39 0.01
Less distributions:
Dividends from net investment income.. (0.14) (0.28) (0.30) (0.08)
Distributions from net realized gain.. 0.00 0.00 0.00 0.00
Total from distributions.............. (0.14) (0.28) (0.30) (0.08)
------ ------ ------ ------
Net asset value, end of period........ $ 4.98 $ 4.98 $ 5.02 $ 4.93
====== ====== ====== ======
Total Return (not annualized)/2/....... 2.90% 4.83% 8.05% 0.28%
Ratios/supplemental data:
Net assets, end of period (000)....... $10,219 $14,023 $5,954 $96
Number of shares outstanding, end of
period (000)......................... 2,054 2,815 1,185 20
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets/3/............................ 0.37% 0.36% 0.30% 0.30%
Ratio of net investment income to
average net assets/3/................ 5.75% 5.47% 6.01% 5.77%
Portfolio turnover/4/................. 143% 247% 227% 0%
Ratio of expenses to average net
assets prior to waived fees and
reimbursed expenses/3/............... 1.84% 1.85% 6.79% 67.89%
Ratio of net investment income (loss)
to average net assets prior to waived
fees and reimbursed expenses/3/...... 4.28% 3.98% (0.48)% (61.82)%
</TABLE>
- --------------
/1/The Short-Term Government-Corporate Income Fund and the corresponding Master
Portfolio each commenced operations on September 19, 1994.
/2/Total returns do not include any sales charges.
/3/This ratio includes income and expenses charged to the Short-Term Government-
Corporate Income Master Portfolio.
/4/The portfolio turnover shown in the table is for the Short-Term Government-
Corporate Income Master Portfolio.

PROSPECTUS 8
<PAGE>

SHORT-TERM MUNICIPAL INCOME FUND
FOR A SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994/1/
----------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 4.97 $ 4.99 $ 4.92 $ 5.00
Income from investment operations:
Net investment income.................. 0.10 0.20 0.22 0.09
Net realized and unrealized gain (loss)
on investments........................ 0.00 (0.02) 0.07 (0.08)
------ ------ ------ ------
Total from investment operations....... 0.10 0.18 0.29 0.01
Less distributions:
Dividends from net investment income... (0.10) (0.20) (0.22) (0.09)
Distributions from net realized gain... 0.00 0.00 0.00 0.00
Total from Distributions............... (0.10) (0.20) (0.22) (0.09)
------ ------ ------ ------
Net asset value, end of period......... $ 4.97 $ 4.97 $ 4.99 $ 4.92
====== ====== ====== ======
Total Return (not annualized)/2/........ 1.95% 3.62% 6.10% 0.13%
Ratios/supplemental data:
Net assets, end of period (000)........ $21,501 $26,714 $16,486 $11,778
Number of shares outstanding, end of
period (000).......................... 4,328 5,373 3,302 2,392
Ratios to average net assets
(annualized):
Ratio of expenses to average net
assets/3/............................. 0.39% 0.40% 0.38% 0.27%
Ratio of net investment income to
average net assets/3/................. 3.89% 3.95% 4.39% 3.67%
Portfolio turnover/4/.................. 19% 47% 46% 8%
Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses/3/........................... 1.48% 1.43% 1.97% 1.98%
Ratio of net investment income to
average net assets prior to waived
fees and reimbursed expenses/3/....... 2.80% 2.92% 2.80% 1.96%
</TABLE>
- --------------
/1/The Short-Term Municipal Income Fund and the corresponding Master Portfolio
each commenced operations on June 3, 1994.
/2/Total returns do not include any sales charges.
/3/This ratio includes income and expenses charged to the Short-Term Municipal
Income Master Portfolio.
/4/The portfolio turnover shown in the table is for the Short-Term Municipal
Income Master Portfolio.

9 PROSPECTUS
<PAGE>

How the Funds Work

INVESTMENT OBJECTIVES AND POLICIES

Set forth below is a description of the investment objectives and related
policies of the Funds. As with all mutual funds, there is no assurance that a
Fund will achieve its investment objective.

The SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND seeks to provide investors
with current income, while managing principal volatility. The Fund seeks to
achieve its investment objective by investing primarily in obligations issued
by the U.S. Government, its agencies or instrumentalities (including
government-sponsored enterprises) and investment-grade corporate obligations.
The securities that the Fund may purchase include U.S. Treasury bonds, notes
and bills; obligations of the U.S. Government, its agencies or
instrumentalities; investment-grade corporate bonds and notes, asset-backed
securities and money market instruments. The Fund seeks to manage principal
volatility by diversifying assets among permissible investments based, in part,
on their maturity, duration or other characteristics that affect the
sensitivity of such investments to changes in market interest rates.

Under normal market conditions, the Short-Term Government-Corporate Income
Fund invests substantially all of its assets in U.S. Government obligations and
corporate securities, and at least 65% of its assets in income-producing
securities. The Fund is a flexible portfolio, in that there is no minimum level
of assets that will be invested in either category of investments. The
investment adviser intends, as a general matter, to keep at least 20% of the
Fund's assets invested in U.S. Government obligations and at least 20% of its
assets invested in corporate securities. The allocation of assets between these
investment categories will vary, depending primarily on their relative yields.

The SHORT-TERM MUNICIPAL INCOME FUND seeks to provide investors with a high
level of income exempt from federal income taxes, while managing principal
volatility. The Fund seeks to achieve its investment objective by investing
(under normal market conditions) substantially all of its 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. 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 seeks to manage principal
volatility by diversifying its assets among permissible investments based, in
part, on their duration, maturity or other characteristics that affect their
sensitivity to changes in market interest rates.

As a fundamental policy, at least 80% of the net assets of the Short-Term
Municipal Income Fund are invested (under normal market conditions) in
municipal obligations that pay interest that is exempt from federal income
taxes. However, as a matter of general

PROSPECTUS 10
<PAGE>

operating policy, the Fund seeks to have substantially all of its assets
invested in such municipal obligations. The investment adviser may rely either
on an 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 could 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. The Fund also may invest in
U.S. Government obligations and money market instruments.

RISK FACTORS

Investments in a Fund are not bank deposits or obligations of Wells Fargo
Bank, are not insured by the FDIC and are not insured against loss of
principal. When the value of the securities that a Fund owns declines, so does
the value of your Fund shares. You should be prepared to accept some risk with
the money you invest in a Fund.

The market value of investments in fixed-income securities changes in response
to various factors, such as changes in market interest rates and the financial
strength of each issuer. During periods of falling interest rates, the value of
fixed-income securities generally rises. Conversely, during periods of rising
interest rates, the value of such securities generally declines. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater price fluctuation than obligations with shorter
maturities. Fluctuations in the market value of fixed-income securities can be
reduced, but not eliminated, by variable rate or floating rate features. In
addition, some of the asset-backed securities in which the Funds invest are
subject to extension risk. This is the risk that when interest rates rise,
prepayments of the underlying obligations slow, thereby lengthening the
duration and potentially reducing the value of these securities.

The debt securities held by the Funds also may be subject to credit risk.
Credit risk is the risk that the issuers of securities in which a Fund invests
may default in the payment of principal and/or interest. Any such defaults or
adverse changes in an issuer's financial condition or credit rating may
adversely affect the value of the Fund's portfolio securities and, hence, the
value of your investment in the Fund.

Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset index or rate.
Some of the permissible investments described in this Prospectus, such as
floating and variable-rate instruments, structured notes and certain U.S.
Government obligations, are considered derivatives. Some derivatives may be
more sensitive than direct securities to changes in interest rates or sudden
market moves. Some derivatives also may be susceptible to fluctuations in yield
or value due to their structure or contract terms. If a Fund's adviser judges
market conditions incorrectly, the use of certain derivatives could result in a
loss regardless of the adviser's intent in using the derivatives.

11 PROSPECTUS
<PAGE>

Although some of the Funds' portfolio securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
Funds' daily net asset value is based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
or instrumentalities where it is not obligated to do so.

As with all mutual funds, there is no assurance that the Funds will achieve
their investment objectives. See "Prospectus Appendix -- Additional Investment
Policies" and the SAI for further information about investment policies and
risks.

PERFORMANCE

Fund performance may be advertised from time to time in terms of average
annual total return, cumulative total return and yield. Performance figures are
based on historical results and are not intended to indicate future
performance. Performance figures are calculated separately for each class of
shares of a Fund.

Average annual total return of a class of shares is based on the overall
dollar or percentage change in value of a hypothetical investment in the class
during a specified period and assumes that all Fund dividends and capital gain
distributions are reinvested at NAV in shares of that class. The standardized
average annual total return assumes that you have paid the maximum front-end
sales charge on the hypothetical investment. Cumulative total return is
calculated similarly, except that the return figure is aggregated over the
relevant time period instead of annualized.

The yield of a class of shares is calculated by dividing the net investment
income per share earned during a specified period (usually 30 days) by the NAV
of the class on the last day of the period and annualizing the result.
Effective yield is calculated similarly but assumes reinvestment of the income
earned from a Fund. Because of the effects of compounding, effective yields are
slightly higher than yields.

For purposes of advertising, from time to time, a Fund also may present
nonstandardized total returns, yields and, in sales literature, distribution
rates. For example, the performance figure of the shares of a class may be
calculated on the basis of an investment at the net asset value per share or at
net asset value per share plus a reduced sales charge (see "Investing in the
Funds -- How To Buy Shares"), rather than the public offering price per share.
In this case, the figure might not reflect the effect of the sales charge that
you may have paid.

The Fund's performance figures calculations may reflect waivers and/or
reimbursements that, if effective, would increase the yields and returns
payable to shareholders. Any fees that may be imposed by a selling agent or
shareholder servicing agent directly on its customer accounts are not reflected
in the performance calculations. Any such fees, if charged, will reduce the
actual return received by customers on their investments.

Additional performance information is contained in the SAI under "Performance
Calculations" and the Annual Report, which are available upon request free of
charge by calling the Company at 1-800-222-8222 or by writing the Company at
the address shown on the front cover of the Prospectus.

PROSPECTUS 12
<PAGE>

The Funds and Management

THE FUNDS

The Funds are two of the funds of the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991 and currently
offers shares of more than twenty-five other funds. For information on another
fund or class of shares, please call Stagecoach Shareholder Services at 1-800-
222-8222 or write the Company at the address shown on the front cover of the
Prospectus.

The Company's Board of Directors supervises each Fund's activities and
monitors its contractual arrangements with various service-providers. Although
the Company is not required to hold annual shareholder meetings, special
meetings may be required for purposes such as electing or removing Directors,
approving advisory contracts and distribution plans, and changing a Fund's
investment objective or fundamental investment policies. All shares of the
Company have equal voting rights and are voted in the aggregate, rather than by
series or class, unless otherwise required by law (such as when the voting
matter affects only one series or class). A Fund shareholder of record 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 under "Capital Stock" in the SAI.

MANAGEMENT

Wells Fargo Bank serves as the Funds' investment adviser, administrator,
transfer and dividend disbursing agent, and custodian. In addition, Wells Fargo
Bank is a shareholder servicing agent and a selling agent of the Funds. 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 August 1, 1997,
Wells Fargo Bank and its affiliates 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 to other
separately managed funds of the Company, and as investment adviser or sub-
adviser to several other registered, open-end, management investment companies.
Wells Fargo Bank, a wholly owned subsidiary of Wells Fargo & Company, is
located at 420 Montgomery Street, San Francisco, California 94104.

PORTFOLIO MANAGERS

Ms. Tamyra Thomas assumed responsibility as portfolio co-manager for the day-
to-day management of the portfolio of the Short-Term Government-Corporate
Income Master Portfolio as of July 16, 1996, and will continue to serve in such
capacity for the corresponding Fund. Ms. Thomas is a senior vice-president and
the chief fixed income investment officer of the Investment Management Group
Policy Committee. Ms. Thomas has managed bond portfolios for over a decade. She
currently manages in excess of

13 PROSPECTUS
<PAGE>

$1 billion of long-term taxable bond portfolios for various foundations,
defined benefit plans and other clients. Prior to joining Wells Fargo Bank in
early 1988, she held a number of senior investment positions for the Valley
Bank & Trust Company of Utah including vice president and manager of the
investment department and chairman of the Trust Investment Committee. She holds
a B.S. from the University of Utah and was past president of the Utah Bond
Club. Ms. Thomas is a chartered financial analyst.

Ms. Madeline Gish also assumed responsibility as portfolio co-manager for the
day-to-day management of the portfolio of the Short-Term Government-Corporate
Income Master Portfolio as of July 16, 1996, and will continue to serve in such
capacity for the corresponding Fund. Ms. Gish joined Wells Fargo Bank in 1989
as the portfolio coordinator for the Mutual Funds Division and played an
integral part in the rapid growth of the Company. Since joining the fixed-
income group in 1992, Ms. Gish has assisted in research and trading for
adjustable-rate mortgage funds and is currently managing taxable liquidity
portfolios. She holds a B.S. in Business Administration from the University of
Kansas and is a chartered financial analyst candidate .

Mr. Scott Smith also assumed responsibility as portfolio co-manager for the
day-to-day management of the portfolio of the Short-Term Government-Corporate
Income Master Portfolio as of July 16, 1996, and will continue to serve in such
capacity for the corresponding Fund. Mr. Smith also serves as a co-manager of
another Fund of the Company, the Variable Rate Government Fund. Mr. Smith has
co-managed this Fund since May 1, 1995. He joined Wells Fargo Bank in 1988 as a
taxable money market portfolio specialist. His experience includes a position
with a private money management firm with mutual fund investment operations.
Mr. Smith holds a B.A. from the University of San Diego and is a chartered
financial analyst.

Mr. Jeff L. Weaver assumed responsibility as portfolio co-manager to the
Short-Term Government-Corporate Income Master Portfolio as of May 1, 1996, and
will continue to serve in such capacity for the corresponding Fund. Mr. Weaver
joined Wells Fargo Bank after three years as a short-term fixed income trader
and portfolio manager in the investment management group of Bankers Trust
Company in New York. He holds a B.A. in economics from the University of
Colorado and is a chartered financial analyst candidate.

Ms. Laura L. Milner assumed responsibility as portfolio co-manager of the
Short-Term Municipal Income Master Portfolio in May 1994, and will continue to
serve in such capacity for the corresponding Fund. Ms. Milner joined Wells
Fargo Bank in 1988. Her background includes over seven years experience
specializing in short- and long-term municipal obligations with Salomon
Brothers. She is a member of the National Federation of Municipal Analysts and
its California chapter.

Mr. David Klug, assumed responsibility as portfolio co-manager for the Short-
Term Municipal Income Master Portfolio in May 1994, and will continue to serve
in such

PROSPECTUS 14
<PAGE>

capacity for the corresponding Fund. Mr. Klug has managed municipal bond
portfolios for Wells Fargo Bank for over nine years. Prior to joining Wells
Fargo Bank, he managed the municipal bond portfolio for a major property and
casualty insurance company. His investment experience exceeds 20 years and
includes all aspects of tax-exempt fixed-income investments. He holds an M.B.A.
from the University of Chicago and is a member of the National Federation of
Municipal Analysts and its California Chapter.

Purchase and sale orders of the securities held by the Funds may be combined
with those of other accounts that Wells Fargo Bank manages or advises, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold for the Funds and other accounts
managed by Wells Fargo Bank, Wells Fargo Bank has undertaken to allocate those
transaction costs among the participants equitably. From time to time, each
Fund, to the extent consistent with its investment objective, policies and
restrictions, may invest in securities of companies with which Wells Fargo Bank
has a lending relationship.

-----------------------

Morrison & Foerster LLP, counsel to the Company and special counsel to Wells
Fargo Bank has advised the Company and Wells Fargo Bank that Wells Fargo Bank
and its affiliates may perform the services contemplated by the Advisory
Contracts and this Prospectus without violation of the Glass-Steagall Act. Such
counsel has pointed out, however, that there are no controlling judicial 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 Funds

OPENING AN ACCOUNT

You can buy shares in either Fund in one of the several ways described below.
You must complete and sign an Account Application to open an account.
Additional documentation may be required from corporations, associations and
certain fiduciaries. Do not mail cash. If you have any questions or need extra
forms, please call 1-800-222-8222.

15 PROSPECTUS
<PAGE>

To invest in the Funds through tax-deferred retirement plans through which the
Fund is available, please contact a shareholder servicing agent or a selling
agent to receive information and the required separate application. See "Tax-
Deferred Retirement Plans" below.

SHARE VALUE

The value of a share of each class of a Fund is its "net asset value" or NAV.
Wells Fargo Bank calculates the NAV of the Funds on each day the Funds are open
as of the close of regular trading on the New York Stock Exchange ("NYSE")
(referred to hereinafter as "the close of the NYSE"), which is currently 1:00
p.m. (Pacific time). The Funds are open for business each day the NYSE is open
for trading (a "Business Day"). The NAV per share for each class of shares is
computed by dividing the value of the Fund's assets allocable to a particular
class, less the liabilities charged to that class by the total number of the
outstanding shares of that class. All expenses, including fees paid to the
investment adviser and administrator, are accrued daily and taken into account
for the purpose of computing the NAV of a share of each class is expected to
fluctuate daily. Shares may be purchased on any day the Funds are open for
business.

Except for debt obligations with remaining maturities of 60 days or less,
which are valued at amortized cost, the other assets of the Funds are valued at
current market prices, or if such prices are not readily available, at fair
value as determined in good faith by the Company's Board of Directors. Prices
used for such valuations may be provided by independent pricing services.

HOW TO BUY SHARES

PROSPECTUS 16
<PAGE>

placed. The selling agent is responsible for forwarding payment for shares
being purchased to a Fund promptly. Payment must accompany orders placed
directly through the transfer agent.

Payments for shares of each class of a Fund are invested in full and
fractional shares at the applicable offering price. If shares are purchased by
a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. In
addition, the Company may hold payment on any redemption until reasonably
satisfied that your investments made by check have been collected (which may
take up to 10 days).

The minimum initial investment is generally $1,000. The minimum investment
amounts, however are $100 through the AutoSaver Plan (described below) and $250
for any tax-deferred retirement account for which Wells Fargo Bank serves as
trustee or custodian under a prototype trust approved by the Internal Revenue
Service ("IRS") (a "Plan Account"). Generally, all subsequent investments must
be made in amounts of $100 or more. Where Fund shares are acquired in exchange
for shares of another fund in the Stagecoach Family of Funds, the minimum
initial investment amount applicable to the shares being exchanged generally
carries over. If the value of your investment in shares of the fund from which
you are exchanging has been reduced below the minimum initial investment amount
by changes in market conditions or sales charges (and not by redemptions), you
may carry over the lesser amount into one of the Funds. Plan Accounts that
invest in the Fund through Wells Fargo ExpressInvest(TM) (available to certain
Wells Fargo tax-deferred retirement plans) are not subject to the minimum
initial or subsequent investment amount requirements. In addition, the minimum
initial or subsequent purchase amount requirements may be waived or lowered for
investments effected on a group basis by certain entities and their employees,
such as pursuant to a payroll deduction or other accumulation plan. If you have
questions regarding purchases of shares or ExpressInvest, please call 1-800-
222-8222 or contact a shareholder servicing agent or selling agent. For
additional information on tax-deferred accounts, please refer to "Investing in
the Fund -- Tax-Deferred Retirement Plans" or contact a shareholder servicing
agent or selling agent.

17 PROSPECTUS
<PAGE>

SALES CHARGES

Set forth below are Front-end Sales Charge Schedules listing the front-end
sales charges applicable to purchases of the Funds' shares. As shown below,
reductions in the rate of front-end sales charges ("Volume Discounts") are
available as you purchase additional shares. You should consider the front-end
sales charge information set forth below and the other information contained in
this Prospectus when making your investment decisions.

FRONT-END SALES CHARGE SCHEDULE

<TABLE>
<CAPTION>
DEALER
FRONT-END FRONT-END ALLOWANCE
SALES CHARGE SALES CHARGE AS % OF
AS % OF AS % OF NET OFFERING
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED PRICE
------------------ -------------- --------------- ---------
<S> <C> <C> <C>
Less than $100,000................... 3.00% 3.09% 2.65%
$100,000 up to $249,999.............. 2.25 2.30 2.00
$250,000 up to $499,999.............. 1.50 1.52 1.30
$500,000 up to $999,999.............. 0.60 0.60 0.50
$1,000,000 and over.................. 0.00 0.00 0.25
</TABLE>

If shares are purchased through a selling agent, Stephens reallows the portion
of the front-end sales charge shown above as the Dealer Allowance. When shares
are purchased directly through the transfer agent and no selling agent is
involved with the purchase, the entire sales charge is paid to Stephens.

REDUCED SALES CHARGE

Discounts described below pertaining to reduced sales charges are based on
your holdings or purchases of shares on which you have paid or will pay a
front-end sales charge.

Volume Discounts

The Volume Discounts described in the Front-end Sales Charge Schedule are
available to you based on the combined dollar amount you invest in shares of
one or more of the Company's funds that assess a front-end sales charge (the
"Load Funds").

Right of Accumulation

The Right of Accumulation allows you to combine the amount you invest in a
Fund's shares with the total NAV of Class A shares in other Load Funds to
determine reduced front-end sales charges in accordance with the above Front-
end Sales Charge Schedule. In addition, you also may combine the total NAV of
Class A shares that you currently have invested in any other mutual fund that
assesses a front-end sales charge and is

PROSPECTUS 18
<PAGE>

advised or sub-advised by Wells Fargo Bank and sponsored by Stephens. For
example, if you own Class A shares of the Load Funds with an aggregate NAV of
$90,000 and you invest an additional $20,000 in Class A shares of a Load Fund,
the front-end sales charge on the additional $20,000 investment would be 2.00%
of the applicable offering price for a Fund. To obtain such a discount, you
must provide sufficient information at the time of your purchase to verify that
your purchase qualifies for the reduced front-end sales charge. Confirmation of
the order is subject to such verification. The Right of Accumulation may be
modified or discontinued at any time without prior notice on all subsequent
shares purchased.

Letter of Intent

A Letter of Intent allows you to purchase a Fund's Class A shares over a 13-
month period at a reduced front-end sales charge based on the total amount you
intend to purchase plus the total NAV of Class A shares in any of the Load
Funds you already own. Each investment you make during the period may be made
at the reduced front-end sales charge that is applicable to the total amount
you intend to invest. If you do not invest the total amount within the period,
you must pay the difference between the higher front-end sales charge rate that
would have been applicable to the purchases you made and the reduced front-end
sales charge rate you have paid. The minimum initial investment for a Letter of
Intent is 5% of the total amount you intend to purchase, as specified in the
Letter. Class A shares of a Fund equal to 5% of the amount you intend to invest
will be held in escrow and, if you do not pay the difference within 20 days
following the mailing of a request, a sufficient amount of escrowed shares will
be redeemed for payment of the additional front-end sales charge. Dividends and
capital gains paid on Class A shares held in escrow are reinvested in
additional Class A shares of the Fund.

Reinvestment

You may reinvest proceeds from a redemption of a Fund's shares in shares of
the Fund or in shares of another of the Company's funds registered in your
state of residence at NAV, without payment of a front-end sales charge, within
120 days after your redemption. However, if the other investment portfolio
charges a front-end sales charge that is higher than the one you paid in
connection with the shares you have redeemed, you must pay the difference
between the dollar amount of the two front-end sales charges. You may reinvest
at this NAV price up to the total amount of the redemption proceeds. A written
purchase order for the shares must be delivered to the Company, a selling
agent, a shareholder servicing agent, or the transfer agent at the time of
reinvestment.

Reductions for Families or Fiduciaries

Reductions in front-end sales charges apply to purchases by a single "person,"
including an individual, members of a family unit, consisting of a husband,
wife and

19 PROSPECTUS
<PAGE>

children under the age of 21 purchasing securities for their own account, or a
trustee or other fiduciary purchasing for a single fiduciary account or single
trust estate.

Reductions for Qualified Groups

Reductions in front-end sales charges also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate
dollar amount of shares purchased by all members of the qualified group. For
purposes of this paragraph, a qualified group consists of a "company", as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring Fund shares at a reduced
sales charge, and the "related parties" of such company. For purposes of this
paragraph, a "related party" of a company is: (i) any individual or other
company who directly or indirectly owns, controls or has the power to vote 5%
percent or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls or
has the power to vote 5% or more of its outstanding voting securities; (iii)
any other company under common control with such company; (iv) any executive
officer, director or partner of such company or of a related party; and (v) any
partnership of which such company is a partner. Investors seeking to rely on
their membership in a qualified group to purchase shares at a reduced sales
load must provide evidence satisfactory to the transfer agent of the existence
of a bona fide qualified group and their membership therein.

Waivers for Certain Parties

Fund shares may be purchased without a front-end sales charge by directors,
officers and employees (and their spouses, parents, children, siblings,
grandparents, grandchildren, father in-law, mother in-law, brother in-law,
sister in-law, aunts, uncles, nieces, and nephews; herein, "relatives") of the
Company, Stephens, its affiliates and other broker/dealers that have entered
into agreements with Stephens to sell such shares. Fund shares also may be
purchased without a front-end sales charge by present and retired directors,
officers and employees (and their relatives) of Wells Fargo Bank and its
affiliates if Wells Fargo Bank and/or the respective affiliates agree. Fund
shares also may be purchased without a front-end sales charge by employee
benefit and thrift plans for such persons and by any investment advisory, trust
or other fiduciary account (other than certain individual retirement accounts)
that is maintained, managed or advised by Wells Fargo Bank, Stephens or their
affiliates. In addition, Fund shares may be purchased without payment of a
front-end sales charge with proceeds from a required minimum distribution from
any Individual Retirement Account ("IRA"), Simplified Employee Pension Plan or
other self-directed retirement plan for which Wells Fargo Bank serves as
trustee, provided that the proceeds are invested in a Fund within 30 days of
such distribution and such distribution is required as a result of reaching age
70 1/2.

PROSPECTUS 20
<PAGE>

Fund Shares may be purchased without a front-end sales charge by the following
types of investors when the trades are placed through an omnibus account
maintained with a Fund by a broker/dealer -- trust companies; deferred
compensation plans and the trusts used to finance these plans; investment
advisers and financial planners who charge a management, consulting or other
fee for their services and who place trades on their own behalf if the clients'
accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker/dealer.

INITIAL PURCHASE BY WIRE

1. Complete an Account Application.

2. Instruct the wiring bank to transmit the specified amount in federal funds
($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund)
Account Name(s): Name(s) in which to be registered
Account Number: (if investing into an existing account)

3. A completed Account Application should be mailed, or sent by telefacsimile
with the original subsequently mailed, to the following address immediately
after funds are wired and must be received and accepted by the transfer
agent before an account can be opened:

Wells Fargo Bank, N.A.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-546-0280

4. Share purchases are effected at the public offering price.

INITIAL PURCHASES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more payable to
"Stagecoach Funds (Name of Fund)" to the address set forth in "Initial
Purchases by Wire."

3. Share purchases are effected at the public offering price.

21 PROSPECTUS
<PAGE>

AUTOSAVER PLAN PURCHASES

The Company's AutoSaver Plan provides you with a convenient way to establish
and automatically add to your Fund account on a monthly basis. To participate
in the AutoSaver Plan, you must specify an amount ($100 or more) to be
withdrawn automatically by the transfer agent on a monthly basis from an
account with a bank that is designated in your Account Application and is
approved by the transfer agent ("Approved Bank Account"). You may open an
Approved Bank Account with Wells Fargo Bank. The transfer agent withdraws and
uses this amount to purchase specified shares of the designated Fund and class
on your behalf each month on or about the day that you have selected, or, if
you have not selected a day, on or about the 20th day of each month. If you
hold shares through a brokerage account, the AutoSaver Plan will comply with
the terms of your brokerage agreement. The transfer agent requires a minimum of
ten (10) Business Days to implement your AutoSaver Plan purchases or to process
your request to change the day on which the AutoSaver purchase is processed.
There are no separate fees charged to you by the Company for participating in
the AutoSaver Plan.

You may change your investment amount, the date on which your AutoSaver
purchase is effected, suspend purchases or terminate your election at any time
by notifying the transfer agent at least five (5) Business Days prior to any
scheduled transaction.

TAX-DEFERRED RETIREMENT PLANS

You may be entitled to invest in the Funds through a Plan Account or other
tax-deferred retirement plan. Contact a shareholder servicing agent or a
selling agent (such as Wells Fargo Bank) for materials describing Plan Accounts
available through it, and the benefits, provisions, and fees of such Plan
Accounts. The minimum initial investment amount for Fund shares acquired
through a Plan Account is $250 (the minimum initial investment amount is not
applicable if you participate in ExpressInvest through a Plan Account).

Application materials for opening a tax-deferred retirement plan can be
obtained from a shareholder servicing agent or a selling agent. Return your
completed tax-deferred retirement plan application to your shareholder
servicing agent or a selling agent for approval and processing. If your tax-
deferred retirement plan application is incomplete or improperly filled out,
there may be a delay before a Fund account is opened. You should ask your
shareholder servicing agent or selling agent about the investment options
available to your tax-deferred retirement plan, since some of the funds in the
Stagecoach Family of Funds may be unavailable or inappropriate as options.
Moreover, certain features described herein, such as the AutoSaver Plan and the
Systematic Withdrawal Plan, may not be available to individuals or entities who
invest through a tax-deferred retirement plan.

PROSPECTUS 22
<PAGE>

ADDITIONAL PURCHASES

You may make additional purchases of $100 or more by instructing a Fund's
transfer agent to debit your Approved Bank Account, by wire by instructing the
wiring bank to transmit the specified amount as directed above for initial
purchases, or by mail with a check payable to "Stagecoach Funds (name of Fund)"
to the address set forth under "Initial Purchases by Wire." Write your Fund
account number on the check and include the detachable stub from your Account
Statement or a letter providing your Fund account number.

PURCHASES THROUGH SELLING AGENTS

You may place a purchase order for Fund shares through a broker/dealer or
financial institution that has entered into a selling agreement with Stephens,
as the Funds Distributor ("Selling Agent"). If your order is placed by the
close of the NYSE, the purchase order is executed on the same day if the order
is received by the transfer agent before the close of business. If your
purchase order is received by a Selling Agent after the close of the NYSE or by
the transfer agent after the close of business, then your purchase order is
executed on the next Business Day after the day your order is placed. The
Selling Agent is responsible for the prompt transmission of your purchase order
to the Company. Because payment for shares of the Fund is not due until
settlement date, the Selling Agent might benefit from the temporary use of your
payment. A financial institution that acts as a Selling Agent, shareholder
servicing agent or in certain other capacities may be required to register as a
dealer pursuant to applicable state securities laws, which may differ from
federal law and any interpretations expressed herein.

PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS

Purchase orders for Fund shares may be transmitted to the transfer agent
through any entity that has entered into a shareholder servicing agreement with
the Company ("Shareholder Servicing Agent"), such as Wells Fargo Bank. See
"Management, Distribution and Servicing Fees -- Shareholder Servicing Agent." A
Shareholder Servicing Agent may transmit your purchase order to the transfer
agent, including a purchase order for which payment is to be transferred from
your Approved Bank Account or wired from a financial institution. If your order
is transmitted by a Shareholder Servicing Agent on your behalf to the transfer
agent before the close of the NYSE, the purchase order is executed on the same
day. If your Shareholder Servicing Agent transmits your purchase order to the
transfer agent after the close of the NYSE, then your order is executed on the
next Business Day after the day your order is received. The Shareholder
Servicing Agent is responsible for the prompt transmission of your purchase
order to the transfer agent.

STATEMENTS AND REPORTS

The Company, or a Shareholder Servicing Agent on its behalf, will typically
send you a confirmation or statement of your account after every transaction
that affects your

23 PROSPECTUS
<PAGE>

share balance or your Fund account registration. Every January, you will be
provided a statement, which is also filed with the IRS, with tax information
for the previous year to assist you in tax return preparation. At least twice a
year, you will receive financial statements.

Dividend And Capital Gain Distributions

Dividends of the Funds are declared daily payable to shareholders of record as
of the close of regular trading of the NYSE (currently, 1:00 p.m., Pacific
time). Dividends declared in a month generally are distributed on the last
Business Day of each month. You begin earning dividends on the Business Day
after the date your purchase order is effective and continue to earn dividends
through the day you redeem your shares. The Funds intend to distribute any
capital gains at least annually.

Dividend and capital-gain distributions have the effect of reducing the NAV
per share by the amount distributed. Although distributions paid to you on
newly issued shares shortly after your purchase would represent, in substance,
a return of your capital, the distributions would ordinarily be taxable to you.
All expenses, such as applicable Rule 12b-1 fees, state securities registration
fees and transfer agency fees also may affect the relative dividend and/or
capital gain distributions of the Funds' shares.

If you redeem shares before the dividend payment date, any dividends credited
to you are paid on the following dividend payment date unless you have redeemed
all shares in your account, in which case you will receive your accrued
dividends together with your redemption proceeds.

How To Redeem Shares

PROSPECTUS 24
<PAGE>

it is not reasonably practicable or (b) it is not reasonably practicable for a
Fund fairly to determine the value of its net assets, or a period during which
the SEC by order permits deferral of redemptions for the protection of the
security holders of such Fund. In addition, the Funds may hold payment on your
redemptions until reasonably satisfied that your investments made by check have
been collected (which can take up to 10 days from the purchase date). To ensure
acceptance of your redemption request, please follow the procedures described
below. In addition, the Company reserves the right to impose charges for wiring
redemption proceeds.

Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close your account and send you the proceeds if
the balance falls below the applicable minimum balance because of a redemption
(including a redemption of shares of the Fund after you have made only the
applicable minimum initial investment). However, you will be given 30 days'
notice to make an additional investment to increase your account balance to the
required minimum balance. Plan Accounts are not subject to minimum Fund account
balance requirements. For a discussion of applicable minimum balance
requirements, see "Investing in the Funds -- How To Buy Shares."

REDEMPTIONS BY TELEPHONE

Telephone redemption or exchange privileges are made available to you
automatically upon opening an account, unless you specifically decline the
privileges. Telephone redemption privileges authorize the transfer agent to act
on telephone instructions from any person representing himself or herself to be
the investor and reasonably believed by the transfer agent to be genuine. The
Company requires the transfer agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Company and the
transfer agent may be liable for any losses due to

25 PROSPECTUS
<PAGE>

unauthorized or fraudulent instructions. Neither the Company nor the transfer
agent will be liable for following telephone instructions reasonably believed
to be genuine.

REDEMPTIONS BY MAIL

1. Write a letter of instruction. Indicate the class and the dollar amount or
number of Fund shares you want to redeem. Refer to your Fund account number
and give your taxpayer identification number ("TIN"), which is generally
your social security or employer identification number.

2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all must sign.

3. Signature guarantees are not required for redemption requests unless
redemption proceeds of $5,000 or more are to be paid to someone other than
you at your address of record or to your Approved Bank Account, or other
unusual circumstances exist that cause the transfer agent to determine that
a signature guarantee is necessary or prudent to protect against
unauthorized redemption requests. If required, a signature must be
guaranteed by an "eligible guarantor institution", which includes a
commercial bank that is an FDIC member, a trust company, a member firm of a
domestic stock exchange, a savings association, or a credit union that is
authorized by its charter to provide a signature guarantee. Signature
guarantees by notaries public are not acceptable. Further documentation may
be requested from corporations, administrators, executors, personal
representatives, trustees or custodians.

4. Mail your letter to the transfer agent at the mailing address set forth
under "Investing in the Funds -- Initial Purchases by Wire."

Unless other instructions are given in proper form, a check for your net
redemption proceeds is sent to your address of record.

EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE

You may request an expedited redemption of Fund shares by letter, in which
case your receipt of redemption proceeds, but not a Fund's receipt of your
redemption request, would be expedited. In addition, you also may request an
expedited redemption of shares of a Fund by telephone on any Business Day, in
which case both your receipt of redemption proceeds and a Fund's receipt of
your redemption request would be expedited. You may request expedited
redemption by telephone only if the total value of the shares redeemed is $100
or more.

You may request expedited redemption by telephone by calling the transfer
agent at the telephone number listed on your transaction confirmation or by
calling 1-800- 222-8222.

PROSPECTUS 26
<PAGE>

Upon request, net redemption proceeds of your expedited redemptions of $5,000
or more are wired or credited to your Approved Bank Account or wired to the
Selling Agent designated in your Account Application. The Company reserves the
right to impose a charge for wiring redemption proceeds. When proceeds of your
expedited redemption are to be paid to someone else, to an address other than
that of record, or to an Approved Bank Account or Selling Agent that you have
not predesignated in your Account Application, your expedited redemption
request must be made by letter and the signature(s) on the letter may be
required to be guaranteed, regardless of the amount of the redemption.

If your expedited redemption request is received by the transfer agent by the
close of the NYSE on a Business Day, your redemption proceeds are transmitted
to your designated Approved Bank Account or Selling Agent on the next Business
Day (assuming your investment check has cleared as described above), absent
extraordinary circumstances. Extraordinary circumstances could include those
described above as potentially delaying redemptions and also could include
situations involving an unusually heavy volume of wire transfer orders on a
national or regional basis or communication or transmittal delays that could
cause a brief delay in the wiring or crediting of funds. A check for net
redemption proceeds of less than $5,000 is mailed to your address of record or,
at your election, credited to your Approved Bank Account.

During periods of drastic economic or market activity or changes, you may
experience problems implementing an expedited redemption by telephone. In the
event you are unable to reach the transfer agent by telephone, you should
consider using overnight mail to implement an expedited redemption. The Company
reserves the right to modify or terminate the expedited telephone redemption
privilege at any time.

SYSTEMATIC WITHDRAWAL PLAN

27 PROSPECTUS
<PAGE>

mails or deposits your net redemption proceeds as instructed on or about the
fifth Business Day prior to the end of each month. There are no separate fees
charged to you by the Company for participating in the Systematic Withdrawal
Plan. However, you should not participate in the Systematic Withdrawal Plan if
you also are purchasing shares of a Fund that are subject to a front-end sales
charges.

It may take up to ten (10) days after receipt of your request to establish
your participation in the Systematic Withdrawal Plan. You may change your
withdrawal amount, suspend withdrawals or terminate your election at any time
by notifying the transfer agent at least five (5) Business Days prior to any
scheduled transaction. Your participation in the Systematic Withdrawal Plan is
terminated automatically if your Fund account is closed or, in some cases, if
your Approved Bank Account is closed.

REDEMPTIONS THROUGH SELLING AGENTS

Unless you have made other arrangements with the Selling Agent and the
transfer agent has been informed of such arrangements, net redemption proceeds
of a redemption order made by you through a Selling Agent are credited to your
Approved Bank Account. If no such account is designated, a check for the net
redemption proceeds is mailed to your address of record or, if such address is
no longer valid, the net redemption proceeds are credited to your account with
the Selling Agent. You may request a check from the Selling Agent or may elect
to retain the net redemption proceeds in such account. The Selling Agent may
charge you a service fee. In addition, it may benefit from the use of your
redemption proceeds until the check it issues to you has cleared or until such
proceeds have been disbursed or reinvested on your behalf.

REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS

You may request a redemption of Fund shares through your Shareholder Servicing
Agent. Any redemption request made by telephone through your Shareholder
Servicing Agent must redeem shares with a total value equal to $100 or more. If
your redemption order is transmitted by the Shareholder Servicing Agent on your
behalf to the transfer agent before the close of the NYSE, the redemption order
is executed at the NAV determined as of the close of the NYSE on that day. If
your Shareholder Servicing Agent transmits your redemption order to the
transfer agent after the close of the NYSE, then

PROSPECTUS 28
<PAGE>

your order is executed on the next Business Day after the date your order is
received. The Shareholder Servicing Agent is responsible for the prompt
transmission of your redemption order to the Company.

Unless you have made other arrangements with your Shareholder Servicing Agent,
and the transfer agent has been informed of such arrangements, net redemption
proceeds of a redemption order made by you through your Shareholder Servicing
Agent are credited to your Approved Bank Account. If no such account is
designated, a check for the net redemption proceeds is mailed to your address
of record or, if such address is no longer valid, the net redemption proceeds
is credited to your account with your Shareholder Servicing Agent or to another
account designated in your agreement with your Shareholder Servicing Agent. The
Shareholder Servicing Agent may charge you a service fee. In addition, it may
benefit from the use of your redemption proceeds until any check it issues for
you has cleared or until such proceeds have been disbursed or reinvested on
your behalf.

Additional Shareholder Services

The Company offers you a number of optional services. As noted above, you can
take advantage of the AutoSaver Plan, Tax-Deferred Retirement Plans, the
Systematic Withdrawal Plan, and Expedited Redemptions by Letter and Telephone.
In addition, you have several distribution payment options and an exchange
privilege, which are described below. If you have questions about the
distribution options available to you, please call 1-800-222-8222.

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out your Account Application, you can choose from the following
distribution options listed below.

A. The AUTOMATIC REINVESTMENT OPTION provides for the reinvestment of your
dividend and capital gain distributions in additional shares of the same class
of the Fund that paid such distributions. Distributions declared in a month
generally are reinvested in additional shares at NAV on the last Business Day
of such month. You are assigned this option automatically if you make no choice
on your Account Application.

29 PROSPECTUS
<PAGE>

Money Market Mutual, National Tax-Free Money Market Mutual, Prime Money Market
Mutual or Treasury Money Market Mutual Funds or in shares of the California
Tax-Free Money Market Mutual Fund (collectively, the "Money Market Mutual
Funds"). Distributions paid on Class A shares may also be invested in shares of
a non-money market fund with a single class of shares (a "single class fund").

C. The AUTOMATIC CLEARING HOUSE OPTION permits you to have dividend and
capital gain distributions deposited in your Approved Bank Account. In the
event your Approved Bank Account is closed, and such distribution is returned
to the Funds' Funds dividend disbursing agent, the distribution is reinvested
in your Fund account at the NAV next determined after the distribution has been
returned. In addition, your Automatic Clearing House Option is then converted
to the Automatic Reinvestment Option.

D. The CHECK PAYMENT OPTION lets you receive a check for all dividend and/or
capital gain distributions, which generally is mailed either to your designated
address or your Approved Bank Account shortly following declaration. If the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, those checks are reinvested in your Fund account at
the NAV next determined after the earlier of the date the checks have been
returned to the Fund's dividend disbursing agent or the date six months after
the payment of such distribution. In addition, your Check Payment Option is
then converted to the Automatic Reinvestment Option.

The Company forwards moneys to the dividend disbursing agent so that it may
issue you distribution checks under the Check Payment Option. The dividend
disbursing agent may benefit from the temporary use of such moneys until these
checks clear. The Company takes reasonable efforts to locate investors whose
checks are returned or uncashed after six months.

EXCHANGE PRIVILEGE

Wells Fargo Bank advises a variety of other funds, each with its own
investment objective and policies. The exchange privilege is a convenient way
to buy shares in Stagecoach Funds to respond to changes in your investment
needs. Shares of each Fund may be exchanged for Class A shares or single class
shares of one of the Company's other funds, or for shares of one of the
Company's Money Market Mutual Funds in an identically registered account at
respective net asset values.

Important factors that you should consider:

. You will need to read the prospectus of the fund into which you want to
exchange.

. Every exchange is a redemption of shares of one fund and a purchase of
shares of another fund. The redemption may produce a gain or loss for
federal income tax purposes.

PROSPECTUS 30
<PAGE>

. You must exchange the minimum purchase amount from the fund you are
redeeming unless your balance has fallen below that amount due to market
conditions.

. You will need to pay any difference in front-end sales load to which you
are subject in the new fund.

. If you exchange Fund shares for shares of a Money Market Mutual Fund, you
may not re-exchange shares of the Money Market Mutual Fund for shares
other than the original exchanged class.

. Stagecoach may limit the number of times shares may be exchanged or may
reject any telephone exchange order. Subject to limited exceptions,
Stagecoach will notify you 60 days before discontinuing or modifying the
exchange privilege.

You can exchange shares by writing the Transfer Agent or, if you have
telephone privileges you may call the Transfer Agent. Exchanges are subject to
the procedures and conditions applicable to purchasing and redeeming shares.

Management, Distribution And Servicing Fees

INVESTMENT ADVISER

Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank, as the Funds' adviser, provides investment guidance and policy
direction in connection with the management of the Funds' assets. The adviser
also furnishes the Board of Directors with periodic reports on the Funds'
investment strategy and performance. For its services as investment adviser to
the Funds, Wells Fargo Bank is entitled to monthly investment advisory fees at
the annual rate of 0.50% of each Fund's average daily net assets. From time to
time, a Fund, consistent with its investment objective, policies and
restrictions, may invest in securities of companies with which Wells Fargo Bank
has a lending relationship.

Wells Fargo Bank provides investment guidance and policy direction in
connection with the daily portfolio management of the Funds. Wells Fargo Bank
also furnishes to the Boards periodic reports on the investment strategy and
performance of the Funds.

Advisory Fees Paid

For the year ended December 31, 1996, Wells Fargo Bank waived all advisory
fees payable by each predecessor portfolio.

31 PROSPECTUS
<PAGE>

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank serves as the Funds' custodian and transfer and dividend
disbursing agent. Under the Custody Agreement, each 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 each 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.

ADMINISTRATIVE SERVICING AGENTS

The Company has adopted a Shareholder Administrative Servicing Plan (the
"Administrative Servicing Plan") on behalf of the Funds. Pursuant to the
Administrative Servicing Plan, the Funds may enter into administrative
servicing agreements with administrative servicing agents (which may include
Wells Fargo Bank and its affiliates) who are dealers/holders of record, or that
otherwise have a servicing relationship with the beneficial owners of the
shares. Administrative servicing agents agree to perform administrative
shareholders services which may include, among other things, maintaining an
omnibus account with the Funds, aggregating and transmitting purchase, exchange
and redemption orders to a Fund's Transfer Agent, answering customer inquiries
regarding a shareholder's account in a Fund, and providing other services the
Company or a customer may reasonably request. Administrative servicing agents
are entitled to a fee which will not exceed 0.25%, on an annualized basis, of
the average daily net assets of the shares represented by the shares owned of
record or beneficially by the customers of the administrative servicing agent
during the period for which payment is being made. In no case shall shares be
sold pursuant to a Fund's Rule
12b-1 Plan while being sold pursuant to its Administrative Servicing Plan.

In no event will the fees paid exceed the maximum amount payable to the
Administrative Servicing Agent under applicable laws, regulations or rules,
including the Conduct Rules of the NASD ("NASD Rules").

Administrative Servicing Agents also may impose certain conditions on their
customers, subject to the terms of this Prospectus, in addition to or different
from those imposed by the Company, such as requiring a higher minimum initial
investment or payment of a separate fee for additional services. Each
Administrative Servicing Agent is required to agree to disclose any fees it may
directly charge its customers who are shareholders of a Fund and to notify them
in writing at least 30 days before it imposes any transaction fees.

ADMINISTRATOR AND CO-ADMINISTRATOR

Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank as Administrator and Stephens as Co-administrator provide each Fund
with

PROSPECTUS 32
<PAGE>

administration services, including general supervision of each Fund's
operation, coordination of other services provided to a 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 each Fund's business and
Stephens compensates the Directors and officers who are affiliated with
Stephens. For these administrative services, Wells Fargo Bank and Stephens are
entitled to receive monthly fees at the annual rates of 0.04% and 0.02%,
respectively, of each Fund's average daily net assets. Wells Fargo Bank and
Stephens may delegate certain of their administrative duties to sub-
administrators.

Stephens previously provided substantially the same services as sole
administrator to the predecessor portfolios and was entitled to receive from
each a monthly fee at the annual rate of 0.15% of its respective average daily
net assets. This fee decreased to 0.10% of the average daily net assets of each
predecessor portfolio in excess of $200 million.

SPONSOR AND DISTRIBUTOR

Stephens is the Fund'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 Funds' principal underwriter within the meaning of the 1940
Act, has entered into a Distribution Agreement with the Company pursuant to
which Stephens is responsible for distributing the shares of the Funds. The
Company also has adopted a Distribution Plan on behalf of the Funds under the
SEC's Rule 12b-1 (the "Plan"). Pursuant to the Plan, the Company may pay to
Stephens as compensation for distribution-related services provided, or
reimbursement for distribution related expenses incurred, a monthly fee at the
annual rate of 0.25% of the average daily net assets attributable to each Fund.
The actual fee payable to Stephens shall, within such limit, be determined from
time to time by mutual agreement between the Company and Stephens. Stephens may
enter into selling agreements with one or more selling agents under which such
agents may receive compensation for distribution-related services from
Stephens, including, but not limited to, commissions or other payments to such
agents based on the average daily net assets of Fund shares attributable to
them. Stephens may retain any portion of the total distribution fee payable
hereunder to compensate it for distribution-related services provided by it or
to reimburse it for other distribution-related expenses.

33 PROSPECTUS
<PAGE>

Under the Distribution Agreement, Stephens may enter into selling agreements
with Selling Agents that wish to make available Fund shares to their respective
customers. On behalf of the shares of the Funds, each Fund may participate in
joint distribution activities with any of the other funds of the Company, in
which event, expenses reimbursed out of the assets of the Fund may be
attributable, in part, to the distribution-related activities of another fund
of the Company. Generally, the expenses attributable to joint distribution
activities are allocated to the Fund and the other funds of the Company in
proportion to their relative net asset sizes, although the Company's Board of
Directors may allocate such expenses in any other manner that it deems fair and
equitable.

In addition, the Plans contemplate that, to the extent any fees payable
pursuant to a shareholder servicing agreement (discussed above) are deemed to
be for distribution-related services, such payments are approved and payable
pursuant to the Plans, subject to any limits under applicable law, regulations
or rules, including the NASD Rules. Financial institutions acting as Selling
Agents, Shareholder Servicing Agents, or in certain other capacities may be
required to register as dealers pursuant to applicable state securities laws
that may differ from federal law and any interpretations expressed herein.

FUND EXPENSES

PROSPECTUS 34
<PAGE>

impact on the fund's performance. Except for the expenses borne by Wells Fargo
Bank and Stephens, each Fund bears all costs of its operations, including its
pro rata portion of Company expenses such as fees and expenses of its
independent auditors and legal counsel, and compensation of the Company's
directors who are not affiliated with the adviser, administrator or any of
their affiliates; advisory, transfer agency, custody and administration fees;
and any extraordinary expenses. Expenses attributable to each fund or class are
charged against the assets of the fund or class. General expenses of the
Company are allocated among all of the funds of the Company in a manner
proportionate to the net assets of each Fund, on a transactional basis, or on
such other basis as the Company's Board of Directors deems equitable.

Taxes

Dividends from net investment income and net short-term capital gains, if any,
of the Short-Term Government-Corporate Income Fund are taxable as ordinary
income to their respective shareholders. The Short-Term Municipal Income Fund's
shareholders will not be subject to federal income taxes on any Fund dividends
attributable to interest from tax-exempt securities. However, dividends of the
Short-Term Municipal Income Fund attributable to interest from taxable
securities, and net short-term capital gains (if any) will be taxable to
shareholders. In addition, distributions designated by a Fund as capital gain
distributions, if any, attributable to its net capital gains may be taxable to
individual, trust and estate shareholders of the Fund at preferential rates.
See "Additional Information Concerning Taxes -- Capital Gain Distributions" in
the SAI. To the extent either Fund distributes taxable dividends and capital
gains, such distributions will be taxable to shareholders, regardless of
whether the shareholder takes such distributions in cash or has them
automatically reinvested in additional Fund shares. Distributions declared in
October, November and December and distributed by the following January will be
taxable as if they were paid by December 31. The Funds' dividends will not
qualify for the dividends-received deduction allowed to corporate shareholders.

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.

35 PROSPECTUS
<PAGE>

The foregoing discussion regarding taxes is based on tax laws which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal tax considerations generally affecting the Funds and their
shareholders. It is not intended as a substitute for careful tax planning; you
should consult your tax advisor with respect to your specific tax situation as
well as with respect to foreign, state and local taxes. Further federal tax
considerations are discussed in the SAI.

PROSPECTUS 36
<PAGE>

PROSPECTUS APPENDIX -- ADDITIONAL INVESTMENT POLICIES

Set forth below is a more detailed description of the Funds' permissible
investments. For additional information, see "Additional Permitted Investment
Activities" in the SAI.

U.S. Government Obligations

The Funds 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 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 obligation, 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, duration or value due to
their structure or contract terms.

Bonds

Certain of the debt instruments purchased by the Funds may be bonds. A bond is
an interest-bearing security issued by a company or governmental unit. The
issuer of a bond has a contractual obligation to pay interest at a stated rate
on specific dates and to repay principal (the bond's face value) periodically
or on a specified maturity date. An issuer may have the right to redeem or
"call" a bond before maturity, in which case the investor may have to reinvest
the proceeds at lower market rates. Most bonds bear interest income at a
"coupon" rate that is fixed for the life of the bond. The value of a fixed rate
bond usually rises when market interest rates fall, and falls when market
interest rates rise. Accordingly, a fixed rate bond's yield (income as a
percent of the bond's current value) may differ from its coupon rate as its
value rises or falls.

Other types of bonds bear income at an interest rate that is adjusted
periodically. Because of their adjustable interest rates, the value of
"floating-rate" or "variable-rate" bonds fluctuates much less in response to
market interest rate movements than the value of fixed rate bonds. Also, the
Funds may treat some of these bonds as having a shorter maturity for purposes
of calculating the weighted average maturity of their investment portfolios.
Bonds may be senior or subordinated obligations. Senior obligations generally
have the first claim on a corporation's earnings and assets and, in

A-1 PROSPECTUS
<PAGE>

the event of liquidation, are paid before subordinated debt. Bonds may be
unsecured (backed only by the issuer's general creditworthiness) or secured
(also backed by specified collateral).

The Short-Term Municipal Income Fund may invest in variable-rate instruments
with a maximum final maturity of up to 30 years, provided the period remaining
until the next readjustment of the instrument's interest rate, or the period
remaining until the principal amount can be recovered through demand, is less
than 5 years.

Asset-backed Securities

The Short-Term Government-Corporate Income Fund may invest in various types of
asset-backed securities. Asset-backed securities are typically backed by an
underlying pool of assets (such as credit card or automobile trade receivables
or corporate loans or bonds) which provides the interest and principal payments
to investors. Credit quality depends primarily on the quality of the underlying
assets and the level of credit support, if any, provided by the issuer. The
underlying assets may be subject to prepayment, which can shorten the life of
asset-backed securities and may lower their return. Asset-backed securities are
subject to interest rate risk and their value may also change because of actual
or perceived changes in the creditworthiness of the originator, servicing agent
or of the financial institution providing any credit support.

Repurchase Agreements

Each of the Funds may enter into repurchase transactions in which the seller
of a security to the Fund agrees to repurchase that security from the Fund at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. A Fund may enter into repurchase agreements only with respect to
securities which could otherwise be purchased for the Fund. All repurchase
agreements must be fully collateralized. A 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 Funds may enter into pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank.

Municipal Securities

The Short-Term Municipal Income Fund may invest in municipal securities that
are issued by states and municipalities to raise money for various public
purposes, including general purpose financing for state and local governments
as well as financing for specific projects or public facilities. Municipal
securities may be backed by the full taxing power of a state or municipality,
by the revenues from a specific project or the credit of a private
organization. In addition, certain municipal securities may be supported by
letters of credit furnished by domestic or foreign banks. Yields on

PROSPECTUS A-2
<PAGE>

municipal securities generally depend on a variety of factors, including: the
general conditions of the municipal note and municipal bond markets; the size
and maturity of the particular offering; the maturity of the obligations; and
the rating of the issue or issuer. Furthermore, any adverse economic conditions
or developments affecting a particular state or municipality could impact the
municipal securities issued by such entities. The two principal classifications
of municipal securities are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit, and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of
the facility being financed. "Private activity bonds," the interest on which is
generally includable for federal alternative minimum tax purposes, held by the
Short-Term Municipal Income Fund are, in most cases, revenue securities and are
not payable from the unrestricted revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved.

The highest rating assigned by S&P is "AAA" for state and municipal bonds,
"SP-1" for state and municipal notes, and "A-1" for state and municipal paper.
The highest rating assigned by Moody's is "Aaa," "MIG 1," and "Prime-1" for
state and municipal bonds, notes and commercial paper, respectively. These
instruments are judged to be the best quality and present minimal risks and a
strong capacity for repayment of principal and interest. If a municipal
security ceases to be rated or is downgraded below an investment grade rating
after purchase by the Fund, it may retain or dispose of such security. In any
event, the Short-Term Municipal Income Fund does not intend to purchase or
retain any municipal security that is rated below the top four rating
categories by a nationally recognized statistical rating organization
("NRSRO"), or, if unrated, is considered by the investment adviser to be of
comparable quality. Securities rated in the fourth highest category are
considered to have speculative characteristics. A description of ratings is
contained in the Appendix to the SAI.

Municipal securities may include "moral obligation" bonds, which are normally
issued by special purpose public authorities. If the issuer of moral obligation
bonds is unable to meet its debt service obligations from current revenues, it
may draw on a reserve fund, the restoration of which is a moral commitment but
not a legal obligation of the state or municipality which created the issuer.
An issuer's obligation to pay principal or interest on an instrument may be
backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend.

Municipal securities may include variable- or floating-rate instruments issued
by industrial development authorities and other governmental entities. While
there may not be an active secondary market with respect to a particular
instrument purchased by the

A-3 PROSPECTUS
<PAGE>

Short-Term Municipal Income Fund, it may demand payment of the principal and
accrued interest on the instrument or may resell it to a third party as
specified in the instruments. The absence of an active secondary market,
however, could make it difficult for the Fund to dispose of the instrument if
the issuer defaulted on its payment obligation or during periods the Fund is
not entitled to exercise its demand rights, and the Fund could, for these or
other reasons, suffer a loss.

Municipal participation interests, which give the purchaser an undivided
interest in one or more underlying municipal securities, may be purchased from
financial institutions. To the extent that municipal participation interests
are considered to be "illiquid securities" such instruments are subject to the
Short-Term Municipal Income Fund's limitation on the purchase of illiquid
securities.

In addition, the Short-Term Municipal Income Fund may acquire "stand-by
commitments" from banks or broker/dealers with respect to municipal securities
held in its portfolios. Under a stand-by commitment, a dealer agrees to
purchase at the Fund's option specified municipal securities at a specified
price. The Fund acquires stand-by commitments solely to facilitate portfolio
liquidity and without intending to exercise its rights thereunder for trading
purposes.

The Short-Term Municipal Income Fund may purchase municipal obligations known
as "certificates of participation" which represent undivided proportional
interests in lease payments by a governmental or nonprofit entity. The lease
payments and other rights under the lease provide for and secure the payments
on the certificates. Lease obligations may be limited by applicable municipal
charter provisions or the nature of the appropriation for the lease. In
particular, lease obligations may be subject to periodic appropriation. Lease
obligations also may be abated if the leased property is damaged or becomes
unsuitable for the lessee's purpose. If the entity does not appropriate funds
for future lease payments, the entity cannot be compelled to make such
payments. Furthermore, a lease may or may not provide that the certificate
trustee can accelerate lease obligations upon default. If the trustee could not
accelerate lease obligations upon default, the trustee would only be able to
enforce lease payments as they became due. In the event of a default or failure
of appropriation, it is unlikely that the trustee would be able to obtain an
acceptable substitute source of payment. Certificates of participation are
generally subject to redemption by the issuing municipal entity under specified
circumstances. If a specified event occurs, a certificate is callable at par
either at any interest payment date or, in some cases, at any time. As a
result, certificates of participation are not as liquid or marketable as other
types of municipal obligations and are generally valued at par or less than par
in the open market.

Forward Commitments, When-Issued Purchases and Delayed Delivery Transactions

The Funds may purchase or sell securities on a when-issued or delayed delivery
basis and may make contracts to purchase or sell securities for a fixed price
at a future

PROSPECTUS A-4
<PAGE>

date beyond customary settlement time. Securities purchased or sold on a when-
issued, delayed delivery or forward commitment basis involve a risk of loss if
the value of the security to be purchased declines, or the value of the
security to be sold increases, before the settlement date. Although the Funds
generally purchase securities with the intention of acquiring them, a Fund may
dispose of securities purchased on a when-issued, delayed-delivery or a forward
commitment basis before settlement when deemed appropriate by Wells Fargo Bank.

Foreign Obligations

The Short-Term Government-Corporate Income Fund may invest up to 25% of its
assets in "Yankee Bonds." Yankee Bonds are U.S. dollar-denominated debt
obligations issued in the U.S. by foreign banks and corporations. Such
investments may involve special risks and considerations not typically
associated with investing in U.S. companies. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political instability which
could affect U.S. investments in foreign countries. Additionally, dispositions
of foreign securities and dividends and interest payable on those securities
may be subject to foreign taxes, including withholding taxes. Foreign
securities often trade with less frequency and volume than domestic securities
and, therefore, may exhibit greater price volatility. The Fund's investments
may be affected either unfavorably or favorably by fluctuations in the relative
rates of exchange between the currencies of different nations, by exchange
control regulations and by indigenous economic and political developments. See
the SAI for further information about foreign obligations.

Temporary Investments

The Short-Term Municipal Income Fund may elect to invest temporarily up to 20%
of its net assets in: U.S. Government obligations; negotiable certificates of
deposit, bankers' acceptance 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; commercial paper rated at the date of purchase "Prime-1"
by Moody's or "A-1-" or "A-1" by S&P; high quality taxable municipal
obligations; shares of taxable or tax-free money market mutual funds; and
repurchase agreements. The Short-Term Municipal Income Fund may invest
temporarily in shares of other open-end, management investment companies,
subject to the limitations of Sections 12(d)(1) of the Investment Company Act
of 1940 (the "1940 Act"). Purchases of shares of other investment companies
will be limited to temporary investments in shares of unaffiliated investment
companies, and

A-5 PROSPECTUS
<PAGE>

the investment adviser will waive its fee for that portion of the Fund's assets
so invested. Such temporary investments would most likely be made for cash
management purposes or when there is an unexpected or abnormal level of
investor purchases or redemptions of shares of the Fund or because of unusual
market conditions. The income from these temporary investments and investment
activities may be subject to federal income taxes. However, as stated above,
Wells Fargo Bank seeks to invest substantially all of the Fund's assets in
securities exempt from such taxes.

INVESTMENT POLICIES AND RESTRICTIONS

Each Fund's investment objective, as set forth above, is fundamental; that is,
the investment objective may not be changed without approval by the vote of the
holders of a majority of a Fund's outstanding voting securities, as described
under "Capital Stock" in the SAI. If the Board of Directors determines,
however, that a Fund's investment objective can best be achieved by a
substantive change in a non-fundamental investment policy or strategy, the
Company may make such change without shareholder approval and will disclose any
such material changes in the then current prospectus.

The classification of each Fund as "diversified" may not be changed without
the approval of the Fund's shareholders.

In addition, as a matter of fundamental policy, each Fund may borrow from
banks up to 10% of the current value of its net assets for temporary purposes
in order to meet redemptions. These borrowings may be secured by the pledge of
up to 10% of the current value of such Fund's net assets (but investments may
not be purchased by a Fund while any such outstanding borrowing exceeds 5% of
the Fund's net assets). As a matter of fundamental policy, each Fund may not
invest more than 25% of its assets (i.e., concentrate) in any particular
industry, excluding U.S. Government obligations. As a matter of non-fundamental
policy, each Fund may invest up to 15% of the current value of its net assets
in securities that are illiquid by virtue of the absence of a readily available
market or 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. Disposing of illiquid or restricted securities may involve
additional costs and require additional time.

Except during temporary defensive periods, each Fund seeks to maintain a
portfolio of securities with an average weighted maturity of between 90 days
and 2 years. The maximum final maturity of the Short-Term Municipal Income
Fund's investments will not exceed 5 years, excluding certain variable rate
instruments described above. The Short-Term Government-Corporate Income Fund
may invest in obligations of any maturity.

The Funds may experience high portfolio turnover rates, which results in
relatively higher portfolio transaction costs, such as brokerage commissions or
dealer mark-ups. Portfolio turnover also can generate relatively higher capital
gains tax exposure.

PROSPECTUS A-6

<PAGE>

Advised by WELLS FARGO BANK, N.A.
Sponsored/Distributed by
Stephens Inc., Member NYSE/SIPC

NOT FDIC INSURED
<PAGE>

STAGECOACH FUNDS(R)
P.O. Box 7066
San Francisco, CA 94120-7066

STAGECOACH FUNDS:
--------------------------------------------------------------------------

.are NOT FDIC insured
.are NOT guaranteed by Wells Fargo Bank
.are NOT deposits or obligations of the Bank
.involve investment risk, including possible loss of principal

[RECYCLED PAPER LOGO APPEARS HERE]
Printed on Recycled Paper SC ST P (12/97)
<PAGE>

[LOGO OF STAGECOACH FUNDS APPEARS HERE]

------------------------------------

PROSPECTUS

------------------------------------

VARIABLE RATE GOVERNMENT FUND

December 12, 1997
<PAGE>

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION

DATED SEPTEMBER 25, 1997

STAGECOACH FUNDS(R)
VARIABLE RATE GOVERNMENT FUND

Stagecoach Funds, Inc. (the "Company") is an open-end, management investment
company. This Prospectus contains information about the Class A and Class C
shares offered by one of the Company's funds -- the VARIABLE RATE GOVERNMENT
FUND (the "Fund").

The VARIABLE RATE GOVERNMENT FUND seeks to earn a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities.

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 December 12, 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 1-800-222-8222. If you hold shares in an IRA, please
call 1-800-BEST-IRA for information or assistance.

ALTHOUGH CERTAIN PORTFOLIO INSTRUMENTS HELD BY THE FUND MAY BE INSURED OR
GUARANTEED BY THE UNITED STATES OR ANY FEDERAL AGENCY OR INSTRUMENTALITY,
SHARES OF THE FUND ARE NOT.

FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, WELLS FARGO BANK, N.A. ("WELLS FARGO BANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

PROSPECTUS DATED DECEMBER 12, 1997
PROSPECTUS
<PAGE>

Table of Contents
-------

<TABLE>
<S> <C>
Prospectus Summary 1
Summary of Fund Expenses 4
Explanation of Tables 5
Financial Highlights 6
How the Fund Works 9
The Fund and Management 12
Investing in the Fund 14
Dividend and Capital Gain Distributions 24
How to Redeem Shares 24
Additional Shareholder Services 29
Management, Distribution and Servicing Fees 31
Taxes 35
Prospectus Appendix -- Additional Investment Policies A-1
</TABLE>

PROSPECTUS i
<PAGE>

Prospectus Summary

The Fund provides you with a convenient way to invest in various portfolios of
securities selected and supervised by professional management. The following
provides you with summary information about the Fund. For more information,
please refer to the identified Prospectus sections and generally to the
Prospectus and SAI.

Q. WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

A. The VARIABLE RATE GOVERNMENT FUND seeks to earn a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities.

The Fund invests primarily in adjustable rate mortgage securities ("ARMS")
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
including the Government National Mortgage Association ("GNMA"), the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). The Fund also may invest in the adjustable rate portions
of collateralized mortgage obligations ("CMOs") issued by government agencies
or instrumentalities, including primarily FNMA and FHLMC, and collateralized by
pools of mortgage loans.

See "How the Fund Works -- Investment Objective 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, are not insured by the Federal Deposit Insurance Corporation ("FDIC") and
are not insured against loss of principal. When the value of the securities
that the Fund owns declines, so does the value of your Fund shares. You should
be prepared to accept some risk with the money you invest in the Fund.

The market value of the Fund's investments in fixed-income securities changes
in response to various factors, such as changes in market interest rates and
the financial strength of each issuer. During periods of falling interest
rates, the value of fixed-income securities generally rises. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. Debt securities with longer maturities, which tend to produce higher
yields, are subject to potentially greater price fluctuation than obligations
with shorter maturities. Fluctuations in the market value of fixed income
securities can be reduced, but not eliminated, by variable rate or floating
rate features. In addition, some of the asset-backed securities in which the
Fund invests are subject to extension risk. This is the risk that when interest
rates rise, prepayments of the

1 PROSPECTUS
<PAGE>

underlying obligations slow, thereby lengthening the duration and potentially
reducing the value of these securities.

The debt securities held by the Fund also may be subject to credit risk.
Credit risk is the risk that the issuers of securities in which the Fund
invests may default in the payment of principal and/or interest. Any such
defaults or adverse changes in an issuer's financial condition or credit rating
may adversely affect the value of the Fund's portfolio securities and, hence,
the value of your investment in the Fund.

Although some of the Fund's portfolio securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
Fund's daily net asset value is based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
and instrumentalities where it is not obligated to do so. Government-sponsored
enterprises such as FNMA and FHLMC in the event of a default in payment on the
underlying mortgages which such entity is unable to satisfy.

As with all mutual funds, there is no assurance that the Fund will achieve its
investment objective. See "How the Fund Works -- Investment Objectives and
Policies-- Risk Factors" below and "Additional Permitted Investment Activities"
in the SAI for further information about the Fund's investments and related
risks.

Q. WHO MANAGES MY INVESTMENTS?

A. Wells Fargo Bank, as the Fund's investment adviser, manages your
investments. Wells Fargo Bank also provides administration, transfer agency,
dividend disbursing agency and custodial services to the Funds. In addition,
Wells Fargo Bank is a shareholder servicing agent and a selling agent for the
Funds. See "The Funds and Management" and "Management, Distribution and
Servicing Fees" for further information.

Q. HOW DO I INVEST?

A. You may invest by purchasing Fund shares at the public offering price,
which is the net asset value ("NAV") per share plus any applicable sales
charge. There is a maximum sales load of 3.00% for purchasing Class A shares of
the Fund. Class C shares of the Fund are subject to a maximum contingent
deferred sales charge of 1.00% of the lesser of net asset value at purchase or
net asset value at redemption. You may open an account by investing at least
$1,000 and may add to your account by making additional investments of at least
$100, although certain exceptions to these minimums may be available. Shares
may be purchased by wire, by mail or by an automatic investment feature called
the AutoSaver Plan on any day the New York Stock Exchange is open.
See "Investing in the Fund." For more details, contact Stephens (the Fund's
sponsor and distributor), a shareholder servicing agent or a selling agent
(such as Wells Fargo Bank).

PROSPECTUS 2
<PAGE>

Q. HOW WILL I RECEIVE DIVIDEND AND ANY CAPITAL GAIN DISTRIBUTIONS?

A. Dividends of the Fund are declared daily and distributed monthly. Any
capital gains are distributed at least annually. Distributions paid by the Fund
are automatically reinvested in shares of the same class of the Fund at NAV
(without a sales charge). You may also elect to receive dividends credited to
your Wells Fargo Bank account, distributed in cash, or in shares of certain
other funds in the Stagecoach Family of Funds in which you have an established
account that meets the applicable minimum initial investment requirement.
Investment income available for distribution to holders of a class of shares is
reduced by the class expenses payable on behalf of those shares. See "Dividend
and Capital Gain Distributions" and "Additional Shareholder Services."

Q. HOW MAY I REDEEM SHARES?

Q. WHAT ARE DERIVATIVES AND DOES THE FUND USE THEM?

A. Derivatives are financial instruments whose value is derived, at least in
part, from the price of another security or a specified asset, index or rate.
Some of the permissible investments described in this Prospectus, such as
floating- and variable-rate instruments, structured notes and certain U.S.
Government obligations, are considered derivatives. Some derivatives may be
more sensitive than direct securities to changes in interest rates or sudden
market moves. Some derivatives also may be susceptible to fluctuations in yield
or value due to their structure or contract terms.If the Fund's adviser judges
market conditions incorrectly, the use of certain derivatives could result in a
loss regardless of the adviser's intent in using the derivatives.

Q. WHAT STEPS DO THE FUNDS TAKE TO CONTROL DERIVATIVES-RELATED RISKS?

A. Wells Fargo Bank, as investment adviser to the Funds, uses a variety of
internal risk management procedures to ensure that derivatives' use is
consistent with the Fund's investment objective, does not expose the Fund to
undue risks and is closely monitored. These procedures include providing
periodic reports to the Board of Directors concerning the use of derivatives.
Derivatives use by the Fund also is subject to broadly applicable investment
policies. For example, the Fund may not invest more than a specified percentage
of its assets in "illiquid securities," including derivatives that do not have
active secondary markets. Nor may the Fund use certain derivatives without
establishing adequate "cover" in compliance with SEC rules limiting the use of
leverage. For more information on the Fund's investment activities, see "How
the Funds Work" and "Prospectus Appendix -- Additional Investment Policies."

3 PROSPECTUS
<PAGE>

Summary of Fund Expenses

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
-------------- --------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).......... 3.00% None
Maximum Sales Charge on Reinvested
Distributions................................ None None
Maximum Sales Charge on Redemptions:
During Year 1................................ None 1.00%
After Year 1................................. None None
Redemption Fees............................... None None
Exchange Fees................................. None None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
-------------- --------------
<S> <C> <C>
Management Fee (after waivers or
reimbursements)/1/.......................... 0.40% 0.40%
Rule 12b-1 Fee/2/............................ 0.25% 0.50%
Other Expenses (after waivers or
reimbursements)/3/.......................... 0.13% 0.38%
----- -----
TOTAL FUND OPERATING EXPENSES
(after waivers or reimbursements)/4/........ 0.78% 1.28%
===== =====
</TABLE>
--------------
/1/ Management Fees (before waivers or reimbursements) would be 0.50%.
/2/ Class A shares are subject to either a 0.25% 12b-1 Fee or a 0.25%
Administrative Servicing Fee. In no case will shareholders be assessed
both 12b-1 and Administrative Servicing Fees and Total Fund Operating
Expenses will not be greater than the amount shown above because of the
combination of such fees. See "Distribution Plans" and "Administrative
Servicing Plan".
/3/ Other Expenses (before waivers or reimbursements) would be 0.23% for
Class A and 0.67% for Class C.
/4/ Total Fund Operating Expenses (before waivers or reimbursements) would
be 0.98% for Class A and 1.67% for Class C.

EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment in the Fund's
shares, assuming (A) a 5% annual return and (B) redemption at the end of
each time period indicated:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares............................... $38 $54 $72 $124
Class C Shares............................... $23 $41 $70 $155

You would pay the following expenses on a $1,000 investment in the Fund's
Class C shares, assuming a 5% annual return and no redemption:

<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class C Shares............................... $13 $41 $70 $155
</TABLE>

PROSPECTUS 4
<PAGE>

Explanation of Tables

SHAREHOLDER TRANSACTION EXPENSES are charges incurred when you buy or sell
Fund shares. You are subject to a front-end sales charge on purchases of Class
A shares and may be subject to a contingent deferred sales charge on the
purchases of Class C shares if you redeem such shares within a specified
period. In certain instances you may qualify for a reduction or waiver of the
front-end sales charge. There are no exchange fees. The Company reserves the
right to impose a charge for wiring redemption proceeds. See "Investing in the
Fund -- Sales Charges."

ANNUAL FUND OPERATING EXPENSES for the Fund are based on amounts incurred
during the most recent fiscal year by the predecessor portfolio. On December
12, 1997, the Variable Rate Government Fund of Overland Express Funds, Inc. was
reorganized as the Stagecoach Fund of the same name. The Overland Fund is
sometimes referred to herein as the "predecessor portfolio." Where indicated,
the amounts shown under Annual Fund Operating Expenses have been adjusted to
reflect voluntary and other fee waivers and expense reimbursements expected to
be in effect during the current fiscal year. Wells Fargo Bank and Stephens have
committed to waive at least .10% of the total operating expenses of the Fund
for the next three years. Otherwise, there is no assurance that any "voluntary"
waivers and reimbursements will continue. Long-term shareholders of the Fund
could pay more in distribution-related charges than the economic equivalent of
the maximum front-end sales charges applicable to mutual funds sold by members
of the National Association of Securities Dealers, Inc. ("NASD").

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 annual rate of
return should not be considered an indication of actual or expected performance
of the Fund nor a representation of past or future expenses; actual expenses
and returns may be greater or lesser than those shown.

Additional information regarding the Fund's expenses is included under "The
Fund and Management" and "Management, Distribution and Servicing Fees" and in
the SAI under "Management," "Distribution Plans" and "Servicing Plans."

5 PROSPECTUS
<PAGE>

Financial Highlights

The following information has been derived from the Financial Highlights
included in the audited financial statements for the year ended December 31,
1996 and the unaudited financial statements for the six-month period ended June
30, 1997, for the predecessor portfolio to the Fund. This information is
provided to assist you in evaluating the Fund's historical performance. The
audited financial statements were audited by KPMG Peat Marwick LLP. The audited
financial statements and the independent auditor's report thereon for the year
ended December 31, 1996 are incorporated by reference into the SAI. In
addition, the unaudited financial statements for the six-month period ended
June 30, 1997 also are incorporated by reference into the SAI. This information
should be read in conjunction with the predecessor portfolio's audited 1996
financial statements and unaudited 1997 semi-annual financial statements and
the notes thereto. The SAI has been incorporated by reference into this
Prospectus.

PROSPECTUS 6
<PAGE>

PROSPECTUS
VARIABLE RATE GOVERNMENT FUND
FOR A CLASS A SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993 1992 1991 1990/1/
----------- -------- -------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 9.25 $ 9.35 $ 9.19 $ 9.99 $ 9.95 $10.13 $10.12 $10.00
Income from investment
operations:
Net investment income.. 0.27 0.50 0.53 0.43 0.44 0.59 0.78 0.08
Net realized and
unrealized gain (loss)
on investments......... 0.04 (0.10) 0.16 (0.80) 0.04 (0.18) 0.01 0.12
------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............. 0.31 0.40 0.69 (0.37) 0.48 0.41 0.79 0.20
Less distributions:
Dividends from net
investment income...... (0.27) (0.46) (0.53) (0.43) (0.44) (0.59) (0.78) (0.08)
Distributions from net
realized gain.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital.. 0.00 (0.04) 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------
Total from
distributions.......... (0.27) (0.50) (0.53) (0.43) (0.44) (0.59) (0.78) (0.08)
------ ------ ------ ------ ------ ------ ------- -------
Net asset value, end of
period................. $ 9.29 $ 9.25 $ 9.35 $ 9.19 $ 9.99 $ 9.95 $10.13 $10.12
====== ====== ====== ====== ====== ====== ====== ======
Total return (not
annualized)/2/.......... 3.35% 4.41% 7.69% (3.81)% 4.87% 4.23% 8.60% 2.75%
Ratios/supplemental
data:
Net assets, end of
period (000)........... $325,237 $393,948 $653,897 $1,215,546 $1,949,031 $2,559,363 $566,840 $6,858
Number of shares
outstanding, end of
period (000)........... 35,022 42,589 69,952 132,256 195,132 257,238 55,933 678
Ratios to average net
assets (annualized):
Ratio of expenses to
average net assets..... 0.83% 0.88% 0.84% 0.79% 0.76% 0.75% 0.50% 0.00%
Ratio of net investment
income to average net
assets................. 5.78% 5.36% 5.71% 4.40% 4.37% 5.62% 7.36% 4.93%
Portfolio turnover..... 40% 277% 317% 164% 201% 197% 250% N/A*
Ratio of expenses to
average net assets
prior to waived fees
and reimbursed
expenses............... 1.10% 0.98% 0.96% 0.94% 0.95% 0.94% 1.08% 5.48%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses............... 5.51% 5.26% 5.59% 4.25% 4.18% 5.43% 6.78% (0.55)%
</TABLE>

7 PROSPECTUS
<PAGE>

VARIABLE RATE GOVERNMENT FUND
FOR A CLASS C SHARE OUTSTANDING

<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993/1/
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $13.83 $13.97 $13.74 $14.93 $15.00
Income from investment
operations:
Net investment income......... 0.36 0.68 0.73 0.57 0.27
Net realized and unrealized
gain (loss) on investments... 0.06 (0.14) 0.23 (1.19) (0.07)
------ ------- ------ ------- -------
Total from investment
operations................... 0.42 0.54 0.96 (0.62) 0.20
Less distributions:
Dividends from net investment
income....................... (0.36) (0.63) (0.73) (0.57) (0.27)
Distributions from net
realized gain................ 0.00 0.00 0.00 0.00 0.00
Tax return of capital......... 0.00 (0.05) 0.00 0.00 0.00
---- ----- ---- ---- ----
Total from distributions...... (0.36) (0.68) (0.73) (0.57) (0.27)
------- ------- ------- ------- -------
Net asset value, end of
period....................... $13.89 $13.83 $13.97 $13.74 $14.93
====== ====== ====== ====== ======
Total return (not
annualized)/2/................ 3.10% 3.95% 7.08% (4.25%) 1.32%
Ratios/supplemental data:
Net assets, end of period
(000)........................ $10,962 $5,516 $7,730 $12,220 $11,319
Number of shares outstanding,
end of period (000).......... 789 399 553 889 758
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets................... 1.34% 1.38% 1.35% 1.29% 1.26%
Ratio of net investment income
to average net assets........ 5.30% 4.85% 5.23% 3.94% 3.41%
Portfolio turnover............ 40% 277% 317% 164% 201%
Ratios of expenses to average
net assets prior to waived
fees and reimbursed
expenses..................... 1.81% 1.67% 1.64% 1.55% 1.75%
Ratio of net investment income
to average net assets prior
to waived fees and reimbursed
expenses..................... 4.83% 4.56% 4.95% 3.68% 2.92%
</TABLE>
- -------------
/1/ The Class A shares of the Fund commenced operations on November 1, 1990 as
Class A shares of the predecessor portfolio. The Class C shares of the Fund
commenced operations on July 1, 1993 as Class D shares of the predecessor
portfolio.
/2/ Total returns do not include any sales charges.
* The Fund sold no securities during this period.

PROSPECTUS 8
<PAGE>

How the Fund Works

INVESTMENT OBJECTIVE AND POLICIES

Set forth below is a description of the investment objective and related
policies of the Fund. As with all mutual funds, there is no assurance that the
Fund will achieve its investment objective.

The VARIABLE RATE GOVERNMENT FUND seeks to earn a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities ("ARMS") issued or guaranteed by the U.S.
Government, its agencies and instrumentalities.

The Fund may invest in obligations of any maturity. Under ordinary
circumstances, the dollar-weighted average maturity of the Fund's portfolio is
expected to be between 10 and 30 years. However, under unusual circumstances,
the dollar-weighted average maturity of the portfolio may be shorter than 10
years. At least 65% of the value of the total assets of the Fund will, under
normal circumstances, be invested in ARMS issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises). ARMS are pass-through certificates representing ownership
interests in a pool of adjustable rate mortgages and the resulting cash flow
from those mortgages. The ARMS in which the Fund may invest are issued and
guaranteed by GNMA, FNMA or FHLMC. Unlike conventional debt securities, which
provide for periodic (usually semi-annual) payments of interest and payments of
principal at maturity or on specified call dates, ARMS provide for monthly
payments based on a pro-rata share of both periodic interest and principal
payments and prepayments of principal on the underlying mortgage pool (less
GNMA's, FNMA's or FHLMC's fees and applicable loan servicing fees).

The Fund also may invest in the adjustable rate portions of CMOs issued by
government agencies, instrumentalities or government-sponsored enterprises
including, primarily, FNMA and FHLMC, and collateralized by pools of mortgage
loans. Payments of principal and interest on the collateral mortgages are used
to pay debt service on the CMO. In a CMO, a series of bonds or certificates is
issued in multiple classes. Each class of CMOs, often referred to as a
"tranche," is issued at a specified coupon rate and has a stated maturity or
final distribution date. The principal and interest payment on the underlying
mortgages may be allocated among the classes of CMOs in several ways.
Typically, payments of principal, including any prepayments, on the underlying
mortgages would be applied to the classes in the order of their respective
stated maturities or final distribution dates, so that no payment of principal
will be made on CMOs of a class until all CMOs of other classes having earlier
stated maturities or final distribution dates have been paid in full. One or
more classes of CMOs may have coupon rates that reset periodically based on an
index, such as the London Interbank

9 PROSPECTUS

<PAGE>

Offered Rate ("LIBOR"). All CMOs purchased by the Fund will be rated, at the
time of purchase, AAA by Standard & Poor's Ratings Group ("S&P") or Aaa by
Moody's Investors Service, Inc. ("Moody's"). The Fund will not invest in CMOs
that, at the time of purchase, are "high-risk mortgage securities" as defined
in the then current Federal Financial Institutions Examination Council
("FFIEC") Supervisory Policy Statement on Securities Activities.

The Fund also may invest cash balances in U.S. Treasury securities with
remaining maturities of two years or less. As described further in the SAI,
certain securities in which the Fund may otherwise invest may be purchased on a
when-issued basis, but the Fund does not presently intend to invest more than
5% of its net assets in when-issued securities during the coming year.

RISK FACTORS

PROSPECTUS 10
<PAGE>

would provide financial support to its agencies or instrumentalities where it
is not obligated to do so.

As with all mutual funds, there is no assurance that the Fund will achieve its
investment objective. See "Prospectus Appendix -- Additional Investment
Policies" and the SAI for further information abut investment policies and
risks.

PERFORMANCE

The yield of a class of shares is calculated by dividing the net investment
income per share earned during a specified period (usually 30 days) by the NAV
of the class on the last day of the period and annualizing the result.
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.

For purposes of advertising, from time to time, the Fund also may present
nonstandardized total returns, yields and, in sales literature, distribution
rates. For example, the performance figure of the shares of a class may be
calculated on the basis of an investment at the net asset value per share or at
net asset value per share plus a reduced sales charge (see "Investing in the
Fund -- How To Buy Shares"), rather than the public offering price per share.
In this case, the figure might not reflect the effect of the sales charge that
you may have paid.

Because of differences in the fees and/or expenses borne by Class C shares of
the Fund, the net yield on such shares can be expected, at any given time, to
be lower than

11 PROSPECTUS
<PAGE>

the net yield on the Fund's Class A shares. Performance information quotations
will be computed separately for Class A shares and Class C shares.

The Fund and Management

THE FUNDS

The Fund is one of the funds of the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991 and currently
offers shares of more than twenty-five other funds. 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 and, accordingly, may affect performance. For information on
another fund or class of shares, please call Stagecoach Shareholder Services at
1-800-222-8222 or write the Company at the address shown on the front cover of
the Prospectus.

The Company's Board of Directors supervises the Fund's activities and monitors
its contractual arrangements with various service-providers. Although the
Company is not required to hold annual shareholder meetings, special meetings
may be required for purposes such as electing or removing Directors, approving
advisory contracts and distribution plans, and changing the Fund's investment
objective or fundamental investment policies. All shares of the Company have
equal voting rights and are voted in the aggregate, rather than by series or
class, unless otherwise required by law (such as when the voting matter affects
only one series or class). A Fund shareholder of record 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 under "Capital Stock" in 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 is a shareholder servicing agent and a selling agent of 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 August 1, 1997,
Wells Fargo Bank and its affiliates

PROSPECTUS 12
<PAGE>

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 to other separately managed funds of the Company, and
as investment adviser or sub-adviser to several other registered, open-end,
management investment companies. Wells Fargo Bank, a wholly owned subsidiary of
Wells Fargo & Company, is located at 420 Montgomery Street, San Francisco,
California 94104.

PORTFOLIO MANAGERS

Mr. Paul Single is responsible for the day-to-day management of the Fund. Mr.
Single has managed taxable bond portfolios for over a decade with specific
expertise in mortgage-backed securities. Prior to joining Wells Fargo Bank in
early 1988, he was a senior portfolio manager for Benham Capital Management
Group. Mr. Single has been portfolio co-manager of the Fund since its inception
in November 1990. Mr. Single received his B.S. from Springfield College.

Mr. Scott Smith is a co-manager of the Fund since May 1, 1995. Mr. Smith also
co-manages the portfolio of another Wells Fargo Bank advised fund, the Short-
Term Government-Corporate Income. He joined Wells Fargo Bank in 1988 as a
taxable money market portfolio specialist. His experience includes a position
with a private money management firm with mutual fund investment operations.
Mr. Smith holds a B.A. from the University of San Diego and is a chartered
financial analyst.

Purchase and sale orders of the securities held by the Fund may be combined
with those of other accounts that Wells Fargo Bank manages or advises, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When Wells Fargo Bank determines that a
particular security should be bought or sold for the Fund and other accounts
managed by Wells Fargo Bank, Wells Fargo Bank has undertaken to allocate those
transaction costs among the participants equitably. From time to time, the
Fund, to the extent consistent with its investment objective, policies and
restrictions, may invest in securities of companies with which Wells Fargo Bank
has a lending relationship.

-----------------------

13 PROSPECTUS
<PAGE>

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

OPENING AN ACCOUNT

You can buy Fund shares in one of the several ways described below. You must
complete and sign an Account Application to open an account. Additional
documentation may be required from corporations, associations and certain
fiduciaries. Do not mail cash. If you have any questions or need extra forms,
please call 1-800-222-8222.

To invest in the Fund through tax-deferred retirement plans through which the
Fund is available, please contact a shareholder servicing agent or a selling
agent to receive information and the required separate application. See "Tax-
Deferred Retirement Plans" below.

SHARE VALUE

The value of a share of each class of the Fund is its "net asset value" or
NAV. Wells Fargo Bank calculates the NAV of the Fund on each day the Fund is
open as of the close of regular trading on the New York Stock Exchange ("NYSE")
(referred to hereinafter as "the close of the NYSE"), which is currently 1:00
p.m. (Pacific time). The Fund is open for business each day the NYSE is open
for trading (a "Business Day"). The NAV per share for each class of shares is
computed by dividing the value of the Fund's assets allocable to a particular
class, less the liabilities charged to that class by the total number of the
outstanding shares of that class. All expenses, including fees paid to the
investment adviser and administrator, are accrued daily and taken into account
for the

PROSPECTUS 14
<PAGE>

purpose of computing the NAV of a share of each class is expected to fluctuate
daily. Shares may be purchased on any day the Fund is open for business.

Except for debt obligations with remaining maturities of 60 days or less,
which are valued at amortized cost, the other assets of the Fund are valued at
current market prices, or if such prices are not readily available, at fair
value as determined in good faith by the Company's Board of Directors. Prices
used for such valuations may be provided by independent pricing services.

HOW TO BUY SHARES

Fund shares are offered continuously at the applicable offering price (the NAV
plus any applicable sales charge) next determined after a purchase order is
received in the form specified for the purchase method being used, as described
in the following sections. Payment for shares purchased through a selling agent
is not due from the selling agent until the settlement date, normally three
Business Days after the order is placed. The selling agent is responsible for
forwarding payment for shares being purchased to the Fund promptly. Payment
must accompany orders placed directly through the transfer agent.

Payments for shares of each class of the Fund are invested in full and
fractional shares at the applicable offering price. If shares are purchased by
a check that does not clear, the Company reserves the right to cancel the
purchase and hold the investor responsible for any losses or fees incurred. In
addition, the Company may hold payment on any redemption until reasonably
satisfied that your investments made by check have been collected (which may
take up to 10 days).

The minimum initial investment is generally $1,000. The minimum investment
amounts, however are $100 through the AutoSaver Plan (described below) and $250
for any tax-deferred retirement account for which Wells Fargo Bank serves as
trustee or custodian under a prototype trust approved by the Internal Revenue
Service ("IRS") (a "Plan Account"). Generally, all subsequent investments must
be made in amounts of $100 or more. Where Fund shares are acquired in exchange
for shares of another fund in the Stagecoach Family of Funds, the minimum
initial investment amount applicable to the shares being exchanged generally
carries over. If the value of your investment in shares of the fund from which
you are exchanging has been reduced below the minimum initial investment amount
by changes in market conditions or sales charges (and not by redemptions), you
may carry over the lesser amount into the Fund. Plan Accounts that invest in
the Fund through Wells Fargo ExpressInvest(TM) (available to certain Wells
Fargo tax-deferred retirement plans) are not subject to the minimum initial or
subsequent investment amount requirements. In addition, the minimum initial or
subsequent purchase amount requirements may be waived or lowered for
investments effected on a group basis by certain entities and their employees,
such as

15 PROSPECTUS
<PAGE>

pursuant to a payroll deduction or other accumulation plan. If you have
questions regarding purchases of shares or ExpressInvest, please call 1-800-
222-8222 or contact a shareholder servicing agent or selling agent. For
additional information on tax-deferred accounts, please refer to "Investing in
the Fund -- Tax-Deferred Retirement Plans" or contact a shareholder servicing
agent or selling agent.

SALES CHARGES

Set forth below are Front-end Sales Charge Schedules listing the front-end
sales charges applicable to purchases of the Fund's shares. As shown below,
reductions in the rate of front-end sales charges ("Volume Discounts") are
available as you purchase additional shares. You should consider the front-end
sales charge information set forth below and the other information contained in
this Prospectus when making your investment decisions.

FRONT-END SALES CHARGE SCHEDULE
CLASS A SHARES

If Class A shares are purchased through a selling agent, Stephens reallows the
portion of the front-end sales charge shown above as the Dealer Allowance. When
shares are purchased directly through the transfer agent and no selling agent
is involved with the purchase, the entire sales charge is paid to Stephens.

The Class C shares of the Fund are not subject to a front-end sales load.
However, Class C shares which are redeemed within one year from the receipt of
a purchase order will be subject to a contingent deferred sales charge equal to
1% of the dollar amount equal to the lesser of the net asset value at the time
of purchase of the shares being redeemed or the net asset value of such shares
at the time of redemption.

A selling agent or servicing agent and any other person entitled to receive
compensation for selling or servicing shares may receive different compensation
for selling or servicing Class A shares as compared with Class C shares.

CONTINGENT-DEFERRED SALES CHARGE -- CLASS C SHARES

Class C shares may be subject to a contingent-deferred sales charge ("CDSC").
A CDSC is an amount you pay if you redeem your shares within a specific period.
The

PROSPECTUS 16
<PAGE>

CDSC will be equal to a percentage of the lesser of the NAV of such shares at
the time of purchase or the NAV of such shares at redemption.

Contingent-deferred sales charges are not imposed on amounts representing
increases in NAV above the NAV at the time of purchase and are not assessed on
Class C shares purchased through reinvestment of dividends or capital gain
distributions.

The amount of any contingent-deferred sales charge, if any, paid upon
redemption of Class C shares is determined in a manner designed to result in
the lowest sales charge rate being assessed. When a redemption request is made,
Class C shares acquired pursuant to the reinvestment of dividends and capital-
gain distributions are considered to be redeemed first. After this, such shares
are considered redeemed on a first-in, first-out basis so that Class C shares,
as applicable, held for a longer period of time are considered redeemed prior
to more recently acquired Class C shares. For a discussion of the interaction
between the optional Exchange Privilege and contingent-deferred sales charges
see "Additional Shareholder Services -- Exchange Privilege."

Contingent-deferred sales charges are waived on redemptions of Class C shares
(i) following the death or disability (as defined in the Internal Revenue Code
of 1986, as amended (the "Code")) of a shareholder, (ii) to the extent that the
redemption represents a scheduled distribution from an IRA or other retirement
plan to a shareholder who has reached age 59 1/2, (iii) effected pursuant to
the Company's right to liquidate a shareholder's account if the aggregate NAV
of the shareholder's account is less than the minimum account size, or (iv) in
connection with the combination of the Company with any other registered
investment company by a merger, acquisition of assets, or any other
transaction.

In deciding whether to purchase Class A or Class C shares, you should compare
the fees assessed on Class A shares (including front-end sales charges) against
those assessed on Class C shares (including potential contingent-deferred sales
charges and higher Rule 12b-1 fees than Class A shares) in light of the amount
to be invested and the anticipated time that the shares will be owned. If your
purchase amount would qualify you for a reduced sales charge on Class A shares,
you should consider carefully whether you would pay lower fees ultimately on
Class A or Class C shares. See "Reduced Sales Charge" below for information on
reduced sales charges for Class A shares.

You may buy shares on any Business Day by any of the methods described below.
The Company reserves the right to reject any purchase order or suspend sales at
any

17 PROSPECTUS
<PAGE>

time. Payment for orders that are not received is returned after prompt
inquiry. The issuance of shares is recorded on the Company's books, and share
certificates are not issued.

REDUCED SALES CHARGE

Discounts described below pertaining to reduced sales charges are based on
your holdings or purchases of shares on which you have paid or will pay a
front-end sales charge.

Volume Discounts

The Volume Discounts described in the Front-End Sales Charge Schedule are
available to you based on the combined dollar amount you invest in shares of
one or more of the Company's funds that assess a front-end sales charge (the
"Load Funds").

Right of Accumulation

The Right of Accumulation allows you to combine the amount you invest in the
Fund's shares with the total NAV of Class A shares in other Load Funds to
determine reduced front-end sales charges in accordance with the above Front-
end Sales Charge Schedule. In addition, you also may combine the total NAV of
Class A shares that you currently have invested in any other mutual fund that
assesses a front-end sales charge and is advised or sub-advised by Wells Fargo
Bank and sponsored by Stephens. For example, if you own Class A shares of the
Load Funds with an aggregate NAV of $90,000 and you invest an additional
$20,000 in Class A shares of a Load Fund, the front-end sales charge on the
additional $20,000 investment would be 2.00% of the applicable offering price
for the Fund. To obtain such a discount, you must provide sufficient
information at the time of your purchase to verify that your purchase qualifies
for the reduced front-end sales charge. Confirmation of the order is subject to
such verification. The Right of Accumulation may be modified or discontinued at
any time without prior notice on all subsequent shares purchased.

Letter of Intent

A Letter of Intent allows you to purchase the Fund's Class A shares over a 13-
month period at a reduced front-end sales charge based on the total amount you
intend to purchase plus the total NAV of Class A shares in any of the Load
Funds you already own. Each investment you make during the period may be made
at the reduced front-end sales charge that is applicable to the total amount
you intend to invest. If you do not invest the total amount within the period,
you must pay the difference between the higher front-end sales charge rate that
would have been applicable to the purchases you made and the reduced front-end
sales charge rate you have paid. The minimum initial investment for a Letter of
Intent is 5% of the total amount you intend to

PROSPECTUS 18
<PAGE>

purchase, as specified in the Letter. Class A shares of the Fund equal to 5% of
the amount you intend to invest will be held in escrow and, if you do not pay
the difference within 20 days following the mailing of a request, a sufficient
amount of escrowed shares will be redeemed for payment of the additional front-
end sales charge. Dividends and capital gains paid on Class A shares held in
escrow are reinvested in additional Class A shares of the Fund.

Reinvestment

You may reinvest proceeds from a redemption of the Fund's shares in shares of
the Fund or in shares of another of the Company's funds registered in your
state of residence at NAV, without payment of a front-end sales charge, within
120 days after your redemption. However, if the other investment portfolio
charges a front-end sales charge that is higher than the one you paid in
connection with the shares you have redeemed, you must pay the difference
between the dollar amount of the two front-end sales charges. You may reinvest
at this NAV price up to the total amount of the redemption proceeds. A written
purchase order for the shares must be delivered to the Company, a selling
agent, a shareholder servicing agent, or the transfer agent at the time of
reinvestment.

Reductions for Families or Fiduciaries

Reductions for Qualified Groups

19 PROSPECTUS
<PAGE>

provide evidence satisfactory to the transfer agent of the existence of a bona
fide qualified group and their membership therein.

Waivers for Certain Parties

Class A shares may be purchased without a front-end sales charge by directors,
officers and employees (and their spouses, parents, children, siblings,
grandparents, grandchildren, father in-law, mother in-law, brother in-law,
sister in-law, aunts, uncles, nieces, and nephews; herein, "relatives") of the
Company, Stephens, its affiliates and other broker/dealers that have entered
into agreements with Stephens to sell such shares. Class A shares also may be
purchased without a front-end sales charge by present and retired directors,
officers and employees (and their relatives) of Wells Fargo Bank and its
affiliates if Wells Fargo Bank and/or the respective affiliates agree. Class A
shares also may be purchased without a front-end sales charge by employee
benefit and thrift plans for such persons and by any investment advisory, trust
or other fiduciary account (other than certain individual retirement accounts)
that is maintained, managed or advised by Wells Fargo Bank, Stephens or their
affiliates. In addition, Class A shares may be purchased without payment of a
front-end sales charge with proceeds from a required minimum distribution from
any Individual Retirement Account ("IRA"), Simplified Employee Pension Plan or
other self-directed retirement plan for which Wells Fargo Bank serves as
trustee, provided that the proceeds are invested in the Fund within 30 days of
such distribution and such distribution is required as a result of reaching age
70 1/2.

INITIAL PURCHASE BY WIRE

1. Complete an Account Application.

2. Instruct the wiring bank to transmit the specified amount in federal funds
($1,000 or more) to:

Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Funds (Name of Fund -- Designate Class)
Account Name(s): Name(s) in which to be registered
Account Number: (if investing into an existing account)

PROSPECTUS 20
<PAGE>

Wells Fargo Bank, N.A.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-546-0280

4. Share purchases are effected at the public offering price or, in the case of
Class C shares, at the net asset value, next determined after the Account
Application is received and accepted.

INITIAL PURCHASES BY MAIL

1. Complete an Account Application. Indicate the services to be used.

2. Mail the Account Application and a check for $1,000 or more payable to
"Stagecoach Funds (Name of Fund -- Designate Class)" to the address set
forth in "Initial Purchases by Wire."

3. Share purchases are effected at the public offering price or, in the case of
Class C shares, at the net asset value, next determined after the Account
Application is received and accepted.

AUTOSAVER PLAN PURCHASES

The Company's AutoSaver Plan provides you with a convenient way to establish
and automatically add to your Fund account on a monthly basis. To participate
in the AutoSaver Plan, you must specify an amount ($100 or more) to be
withdrawn automatically by the transfer agent on a monthly basis from an
account with a bank that is designated in your Account Application and is
approved by the transfer agent ("Approved Bank Account"). You may open an
Approved Bank Account with Wells Fargo Bank. The transfer agent withdraws and
uses this amount to purchase specified shares of the designated Fund and class
on your behalf each month on or about the day that you have selected, or, if
you have not selected a day, on or about the 20th day of each month. If you
hold shares through a brokerage account, the AutoSaver Plan will comply with
the terms of your brokerage agreement. The transfer agent requires a minimum of
ten (10) Business Days to implement your AutoSaver Plan purchases or to process
your request to change the day on which the AutoSaver purchase is processed.
There are no separate fees charged to you by the Company for participating in
the AutoSaver Plan.

21 PROSPECTUS
<PAGE>

TAX-DEFERRED RETIREMENT PLANS

Application materials for opening a tax-deferred retirement plan can be
obtained from a shareholder servicing agent or a selling agent. Return your
completed tax-deferred retirement plan application to your shareholder
servicing agent or a selling agent for approval and processing. If your tax-
deferred retirement plan application is incomplete or improperly filled out,
there may be a delay before the Fund account is opened. You should ask your
shareholder servicing agent or selling agent about the investment options
available to your tax-deferred retirement plan, since some of the funds in the
Stagecoach Family of Funds may be unavailable or inappropriate as options.
Moreover, certain features described herein, such as the AutoSaver Plan and the
Systematic Withdrawal Plan, may not be available to individuals or entities who
invest through a tax-deferred retirement plan.

ADDITIONAL PURCHASES

You may make additional purchases of $100 or more by instructing the Fund's
transfer agent to debit your Approved Bank Account, by wire by instructing the
wiring bank to transmit the specified amount as directed above for initial
purchases, or by mail with a check payable to "Stagecoach Funds (name of
Fund -- Designate Class)" to the address set forth under "Initial Purchases by
Wire." Write your Fund account number on the check and include the detachable
stub from your Account Statement or a letter providing your Fund account
number.

PURCHASES THROUGH SELLING AGENTS

PROSPECTUS 22
<PAGE>

after the close of the NYSE or by the transfer agent after the close of
business, then your purchase order is executed on the next Business Day after
the day your order is placed. The Selling Agent is responsible for the prompt
transmission of your purchase order to the Company. Because payment for shares
of the Fund is not due until settlement date, the Selling Agent might benefit
from the temporary use of your payment. A financial institution that acts as a
Selling Agent, shareholder servicing agent or in certain other capacities may
be required to register as a dealer pursuant to applicable state securities
laws, which may differ from federal law and any interpretations expressed
herein.

PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS

STATEMENTS AND REPORTS

The Company, or a Shareholder Servicing Agent on its behalf, will typically
send you a confirmation or statement of your account after every transaction
that affects your share balance or your Fund account registration. Every
January, you will be provided a statement, which is also filed with the IRS,
with tax information for the previous year to assist you in tax return
preparation. At least twice a year, you will receive financial statements.

23 PROSPECTUS

<PAGE>

Dividend and Capital Gain Distributions

Dividends of the Fund are declared daily payable to shareholders of record as
of the close of regular trading of the NYSE (currently, 1:00 p.m., Pacific
time). Dividends declared in a month generally are distributed on the last
Business Day of each month. You begin earning dividends on the Business Day
after the date your purchase order is effective and continue to earn dividends
through the day you redeem your shares. The Fund intends to distribute any
capital gains at least annually.

How To Redeem Shares

You may redeem Fund shares on any Business Day. Your shares are redeemed at
the NAV per share next calculated after the Company has received your
redemption request in proper form. The Company ordinarily remits redemption
proceeds (the "net redemption proceeds"), within seven days after your
redemption order is received in proper form, unless the SEC permits a longer
period under extraordinary circumstances. Such extraordinary circumstances
could include a period during which an emergency exists as a result of which
(a) disposal by the Fund of securities owned by it is not reasonably
practicable or (b) it is not reasonably practicable for the Fund fairly to
determine the value of its net assets, or a period during which the SEC by
order permits deferral of redemptions for the protection of the security
holders of such Fund. In addition, the Funds may hold payment on your
redemptions until reasonably satisfied that your investments made by check have
been collected (which can take up to 10

PROSPECTUS 24
<PAGE>

days from the purchase date). To ensure acceptance of your redemption request,
please follow the procedures described below. In addition, the Company
reserves the right to impose charges for wiring redemption proceeds.

All redemptions of shares generally are made in cash, except that the
commitment to redeem shares in cash extends only to redemption requests made
by each Fund shareholder during any 90-day period of up to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This commitment is irrevocable without the prior approval of the SEC
and is a fundamental policy of the Fund that may not be changed without
shareholder approval. In the case of redemption requests by shareholders in
excess of such amounts, the Board of Directors reserves the right to have the
Fund make payment, in whole or in part, in securities or other assets, in case
of an emergency or any time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the securities of the Fund
are valued. If the recipient were to sell such securities, he or she would
incur brokerage costs in converting such securities to cash.

Due to the high cost of maintaining Fund accounts with small balances, the
Company reserves the right to close your account and send you the proceeds if
the balance falls below the applicable minimum balance because of a redemption
(including a redemption of Fund shares after you have made only the applicable
minimum initial investment). However, you will be given 30 days' notice to
make an additional investment to increase your account balance to the required
minimum balance. Plan Accounts are not subject to minimum Fund account balance
requirements. For a discussion of applicable minimum balance requirements, see
"Investing in the Fund --How To Buy Shares."

REDEMPTIONS BY TELEPHONE

REDEMPTIONS BY MAIL

1. Write a letter of instruction. Indicate the class and the dollar amount or
number of Fund shares you want to redeem. Refer to your Fund account number
and give your

25 PROSPECTUS
<PAGE>

taxpayer identification number ("TIN"), which is generally your social
security or employer identification number.

2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all must sign.

4. Mail your letter to the transfer agent at the mailing address set forth
under "Investing in the Fund -- Initial Purchases by Wire."

Unless other instructions are given in proper form, a check for your net
redemption proceeds is sent to your address of record.

EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE

You may request an expedited redemption of Fund shares by letter, in which
case your receipt of redemption proceeds, but not the Fund's receipt of your
redemption request, would be expedited. In addition, you also may request an
expedited redemption of shares of the Fund by telephone on any Business Day, in
which case both your receipt of redemption proceeds and the Fund's receipt of
your redemption request would be expedited. You may request expedited
redemption by telephone only if the total value of the shares redeemed is $100
or more.

You may request expedited redemption by telephone by calling the transfer
agent at the telephone number listed on your transaction confirmation or by
calling 1-800-222-8222.

Upon request, net redemption proceeds of your expedited redemptions of $5,000
or more are wired or credited to your Approved Bank Account or wired to the
Selling

PROSPECTUS 26
<PAGE>

Agent designated in your Account Application. The Company reserves the right to
impose a charge for wiring redemption proceeds. When proceeds of your expedited
redemption are to be paid to someone else, to an address other than that of
record, or to an Approved Bank Account or Selling Agent that you have not
predesignated in your Account Application, your expedited redemption request
must be made by letter and the signature(s) on the letter may be required to be
guaranteed, regardless of the amount of the redemption.

SYSTEMATIC WITHDRAWAL PLAN

The Company's Systematic Withdrawal Plan provides you with a convenient way to
have Fund shares redeemed from your account and the net redemption proceeds
distributed to you on a monthly basis. You may participate in the Systematic
Withdrawal Plan only if you have the Fund account valued at $10,000 or more as
of the date of your election to participate, your dividends and capital gain
distributions are being reinvested automatically and you are not participating
in the AutoSaver Plan at any time while participating in the Systematic
Withdrawal Plan. You specify an amount ($100 or more) to be distributed by
check to your address of record or deposited in your designated Approved Bank
Account. The transfer agent redeems sufficient shares and mails or deposits
your net redemption proceeds as instructed on or about the fifth Business Day
prior to the end of each month. There are no separate fees charged to you by
the Company for participating in the Systematic Withdrawal Plan. However, you
should not participate in the Systematic Withdrawal Plan if you also are
purchasing shares of the Fund that are subject to a front-end sales charges.

It may take up to ten (10) days after receipt of your request to establish
your participation in the Systematic Withdrawal Plan. You may change your
withdrawal

27 PROSPECTUS
<PAGE>

amount, suspend withdrawals or terminate your election at any time by notifying
the transfer agent at least five (5) Business Days prior to any scheduled
transaction. Your participation in the Systematic Withdrawal Plan is terminated
automatically if your Fund account is closed or, in some cases, if your
Approved Bank Account is closed.

REDEMPTIONS THROUGH SELLING AGENTS

REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS

PROSPECTUS 28
<PAGE>

for the net redemption proceeds is mailed to your address of record or, if such
address is no longer valid, the net redemption proceeds is credited to your
account with your Shareholder Servicing Agent or to another account designated
in your agreement with your Shareholder Servicing Agent. The Shareholder
Servicing Agent may charge you a service fee. In addition, it may benefit from
the use of your redemption proceeds until any check it issues for you has
cleared or until such proceeds have been disbursed or reinvested on your
behalf.

Additional Shareholder Services

The Company offers you a number of optional services. As noted above, you can
take advantage of the AutoSaver Plan, Tax-Deferred Retirement Plans, the
Systematic Withdrawal Plan, and Expedited Redemptions by Letter and Telephone.
In addition, you have several distribution payment options and an exchange
privilege, which are described below. If you have questions about the
distribution options available to you, please call 1-800-222-8222.

DIVIDEND AND DISTRIBUTION OPTIONS

When you fill out your Account Application, you can choose from the following
distribution options listed below.

B. The FUND PURCHASE OPTION lets you use your dividend and/or capital gain
distributions from the Fund to purchase, at NAV, shares of another fund in the
Stagecoach Family of Funds with which you have an established account that has
met the applicable minimum initial investment requirement. Distributions paid
on Class A or Class C shares may be invested in Class A or Class C shares,
respectively, of another fund, in Retail shares of a fund offered by another
investment company in the Stagecoach Family of Funds, in Class A shares of the
Government Money Market Mutual, Money Market Mutual, National Tax-Free Money
Market Mutual, Prime Money Market Mutual or Treasury Money Market Mutual Funds
or in shares of the California Tax-Free Money Market Mutual Fund (collectively,
the "Money Market Mutual Funds"). Distributions paid on Class A shares may also
be invested in shares of a non-money market fund with a single class of shares
(a "single class fund"). Distributions paid on Class C shares may not be
invested in shares of a single class fund.

C. The AUTOMATIC CLEARING HOUSE OPTION permits you to have dividend and
capital gain distributions deposited in your Approved Bank Account. In the
event your

29 PROSPECTUS
<PAGE>

Approved Bank Account is closed, and such distribution is returned to the
Fund's dividend disbursing agent, the distribution is reinvested in your Fund
account at the NAV next determined after the distribution has been returned. In
addition, your Automatic Clearing House Option is then converted to the
Automatic Reinvestment Option.

EXCHANGE PRIVILEGE

Wells Fargo Bank advises a variety of other funds, each with its own
investment objective and policies. The exchange privilege is a convenient way
to buy shares in another fund of the Stagecoach Family of Funds to respond to
changes in your investment needs. You can exchange between the various funds as
follows:

<TABLE>
<CAPTION>
EXCHANGES BETWEEN YES NO
----------------- --- ---
<S> <C> <C>
Class A or C shares and a Money Market Mutual Fund................... X
Class A shares and Class A shares.................................... X
Class C shares and Class C shares.................................... X
Class A shares of a non-Money Market Mutual Fund and Class C shares.. X
</TABLE>

Important factors that you should consider:

. You will need to read the prospectus of the fund into which you want to
exchange.

. Every exchange is a redemption of shares of one fund and a purchase of
shares of another fund. The redemption may produce a gain or loss for
federal income tax purposes.

. You must exchange the minimum initial purchase amount of the fund you are
redeeming, unless your balance has fallen below that amount due to market

PROSPECTUS 30
<PAGE>

conditions or you have already met the minimum initial purchase amount of
the fund you are purchasing.

. If you exchange Class A shares, you will need to pay any difference
between a load that you have already paid and the load that you are
subject to in the new fund (less the difference between any load already
paid under the maximum 3% load schedule and the maximum 4.50% schedule).

. You will not pay a contingent deferred sales charge on any exchange from
Class C shares into other Class C shares, respectively, or a Money Market
Mutual Fund. The new shares will continue to age while they are in the new
fund and will be charged the contingent deferred sales charge applicable
to the original shares upon redemption.

. If you exchange Class A or Class C shares for shares of a Money Market
Mutual Fund, you may not re-exchange shares of the Money Market Mutual
Fund for shares other than the original exchanged class.

You may exchange shares by writing the Transfer Agent or, if you have
telephone privileges, you may call the Transfer Agent. Exchanges are subject
to the procedures and conditions applicable to purchasing and redeeming
shares.

Management, Distribution and Servicing Fees

INVESTMENT ADVISER

Subject to the overall supervision of the Company's Board of Directors, Wells
Fargo Bank, as the Fund's adviser, provides investment guidance and policy
direction in connection with the management of the Fund's assets. The adviser
also furnishes the Board of Directors with periodic reports on the Fund's
investment strategy and performance. For its services as investment adviser to
the Fund, Wells Fargo Bank is entitled to monthly investment advisory fees at
the annual rate of 0.50% of the Fund's average daily net assets. 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.

Wells Fargo Bank provides investment guidance and policy direction in
connection with the daily portfolio management of the Fund. Wells Fargo Bank
also furnishes to the Boards periodic reports on the investment strategy and
performance of the Fund.

31 PROSPECTUS
<PAGE>

Advisory Fees Paid

For the year ended December 31, 1996, Wells Fargo Bank was paid 0.50% of the
average daily net assets of the predecessor portfolio as compensation for its
services as investment adviser.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank 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.

ADMINISTRATIVE SERVICING AGENTS -- CLASS A

SHAREHOLDER SERVICING AGENTS -- CLASS C

The Company has adopted Shareholder Servicing Plans ("Servicing Plans") on
behalf of the Class C shares. Pursuant to the Servicing Plans, the Fund may
enter into servicing agreements with one or more shareholder servicing agents
(which may include Wells Fargo Bank and its affiliates) who agree to provide
shareholder support services, which may include responding to customer
inquiries and providing information on shareholder investments, and provide
such other related services as the Fund or a shareholder may reasonably
request. Shareholder servicing agents are

PROSPECTUS 32
<PAGE>

entitled to receive a fee which will not exceed, on an annualized basis for the
Fund's then-current fiscal year, the lesser of 0.25% of the average daily net
asset value of the Class C shares held of record or beneficially by such
customers.

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 each Fund
with administration services, including general supervision of the Fund's
operation, coordination of 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 each Fund's business and
Stephens compensates the Directors and officers who are affiliated with
Stephens. For these administrative services, Wells Fargo Bank and Stephens are
entitled to receive monthly fees at the annual rates of 0.04% and 0.02%,
respectively, of each Fund's average daily net assets. Wells Fargo Bank and
Stephens may delegate certain of their administrative duties to sub-
administrators.

Stephens previously provided substantially the same services as sole
administrator to the predecessor portfolio and was entitled to receive from the
predecessor portfolio a monthly fee at the annual rate of 0.15% of its average
daily net assets. This fee decreased to 0.10% of the average daily net assets
of the predecessor portfolio in excess of $200 million.

SPONSOR AND DISTRIBUTOR

33 PROSPECTUS
<PAGE>

currently manages investment portfolios for pension and profit sharing plans,
individual investors, foundations, insurance companies and university
endowments.

Stephens, as the principal underwriter of the Fund within the meaning of the
1940 Act, has entered into a Distribution Agreement with the Company pursuant
to which Stephens is responsible for distributing shares of the Fund. The
Company also has adopted a Distribution Plan on behalf of each class of shares
of the Fund under the SEC's Rule 12b-1 ("Plans"). Pursuant to the Plan for
Class A shares and the Plan for Class C shares, the Company may pay to Stephens
as compensation for distribution-related services provided, or reimbursement
for distribution related expenses incurred, a monthly fee at the annual rate of
0.25% and 0.50%, respectively, of the average daily net assets attributable to
the Class A and Class C shares. The actual fee payable to Stephens shall,
within such limit, be determined from time to time by mutual agreement between
the Company and Stephens. Stephens may enter into selling agreements with one
or more selling agents under which such agents may receive compensation for
distribution-related services from Stephens, including, but not limited to,
commissions or other payments to such agents based on the average daily net
assets of Fund shares attributable to them. Stephens may retain any portion of
the total distribution fee payable hereunder to compensate it for distribution-
related services provided by it or to reimburse it for other distribution-
related expenses.

In addition, the Plans contemplate that, to the extent any fees payable
pursuant to a shareholder servicing agreement (discussed above) are deemed to
be for distribution-related services, such payments are approved and payable
pursuant to the Plans, subject to any limits under applicable law, regulations
or rules, including the NASD Rules. Financial institutions acting as Selling
Agents, Shareholder Servicing Agents or in certain other capacities may be
required to register as dealers pursuant to applicable state securities laws
which may differ from federal law and any interpretations expressed herein.

PROSPECTUS 34
<PAGE>

destinations, tickets to sporting events, theater or other entertainment,
opportunities to participate in golf or other outings and gift certificates for
meals or merchandise or the cash value of a non-cash compensation item.

FUND EXPENSES

From time to time, Wells Fargo Bank and Stephens may waive their respective
fees in whole or in part and reimburse expenses payable to others. Any such
waivers or reimbursements will reduce the Fund's expenses and, accordingly,
have a favorable impact on the Fund's performance. Except for the expenses
borne by Wells Fargo Bank and Stephens, the Fund bears all costs of its
operations, including its pro rata portion of Company expenses such as fees and
expenses of its independent auditors and legal counsel, and compensation of the
Company's directors who are not affiliated with the adviser, administrator or
any of their affiliates; advisory, transfer agency, custody and administration
fees; and any extraordinary expenses. Expenses attributable to the Fund or a
class are charged against the assets of the Fund or class. General expenses of
the Company are allocated among all of the funds of the Company in a manner
proportionate to the net assets of each fund, on a transactional basis, or on
such other basis as the Company's Board of Directors deems equitable.

Taxes

Dividends from net investment income and net short-term capital gains, if any,
of the Fund are taxable as ordinary income to its shareholders. Distributions
designated by the Fund as capital gain distributions, if any, attributable to
its net capital gains may be taxable to individual, trust and estate
shareholders of the Fund at preferential rates. See "Additional Information
Concerning Taxes -- Capital Gain Distributions" in the SAI. In general,
distributions will be taxable to shareholders, regardless of whether the
shareholder takes such distributions in cash or has them automatically
reinvested in additional Fund shares. Distributions declared in October,
November and December and distributed by the following January will be taxable
as if they were paid by December 31. The Fund's dividends will not qualify for
the dividends-received deduction allowed to corporate shareholders.

Foreign shareholders may be subject to different tax treatment, including
withholding taxes. See "Federal Income Taxes -- Foreign Shareholders" in the
SAIs. In certain

35 PROSPECTUS
<PAGE>

circumstances, U.S. residents may also be subject to withholding taxes. See
"Federal Income Taxes -- Backup Withholding" in the SAI.

PROSPECTUS 36
<PAGE>

PROSPECTUS APPENDIX -- ADDITIONAL INVESTMENT POLICIES

Set forth below is a more detailed description of the Fund's permissible
investments. For additional information, see "Additional Permitted Investment
Activities" in the SAI.

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 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 obligation, 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, duration or value due to
their structure or contract terms.

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 at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, often overnight or a few days, although it may extend over a number of
months. The Fund may enter into repurchase agreements only with respect to
securities which could otherwise be purchased for the Fund. All repurchase
agreements must be fully 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 enter into pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank.

Adjustable Rate Mortgages and Collaterallized Mortgage Obligations

The Fund may invest in ARMS issued or guaranteed by GNMA, FNMA or FHLMC. The
full and timely payment of principal and interest on GNMA ARMS is guaranteed by
GNMA and backed by the full faith and credit of the U.S. Government. FNMA also
guarantees full and timely payment of both interest and principal, while FHLMC
guarantees full and timely payment of interest and ultimate payment of
principal. FNMA

A-1 PROSPECTUS
<PAGE>

and FHLMC ARMS are not backed by the full faith and credit of the United
States. However, because FNMA and FHLMC are government-sponsored enterprises,
these securities are generally considered to be high quality investments that
present minimal credit risks. The yields provided by these ARMS have
historically exceeded the yields on other types of U.S. Government securities
with comparable maturities, although there can be no assurance that this
historical performance will continue.

The mortgages underlying ARMS guaranteed by GNMA are typically insured or
guaranteed by the Federal Housing Administration, the Veterans Administration
or the Farmers Home Administration, while those underlying ARMS issued by FNMA
or FHLMC are typically conventional residential mortgages which are not so
insured or guaranteed, but which conform to specific underwriting, size and
maturity standards.

The interest rates on the mortgages underlying the ARMS and some of the CMOs
in which the Fund may invest generally are readjusted at periodic intervals
ranging from one year or less to several years in response to changes in a
predetermined interest rate index. There are two main categories of indices:
those based on U.S. Treasury securities and those derived from a calculated
measure, such as a cost-of-funds index or a moving average of mortgage rates.
Commonly utilized indices include the one-year and five-year constant maturity
Treasury note rates, the three-month Treasury bill rate, the 180-day Treasury
bill rate, rates on longer-term Treasury securities, the National Median Cost
of Funds, the one-month, three-month, six-month or one-year LIBOR, a published
prime rate or commercial paper rates. Certain of these indices follow overall
market interest rates more closely than others.

Adjustable rate mortgages generally have a specified maturity date. Most
provide for amortization of principal in a manner similar to fixed-rate
mortgages, but have interest rates that change in response to changes in a
specified interest rate index. The rate of interest due on such a mortgage is
calculated by adding an agreed-upon "margin" to the specified index, although
there generally are limitations or "caps" on interest rate movements in any
given period or over the life of the mortgage. To the extent that the interest
rates on adjustable rate mortgages cannot be adjusted in response to interest
rate changes because of interest rate caps, the ARMS or CMOs backed by such
mortgages are likely to respond to changes in market rates more like fixed rate
securities. In other words, interest rate increases in excess of such caps can
be expected to cause CMOs or ARMS backed by mortgages that have such caps to
decline in value to a greater extent than would be the case in the absence of
such caps. Conversely, interest rate decreases below interest rate floors can
be expected to cause the CMOs or ARMS backed by mortgages that have such floors
to increase in value to a greater extent than would be the case in the absence
of such floors.

These adjustable rate features should reduce, but will not eliminate, price
fluctuations in such securities, particularly during periods of extreme
fluctuations in

PROSPECTUS A-2
<PAGE>

market interest rates. Since the interest rates on mortgages typically are
reset at most annually and generally are subject to caps, it can be expected
that the prices of ARMS and CMOs backed by such mortgages will fluctuate to the
extent prevailing market interest rates are not reflected in the interest rates
payable on the underlying adjustable rate mortgages. In this regard, the net
asset value of the Fund's shares could fluctuate to the extent interest rates
on underlying mortgages differ from prevailing market interest rates during
interim periods between interest rate reset dates. Accordingly, investors could
experience some principal loss or less gain than might otherwise be achieved if
they redeem their shares of the Fund or if the Fund sells these portfolio
securities before the interest rates on the underlying mortgages are adjusted
to reflect prevailing market interest rates.

The holder of ARMS and certain CMOs receives not only monthly scheduled
payments of principal and interest, but also may receive unscheduled principal
payments representing prepayments on the underlying mortgages. Changes in
market interest rates and interest rate indexes can affect these prepayment
rates, thereby shortening or lengthening their duration, the holder therefore,
may have to reinvest the periodic payments and any unscheduled prepayments of
principal it receives at a rate of interest which is lower than the rate on the
ARMS and CMOs held by it.

CMOs backed by fixed rate mortgages share many of the rate, duration and
investment risks described above because of their contractual and investment
features and because of factors such as the prepayment rates on the underlying
fixed rate mortgages.

Forward Commitments, When-Issued Purchases and Delayed Delivery Transactions

The Fund may purchase or sell securities on a when-issued or delayed delivery
basis and may make contracts to purchase or sell securities for a fixed price
at a future date beyond customary settlement time. Securities purchased or sold
on a when-issued, delayed delivery or forward commitment basis involve a risk
of loss if the value of the security to be purchased declines, or the value of
the security to be sold increases, before the settlement date. Although the
Funds generally purchase securities with the intention of acquiring them, a
Fund may dispose of securities purchased on a when-issued, delayed-delivery or
a forward commitment basis before settlement when deemed appropriate by Wells
Fargo Bank.

INVESTMENT POLICIES AND RESTRICTIONS

The Fund's investment objective, as set forth above, is fundamental; that is,
the investment objective 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. If the Board of Directors determines,
however, that the Fund's investment objective can best be achieved by a
substantive change in a non-fundamental

A-3 PROSPECTUS
<PAGE>

investment policy or strategy, the Company may make such change without
shareholder approval and will disclose any such material changes in the then
current prospectus.

As a matter of fundamental policy, the Fund may borrow from banks up to 10% of
the current value of its net assets for temporary purposes in order to meet
redemptions. These borrowings may be secured by the pledge of up to 10% of the
current value of the Fund's net assets but investments may not be purchased by
the Fund while any such outstanding borrowing exists. As a matter of
fundamental policy, the Fund may invest up to 10% of the current value of its
net assets in repurchase agreements having maturities of more than seven days,
restricted securities and illiquid securities. Disposing of illiquid or
restricted securities may involve additional costs and require additional time.

PROSPECTUS A-4
<PAGE>

Advised by WELLS FARGO BANK, N.A.
Sponsored/Distributed by
Stephens Inc., Member NYSE/SIPC

NOT FDIC INSURED
<PAGE>

STAGECOACH FUNDS(R)
P.O. Box 7066
San Francisco, CA 94120-7066

- -------------------------------------------------------------------------------
STAGECOACH FUNDS:
--------------------------------------------------------------------------

.are NOT FDIC insured
.are NOT guaranteed by Wells Fargo Bank
.are NOT deposits or obligations of the Bank
.involve investment risk, including possible loss of principal
- -------------------------------------------------------------------------------

[LOGO OF RECYCLABLE PRODUCTS APPEARS HERE]
Printed on Recycled Paper SC 72 P (12/97)
<PAGE>

STAGECOACH FUNDS, INC.
Telephone: (800) 222-8222

STATEMENT OF ADDITIONAL INFORMATION
Dated December 12, 1997

INDEX ALLOCATION FUND

Stagecoach Funds, Inc. (the "Company") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
additional information about the Index Allocation Fund (the "Fund") of the
Stagecoach Family of Funds. The Fund offers Class A, Class B and Class C
shares. This SAI relates to each Class. The investment objective of the Fund
is described in its Prospectus under "Investment Objectives and Policies."

This SAI is not a Prospectus and should be read in conjunction with the
Fund's Prospectus dated December 12, 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 by calling the Transfer Agent at
the telephone number indicated above.
<PAGE>

TABLE OF CONTENTS

Page
----
<S> <C>

General............................................................... 1
Investment Restrictions............................................... 1
Additional Permitted Investment Activities............................ 3
Management............................................................ 11
Performance Calculations.............................................. 19
Determination of Net Asset Value...................................... 25
Additional Purchase and Redemption Information........................ 25
Portfolio Transactions................................................ 26
Fund Expenses......................................................... 28
Federal Income Taxes.................................................. 29
Capital Stock......................................................... 33
Other................................................................. 35
Independent Auditors.................................................. 35
Financial Information................................................. 35
Appendix.............................................................. A-1

</TABLE>

i
<PAGE>

GENERAL

The Company's Index Allocation Fund was originally organized on April 7,
1988 as the Asset Allocation Fund (the "predecessor portfolio") of Overland
Express Funds, Inc. ("Overland"), another open-end management investment company
advised by Wells Fargo Bank. The predecessor portfolio changed its name to the
Index Allocation Fund on February 14, 1997. On July 23, 1997, the Boards of the
Directors of the Company and Overland approved an Agreement and Plan of
Consolidation. As a result of the Consolidation, the predecessor portfolio was
reorganized as the Company's Index Allocation Fund on December 12, 1997, and
shareholders of the predecessor portfolio's Class A and Class D shares became
shareholders of the Company's Index Allocation Fund's Class A and Class C
shares, respectively. The Class B shares commenced operations as of December
12, 1997.

INVESTMENT RESTRICTIONS

Fundamental Investment Policies. The Index Allocation 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 exceed 25%
of the current value of its 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; (iii) any
industry in which the S&P Index becomes concentrated to the same degree during
the same period; (iv) securities that are exempt from personal income taxes of
the State of California; and (v) the obligations of domestic banks;

(2) purchase or sell real estate (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), commodities or
commodity contracts; except that the Fund may purchase and sell (i.e., write)
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices, and may participate in
interest rate swaps and index swaps;

(3) purchase securities on margin or make short sales of securities (except
for short-term credits necessary for the clearance of transactions and except
that the Fund may make margin payments in connection with transactions in
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices);

<PAGE>

(4) 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;

(5) invest more than 10% of the current value of its net assets in
repurchase agreements maturing in more than seven days, restricted securities,
which are securities that must be registered under the Securities Act of 1933
before they may be offered or sold to the public, and illiquid securities;

(6) make investments for the purpose of exercising control or management;

(7) issue senior securities, except to the extent the activities of the
Fund permitted in Investment Restrictions Nos. 2 and 3 may be deemed to give
rise to a senior security but do not violate the provisions of section 18 of the
1940 Act, and 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 borrowing exists); or

(8) invest more than 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.

In addition, the Fund may not write, purchase or sell puts, calls, warrants
or options or any combination thereof, except that the Fund may purchase
securities with put rights in order to maintain liquidity, and except that the
Fund may engage in options transactions to the extent permitted in Investment
Restrictions Nos. 2 and 3.

The Fund may not, as to 75% of its total assets, purchase securities of any
issuer (except securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities) if, as a result, more than 5% of the value of
its total assets would be invested in the securities of any one issuer or, with
respect to 100% of its assets, the Fund's ownership would be more than 10% of
the outstanding voting securities of such issuer.

Non-Fundamental Investment Policies. The Index Allocation Fund is subject
to the following non-fundamental policies:

(1) The Fund will not purchase or retain securities of any issuer if the
officers or directors of the Fund or its Investment Adviser owning beneficially
more than one-half of one percent (0.5%) of the securities of the issuer
together owned beneficially more than 5% of such securities.

(2) The Fund may not purchase interests, leases, or limited partnership
interests in oil, gas, or other mineral exploration or development programs.

2
<PAGE>

(3) The Fund will not invest in securities of issuers who, with their
predecessors, have been in existence less than three years, unless the
securities are fully guaranteed or insured by the U.S. Government, 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.

(4) 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 and the Investment Adviser will
waive its advisory fees for that portion of the Fund's assets so invested,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.

(5) The Fund will not 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.

(6) The Fund may not purchase or sell real estate limited partnership
interests.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

Unrated Investments. The Index Allocation Fund may purchase instruments
that are not rated if, in the opinion of Wells Fargo Bank, such obligations are
of investment quality comparable to other rated investments that are permitted
to be purchased by the Fund. After purchase by the Fund, a security may cease
to be rated or its rating may be reduced below the minimum required for purchase
by the Fund. Neither event will require an immediate sale of such security by
the Fund. To the extent the ratings given by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("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 Appendix to this SAI.

Letters of Credit. The Index Allocation Fund may purchase debt
obligations, including municipal securities, certificates of participation,
commercial paper and other short-term obligations, backed by an 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 investment
quality comparable to other permitted investments of the Fund may be used for
letter of credit-backed investments.

3
<PAGE>

When-Issued Securities. The Index Allocation Fund may purchase securities
on a when-issued basis, in which case delivery and payment normally take place
within 45 days after the date of the commitment to purchase. However, the Fund
does not intend to invest more than 5% of its net assets in when-issued
securities during the coming year. The Fund will only make commitments to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed-upon purchase price, in which case
there could be an unrealized loss at the time of delivery.

The Fund will establish a segregated account in which it will maintain
cash, U.S. Government obligations and other high-quality debt instruments in an
amount at least equal in value to the commitment to purchase when- issued
securities. If the value of these assets declines, the Fund will place
additional liquid assets in the account on a daily basis so that the value of
the assets in the account is equal to the amount of such commitments.

Loans of Portfolio Securities. The Index Allocation Fund may lend
securities from its portfolio to brokers, dealers and financial institutions
(but not individuals) if cash, U.S. Government securities or other high grade
debt instruments 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 to lend a security to a particular broker, dealer or
financial institution, the Fund's investment adviser will consider all relevant
facts and circumstances, including the creditworthiness of the broker, dealer or
financial institution. Any loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. The Fund will
not enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities that the Fund may receive as collateral
will not become part of the Fund's portfolio at the time of the loan and, in the
event of a default by the borrower, the Fund 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 in U.S. Government securities or other high grade
debt obligations 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 will be 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 may not be
affiliated, directly or indirectly, with the Company, its investment adviser, or
its distributor.

4
<PAGE>

Floating- and Variable-Rate Instruments. Certain of the debt instruments in
which the Fund may invest bear interest rates that are periodically adjusted at
specified intervals or whenever a benchmark rate or index change. These
adjustments generally limit the increase or decrease in the amount of interest
received on debt instruments. The Fund may purchase certificates of
participation in pools of floating- and variable-rate instruments from banks and
other financial institutions. With respect to the tax-exempt status of these
certificates, the investment adviser may rely upon either the opinion of counsel
or Internal Revenue Service rulings thereto. Wells Fargo Bank, as investment
adviser to the Fund, monitors on an ongoing basis the ability of an issuer of a
demand instrument to pay principal and interest on demand. Events occurring
between the date the Fund elects to demand payment on a floating- or variable-
rate instrument and the date payment is due may affect the ability of the issuer
of the instrument to make payment when due, and unless such demand instrument
permits same-day settlement, such events may affect a Fund's ability to obtain
payment at par. Demand instruments whose demand feature is not exercisable
within seven days may be treated as liquid, provided that an active secondary
market exists.

Repurchase Agreements. The Fund may enter into repurchase agreements,
wherein the seller of a security to the Fund agrees to repurchase that security
from the Fund at a mutually agreed upon time and price, only with respect to
U.S. Government obligations and other securities that are permissible
investments for the Fund. All repurchase agreements will be fully collateralized
at 102% based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months, although the maximum term of a repurchase agreement will always
be less than twelve months. If the seller defaults and the value of the
underlying securities has declined, the Fund may incur a loss. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
the Fund's disposition of the security may be delayed or limited.

The Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Directors and that are not affiliated with the investment adviser. The
Fund may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.

Derivative Securities. Some of the permissible investments described
herein are considered "derivative" securities because their value is derived, at
least in part, from the price of another security or a specified asset, index or
rate. For example, the futures contracts and options on futures contracts that
the Fund may purchase are considered derivatives. The Fund may only purchase or
sell these contracts or options as substitutes for comparable market positions
in the underlying securities. Also, asset-backed securities issued or guaranteed
by U.S. Government agencies or instrumentalities and certain

5
<PAGE>

floating- and variable-rate instruments can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in interest
rates or sudden market moves. Some derivatives also may be susceptible to
fluctuations in yield or value due to their structure or contract terms. Wells
Fargo Bank and BGFA use a variety of internal risk management procedures to
ensure that derivatives use is consistent with a Fund's investment objective,
does not expose the Fund to undue risk and is closely monitored. These
procedures include providing periodic reports to the Board of Directors
concerning the use of derivatives. Also, cash maintained by the Fund for short-
term liquidity needs (e.g., to meet anticipated redemption requests) will, as a
general matter, only be invested in U.S. Treasury bills, shares of other mutual
funds and repurchase agreements. The use of derivatives by the Fund also is
subject to broadly applicable investment policies. For example, the Fund may not
invest more than a specified percentage of its assets in "illiquid securities,"
including those derivatives that do not have active secondary markets. Nor may
the Fund use certain derivatives without establishing adequate "cover" in
compliance with Securities and Exchange Commission ("SEC") rules limiting the
use of leverage.

Municipal Bonds. The Fund may invest in municipal bonds. As discussed in
the Prospectus, the two principal classifications of municipal bonds are
"general obligation" and "revenue" bonds. Municipal bonds are debt obligations
issued to obtain funds 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 funds 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 funds 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. 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. Some or all of these bonds may
be considered "private activity bonds" for federal income tax purposes.

Municipal Notes. The Fund may invest in 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.

<PAGE>

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.

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 will also 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) they would sell at a discount. If
interests rates fall, the values of outstanding securities will generally
increase and (if purchased at par value) they would 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.

Futures Contracts and Options Transactions. The Index Allocation Fund may
engage in futures transactions as discussed below. In general, a futures
transaction involves a firm agreement to buy or sell a commodity or financial
instrument at a particular price on a specified future date, while an option
transaction generally involves a right, which may or may not be exercised, to
buy or sell a commodity or financial instrument at a particular price on a
specified future date. Futures contracts and options are standardized and
exchange-traded, where the exchange serves as the ultimate counterparty for all
contracts. Consequently, the only credit risk on futures contracts is the
creditworthiness of the exchange. Futures contracts, however, are subject to
market risk (i.e., exposure to adverse price changes). The Fund may trade
futures contracts and options on futures contracts in U.S. domestic markets,
such as the Chicago Board of Trade and the International Monetary Market of the
Chicago Mercantile Exchange.

The Fund's futures transactions must constitute permissible transactions
pursuant to regulations promulgated by the Commodity Futures Trading Commission
("CFTC"). In addition, the Fund may not engage in futures transactions if the
sum of the amount of initial margin deposits and premiums paid for unexpired
options on futures contracts, other than those contracts entered into for bona
fide hedging purposes, would exceed 5% of the liquidation value of the Fund's
assets, after taking into account unrealized profits and

7
<PAGE>

unrealized losses on such contracts; provided, however, that in the case of an
option on a futures contract that is in-the money at the time of purchase, the
in-the money amount may be excluded in calculating the 5% liquidation amount.
Pursuant to regulations and/or published positions of the SEC, the Fund may be
required to segregate cash or high-quality money-market instruments in
connection with its futures transactions in an amount generally equal to the
entire value of the underlying security.

Initially, when purchasing or selling futures contracts the Fund will be
required to deposit with its custodian in the broker's name an amount of cash or
cash equivalents up to approximately 10% of the contract amount. This amount is
subject to change by the exchange or board of trade on which the contract is
traded, and members of such exchange or board of trade may impose their own
higher requirements. This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Fund upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin", to and from the broker will be made daily as the price of
the index or securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable. At any
time prior to the expiration of a futures contract, the Fund may elect to close
the position by taking an opposite position, at the then prevailing price,
thereby terminating its existing position in the contract.

Although the Fund intends to purchase or sell futures contracts only if
there is an active market for such contracts, no assurance can be given that a
liquid market will exist for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for specified
periods during the trading day. Futures contracts prices could move to the
limit for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially subjecting
the Fund to substantial losses. If it is not possible, or the Fund determines
not to close a futures position in anticipation of adverse price movements, the
Fund will be required to make daily cash payments of variation margin.

An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a long
position if the option is a put). Upon exercise of the option, the assumption
of offsetting futures positions by both the writer and the holder of the option
will be accompanied by delivery of the accumulated cash balance in the writer's
futures margin account in the amount by which the market price of the futures
contract, at exercise, exceeds (in the case of a call) or is less than (in the
case of a put) the exercise price of the option on the futures contract.

8
<PAGE>

Stock Index Options. The Index Allocation Fund may purchase and write
(i.e., sell) put and call options on stock indices as a substitute for
comparable market positions in the underlying securities. A stock index
fluctuates with changes in the market values of the stocks included in the
index. The aggregate premiums paid on all options purchased may not exceed 20%
of the Fund's total assets and the value of the options written may not exceed
10% of the value of the Fund's total assets.

The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in the Fund's portfolio correlate with
price movements of the stock index selected. Because the value of an index
option depends upon movements in the level of the index rather than the price of
a particular stock, whether the Fund will realize a gain or loss from purchasing
or writing stock index options depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of particular
stock.

When the Fund writes an option on a stock index, it will place in a
segregated account with it's custodian cash or liquid securities in an amount at
least equal to the market value of the underlying stock index and will maintain
the account while the option is open or otherwise will cover the transaction.

Stock Index Futures and Options on Stock Index Futures. The Index
Allocation Fund may invest in stock index futures and options on stock index
futures as a substitute for a comparable market position in the underlying
securities. A stock index future obligates the seller to deliver (and the
purchaser to take), effectively, an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the index
is made. With respect to stock indices that are permitted investments, the Fund
intends to purchase and sell futures contracts on the stock index for which it
can obtain the best price with consideration also given to liquidity.

Interest Rate Futures Contracts and Options Thereon. The Index Allocation
Fund may invest in interest-rate futures contracts and options on interest-rate
futures contracts as a substitute for a comparable market position in the
underlying securities. The Fund also may sell options on interest-rate futures
contracts as part of closing purchase transactions to terminate its options
positions. No assurance can be given that such closing transactions can be
effected or as to the degree of correlation between price movements in the
options on interest rate futures and price movements in the Fund's portfolio
securities which are the subject of the transaction.

The Fund may engage in futures contracts sales to maintain the income
advantage from continued holding of a long-term security while endeavoring to
avoid part or all of the loss in market value that would otherwise accompany a
decline in long-term security prices.

9
<PAGE>

If, however, securities prices rise, the Fund would realize a loss in closing
out their futures contract sales that would offset any increases in prices of
the long-term securities they hold.

An option on a futures contract gives the purchaser the right, but not the
obligation, in return for the premium paid, to assume (in the case of a call) or
sell (in the case of a put) a position in a specified underlying futures
contract (which position may be a long or short position) at a specified
exercise price at any time during the option exercise period. Sellers of options
on future contracts, like buyers and sellers of futures contracts, make an
initial performance deposit and are subject to calls for variation margin.

Transactions by the Fund in futures contracts and options thereon involve
certain risks. One risk in employing futures contracts and options thereon to
protect against cash market price volatility is the possibility that futures
prices will correlate imperfectly with the behavior of the prices of the
securities in such portfolio (the portfolio securities will not be identical to
the debt instruments underlying the futures contracts). In addition, commodity
exchanges generally limit the amount of fluctuation permitted in futures
contract and option prices during a single trading day, and the existence of
such limits may prevent the prompt liquidation of futures and option positions
in certain cases. Inability to liquidate positions in a timely manner could
result in the Fund incurring larger losses than would otherwise be the case.

The Fund may enter into futures contracts and may purchase call and put
options on futures contracts that are traded on U.S. commodity exchanges and
write call options on such futures contracts.

Additional Limitations on Interest Rate Futures and Related Options. In
order to comply with undertakings made by the Index Allocation Fund pursuant to
CFTC Regulation 4.5, the Fund will use futures and option contracts, interest
rate futures and option contracts, solely for bona fide hedging purposes within
the meaning and intent of CFTC Reg. 1.3(z)(1); provided, however, that with
respect to each long position in an interest rate futures or option contract
that will be used as part of a portfolio management strategy and that is
incidental to the Fund's activities in the underlying cash market but would not
come within the meaning and intent of Reg. 1.3(z)(1).

The Fund will not enter into interest rate futures contracts and options
thereon, for which the aggregate initial margin and premiums exceed 5% of the
fair market value of their respective assets, after taking into account
unrealized profits and unrealized losses on any such contracts into which they
have entered; provided, however, that the "in-the-money" amount of an option
that was in-the-money at the time of purchase will be excluded in computing such
5%.

Future Developments. The Index Allocation Fund may take advantage of
opportunities in the areas of options and futures contracts and options on
futures contracts and any other derivative investments which are not presently
contemplated for use by the Fund or which are not currently available but which
may be developed, to the extent such

10
<PAGE>

opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund. Before entering into such transactions or
making any such investment, the Fund would provide appropriate disclosure in its
Prospectus or this SAI.

Interest-Rate and Index Swaps. The Index Allocation Fund may enter into
interest-rate and index swaps in pursuit of its investment objective. Interest-
rate swaps involve the exchange by the Fund with another party of its
commitments to pay or receive interest (e.g., an exchange of floating-rate
payments for fixed-rate payments). Index swaps involve the exchange by the Fund
with another party of cash flows based upon the performance of an index of
securities or a portion of an index of securities that usually include dividends
or income. In each case, the exchange commitments can involve payments to be
made in the same currency or in different currencies. The Fund will usually
enter into swaps on a net basis. In so doing, the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net amount
of the two payments. If the Fund enters into a swap, it will maintain a
segregated account on a gross basis, unless the contract provides for a
segregated account on a net basis. If there is a default by the other party to
such a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transaction.

The use of interest-rate and index swaps is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio security transactions. There is no limit, except as
provided below, on the amount of swap transactions that may be entered into by
the Fund. These transactions generally do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps generally is limited to the net amount of payments
that the Fund is contractually obligated to make. There is also a risk of a
default by the other party to a swap, in which case the Fund may not receive net
amount of payments that the Fund contractually is entitled to receive.

MANAGEMENT

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Management of the Fund." 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.

11
<PAGE>

Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>
Jack S. Euphrat, 75 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 46 Director, Executive Vice President
Chairman and of Stephens; Manager of
President Financial Services Group;
President of Stephens
Insurance Services Inc.;
Senior Vice President of
Stephens Sports
Management Inc.; and
President of Investor
Brokerage Insurance Inc.

Thomas S. Goho, 55 Director Associate Professor of
321 Beechcliff Court Finance of the School of
Winston-Salem, NC 27104 Business and Accounting
at Wake Forest University
since 1982.

Joseph N. Hankin, 57 Director President of Westchester
75 Grasslands Road Community College since
Valhalla, N.Y. 10595 1971; Adjunct Professor
(appointed as of September of Columbia University
6, 1996) Teachers College since
1976.

*W. Rodney Hughes, 71 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 79 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

*J. Tucker Morse, 53 Director Private Investor;
4 Beaufain Street Chairman of Home Account
Charleston, SC 29401 Network, Inc. Real Estate
Developer; Chairman of
Renaissance Properties
Ltd.; President of Morse
Investment Corporation;
and Co-Managing Partner
of Main Street Ventures.

Richard H. Blank, Jr., 41 Chief Operating Associate of Financial
Officer, Services Group of
Secretary and Stephens; Director of
Treasurer Stephens Sports
Management Inc.; and
Director of Capo Inc.

</TABLE>

12
<PAGE>

Compensation Table
Year Ended March 31, 1997
-------------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- --------------- ----------------
<S> <C> <C>
Jack S. Euphrat $11,250 $33,750
Director

R. Greg Feltus $ -0- $ -0-
Director

Thomas S. Goho $11,250 $33,750
Director

Joseph N. Hankin $ -0- $ -0-
Director
(appointed as of 9/6/96)

Zoe Ann Hines $ -0- $ -0-
Director
(resigned as of 9/6/96)

W. Rodney Hughes $ 9,250 $27,750
Director

Robert M. Joses $11,250 $33,750
Director

J. Tucker Morse $ 9,250 $27,750
Director
</TABLE>

13
<PAGE>

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.

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. Wells Fargo
Bank furnishes the Fund with investment guidance and policy direction in
connection with the daily portfolio management of the Fund. Wells Fargo Bank
furnishes to the Board of Directors periodic reports on the investment strategy
and performance of the Fund. For its services as investment adviser to the
Index Allocation Fund, Wells Fargo Bank is entitled to receive a monthly fee at
the annual rate of 0.70% of the Fund's average daily net assets up to $500
million and 0.60% on assets in excess of $500 million.

Prior to the Consolidation, Wells Fargo Bank served as investment adviser
to the predecessor portfolio and was entitled to receive a monthly fee at the
annual rate of 0.70% of the predecessor portfolio's average daily net assets.
For the years ended December 31, 1994, 1995 and 1996, the predecessor portfolio
paid to Wells Fargo Bank the advisory fees indicated below and Wells Fargo Bank
waived the following amounts:

1994 1995 1996
---- ---- ----
Fees Fees Fees Fees Fees Fees
Paid Waived Paid Waived Paid Waived
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C>
$424,899 $0 $424,416 $0 $525,093 $1,324
</TABLE>

Wells Fargo Bank has agreed to provide to the Fund, among other things,
money market security and fixed-income research, analysis and statistical and
economic data and information concerning interest rate and security market
trends, portfolio composition and credit conditions.

The Fund's 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.

14
<PAGE>

Sub-Investment Adviser. Barclays Global Fund Advisors ("BGFA") serves as
Sub-Investment Adviser to the Fund. Subject to the direction of the Company's
Board of Directors and the overall supervision and control of Wells Fargo Bank
and the Company, BGFA makes recommendations regarding the investment and
reinvestment of the Fund's assets. BGFA is responsible for implementing and
monitoring the performance of the asset allocation model employed with respect
to the Fund in accordance with the investment objectives, policies and
restrictions set forth in the Fund's Prospectus. BGFA furnishes to Wells Fargo
Bank periodic reports on the investment activity and performance of the Fund and
will also furnish such additional reports and information as Wells Fargo Bank
and the Company's Board of Directors and officers may reasonably request.

BGFA was created by the reorganization of Wells Fargo Nikko Investment
Advisors ("WFNIA"), a former affiliate of Wells Fargo Bank, with and into an
affiliate of Wells Fargo Institutional Trust Company, N.A. Prior to the
Consolidation, BGFA served as sub-adviser to the predecessor portfolio pursuant
to a sub-advisory contract and under substantially similar terms as are
currently in effect for the Fund. Prior to January 1, 1996, WFNIA provided sub-
advisory services directly to the predecessor portfolio.

For the years ended December 31, 1994, 1995 and 1996, Wells Fargo Bank paid
to WFNIA / BGFA on behalf of the predecessor portfolio the sub-advisory fees
indicated below:

1994 1995 1996
---- ---- ----

Fees Paid Fees Waived Fees Paid Fees Waived Fees Paid Fees Waived
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
$424,899 $0 $177,707 $0 $210,226 $0

</TABLE>

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 Bank, Stephens and the Fund, state
that Wells Fargo Bank and Stephens shall provide as administration 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
auditors 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.

15
<PAGE>

Prior to the Consolidation, Wells Fargo Bank and Stephens served as
Administrator and Co-Administrator, respectively, to the predecessor portfolio
under substantially similar terms. Prior to February 1, 1997, Stephens served
as sole administrator to the predecessor portfolio and provided the Fund with
essentially the same services described above. Stephens was entitled to receive
a monthly fee from the predecessor portfolio at the annual rate of 0.10% of its
average daily net assets up to $200 million and 0.05% in excess of $200 million.

For the years ended December 31, 1994, 1995 and 1996, Stephens received
administration fees from the predecessor portfolio as follows:

1994 1995 1996
---- ---- ----
<S> <C> <C>
$ 66,524 $ 60,627 $ 75,203

</TABLE>

Sponsor and Distributor. As discussed in the Prospectus under "Management
of the Fund," Stephens serves as the Fund's sponsor and distributor.

Distribution Plans. As indicated in the Prospectus, the Fund, on behalf of
each class of its shares, has adopted a Plan under Section 12(b) of the 1940 Act
and Rule 12b-1 thereunder (the "Rule").

Pursuant to the Plan for the Class A shares, the Fund may pay to Stephens,
as compensation for distribution-related services provided or distribution-
related expenses incurred, a monthly fee at the annual rate of up to 0.25% of
the average daily net assets attributable to the Class A shares. Pursuant to
the Plans for Class B and Class C shares, the Fund may pay to Stephens, as
compensation for distribution-related services provided, or reimbursement for
distribution- related expenses incurred, a monthly fee at an annual rate of up
to 0.75% of the average daily net assets attributable to the Class B or Class C
shares. The actual fee payable to Stephens shall, within such limit, be
determined from time to time by mutual agreement between the Company and
Stephens. Stephens may enter into selling agreements with one or more selling
agents under which such agents may receive compensation for distribution-related
services from Stephens, including, but not limited to, commissions or other
payments to such agents based on the average daily net assets of Index
Allocation Fund shares attributable to them. Stephens may retain any portion of
the total distribution fee payable hereunder to compensate it for distribution-
related services provided by it or to reimburse it for other distribution-
related expenses.

Each Plan will continue in effect from year to year if such continuance is
approved by a majority vote of both the directors of the Company and the
Qualified Directors. Agreements related to the Plans also must be approved by
such vote of the directors and the Qualified Directors. Such agreements will
terminate automatically if assigned, and may be terminated at any time, without
payment of any penalty, by a vote of a majority of the outstanding voting
securities of the Fund. No Plan may be amended to increase materially

16
<PAGE>

the amounts payable thereunder without the approval of a majority of the
outstanding voting securities of the Fund, and no material amendment to a Plan
may be made except by a majority of both the directors of the Company and the
Qualified Directors.

Each Plan requires that the Treasurer of the Fund shall provide to the
directors, and the directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of directors who are not "interested
persons" of the Company be made by such disinterested directors.

Prior to the Consolidation, the predecessor portfolio had adopted Rule 12b-
1 Distribution Plans for its Class A and Class D shares. For the year ended
December 31, 1996, the predecessor portfolio's distributor received the
following amounts of 12b-1 fees for the specified purposes set forth below under
the predecessor portfolio's Rule 12b-1 Plans.

Printing &
Mailing Marketing Compensation to
Total Prospectus Brochures Underwriters
----- ---------- --------- ------------
<S> <C> <C> <C> <C>
Class A $137,481 N/A N/A $137,481
Class D $151,575 N/A N/A $151,575

</TABLE>

For the year ended December 31, 1996, WFSI and its registered
representatives received no compensation under the Predecessor Fund's Plans.

Shareholder Servicing Agent. The Fund has entered into a shareholder
servicing agreement with Wells Fargo Bank. Prior to the Consolidation, the
predecessor portfolio on behalf of its Class D shares had entered into a similar
shareholder servicing agreement with Wells Fargo Bank. For the years ended
December 31, 1994, 1995 and 1996 the predecessor portfolio paid the following
amounts in shareholder servicing fees pursuant to the Servicing Plan for its
Class D shares:

1994 1995 1996
---- ---- ----
<S> <C> <C>
$28,377 $31,150 $50,525

</TABLE>

Class A Shareholder Administrative Servicing Plan. As indicated in the
Prospectus, the Fund has adopted a Shareholder Administrative Servicing Plan
(the "Administrative Servicing Plan") on behalf of its Class A shares. Pursuant
to the Administrative Servicing Plan, the Fund may enter into Administrative
Servicing Agreements with administrative servicing agents (broker/dealers, banks
and other financial institutions, which may include Wells Fargo Bank and its
affiliates) who are dealers/holders of record, or that otherwise have a
servicing relationship with the beneficial owners, of the Fund's Class A shares.
Administrative servicing agents agree to perform shareholder

17
<PAGE>

administrative and liaison services which may include, among other things,
maintaining an omnibus account with the Fund, aggregating and transmitting
purchase, exchange and redemption orders from its customers, answering customer
inquiries regarding a shareholder's accounts in the Fund, and providing such
other services as the Company or a customer may reasonably request.
Administrative servicing agents are entitled to a fee which will not exceed
0.25%, on an annualized basis, of the average daily net assets of the Class A
shares represented by the shares owned of record or beneficially by the
customers of the administrative servicing agent during the period for which
payment is being made. In no case shall shares be sold pursuant to the Class A
Rule 12b-1 Plan while being sold pursuant to its Administrative Servicing Plan.

Class B and Class C Servicing Plans. As indicated in the Prospectus, the
Fund has adopted Shareholder Servicing Plans ("Servicing Plans") on behalf of
its Class B and Class C shares. Under each Servicing Plan and pursuant to the
Servicing Agreements, the Fund may pay one or more servicing agents, as
compensation for performing certain services, a fee at an annual rate of up to
0.25% of the average daily net assets of the Funds Class B or Class C shares, as
appropriate, attributable to the servicing agents customers. Servicing agents
may include broker/dealers, banks and other financial institutions, including
Wells Fargo Bank and its affiliates. The actual fee payable to servicing agents
is determined, within such limit, 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 Conduct Rules
of the NASD.

The Administrative Servicing Plan and Servicing Plans will continue in
effect from year to year if such continuance is approved by a majority vote of
the Directors of the Company. Any form of Servicing Agreement related to the
Plans also must be approved by such vote of the Directors. Servicing Agreements
will terminate automatically if assigned, and may be terminated at any time,
without payment of any penalty, by a vote of a majority of the outstanding
shares of the appropriate class of the Fund. The Administrative Servicing Plan
and Servicing Plans may not be amended to increase materially the amount payable
thereunder without the approval of a majority of the outstanding shares of the
appropriate class of the Fund, and no material amendment to the Plans may be
made except by a majority of the Directors.

The Administrative Servicing Plan and Servicing Plans require that the
Company's Directors shall review, at least quarterly, a written report of the
amounts expended (and purposes therefor) under each of the Plans.

Custodian. Barclays Global Investors, N.A. ("BGI") acts as Custodian for
the Fund. The Custodian, among other things, maintains a custody account or
accounts in the name of the Fund; receives and delivers all assets for the Fund
upon purchase and upon sale or maturity; collects and receives all income and
other payments and distributions on account of the assets of the Fund and pays
all expenses of the Fund. BGI is not entitled to receive compensation for its
services as Custodian to the Fund so long as its subsidiary, BGFA, is entitled
to receive fees for providing investment advisory services to the Fund.

18
<PAGE>

Prior to the Consolidation, BGI also served as Custodian to the predecessor
portfolio. For the year ended December 31, 1996, the predecessor portfolio did
not pay any custody fees.

Transfer and Dividend Disbursing Agent. Wells Fargo Bank has been retained
to act as transfer and dividend disbursing agent to the Fund. For its services
as transfer and dividend disbursing agent to the Fund, Wells Fargo Bank is
entitled to receive monthly payments at the annual rate of 0.14% of the average
daily net assets of each class of shares. Under a prior transfer agency
agreement with the predecessor portfolio, Wells Fargo Bank was entitled to
receive a base fee and per-account fees paid without regard to class. For the
year ended December 31, 1996, the predecessor portfolio did not pay any transfer
and dividend disbursing agency fees.

Underwriting Commissions. For the year ended December 31, 1994, the
aggregate dollar amount of underwriting commissions (front-end sales loads and
CDSCs, if any) paid to Stephens on sales/redemptions of the Company's shares was
$5,414,227. Wells Fargo Securities Inc. ("WFSI"), an affiliated broker-dealer
of the Company, and its registered representatives received $904,274 of such
commissions.

For the year ended December 31, 1995, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
shares was $1,584,545 and Stephens retained $1,251,311 of such commissions.
WFSI and its registered representatives received $333,234 of such commissions.

For the fiscal period ended September 30, 1996, the aggregate dollar amount
of underwriting commissions paid to Stephens on sales/redemptions of the
Company's shares was $2,917,738 and Stephens retained $198,664 of such
commissions. WFSI and its registered representatives received $2,583,027 and
$136,047, respectively, of such commissions.

For the six months ended March 31, 1997, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
shares was $_________ and Stephens retained $_______ of such commissions. WFSI
and its registered representatives received $__________ and $________,
respectively, of such commissions.

PERFORMANCE CALCULATIONS

Total Return. As indicated in the Prospectus, the Fund may advertise
certain total return information for a class of shares computed in the manner
described in the Prospectus. As and to the extent required by the SEC, an
average annual compound rate of return ("T") will be computed by using the value
at the end of a specified period ("ERV") of a hypothetical initial investment in
a class of shares ("P") over a period of years ("n") according to the following
formula: P(1+T)n = ERV. In addition, as indicated in the

19
<PAGE>

Prospectus, the Fund may also, at times, calculate total return for a class of
shares based on net asset value per share (rather than the public offering
price), in which case the figures would not reflect the effect of any sales
charges that would have been paid by an investor, or based on the assumption
that a sales charge other than the maximum sales charge (reflecting a Volume
Discount) was assessed, provided that total return data derived pursuant to the
calculation described above also are presented.

The performance information presented below and advertised by the Fund for
periods prior to the effective date of the Consolidation, is based upon the
prior performance of the predecessor portfolio. The Class A and Class C shares
of the Fund track the performance of the predecessor portfolio's Class A and
Class D shares, respectively.

Predecessor Portfolio-Average Annual Total Return for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------------

Inception(1) Inception Five Year Five Year One Year One Year
With Sales No Sales With Sales No Sales With Sales No Sales
Charge(2) Charge Charge Charge Charge(2) Charge
--------- ------ ------ ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Class A 11.99% 12.58% 12.58% 13.62% 11.76% 17.04%
Class D N/A 14.47% N/A N/A 15.38% 16.37%
</TABLE>
- --------------

(1) The predecessor portfolio's Class A shares commenced operations on April 7,
1988. The predecessor portfolio's Class D shares commenced operations on
July 1, 1993.
(2) The term "Sales Charge" for Class A shares reflects a front-end sales
charge of 4.50%, and for Class D shares reflects the maximum applicable
contingent deferred sales charge ("CDSC") of 1.00% if shares are redeemed
in the first year.

In addition to the above performance information, the Fund may advertise
the cumulative total return of for one-month, three-month, six-month and year-
to-date periods. The cumulative total return for such periods is based on the
overall percentage change in value of a hypothetical investment in the Fund,
assuming all Fund dividends and capital gain distributions are reinvested,
without reflecting the effect of any sales charge that would be paid by an
investor, and is not annualized.

The Fund may advertise the cumulative total return on its shares.
Cumulative total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Cumulative total return of shares
generally is expressed as a percentage rate which is calculated by combining the
income and principal charges for a specified period and dividing by the net
asset value per share at the beginning of the period. Advertisements may
include the percentage rate of total return of shares or may include the value
of a hypothetical investment in shares at the end of the period which assumes
the application of the percentage rate of total return.

20
<PAGE>

Predecessor Portfolio-Cumulative Total Return for the Year Ended December 31, 1996
- ----------------------------------------------------------------------------------

Inception(1) Inception Five Year Five Year
With Sales No Sales With Sales No Sales
Charge(2) Charge Charge Charge
--------- ------ ------ ------
<S> <C> <C> <C> <C>
Class A 169.64% 182.11% 80.85% 89.32%
Class D N/A 60.47% N/A N/A
</TABLE>
- ---------------

(1) The predecessor portfolio's Class A shares commenced operations on April 7,
1988. The predecessor portfolio's Class D shares commenced operations on
July 1, 1993.
(2) The term "Sales Charge" for Class A shares reflects a front-end sales
charge of 4.50%, and for Class D shares reflects the maximum applicable
CDSC of 1.00% if shares are redeemed in the first year.

Other. The Company also may disclose in advertising and other types of
literature, information and statements, the average credit quality of the Fund's
portfolio or categories of investments therein, as of a specified date or
period. Average credit quality is calculated on a dollar weighted average basis
based on ratings assigned each issue or issuer, as the case may be, by S&P
and/or Moody's. In the event one rating agency does not rate the issue or
issuer, as the case may be, in the same tier as the other agency, the highest
rating is used in the calculation.

From time to time and only to the extent the comparison is appropriate for
a class of shares of the Fund, the Company may quote the performance or price-
earning ratio of a class of shares of the Fund in advertising and other types of
literature as compared to the performance of the 1-Year Treasury Bill Rate, 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 the World Gold
Council), Bank Averages (which is calculated from figures supplied by the U.S.
League of Savings Institutions based on effective annual rates of interest on
both passbook and certificate accounts), average annualized certificate of
deposit rates (from the Federal Reserve G-13 Statistical Releases or the Bank
Rate Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), Ten Year U.S.
Government Bond Average, S&P's Corporate Bond Yield Averages, Schabacter
Investment Management Indices, Salomon Brothers High Grade Bond Index, Lehman
Brothers Long-Term High Quality Government/Corporate Bond Index, other managed
or unmanaged indices or performance data of bonds, stocks or government
securities (including data provided by Ibbotson Associates), or by other
services, companies, publications or persons who monitor mutual funds on overall
performance or other criteria. The S&P Index and the Dow Jones Industrial
Average are unmanaged indices of selected common stock prices.

21
<PAGE>

The performance of a class of shares of the Fund also may be compared to
those of other mutual funds having similar objectives. This comparative
performance could be expressed as a ranking prepared by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Bloomberg Financial Markets
or Morningstar, Inc., independent services which monitor the performance of
mutual funds. The performance of a class of shares of the Fund will be
calculated by relating net asset value per share at the beginning of a stated
period to the net asset value of the investment, assuming reinvestment of all
gains distributions and dividends paid, at the end of the period. Any such
comparisons may be useful to investors who wish to compare the class' past
performance with that of its competitors. Of course, past performance cannot be
a guarantee of future results. The Company also may include, from time to time,
a reference to certain marketing approaches of the Distributor, including, for
example, a reference to a potential shareholder being contacted by a selected
broker or dealer. General mutual fund statistics provided by the Investment
Company Institute may also be used.

In addition, the Company may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Company
also may include in advertising and other types of literature information and
other data from reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the related "Tax Freedom
Day."

From time to time the Company may reprint, reference or otherwise use
material from magazines, newsletters, newspapers and books including, but not
limited to the Wall Street Journal, Money Magazine, Barrons, Kiplingers,
Business Week, Fortune, Forbes, the San Francisco Chronicle, the San Jose
Mercury News, The New York Times, the Los Angeles Times, the Boston Globe, the
Washington Post, the Chicago Sun-Times, Investor Business Daily, Worth, Bank
Investor, American Banker, Smart Money, the 100 Best Mutual Funds (Adams
Publishing), Morningstar or Value Line.

The Company also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
a class of shares of the Fund: (i) the Consumer Price Index may be used to
assess the real rate of return from an investment in a class of shares; (ii)
other government statistics, including, but not limited to, The Survey of
Current Business, may be used to illustrate investment attributes of a class of
shares of a Fund or the general economic, business, investment, or financial
environment in which the Fund operates; (iii) the effect of tax-deferred
compounding on the investment returns of a class of shares of the Fund, or on
returns in general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the return from an
investment in a class of shares of the Fund (or returns in general) on a tax-
deferred basis (assuming reinvestment of capital gains and dividends and
assuming one

22
<PAGE>

or more tax rates) with the return on a taxable basis; and (iv) the sectors or
industries in which the Fund invests may be compared to relevant indices of
stocks or surveys (e.g., S&P Industry Surveys) to evaluate the historical
performance or current or potential value of a class of shares of the Fund with
respect to the particular industry or sector.

In addition, performance information for a class of shares of the Index
Allocation Fund may be compared, in reports and promotional literature, to the
S&P 500 Index, the Wilshire 5000 Equity Index, the Lehman Brothers 20+ Treasury
Index, Donoghue's Money Fund Averages, the Lehman Brothers 5-7 Year Treasury
Index, or other appropriate managed or unmanaged indices of the performance of
various types of investments, so that investors may compare the results of a
class of shares of the Fund with those of indices widely regarded by investors
as representative of the security markets in general. Unmanaged indices may
assume the reinvestment of dividends, but generally do not reflect deductions
for administrative and management costs and expenses. Managed indices generally
do reflect such deductions.

From time to time, the Company also may include in advertisements or other
marketing materials a discussion of certain of the objectives of the Index
Allocation Fund's investment strategy and a comparison of this strategy with
other investment strategies. In particular, the responsiveness of the Fund to
changing market conditions may be discussed. For example, the Company may
describe the benefits derived by having Wells Fargo Bank, as Investment Adviser,
or BGFA, as Sub-Adviser, monitor and reallocate investments among the three
asset categories described above and in the Prospectus. The Company's
advertising or other marketing materials also might set forth illustrations
depicting examples of recommended allocations in different market conditions. It
may state, for example, that when the model indicates that stocks represent a
better value than bonds or money market instruments, the Index Allocation Fund
might consist of 70% stocks, 25% bonds and 5% money market instruments and that
when the model indicates that bonds represent a better value than stocks or
money market instruments, the balance of assets might shift to 60% bonds, 20%
stocks and 20% money market instruments.

The Company also may include, from time to time, a reference to certain
marketing approaches of the Distributor, including, for example, a reference to
a potential shareholder being contacted by a selected broker or dealer.

The Company also may discuss in advertising and other types of sales
literature that the Fund has been assigned a rating by a nationally recognized
statistical rating organization ("NRSRO"), such as Moody's and S&P. 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 performance of a
class of shares of the Fund with other

23
<PAGE>

investments which are assigned ratings by NRSROs. Any such comparisons may be
useful to investors who wish to compare a class' past performance with other
rated investments.

The Company may disclose in sales literature the distribution rate on
shares of each class of the Fund. Distribution rate, which may be annualized,
is the amount determined by dividing the dollar amount per share of the most
recent dividend by the most recent NAV or maximum offering price per share as of
a date specified in the sales literature. Distribution rate will be accompanied
by the standard 30-day yield as required by the SEC.

The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
(formerly, Wells Fargo Investment Management) a subsidiary of Wells Fargo Bank,
is listed in the top 100 by Institutional Investor magazine in its July 1997
survey "America's Top 300 Money Managers." This survey ranks money managers in
several asset categories. The Company may disclose in advertising and other
types of sales literature the assets and categories of assets under management
by its investment adviser or sub-adviser and the total amount of assets and
mutual fund assets managed by Wells Fargo Bank. As of August 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 $19 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.

24
<PAGE>

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of the Fund is determined by Wells
Fargo Bank on each day the Fund is open as of 1:00 p.m. (Pacific time).

Securities for which the primary market is a national securities or
commodities exchange or a recognized foreign securities exchange or commodities
exchange, or the National Association of Securities Dealers Automated Quotations
National Market System, are valued at last sale prices on the principal exchange
on which they are traded or in the absence of any sale on the valuation date, at
latest quoted bid prices. In the absence of any latest quoted bid prices, the
previous market close will be used. In the absence of any sale of such
securities on the valuation date and in the case of other securities, including
U.S. Government securities but excluding money market instruments maturing in 60
days or less, the valuations are based on latest quoted bid prices. Money market
instruments maturing in 60 days or less are valued at amortized cost. Futures
contracts and options listed on a national exchange are valued at the last sale
price on the exchange on which they are traded at the close of the Exchange, or,
in the absence of any sale on the valuation date, at latest quoted bid prices.
Options not listed on a national exchange are valued at latest quoted bid
prices. Debt securities maturing in 60 days or less are valued at amortized
cost. In all cases, bid prices will be furnished by a reputable independent
pricing service approved by the Board of Directors. Prices provided by an
independent pricing service may be determined without exclusive reliance on
quoted prices and may take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. All other securities and other assets of the Fund for which current market
quotations are not readily available are valued at fair value as determined in
good faith by the Company's Board of Directors and in accordance with procedures
adopted by the Board of Directors.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares may be purchased on any day the Fund is open for business. The Fund
is open for business each day the NYSE is open for trading (a "Business Day").
Currently, the NYSE is closed on New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday falls on
a weekend, the NYSE typically is closed on the weekday immediately before or
after such Holiday.

Payment for shares may, in the discretion of the adviser, be made in the
form of securities that are permissible investments for the Fund as described in
the Prospectus. For further information about this form of payment please
contact Stephens. In connection with an in-kind securities payment, the Fund
will require, among other things, that the securities be valued on the day of
purchase in accordance with the pricing methods used by the Fund and that the
Fund receives satisfactory assurances that (i) it will have good and marketable
title to the securities received by it; (ii) that the securities are in proper
form for transfer to

25
<PAGE>

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 equity securities on a securities exchange usually
are effected through brokers who charge a negotiated commission for their
services. Commission rates are established pursuant to negotiations with the
broker based on the quality and quantity of execution services provided by the
broker in light of generally prevailing rates. Orders may be directed to any
broker including, to the extent and in the manner permitted by applicable law,
Stephens or WFSI. In the over-the-counter market, securities are generally
traded on a "net" basis with dealers acting as principal for their own accounts
without a stated commission, although the price of the security usually includes
a profit to the dealer. In underwritten offerings, securities are purchased at a
fixed price that includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or discount.

Purchases 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 an issuer. Generally debt obligations
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
Company are prohibited from dealing with the Company as a principal in the
purchase and sale of portfolio securities unless an exemptive order allowing
such transactions is obtained from the SEC or an exemption is otherwise
available. The

26
<PAGE>

Fund may purchase securities from underwriting syndicates of which Stephens,
Wells Fargo Bank or BGFA is a member under certain conditions in accordance with
the provisions of a rule adopted under the Act and in compliance with procedures
adopted by the Company's Board of Directors.

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, as adviser,
or BGFA, as sub-adviser, 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 and BGFA generally seek reasonably competitive
spreads or commissions.

In assessing the best overall terms available for any transaction, Wells
Fargo Bank and BGFA consider 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.
As a result, the Fund may 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 such
commission is determined to be reasonable in relation to the value of the
brokerage and research services provided by such broker/dealer. 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 BGFA and
does to reduce the advisory or sub-advisory fees payable by the Fund. The Board
of Directors will periodically review the commissions paid by the Fund to
consider whether the commissions paid over representative periods of time appear
to be reasonable in relation to the benefits inuring to the Fund. It is possible
that certain of the supplementary research or other services received will
primarily benefit one or more other investment companies or other accounts for
which 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.

27
<PAGE>

transaction or its overall responsibilities with respect to the accounts as to
which it exercises investment discretion and that the services provided by a
broker provide an adviser with lawful and appropriate assistance in the
performance of its investment decision-making responsibilities." Accordingly,
the price to the Fund in any transaction may be less favorable than that
available from another broker/dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.

Broker/dealers may furnish statistical, research and other information or
services which are deemed to be beneficial to the Fund's investment program.
Research services received from brokers supplement the advisers' 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 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 since the brokers utilized by the
Fund may follow a broader universe of securities and other matters than the
staff of Wells Fargo Bank and/or BGFA can follow. In addition, this research
provides Wells Fargo Bank and/or BGFA with a diverse perspective on financial
markets. Research services which are provided to Wells Fargo Bank and/or BGFA by
brokers are available for the benefit of all accounts managed or advised by
Wells Fargo Bank and/or BGFA. 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.

Brokerage Commissions. For the year ended December 31, 1996, the
predecessor portfolio paid brokerage commissions in the amount of $2,317.

Securities of Regular Broker/Dealers. The predecessor portfolio did not own
securities of its "regular brokers or dealers" as of December 31, 1996.

FUND EXPENSES

28
<PAGE>

the Company's directors who are not officers or employees of Wells Fargo Bank or
Stephens or any of their affiliates; advisory, shareholder servicing, and
administration fees; payments pursuant to any Plans; interest charges; taxes;
fees and expenses of independent auditors; legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Fund shares; expenses of
preparing and printing Prospectuses (except the expense of printing and mailing
Prospectuses used for promotional purposes, unless otherwise payable pursuant to
a Plan), shareholders' or investors' reports, notices, proxy statements and
reports to regulatory agencies; insurance premiums and certain expenses relating
to insurance coverage; trade association membership dues; brokerage and other
expenses connected with the execution of portfolio transactions; fees and
expenses of the custodian, including those of keeping books and accounts and
calculating the net asset value of the Fund; expenses of shareholders' or
investors' meetings; expenses relating to the issuance, registration and
qualification of shares of the Fund; pricing services; organizational expenses;
and any extraordinary expenses. Expenses attributable to the Fund are charged
against the assets of the Fund. A pro rata portion of the expenses of the
Company are charged against the assets of the Fund.

FEDERAL INCOME TAXES

The following information supplements and should be read in conjunction
with the Fund's Prospectus. The Prospectus generally describes the tax
treatment of distributions by the Fund. This section of the SAI includes
additional information concerning federal income taxes.

In General. The Company intends to qualify the Fund as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986 as
amended (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 dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies (to the extent such currency gains are directly related to the
regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) 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

29
<PAGE>

the value of its assets is invested in the securities of any one issuer (other
than U.S. Government obligations and the securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are determined to be engaged in the same or similar trades or businesses.

In addition, the Fund must, in general, derive less than 30% of its
gross income from the sale or other disposition of securities or options thereon
held for less than three months. However, this restriction has been repealed
with respect to taxable years beginning after August 7, 1997.

The Fund must also distribute or be deemed to distribute to its shareholders at
least 90% of its net investment income earned in each taxable year. In general,
these distributions must actually or be deemed to be made in the taxable year.
However, in certain circumstances, such distributions may be made in the 12
months following the taxable year. The Fund intends to pay out substantially all
of its net investment income and net realized capital gains (if any) for each
year.

Excise Tax. A 4% nondeductible excise tax will be imposed on the Fund (other
than to the extent of its tax-exempt interest income) to the extent it does not
meet certain minimum distribution requirements by the end of each calendar year.
The Fund intends to actually or be deemed to distribute substantially all of its
net investment income and net capital gains by the end of each calendar year
and, thus, expects not to be subject to the excise tax.

Corporate shareholders may be eligible for the dividends-received deduction
on dividends distributed out of the Fund's net investment income attributable to
dividends received from domestic corporations, which, if received directly by
the corporate shareholder, would qualify for such deduction. In order to
qualify for the dividends-received deduction, a corporate shareholder must hold
the Fund shares paying the dividends upon which the deduction is based for at
least 46 days.

Taxation of Fund Investments. Except as provided herein, gains and losses
on the sale of portfolio securities by a Fund will generally be capital gains
and losses. Such gains and losses will ordinarily be long-term capital gain and
loss if the securities have been held by the Fund for more than 12 months at the
time of disposition of the securities (however, see "Capital Gain Distributions"
below), 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, but was not previously recognized, pursuant to an available election,
during the term the Fund held the debt obligation.

<PAGE>

If an option written by the Fund lapses or is terminated through a closing
transaction, such as a repurchase by the Fund of the option from its holder, the
Fund will realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid by the Fund in the
closing transaction. Some realized capital losses may be deferred if they
result from a position which is part of a "straddle," discussed below. If
securities are sold by a Fund pursuant to the exercise of a call option written
by it, the Fund will add the premium received to the sale price of the
securities delivered in determining the amount of gain or loss on the sale. If
securities are purchased by a Fund pursuant to the exercise of a put option
written by it, the Fund will subtract the premium received from its cost basis
in the securities purchased. The requirement that the Fund derive less than 30%
of its gross income from gains from the sale of securities held for less than
three months may limit the Fund's ability to write options.

The amount of any gain or loss realized by the Fund on closing out a
futures contract will generally result in a realized capital gain or loss for
tax purposes. Futures contracts held at the end of each fiscal year will be
required to be "marked to market" for federal income tax purposes pursuant to
Section 1256 of the Code. In this regard, they will be deemed to have been sold
at market value. Sixty percent (60%) of any net gain or loss recognized on these
deemed sales and sixty percent (60%) of any net realized gain or loss from any
actual sales, generally will be treated as long-term capital gain or loss, and
the remaining forty percent (40%) will be treated as short-term capital gain or
loss. Transactions that qualify as designated hedges are excepted from the
"marked to market" and "60%/40%" rules.

Offsetting positions held by a regulated investment company involving
certain financial forward, futures or options contracts may be considered, for
tax purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of "straddles" is governed by Section 1092 of the Code which, in certain
circumstances, overrides or modifies the provisions of Section 1256. If a
regulated investment company were treated as entering into "straddles" by reason
of its engaging in certain financial forward, futures or option contracts, such
straddles could be characterized as "mixed straddles" if the futures, forwards,
or options comprising a part of such straddles were governed by Section 1256 of
the Code. The regulated investment company may make one or more elections with
respect to "mixed straddles." Depending upon which election is made, if any, the
results with respect to the regulated investment company may differ. Generally,
to the extent the straddle rules apply to positions established by the regulated
investment company, losses realized by the regulated investment company may be
deferred to the extent of unrealized gain in any offsetting positions.
Moreover, as a result of the straddle and the conversion transaction rules,
short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gain may be characterized as
short-term capital gain or ordinary income.

If the Fund enters into a "constructive sale" of any appreciated position
in stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not

31
<PAGE>

loss) with respect to that position. For this purpose, a constructive sale
occurs when the Fund enters into one of the following transactions with respect
to the same or substantially identical property: (i) a short sale; (ii) an
offsetting notional principal contract; or (iii) a futures or forward contract.

Capital Gain Distributions. Distributions which are designated by the Fund
as capital gain distributions will be taxed to shareholders as long-term term
capital gains (to the extent such dividends do not exceed the Fund's actual net
capital gains for the taxable year), 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.

With respect to shareholders who are individuals, trusts or estates, the
Taxpayer Relief Act of 1997 (the "Act") reduces the maximum tax rate on net
capital gains derived from securities held for more than 18 months to 20% and
provides a maximum tax rate on net capital gains derived from securities held
for more than one year and for not more than 18 months ("mid-term gains") of
28%. A maximum 18% rate will ultimately be available to individuals, trusts and
estates for net gain on the disposition of certain securities held more than
5 years upon their disposition. The Treasury Department is authorized to issue
regulations for application of the reduced rates to pass-through entities,
including regulated investment companies. Shareholders who are individuals,
trusts or estates may therefore qualify for the reduced rate of tax on capital
gain distributions paid by a Fund to the extent such distributions are
attributable to the Fund's dispositions after May 7, 1997.

Net gain recognized on securities held for one year or less in excess of
net long-term capital loss continues to be short-term capital gain subject to
tax at ordinary income rates, and the Act generally does not affect the taxation
of capital gains to corporations.

Disposition of Fund Shares. A disposition of Fund shares pursuant to
redemption (including a redemption in-kind) or exchanges will ordinarily result
in a taxable capital gain or loss, depending on the amount received for the
shares (or are deemed to receive in the case of an exchange) and the cost of
your shares.

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 or load on a
new purchase of shares of the Fund or a different regulated investment company,
the sales charge or load previously incurred acquiring the Fund's shares shall
not be taken into account (to the extent such previous sales charge or load does
not exceed the reduction in sales charge or load on the new purchase) for the
purpose of determining the amount of gain or loss on the disposition, but will
be treated as having been incurred in the acquisition of such other shares.
Also, any loss realized on a redemption or exchange of shares of the Fund will
be disallowed to the extent that substantially identical shares are acquired
within the 61-day period beginning 30 days before and ending 30 days after the
shares are disposed of.

32
<PAGE>

If a shareholder holds Fund shares for six months or less, any loss on the
sale or exchange of those shares will be disallowed to the extent of the amount
of exempt interest dividends received with respect to the shares. The Treasury
Department is authorized to issue regulations reducing the six months holding
requirement to a period of not less than the greater of 31 days or the period
between regular dividend distributions where a Fund regularly distributed at
least 90% of its net tax-exempt interest, if any. No such regulations have been
issued as of the date of this SAI. In addition, 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. The foregoing
recharacterization and disallowance rules do not apply to losses realized under
a periodic redemption plan.

Federal Income Tax Rates. As of the printing of this SAI, the maximum
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gains is 28% (however, see "Capital Gain Distributions" above);
and the maximum corporate tax rate applicable to ordinary income and net capital
gains is 35% (marginal tax rates may be higher for some corporations to reduce
or eliminate the benefit of lower marginal income tax rates). Naturally, the
amount of tax payable by an individual or corporation will be affected by a
combination of lax laws covering, for example, deductions, credits, deferrals,
exemptions, sources of income and other matters.

Foreign Shareholders. Under the Code, distribution of net investment income
by the Fund to a nonresident alien individual, foreign trust (i.e. trust which a
U.S. court is able to exercise primary supervision over administration of that
trust and one or more U.S. persons have authority to control substantial
decisions of that trust), foreign estate (i.e. the income of which is not
subject to U.S. tax, regardless of source), 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. Furthermore, distributions of net long-term capital
gains generally are not subject to tax withholding. Such tax withheld is
generally not refundable.

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 redemptions in
kind and 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 notified 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 Funds may involve sophisticated tax rules that may result in income or gain
recognition by the Fund without corresponding current cash receipts. Although
the Funds will seek to avoid significant noncash income such noncash income
could be recognized by the Funds, in which case the Funds may distribute cash
derived from other sources in order to meet the minimum distribution
requirements described above.

The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the federal tax considerations
generally affecting investments in the Funds. Each investor if urged to consult
his or her tax advisor regarding specific questions as to federal, state, local
or foreign taxes.

CAPITAL STOCK

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Management of the Fund."

The Fund is one of the funds in the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991 and currently
offers shares of over thirty funds.

Most of the Company's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, one or more classes 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 1-800-222-8222 if you would like additional
information about other funds or classes of shares offered.

With respect to matters affecting one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of the Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in
a fund's fundamental investment policy affects only one series and would be
voted upon only by shareholders of the fund involved. Additionally, approval of
an advisory contract, since it affects only one fund, is a matter to be
determined separately by series. Approval by the shareholders of one series is
effective as to that series whether or not sufficient votes are received from
the shareholders of the other series to approve the proposal as to those series.

33
<PAGE>

in person or by proxy, or (ii) more than 50% of the outstanding shares of the
Fund. The term "majority," when referring to the approvals to be obtained from
shareholders of the Company as a whole, means the vote of the lesser of (i) 67%
of the Company's shares represented at a meeting if the holders of more than 50%
of the Company's outstanding shares are present in person or by proxy, or
(ii) more than 50% of the Company's outstanding shares.

Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. The Company may dispense with an
annual meeting of shareholders in any year in which it is not required to elect
Directors under the 1940 Act.

Each share of a class of the Fund represents an equal proportional interest
in the Fund with each other share of the same class and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared in the discretion of the Directors. In the event of the
liquidation or dissolution of the Company, shareholders of a Fund are entitled
to receive the assets attributable to that Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular Fund that are available for distribution in such manner and on such
basis as the Directors in their sole discretion may determine.

Shareholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Company.

Set forth below is the name, address and share ownership of each person
known by the Company to have beneficial or record ownership of 5% or more of a
class of the predecessor portfolio or 5% or more of the voting securities of the
predecessor portfolio as a whole.

34
<PAGE>

5% OWNERSHIP AS OF AUGUST 31, 1997
----------------------------------

Predecessor Type of Percentage Percentage
Portfolio Name and Address Ownership of Class of Portfolio
--------- ---------------- --------- -------- ------------
<S> <C> <C> <C> <C>

Class A Stephens Inc. for the Exclusive Benefit Class A
of Customers Record
P.O. Box 34127 Holder 9.65% 6.92%
Little Rock, AR 72203

Merrill Lynch Pierce Fenner & Smith, Class A
Inc. Record Holder for Exclusive Benefit Record
of Customers Holder 10.67% 7.66%
Attn: Fund Administration
4800 Deer Lake East, 3rd Floor
Jacksonville, FL 32246

Class D Merrill Lynch Pierce Fenner & Smith, Class D
Inc. for Exclusive Benefit of Record
Customers Attn: Fund Admin. Holder 35.65% 10.06%
4800 Deer Lake East, 3rd Floor
Jacksonville, FL 32246

Stephens Inc. Class D
For Exclusive Benefit of Customers Record
P.O. Box 34127 Holder 6.62% N/A
Little Rock, AR 72203
</TABLE>

For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund), or is identified as the holder of
record of more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).

OTHER

The Company's Registration Statement, including the Prospectus and SAI for
the Fund, and the exhibits filed therewith, may be examined at the office of the
SEC in Washington, D.C. Statements contained in the Prospectus or the SAI as to
the contents of any contract or other document referred to herein or in the
Prospectus are not necessarily complete, and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

35
<PAGE>

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. The address of KPMG Peat Marwick LLP is Three Embarcadero Center, San
Francisco, California 94111.

FINANCIAL INFORMATION

The portfolio of investments and unaudited financial statements for the
Predecessor Fund for the six month period ended June 30, 1997 are hereby
incorporated by reference to the Overland Semi-Annual Reports as filed with the
SEC on September 3, 1997.

The portfolio of investments, audited financial statements and independent
auditors' report for the Predecessor Fund for the year ended December 31, 1996,
are hereby incorporated by reference to the Overland Annual Reports as filed
with the SEC on March 11, 1997.

The Company's Annual Report for the Fiscal Period ended March 31, 1997 was
filed with the SEC on June 4, 1997. Annual Reports may be obtained by calling
1-800-222-8222.

36
<PAGE>

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 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 have "an extremely strong capacity" to pay interest and repay principal.
Bonds rated "AA" have a "very strong capacity" to pay interest and repay
principal and "differ from the highest rated 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 rating 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>

S&P: The two highest ratings for corporate, state 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, state 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, state 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>

STAGECOACH FUNDS, INC.
Telephone: (800) 222-8222

STATEMENT OF ADDITIONAL INFORMATION
Dated December 12, 1997

OVERLAND EXPRESS SWEEP FUND

Stagecoach Funds, Inc. (the "Company") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
additional information about the Overland Express Sweep Fund (the "Fund") of the
Stagecoach Family of Funds. The investment objective of the Fund is described in
the Prospectus. See "Investment Objective and Policies."

This SAI is not a prospectus and should be read in conjunction with the
Fund's Prospectus, dated December 12, 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>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General..................................................................... 1
Investment Restrictions..................................................... 1
Additional Permitted Investment Activities.................................. 3
Management.................................................................. 4
Calculation of Yield........................................................ 10
Determination of Net Asset Value............................................ 14
Additional Purchase and Redemption Information.............................. 15
Portfolio Transactions...................................................... 15
Fund Expenses............................................................... 18
Federal Income Taxes........................................................ 18
Capital Stock............................................................... 22
Other....................................................................... 23
Independent Auditors........................................................ 23
Financial Information....................................................... 23
Appendix.................................................................... A-1
</TABLE>

i
<PAGE>

GENERAL

The Company's Overland Express Sweep Fund was originally organized on
October 1 1991 as the Overland Sweep Fund (the "predecessor portfolio") of
Overland Express Funds, Inc. ("Overland"), another open-end management
investment company advised by Wells Fargo Bank. On July 23, 1997, the Boards of
the Directors of the Company and Overland approved an Agreement and Plan of
Consolidation providing for the transfer of the assets and stated liabilities of
the predecessor portfolio to the Company's Overland Express Sweep Fund. As a
result of the Consolidation, the predecessor portfolio was reorganized as the
Company's Overland Express Sweep Fund. Prior to the Consolidation, the
predecessor portfolio pursued its investment objective by investing all of its
assets in the Cash Investment Trust Master Portfolio (the "Master Portfolio") of
Master Investment Trust ("MIT"). The Fund invests directly in a portfolio of
securities and does not invest in a Master Portfolio.

INVESTMENT RESTRICTIONS

The Fund is subject to the following investment restrictions, all of which
are fundamental policies; that is, they may not be changed without approval by a
vote of the holders of a majority of the Fund's outstanding voting securities,
as described under "Capital Stock."

The Fund may not:

(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund's investments in that industry would exceed 25%
of the current value of its respective total assets, provided that there is no
limitation with respect to investments in (i) obligations of the United States
Government, its agencies or instrumentalities, and (ii) 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) purchase or sell real estate or real estate limited partnership
interests (other than money market securities secured by real estate or
interests therein or securities issued by companies that invest in real estate
or interests therein), commodities or commodity contracts;

(3) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions) or make short sales of securities;

(4) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Fund's investment program may be deemed to be an
underwriting;

1
<PAGE>

(5) make investments for the purpose of exercising control or management;

(6) issue senior securities, except that the Fund may borrow from banks up
to 10% of the current value of their respective 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 their respective net assets
(but investments may not be purchased while any such borrowing in excess of 5%
of their respective net assets exists);

(7) write, purchase or sell puts, calls, warrants or options or any
combination thereof, except that the Fund may purchase securities with put
rights in order to maintain liquidity; or

(8) make loans of portfolio securities or other assets, except that loans
for purposes of this restriction will not include the purchase of fixed time
deposits, repurchase agreements, commercial paper and other short-term
obligations, and other types of debt instruments commonly sold in a public or
private offering.

Non-Fundamental Investment Policies. The Fund is are subject to the
following non-fundamental policies:

The Fund may not:

(1) purchase or retain securities of any issuer if the officers or
directors of the Company or the Investment Adviser owning beneficially more than
one-half of one percent (0.5%) of the securities of the issuer together owned
beneficially more than 5% of such securities;

(2) purchase interests, leases, or limited partnership interests in oil,
gas, or other mineral exploration or development programs;

(3) invest in securities of issuers who, with their predecessors, have been
in existence less than three years, unless the securities are fully guaranteed
or insured by the U.S. Government, 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; or

(4) invest more than 10% of the current value of its net assets in
repurchase agreements maturing in more than seven days, fixed time deposits that
are subject to withdrawal penalties and that have maturities of more than seven
days, restricted securities (which are securities that must be registered under
the Securities Act of 1933 before they may be offered or sold to the public),
and illiquid securities.

2
<PAGE>

As provided in Rule 2a-7 under the Act, the Fund may only purchase
"Eligible Securities" (as defined in Rule 2a-7) and only if, immediately after
such purchase, the Fund would have no more than 5% of its total assets in "First
Tier Securities" (as defined in Rule 2a-7) of any one issuer, excluding
government securities and except as otherwise permitted for temporary purposes
and for certain guarantees and unconditional puts; the Fund would own no more
than 10% of the voting securities of any one issuer; the Fund would have no more
than 5% of its total assets in "Second Tier Securities" (as defined in Rule
2a-7); and the Fund would have no more than the greater of $1 million or 1% of
its total assets in Second Tier Securities of any one issuer.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

Foreign Obligations. The Fund may invest a portion of its assets (no more
than 5%) in 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 accounting, auditing
and financial reporting standards or governmental supervision as domestic
issuers. In addition, with respect to certain foreign countries, taxes may be
withheld at the source under foreign income tax laws, and there is a possibility
of expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect investments in, the
liquidity of, and the ability to enforce contractual obligations with respect
to, securities of issuers located in those countries.

Unrated Investments. The Fund may purchase instruments that are not rated
if, in the opinion of Wells Fargo Bank as investment adviser, such obligations
are of comparable quality to other high-quality investments that are permitted
to be purchased by the Fund. After purchase by the Fund, a security may cease
to be rated or its rating may be reduced below the minimum required for purchase
by the Fund. Neither event requires an immediate sale of such security by the
Fund. To the extent the ratings given by Moody's Investors Service ("Moody's")
or Standard and Poor's Rating Group ("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 Prospectus and in this SAI. The ratings of
Moody's and S&P are more fully described in the Appendix to this SAI.

Repurchase Agreements. The Fund may enter into repurchase agreements
wherein the seller of a security to the Fund agrees to repurchase that security
from the Fund at a mutually agreed-upon time and price. The period of maturity
is usually quite short, often overnight or a few days, although it may extend
over a number of months. The Fund may enter into repurchase agreements only with
respect to U.S. Government obligations and other securities that are permissible
investments for the Fund. All repurchase agreements will be fully
collateralized at 102% based on values that are marked to market daily. The
maturities of the underlying securities in a repurchase agreement transaction
may be greater

3
<PAGE>

than twelve months. However, the term of any repurchase agreement on behalf of
the Fund will always be less than twelve months. If the seller defaults and the
value of the underlying securities has declined, the Fund may incur a loss. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the security, the Fund's disposition of the security may be delayed or limited.

The Fund may not enter into a repurchase agreement with a maturity of more
than seven days if, as a result, more than 10% of the market value of it's total
net assets would be invested in repurchase agreements with maturities of more
than seven days, restricted securities and/or illiquid securities. The Fund
will enter into repurchase agreements only with primary broker/dealers and
commercial banks that meet guidelines established by the Board of Directors of
the Company and that are not affiliated with Wells Fargo Bank. The Fund,
subject to the conditions described above, may participate in pooled repurchase
agreement transactions with other funds advised by Wells Fargo Bank.

MANAGEMENT

Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>

Jack S. Euphrat, 75 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 46 Director, Executive Vice President of Stephens;
Chairman and Manager of Financial Services Group;
President President of Stephens Insurance Services Inc.;
Senior Vice President of Stephens Sports
Management Inc.; and President of Investor
Brokerage Insurance Inc.

Thomas S. Goho, 55 Director Associate Professor of Finance of the School
321 Beechcliff Court of Business and Accounting at Wake Forest
Winston-Salem, NC 27104 University since 1982.

Joseph N. Hankin, 57 Director President of Westchester Community College
75 Grasslands Road since 1971; Adjunct Professor of Columbia
Valhalla, N.Y. 10595 University Teachers College since 1976.
(appointed as of September 6, 1996)
</TABLE>

4
<PAGE>

<TABLE>
<S> <C> <C>
Robert M. Joses, 79 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
</TABLE>

<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>

*J. Tucker Morse, 53 Director Private Investor; Chairman of Home Account
4 Beaufain Street Network, Inc. Real Estate Developer;
Charleston, SC 29401 Chairman of Renaissance Properties Ltd.;
President of Morse Investment Corporation;
and Co-Managing Partner of Main Street
Ventures.

Richard H. Blank, Jr., 41 Chief Operating Associate of Financial Services Group of
Officer, Stephens; Director of Stephens Sports
Secretary and Management Inc.; and Director of Capo Inc.
Treasurer
</TABLE>

Compensation Table
Year Ended March 31, 1997
-------------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
----------------- --------------- ----------------
<S> <C> <C>

Jack S. Euphrat $11,250 $33,750
Director

R. Greg Feltus $-0- $-0-
Director

Thomas S. Goho $11,250 $33,750
Director

Joseph N. Hankin $-0- $-0-
Director
(appointed as of 9/6/96)

Zoe Ann Hines $-0- $-0-
Director
(resigned as of 9/6/96)

W. Rodney Hughes $9,250 $27,750
Director

Robert M. Joses $11,250 $33,750
Director

J. Tucker Morse $9,250 $27,750
Director
</TABLE>

5
<PAGE>

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. Prior to December 15, 1997, the Company, Overland, 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"). After the Consolidation and the winding down
of the affairs of Overland and MIT, the Company, Stagecoach Trust and Life &
Annuity Trust will be considered the only members of 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.

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. Wells Fargo
Bank furnishes the Fund with investment guidance and policy direction in
connection with daily portfolio management. Wells Fargo Bank furnishes to the
Board of Directors of the Company periodic reports on the investment strategy
and performance of the Fund. Wells Fargo Bank has agreed to provide to the Fund,
among other things, money market security and fixed-income research, analysis
and statistical and economic data and information concerning interest rate and
security market trends, portfolio composition, credit conditions and average
maturities of the investments of the Fund. For its services as investment
adviser to the Fund, Wells Fargo Bank is entitled to receive a monthly fee at
the annual rate of 0.45% of the Fund's average daily net assets.

Prior to the Consolidation, the predecessor portfolio invested all of its
assets in the Master Portfolio of MIT and did not retain an investment adviser.
Wells Fargo Bank served as investment adviser to the Master Portfolio in which
the predecessor portfolio invested and was entitled to receive a monthly fee at
the annual rate of 0.25% of the Master Portfolio's average daily net assets.
For the years ended December 31, 1994, 1995 and 1996, the Master Portfolio paid
to Wells Fargo Bank the following advisory fees and Wells Fargo Bank waived the
indicated amounts:

6
<PAGE>

<TABLE>
<CAPTION>
1994 1995 1996
Paid Waived Paid Waived Paid Waived
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C>
$1,426,685 $0 $1,902,572 $255,082 $3,310,083 $0
</TABLE>

The Fund's 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 Board of
Directors of the Company and (ii) by a majority of the Company's Directors 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.
Under the Administration and Co- Administration Agreements, Wells Fargo Bank and
Stephens provide as administration services, among other things: (i) general
supervision of the Fund's operations, including coordination of the services
performed by the investment adviser, transfer agent, custodian, shareholder
servicing agent(s), independent auditors 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
Directors. Wells Fargo Bank and Stephens also furnish office space and certain
facilities required for conducting the Fund's business 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 from the Fund a
monthly fee of 0.04% and 0.02%, respectively, of the average daily net assets of
the Fund.

Prior to the Consolidation, Wells Fargo Bank and Stephens served as
Administrator and Co-Administrator, respectively, to the predecessor portfolio
under substantially similar terms. Prior to February 1, 1997, Stephens served
as sole administrator to the Fund and provided the predecessor portfolio with
essentially the same services described above. Stephens was entitled to receive
a monthly fee at the annual rate of 0.05% of the Fund's average daily net
assets. For the years ended December 31, 1994, 1995 and 1996, the Predecessor
Fund paid administration fees to Stephens as follows:

Sponsor and Distributor. As discussed in the Fund's Prospectus under the
heading "Management of the Fund," Stephens serves as the Fund's sponsor and
distributor.

Distribution Plan. As indicated in the Prospectus, the Fund has adopted a
Plan under Section 12(b) of the Act and Rule 12b-1 thereunder.

7
<PAGE>

Pursuant to the Plan the Company may pay to Stephens Inc., as compensation
for distribution-related services provided, or distribution-related expenses
incurred, a monthly fee at the annual rate of 0.30% of the Fund's average daily
net assets. The actual fee payable to Stephens shall, within such limit, be
determined from time to time by mutual agreement between the Company and
Stephens. Stephens may enter into selling agreements with one or more selling
agents under which such agents may receive compensation for distribution-related
services from Stephens, including, but not limited to, commissions or other
payments to such agents based on the average daily net assets of Fund shares
attributable to them. Stephens may retain any portion of the total distribution
fee payable hereunder to compensate it for distribution-related services
provided by it or to reimburse it for other distribution-related expenses.

The Plan will continue in effect from year to year if such continuance is
approved by a majority vote of both the Directors of the Company and the
Qualified Directors. Agreements related to the Plan must also be approved by
such vote of the Directors and the Qualified Directors. Such agreements will
terminate automatically if assigned, and may be terminated at any time, without
payment of any penalty, by a vote of a majority of the outstanding voting
securities of the Fund. The Plan may not be amended to increase materially the
amounts payable thereunder without the approval of a majority of the outstanding
voting securities of the Fund, and no material amendment to the Plan may be made
except by a majority of both the Directors of the Company and the Qualified
Directors.

The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Directors who are not "interested
persons" of the Company be made by such disinterested Directors.

Prior to the Consolidation, the predecessor portfolio had adopted a
Rule 12b-1 Distribution Plan on behalf of its shares providing for payment to
the distributor of up to 0.55% of the predecessor portfolio's average daily net
assets. For the year ended December 31, 1996, the predecessor portfolio's
distributor received the following amount of 12b-1 fees for the specified
purposes set forth below under the predecessor portfolio's Rule 12b-1 Plan.

<TABLE>
<CAPTION>
Printing & Marketing Compensation
Total Mailing Prospectus Brochures to Underwriters
----- ------------------ --------- ---------------
<S> <C> <C> <C>
$7,290,299 N/A N/A $7,290,299
</TABLE>

For the year ended December 31, 1996, WFSI and its registered
representatives did not receive any compensation under the Plan.

Shareholder Servicing Agent. The Fund has entered into a shareholder
servicing agreement with Wells Fargo Bank. Prior to the Consolidation, the
predecessor portfolio,

8
<PAGE>

had entered into a similar shareholder servicing agreement with Wells Fargo
Bank. For the year ended December 31, 1996, the predecessor portfolio did not
pay any shareholder servicing fees to Wells Fargo Bank.

Shareholder Servicing Plan. As indicated in the Prospectus, the Fund has
adopted a Shareholder Servicing Plan ("Servicing Plan") on behalf of its shares.
Under the Servicing Plan and pursuant to the Servicing Agreements, the Fund may
pay one or more servicing agents, as compensation for performing certain
services, a fee at an annual rate of up to 0.30% of the average daily net assets
of the Fund attributable to the servicing agents customers. Servicing agents
may include broker/dealers, banks and other financial institutions, including
Wells Fargo Bank and its affiliates. The actual fee payable to servicing agents
is determined, within such limit, 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 Conduct Rules
of the NASD.

The Servicing Plan will continue in effect from year to year if such
continuance is approved by a majority vote of the Directors of the Company. Any
form of Servicing Agreement related to the Plan also must be approved by such
vote of the Directors. Servicing Agreements will terminate automatically if
assigned, and may be terminated at any time, without payment of any penalty, by
a vote of a majority of the outstanding shares of the Fund. The Servicing Plan
may not be amended to increase materially the amount payable thereunder without
the approval of a majority of the outstanding shares of the Fund, and no
material amendment to the Plan may be made except by a majority of the
Directors.

The Servicing Plan requires that the Company's Directors shall review, at
least quarterly, a written report of the amounts expended (and purposes
therefor) under the Plan.

Custodian. Wells Fargo Bank has been retained to act as custodian for the
Fund. The custodian, among other things, maintains a custody account or
accounts in the name of the Fund; receives and delivers all assets for the Fund
upon purchase and upon sale or maturity; collects and receives all income and
other payments and distributions on account of the assets of the Fund; and pays
all expenses of the Fund. For its services as Custodian, 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 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 the 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. Prior to the Consolidation, Wells Fargo Bank served as Custodian
to the predecessor portfolio. For the year ended December 31, 1996, the
predecessor portfolio did not pay any custody fees.

Transfer and Dividend Disbursing Agent. Wells Fargo Bank has been retained
to act as Transfer and Dividend Disbursing Agent for the Fund. For its services
as transfer

9
<PAGE>

and dividend disbursing agent for the Fund, Wells Fargo Bank is entitled to
receive monthly payments at the annual rate of 0.10% of the Fund's average daily
net assets. Under a prior transfer agency agreement with the predecessor
portfolio, Wells Fargo Bank was entitled to receive a base fee and per-account
fees. For the year ended December 31, 1996, the predecessor portfolio paid
$4,637,643 to Wells Fargo Bank for transfer and dividend disbursing agency
services.

Underwriting Commissions. For the year ended December 31, 1994, the
aggregate dollar amount of underwriting commissions (front-end sales loads and
CDSCs, if any) paid to Stephens on sales/redemptions of the Company's shares was
$5,415,227. Wells Fargo Securities Inc. ("WFSI"), an affiliated broker-dealer
of the Company, and its registered representatives received $904,274 of such
commissions.

For the year ended December 31, 1995, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
shares was $1,584,545. Stephens retained $1,251,311 of such commissions. WFSI
and its registered representatives retained $333,234 of such commissions.

For the fiscal period ended September 30, 1996, the aggregate dollar amount
of underwriting commissions paid to Stephens on sales/redemptions of the
Company's shares was $2,917,738. Stephens retained $198,664 of such
commissions. WFSI and its registered representatives retained $2,583,027 and
$136,047, respectively, of such commissions.

For the six months ended March 31, 1997, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
shares was $_________. Stephens retained $_______ of such commissions. WFSI
and its registered representatives retained $_________ and $________,
respectively, of such commissions.

CALCULATION OF YIELD

Yield. As indicated in the Prospectus, the Fund may advertise certain yield
information. Current 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. The yield for the
predecessor portfolio for the seven-day period ended December 31, 1996 was
4.22%.

Effective yield for the Fund is calculated by determining the 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

10
<PAGE>

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. The
effective yield for the predecessor portfolio for the seven-day period ended
December 31, 1996 was 4.31%.

The Fund's yield 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 incurred by or allocated
to the Fund.

Yield information for the Fund may be useful in reviewing the performance
of the Fund 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.

In addition to the above performance information, the Fund may advertise
average annual total return information. Average annual total return refers to
the average annual compounded rates of return over one-, five-, and ten-year
periods (or the life of the Fund, which periods are stated in the
advertisement), and is measured by comparing the value of an investment in the
Fund at the beginning of the relevant period to the redemption value at the end
of the period and annualizing the result, assuming that all Fund dividends and
capital gains distributions are reinvested.

Other. From time to time and only to the extent the comparison is
appropriate for the Fund, the Company may quote the Fund's performance or price-
earning ratio in advertising and other types of literature as compared to the
performance of the Lehman Brothers Municipal Bond Index, 1-Year Treasury Bill
Rate, 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 the World Gold Council), Bank Averages (which is calculated from
figures supplied by the U.S. League of Savings Institutions based on effective
annual rates of interest on both passbook and certificate accounts), average
annualized certificate of deposit rates (from the Federal Reserve G-13
Statistical Releases or the Bank Rate Monitor), the Salomon One Year Treasury
Benchmark Index, the Consumer Price Index (as published by the U.S. Bureau of
Labor Statistics), Ten Year U.S. Government Bond Average, S&P's Corporate Bond
Yield Averages, Schabacter Investment Management Indices, Salomon Brothers High
Grade Bond Index, Lehman Brothers Long-Term High Quality Government/Corporate
Bond Index, other managed or unmanaged indices or performance data of bonds,
stocks or government securities (including data provided by Ibbotson
Associates), or by other services, companies, publications or persons who
monitor mutual funds on overall performance or other criteria.

11
<PAGE>

The S&P Index and the Dow Jones Industrial Average are unmanaged indices of
selected common stock prices.

The Fund's performance also may be compared to those of other mutual funds
having similar objectives. This comparative performance could be expressed as a
ranking prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The 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. Any such comparisons may be useful to investors who wish to compare the
Fund's past performance with that of its competitors. Of course, past
performance cannot be a guarantee of future results. The Company also may
include, from time to time, a reference to certain marketing approaches of the
Distributor, including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.

In addition, the Company also may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Company
also may include in advertising and other types of literature information and
other data from reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the related "Tax Freedom
Day."

The Company also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
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 the Fund (or returns in general) on a tax-deferred basis (assuming
reinvestment of capital gains and dividends and

12
<PAGE>

assuming one or more tax rates) with the return on a taxable basis; and (iv) the
sectors or industries in which the Fund invests may be compared to relevant
indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate the Fund's
historical performance or current or potential value with respect to the
particular industry or sector.

The Company also may discuss in advertising and other types of literature
that the Fund has been assigned a rating by a nationally recognized statistical
rating organization ("NRSRO"), such as S&P or Moody's. Such rating would assess
the creditworthiness of the investments held by the Fund. The assigned rating
would not be a recommendation to purchase, sell or hold the Fund's shares since
the rating would not comment on the market price of the Fund's shares or the
suitability of the Fund for a particular investor. In addition, the assigned
rating would be subject to change, suspension or withdrawal as a result of
changes in, or unavailability of, information relating to the Fund or its
investments. The Company may compare the Fund's performance with other
investments which are assigned ratings by NRSROs. Any such comparisons may be
useful to investors who wish to compare the Fund's past performance with other
rated investments.

The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
(formerly, Wells Fargo Investment Management) a subsidiary of Wells Fargo Bank,
is listed in the top 100 by Institutional Investor magazine in its July 1997
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 its investment adviser or sub-adviser and the total amount of
assets and mutual fund assets managed by Wells Fargo Bank. As of August 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 $19 billion of mutual fund assets.

13
<PAGE>

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

Net asset value per share for the Fund is determined on each day the Fund
is open as of 9:00 a.m. and 1:00 p.m. (Pacific time).

As indicated under "Determination of Net Asset Value, Dividends and
Distributions" 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
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 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 investors 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 investments 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 investors 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 Eligible Securities
determined by the Company's 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 is required to establish procedures
designed to stabilize, to the extent reasonably possible, the Fund's net asset
value. Such procedures include review of the Fund's portfolio 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 within 1/2 of 1% of the value 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, the Board will
take such corrective action as it regards as necessary and appropriate,
including the sale of portfolio instruments prior to maturity to

14
<PAGE>

realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value by using available
market quotations.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares may be purchased on any day the Fund is open. The Fund is open for
business each day the New York Stock Exchange ("NYSE") is open for trading (a
"Business Day"). Currently, the NYSE is closed on New Year's Day, Martin Luther
King Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day (each a "Holiday"). When any
Holiday falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such Holiday.

Payment for shares may, in the discretion of the adviser, be made in the
form of securities that are permissible investments for the Fund as described in
the Prospectuses. For further information about this form of payment please
contact Stephens. In connection with an in-kind securities payment, the Fund
will require, among other things, that the securities be valued on the day of
purchase in accordance with the pricing methods used by the Fund and that the
Fund receives satisfactory assurances that (i) it will have good and marketable
title to the securities received by it; (ii) that the securities are in proper
form for transfer to the Fund; and (iii) adequate information will be provided
concerning the basis and other matters relating to the securities.

Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than customary weekend and holiday closings, or during
which trading is restricted, or during which as determined by the SEC by rule or
regulation), an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such periods as the
SEC may permit.

In addition, the Company may redeem shares involuntarily to reimburse the
Fund for any losses sustained by reason of the failure of a shareholders to make
full payment for shares 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

15
<PAGE>

the securities at a net price. Debt securities also may be purchased in
underwritten offerings and may be purchased directly from the issuer. Generally,
U.S. Government Obligations, 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 Company are prohibited from dealing with the Company as a
principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is otherwise
available. The Fund may purchase municipal or other 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 Board of Directors.

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. While Wells Fargo Bank
generally seeks reasonably competitive spreads or commissions, the Fund will not
necessarily be paying the lowest spread or commission available.

In assessing the best overall terms available for any transaction, Wells
Fargo Bank considers factors deemed relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
Wells Fargo Bank may cause the Fund to pay a broker/dealer which furnishes
brokerage and research services a higher commission than that which might be
charged by another broker/dealer for effecting the same transaction, provided
that Wells Fargo Bank determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker/dealer, viewed in terms of either the particular
transaction or the overall responsibilities of Wells Fargo Bank. Such brokerage
and research services might consist of reports and statistics relating to
specific companies or industries, general summaries of groups of stocks or bonds
and their comparative earnings and yields, or broad overviews of the stock,
bond, and government securities markets and the economy.

Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by Wells Fargo Bank and does not
reduce the advisory fees payable by the Fund. The Board of Directors will
periodically review the commissions paid by the Fund to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund. It is possible that certain of
the supplementary research or other services received will primarily benefit one
or more other investment companies or other accounts for which Wells Fargo Bank

16
<PAGE>

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 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 program. 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 Board of 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.

Brokerage Commissions. For the year ended December 31, 1996, the
predecessor portfolio and the Master Portfolio did not pay brokerage
commissions.

17
<PAGE>

Securities of Regular Broker/Dealers. As of December 31, 1996, the Master
Portfolio owned securities (pooled repurchase agreements) of its "regular
brokers or dealers" or their parents, as defined in the 1940 Act as follows:
$45,507,000 in Goldman Sachs & Co., $13,000,000 in Morgan Stanley, $68,637,000
in JP Morgan, and $9,319,000 in HSBC.

Portfolio Turnover. Because the investments of the Fund consist of
securities with relatively short-term maturities, the Fund can expect to
experience high portfolio turnover. 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

From time to time, Wells Fargo Bank and Stephens may waive fees from the
Fund in whole or in part. Any such waiver will reduce the Fund's expenses and,
accordingly, have a favorable impact on it's performance. 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
auditors, legal counsel, transfer agent and dividend disbursing agent; expenses
of redeeming shares; expenses of preparing and printing Prospectuses (except the
expense of printing and mailing Prospectuses used for promotional purposes,
unless otherwise payable pursuant to a Plan), shareholders' reports, notices,
proxy statements and reports to regulatory agencies; insurance premiums and
certain expenses relating to insurance coverage; trade association membership
dues; brokerage and other expenses connected with the execution of portfolio
transactions; fees and expenses of its custodian, including those for keeping
books and accounts and calculating the NAV per share of the Fund; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of 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

The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectus describes
generally the tax treatment of distributions by the Fund. This section of the
SAI includes additional information concerning federal income taxes.

In General. 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

18
<PAGE>

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 dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) the Fund diversify its holdings
so that, at the end of each quarter of the taxable year, (i) at least 50% of the
market value of the Fund's assets is represented by cash, government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. Government
obligations and the securities of other regulated investment companies), or in
two or more issuers which the Fund controls and which are determined to be
engaged in the same or similar trades or businesses.

In addition, the Fund must, in general, derive less than 30% of its gross
income from the sale or other disposition of securities or options thereon held
for less than three months. However, this restriction has been repealed with
respect to taxable years beginning after August 5, 1997.

The Fund must also distribute or be deemed to distribute to its
shareholders at least 90% of the Fund's net investment income earned in each
taxable year. In general, these distributions must actually or be deemed to be
made in the taxable year. However, in certain circumstances, such distributions
may be made in the 12 months following the taxable year. The Fund intends to pay
out substantially all of its net investment income and net realized capital
gains (if any) for each year.

19
<PAGE>

dividends-received deduction, a corporate shareholder must hold the Fund shares
paying the dividends upon which the deduction is based for at least 46 days.

Taxation of Fund Investments. Except as provided herein, gains and losses
on the sale of portfolio securities by the Fund will generally be capital gains
and losses. Such gains and losses will ordinarily be long-term capital gain and
loss if the securities have been held by the Fund for more than 12 months at the
time of disposition of the securities (however, see "Capital Gain
Distributions" below).

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, but was not previously recognized pursuant to an available
election, during the term the Fund held the debt obligation.

Capital Gain Distributions. Distributions which are designated by the Fund
as capital gain distributions will be taxed to shareholders as net capital gain
(generally, the excess of net long-term capital gain over net short-term capital
loss), to the extent such distributions are attributable to net capital gain of
the Fund, 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.

The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of 28% on net
capital gain. Noncorporate taxpayers are now generally taxed at a maximum rate
of 20% on net capital gain attributable to gains realized on the sale of
property held for greater than 18 months, and a maximum rate of 28% on net
capital gain attributable to gain realized on the sale of property held for
greater than 1 year and 18 months or less. The 1997 Act retains the treatment of
short-term capital gain and did not affect the taxation of corporate taxpayers.
The Treasury is authorized to issue regulations for application of the reduced
capital gain tax rates enacted under the 1997 Act to pass-through entities,
including regulated investment companies. Noncorporate shareholders of the Fund
may therefore qualify for the reduced rate of tax on capital gain dividends paid
by the Fund.

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.

20
<PAGE>

In addition, 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. The foregoing recharacterization rule does
not apply to losses realized under a periodic redemption plan.

Federal Income Tax Rates. As of the printing of this SAI, the maximum
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gains is 28% (see "Capital Gain Distributions" above); and the
maximum corporate tax rate applicable to ordinary income and net capital gains
is 35% (marginal tax rates may be higher for some corporations to reduce or
eliminate the benefit of lower marginal income tax rates). 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,
source of income and other matters.

Foreign Shareholders. Under the Code, distributions of net investment
income by the Fund to a nonresident alien individual, foreign trust (i.e., trust
which a U.S. court if able to exercise primary supervision over administration
of that trust and one or more U.S. persons have authority to control substantial
decisions of that trust), foreign estate (i.e., the income of which is not
subject to U.S. tax regardless of source), 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). Such tax withholding generally is not
refundable. 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. Furthermore,
distributions of net long-term capital gains are not generally subject to tax
withholding.

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 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.

21
<PAGE>

CAPITAL STOCK

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Organization and Capital Stock."

The Fund is a fund in the Stagecoach Family of Funds. The Company was
organized as a Maryland corporation on September 9, 1991 and currently offers
shares of over thirty funds.

As used in the Prospectus and in this SAI, the term "majority," when
referring to approvals to be obtained from shareholders of a 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.

22
<PAGE>

Each share represents an equal proportional interest in a Fund with each
other share of the same class and is entitled to such dividends and
distributions out of the income earned on the assets belonging to the Fund as
are declared in the discretion of the Directors. In the event of the liquidation
or dissolution of the Company, shareholders of a Fund are entitled to receive
the assets attributable to that Fund that are available for distribution, and a
distribution of any general assets not attributable to a particular Fund 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 August 31, 1997, no shareholders were known by the Company to own 5%
or more of the predecessor portfolio's outstanding shares.

OTHER

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent auditors for the
Company. KPMG Peat Marwick LLP provides audit services, tax return preparation
and assistance and consultation in connection with review of certain Securities
and Exchange Commission filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.

FINANCIAL INFORMATION

The portfolio of investments and unaudited financial statements for the
predecessor portfolio and Master Portfolio for the six month period ended June
30, 1997 are hereby incorporated by reference to the Overland Semi-Annual
Reports as filed with the SEC on September 3, 1997.

23
<PAGE>

The portfolio of investments, audited financial statements and independent
auditors' report for the predecessor portfolio for the year ended December 31,
1996, are hereby incorporated by reference to the Overland Annual Reports as
filed with the SEC on March 11, 1997.

The Company's Annual Reports for the fiscal period ended March 31, 1997,
were filed with the SEC on June 4, 1997. Annual Reports may be obtained by
calling 1-800-222-8222.

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<PAGE>

APPENDIX

The following is a description of the ratings given by Moody's and S&P to
corporate bonds and commercial paper.

Corporate Bonds

Moody's: The two highest ratings for corporate bonds are "Aaa" and "Aa."
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. Moody's applies numerical
modifiers: 1, 2 and 3 in the "Aa" category 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 two highest ratings for corporate bonds are "AAA" and "AA." Bonds
rated "AAA" have the "highest ratings" assigned by S&P and have "an extremely
strong capacity" to pay interest and repay principal. Bonds rated "AA" have a
"very strong capacity" to pay interest and repay principal and "differ from the
highest rated obligations only in small degree." The ratings in the "AA"
category may be modified by the addition of a plus or minus sign to show
relative standing within the category.

Commercial Paper

Moody's: The highest rating for corporate commercial paper is "P-1" (Prime-
1). Issuers rated "P-1" have a "superior ability for repayment of senior short-
term debt obligations."

S&P: The "A-1" rating for corporate 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-1
<PAGE>

STAGECOACH FUNDS, INC.
Telephone: (800) 222-8222

STATEMENT OF ADDITIONAL INFORMATION
Dated December 12, 1997

SHORT-TERM MUNICIPAL INCOME FUND
SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND

Stagecoach Funds, Inc. (the "Company") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
information about two of the funds offered in the Stagecoach Family of Funds -
the Short-Term Municipal Income Fund and the Short-Term Government-Corporate
Income Fund (the "Funds"). The investment objective of each Fund is described
in its Prospectus under "Investment Objectives and Policies."

This SAI is not a Prospectus and should be read in conjunction with the
Funds' Prospectus, dated December 12, 1997. All terms used in this SAI that are
defined in the Prospectus will have the meanings as 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 by calling the Transfer Agent at
the telephone number indicated above.
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----
<S> <C>
General.....................................................................1
Investment Restrictions.....................................................1
Additional Permitted Investment Activities..................................3
Management..................................................................5
Performance Calculations...................................................12
Determination of Net Asset Value...........................................17
Additional Purchase and Redemption Information.............................18
Portfolio Transactions.....................................................19
Fund Expenses..............................................................21
Federal Income Taxes.......................................................22
Capital Stock..............................................................25
Other......................................................................27
Independent Auditors.......................................................28
Financial Information......................................................28
Appendix..................................................................A-1
</TABLE>

i
<PAGE>

GENERAL

The Company's Short-Term Government-Corporate Income Fund was originally
organized as the Short-Term Government-Corporate Income Fund of Overland Express
Funds, Inc. ("Overland"), another open end management investment company advised
by Wells Fargo Bank, on September 19, 1994. The Company's Short-Term Municipal
Income Fund was originally organized as the Short-Term Municipal Income Fund of
Overland on June 3, 1994. The Overland Funds are herein referred to individually
as a "predecessor portfolio" and together as the "predecessor portfolios".

On July 23, 1997, the Boards of the Directors of the Company and Overland
approved an Agreement and Plan of Consolidation providing for the transfer of
the assets and stated liabilities of each of the predecessor portfolios to the
corresponding Fund of the Company. As a result of the Consolidation, the
predecessor portfolios were reorganized as the Funds. Prior to the
Consolidation, each of the predecessor portfolios pursued its investment
objective by investing all of its assets in a separate Master Portfolio (each a
"Master Portfolio" and together, the "Master Portfolios") of Master Investment
Trust ("MIT") with the same investment objective as the corresponding
predecessor portfolios. The Funds now invests directly in a portfolio of
securities and do not invest in corresponding Master Portfolios.

INVESTMENT RESTRICTIONS

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Investment Objectives and
Policies."

Fundamental Investment Policies. The Funds are subject to the following
investment restrictions, all of which are fundamental policies. These
restrictions cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Fund.

The Funds 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 a Fund's investments in that industry would exceed 25% of
the current value of the Fund's total assets, provided that there is no
limitation with respect to: (1) investments in securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities; and (2) municipal
securities (for the purpose of this restriction, private activity bonds and
notes shall not be deemed municipal securities if the payment of principal and
interest on such bonds or notes is the ultimate responsibility of non-
governmental issuers); and provided further that there is no limitation with
respect to investments by the Fund in securities issued by registered investment
companies.

1
<PAGE>

(2) purchase or sell real estate (other than securities secured by real
estate or interests therein or securities issued by companies that invest in
real estate or interests therein), commodities or commodity contracts, or
interests in oil, gas, or other mineral exploration or development programs.

(3) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions) or make short sales of securities.

(4) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with a Fund's investment program may be deemed to be an underwriting.

(5) make investments for the purpose of exercising control or management.

(6) purchase puts, calls, straddles, spreads, or any combination thereof,
except that a Fund may purchase securities with put rights in order to maintain
liquidity.

(7) issue senior securities, except that a Fund may borrow from banks up
to 10% of the current value of its net assets for temporary purposes only in
order to meet redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of its net assets (but investments may not be
purchased by the Fund while any such outstanding borrowing in excess of 5% of
its net assets exists).

(8) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of the total assets, more than 5% of the value of a
Fund's total assets would be invested in the securities of any one issuer or the
Fund would own more than 10% of the outstanding voting securities of such
issuer.

(9) lend their portfolio securities having a value that exceeds 50% of the
current value of their total assets, provided that, for purposes of this
restriction, the purchase of fixed time deposits, repurchase agreements,
commercial paper and other types of debt instruments commonly sold in a public
or private offering will not be subject to this restriction. The Funds do not
intend to make loans of their portfolio securities during the coming year.

Non-Fundamental Investment Policies. The Funds are subject to the
following non-fundamental policies. These restrictions may be changed by vote
of a majority of the Directors of the Company at any time.

2
<PAGE>

The Funds may not:

(1) invest more than 5% of their net assets at the time of purchase in
warrants, or more than 2% of their net assets in warrants which are not listed
on the New York or American Stock Exchange.

(2) purchase or retain securities of any issuer if the officers, directors
of the Company or the Investment Adviser owning beneficially more than one-half
of one percent (0.5%) of the securities of the issuer together own beneficially
more than 5% of such securities.

(3) invest in securities of issuers who, with their predecessors, have
been in existence less than three years, unless the securities are guaranteed or
insured by the U.S. Government, or a state or municipality, or an agency or
instrumentality thereof, if, by reason thereof, the value of a Fund's aggregate
investment in such securities will exceed 5% of its total assets.

(4) write, purchase or sell options.

(5) invest more than 15% of the current value of their net assets in
repurchase agreements maturing in more than seven days, fixed time deposits that
are subject to withdrawal penalties and that have maturities of more than seven
days and other illiquid securities.

(6) purchase, hold or deal in real estate limited partnerships.

(7) engage in any short sales other than short sales against the box.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

The following information supplements and should be read in conjunction
with the sections in the Prospectus entitled "Investment Objectives and
Policies" and "Investment Activities."

When-Issued Securities. The Funds may purchase securities on a when-issued
basis, in which case delivery and payment normally take place within 120 days
after the date of the commitment to purchase. However, the Short-Term
Government-Corporate Income Fund does not intend to invest more than 5% of its
net assets in when-issued securities during the coming year. The Short-Term
Government-Corporate Income Fund makes commitments to purchase securities on a
when-issued basis only with the intention of actually acquiring the securities,
but may sell them before the settlement date if it is deemed advisable. When-
issued securities are subject to market fluctuation, and no income accrues to
the purchaser during the period prior to issuance. The purchase price and the
interest rate that will be received on debt securities are fixed at the time the
purchaser enters into the commitment. Purchasing a security on a when-issued
basis can involve a risk that the

3
<PAGE>

market price at the time of delivery may be lower than the agreed-upon purchase
price, in which case there could be an unrealized loss at the time of delivery.

The Funds have established segregated accounts in which each Fund maintains
liquid assets in an amount at least equal in value to each Fund's commitments to
purchase when-issued securities. If the value of these assets declines, the
will place additional liquid assets in the account on a daily basis so that the
value of the assets in the account is equal to the amount of such commitments.

Municipal Bonds. As discussed in the Prospectus, the two principal
classifications of municipal bonds in which the Short-Term Municipal Income Fund
may invest are "general obligation" and "revenue" bonds. Municipal bonds are
debt obligations issued to obtain funds 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 public purposes for which municipal bonds may be issued include
the refunding of outstanding obligations and obtaining funds 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 funds 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. 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. Subject to its investment
objective and policies, the Fund is not limited with respect to which category
of municipal bond it may acquire. Some or all of these bonds may be considered
"private activity bonds" for federal income tax purposes.

Municipal Notes. The Short-Term Municipal Income Fund may invest in
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.

4
<PAGE>

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.

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 will also 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 value of
outstanding securities, including those held by the Short-Term Municipal Income
Fund, will generally decline and (if purchased at par value) will sell at a
discount. If interest rates fall, the values of outstanding securities will
generally increase and (if purchased at par value) will sell at a premium.
Changes in the value of municipal securities held by the Fund arising from these
or other factors will cause changes in the net asset value per share of the
Fund.

Unrated Investments. Each Fund may purchase instruments that are not rated
if, in the opinion of Wells Fargo Bank as Investment Adviser, such obligations
are of comparable quality to other high-quality investments that are permitted
to be purchased by such Fund. After purchase by a Fund, a security may cease to
be rated or its rating may be reduced below the minimum required for purchase by
such Fund. Neither event requires an immediate sale of such security by such
Fund. 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 Funds will attempt
to use comparable ratings as standards for investments in accordance with the
investment policies contained in their Prospectuses and in this SAI. The ratings
of Moody's and S&P are more fully described in the Appendix to this SAI.

[Floating- and Variable-Rate Instruments. Certain of the debt instruments
in which the Fund may invest bear interest rates that are periodically adjusted
at specified intervals or whenever a benchmark rate or index change. These
adjustments generally limit the increase or decrease in the amount of interest
received on debt instruments. The Fund may purchase certificates of
participation in pools of floating- and variable-rate instruments from banks and
other financial institutions. With respect to the tax-exempt status of these
certificates, the investment adviser may rely upon either the opinion of counsel
or Internal Revenue Service rulings thereto. Wells Fargo Bank, as investment
adviser to the Fund, monitors on an ongoing basis the ability of an issuer of a
demand instrument to pay principal and interest on demand. Events occurring
between the date the Fund elects to demand payment on a floating- or variable-
rate instrument and the date payment is due may affect the ability of the issuer
of the instrument to make payment when due, and unless such demand instrument
permits same-day settlement, such events may affect a Fund's ability to obtain
payment at par. Demand instruments whose demand feature is not exercisable
within seven days may be treated as liquid, provided that an active secondary
market exists.]

[Repurchase Agreements. The Fund may enter into repurchase agreements,
wherein the seller of a security to the Fund agrees to repurchase that security
from the Fund at a mutually agreed upon time and price, only with respect to
U.S. Government obligations and other securities that are permissible
investments for the Fund. All repurchase agreements will be fully collateralized
at 102% based on values that are marked to market daily. The maturities of the
underlying securities in a repurchase agreement transaction may be greater than
twelve months, although the maximum term of a repurchase agreement will always
be less than twelve months. If the seller defaults and the value of the
underlying securities has declined, the Fund may incur a loss. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
the Fund's disposition of the security may be delayed or limited.

The Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than [__%] of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Directors and that are not affiliated with the investment adviser. The
Fund may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.]

[Derivative Securities. Some of the permissible investments described
herein are considered "derivative" securities because their value is derived, at
least in part, from the price of another security or a specified asset, index or
rate. For example, asset-backed securities issued or guaranteed by U.S.
Goverment agencies or instrumentalities and certain floating- and variable-rate
instruments can be considered derivatives. Some derivatives may be more
sensitive than direct securities to changes in interest rates or sudden market
moves. Some derivatives also may be susceptible to fluctuations in yield or
value due to their structure or contract terms. Wells Fargo Bank uses a variety
of internal risk management procedures to ensure that derivatives use is
consistent with the Fund's investment objective, does not expose the Fund to
undue risk and is closely monitored. These procedures include providing periodic
reports to the Board of Directors concerning the use of derivatives. Also, cash
maintained by the Fund for short-term liquidity needs (e.g., to meet anticipated
redemption requests) will, as a general matter, only be invested in U.S.
Treasury bills, shares of other mutual funds and repurchase agreements. The use
of derivatives by the Fund also is subject to broadly applicable investment
policies. For example, the Fund may not invest more than a specified percentage
of its assets in "illiquid securities," including those derivatives that do not
have active secondary markets. Nor may the Fund use certain derivatives without
establishing adequate "cover" in compliance with Securities and Exchange
Commission ("SEC") rules limiting the use of leverage.]

MANAGEMENT

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Management of the Funds." 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.

5
<PAGE>

Thomas S. Goho, 55 Director Associate Professor of Finance of the School
321 Beechcliff Court of Business and Accounting at Wake Forest
Winston-Salem, NC 27104 University since 1982.

*W. Rodney Hughes, 71 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 79 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

*J. Tucker Morse, 53 Director Private Investor; Chairman of Home Account
4 Beaufain Street
Charleston, SC 29401 Network, Inc. Real Estate Developer;
Chairman of Renaissance Properties Ltd.;
President of Morse Investment Corporation;
and Co-Managing Partner of Main Street
Ventures.

Richard H. Blank, Jr., 41 Chief Operating Associate of Financial Services Group of
Officer, Stephens; Director of Stephens Sports
Secretary and Management Inc.; and Director of Capo Inc.
Treasurer

</TABLE>

6
<PAGE>

Compensation Table
Year Ended March 31, 1997
-------------------------

Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
----------------- --------------- ----------------
<S> <C> <C>
Jack S. Euphrat $11,250 $33,750
Director

R. Greg Feltus $-0- $-0-
Director

Thomas S. Goho $11,250 $33,750
Director

Joseph N. Hankin $-0- $-0-
Director
(appointed as of 9/6/96)

Zoe Ann Hines $-0- $-0-
Director
(resigned as of 9/6/96)

W. Rodney Hughes $ 9,250 $27,750
Director

Robert M. Joses $11,250 $33,750
Director

J. Tucker Morse $ 9,250 $27,750
Director
</TABLE>

7
<PAGE>

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 Funds are advised by Wells Fargo Bank. Wells Fargo
Bank furnishes each Fund with investment guidance and policy direction in
connection with daily portfolio management. Wells Fargo Bank furnishes to the
Board of Directors of the Company periodic reports on the investment strategy
and performance of the Funds. For its services as investment adviser to the
Short-Term Municipal Income and the Short-Term Government-Corporate Income
Funds, Wells Fargo Bank is entitled to receive a monthly fee at the annual rate
of 0.50% of each Fund's average daily net assets.

Prior to the Consolidation, each of the predecessor portfolios invested all
of its assets into a corresponding Master Portfolio of MIT and did not retain an
investment adviser. Wells Fargo Bank served as investment adviser to the Master
Portfolios in which the predecessor portfolios invested and was entitled to
receive a monthly fee at the annual rate of 0.50% of each Master Portfolios'
average daily net assets. For the period ended December 31, 1994 and the years
ended December 31, 1995 and 1996, the Master Portfolios paid to Wells Fargo Bank
the following advisory fees and Wells Fargo Bank waived the indicated amounts:

1994* 1995 1996
Fees Fees Fees Fees Fees Fees
Paid Waived Paid Waived Paid Waived
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Short-Term
Municipal Income $0 $7,879 $0 $62,512 $0 $104,623
Short-Term
Gov-Corp. Income $0 $131 $0 $11,944 $0 $ 55,285
</TABLE>

- -------------------------
* The Short-Term Municipal Income and Short-Term Government-Corporate Income
Master Portfolios commenced operations on June 3, 1994 and September 19,
1994, respectively.

Wells Fargo Bank has agreed to provide to the Funds, among other things,
money market and fixed-income research, analysis and statistical and economic
data and information concerning interest rate and security market trends,
portfolio composition, credit conditions and average maturities of the
investments of the Funds.

8
<PAGE>

Each Fund Advisory Contract will continue in effect for more than two years
from the effective date provided the continuance is approved annually (i) by the
holders of a majority of the respective 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 Contracts or "interested
persons" (as defined in the 1940 Act) of any such party. The Advisory Contracts
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 Funds.
Under the Administration and Co-Administration Agreements, Wells Fargo Bank and
Stephens provide as administration services, among other things: (i) general
supervision of the Fund's operations, including coordination of the services
performed by the investment adviser, transfer agent, custodian, shareholder
servicing agent(s), independent auditors 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
Directors. Wells Fargo Bank and Stephens also furnish office space and certain
facilities required for conducting the Fund's business 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 at
the annual rate of 0.04% and 0.02%, respectively, of each Fund's average daily
net assets.

Prior to the Consolidation, Wells Fargo Bank and Stephens served as
Administrator and Co-Administrator, respectively, to the predecessor portfolios
under substantially similar portfolios terms. Prior to February 1, 1997,
Stephens served as sole administrator to the predecessor portfolios and provided
the predecessor portfolios with essentially the same services described above.
Stephens was entitled to receive a monthly fee from each predecessor portfolios
at the annual rate of 0.15% of the predecessor portfolios' average daily net
assets up to $200 million and 0.10% in excess of $200 million.

For the period ended December 31, 1994, and the years ended December 31,
1995 and 1996, the predecessor portfolios paid administration fees to Stephens
as follows:

Predecessor Portfolio 1994 1995 1996
--------------------- ---- ---- ----
<S> <C> <C> <C>
Short-Term Municipal Income $2,497 $19,436 $19,941
Short-Term Government-Corporate-Income $ 39 $ 3,560 $10,073
</TABLE>

Sponsor and Distributor. As discussed in the Funds' Prospectus under the
heading "Management of the Funds," Stephens serves as the Funds' sponsor and
distributor.

9
<PAGE>

Distribution Plans. As indicated in the Prospectus, each Fund has adopted
a Plan under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the
"Rule").

Pursuant to the Plans, the Company may pay to Stephens as compensation for
distribution-related services provided, or reimbursement for distribution-
related expenses incurred, a monthly fee at annual rate of 0.25% of the Fund's
average daily net assets. The actual fee payable to Stephens shall, within such
limit, be determined from time to time by mutual agreement between the Company
and Stephens. Stephens may enter into selling agreements with one or more
selling agents under which such agents may receive compensation for
distribution-related services from Stephens, including, but not limited to,
commissions or other payments to such agents based on the average daily net
assets of Fund shares attributable to them. Stephens may retain any portion of
the total distribution fee payable hereunder to compensate it for distribution-
related services provided by it or to reimburse it for other distribution-
related expenses.

Each Plan will continue in effect from year to year if such continuance is
approved by a majority vote of both the Directors of the Company and the
Qualified Directors. Any Distribution Agreement related to the Plans also must
be approved by such vote of the Directors and the Qualified Directors. The
Distribution Agreement terminates automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the outstanding voting securities of the Fund involved. The Plans may not be
amended to increase materially the amounts payable thereunder without the
approval of a majority of the outstanding voting securities of the Fund
involved, and no material amendments to the Plans may be made except by a
majority of both the Directors of the Company and the Qualified Directors.

Each Plan requires that the Treasurer of the Company shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plans. The Rule also
requires that the selection and nomination of Directors who are not "interested
persons" of the Company be made by such disinterested Directors.

Prior to the Consolidation, each predecessor portfolio had adopted a Rule
12b-1 Distribution Plan on behalf of its shares. For the year ended December
31, 1996, the predecessor portfolios' distributor received the following amounts
of 12b-1 fees for the specified purposes set forth below under each predecessor
portfolio's Plan.

Printing &
Mailing Marketing Compensation
Predecessor Portfolio Total Prospectus Brochures to Underwriters
- --------------------- ----- ---------- --------- ---------------

<S> <C> <C> <C> <C>
Short-Term Gov-Corp Income $27,719 N/A N/A $27,719
Short-Term Municipal Income $54,276 N/A N/A $54,276
</TABLE>

10
<PAGE>

For the year ended December 31, 1996, WFSI and its registered
representatives did not receive any compensation under either predecessor
portfolio's Plans.

Shareholder Administrative Servicing Plan. As indicated in the Prospectus,
the Funds have adopted a Shareholder Administrative Servicing Plan (the
"Administrative Servicing Plan") on behalf of its shares. Pursuant to the
Administrative Servicing Plan, the Funds may enter into Administrative Servicing
Agreements with administrative servicing agents (broker/dealers, banks and other
financial institutions, which may include Wells Fargo Bank and its affiliates)
who are dealers/holders of record, or that otherwise have a servicing
relationship with the beneficial owners of such Funds shares. Administrative
servicing agents agree to perform shareholder administrative and liaison
services which may include, among other things, maintaining an omnibus account
with the Fund, aggregating and transmitting purchase, exchange and redemption
orders from its customers, answering customer inquiries regarding a
shareholder's accounts in the Fund, and providing such other services as the
Company or a customer may reasonably request. Administrative servicing agents
are entitled to a fee which will not exceed 0.25%, on an annualized basis, of
the average daily net assets of shares of each Fund owned of record or
beneficially by the customers of the administrative servicing agent during the
period for which payment is being made. In no case shall shares be sold pursuant
to the Funds' Rule 12b-1 Plan while being sold pursuant to the Administrative
Servicing Plan.

The Administrative Servicing Plan will continue in effect from year to year
if such continuance is approved by a majority vote of the Directors of the
Company. Any form of Servicing Agreement related to the Plan also must be
approved by such vote of the Directors. Servicing Agreements will terminate
automatically if assigned, and may be terminated at any time, without payment of
any penalty, by a vote of a majority of the outstanding shares of the
appropriate Fund. The Administrative Servicing Plan and Servicing Plans may not
be amended to increase materially the amount payable thereunder without the
approval of a majority of the outstanding shares of the appropriate Fund, and no
material amendment to the Plan may be made except by a majority of the
Directors.

The Administrative Servicing Plan requires that the Company's Directors
shall review, at least quarterly, a written report of the amounts expended (and
purposes therefor) under the Plan.

Custodian. Wells Fargo Bank has been retained to act as Custodian for the
Funds. The Custodian, among other things, maintains a custody account or
accounts in the name of each Fund, receives and delivers all assets for each
Fund upon purchase and upon sale or maturity, collects and receives all income
and other payments and distributions on account of the assets of each Fund, and
pays all expenses of each 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 also
will provide portfolio accounting services under the Custody Agreement 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 the Fund's average daily net assets, 0.045%
of the next

11
<PAGE>

$50,000,000, and 0.020% of the average daily net assets in excess of
$100,000,000. Prior to the Consolidation, Wells Fargo Bank served as Custodian
to the predecessor portfolios. For the year ended December 31, 1996, the
predecessor portfolios did not pay any custody fees.

Transfer and Dividend Disbursing Agent. Wells Fargo Bank has been retained
to act as Transfer and Dividend Disbursing Agent for the Funds. For its services
as transfer and dividend disbursing agent for the Funds, Wells Fargo Bank is
entitled to receive monthly payments at the annual rate of 0.14% of each Fund's
average daily net assets. Under a prior transfer agency agreement with the
predecessor portfolios, Wells Fargo Bank was entitled to receive a base fee and
per-account fees. For the year ended December 31, 1996, the predecessor
portfolios did not pay any transfer and dividend disbursing agency fees.

Underwriting Commissions. For the year ended December 31, 1994, the
aggregate dollar amount of underwriting commissions (front-end sales loads and
CDSCs, if any) paid to Stephens on sales/redemptions of the Company's shares was
$5,415,227. Wells Fargo Securities Inc. ("WFSI"), an affiliated broker-dealer of
the Company, and its registered representatives received $904,274 of such
commissions.

For the fiscal period ended September 30, 1996, the aggregate dollar amount
of underwriting commissions paid to Stephens on sales/redemptions of the
Company's shares was $2,917,738. Stephens retained $198,664 of such
commissions. WFSI and its registered representatives retained $2,583,027 and
$136,047, respectively, of such commissions.

PERFORMANCE CALCULATIONS

Total Return. As indicated in the Prospectus, the Funds may advertise
certain total return information computed in the manner described in the
Prospectus. As and to the extent required by the SEC, an average annual compound
rate of return ("T") is computed by using the redeemable value at the end of a
specified period ("ERV") of a hypothetical initial investment in a Fund ("P")
over a period of years ("n") according to the following formula: P(1+T)n = ERV.
In addition, as indicated in the Prospectus, the Funds also may at

12
<PAGE>

times, calculate total return based on net asset value per share (rather than
the public offering price), in which case the figures would not reflect the
effect of any sales charges that would have been paid by an investor, or might
be based on the assumption that a sales charge other than the maximum sales
charge (reflecting a Volume Discount) was assessed, provided that total return
data derived pursuant to the calculation described above also are presented.

In addition to the above performance information, the Funds may also
advertise the cumulative total return for one-month, three-month, six-month and
year-to-date periods. The cumulative total return for such periods is based on
the overall percentage change in value of a hypothetical investment in a Fund,
assuming all Fund dividends and capital gain distributions are reinvested,
without reflecting the effect of any sales charge that would be paid by an
investor, and is not annualized.

The performance information presented below and advertised by the Funds for
periods prior to the effective date of the Consolidation, is based upon the
prior performance of the predecessor portfolios.

Predecessor Portfolio-Average Annual Total Return for the Year Ended
- --------------------------------------------------------------------
December 31, 1996
- -----------------

Inception One Year
Inception(1) Without Sales One Year Without
With Sales With Sales Sales
Predecessor Portfolio Charge(2) Charge Charge(2) Charge
- --------------------- --------- ------ --------- ------

<S> <C> <C> <C> <C>
Short-Term
Municipal Income 2.61% 3.79% 0.59% 3.62%
Short-Term
Gov-Corp. Income 4.36% 5.72% 1.59% 4.83%
</TABLE>

- ---------------------

(1) The predecessor portfolios to the Short-Term Government-Corporate Income
Fund and Short-Term Municipal Income Fund commenced operations on September
19, 1994 and June 3, 1994, respectively.
(2) The term "Sales Charge" reflects a front-end sales load of 3.00%.

Yield. As indicated in the Prospectus, the Funds may also advertise certain
yield information. As and to the extent required by the SEC, yield for each
Fund's shares is calculated based on a 30-day (or one-month) period, computed by
dividing the net investment income per share earned during the period by the
maximum offering price per share of the Fund on the last day of the period,
according to the following formula: YIELD = 2[((a-b divided by cd)+1)/6/-1],
where a = dividends and interest earned during the period; b = expenses accrued
for the period (net of reimbursements); c = the average daily number of shares
of the Fund outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share of the Fund on the last
day of the period. The net investment income of a Fund includes actual interest
income, plus or minus amortized

13
<PAGE>

purchase discount (which may include original issue discount) or premium, less
accrued expenses. Realized and unrealized gains and losses on portfolio
securities are not included in net investment income. For purposes of sales
literature, yield also may be calculated on the basis of the net asset value per
share rather than the public offering price, or based on the assumption that a
sales charge other than the maximum sales charge (reflecting a Volume Discount)
was assessed, provided that the yield data derived pursuant to the calculation
described above also are presented.

Predecessor Portfolios-Yield Calculations for the Applicable Period Ended
-------------------------------------------------------------------------
December 31, 1996
-----------------

Thirty-Day
Thirty-Day Yield Tax-Equivalent Yield(2)
With Without With Without
Sales Charge(1) Sales Charge Sales Charge Sales Charge
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Short-Term Municipal
Income 3.77% 3.89% 6.24% 6.44%
Short-Term Govt.-
Corporate Income 5.13% 5.29% N/A N/A
</TABLE>

- ---------------------------

(1) The term "Sales Charge" reflects a front-end sales load of 3.00%.
(2) Assumes a maximum tax rate of 39.6%

The tax-equivalent yield for the Short-Term Municipal Income Fund is
computed by dividing that portion of the yield 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. This yield figure may not reflect the
applicability of the alternative minimum tax.

The yield for the Funds' shares will fluctuate from time to time, unlike
fixed-rate bank deposits or other investments that pay a fixed yield for a
stated period of time. Past yields are based on historical data and do not
provide a basis for determining future yields, since yield is a function of
portfolio quality, composition, maturity and market conditions as well as the
expenses allocated to the Funds.

In addition, investors should recognize that changes in the net asset
values of shares of the Funds will affect the yield of the Funds' shares for any
specified period, and such changes should be considered together with the Funds'
yield in ascertaining the Funds' total return to shareholders for the period.
Yield information may be useful in reviewing the performance of the Funds'
shares and for providing a basis for comparison with investment alternatives.
The yield of the Funds' shares, 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.

14
<PAGE>

From time to time and only to the extent the comparison is appropriate for
the Funds, the Company may quote the performance or price-earning ratio of the
Funds' shares in advertising and other types of literature as compared to the
performance of the Lehman Brothers Municipal Bond Index, 1-Year Treasury Bill
Rate, S&P Index, the Dow Jones Industrial Average, the Lehman Brothers 20+
Treasury Index, the Lehman Brothers 5-7 Year Treasury Index, IBC/Donoghue's
Money Fund Averages, Real Estate Investment Averages (as reported by the
National Association of Real Estate Investment Trusts), Gold Investment Averages
(provided by the World Gold Council), Bank Averages (which is calculated from
figures supplied by the U.S. League of Savings Institutions based on effective
annual rates of interest on both passbook and certificate accounts), average
annualized certificate of deposit rates (from the Federal Reserve G-13
Statistical Releases or the Bank Rate Monitor), the Salomon One Year Treasury
Benchmark Index, the Consumer Price Index (as published by the U.S. Bureau of
Labor Statistics), Ten Year U.S. Government Bond Average, S&P's Corporate Bond
Yield Averages, Schabacter Investment Management Indices, Salomon Brothers High
Grade Bond Index, Lehman Brothers Long-Term High Quality Government/Corporate
Bond Index, other managed or unmanaged indices or performance data of bonds,
stocks or government securities (including data provided by Ibbotson
Associates), or by other services, companies, publications or persons who
monitor mutual funds on overall performance or other criteria. The S&P Index
and the Dow Jones Industrial Average are unmanaged indices of selected common
stock prices.

The performance of the Funds also may be compared to those of other mutual
funds having similar objectives. This comparative performance could be
expressed as a ranking prepared by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The
performance of the Funds is calculated by relating net asset value per share at
the beginning of a stated period to the net asset value of the investment at the
end of the period, assuming reinvestment of all capital gain distributions and
dividends paid at net asset value. Any such comparisons may be useful to
investors who wish to compare the past performance of the Funds with that of
their competitors. Of course, past performance cannot be a guarantee of future
results. The Company also may include, from time to time, a reference to
certain marketing approaches of the Distributor, including, for example, a
reference to a potential shareholder being contacted by a selected broker or
dealer. General mutual fund statistics provided by the Investment Company
Institute may also be used.

In addition, the Company also may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Company
also may include in advertising and other types of literature, information and
other data from reports and studies prepared by the Tax

15
<PAGE>

Foundation, including information regarding federal and state tax levels and the
related "Tax Freedom Day."

The Company also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
the Funds: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in the Funds; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of the Funds or the general economic, business,
investment, or financial environment in which the Funds operate; (iii) the
effect of tax-deferred compounding on the investment returns of the Funds 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 the Funds (or returns in general) on a tax-deferred basis
(assuming reinvestment of capital gains and dividends at net asset value and
assuming one or more tax rates) with the return on a taxable basis; and (iv) the
sectors or industries in which the Funds invest may be compared to relevant
indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate the
historical performance or current or potential value of the Funds with respect
to the particular industry or sector.

The Company also may discuss in advertising and other types of literature
that the Funds have been assigned a rating by an NRSRO, such as S&P or Moody's.
Such rating would assess the creditworthiness of the investments held by the
Funds. The assigned rating would not be a recommendation to purchase, sell or
hold the Funds' shares since the rating would not comment on the market price of
the Funds' shares or the suitability of the Funds 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 Funds or their investments. The Company may compare the performance of
the Funds with other investments that are assigned ratings by NRSROs. Any such
comparisons may be useful to investors who wish to compare the Funds' past
performance with other rated investments.

The Company may disclose in sales literature, information and statements
the distribution rate on the Fund's shares. Distribution rate, which may be
annualized, is the amount determined by dividing the dollar amount per share of
the most recent dividend by the most recent NAV or maximum offering price per
share as of a date specified in the sales literature. Distribution rate will be
accompanied by the standard 30-day yield as required by the SEC.

16
<PAGE>

The Company also may disclose in advertising and other types of literature,
information and statements, the average credit quality of each Fund's portfolio
or categories of investments therein, as of a specified date or period. Average
credit quality is calculated on a dollar weighted average basis based on ratings
assigned each issue or issuer, as the case may be, by S&P and/or Moody's. In
the event one rating agency does not rate the issue or issuer, as the case may
be, in the same tier as the other agency, the highest rating is used in the
calculation.

The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
(formerly, Wells Fargo Investment Management), a division of Wells Fargo Bank,
is listed in the top 100 by Institutional Investor magazine in its July 1997
survey "America's Top 300 Money Managers." This survey ranks money managers in
several asset categories. The Company may also disclose in advertising and other
types of sales literature the assets and categories of assets under management
by the Company's investment adviser and the total amount of assets under
management by Wells Fargo Bank. As of August 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 $19 billion of
mutual fund assets.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each Fund is determined on each day the Fund
is open as of 1:00 p.m. (Pacific time).

17
<PAGE>

Securities for which the primary market is a national securities or
commodities exchange or a recognized foreign securities exchange or commodities
exchange, or the National Association of Securities Dealers Automated Quotations
National Market System, are valued at last sale prices on the principal exchange
on which they are traded or in the absence of any sale on the valuation date, at
latest quoted bid prices. In the absence of any latest quoted bid prices, the
previous market close will be used. In the absence of any sale of such
securities on the valuation date and in the case of other securities, including
U.S. Government securities but excluding debt instruments maturing in 60 days or
less, the valuations are based on latest quoted bid prices. In the absence of
any latest quoted bid prices, the previous market close will be used. Debt
instruments maturing in 60 days or less are valued at amortized cost. In all
cases, bid prices will be furnished by a reputable independent pricing service
approved by the Company's Board of Directors. Prices provided by an independent
pricing service may be determined without exclusive reliance on quoted prices
and may take into account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. All other securities and
other assets of the Funds for which current market quotations are not readily
available are valued at fair value as determined in good faith by the Company's
Directors and in accordance with procedures adopted by the Board of Directors.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares may be purchased on any day a Fund is open. The Funds are open for
business each day the New York Stock Exchange ("NYSE") is open for trading (a
"Business Day"). Currently, the NYSE is closed on New Year's Day, Martin Luther
King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day (each a "Holiday"). When any
Holiday falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such Holiday.

Payment for shares may, in the discretion of the adviser, be made in the
form of securities that are permissible investments for the Funds as described
in the Prospectus. For further information about this form of payment please
contact Stephens. In connection with an in-kind securities payment, each 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 Funds 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

18
<PAGE>

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
Funds 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 a Fund as provided from time to time in the Prospectus.

PORTFOLIO TRANSACTIONS

Purchases and sales of securities are usually principal transactions.
Portfolio securities normally are purchased or sold from or to dealers serving
as market makers for the securities at a net price. The Funds also may purchase
portfolio securities in underwritten offerings and may purchase securities
directly from the issuer. The cost of executing the Funds' portfolio securities
transactions consists primarily of dealer spreads and underwriting commissions.
Under the 1940 Act, persons affiliated with the Company are prohibited from
dealing with the Company as a principal in the purchase and sale of securities
unless an exemptive order or other relief allowing such transactions is obtained
from the SEC or an exemption is otherwise available. The Funds may purchase
securities from underwriting syndicates of which Stephens or Wells Fargo Bank is
a member under certain conditions in accordance with the provisions of a rule
adopted under the 1940 Act and in compliance with procedures adopted by the
Board of Directors.

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 Funds' 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 Funds 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

19
<PAGE>

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 Funds. The Board of Directors will
periodically review the commissions paid by the Funds to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Funds. 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 Funds 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 Funds in any transaction may be less favorable than that
available from another broker/dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.

Broker/dealers utilized by Wells Fargo Bank may furnish statistical,
research and other information or services which are deemed by Wells Fargo Bank
to be beneficial to the Funds' 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

20
<PAGE>

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
Funds by improving the quality of Wells Fargo Bank's investment advice.

Brokerage Commissions. For the year ended December 31, 1996, the
predecessor portfolios and the Master Portfolios did not pay any brokerage
commissions.

Securities of Regular Broker Dealers. As of December 31, 1996, the Short-
Term Government-Corporate Income Master Portfolio owned securities (pooled
repurchase agreements) of its "regular brokers or dealers" as defined in the
1940 Act or their parents as follows: $378,000 of Goldman Sachs and $300,000 of
JP Morgan.

Portfolio Turnover. For the year ended December 31, 1996, the portfolio
turnover rates were 247% and 47%, respectively, for the predecessor portfolios'
Short-Term Government-Corporate Income and Short-Term Municipal Income Master
Portfolios.

Portfolio turnover generally involves some expense to a Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and the reinvestment in other securities. A high portfolio
turnover rate should not result in the Funds paying substantially more brokerage
commissions, since most transactions in government securities and municipal
securities are effected on a principal basis. Portfolio turnover also can
generate short-term capital gains tax consequences. The portfolio turnover rate
will not be a limiting factor when Wells Fargo Bank deems portfolio changes
appropriate.

FUND EXPENSES

From time to time, Wells Fargo Bank and Stephens may waive fees from the
Funds in whole or in part. Any such waiver will reduce Fund expenses and,
accordingly, have a favorable impact on a Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, each Fund bears all costs of
its operations, including the compensation of the Company's directors and the
Trust's trustees who are not officers or employees of Wells Fargo Bank or
Stephens or any of their affiliates; advisory, shareholder servicing, and
administration fees; payments pursuant to any Plans; interest charges; taxes;
fees and expenses of independent auditors; legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Fund shares; expenses of
preparing and printing Prospectuses (except the expense of printing and mailing
Prospectuses used for promotional purposes, unless otherwise payable pursuant to
a Plan), shareholders' or investors' reports, notices, proxy statements and
reports to regulatory agencies; insurance premiums and certain expenses relating
to insurance coverage; trade association membership dues; brokerage and other
expenses connected with the execution of portfolio transactions; fees and
expenses of

21
<PAGE>

the custodian, including those of keeping books and accounts and calculating the
net asset value of the Fund; expenses of shareholders' or investors' meetings;
expenses relating to the issuance, registration and qualification of shares of
the Fund; pricing services; organizational expenses; and any extraordinary
expenses. Expenses attributable to a Fund are charged against the respective
assets of the Fund. A pro rata portion of the expenses of the Company are
charged against the assets of each Fund.

FEDERAL INCOME TAXES

In General. The following information supplements and should be read in
conjunction with the Prospectus section entitled "Taxes." The Prospectus
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 each 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) each Fund derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) each Fund diversify its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Fund's assets is represented by cash, government
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government obligations and the securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses.

In addition, each Fund must, in general, derive less than 30% of its gross
income from the sale or other disposition of securities or options thereon held
for less than three months. However, this restriction has been repealed with
respect to taxable years beginning after August 5, 1997.

Each Fund must also distribute or be deemed to distribute to its
shareholders at least 90% of its net investment income earned in each taxable
year. In general, these distributions must actually or be deemed to be made in
the taxable year. However, in certain circumstances, such distributions may be
made in the 12 months following the taxable year. The Funds intend to pay out
substantially all of their net investment income and net realized capital gains
(if any) for each year.

Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund
(other than to the extent of its tax-exempt interest income) to the extent it
does not meet certain minimum distribution requirements by the end of each
calendar year. The Funds intend to actually or be deemed to distribute
substantially all of their net investment income and net capital gains by the
end or each calendar year and, thus, expect not to be subject to the excise tax.

Corporate shareholders of the Fund may be eligible for the
dividends-received deduction on dividends distributed out of the Fund's net
investment income attributable to dividends received from domestic corporations,
which, if received directly by the corporate shareholder, would qualify for such
deduction. In order to qualify for the dividends-received deduction, a
corporate shareholder must hold the Fund shares paying the dividends upon which
the deduction is based for at least 46 days.

Gains recognized on the disposition of a debt obligation (including
tax-exempt obligations purchased after April 30, 1993) purchased by a 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, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.

Capital Gain Distributions. Distributions which are designated by a Fund
as capital gain distributions will be taxed to shareholders as net capital gain
(generally, the excess of net long-term capital gain over net short-term capital
loss), to the extent such distributions are attributable to net capital gain of
the Fund, 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.

22
<PAGE>

and a maximum rate of 28% on net capital gain attributable to gain realized on
the sale of property held for greater than 1 year and 18 months or less. The
1997 Act retains the treatment of short-term capital gain and did not affect the
taxation of corporate taxpayers. The Treasury is authorized to issue
regulations for application of the reduced capital gain tax rates enacted under
the 1997 Act to pass-through entities, including regulated investment companies.
Noncorporate shareholders of a Fund may therefore qualify for the reduced rate
of tax on capital gain dividends paid by the Fund.

Other Distributions. Although dividends will be declared daily based on
the Fund's daily earnings, for federal income tax purposes, each 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 a 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
each Fund's net income, on an annual basis, will equal the dividends declared
during the year.

Disposition of Fund Shares. A disposition of Fund shares pursuant to
redemption (including a redemption in-kind) or exchanges will ordinarily result
in a taxable capital gain or loss depending on the amount received for the
shares (or are deemed to receive in the case of any exchange) and the cost of
your shares.

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 or load on a
new purchase of shares of the Funds or a different regulated investment company,
the sales charge or load previously incurred acquiring the Fund's shares shall
not be taken into account (to the extent such previous sales charge or load does
not exceed the reduction in sales charge or load 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 Funds will
be disallowed to the extent that substantially identical shares are acquired
with the 61-day period beginning 30 days before and ending 30 days after the
shares are disposed of.

If a shareholder holds Fund shares for six months or less, any loss on the
sale or exchange of those shares will be disallowed to the extent of the amount
of exempt-interest dividends received with respect to the shares. The Treasury
Department is authorized to issue regulations reducing the six months holding
requirement to a period of not less than the greater of 31 days or the period
between regular dividend distributions where a Fund regularly distributes at
least 90% of its net tax-exempt interest, if any. No such regulations have been
issued as of the date of this SAI. In addition, 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

23
<PAGE>
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. The foregoing
recharacterization and disallowance rules do not apply to losses realized under
a periodic redemption plan.

Federal Income Tax Rates. As of the printing of this SAI, the maximum
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gains is 28% (see "Capital Gain Distributions" above); and the
maximum corporate tax rate applicable to ordinary income and net capital gains
is 35% (marginal tax rates may be higher for some corporations to reduce or
eliminate the benefit of lower marginal income tax rates). 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.

Foreign Shareholders. Under the Code, distributions of net investment
income by each Fund to a nonresident alien individual, foreign trust (i.e. trust
which a U.S. court is able to exercise primary supervision over administration
of that trust and one or more U.S. persons have authority to control substantial
decisions of that trust), foreign estate (i.e., the income of which is not
subject to U.S. tax regardless of source), 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). Such tax withheld is generally not
refundable. 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. Furthermore,
distributions of net long-term capital gains are generally not subject to tax
withholding.

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.

Additional Information for Short-Term Municipal Income Fund. If at least
50% of the value of a regulated investment company's total assets at the close
of each quarter of its taxable years consists of obligations the interest on
which is exempt from federal income tax, it will qualify under the Code to pay
"exempt-interest dividends." The Short-

24
<PAGE>
Term Municipal Income fund intends to so qualify and is designed to provide
investors with a high level of income exempt from federal income tax.

The portion of total dividends paid by the Short-Term Municipal Income
Fund with respect to any taxable year that constitutes exempt-interest dividends
will be the same for all shareholders receiving dividends during such year.
Distributions of capital gains or from net investment income not attributable
to interest on the Fund's tax-exempt obligations will not constitute
exempt-interest dividends and will be taxable to its shareholders. The exemption
of interest income derived from investments in tax-exempt obligations for
federal income tax purposes may not result in a similar exemption under the laws
of a particular state or local taxing authority.

Not later than 60 days after the close of its taxable year, the Short-Term
Municipal Income Fund will notify its shareholders of the portion of the
dividends paid with respect to such taxable year which constitutes
exempt-interest dividends. The aggregate amount of dividends so designated
cannot exceed the excess of the amount of interest excludable from gross income
under Section 103 of the Code received by the Fund during the taxable year over
any amounts disallowed as deductions under Sections 265 and 171(a)(2) of the
Code. Interest on indebtedness incurred to purchase or carry shares of the
Short-Term Municipal Income Fund will not be deductible to the extent that the
Fund's distributions are exempt from federal income tax.

In addition, the federal alternative minimum tax ("AMT") rules ensure that
at least a minimum amount of tax is paid by taxpayers who obtain significant
benefit from certain tax deductions and exemptions. Some of these deductions
and exemptions have been designated "tax preference items" which must be added
back to taxable income for purposes of calculating AMT. Among the tax
preference items is tax-exempt interest from "private activity bonds" issued
after August 7, 1986. To the extent that the Short-Term Municipal Income Fund
invests in private activity bonds, its shareholders who pay AMT will be required
to report that portion of Fund distributions attributable to income from the
bonds as a tax preference item in determining their AMT. Shareholders will be
notified of the tax status of distributions made by the Short-Term Municipal
Income Fund. Persons who may be "substantial users" (or "related persons" of
substantial users) of facilities financed by private activity bonds should
consult their tax advisors before purchasing shares in the Short-Term Municipal
Income Fund. Furthermore, shareholders will not be permitted to deduct any of
their share of the Short-Term Municipal Income Fund expenses in computing their
AMT. With respect to a corporate shareholder of the Short-Term Municipal Income
Fund, exempt-interest dividends paid by the Fund is included in the corporated
shareholder's "adjusted current earnings" as part of its AMT calculation, and
may also affect its Federal "environmental tax" liability. As of the printing
of this SAI, individuals are subject to an AMT at a maximum rate of 28% and
corporations at a maximum rate of 20%. Shareholders with questions or concerns
about AMT should consult their tax advisors.

Shares of the Short-Term Municipal Income Fund would not be suitable for
tax-exempt institutions and may not be suitable for retirement plans qualified
under Section 401 of the Code, H.R. 10 plans and IRAs since such plans and
accounts are generally tax-exempt and, therefore, would not benefit from the
exempt status of distributions from the Fund. Such distributions may ultimately
be taxable to the beneficiaries when distributed to them.

Other Matters. Investors should be aware that the investments to be made
by the Funds may involve sophisticated tax rules that may result in income or
gain recognition by a Fund without corresponding current cash receipts.
Although the Funds will seek to avoid significant noncash income, such noncash
income could be recognized by a Fund, in which case the Fund may distribute cash
derived from other sources in order to meet the minimum distribution
requirements described above.

CAPITAL STOCK

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Organization and Capital Stock."

The Funds are two of the funds in the Stagecoach Family of Funds. The
Company was organized as a Maryland corporation on September 9, 1991 and
currently offers shares of over thirty funds.

25
<PAGE>

determined separately by series. Approval by the shareholders of one series is
effective as to that series whether or not sufficient votes are received from
the shareholders of the other series to approve the proposal as to those series.

Shareholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Company.

Set forth below is the name, address and share ownership of each person
known by the Company to have beneficial or record ownership of 5% or more of the
voting securities of a predecessor portfolios as a whole.

26
<PAGE>

5% OWNERSHIP AS OF AUGUST 31, 1997
----------------------------------
<TABLE>
<CAPTION>

Type of Percentage
Predecessor Portfolio Name and Address Ownership of Portfolio
- --------------------- ---------------- --------- ------------
<S> <C> <C> <C>
Short-Term Government Virginia & Co. Single Class 22.96%
Corporate Income Fund c/o Wells Fargo Bank Record Holder
Mutual Funds A-88-4
P.O. Box 9800
Calabassu, CA 91302

Hep & Co. Single Class 49.53%
c/o Wells Fargo Bank Record Holder
P.O. Box 9800
Calabassu, CA 91302

Kimball Medical Single Class 19.97%
Center Record Holder
600 River Avenue
Lakewood, NJ 08701

Short-Term Hep & Co. Single Class 45.45%
Municipal Income Fund c/o Wells Fargo Bank Record Holder
P.O. Box 9800
Calabassu, CA 91302

Herman & Raymond Single Class 23.00%
Christensen Record Holder
801 Americah Street
San Carlos, CA
94010

JJ&W Single Class 14.93%
P.O. Box 5807 Record Holder
Redwood City, CA
94063

</TABLE>

OTHER

The Company's Registration Statement, including the Prospectus and SAI for
the Funds, and the exhibits filed therewith, may be examined at the office of
the SEC in Washington, D.C. Statements contained in the Prospectus or the SAI as
to the contents of

27
<PAGE>

any contract or other document referred to herein or in the Prospectus are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent auditor for the
Company and the Trust. KPMG Peat Marwick LLP provides audit services, tax
return preparation and assistance and consultation in connection with review of
certain SEC filings. KPMG Peat Marwick LLP's address is Three Embarcadero
Center, San Francisco, California 94111.

FINANCIAL INFORMATION

The portfolio of investments and unaudited financial statements for the
predecessor portfolios and Master Portfolios for the six month period ended June
30, 1997 are hereby incorporated by reference to the Overland Semi-Annual
Reports as filed with the SEC on September 3, 1997.

The portfolio of investments, audited financial statements and independent
auditors' report for the predecessor portfolios for the year ended December 31,
1996, are hereby incorporated by reference to the Overland Annual Reports as
filed with the SEC on March 11, 1997.

The Company's Annual Reports for the fiscal period ended March 31, 1997,
were filed with the SEC on June 4, 1997. Annual Reports may be obtained by
calling 1-800-222-8222.

28
<PAGE>

APPENDIX

The following is a description of the ratings given by Moody's and S&P to
corporate bonds 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 face 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 bonds are "AAA," "AA," "A" and
"BBB." Bonds rated "AAA" have the "highest rating" assigned by S&P and have "an
extremely strong capacity" to pay interest and repay principal. Bonds rated "AA"
have a "very strong capacity" to pay interest and repay principal and "differ
from the highest rated 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 an "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.

Commercial 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>

S&P: The two highest ratings for corporate, state 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, state and municipal commercial
paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior ability for
repayment of 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, state 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>

STAGECOACH FUNDS, INC.
Telephone: (800) 222-8222

STATEMENT OF ADDITIONAL INFORMATION
Dated December 12, 1997

VARIABLE RATE GOVERNMENT FUND

Stagecoach Funds, Inc. (the "Company") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
additional information about the Variable Rate Government Fund (the "Fund") of
the Stagecoach Family of Funds. The Fund offers Class A and Class C shares. This
SAI relates each class. The investment objective of the Fund is described in its
Prospectus under "Investment Objectives and Policies."

This SAI is not a Prospectus and should be read in conjunction with the
Fund's Prospectus dated December 12, 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 by calling the Transfer Agent at
the telephone number indicated above.
<PAGE>

TABLE OF CONTENTS

General.................................................................. 1
Investment Restrictions.................................................. 1
Additional Permitted Investment Activities............................... 3
Investment by Federal Credit Unions in the Fund.......................... 4
Management............................................................... 4
Performance Calculations................................................. 11
Determination of Net Asset Value......................................... 17
Additional Purchase and Redemption Information........................... 17
Portfolio Transactions................................................... 18
Fund Expenses............................................................ 20
Federal Income Taxes..................................................... 20
Capital Stock............................................................ 24
Other.................................................................... 26
Independent Auditors..................................................... 26
Financial Information.................................................... 26
Appendix................................................................. A-1
</TABLE>

i
<PAGE>

GENERAL

The Company's Variable Rate Government Fund was originally organized on
November 1, 1990 as the Variable Rate Government Fund (the "predecessor
portfolio") of Overland Express Funds, Inc. ("Overland"), another open-end
management investment company advised by Wells Fargo Bank. On July 23, 1997,
the Boards of the Directors of the Company and Overland approved an Agreement
and Plan of Consolidation. As a result of the Consolidation, the predecessor
portfolio was reorganized as the Company's Variable Rate Government Fund, and
Class A and D shareholders of the predecessor portfolio became Class A and C
shareholders, respectively, of the Company's Variable Rate Government Fund.

INVESTMENT RESTRICTIONS

Fundamental Investment Policies. The Variable Rate Government Fund is
subject to the following investment restrictions, all of which are fundamental
policies:

The Fund may not:

(2) purchase or sell real estate (other than securities secured by real
estate or interests therein or securities issued by companies that invest in
real estate or interests therein), commodities or commodity contracts or
interests, in oil, gas, or other mineral exploration or development programs;

(3) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions) or make short sales of securities;

(5) invest more than 10% of the current value of its net assets in
repurchase agreements maturing in more than seven days, restricted securities,
which are securities that must be registered under the Securities Act of 1933
(the "1933 Act") before they may be offered or sold to the public, and illiquid
securities;

(6) make investments for the purpose of exercising control or management;

1
<PAGE>

(7) purchase puts, calls, straddles, spreads, or any combination thereof,
except that the Fund may purchase securities with put rights in order to
maintain liquidity;

(8) issue senior securities, except that the Fund may borrow from banks up
to 10% of the current value of its net assets for temporary purposes only in
order to meet redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of its net assets (but investments may not be
purchased by the Fund while any such outstanding borrowing exists);

(9) invest more than 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;

(10) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of the total assets of the Fund, 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 the Fund's total assets, the Fund would own
more than 10% of the outstanding voting securities of such issuer; and

(11) lend its portfolio securities having a value that exceeds 50% of the
current value of its total assets, provided that, for purposes of this
restriction, loans will not include the purchase of fixed time deposits,
repurchase agreements, commercial paper and other types of debt instruments
commonly sold in a public or private offering.

With respect to fundamental investment restriction (5), the Fund does not
intend to invest, during the coming year, in repurchase agreements maturing in
more than seven days, restricted securities, which are securities that must be
registered under the 1933 Act before they may be offered or sold to the public
or illiquid securities. With respect to fundamental investment restriction (7),
the Fund does not intend to purchase, during the coming year, puts, calls,
straddles, spreads, or purchase securities with put rights in order to maintain
liquidity. With respect to fundamental investment restriction (9), the Fund does
not intend to invest, during the coming year, in fixed time deposits that are
subject to withdrawal penalties and that have maturities of more than seven
days. With respect to fundamental investment restriction (11), the Fund does not
intend to make loans of its portfolio securities during the coming year.

Non-Fundamental Investment Policies. The Variable Rate Government Fund is
subject to the following non-fundamental policies:

The Fund may not:

(1) invest in warrants, and not more than 2% of its net assets in warrants
which are not listed on the New York or American Stock Exchange;

(2) purchase or retain securities of any issuer if the officers or
Directors of the Company or its Investment Adviser owning beneficially more than
one-half of one percent (0.5%) of the securities of the issuer together own
beneficially more than 5% of such securities;

2
<PAGE>

(4) write, purchase or sell options; and

(5) purchase or sell real estate limited partnership interests.

In addition, the Fund will not invest in commercial paper or equity
securities.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

The following information supplements and should be read in conjunction
with the sections in the prospectus entitled: "Investment Objectives and
Policies" and "Investment Activities."

When-Issued Securities. The Variable Rate Government Fund may purchase
securities on a when-issued basis, in which case delivery and payment normally
take place within 45 days after the date of the commitment to purchase. However,
the Fund does not intend to invest more than 5% of its net assets in when-issued
securities during the coming year. The Fund only will make commitments to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation, and
no income accrues to the purchaser during the period prior to issuance. The
purchase price and the interest rate that will be received on debt securities
are fixed at the time the purchaser enters into the commitment. Purchasing a
security on a when-issued basis can involve a risk that the market price at the
time of delivery may be lower than the agreed-upon purchase price, in which case
there could be an unrealized loss at the time of delivery.

The Fund will establish a segregated account in which it will maintain
cash, U.S. Government obligations or other high-quality debt instruments in an
amount at least equal in value to the Fund's commitments to purchase when-issued
securities. If the value of these assets declines, the Fund will place
additional liquid assets in the account on a daily basis so that the value of
the assets in the account is equal to the amount of such commitments.

High-Risk Mortgage Securities. The Variable Rate Government Fund will not
invest in Collateralized Mortgage Obligations ("CMOs") that, at the time of
purchase, are "high-risk mortgage securities" as defined in the then current
Federal Financial Institutions Examination Council Supervisory Policy Statement
on Securities Activities (the "FFIEC Policy Statement"). Under the FFIEC Policy
Statement, a CMO qualifies as a "high-risk mortgage security" if it meets an
Average Life Test, an Average Life Sensitivity Test, or a Price Sensitivity
Test. A CMO meets the Average Life Test if it has an expected weighted average
life greater than 10 years. A CMO meets the Average Life Sensitivity Test if the
expected weighted average life of the CMO either (i) extends by more than 4
years, assuming an immediate and sustained parallel shift in the yield curve of
plus 300 basis points, or (ii) shortens by more than 6 years, assuming an
immediate and

3
<PAGE>

sustained parallel shift in the yield curve of minus 300 basis points. A CMO
meets the Price Sensitivity Test if an immediate and sustained parallel shift in
the yield curve of plus or minus 300 basis points would result in an estimated
change in the price of the CMO of more than 17 percent. Under the FFIEC Policy
Statement, a CMO floating-rate debt class, i.e., a CMO the rate of which adjusts
at least annually on a one-for-one basis with a conventional, widely used market
interest rate index (such as the London Interbank Offered Rate), will not be
subject to the Average Life and Average Life Sensitivity Tests if it bears a
rate that is below the contractual cap on the instrument.

INVESTMENT BY FEDERAL CREDIT UNIONS IN THE FUND

The Variable Rate Government Fund will invest only in investments that are
permissible for federal credit unions under the regulations of the National
Credit Union Administration ("NCUA"). Federal credit unions may invest in CMOs
that do constitute "high-risk mortgage securities" for purposes of the FFIEC
Policy Statement. The Fund will enter into repurchase transactions and cash
forward agreements (i.e., "when-issued" securities) only to the extent
permissible for federal credit unions. Specifically, the Fund will enter into
repurchase transactions only where the purchase price of the security obtained
in the transaction will be at or below the market price and either: (1) the
repurchase transaction will be with another financial institution or (2) the
Fund will take physical possession of the security or receive written
confirmation of the purchase and a custodial or safekeeping receipt from a third
party under a written bailment for hire contract, or be recorded as the owner of
the security through the Federal Reserve Book-Entry System. In addition, the
Fund will enter into a cash forward agreement to purchase a security only where:
(1) the period from the trade date to the settlement date does not exceed 120
days; (2) the Fund has written cash flow projections evidencing its ability to
purchase the security; and (3) the cash forward agreement is settled on a cash
basis at the settlement date.

MANAGEMENT

4
<PAGE>

Thomas S. Goho, 55 Director Associate Professor of
321 Beechcliff Court Finance of the School of
Winston-Salem, NC 27104 Business and Accounting
at Wake Forest University
since 1982.

*W. Rodney Hughes, 71 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 79 Director Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

Richard H. Blank, Jr., 41 Chief Operating Associate of Financial
Officer, Services Group of
Secretary and Stephens; Director of
Treasurer Stephens Sports
Management Inc.; and
Director of Capo Inc.
</TABLE>

5
<PAGE>

Compensation Table
Year Ended March 31, 1997
-------------------------

R. Greg Feltus $-0- $-0-
Director

Thomas S. Goho $11,250 $33,750
Director

Joseph N. Hankin $-0- $-0-
Director
(appointed as of 9/6/96)

Zoe Ann Hines $-0- $-0-
Director
(resigned as of 9/6/96)

W. Rodney Hughes $9,250 $27,750
Director

Robert M. Joses $11,250 $33,750
Director

J. Tucker Morse $9,250 $27,750
Director
</TABLE>

Directors of the Company are compensated annually by the Company and by
all the registrants in each fund complex they serve as indicated above and also
are reimbursed for all out-of-pocket expenses relating to attendance at board
meetings. Prior to December 15, 1997, the Company, Overland, 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"). After the Consolidation and the winding down
of the affairs of Overland and MIT, the Company, Stagecoach Trust and Life &
Annuity Trust will be considered the only members of 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

6
<PAGE>

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.

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. Wells Fargo
Bank furnishes the Fund with investment guidance and policy direction in
connection with the daily portfolio management of the Fund. Wells Fargo Bank
also furnishes to the Board of Directors periodic reports on the investment
strategy and performance of the Fund. For its services as investment adviser to
the Fund, Wells Fargo Bank is entitled to receive a monthly fee at the annual
rate of 0.50% of the Fund's average daily net assets.

Wells Fargo Bank and Stephens have agreed to waive ten basis points (0.10%)
of their fees in connection with the settlement of certain litigation involving
the Fund for the next three years.

Prior to the Consolidation, Wells Fargo Bank served as investment adviser
to the predecessor portfolio and was entitled to receive a monthly fee at the
annual rate of 0.50% of the predecessor portfolio's average daily net assets.
For the years ended December 31, 1994, 1995 and 1996, the predecessor portfolio
paid Wells Fargo Bank the advisory fees indicated below and Wells Fargo Bank
waived the following amounts:

1994 1995 1996
Fees Paid Fees Waived Fees Paid Fees Waived Fees Paid Fees Waived
- --------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
$6,929,600 $1,622,859 $3,561,101 $554,480 $2,696,450 $0
</TABLE>

The Fund's Advisory Contract will continue in effect for more than two
years from the effective date provided the continuance is approved annually (i)
by the holders of a majority of the Fund's outstanding voting securities or by
the Company's Board of Directors and (ii) by a majority of the Directors of the
Company who are not parties to the Advisory Contract or "interested persons" (as
defined in the 1940 Act) of any such party. The Advisory Contract may be
terminated on 60 days' written notice by either party and will terminate
automatically if assigned.

7
<PAGE>

as administration 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 auditors 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 each 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 Fund's average daily net assets.

Prior to the Consolidation, Wells Fargo Bank and Stephens served as
Administrator and Co-Administrator, respectively, to the predecessor portfolio
under substantially similar terms. Prior to February 1, 1997, Stephens served
as sole administrator to the predecessor portfolio and provided the predecessor
portfolio with essentially the same services described above. Stephens was
entitled to receive a monthly fee from the predecessor portfolio at the annual
rate of 0.15% of the predecessor portfolio's average daily net assets up to $200
million and 0.10% in excess of $200 million.

For the years ended December 31, 1994, 1995 and 1996, Stephens received
administration fees from the predecessor portfolio as follows:

1994 1995 1996
---- ---- ----
<S> <C> <C>
$1,810,492 $923,116 $400,616
</TABLE>

Sponsor and Distributor. As discussed in the Prospectus under the
"Management of the Fund," Stephens serves as the Fund's sponsor and distributor.

Distribution Plans. As indicated in the Prospectus, the Fund, on behalf of
each of its classes of shares, has adopted a Plan under Section 12(b) of the
1940 Act and Rule 12b-1 thereunder (the "Rule").

Pursuant to the Plan for Class A and Class C shares, the Company may pay to
Stephens, as compensation for distribution-related services provided, or
reimbursement for distribution-related expenses incurred, a monthly fee at an
annual rate of up to 0.25% and 0.50%, respectively, of the average daily net
assets attributable to Class A and Class C shares. The actual fee payable to
Stephens shall, within such limit, be determined from time to time by mutual
agreement between the Company and Stephens. Stephens may enter into selling
agreements with one or more selling agents under which such agents may receive
compensation for distribution-related services from Stephens, including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to them. Stephens may retain any
portion of the total distribution fee payable hereunder to compensate it for
distribution-related services provided by it or to reimburse it for other
distribution-related expenses.

8
<PAGE>

Each Plan will continue in effect from year to year if such continuance is
approved by a majority vote of both the Directors of the Company and the
Qualified Directors. Any Distribution Agreement related to the Plan also must be
approved by such vote of the Directors and the Qualified Directors. Such
Agreement will terminate automatically if assigned, and may be terminated at any
time, without payment of any penalty, by a vote of a majority of the outstanding
voting securities of the Fund. The Plans may not be amended to increase
materially the amounts payable thereunder without the approval of a majority of
the outstanding voting securities of the Fund, and no material amendment to the
Plans may be made except by a majority of both the Directors of the Company and
the Qualified Directors.

The Plans requires that the Treasurer of the Company shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plans. The Rule also
requires that the selection and nomination of Directors who are not "interested
persons" of the Company be made by such disinterested Directors.

Prior to the Consolidation, the predecessor portfolio had adopted Rule 12b-
1 Distribution Plans on behalf of its Class A and Class D shares. For the year
ended December 31, 1996, the predecessor portfolio's distributor received the
following amounts of 12b-1 fees for the specified purposes set forth below under
the predecessor portfolio's Plan.

Printing &
Mailing Marketing Compensation to
Total Prospectuses Brochures Underwriters
----- ------------ --------- ------------
<S> <C> <C> <C> <C>
Class A $1,330,313 N/A N/A $1,330,313
Class D $ 35,887 N/A N/A $ 35,887
</TABLE>

For the year ended December 31, 1996, WFSI and its registered
representatives did not receive any compensation under the predecessor
portfolio's Plans.

Shareholder Servicing Agent. The Fund has entered into a shareholder
servicing agreement with Wells Fargo Bank. Prior to the Consolidation, the
predecessor portfolio, on behalf of its Class D shares had entered into a
similar shareholder servicing agreement with Wells Fargo Bank. For the year
ended December 31, 1996, the predecessor portfolio paid $17,944 in shareholder
servicing fees for its Class D shares.

9
<PAGE>

and redemption orders from its customers, answering customer inquiries regarding
a shareholder's accounts in the Fund, and providing such other services as the
Company or a customer may reasonably request. Administrative servicing agents
are entitled to a fee which will not exceed 0.25%, on an annualized basis, of
the average daily net assets of the Class A shares represented by the shares
owned of record or beneficially by the customers of the administrative servicing
agent during the period for which payment is being made. In no case shall shares
be sold pursuant to the Class A Rule 12b-1 Plan while being sold pursuant to its
Administrative Servicing Plan.

Class C Servicing Plan. As indicated in the Prospectus, the Fund has
adopted a Shareholder Servicing Plan ("Servicing Plan") on behalf of its Class C
shares. Under the Servicing Plan and pursuant to the Servicing Agreements, the
Fund may pay one or more servicing agents, as compensation for performing
certain services, a fee at an annual rate of up to 0.25% of the average daily
net assets of the Funds Class C shares attributable to the servicing agents
customers. Servicing agents may include broker/dealers, banks and other
financial institutions, including Wells Fargo Bank and its affiliates. The
actual fee payable to servicing agents is determined, within such limit, 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 Conduct Rules of the NASD.

The Administrative Servicing Plan and Servicing Plan will continue in
effect from year to year if such continuance is approved by a majority vote of
the Directors of the Company. Any form of Servicing Agreement related to the
Plans also must be approved by such vote of the Directors. Servicing Agreements
will terminate automatically if assigned, and may be terminated at any time,
without payment of any penalty, by a vote of a majority of the outstanding
shares of the appropriate class of the Fund. The Administrative Servicing Plan
and Servicing Plan may not be amended to increase materially the amount payable
thereunder without the approval of a majority of the outstanding shares of the
appropriate class of the Fund, and no material amendment to the Plans may be
made except by a majority of the Directors.

The Administrative Servicing Plan and Servicing Plan require that the
Company's Directors shall review, at least quarterly, a written report of the
amounts expended (and purposes therefor) under each of the Plans.

Custodian. Wells Fargo Bank acts as Custodian for the Fund. The Custodian,
among other things, maintains a custody account or accounts in the name of the
Fund, receives and delivers all assets for the Fund upon purchase and upon sale
or maturity, collects and receives all income and other payments and
distributions on account of the assets of the Fund, and pays all expenses of the
Fund. For its services as Custodian, 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 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 the 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. Prior to the Consolidation, Wells Fargo Bank served as Custodian
to the predecessor portfolio. For the year ended December 31, 1996, the
predecessor portfolio did not pay any custody fees.

10
<PAGE>

Transfer and Dividend Disbursing Agent. Wells Fargo Bank has been retained
to act as Transfer and Dividend Disbursing Agent for the Fund. For its services
as transfer and dividend disbursing agent for the Fund, Wells Fargo Bank is
entitled to receive monthly payments at the annual rate of 0.14% of the average
daily net assets of each class of shares. Under a prior transfer agency
agreement with the predecessor portfolio, Wells Fargo Bank received a base fee
and per-account fees from the Fund paid without regard to class. For the year
ended December 31, 1996, the predecessor portfolio paid Wells Fargo Bank $63,299
in transfer and dividend disbursing agency fees.

Underwriting Commissions. For the year ended December 31, 1994, the
aggregate dollar amount of underwriting commissions (front-end sales loads and
CDSCs, if any) paid to Stephens on sales/redemptions of the Company's shares was
$5,415,227. Wells Fargo Securities Inc. ("WFSI"), an affiliated broker-dealer
of the Company, and its registered representatives received $904,274 of such
commissions.

For the year ended December 31, 1995, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
shares was $1,584,545 and Stephens retained $1,251,311 of such commissions. WFSI
and its registered representatives received $333,234 of such commissions.

For the six months ended March 31, 1997, the aggregate dollar amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
shares was [$_________] and Stephens retained [$________] of such commissions.
WFSI and its registered representatives received [$__________] and [$________],
respectively, of such commissions.

PERFORMANCE CALCULATIONS

Total Return. As indicated in the Prospectus, the Fund may advertise
certain total return information for each class of shares computed in the manner
described in the Prospectus. As and to the extent required by the SEC, an
average annual compound rate of return ("T") will be computed by using the
redeemable value at the end of a specified period ("ERV") of a hypothetical
initial investment in a Fund or a class of shares ("P") over a period of years
("n") according to the following formula: P(1+T)n = ERV. In addition, as
indicated in the Prospectus, the Fund also may at times, calculate total return
for the Fund or a class of shares based on net asset value per share (rather
than the public offering price), in which case the figures would not reflect the
effect of any sales charges that would have been paid by an investor, or based
on the assumption that a sales charge other than the maximum sales charge
(reflecting a Volume Discount) was assessed, provided that total return data
derived pursuant to the calculation described above also are presented.

11
<PAGE>

In addition to the above performance information, the Fund may advertise
cumulative total return for one-month, three-month, six-month, and year-to-date
periods. The cumulative total return for such periods is based on the overall
percentage change in value of a hypothetical investment in the Fund, assuming
all Fund dividends and capital gain distributions are reinvested, without
reflecting the effect of any sales charge that would be paid by an investor, and
is not annualized.

The performance information presented below and advertised by the Fund for
periods prior to December 15, 1997, the date of the Consolidation, is based upon
the prior performance of the predecessor portfolio. The Class A and Class C
shares of the Fund track the performance of the predecessor portfolio's Class A
and Class D shares, respectively.

Predecessor Portfolio - Average Annual Total Return for the Year Ended December 31, 1996
- ----------------------------------------------------------------------------------------

Inception(1) Inception Five Year Five Year One Year One Year
With Sales No Sales With Sales No Sales With Sales No Sales
Charge(2) Charge Charge Charge Charge Charge
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Class A 4.08% 4.59% 2.78% 3.40% 1.27% 4.41%
Class D N/A 2.22% N/A N/A 2.97% 3.95%
</TABLE>

- --------------------

(1) The Predecessor Portfolio's Class A shares commenced operations on November
1, 1990 and the Class D shares commenced operations on July 1, 1993.
(2) The term "Sales Charge" for Class A shares reflects a front-end sales
charge of 3.00%, and for Class D shares reflects the maximum applicable
contingent deferred sales charge ("CDSC") of 1.00% if shares are redeemed
in the first year.

The Fund may advertise the cumulative total return on its shares.
Cumulative total return of shares is computed on a per share basis and assumes
the reinvestment of dividends and distributions. Cumulative total return of
shares generally is expressed as a percentage rate which is calculated by
combining the income and principal changes for a specified period and dividing
by the net asset value per share at the beginning of the period. Advertisements
may include the percentage rate of total return of shares or may include the
value of a hypothetical investment in shares at the end of the period which
assumes the application of the percentage rate of total return.

12
<PAGE>

Predecessor Portfolio - Cumulative Total Return for the Year Ended December 31, 1996
- ------------------------------------------------------------------------------------

Inception(1) Inception Five Year Five Year
With Sales No Sales With Sales No Sales
Charge(2) Charge Charge Charge
------------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Class A 27.95% 31.91% 14.70% 18.21%
Class D N/A 7.98% N/A N/A
</TABLE>

- --------------------

(1) The Predecessor Portfolio Class A shares commenced operations on November
1, 1990, and the Class D shares commenced operations on July 1, 1993.
(2) The term "Sales Charge" for Class A shares reflects a front-end sales
charge of 3.00%, and for Class D shares reflects the maximum applicable
CDSC of 1.00% if shares are redeemed in the first year.

Yield. As indicated in the Prospectus, the Fund may advertise certain yield
information for the Fund or a class of shares. As and to the extent required by
the SEC, yield for each class of shares of the Fund will be calculated based on
a 30-day (or one month) period, computed by dividing the net investment income
per share of each class earned during the period by the maximum offering price
per share of each class on the last day of the period, according to the
following formula: YIELD = 2[((a-b divided by cd)+ 1)/6/-1], where a = dividends
and interest earned during the period; b = expenses accrued for the period (net
of reimbursements); c = the average daily number of shares of each class
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share each class of shares on the last day of the
period. The net investment income attributable to a class of shares includes
actual interest income, plus or minus amortized purchase discount (which may
include original issue discount) or premium, less accrued expenses. Realized and
unrealized gains and losses on portfolio securities are not included in net
investment income. For purposes of sales literature, yield also may be
calculated on the basis of the net asset value per share of each class rather
than the public offering price, or based on the assumption that a sales charge
other than the maximum sales charge (reflecting a Volume Discount) was assessed,
provided that the yield data derived pursuant to the calculation described above
also are presented.

Predecessor Portfolio - Yield Calculations for the Thirty-Day Period Ended December 31, 1996(1)
- -----------------------------------------------------------------------------------------------

Thirty Day Yield
----------------

With Sales Charge(1) No Sales Charge
-------------------- ----------------
<S> <C> <C>
Class A 5.01% 5.17%
Class D N/A 4.67%
</TABLE>

- ---------------

(1) The term "Sales Charge" for Class A shares reflects a front-end sales
charge of 3.00%, and for Class D shares reflects the maximum applicable
CDSC of 1.00% if shares are redeemed in the first year.

13
<PAGE>

The yields for each class of shares will fluctuate from time to time,
unlike bank deposits or other investments that pay a fixed yield for a stated
period of time, and do not provide a basis for determining future yields since
they are 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 or to a particular class of the Fund.

In addition, investors should recognize that changes in the net asset
values of shares of each class of the Fund will affect the yield of the
respective class of shares for any specified period, and such changes should be
considered together with such class' yield in ascertaining such class' total
return to shareholders for the period. Yield information for each class of
shares may be useful in reviewing the performance of the class of shares and for
providing a basis for comparison with investment alternatives. The yield of each
class of shares, 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.

Other. The Company may disclose in sales literature, information and
statements, the distribution rate of Fund shares. Distribution rate, which may
be annualized, is the amount determined by dividing the dollar amount per share
of the most recent dividend by the most recent NAV or maximum offering price per
share as of a date specified in the sales literature. Distribution rate will be
accompanied by the standard 30-day yield as required by the SEC.

The Company also may disclose in advertising and other types of literature,
information and statements, the average credit quality of the Fund's portfolio
or categories of investments therein, as of a specified date or period. Average
credit quality is calculated on a dollar weighted average basis based on ratings
assigned each issue or issuer, as the case may be, by S&P and/or Moody's. In the
event one rating agency does not rate the issue or issuer, as the case may be,
in the same tier as the other agency, the highest rating is used in the
calculation.

From time to time and only to the extent the comparison is appropriate for
each class of shares of the Fund, the Company may quote the performance or
price-earning ratio of each class of shares of the Fund in advertising and other
types of literature as compared to the performance of the Lehman Brothers
Municipal Bond Index, 1-Year Treasury Bill Rate, S&P Index, the Dow Jones
Industrial Average, the Lehman Brothers 20+ 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 the World Gold Council), Bank
Averages (which is calculated from figures supplied by the U.S. League of
Savings Institutions based on effective annual rates of interest on both
passbook and certificate accounts), average annualized certificate of deposit
rates (from the Federal Reserve G-13 Statistical Releases or the Bank Rate
Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), Ten Year U.S.
Government Bond Average, S&P's Corporate Bond Yield Averages, Schabacter
Investment Management Indices, Salomon Brothers High Grade Bond Index, Lehman
Brothers Long-Term High Quality Government/Corporate Bond Index, other managed
or unmanaged indices or performance data of bonds, stocks or government
securities (including data provided by Ibbotson Associates), or by other
services, companies, publications or persons who monitor mutual

14
<PAGE>

funds on overall performance or other criteria. The S&P Index and the Dow Jones
Industrial Average are unmanaged indices of selected common stock prices.

The performance of a class of shares of the Fund also may be compared to
the performance of other mutual funds having similar objectives. This
comparative performance could be expressed as a ranking prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Bloomberg
Financial Markets or Morningstar, Inc., independent services which monitor the
performance of mutual funds. The performance of each class of shares of the Fund
will be calculated by relating net asset value per share of each class at the
beginning of a stated period to the net asset value of the investment, assuming
reinvestment of all capital gains distributions and dividends paid, at the end
of the period. Any such comparisons may be useful to investors who wish to
compare the past performance of each class of shares of the Fund with the
performance of the Fund's 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.

The Company also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
each class of shares of the Fund: (i) the Consumer Price Index may be used to
assess the real rate of return from an investment in each class of shares of the
Fund; (ii) other government statistics, including, but not limited to, The
Survey of Current Business, may be used to illustrate investment attributes of
each class of shares of the Fund or the general economic, business, investment,
or financial environment in which the Fund operates; (iii) the effect of tax-
deferred compounding on the investment returns of each class of shares of the
Fund or on returns in general, may be illustrated by graphs, charts, etc., where
such graphs or charts would compare, at various points in time, the return from
an investment in each class of shares of the Fund (or returns in general) on a
tax-deferred basis (assuming reinvestment of

15
<PAGE>

capital gains and dividends and assuming one or more tax rates) with the return
on a taxable basis; and (iv) the sectors or industries in which the Fund invests
may be compared to relevant indices of stocks or surveys (e.g., S&P Industry
Surveys) to evaluate the historical performance or current or potential value of
each class of shares of the Fund with respect to the particular industry or
sector.

The Company also may discuss in advertising and other types of literature
that the Fund has been assigned a rating by a nationally recognized statistical
rating organization ("NRSRO"), such as S&P or Moody's. Such rating would assess
the creditworthiness of the investments held by the Fund. The assigned rating
would not be a recommendation to purchase, sell or hold 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 performance of each class of shares of
the Fund with other investments which are assigned ratings by NRSROs. Any such
comparisons may be useful to investors who wish to compare each class' past
performance with other rated investments.

The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
(formerly, Wells Fargo Investment Management) a subsidiary of Wells Fargo Bank,
is listed in the top 100 by Institutional Investor magazine in its July 1997
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 the Company's investment adviser and the total amount of assets and mutual
fund assets managed by Wells Fargo Bank. As of August 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 $19
billion of mutual fund assets.

16
<PAGE>

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of the Fund is determined on each
day the Fund is open as of 1:00 p.m. (Pacific time).

Securities for which the primary market is a national securities or
commodities exchange or a recognized foreign securities exchange or commodities
exchange will be valued at last sales prices on the principal exchange on which
they are traded. In the absence of any sale of such securities on the valuation
date and in the case of other securities, including U.S. Government securities
but excluding money market instruments maturing in 60 days or less, the
valuations are based on latest quoted bid prices. In the absence of any latest
quoted bid prices, the previous market close will be used. Money market
instruments maturing in 60 days or less are valued at amortized cost. The assets
of the Fund other than money market instruments maturing in 60 days or less are
valued at latest quoted bid prices. In all cases, bid prices will be furnished
by a reputable independent pricing service approved by the Board of Directors.
Prices provided by an independent pricing service may be determined without
exclusive reliance on quoted prices and may take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data. All other securities and other assets of the Fund for
which current market quotations are not readily available are valued at fair
value as determined in good faith by the Company's Board of Directors and in
accordance with procedures adopted by the Board of Directors.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares may be purchased on any day the Fund is open for business. The Fund
is open for business each day the NYSE is open for trading (a "Business Day").
Currently, the NYSE is closed on New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday falls on
a weekend, the NYSE typically is closed on the weekday immediately before or
after such Holiday.

17
<PAGE>

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.

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, ARMS and CMOs 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 Company are prohibited from dealing with the Company
as a principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is otherwise
available. The Fund may purchase securities from underwriting syndicates of
which Stephens or Wells Fargo Bank is a member under certain conditions in
accordance with the provisions of a rule adopted under the 1940 Act and in
compliance with procedures adopted by the Board of Directors.

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.

18
<PAGE>

responsibilities of Wells Fargo Bank. Such brokerage and research services might
consist of reports and statistics relating to specific companies or industries,
general summaries of groups of stocks or bonds and their comparative earnings
and yields, or broad overviews of the stock, bond, and government securities
markets and the economy.

Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by Wells Fargo Bank and does not
reduce the advisory fees payable by the Fund. The Board of Directors will
periodically review the commissions paid by the Fund to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund. It is possible that certain of the
supplementary research or other services received will primarily benefit one or
more other investment companies or other accounts for which 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.

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 program. 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.

19
<PAGE>

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.

Brokerage Commissions. For the year ended December 31, 1996, the
predecessor portfolio did not pay any brokerage commissions.

Securities of Regular Broker/Dealers. On December 31, 1996, the predecessor
portfolio owned securities (pooled repurchase agreements) of its "regular
brokers or dealers" as defined in the 1940 Act or their parents, as follows:
$673,000 of Goldman Sachs & Co. and $12,000,000 of JP Morgan.

Portfolio Turnover. The portfolio turnover rate is not a limiting factor
when Wells Fargo Bank deems portfolio changes appropriate.

FUND EXPENSES

From time to time, Wells Fargo Bank and Stephens may waive fees from the
Fund in whole or in part. Any such waiver will reduce expenses and,
accordingly, have a favorable impact on the Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, the Fund bears all costs of its
operations, including the compensation of its Directors who are not affiliated
with Stephens or Wells Fargo Bank or any of their affiliates; advisory,
shareholder servicing and administration fees; payments pursuant to any Plan;
interest charges; taxes; fees and expenses of its independent accountants, legal
counsel, transfer agent and dividend disbursing agent; expenses of redeeming
shares; expenses of preparing and printing Prospectuses (except the expense of
printing and mailing Prospectuses used for promotional purposes, unless
otherwise payable pursuant to a Plan), shareholders' reports, notices, proxy
statements and reports to regulatory agencies; insurance premiums and certain
expenses relating to insurance coverage; trade association membership dues;
brokerage and other expenses connected with the execution of portfolio
transactions; fees and expenses of its custodian, including those for keeping
books and accounts and calculating the NAV per share of the Fund; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of the Fund's shares; pricing services, organizational expenses
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

The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectus describes generally
the tax treatment of distributions by the Fund. This section of the SAI includes
additional information concerning federal income taxes.

20
<PAGE>

In General. The Company intends to qualify the Fund as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (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.

Qualifications 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 dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) 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, governmental
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government obligations and the securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses.

In addition, the Fund must, in general, derive less than 30% of its gross
income from the sale or other disposition of securities or options thereon held
for less than three months. However, this restriction has been repealed with
respect to taxable years beginning after August 5, 1997.

The Fund must also distribute or be deemed to distribute to its
shareholders at least 90% of its net investment income earned in each taxable
year. In general, these distributions must actually or be deemed to be made in
the taxable year. However, in certain circumstances, such distributions may be
made in the 12 months following the taxable year. The Fund intends to pay out
substantially all of its net investment and net realized capital gains (if any)
for each year.

Taxation of Fund Investments. Except as provided herein, gains and losses
on the sale of portfolio securities by the Fund will generally be capital gains
and losses. Such gains and

21
<PAGE>

losses will ordinarily be long-term capital gain and loss if the securities have
been held by the Fund for more than 12 months at the time of disposition of the
securities (however, see "Capital Gain Distributions" below).

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, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.

The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of 28% on
net capital gain. Noncorporate taxpayers are now generally taxed at a maximum
rate of 20% on net capital gain attributable to gains realized on the sale of
property held for greater than 18 months, and a maximum rate of 28% on net
capital gain attributable to gain realized on the sale of property held for
greater than 1 year and 18 months or less. The 1997 Act retains the treatment of
short-term capital gain and did not affect the taxation of corporate taxpayers.
The Treasury is authorized to issue regulations for application of the reduced
capital gain tax rates enacted under the 1997 Act to pass-through entities,
including regulated investment companies. Noncorporate shareholders of the Fund
may therefore qualify for the reduced rate of tax on capital gain dividends paid
by the Fund.

22
<PAGE>

If a shareholder exchanges of 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 or load on a
new purchase of shares of the Fund or a different regulated investment company,
the sales charge or load previously incurred acquiring the Fund's shares shall
not be taken into account (to the extent such previous sales charge or load does
not exceed the reduction in sales charge or load on the new purchase) for the
purpose of determining the amount of gain or loss on the disposition, but will
be treated as having been incurred in the acquisition of such other shares.
Also, any loss realized on a redemption or exchange of shares of the Fund will
be disallowed to the extent that substantially identical shares are acquired
within the 61-day period beginning 30 days before and ending 30 days after the
shares are disposed of.

Federal Income Tax Rates. As of the printing of this SAI, the maximum
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gains is 28% (however, see "Capital Gain Distributions" above);
and the maximum corporate tax rate applicable to ordinary income and net capital
gains is 35% (marginal tax rates may be higher for some corporations to reduce
or eliminate the benefit of lower marginal income tax rates). 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.

Foreign Shareholders. Under the Code, distributions of net investment
income by the Fund to a nonresident alien individual, foreign trust (i.e. trust
which a U.S. court is able to exercise primary supervision over administration
of that trust and one or more U.S. persons have authority to control substantial
decisions of that trust), foreign estate (i.e. the income of which is not
subject to U.S. tax regardless of source), 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. Such tax withheld is generally not refundable. Further,
distributions of net long-term capital gains generally are not subject to tax
withholding.

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.

CAPITAL STOCK

The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Organization and Capital Stock."

23
<PAGE>

The Fund is one of the funds in the Stagecoach Family of Funds. The Company
was organized as a Maryland corporation on September 9, 1991 and currently
offers shares of over thirty funds.

As used in the Prospectus and in this SAI, the term "majority," when
referring to approvals to be obtained from shareholders of a class of shares of
the Fund, means the vote of the lesser of (i) 67% of the shares of the class
represented at a meeting if the holders of more than 50% of the outstanding
shares of the class are present in person or by proxy, or (ii) more than 50% of
the outstanding shares of the class of the Fund. 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 not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Company. 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.

24
<PAGE>

Each share of a class of the Fund represents an equal proportional interest
in the Fund with each other share of the same class and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared in the discretion of the Directors. In the event of the
liquidation or dissolution of the Company, shareholders of the Fund are entitled
to receive the assets attributable to that Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular Fund or portfolio that are available for distribution in such manner
and on such basis as the Directors in their sole discretion may determine.

5% OWNERSHIP AS OF AUGUST 31, 1997
----------------------------------
<TABLE>
<CAPTION>
Percentage
Predecessor Type of Percentage of
Portfolio Name and Address Ownership of Class Portfolio
--------- ----------------- --------- -------- ---------
<S> <C> <C> <C> <C>
Class A San Bernadina County Class A 30.16% 29.85%
172 West 3rd St., 1s Floor Record Holder
San Bernadina, CA 92415

APCO Employees Credit Union Class A 10.43% 10.32%
1608 7th Ave. Record Holder
Birmingham, AL 35203

Class D Merrill Lynch Pierce Fenner & Class D 29.20% N/A
Smith, Inc., for the sole benefit of Record
its Customers Attn: Fund Admin. Holder
4800 Deer Lake East 3rd Floor
Jacksonville, FL 32246

City of Waterville Class D 11.59% N/A
P.O. Box 9 Record
Waterville, MN 56096 Holder

<CAPTION>
Percentage
Predecessor Type of Percentage of
Portfolio Name and Address Ownership of Class Portfolio
--------- ----------------- --------- -------- ---------
<S> <C> <C> <C> <C>
Class D Firstar Trust Co. Agent Class D 5.33% N/A
Firstar Bank of Minnesota Record
Hendricks Community Holder
Hospital Reserve Fund
P.O. Box 1787
Milwaukee, WI 53201

City of Mountain Lake Class D 10.84% N/A
</TABLE>

25
<PAGE>

City Hall Record Holder
Mountain Lake, MN 56159

OTHER

The Company's Registration Statement, including the Prospectus and SAI for
the Fund and the exhibits filed therewith, may be examined at the office of the
SEC in Washington, D.C. Statements contained in the Prospectus or the SAI as to
the contents of any contract or other document referred to herein or in the
Prospectus are not necessarily complete, and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

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.

FINANCIAL INFORMATION

The portfolio of investments, audited financial statements and independent
auditors' reports for the Predecessor Fund for the year ended December 31, 1996
are hereby incorporated by reference to the Overland Annual Reports as filed
with the SEC on March 11, 1997.

The Company's Annual Report for the fiscal period ended March 31, 1997 was
filed with the SEC on June 4, 1997. Annual Reports may be obtained by calling
1-800-222-8222.

26
<PAGE>

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 Bonds

Moody's: The four highest ratings for corporate bonds are "Aaa," "Aa," "A"
and "Baa." Bonds rated "Aaa" are judged to be of the "best quality" and carry
the smallest amount of investment risk. Bonds rated "Aa" are of "high quality by
all standards," but margins of protection or other elements make long-term risks
appear somewhat greater than "Aaa" rated bonds. Bonds rated "A" possess many
favorable investment attributes and are considered to be upper medium grade
obligations. Bonds rated "Baa" are considered to be medium grade obligations;
interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds 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.

Commercial Paper

Moody's: The highest rating for 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.

A-1
<PAGE>

S&P: The "A-1" rating for 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>

STAGECOACH FUNDS, INC.
SEC Registration Nos. 33-42927; 811-6419

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits
---------------------------------

(a) Financial Statements:
--------------------

With respect to the Aggressive Growth, Arizona Tax-Free, Asset
Allocation, Balanced, California Tax-Free Bond, California
Tax-Free Income, California Tax-Free Money Market Mutual,
Corporate Stock, Diversified Income, Equity Value, Ginnie Mae,
Government Money Market Mutual, Growth and Income, Intermediate
Bond, Money Market Mutual, Money Market Trust, National Tax-Free,
National Tax-Free Money Market Mutual, Oregon Tax-Free, Prime
Money Market Mutual, Short-Intermediate U.S. Government Income,
Small Cap, Treasury Money Market Mutual and U.S. Government
Allocation Funds, the portfolio of investments, audited financial
statements and independent auditors' report for the fiscal period
ended March 31, 1997 are incorporated in the respective
statements of additional information for such Funds by reference
to the Company's Annual Reports, as filed with the SEC on June 4,
1997.

With respect to the Asset Allocation, Capital Appreciation,
Corporate Stock, Small Cap, Tax-Free Money Market and U.S.
Government Allocation Master Portfolios of Master Investment
Trust ("MIT"), the portfolio of investments, audited financial
statements and independent auditors' report for the fiscal period
ended March 31, 1997 are incorporated in the respective
statements of additional information for such Funds by reference
to the Company's Annual Reports as filed with the SEC on June 4,
1997.

With respect to the International Equity Fund and National Tax
Free Money Market Trust, the financial statements for such Funds
will be incorporated by reference in their respective statements
of additional information when available.

With respect to the predecessor portfolios to the Index
Allocation, Overland Express Sweep, Short-Term
Government-Corporate Income, Short-term Municipal Income and
Variable Rate Government Funds, the portfolio of investments and
unaudited financial statements for the six month period ended
June 30, 1997 are hereby incorporated by reference to the
Semi-Annual Reports for Overland Express Funds, Inc. ("Overland")
(SEC File Nos. 33-16296; 811-8275) as filed with the SEC on
September 3, 1997.

C-1
<PAGE>

With respect to the Cash Investment Trust, Short-Term
Government-Corporate Income and Short-Term Municipal Income
Master Portfolios of MIT, the portfolio of investments and
unaudited financial statements for the six month period ended
June 30, 1997 are hereby incorporated by reference to the
Semi-Annual Reports for Overland as filed with the SEC on
September 3, 1997.

With respect to the predecessor portfolios to the Index
Allocation, Overland Express Sweep, Short-Term
Government-Corporate Income, Short-term Municipal Income and
Variable Rate Government Funds, the portfolio of investments,
audited financial statements and independent auditors' report for
the year ended December 31, 1996, are hereby incorporated by
reference to the Overland Annual Reports as filed with the SEC on
March 11, 1997.

With respect to the Cash Investment Trust, Short-Term
Government-Corporate Income and Short-Term Municipal Income
Master Portfolios of MIT, the portfolio of investments, audited
financial statements and independent auditors' report for the
year ended December 31, 1996, are hereby incorporated by
reference to the Overland Annual Reports as filed with the SEC on
March 11, 1997.

(b) Exhibits:
--------
<TABLE>
<CAPTION>

Exhibit
Number Description
------ -----------
<S> <C>

1(a) - 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.

1(b) - Articles Supplementary, filed herewith.

2 - By-Laws, incorporated by reference to Post-Effective
Amendment No. 31 to the Registration Statement, filed May 15,
1997.

3 - Not Applicable

4 - Not Applicable

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.

</TABLE>
C-2
<PAGE>

<TABLE>

<S> <C>
5(b)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the U.S. Government Allocation Fund, incorporated
by reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.

5(c) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.

5(d) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.

5(e) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.

5(f) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.

5(g)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.

5(g)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Corporate Stock Fund, incorporated by reference
to Post-Effective Amendment No. 21 to the Registration
Statement, filed February 29, 1996.

5(h) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.

5(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Income Fund, incorporated by
reference to Post-Effective Amendment No. 4 to the
Registration Statement, filed September 10, 1992.

5(j) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.

5(k) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Arizona Tax-Free Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.

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.

</TABLE>
C-3
<PAGE>

<TABLE>

<S> <C>
5(o) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Intermediate Bond Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.

5(p) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Money Market Trust Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.

5(q) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the National Tax-Free Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.

5(r) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Oregon Tax-Free Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.

5(s) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Prime Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.

5(t) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Treasury Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.

5(u) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the California Tax-Free Money Market Trust,
incorporated by reference to Post-Effective Amendment No. 28
to the Registration Statement, filed December 3, 1996.

5(v) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the National Tax-Free Money Market Trust,
incorporated by reference to Post-Effective Amendment No. 32
to the Registration Statement, filed May 30, 1997.

5(w) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the International Equity Fund, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.

5(v)(i) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the Index Allocation, Short-Term Government-
Corporate Income, Short-Term Municipal Income, Overland
Express Sweep and Variable Rate Government Funds, filed
herewith.

5(v)(ii) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors on behalf of the Index Allocation Fund, filed
herewith.

6(a) - Amended Distribution Agreement with Stephens Inc.,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.

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-4
<PAGE>

<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-5
<PAGE>

<TABLE>

<S> <C>
8(n) - Custody Agreement with Wells Fargo Bank on behalf of the
Arizona Tax-Free, Balanced, Equity Value, Government Money
Market Mutual, Index Allocation, Intermediate Bond, Money
Market Trust, National Tax-Free, Oregon Tax-Free, Overland
Express Sweep, Prime Money Market Mutual, Short-Term
Government-Corporate Income, Short-Term Municipal Income,
Treasury Money Market Mutual and Variable Rate Government
Funds, filed herewith.

9(a)(i) - Administration Agreement with Wells Fargo Bank, N.A. on
behalf of the Funds, incorporated by reference to Post-
Effective Amendment No. 33 to the Registration Statement,
filed August 5, 1997.

9(a)(ii) - Co-Administration Agreement with Wells Fargo Bank, N.A. and
Stephens Inc. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement, filed August 5, 1997.

9(b) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the
Funds, incorporated by reference to Post-Effective Amendment
No. 32 to the Registration Statement, filed May 30, 1997.

9(c)(i) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the California Tax-Free Money Market Mutual
Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.

9(c)(ii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Corporate Stock Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.

9(c)(iii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 3 to the
Registration Statement, filed May 1, 1992.

9(c)(iv) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the California Tax-Free Income Fund,
incorporated by reference to Post-Effective Amendment No. 17
to the Registration Statement, filed November 29, 1995.

9(c)(v) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Short-Intermediate U.S. Government Income
Fund, incorporated by reference to Post-Effective Amendment
No. 8 to the Registration Statement, filed February 10, 1994.

9(c)(vi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the National Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 24
to the Registration Statement, filed April 29, 1996.

9(c)(vii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.

9(c)(viii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the California Tax-Free
Bond Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.

</TABLE>
C-6
<PAGE>

<TABLE>
<S> <C>
9(c)(ix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Diversified Income
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.

9(c)(x) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.

9(c)(xi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Growth and Income
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.

9(c)(xii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the U.S. Government
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.

9(c)(xiii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment
No. 20 to the Registration Statement, filed February 28,
1996.

9(c)(xiv) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.

9(c)(xv) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the California
Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.

9(c)(xvi) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Diversified
Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.

9(c)(xvii) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Ginnie Mae
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.

9(c)(xviii) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Growth and
Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.

9(c)(xix) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the U.S.
Government Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
</TABLE>
C-7
<PAGE>
<TABLE>
<S> <C>
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.

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 on behalf of the Class B shares of the Index
Allocation Fund, filed herewith.

</TABLE>

C-8
<PAGE>

<TABLE>
<S> <C>
9(e)(i) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class A Shares of the Arizona Tax-Free,
Balanced, Equity Value, Government Money Market Mutual,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free, Prime Money Market Mutual, Small Cap and
Treasury Money Market Mutual Funds, incorporated by reference
to Post-Effective Amendment No. 32 to the Registration
Statement, incorporated by reference to Post-Effective
Amendment No. 32 to the Registration Statement, filed May 30,
1997.

9(e)(ii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class B Shares of the Arizona Tax-Free,
Balanced, Equity Value, Intermediate Bond, International
Equity, National Tax-Free, Oregon Tax-Free and Small Cap
Funds, incorporated by reference to Post-Effective Amendment
No. 32 to the Registration Statement, filed May 30, 1997.

9(e)(iii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Institutional Class Shares of the Aggressive
Growth, Arizona Tax-Free, Balanced, California Tax-Free Bond,
California Tax-Free Income, Equity Value, Ginnie Mae, Growth
and Income, Intermediate Bond, International Equity, Money
Market Mutual, National Tax-Free, Oregon Tax-Free, Prime
Money Market Mutual, Short-Intermediate Government, Small Cap
and Treasury Money Market Mutual Funds, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.

9(e)(iv) - 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(e)(v) - 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(e)(vi) - 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)(vii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Administrative Class shares of the Prime Money
Market Mutual and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 33
to the Registration Statement, filed August 5, 1997.

9(e)(viii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class C shares of the Aggressive Growth,
California Tax-Free Bond, Index Allocation, Ginnie Mae,
National Tax-Free Bond, Small Cap and Variable Rate
Government Funds, incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement, filed August
5, 1997.

9(e)(ix) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Institutional Class shares of the National Tax-
Free Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement, filed August 5, 1997.

</TABLE>
C-9
<PAGE>

<TABLE>
<S> <C>
9(f) - Shareholder Administrative Servicing Plan and Form of
Administrative Servicing Agreement on behalf of Class A
shares of Index Allocation and Variable Rate Government Funds
and shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds, filed herewith.

10 - Opinion and Consent of Counsel, filed herewith.

11 - Not Applicable

12 - Not Applicable

13 - Investment letter, incorporated by reference to Item 24(b) of
Pre-Effective Amendment No. 1 to the Registration Statement,
filed November 29, 1991.

14 - Not Applicable

15(a)(i) - Distribution Plan on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.

15(a)(ii) - Distribution Plan on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.

15(a)(iii) - Distribution Plan on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3
to the Registration Statement, filed May 1, 1992.

15(a)(iv) - Distribution Plan on behalf of the California Tax-Free Income
Fund, incorporated by reference to Post-Effective Amendment
No. 4 to the Registration Statement, filed September 10,
1992.

15(a)(v) - Distribution Plan on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-
Effective Amendment No. 8 to the Registration Statement,
filed February 10, 1994.

15(a)(vi) - 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(a)(vii) - 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(a)(viii) - 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(a)(ix) - 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(a)(x) - 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.
</TABLE>
C-10
<PAGE>

<TABLE>
<S> <C>
15(a)(xi) - 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(a)(xii) - 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)(xiii) - 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(a)(xiv) - 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(a)(xv) - Distribution Plan on behalf of the Class A Shares of the
Arizona Tax-Free, Balanced, Equity Value, Government Money
Market Mutual, Intermediate Bond, International Equity,
National Tax-Free, Oregon Tax-Free, Prime Money Market
Mutual, Small Cap and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 32,
filed May 30, 1997.

15(a)(xvi) - Distribution Plan on behalf of the Class A shares of the
Index Allocation and Variable Rate Government Funds and
shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds, filed herewith.

15(b)(i) - Distribution Plan on behalf of the Class B Shares of the
Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.

15(b)(ii) - Distribution Plan on behalf of the Class B Shares of the
California Tax-Free Bond Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.

15(b)(iii) - Distribution Plan on behalf of the Class B Shares of the
Diversified Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.

15(b)(iv) - Distribution Plan on behalf of the Class B Shares of the
Ginnie Mae Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.

15(b)(v) - Distribution Plan on behalf of the Class B Shares of the
Growth and Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.

15(b)(vi) - Distribution Plan on behalf of the Class B Shares of the U.S.
Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.

15(b)(vii) - Distribution Plan on behalf of the Class B Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.

</TABLE>
C-11
<PAGE>

<TABLE>
<S> <C>
15(b)(viii) - Distribution Plan on behalf of the Class B Shares of the
Arizona Tax-Free, Balanced, Equity Value, Index Allocation,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free and Small Cap Funds, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.

15(c) - Distribution Plan on behalf of the Class C Shares of the
Aggressive Growth, California Tax-Free Bond, Index
Allocation, Ginnie Mae, National Tax-Free Bond, Small Cap and
Variable Rate Government Funds, incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement, filed August 5, 1997.

15(d) - Distribution Plan on behalf of the Overland Sweep Fund, filed
herewith.

15(e) - Distribution Plan on behalf of the Class E Shares of the
Treasury Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 29, filed January 23, 1997.

16 - Schedules for Computation of Performance Data, incorporated
by reference to Post-Effective Amendment No. 15, filed May 1,
1995.

17 - See Exhibit 27.

18 - Rule 18f-3 Multi-Class Plan, as amended, incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement, filed August 5, 1997.

19 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat,
Thomas S. Goho, Joseph N. Hankin, W. Rodney Hughes, Robert M.
Joses and J. Tucker Morse, incorporated by reference to Post-
Effective Amendment No. 32, filed May 30, 1997.

27 - Financial Data Schedules for the period ended September 30,
1996, incorporated by reference to the Form N-SAR filed
December 9, 1996; Financial Data Schedules for the fiscal
period ended March 31, 1997, incorporated by reference to the
Form N-SAR, filed May 29, 1997.
</TABLE>

Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------

As of June 30, 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 June 30, 1997, the Aggressive Growth, National Tax-Free
Money Market Mutual and Small Cap Funds owned approximately 25%, 18% and 90% 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.

C-12
<PAGE>

Item 26. Number of Holders of Securities
-------------------------------

As of June 30, 1997 the number of record holders of each class of
Securities of the Registrant was as follows:

Title of Class Number of Record Holders
-------------- ------------------------
Class A* Class B Institutional
-------- ------- -------------
Class
-----
<S> <C> <C> <C>
Aggressive Growth Fund 1,664 1,942 N/A

Arizona Tax-Free Fund 206 7 7

Asset Allocation Fund 11,184 6,008 N/A

Balanced Fund 1,789 125 118

California Tax-Free Bond Fund 8,423 1,111 44

California Tax-Free Income Fund 3,253 N/A 3

California Tax-Free Money Market Trust 0 N/A N/A

Corporate Stock Fund 1,318 N/A N/A

Diversified Income Fund 11,850 2,562 N/A

Equity Value Fund 1,338 809 122

Ginnie Mae Fund 3,133 657 88

Government Money Market Mutual Fund 174 N/A N/A

Growth and Income Fund 12,498 2,409 30

Intermediate Bond Fund 151 44 7

Money Market Mutual Fund 12,046 2** 6

Money Market Trust 7 N/A N/A

National Tax-Free Fund 118 9 5

National Tax-Free Money Market Mutual Fund 79 N/A N/A

Oregon Tax-Free Fund 684 10 9

Prime Money Market Mutual 262 4*** 53

Short-Intermediate U.S. Government Income Fund 843 N/A 59
</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

C-13
<PAGE>

Title of Class Number of Record Holders
-------------- ------------------------
Class A* Class B Institutional
-------- ------- -------------
Class
-----
<S> <C> <C> <C>
Small Cap Fund 252 398 11

Treasury Money Market Mutual Fund 259 4*** 225
1****
U.S. Government Allocation Fund 1,424 246 N/A
</TABLE>

As of August 31, 1997 the number of record holders of each class
of Securities of the Overland predecessor portfolios were as follows:

Title of Class Number of Record Holders
-------------- ------------------------
Class A* Class D**
-------- ---------
<S> <C> <C>
Index Allocation Fund 1192 811
Overland Express Sweep Fund 3 N/A
Short-Term Government-Corporate Income Fund 16 N/A
Short-Term Municipal Income Fund 18 N/A
Variable Rate Government Fund 816 49
</TABLE>

* For purposes of this chart, shares of single class Funds are included under
the designation "Class A"
** If the Consolidation is approved, Class D shareholders of the Overland Fund
will become Class C shareholders of the Stagecoach Fund on or about
December 12, 1997.

Item 27. Indemnification
---------------

The following paragraphs of Article VIII of the Registrant's
Articles of Incorporation provide:

(h) The Corporation shall indemnify (1) its Directors and
Officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by law,
and (2) its other employees and agents to such extent as shall be
authorized by the Board of Directors or the Corporation's By-Laws and be
permitted by law. The foregoing rights of indemnification shall not be
exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary
to carry out these indemnification provisions and is expressly empowered
to adopt, approve and amend from time to time such By-Laws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of these Articles
of Incorporation of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal. Nothing contained herein
shall be construed to authorize the Corporation to indemnify any Director
or officer of the Corporation against any liability to the Corporation or
to any holders of securities of the Corporation to which he is subject by

C-14
<PAGE>

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.

Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, 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
</TABLE>

C-15
<PAGE>

<TABLE>

<S> <C>
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

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
</TABLE>

C-16
<PAGE>

<TABLE>
<S> <C>
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
Director Graduate School of Business at Stanford University
MBA Admissions Office
Stanford, CA 94305

Director of Bailard Biehl & Kaiser
Real Estate Investment Trust, Inc.
2755 Campus Dr.
San Mateo, CA 94403

Director of Boise Cascade Corporation
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728

Director of California Water Service Company
1720 North First Street
San Jose, CA 95112

Director of Enron Corporation
1400 Smith Street
Houston, TX 77002

Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333

Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108
</TABLE>

C-17
<PAGE>

<TABLE>

<S> <C>
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
University of California at San Francisco Foundation
250 Executive Park Blvd.
Suite 2000
San Francisco, CA 94143

Director of the California Chamber of Commerce
1201 K Street
12th Floor
Sacremento, CA 95814

Philip J. Quigley Chairman, President and Chief Executive Officer of
Director Pacific Telesis Group
130 Kearney Street Rm. 3700
San Francisco, CA 94108

Carl E. Reichardt Director of Columbia/HCA Healthcare Corporation
Director One Park Plaza
Nashville, TN 37203

Director of Ford Motor Company
The American Road
Dearborn, MI 48121

Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355

Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
</TABLE>

C-18
<PAGE>

<TABLE>
<S> <C>
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

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
</TABLE>

C-19
<PAGE>

<TABLE>
<S> <C>
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
Director of Raychem Corporation
300 Constitution Drive
Menlo Park, CA 94025

John A. Young President, Chief Executive Officer and Director
Director of Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 9434

Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104

Director of Lucent Technologies
25 John Glenn Drive
Amherst, NY 14228

Director of Novell, Inc.
11300 West Olympic Blvd.
Los Angeles, CA 90064

Director of Shaman Pharmaceuticals Inc.
213 East Grand Ave. South
San Francisco, CA 94080

William F. Zuendt President of Wells Fargo & Company
President 420 Montgomery Street
San Francisco, CA 94105

Director of 3Com Corporation
5400 Bayfront Plaza, P.O. Box 58145
Santa Clara, CA 95052
</TABLE>

C-20
<PAGE>

Director of the California Chamber of Commerce

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.
To the knowledge of the Registrant, except as set forth below, none of the
directors or executive officers of BGFA is or has been at any time during the
past two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.

<TABLE>

Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ------- -------------------------------
<S> <C>
Frederick L.A. Grauer Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105

Patricia Dunn Director of BGFA and C-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105

Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105

Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market 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

C-21
<PAGE>

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., Life & Annuity Trust, MasterWorks Funds, Inc. (formerly, Stagecoach Inc.),
Stagecoach Trust, Nations Fund, Inc., Nations Fund Trust, Nations Fund
Portfolios, Inc., Nations LifeGoal 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 and Master
Investment Portfolio, all of which are registered open-end management investment
companies, and has acted as principal underwriter for Nations Government Income
Term Trust 2003, Inc., Nations Government Income Term Trust 2004, Inc., and
Nations Managed Balanced Target Maturity Fund, Inc., which are closed-end
management investment companies.

(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens Inc. with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940 (file No. 501-15510).

Item 30. Location of Accounts and Records.
--------------------------------

(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder (collectively, "Records") at the offices of Stephens Inc., 111 Center
Street, Little Rock, Arkansas 72201.

(b) Wells Fargo Bank maintains all Records relating to its
services as investment adviser, administrator and custodian and transfer and
dividend disbursing agent at 525 Market Street, San Francisco, California 94105.

(c) WFNIA and Wells Fargo Institutional Trust Company, N.A.
maintain all Records relating to their services as sub-adviser and custodian,
respectively, for the period prior to January 1, 1996, at 45 Fremont Street, San
Francisco, California 94105.

(d) BGFA and BGI maintain all Records relating to their services
as sub-adviser and custodian, respectively, for the period beginning January 1,
1996 at 45 Fremont Street, San Francisco, California 94105.

(e) Stephens maintains all Records relating to its services as
sponsor, co-administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.

C-22
<PAGE>

Item 31. Management Services.
-------------------

Other than as set forth under the captions "The Fund(s) and
Management" in the Prospectuses constituting Part A of this Registration
Statement and "Management" in the Statements of Additional Information
constituting Part B of this Registration Statement, the Registrant is not a
party to any management-related service contract.

Item 32. Undertakings.
------------

(a) Not Applicable.

(b) Registrant undertakes to file a Post-Effective Amendment,
using financial statements for the Index Allocation,
Overland Express Sweep, Short-Term Government-Corporate
Income, Short-Term Municipal Income and Variable Rate
Government Funds, which need not be certified, within four
to six months from the later of the effective date of this
Registration Statement or the Funds' commencement of
operations.

(c) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of its most current
annual report to shareholders, upon request and without
charge.

(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the provisions set forth above in response to Item 27,
or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

C-23
<PAGE>

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 24th day of September, 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:

Signature Title Date
--------- ----- ----
<S> <C> <C>
*
---------------------------- Director, Chairman and President 9/24/97
(R. Greg Feltus) (Principal Executive Officer)

/s/Richard H. Blank, Jr. Secretary and Treasurer 9/24/97
---------------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)

*
---------------------------- Director 9/24/97
(Jack S. Euphrat)

*
---------------------------- Director 9/24/97
(Thomas S. Goho)

*
---------------------------- Director 9/24/97
(Joseph N. Hankin)

*
---------------------------- Director 9/24/97
(W. Rodney Hughes)

*
---------------------------- Director 9/24/97
(Robert M. Joses)

*
---------------------------- Director 9/24/97
(J. Tucker Morse)
</TABLE>

*By /s/Richard H. Blank, Jr.
------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
September 24, 1997
<PAGE>

STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419

EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit Number Description
<S> <C>
EX-99.1(b) Articles Supplementary

EX-99.5(v)(i) Form of Investment Advisory Contract with Wells Fargo
Bank, N.A.

EX-99.5(v)(ii) Form of Sub-Advisory Contract with Barclays Global Fund
Advisors on behalf of the Index Allocation Fund

EX-99.8(n) Custody Agreement with Wells Fargo Bank, N.A.

EX-99.9(d)(x) Servicing Plan on behalf of Class B shares of the Index
Allocation Fund

EX-99.9(f) Shareholder Administrative Servicing Plan and
Form of Administrative Servicing Agreement on
behalf of Class A shares of the Index Allocation
and Variable Rate Government Funds and shares of
the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds

EX-99.B10 Opinion and Consent of Counsel

EX-99.B11 Independent Auditor's Consent

EX-99.15(a)(xvi) Distribution Plan on behalf of Class A shares of the
Index Allocation and Variable Rate Government Funds and
shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds

EX-99.15(d) Distribution Plan on behalf of the Overland Express
Sweep Fund
</TABLE>

<PAGE>

EXHIBIT 99.1(b)

STAGECOACH FUNDS, INC.

ARTICLES SUPPLEMENTARY

INCREASING THE AGGREGATE NUMBER OF SHARES OF CAPITAL
STOCK OF THE CORPORATION, RECLASSIFYING AN EXISTING
SERIES, REDESIGNATING EXISTING SERIES,
ESTABLISHING NEW SERIES AND
ESTABLISHING NEW CLASSES
OF EXISTING SERIES

Stagecoach Funds, Inc., a Maryland corporation (the
"Corporation"), having its principal office in Maryland at The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202 hereby certifies to the
State Department of Assessments and Taxation of Maryland that:

FIRST: The Corporation is registered as an open-end
management investment company under the Investment Company Act of 1940.

SECOND: Pursuant to authority expressly vested in the
Board of Directors by the Amended and Restated Articles of
Incorporation of the Corporation (the "Charter") and Article Sixth
thereto, and in accordance with Sections 2-105(a), 2-105(c) and 2-208
of the Corporation and Associations Article of the Annotated Code of
Maryland, and pursuant to resolutions duly adopted on July 23, 1997,
the Board of Directors of the Corporation has taken the following
actions:

(1) reclassified one hundred million (100,000,000)
shares of the Corporation's authorized, classified
and designated shares, with a par value of $.001
per share, currently classified and designated as
the existing class of the Variable Rate Government
Series, as authorized, unclassified and unissued
shares of the Corporation; and

(2) redesignated five billion (5,000,000,000) shares of
the Corporation's authorized, classified and
designated shares, with a par value of $.001 per
share, currently classified and designated as the
existing class of the National Tax-Free Money
Market Mutual Series, as "Class A Shares" of the
National Tax-Free Money Market Mutual Series; and

(3) increased the aggregate number of shares of stock
that the Corporation is authorized to issue by ten
billion,
<PAGE>

four hundred million (10,400,000,000) shares, $.001
par value per share; and

(4) designated and classified three hundred million
(300,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
shares of the "Short-Term Government-Corporate
Income Series" and provided for the issuance of
such shares; and

(5) designated and classified three hundred million
(300,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
shares of the "Short-Term Municipal Income Series"
and provided for the issuance of such shares; and

(6) designated and classified three billion
(3,000,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
shares of the "Overland Express Sweep Series" and
provided for the issuance of such shares; and

(7) designated and classified three hundred million
(300,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
shares of the "Index Allocation Series" and
provided for the issuance of one hundred million
(100,000,000) of such shares as Class A, one
hundred million (100,000,000) of such shares as
Class B and one hundred million (100,000,000) of
such shares as Class C shares; and

(8) designated and classified one billion
(1,000,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
shares of the "Variable Rate Government Series" and
provided for the issuance of five hundred million
(500,000,000) of such shares as Class A and five
hundred million (500,000,000) of such shares as
Class C shares; and

(9) designated and classified one hundred million
(100,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Class C shares of the existing Aggressive Growth
Series; and

(10) designated and classified one hundred million
(100,000,000) shares of the Corporation's
authorized,

2
<PAGE>

unclassified and unissued shares as Class C shares
of the existing California Tax-Free Bond Series;
and

(11) designated and classified one hundred million
(100,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Class C shares of the existing Ginnie Mae Series;
and

(12) designated and classified three billion
(3,000,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Institutional Class shares of the existing National
Tax-Free Money Market Mutual Series; and

(13) designated and classified one hundred million
(100,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Class C shares of the existing National Tax-Free
Series; and

(14) designated and classified one billion
(1,000,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Administrative Class shares of the existing Prime
Money Market Mutual Series; and

(15) designated and classified one hundred million
(100,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Class C shares of the existing Small Cap Series;
and

(16) designated and classified one billion
(1,000,000,000) shares of the Corporation's
authorized, unclassified and unissued shares as
Administrative Class shares of the existing
Treasury Money Market Mutual Series.

THIRD: The shares authorized and classified in Article SECOND
hereto shall have the same preferences, conversions and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as each previously authorized and classified Series and
Class of the Corporation.

FOURTH: In connection with Article SECOND hereto, the Corporation
provides the following information:

Prior to the authorization and classification, the number of
shares of stock of each Series and Class of the Corporation was as follows:

3
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
Aggressive Growth Series
Class A 150,000,000
Class B 150,000,000
Institutional 150,000,000

Arizona Tax-Free Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Asset Allocation Series
Class A 100,000,000
Class B 100,000,000

Balanced Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

California Tax-Free Bond Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

California Tax-Free Income Series
Class A 100,000,000
Institutional 100,000,000

California Tax-Free Money Market
Mutual Series 10,000,000,000

California Tax-Free Money Market Trust Series
5,000,000,000

Corporate Stock Series 100,000,000

Diversified Income Series
Class A 100,000,000
Class B 100,000,000

Equity Value Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000
</TABLE>

4
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
Ginnie Mae Series
Class A 300,000,000
Class B 300,000,000
Institutional 300,000,000

Government Money Market Mutual Series
Class A 5,000,000,000

Growth and Income Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Intermediate Bond Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

International Equity Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Money Market Mutual Series
Class A 10,000,000,000
Class S 5,000,000,000
Institutional 5,000,000,000

Money Market Trust Series 5,000,000,000

National Tax-Free Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

National Tax-Free Money Market
Mutual Series 5,000,000,000

National Tax-Free Money Market
Trust Series 5,000,000,000
</TABLE>

5
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
Oregon Tax-Free Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Prime Money Market Mutual Series
Class A 5,000,000,000
Institutional 5,000,000,000
Service 5,000,000,000

Short-Intermediate U.S.
Government Income Series
Class A 100,000,000
Institutional 100,000,000

Small Cap Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Treasury Money Market Mutual Series
Class A 5,000,000,000
Class E 5,000,000,000
Institutional 5,000,000,000
Service 5,000,000,000

U.S. Government Allocation Series
Class A 300,000,000
Class B 300,000,000

Variable Rate Government Series (Old) 100,000,000

Unclassified 350,000,000
-----------

TOTAL 96,300,000,000
</TABLE>

FIFTH: After the increase of the Corporation's authorized shares
and the classification and designation of shares as set forth in Article SECOND
hereto, the number of shares of stock of each series and class of the
Corporation is as follows:

6
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
Aggressive Growth Series
Class A 150,000,000
Class B 150,000,000
Class C 100,000,000
Institutional 150,000,000

Arizona Tax-Free Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Asset Allocation Series
Class A 100,000,000
Class B 100,000,000

Balanced Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

California Tax-Free Bond Series
Class A 100,000,000
Class B 100,000,000
Class C 100,000,000
Institutional 100,000,000

California Tax-Free Income Series
Class A 100,000,000
Institutional 100,000,000

California Tax-Free Money Market
Mutual Series 10,000,000,000

California Tax-Free Money Market Trust Series
5,000,000,000

Corporate Stock Series 100,000,000

Diversified Income Series
Class A 100,000,000
Class B 100,000,000
</TABLE>

7
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
Equity Value Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Ginnie Mae Series
Class A 300,000,000
Class B 300,000,000
Class C 100,000,000
Institutional 300,000,000

Government Money Market Mutual Series
Class A 5,000,000,000

Growth and Income Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Index Allocation Series
Class A 100,000,000
Class B 100,000,000
Class C 100,000,000

Intermediate Bond Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

International Equity Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Money Market Mutual Series
Class A 10,000,000,000
Class S 5,000,000,000
Institutional 5,000,000,000

Money Market Trust Series 5,000,000,000
</TABLE>

8
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
National Tax-Free Series
Class A 100,000,000
Class B 100,000,000
Class C 100,000,000
Institutional 100,000,000

National Tax-Free Money Market Mutual Series
Class A 5,000,000,000
Institutional 3,000,000,000

National Tax-Free Money Market Trust Series 5,000,000,000

Oregon Tax-Free Series
Class A 100,000,000
Class B 100,000,000
Institutional 100,000,000

Overland Express Sweep Series 3,000,000,000

Prime Money Market Mutual Series
Class A 5,000,000,000
Administrative 1,000,000,000
Institutional 5,000,000,000
Service 5,000,000,000

Short-Intermediate U.S.
Government Income Series
Class A 100,000,000
Institutional 100,000,000

Short-Term Government-Corporate
Income Series 300,000,000

Short-Term Municipal Income Series 300,000,000

Small Cap Series
Class A 100,000,000
Class B 100,000,000
Class C 100,000,000
Institutional 100,000,000
</TABLE>

9
<PAGE>

Class Number of Shares
----- ----------------
<S> <C>
Treasury Money Market Mutual Series
Class A 5,000,000,000
Class E 5,000,000,000
Administrative 1,000,000,000
Institutional 5,000,000,000
Service 5,000,000,000

U.S. Government Allocation Series
Class A 300,000,000
Class B 300,000,000

Variable Rate Government Series (New)
Class A 500,000,000
Class C 500,000,000

Unclassified 450,000,000

---------------
TOTAL 106,700,000,000
</TABLE>

SIXTH: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the shares classified as the Index
Allocation Series, Overland Express Sweep Series, Short-Term
Government-Corporate Income Series, Short-Term Municipal Income Series and the
Variable Rate Government Series (each, a "New Series") as stated in Article
SECOND hereto is as follows:

1. Assets Belonging to the New Series. All
----------------------------------
consideration received by the Corporation for the issue or sale of
shares of a New Series shall be invested and reinvested with the
consideration received by the Corporation for the issue and sale of all
other shares now or hereafter designated as shares of the New Series
together with all assets in which such consideration is invested and
reinvested, income, earnings, profits and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
the Corporation allocated to shares of the New Series or such other
shares by the Board of Directors in accordance with the Corporation's
Charter, shall irrevocably belong to the New Series of shares of
capital stock or such other shares with respect to which such assets,
payments or funds were received by the Corporation for all purposes,
subject only to the rights of creditors, and shall be so handled upon
the books of account of the Corporation. Such consideration, assets,
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any assets
derived from any reinvestment of such proceeds in whatever form, are
herein referred to as

10
<PAGE>

"assets belonging to" the New Series. Any assets, income, earnings,
profits, and proceeds thereof, funds or payments which are not readily
attributable to a New Series, or other series, shall be allocable among
the New Series and other series of the Corporation in such manner and
on such basis as the Board of Directors, in its sole discretion, shall
deem fair and equitable.

2. Liabilities Belonging to a New Series. The assets
-------------------------------------
belonging to a New Series of capital stock, or any other share now or
hereafter designated as a share of a New Series, shall be charged with
the liabilities in respect of such New Series and shall be charged with
such New Series' share of the general liabilities of the Corporation as
hereinafter provided. The determination of the Board of Directors shall
be conclusive as to the amount of such liabilities; including the
amount of accrued expenses and reserves; as to any allocation of such
liabilities to a New Series; and as to whether the same are allocable
to the New Series or other series. The liabilities so allocated to a
New Series are herein referred to as "liabilities belonging to" the New
Series. Any liabilities which are not readily attributable to any
particular series shall be allocable among any one or more series in
such manner and on such basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable.

3. Preferences, Conversion and Other Rights, Voting
------------------------------------------------
Powers, Restrictions, Limitations as to Dividends, Qualifications and
---------------------------------------------------------------------
Terms and Conditions of Redemption. Except as provided hereby, each
----------------------------------
share of a New Series shall have the same preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption applicable to
all other shares of common stock as set forth in the Charter and shall
also have the same preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption as each other share formerly, now or
hereafter classified as a share of the New Series, provided that on any
matter submitted to a vote of shareholders, all shares of capital stock
then issued and outstanding and entitled to vote shall be voted in the
aggregate and not by series or class except that: (i) when expressly
required by law, shares of capital stock shall be voted by individual
class or series; and (ii) only shares of the respective series or class
or classes affected by a matter shall be entitled to vote on such
matter.

SEVENTH: A description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the new classes of shares classified
and designated as Administrative Class shares of the Prime Money Market Mutual
Series and Treasury Money Market Mutual Series, Class C shares of the Aggressive
Growth Series, California Tax-Free Bond Series, National Tax-Free Series, Small
Cap Series, and U.S. Government Income Series, Class B shares of the Index
Allocation Series and Institutional Class shares of the National Tax-Free Money
Market Mutual Series stated in Article SECOND hereto each, a "Class" is as
follows:

1. Assets Belonging to a Class. All consideration received by the
---------------------------
Corporation for the issue or sale of a new Class of shares shall be
invested and reinvested with the

11
<PAGE>

consideration received by the Corporation for the issue and sale of all
other shares now or hereafter designated as such Class together with
all assets in which such consideration is invested and reinvested,
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any funds
or payments derived from any reinvestment of such proceeds in whatever
form the same may be, and any general assets of the Corporation
allocated to a new Class of shares or such other class of shares by the
Board of Directors in accordance with the Corporation's Charter, shall
irrevocably belong to the new Class of shares or such other class of
shares with respect to which such assets, payments or funds were
received by the Corporation for all purposes, subject only to the
rights of creditors, and shall be so handled upon the books of account
of the Corporation. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein referred to
as "assets belonging to" a new Class of shares or such other class of
shares. Any assets, income, earnings, profits, and proceeds thereof,
funds or payments which are not readily attributable to any particular
class of a Series shall be allocable among any one or more of the
classes of shares of such Series or such other shares of the
Corporation in such manner and on such basis as the Board of Directors,
in its sole discretion, shall deem fair and equitable.

2. Liabilities Belonging to a Class. The assets belong to a new
--------------------------------
Class of shares or any other shares now or hereafter designated as a
Class of an existing Series, shall be charged with the liabilities in
respect of such Class, shall also be charged with such Class's share of
the general liabilities of the Series, and shall further be charged
with such Class's share of the general liabilities of the Corporation
charged to the Series and determined as hereinafter provided. The
determination of the Board of Directors shall be conclusive as to the
amount of such liabilities, including the amount of accrued expenses
and reserves, as to any allocation of such liabilities to a Series or a
given Class thereof; and as to whether the same are allocable to one or
more classes of the Series. The liabilities so allocated to a Class or
Series are herein referred to as "liabilities belonging to" such Class
or Series. Any liabilities which are not readily attributable to any
particular class or series shall be allocable among any one or more of
the Classes or Series in such manner and on such basis as the Board of
Directors, in its sole discretion, shall deem fair and equitable.

EIGHTH: The total number of shares the Corporation is authorized
to issue is increased to one hundred and six billion, seven hundred million
(106,700,000,000) shares from ninety-six billion, three hundred million
(96,300,000,000) shares and the aggregate par value of all shares having a $.001
par value is increased to one hundred and six million, seven hundred thousand
($106,700,000,000) dollars from ninety-six million, three hundred thousand
($96,300,000) dollars.

NINTH: The Board of Directors has duly authorized the filing of
these Articles Supplementary.

12
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused these presents to
be signed in its name and on its behalf by its President and witnessed by its
Secretary as of the 23rd day of July, 1997.

WITNESS: STAGECOACH FUNDS, INC.

By: Richard H. Blank, Jr. By: R. Greg Feltus
Richard H. Blank, Jr. R. Greg Feltus
Chief Operating Officer, President
Secretary and Treasurer

THE UNDERSIGNED, President of the Corporation, who executed on
behalf of the Corporation the Articles Supplementary of which this Certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of said
Corporation and hereby certifies that the matters and facts set forth herein
with respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury, and that the Board of Directors of the
Corporation has duly authorized the filing of these Articles Supplementary.

By: R. Greg Feltus
R. Greg Feltus
President

<PAGE>

EXHIBIT 99.B5(v)(i)

FORM OF INVESTMENT ADVISORY CONTRACT

for various portfolios of

STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201

December _______, 1997

Wells Fargo Bank, N.A.
420 Montgomery Street
San Francisco, California 94163

Dear Sirs:

This will confirm the agreement between the undersigned (the "Company"), on
behalf of the Company's investment portfolios listed on Schedule 1 hereto, as
such Schedule may be revised from time to time (each, a "Fund" and collectively,
the "Funds"), and Wells Fargo Bank, N.A. (the "Adviser") as follows:

1. The Company is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios.
The Company proposes to engage in the business of investing and reinvesting the
assets of each Fund in the manner and in accordance with the investment
objective and restrictions specified in the Company's currently effective
prospectus and the currently effective statement of additional information
incorporated by reference therein relating to the Funds and the Company (such
prospectus and such statement of additional information being collectively
referred to as the "Prospectus") included in the Company's Registration
Statement, as amended from time to time (the "Registration Statement"), filed by
the Company under the Investment Company Act of 1940 (the "Act") and the
Securities Act of 1933. Copies of the Registration Statement have been
furnished to the Adviser. Any amendments to the Registration Statement shall be
furnished to the Adviser promptly.

2. The Company is engaging the Adviser to manage the investing and
reinvesting of the assets of each Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an administration agreement
between the Company and the Advisor, and a co-administration agreement between
the Company and Stephens Inc. (the "Administrators") on behalf of the Funds, the
Company has engaged the Administrators to provide the administrative services
specified therein.

3. (a) The Adviser shall make investments for the account of each Fund
in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Company's Prospectus, the
Act and the provisions of the Internal Revenue Code relating to regulated
investment companies, subject to policy decisions adopted by the Company's Board
of Directors. The Adviser shall advise the Company's officers and Board of
Directors, at such times as the Company's Board of Directors may specify, of
investments made for a Fund and shall, when requested by the Company's officers
or Board of Directors, supply the reasons for making particular investments.
<PAGE>

(b) The Adviser shall provide to the Company investment guidance and
policy direction in connection with the daily management of the Funds'
portfolios, including oral and written research, analysis, advice, statistical
and economic data and information and judgments, and shall furnish to the
Company's Board of Directors periodic reports on the investment strategy and
performance of the Funds and such additional reports and information as the
Company's Board of Directors and officers shall reasonably request.

(c) The Adviser shall pay the costs of printing and distributing all
materials relating to the Funds prepared by it, or prepared at its request,
other than such costs relating to proxy statements, prospectuses, shareholder
reports and other materials distributed to existing or prospective shareholders
on behalf of a Fund.

(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.

4. The Company understands that the Adviser, in rendering its services
to the Funds hereunder, may engage a sub-adviser to provide certain sub-advisory
services pursuant to a separate sub-advisory contract. The Adviser will not seek
to amend any sub-advisory contract to materially alter the obligations of the
parties unless the Adviser gives the Company at least 60 days' prior written
notice thereof.

5. Except as provided in each of the advisory contracts and
administration agreements on behalf of the Company's funds, each fund of the
Company, including the Funds, shall bear all costs of its operations, except to
the extent that such costs are identified as attributable to a specific class of
a fund ("Class Expenses"), including the fund's pro-rata portion of the
compensation of the Company's directors who are not affiliated with the Adviser,
the Administrator or any of their affiliates; advisory and administration fees;
governmental fees; interest charges; taxes; fees and expenses of its independent
auditors, legal counsel, transfer agent and dividend disbursing agent; expenses
of redeeming shares; expenses of preparing and printing any stock certificates,
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; travel expenses of directors, officers and employees; office supplies;
insurance premiums and certain expenses relating to insurance coverage; trade
association membership dues; brokerage and other expenses connected with the
execution of portfolio securities transactions; fees and expenses of any
custodian, including those for keeping books and accounts and calculating the
net asset value per share of the fund; expenses of shareholders' meetings;
expenses relating to the issuance, registration and qualification of shares of
the fund; expenses relating to any pricing services; organizational expenses;
and any extraordinary expenses; except that Class Expenses, such as payments
related to a servicing plan or distribution-related expenses pursuant to a Rule
12b-1 Plan, i.e., a plan of distribution of the Company adopted on behalf of a
- -
class of shares of the fund pursuant to Rule 12b-1 under the Act, or other such
expenses as determined in accordance with the Company's Rule 18f-3 Plan, shall
be borne by the applicable class of the fund. Expenses attributable to one or
more, but not all, of the Company's funds are charged against the assets of the
relevant Funds. General expenses of the Company are allocated among the funds in
a manner proportionate to the net assets of each fund, on a transactional basis,
or on such other basis as the Board of Directors deems equitable.

6. The Adviser shall give the Company the benefit of the Adviser's best
judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Company
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this

2
<PAGE>

contract shall be deemed to protect or purport to protect the Adviser against
any liability to the Company or its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties under this contract or by
reason of reckless disregard of its obligations and duties hereunder.

7. In consideration of the services to be rendered by the Adviser under
this contract, the Company shall pay the Adviser a monthly fee at the rates
specified on Schedule 1 hereto. If the fee payable to the Adviser pursuant to
this paragraph 7 begins to accrue before the end of any month or if this
contract terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating each such monthly fee, the
value of a Fund's net assets shall be computed in the manner specified in the
Prospectus and the Company's Articles of Incorporation for the computation of
the value of such Fund's net assets in connection with the determination of the
net asset value of Fund shares.

8. If in any fiscal year the total expenses of a Fund incurred by, or
allocated to, such Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized in
accordance with generally accepted accounting principles, extraordinary expenses
and amounts accrued or paid under a Rule 12b-1 Plan of the Fund, but including
the fees provided for in paragraph 7 and those provided for pursuant to the
Fund's Administration Agreements ("includible expenses"), exceed the most
restrictive expense limitation applicable to the Fund imposed by state
securities laws or regulations thereunder, as these limitations may be raised or
lowered from time to time, the Adviser shall waive or reimburse that portion of
the excess derived by multiplying the excess by a fraction, the numerator of
which shall be the percentage at which the excess portion attributable to the
fee payable pursuant to this agreement is calculated under paragraph 7 hereof,
and the denominator of which shall be the sum of such percentage plus the
percentage at which the excess portion attributable to the fee payable pursuant
to the Funds' Administration Agreements is calculated (the "Applicable Ratio"),
but only to the extent of the fee hereunder for the fiscal year. If the fees
payable under this agreement and/or the Funds' Administration Agreements
contributing to such excess portion are calculated at more than one percentage
rate, the Applicable Ratio shall be calculated separately on the basis of, and
applied separately to, the portions of the fees calculated at the different
rates. At the end of each month of the Company's fiscal year, the Company shall
review the includible expenses accrued during that fiscal year to the end of the
period and shall estimate the contemplated includible expenses for the balance
of that fiscal year. If as a result of that review and estimation it appears
likely that the includible expenses will exceed the limitations referred to in
this paragraph 8 for a fiscal year with respect to a Fund, the monthly fee set
forth in paragraph 7 payable to the Adviser for such month shall be reduced,
subject to a later adjustment, by an amount equal to the Applicable Ratio times
the pro rata portion (prorated on the basis of the remaining months of the
fiscal year, including the month just ended) of the amount by which the
includible expenses for the fiscal year are expected to exceed the limitations
provided for in this paragraph 8. For purposes of computing the excess, if any,
over the most restrictive applicable expense limitation, the value of a Fund's
net assets shall be computed in the manner specified in the last sentence of
paragraph 7, and any reimbursements required to be made by the Adviser shall be
made once a year promptly after the end of the Company's fiscal year.

9. This contract shall become effective on its execution date and shall
thereafter continue in effect, provided that this contract shall continue in
effect for a period of more than two years from the date hereof only so long as
the continuance is specifically approved at least annually (a) by the vote of a

3
<PAGE>

majority of the relevant Fund's outstanding voting securities (as defined in the
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this contract or "interested persons" (as defined in the
Act) of any such party. This contract may be terminated at any time by the
Company, without the payment of any penalty, by a vote of a majority of the
relevant Fund's outstanding voting securities (as defined in the Act) or by a
vote of a majority of the Company's entire Board of Directors on 60 days'
written notice to the Adviser or by the Adviser, at any time after the second
anniversary of the effective date of this contract, on 60 days' written notice
to the Company. This contract shall terminate automatically in the event of its
assignment (as defined in the Act).

10. Except to the extent necessary to perform the Adviser's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.

11. The Adviser and the Company each agree that the words "Stagecoach,"
which comprise a component of the Company's name, is a property right of the
parent of the Adviser. The Company agrees and consents that: (i) it will use
the words "Stagecoach" as a component of its corporate name, the name of any
class, or both and for no other purpose; (ii) it will not grant to any third
party the right to use the words "Stagecoach" for any purpose; (iii) the Adviser
or any corporate affiliate of the Adviser may use or grant to others the right
to use the words "Stagecoach," or any combination or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
other than a grant of such right to another registered investment company not
advised by the Adviser or one of its affiliates; and (iv) in the event that the
Adviser or an affiliate thereof is no longer acting as investment adviser to any
class, the Company shall, upon request by the Adviser, promptly take such action
as may be necessary to change its corporate name to one not containing the words
"Stagecoach" and following such change, shall not use the words "Stagecoach," or
any combination thereof, as a part of its corporate name or for any other
commercial purpose, and shall use its best efforts to cause its directors,
officers, and shareholders to take any and all actions that the Adviser may
request to effect the foregoing and to reconvey to the Adviser any and all
rights to such words.

12. This contract shall be governed by and construed in accordance with
the laws of the State of California without giving effect to the choice of law
provisions thereof.

4
<PAGE>

If the foregoing correctly sets forth the agreement between the Company and
the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.

Very truly yours,

STAGECOACH FUNDS, INC.,
on behalf of each of the Fund's
listed on Schedule 1

By:
---------------------------

Name:
-------------------------

Title:
------------------------

ACCEPTED as of the date
set forth above:

WELLS FARGO BANK, N.A.

By:
--------------------------

Name:
------------------------

Title:
-----------------------

By:
--------------------------

Name:
------------------------

Title:
-----------------------

5
<PAGE>

SCHEDULE 1

Investment advisory fees shall be paid monthly on the first business day of
each month, at the annual rates specified below of each Fund's average daily
value (as determined on each day that such value is determined for the Fund at
the time set forth in the Prospectus for determining net asset value per share)
during the preceding month.
<TABLE>
<CAPTION>

Fund Advisory Fee
- ---- ------------
<S> <C>
Index Allocation Fund 0.70% on assets up to $500 million, and
0.60% on assets in excess of $500 million

Variable Rate Government Fund 0.50%

Short-Term Government-Corporate
Income Fund 0.50%

Short-Term Municipal Income Fund 0.50%

Overland Express Sweep Fund 0.25%

</TABLE>

Approved: June 23, 1997

<PAGE>

EXHIBIT 99.B5(v)(ii)

FORM OF SUB-ADVISORY CONTRACT
Index Allocation Fund
a portfolio of
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201

December ____ , 1997

Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105

Dear Sirs:

This will confirm the agreement by and among Wells Fargo Bank, N.A.
(the "Adviser"), Stagecoach Funds, Inc. (the "Company"), on behalf of the Index
Allocation Fund (the "Fund"), and Barclays Global Fund Advisors (the "Sub-
Adviser") as follows:

1. The Company is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios. The
Company proposes to engage in the business of investing and reinvesting the
assets of the Fund in the manner and in accordance with the investment objective
and restrictions specified in the Company's currently effective Registration
Statement, as amended from time to time (the "Registration Statement"), filed by
the Company under the Investment Company Act of 1940 (the "Act") and the
Securities Act of 1933. Copies of the Registration Statement have been furnished
to the Sub-Adviser. Any amendments to the Registration Statement shall be
furnished to the Sub-Adviser promptly.

2. The Company has engaged the Adviser to manage the investing and
reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in the Investment Advisory Contract between the Company and
the Adviser, subject to the overall supervision of the Board of Directors of the
Company. Pursuant to an administration agreement between the Company, on behalf
of the Fund, and the Advisor, and a co-administration agreement between the
Company, on behalf of the Fund, and Stephens Inc. (the "Administrators"), the
Company has engaged the Administrators to provide the administrative services
specified therein.

3. (a) The Adviser hereby employs the Sub-Adviser to perform for the
Fund certain advisory services and the Sub-Adviser hereby accepts such
employment. The Adviser shall retain the authority to establish and modify, from
time to time, the investment strategies and approaches to be followed by the
Sub-Adviser, subject, in all respects, to the supervision and direction of the
Company's Board of Directors and subject to compliance with the investment
objectives, policies and restrictions set forth in the Registration Statement.

(b) Subject to the overall supervision and control of the Adviser
and the Company, the Sub-Adviser shall be responsible for investing and
reinvesting the Fund's assets in a manner consistent with
<PAGE>

the investment strategies and approaches referenced in subparagraph (a) above.
In this regard, the Sub-Adviser, in accordance with the investment objectives,
policies and restrictions set forth in the Registration Statement, the Act and
the provisions of the Internal Revenue Code of 1986 relating to regulated
investment companies, shall be responsible for implementing and monitoring the
performance of the investment model employed with respect to the Fund and shall
furnish to the Adviser periodic reports on the investment activity and
performance of the Fund. The Sub-Adviser shall also furnish such additional
reports and information as the Adviser and the Company's Board of Directors and
officers shall reasonably request.

(c) The Sub-Adviser shall, at its expense, employ or associate
with itself such persons as the Sub-Adviser believes appropriate to assist it in
performing its obligations under this contract.

4. The Adviser shall be responsible for the fees paid to the Sub-
Adviser for its services hereunder. The Sub-Adviser agrees that it shall have no
claim against the Company or the Fund respecting compensation under this
contract. In consideration of the services to be rendered by the Sub-Adviser
under this contract, the Adviser shall pay the Sub-Adviser a fee on the first
business day of each calendar month, at the annual rate of 0.20% of the average
daily value (as determined on each day that such value is determined for the
Fund at the time set forth in the Registration Statement for determining net
asset value per share) of the Fund's net assets during the preceding month. The
Sub-Adviser will also receive an annual fee from the Adviser of $60,000 payable
in monthly installments. If the fee payable to the Sub-Adviser pursuant to this
Paragraph 4 begins to accrue on a day after the first day of any month or if
this contract terminates before the end of any month, the fee for the period
from the effective date to the end of the month or from the beginning of that
month to the termination date, shall be prorated according to the proportion
that such period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating the monthly fee, the value of
the Fund's net assets shall be computed in the manner specified in the
Registration Statement and the Company's Articles of Incorporation for the
computation of the value of the Fund's net assets in connection with the
determination of the net asset value of Fund shares.

5. The Sub-Adviser shall give the Company the benefit of the Sub-
Adviser's best judgment and efforts in rendering services under this contract.
As consideration and as an inducement to the Sub-Adviser's undertaking to render
these services, the Company and the Adviser agree that the Sub-Adviser shall not
be liable under this contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this contract
shall be deemed to protect or purport to protect the Sub-Adviser against any
liability to the Adviser, the Company or its shareholders to which the Sub-
Adviser would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of the Sub-Adviser's duties under this
contract or by reason of reckless disregard of its obligations and duties
hereunder.

6. This contract shall become effective as of its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote of
a majority of the Fund's outstanding voting securities (as defined in the Act)
or by the Company's Board of Directors and (b) by the vote, cast in person at a
meeting called specifically for the purpose of continuing this Sub-Advisory
Contract, of a majority of the Company's Directors who are not parties to this
contract or "interested persons" (as defined in the Act) of any such party. This
contract may be terminated, upon 60 days' written notice to the Sub-Adviser, by
the Company, without the payment of any penalty, by a vote of a majority of the
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Company's entire Board of Directors. The Sub-Adviser may
terminate this contract on 60 days' written

2
<PAGE>

notice to the Company. This contract shall terminate automatically in the event
of its assignment (as defined in the Act).

7. Except to the extent necessary to perform the Sub-Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Sub-Adviser, or any affiliate of the Sub-Adviser, or
any employee of the Sub-Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.

8. The Sub-Adviser and the Company each agree that the words
"Stagecoach," which comprise a component of the Company's name, is a property
right of the parent of the Adviser. The Company agrees and consents that: (i)
it will use the words "Stagecoach" as a component of its corporate name, the
name of any class, or both and for no other purpose; (ii) it will not grant to
any third party the right to use the words "Stagecoach" for any purpose; (iii)
the Adviser or any corporate affiliate of the Adviser may use or grant to others
the right to use the words "Stagecoach," or any combination or abbreviation
thereof, as all or a portion of a corporate or business name or for any
commercial purpose, other than a grant of such right to another registered
investment company not advised by the Adviser or one of its affiliates; and (iv)
in the event that the Adviser or an affiliate thereof is no longer acting as
investment adviser to any class, the Company shall, upon request by the Adviser,
promptly take such action as may be necessary to change its corporate name to
one not containing the words "Stagecoach" and following such change, shall not
use the words "Stagecoach," or any combination thereof, as a part of its
corporate name or for any other commercial purpose, and shall use its best
efforts to cause its directors, officers, and shareholders to take any and all
actions that the Adviser may request to effect the foregoing and to reconvey to
the Adviser any and all rights to such words.

9. This contract shall be governed by and construed in accordance
with the laws of the State of California without giving effect to the choice of
law provisions thereof.

3
<PAGE>

If the foregoing correctly sets forth the agreement between the
Company, the Adviser and the Sub-Adviser, please so indicate by signing and
returning to the Company the enclosed copy hereof.

Very truly yours,

WELLS FARGO BANK, N.A.

By:
--------------------
Name:
------------------
Title:
-----------------

ACCEPTED as of the date
set forth above:

STAGECOACH FUNDS, INC.
on behalf of the Index Allocation Fund

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

BARCLAYS GLOBAL FUND ADVISORS

By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------

<PAGE>

EXHIBIT 99.B8(n)
CUSTODY AGREEMENT

for various funds of

STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201

This Agreement is made as of this 6th day of September, 1996 (the
"Agreement"), by and between STAGECOACH FUNDS, INC. (the "Company"), on behalf
of the Funds listed on Appendix F hereto, as such Appendix may be revised from
time to time (each a "Fund" and, collectively, the "Funds"), and WELLS FARGO
BANK, N.A. (the "Custodian").

W I T N E S S E T H :

that for and in consideration of the mutual promises hereinafter set forth, the
Company and the Custodian agree as follows:

ARTICLE I
DEFINITIONS

Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:

1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Company, duly authorized by the Board of Directors ("Directors")
to give Oral Instructions and Written Instructions on behalf of a Fund and
listed in the Certificate attached hereto as Appendix A or such other
Certificate as may be received from time to time by the Custodian.

2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its successor(s)
and its nominee(s).

3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of a
Fund by any two Officers of the Company.

4. "Clearing Member" shall mean a registered broker-dealer that is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably believed by the Custodian to
be such a clearing member.

5. "Depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, its successor(s) and its nominee(s), provided the
Custodian has received a certified copy of a resolution of the Board of
Directors specifically approving deposits in DTC, PTC or such other clearing
agency. The term "Depository" shall further mean and include any person
authorized to act as a depository pursuant to
<PAGE>

Section 17, Rule 17f-4 or Rule 17f-5 thereunder, under the Investment Company
Act of 1940, its successor(s) and its nominee(s), specifically identified in a
certified copy of a resolution of the Board of Directors approving deposits
therein by the Custodian.

6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Company or a Fund for
the benefit of a broker, dealer, or Clearing Member, or otherwise, in accordance
with an agreement between the Company on behalf of a Fund, the Custodian and a
broker, dealer, or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or moneys of
a Fund shall be deposited and withdrawn from time to time in connection with
such transactions as a Fund may from time to time determine. Securities held in
the Book-Entry System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.

7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.

8. "Officers" shall be deemed to include the President, Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly authorized by the
Directors of the Company to execute any Certificate, instruction, notice or
other instrument on behalf of a Fund and listed in the Certificate attached
hereto as Appendix B or such other Certificate as may be received by the
Custodian from time to time.

9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.

10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which a Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.

11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common stock
and other instruments or rights having characteristics similar to common stocks,
preferred stocks, debt obligations issued by state or municipal governments and
by public authorities (including, without limitation, general obligations
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.

12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of a Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as a Fund may from time to time determine.

2
<PAGE>

13. "Shares" shall mean the shares of common stock of a Fund, each of
which, in the case of a Fund having Series, is allocated to a particular Series.

14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication.

ARTICLE II
APPOINTMENT OF A CUSTODIAN

1. The Company on behalf of a Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any time owned by a
Fund during the term of this Agreement.

2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.

ARTICLE III
CUSTODY OF CASH AND SECURITIES

1. Except as otherwise provided in Article V, a Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will be
entitled to reverse any credits made on a Fund's behalf where such credits have
been previously made and moneys are not finally collected. A Fund shall deliver
to the Custodian a certified resolution of the Directors of the Company
authorizing and instructing the Custodian on a continuous and ongoing basis to
deposit in the Book-Entry System all Securities eligible for deposit therein and
to utilize the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of a Fund in the Depository, a Fund shall deliver to the Custodian a
certified resolution of the Directors of the Company approving, authorizing and
instructing the Custodian on a continuous and ongoing basis until instructed to
the contrary by a Certificate actually received by the Custodian to deposit in
the Depository all Securities eligible for deposit therein and to utilize the
Depository to the extent possible in connection with its performance hereunder,
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys of a Fund deposited in either the
Book-Entry System or the Depository will be represented in accounts which
include only assets held by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a fiduciary or
representative capacity.

2. The Custodian shall credit to a separate account in the name of a
Fund all moneys received by it for the account of a Fund, and shall disburse the
same only:

(a) In payment for Securities purchased, as provided in Article IV
hereof;

3
<PAGE>

(b) In payment of dividends or distributions, as provided in Article
VIII hereof;

(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;

(e) Pursuant to Certificate(s) setting forth the name(s) and address(es)
of the person(s) to whom the payment is to be made, and the purpose for which
payment is to be made; or

(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.

3. Promptly after the close of business on each day, the Custodian shall
furnish a Fund with confirmations and a summary of all transfers to or from the
account of a Fund during said day. Where Securities are transferred to the
account of a Fund, the Custodian shall also by book-entry or otherwise identify
as belonging to a Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
The Custodian shall furnish a Fund at least monthly with a detailed statement of
the Securities and moneys held for a Fund under this Agreement.

4. Except as otherwise provided in Article V, all Securities held for a
Fund which are issued or issuable only in bearer form, except such Securities as
are held in the Book-Entry System, shall be held by the Custodian in that form;
all other Securities held for a Fund may be registered in the name of a Fund, in
the name of any duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor(s) or their nominee(s). The Company
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Fund and which
may from time to time be registered in the name of a Fund. The Custodian shall
hold all such Securities which are not held in the Book-Entry System or in the
Depository in a separate account in the name of a Fund physically segregated at
all times from those of any other person or persons.

5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall, with respect to all Securities held for a
Fund in accordance with this Agreement:

(a) Collect all income due or payable;

(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended at
any time by the Custodian upon five business days' prior notification to a Fund;

(d) Surrender Securities in temporary form for definitive Securities;

4
<PAGE>

(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and

(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.

6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:

(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of a Fund as owner of any Securities may be exercised;

(b) Deliver any Securities held for a Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;

(c) Deliver any Securities held for a Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;

(d) Make such transfer or exchanges of the assets of a Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of a Fund; and

(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called as
specified in the Certificate.

ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND

1. Promptly after each purchase or sale (as applicable) of Securities by
a Fund, other than a purchase or sale of any Reverse Repurchase Agreement, a
Fund shall deliver to the Custodian (i) with respect to each purchase or sale of
Securities which are not Money Market Securities, a Certificate; and (ii) with
respect to each purchase or sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase or sale: (a) the name of the issuer and the title of the Securities;
(b) the number of shares or the principal amount purchased or sold and accrued
interest, if any; (c) the date of purchase or sale and settlement date; (d) the
purchase or sale price per unit; (e) the total amount payable upon such purchase
or sale; (f) the name of the person from whom or the broker through whom the
purchase or sale was made, and the name of the clearing broker, if any; (g) in
the case of a purchase, the name of the broker to which payment is to be made;
and (h) in the case of a sale, the name of the broker to whom the Securities are
to be delivered. In the case of a purchase, the Custodian shall, upon receipt
of Securities purchased by or for a Fund, pay out of the moneys held for

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the account of a Fund the total amount payable to the person from whom, or the
broker through whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions. In the case of a sale, the Custodian shall deliver the
Securities upon receipt of the total amount payable to a Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.

ARTICLE V
SHORT SALES

1. Promptly after any short sale, a Fund shall deliver to the Custodian
a Certificate specifying: (a) the name of the issuer and the title of the
Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d) the
sale price per unit; (e) the total amount credited to a Fund upon such sale, if
any (f) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (g) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated Security
Account; and (h) the name of the broker through which such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to a Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of a Fund, issue a
receipt or make the deposits into the Margin Account and the Segregated Security
Account specified in the Certificate.

2. In connection with the closing-out of any short sale, a Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued interest or dividends,
if any, required to effect such closing-out to be delivered to the broker; (c)
the dates of the closing-out and settlement; (d) the purchase price per unit;
(e) the net total amount payable to a Fund upon such closing-out; (f) the net
total amount payable to the broker upon such closing-out; (g) the amount of cash
and the amount and kind of Securities, if any, to be withdrawn, from the Margin
Account; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and (i) the name of
the broker through which a Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to a Fund upon such closing-
out and the return and/or cancellation of the receipts, if any, issued by the
Custodian with respect to the short sale being closed-out, pay out the moneys
held for the account of a Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Segregated
Security Account, as the same are specified in the Certificate.

ARTICLE VI
REVERSE REPURCHASE AGREEMENTS

1. Promptly after a Fund enters into a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, a Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions or
Written Instructions specifying: (a) the total amount payable to a Fund

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<PAGE>

in connection with such Reverse Repurchase Agreement; (b) the broker or dealer
through or with which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by a Fund to such broker or
dealer; (d) the date of such Reverse Repurchase Agreement; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to a
Fund specified in the Certificate, Oral Instructions or Written Instructions
make the delivery to the broker or dealer, and the deposits, if any, to the
Segregated Security Account, specified in such Certificate, Oral Instructions or
Written Instructions.

2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article VI, a Fund shall promptly deliver a Certificate or,
in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the
total amount payable by a Fund in connection with such termination; (c) the
amount and kind of Securities to be received by a Fund in connection with such
termination; (d) the date of termination; (e) the name of the broker or dealer
with or through which the Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security Account. The Custodian shall, upon receipt of the
amount and kind of Securities to be received by a Fund specified in the
Certificate, Oral Instructions or Written Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Segregated Security
Account, specified in such Certificate, Oral Instructions or Written
Instructions.

ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS

1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that a Fund fails to specify in a
Certificate the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the Custodian shall be
under no obligation to make any such deposit or withdrawal and shall so notify a
Fund.

2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.

3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.

4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.

5. On each business day, the Custodian shall furnish a Fund with a
statement with respect to a Fund's Margin Account in which money or Securities
are held specifying as of the close of business on

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<PAGE>

the previous business day: (a) the name of the Margin Account; (b) the amount
and kind of Securities held therein; and (c) the amount of money held therein.
The Custodian shall make available upon request to any broker or dealer
specified in the name of a Margin Account a copy of the statement furnished a
Fund with respect to such Margin Account.

6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish a Fund with a statement with respect to a Fund's Collateral
Account specifying the amount of cash and/or the amount and kind of Securities
held therein. No later than the close of business next succeeding the delivery
to a Fund of such statement, a Fund shall furnish the Custodian with a
Certificate or Written Instructions specifying the then market value of the
Securities described in such statement.

ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. A Fund shall furnish the Custodian with a copy of the resolution of
the Directors, certified by the Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent of a
Fund on the payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis or some other periodic basis and authorizing the
Custodian to rely on Oral Instructions, Written Instructions or a Certificate
setting forth the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent on the
payment date.

2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of a Fund the total amount payable to the
Dividend Agent of a Fund.

ARTICLE IX
SALE AND REDEMPTION OF SHARES

1. Whenever a Fund shall sell any of its Shares, it shall deliver to the
Custodian a Certificate duly specifying the number of Shares sold, trade date,
price and the amount of money to be received by the Custodian for the sale of
such Shares.

2. Upon receipt of such money from the Transfer Agent or a co-transfer
agent, the Custodian shall credit such money to the account of a Fund.

3. Upon issuance of any of a Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of a Fund, all original issue or other taxes required
to be paid by a Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.

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<PAGE>

4. Except as provided hereinafter, whenever a Fund shall redeem any of
its Shares, it shall furnish the Custodian with a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.

5. Upon receipt from the Transfer Agent or co-transfer agent of an
advice setting forth the number of Shares received by the Transfer Agent or co-
transfer agent for redemption, and that such Shares are valid and in good form
for redemption, the Custodian shall make payment to the Transfer Agent or co-
transfer agent, as the case may be, out of the moneys held for the account of a
Fund of the total amount specified in the Certificate issued pursuant to
paragraph 4 of this Article IX.

6. Notwithstanding the above provisions regarding the redemption of any
of a Fund's Shares, whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by a Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from a Fund or its agent setting forth that the redemption is in good
form for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the money held
in the account of a Fund for such purposes.

ARTICLE X
OVERDRAFTS OR INDEBTEDNESS

1. If the Custodian should in its sole discretion advance funds on
behalf of a Fund which results in an overdraft because the moneys held by the
Custodian for the account of a Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if a Fund is, for any other reason, indebted
to the Custodian (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article X), such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
a Fund payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days involved)
equal to 1/2% over the Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date of any change in
such prime commercial lending rate but in no event to be less than 6% per annum.
Any such overdraft or indebtedness shall be reduced by an amount equal to the
total of all amounts due a Fund which have not been collected by the Custodian
on behalf of a Fund when due because of the failure of the Custodian to make
timely demand or presentment for payment. In addition, the Company on behalf of
a Fund hereby agrees that the Custodian shall have a continuing lien and
security interest in and to any property at any time held by it for the benefit
of a Fund or in which a Fund may have an interest which is then in the
Custodian's possession or control or in possession or control of any third party
acting on the Custodian's behalf. The Company authorizes the Custodian, in its
sole discretion, at any time to charge any such overdraft or indebtedness
together with interest due thereon against any balance of account standing to a
Fund's credit on the Custodian's books.

2. A Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank setting forth the
amount which such bank will loan to a Fund against delivery of a stated amount
of collateral. A Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank; (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference

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<PAGE>

an attached promissory note, duly endorsed by a Fund, or other loan
agreement; (c) the time and date, if known, on which the loan is to be entered
into; (d) the date on which the loan becomes due and payable; (e) the total
amount payable to a Fund on the borrowing date; (f) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal of any
particular Securities; and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and a Fund's prospectus.
The Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank of the total amount of the loan payable, provided that the
same conforms to the total amounts payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described in this
paragraph. A Fund shall cause all Securities released from collateral status to
be returned directly to the Custodian, and the Custodian shall receive from time
to time such return of collateral as may be tendered to it. In the event that a
Fund fails to specify in a Certificate the name of the issuer, the title and
number of shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, the Custodian shall not be under any
obligation to deliver any Securities.

ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND

1. If a Fund is permitted by the terms of the Company's Articles of
Incorporation and as disclosed in a Fund's most recent and currently effective
prospectus to lend its portfolio Securities, within twenty-four (24) hours after
each loan of portfolio Securities a Fund shall deliver or cause to be delivered
to the Custodian a Certificate specifying with respect to each such loan; (a)
the name of the issuer and the title of the Securities; (b) the number of shares
or the principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of a Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.

2. Promptly after each termination of the loan of Securities by a Fund,
it shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date of
termination; (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of a Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.

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<PAGE>

ARTICLE XII
THE CUSTODIAN

1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including attorney's fees, resulting
from its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to a Fund or of its own
counsel, at the expense of a Fund, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to a Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.

2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:

(a) The validity of the issue of any Securities purchased, sold or
written by or for a Fund, the legality of the purchase, sale or writing thereof,
or the propriety of the amount paid or received thereof;

(b) The legality of the issue or sale of any of a Fund's Shares, or the
sufficiency of the amount to be received therefor;

(d) The legality of the declaration or payment of any dividend by a
Fund;

(e) The legality of any borrowing by a Fund using Securities as
collateral;

(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement, nor shall the Custodian be under any duty or obligation to
see to it that any cash collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of
portfolio Securities of a Fund is adequate collateral for a Fund against any
loss it might sustain as a result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty or obligation periodically
to check or notify a Fund that the amount of such cash collateral held by it for
a Fund is sufficient collateral for a Fund, but such duty or obligation shall be
the sole responsibility of a Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of a Fund are lent pursuant to Article XI of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of a Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify a Fund in the event that such dividends or interest are not paid and
received when due; or

(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account in
connection with transactions by a Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer, or Clearing

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<PAGE>

Member makes payment to a Fund of any variation margin payment or similar
payment which a Fund may be entitled to receive from such broker, dealer, or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, or Clearing Member is the amount a Fund is entitled to receive,
or to notify a Fund of the Custodian's receipt or non-receipt of any such
payment; provided however that the Custodian, upon a Fund's written request,
shall as Custodian, demand from any broker, dealer, or Clearing Member
identified by a Fund the payment of any variation margin payment or similar
payment that a Fund asserts it is entitled to receive pursuant to the terms of a
Margin Account Agreement or otherwise from such broker, dealer, or Clearing
Member.

3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or other
instrument for the payment of money, received by it on behalf of a Fund until
the Custodian actually receives and collects such money directly or by the final
crediting of the account representing a Fund's interest at the Book-Entry System
or the Depository.

4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchanges, offers,
tenders, interest rate changes or similar matters relating to Securities held in
the Depository unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
a Fund of an overdue amount on Securities held in the Depository, the Custodian
shall make a claim against the Depository on behalf of a Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action, suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.

5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to a Fund from the Transfer Agent
of a Fund nor to take any action to effect payment or distribution by the
Transfer Agent of a Fund of any amount paid by the Custodian to the Transfer
Agent of a Fund in accordance with this Agreement.

6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.

7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub-custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by a Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Company's Board of Directors adopted in accordance
with Rule 17f-5 under the Investment Company Act of 1940, as amended.

8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
a Fund are such as properly may be held by a Fund under the provisions of its
Articles of Incorporation.

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9. The Custodian shall be entitled to receive and each Fund agrees to
pay to the Custodian all out-of-pocket expenses and fees as set forth in
Appendix D attached hereto. The Custodian may charge such fees and any expenses
incurred by the Custodian in the performance of its duties against any money
held by it for the account of a Fund. The Custodian shall also be entitled to
charge against any money held by it for the account of a Fund the amount of any
loss, damage, liability or expense, including attorney's fees, for which it
shall be entitled to reimbursement under the provisions of this Agreement. The
expense which the Custodian may charge against the account of a Fund include,
but are not limited to, the expenses of Sub-Custodians of the Custodian incurred
in settling outside of New York City transactions involving the purchase and
sale of Securities of a Fund.

10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or VII hereof. A Fund agrees to forward to the
Custodian a Certificate or facsimile thereof, confirming such Oral Instructions
or Written Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such Oral Instructions
or Written Instructions are given to the Custodian. A Fund agrees that the fact
that such confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions hereby authorized by a Fund. A Fund
agrees that the Custodian shall incur no liability to a Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.

11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.

12. The books and records pertaining to a Fund which are in the
possession of the Custodian shall be the property of a Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws, rules and
regulations. A Fund, or a Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of a Fund, copies of any such books and records
shall be provided by the Custodian to a Fund or a Fund's authorized
representative(s) at a Fund's expense.

13. The Custodian shall provide the Company with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Company may reasonably request from time to time.

14. A Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article IX as part of any check redemption privilege program of a
Fund, except for any such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.

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15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian in
accordance with the customs prevailing from time to time among brokers or
dealers in such Securities.

16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix D attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.

ARTICLE XIII
TERMINATION

1. This Agreement shall continue until January 1998, and thereafter
shall continue automatically for successive annual periods ending on the last
day of December of each year, provided such continuance is specifically approved
at least annually by (i) the Company's Directors or (ii) vote of a majority (as
defined in the Investment Company Act of 1940) of a Fund's outstanding voting
securities, provided that in either event its continuance also is approved by a
majority of the Company's Directors who are not "interested persons" (as defined
in said Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable
without penalty, on sixty (60) days' notice, by the Company's Directors or, by
vote of holders of a majority of a Fund's Shares or, upon not less than ninety
(90) days' notice, by the Custodian. In the event such notice is given by a
Fund, it shall be accompanied by a copy of a resolution of the Directors of the
Company on behalf of a Fund, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement and designating a successor
custodian or custodians, each of which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. In
the event such notice is given by the Custodian, a Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the
Directors, certified by the Secretary or any Assistant Secretary, designating a
successor custodian or custodians. In the absence of such designation by a
Fund, the Custodian may designate a successor custodian which shall be a bank or
trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. Upon the date set forth in such notice, this Agreement shall
terminate and the Custodian shall, upon receipt of a notice of acceptance by the
successor custodian, on that date deliver directly to the successor custodian
all Securities and moneys then owned by a Fund and held by it as Custodian,
after deducting all fees, expenses, and other amounts for the payment of
reimbursement of which shall then be entitled.

2. If a successor custodian is not designated by the Company on behalf
of a Fund or the Custodian in accordance with the preceding paragraph, a Fund
shall, upon the date specified in the notice of termination of this Agreement
and upon the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to a Fund) and moneys
then owned by a Fund, be deemed to be its own custodian, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot be delivered to a
Fund, to hold such Securities hereunder in accordance with this Agreement.

14
<PAGE>

ARTICLE XIV
MISCELLANEOUS

1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Company under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Company agrees to furnish to
the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.

2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Company under its seal, setting forth the names and the
signatures of the present Officers of the Company. A Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Company, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully be protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.

3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
420 Montgomery Street, San Francisco, California, 94105, or at such other place
as the Custodian may from time to time designate in writing.

4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given by or on behalf of a Fund, shall be deemed
sufficiently given if addressed to a Fund and mailed or delivered to it at its
office at 111 Center Street, Little Rock, Arkansas, 72201, or at such other
place as a Fund may from time to time designate in writing.

5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by a
resolution of the Directors of the Company.

6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however, that
this Agreement shall not be assignable by the Company without the written
consent of the Custodian, or by the Custodian without the written consent of the
Company, authorized or approved by a resolution of its Directors.

7. This Agreement shall be construed in accordance with the laws of the
State of California without giving effect to the choice of law provisions
thereof.

15
<PAGE>

8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized, as of the day
and year first above written.

STAGECOACH FUNDS, INC.

By: /s/ Richard H. Blank, Jr.
---------------------------

Name: Richard H. Blank Jr.
--------------------------

Title: Chief Operating Officer
------------------------

WELLS FARGO BANK, N.A.

By: /s/ Elizabeth A. Gottfried
----------------------------

Name: Elizabeth A. Gottfried
--------------------------

Title: Vice President - Fund Administration
----------------------------------------

By: /s/ Joel Gallant
-------------------

Name: Joel Gallant
-----------------

Title: Vice President - Securities Operations
--------------------------------------------

16
<PAGE>

APPENDIX A
----------

AUTHORIZED PERSONS

Pursuant to Article I, Para. 1, and Article XIV, Para. 1, of the
Custody Agreement, the following persons have been authorized by the Board of
Directors to give Oral Instructions and Written Instructions on behalf of a
Fund.

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

By:
------------------------

Name:
----------------------

Title:
---------------------

-A-
<PAGE>

APPENDIX B
----------

OFFICERS

Pursuant to Article I, Para. 8, and Article XIV, Para. 2, of the
Custody Agreement, the term "Officers" does not include any persons other than
the President, Vice President, Secretary, Treasurer, Controller, Assistant
Secretary and Assistant Treasurer; and the following persons are Officers of the
Company authorized by the Board of Directors to execute any Certificate,
instruction, notice or other instrument on behalf of a Fund.

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

Signature:
----------------------------

Name:
---------------------------------

By: By:
-------------------------- ---------------------------

Name: Name:
------------------------ -------------------------

Title: Title:
--------------------- ------------------------

-B-
<PAGE>

APPENDIX C
----------

DESIGNATED PUBLICATIONS LIST FOR CALLED INSTRUMENTS

The following publications are designated publications for the purposes
of Article III, Para. 5(b):

A. The Bond Buyer

B. The Depository Trust Company Notices

C. Financial Daily Card Services

D. The New York Times

E. Standard & Poor's Called Bond Record

F. The Wall Street Journal

-C-
<PAGE>

APPENDIX D
----------

CUSTODY FEES

Net Asset Charge 0.0167% (1.67 bps) annually

Transaction Charges:

Depository Eligible $10.00 ea.
Physical Delivery $20.00 ea.
Principal & Interest Paydown $10.00 ea.
Sweeps $-0-

PORTFOLIO ACCOUNTING

Monthly Base Fee $2,000.00
Net Asset Charge:

First $50,000,000 Net Assets 0.070% (7 bps) annually
Next $50,000,000 Net Assets 0.045% (4.5 bps) annually
Net Assets Over $100,000,000 0.020% (2.0 bps) annually

-D-
<PAGE>

APPENDIX E
----------

COMPANY AND FUND ACCOUNTING SERVICES:
Schedule of Services

A. Maintain Fund general ledger and journal.

B. Prepare and record disbursements for direct Fund expenses.

C. Prepare daily money transfers.

D. Reconcile all Fund bank and custodian accounts.

E. Assist Fund independent auditors as appropriate.

F. Prepare daily projection of available cash balances.

G. Record trading activity for purposes of determining net asset values and
daily dividend.

H. Prepare daily portfolio evaluation report to value portfolio Securities and
determine daily accrued income.

I. Determine the daily net asset value per share.

J. Determine the daily dividend per share.

K. Prepare monthly, quarterly, semi-annual and annual financial statements.

L. Provide financial information for reports to the Securities and Exchange
Commission in compliance with the provisions of the Investment Company Act of
1940 and the Securities Act of 1933, the Internal Revenue Service and any
other regulatory or governmental agencies as required.

M. Provide financial, yield, net asset value, etc., information to National
Association of Securities Dealers, Inc., and other survey and statistical
agencies as instructed from time to time by a Fund.

-E-
<PAGE>

APPENDIX F
----------

Arizona Tax-Free
Balanced Fund
California Tax-Free Money Market Trust
Equity Value Fund
Government Money Market Mutual Fund
Index Allocation Fund
Intermediate Bond Fund
Money Market Trust
National Tax-Free Fund
National Tax-Free Money Market Trust
Oregon Tax-Free Fund
Overland Express Sweep Fund
Prime Money Market Mutual Fund
Short-Term Government-Corporate Income Fund
Short-Term Municipal Income Fund
Small Cap Fund
Treasury Money Market Mutual Fund
Variable Rate Government Fund

Approved: April 25, 1996

Approved as revised: August 29, 1996 for the Small Cap Fund

Approved as revised: October 24, 1996 for the California Tax-Free Money Market
Trust

Approved as revised: April 29, 1997 for the National Tax-Free Money Market
Trust

Approved as revised: July 23, 1997 for the Index Allocation, Short-Term
Government-Corporate Income, Short-Term Municipal Income, Overland Express Sweep
and Variable Rate Government Funds

-F-

<PAGE>

EXHIBIT 99.B9(d)(x)

STAGECOACH FUNDS, INC.

SERVICING PLAN
--------------
CLASS B SHARES
--------------

Section 1. Each of the proper officers of Stagecoach Funds, Inc. (the
"Company") is authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based substantially on the form attached hereto
as Exhibit A or any other form duly approved by the Company's Board of Directors
("Agreements") with broker/dealers, banks and other financial institutions that
are dealers of record or holders of record or which have a servicing
relationship with the beneficial owners of Class B shares ("Servicing Agents")
of the Company's Funds listed on the attached Appendix (each a "Fund").
Pursuant to such Agreements, Servicing Agents shall provide support services as
set forth therein to their clients who beneficially own Class B shares of the
Fund in consideration of a fee, computed monthly in the manner set forth in the
Fund's then current prospectus, at an annual rate of up to 0.25% of the average
daily net asset value of the Class B shares beneficially owned by or
attributable to such clients. The Company's distributor, administrator and
adviser and their respective affiliates are eligible to become Servicing Agents
and to receive fees under this Servicing Plan. All expenses incurred by the
Fund in connection with the Agreements and the implementation of this Servicing
Plan shall be borne entirely by the holders of the Class B shares of the Fund.

Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Servicing Agents. The Company's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Company shall not be obligated to execute, any Agreement with
any qualifying Servicing Agents.

Section 3. So long as this Servicing Plan is in effect, the Company's
administrator shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.

Section 4. The Plan shall be effective on the date upon which it is
approved by a majority of the Directors of the Company, or on the date the Fund
commences operations, if such date is later.

Section 5. Unless sooner terminated, this Servicing Plan (and each related
agreement) shall continue in effect for a period of one year from its date of
approval and shall continue thereafter for successive annual periods, provided
that such Plan is not specifically terminated by a majority of the Board of
Directors.
<PAGE>

Section 6. This Servicing Plan may be amended at any time with respect to
the Fund by the Company's Board of Directors.

Section 7. This Servicing Plan is terminable at any time with respect to
the Fund by vote of a majority of the Board of Directors.

Section 8. Notwithstanding anything herein to the contrary, the Fund shall
not be obligated to make any payments under this Plan that exceed the maximum
amounts payable under Rule 2830 of the Conduct Rules of the National Association
of Securities Dealers, Inc.

Section 9. The Company will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Directors for a period of not less than six years.

Dated: July 23, 1997

2
<PAGE>

APPENDIX
--------

Index Allocation Fund

Approved: July 23, 1997

<PAGE>

EXHIBIT 99.B9(f)

STAGECOACH FUNDS, INC.

SHAREHOLDER ADMINISTRATIVE SERVICING PLAN
-----------------------------------------
CLASS A SHARES
--------------

Section 1. Each of the proper officers of Stagecoach Funds, Inc. (the
"Company") is authorized to execute and deliver, in the name and on behalf of
the Company, written agreements based substantially on the form attached hereto
as Exhibit A or any other form duly approved by the Board of Directors
("Agreements") with securities dealers, financial institutions and other
industry professionals that are shareholders or dealers of record or which have
a servicing relationship ("Shareholder Organizations") with the beneficial
owners of the various classes of shares (each a "Class") of the portfolios of
the Company (each a "Fund") listed in the attached Appendix, as amended from
time to time. Pursuant to such Agreements, Shareholder Organizations shall
provide support services as set forth therein to their clients who beneficially
own shares of the particular Class of the particular Fund in consideration of a
fee, computed monthly in the manner set forth in the Agreements, at the
particular annual rate set forth in the attached Appendix, such rate being a
percentage of the average daily net asset value of the shares of the particular
Class of the particular Fund beneficially owned by such clients; provided that,
-------------
in no event shall any fees be payable hereunder with respect to shares of any
Class to the extent that such shares were sold pursuant to a Fund's Rule 12b-1
distribution plan. The Company's distributor, administrator and adviser and
their respective affiliates are eligible to become Shareholder Organizations and
to receive fees under this Plan. All expenses incurred by a particular Fund in
connection with the Agreements and the implementation of this Plan shall be
borne entirely by the holders of the particular Class of the particular Fund
involved.

Section 2. The Company's administrator shall monitor the arrangements
pertaining to the Company's Agreements with Shareholder Organizations. The
Company's administrator shall not, however, be obliged by this Plan to
recommend, and the Company shall not be obliged to execute, any Agreement with
any qualifying Shareholder Organization.

Section 3. So long as this Plan is in effect, the Company shall provide to
the Company's Board of Directors, and the Directors shall review at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such expenditures were made.

Section 4. The Plan shall be effective on the date upon which it is
approved by a majority of the Directors of the Company, or on the date the Fund
commences operations, if such date is later.
<PAGE>

Section 5. Unless sooner terminated, this Plan (and each related
agreement) shall continue in effect for a period of one year from its effective
date and shall continue thereafter for successive annual periods, provided that
such Plan is not specifically terminated by a majority of the Board of
Directors.

Section 6. This Plan may be amended at any time with respect to any Fund
or any class of such Fund by the Board of Directors.

Section 7. This Plan is terminable at any time with respect to any Fund or
any class of such Fund by vote of a majority of the Board of Directors.

Section 8. The Company will preserve copies of this Plan, Agreements, and
any written reports regarding this Plan presented to the Board of Directors for
a period of not less than six years.

Approval date: July 23, 1997

2
<PAGE>

APPENDIX
--------

<TABLE>
<CAPTION>
Administrative Servicing Fee
(expressed as a percentage of
average daily assets of shares
beneficially owned by clients of
a particular Shareholder
Name of Fund Class of Shares Organization)
------------ --------------- -----------------
<S> <C> <C>

Index Allocation Fund Class A 0.25%

Stagecoach Short-Term 0.25%
Government-Corporate
Income Fund

Stagecoach Short-Term 0.25%
Municipal Income Fund

Stagecoach Variable Rate Class A 0.25%
Government Fund
</TABLE>

3
<PAGE>

EXHIBIT A
---------

FORM OF
ADMINISTRATIVE SERVICING AGREEMENT

Stagecoach Funds, Inc. (the "Company")

Ladies and Gentlemen:

We wish to enter into this Administrative Service Agreement with you
concerning the provision of support services to your clients ("Clients") who may
from time to time beneficially own shares of any of the various classes (each a
"Class") of the various portfolios of the Company (each a "Fund") listed on
Appendix A hereto, as amended from time to time. The terms and conditions of
this Agreement are as follows:*

1. You agree to provide the following support services to Clients who may
from time to time beneficially own shares of a particular Class of a particular
Fund: (i) aggregating and processing purchase and redemption requests for
shares from Clients and placing net purchase and redemption orders with our
distributor; (ii) providing Clients with a service that invests the assets of
their accounts in such shares pursuant to specific or pre-authorized
instructions; (iii) processing dividend payments from us on behalf of Clients;
(iv) providing statements periodically to clients showing their positions in
such shares; (v) providing subaccounting with respect to Shares beneficially
owned by Clients or the information to us necessary for subaccounting; (vi) if
required by law, forwarding communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to Clients; (vii) forwarding to Clients proxy statements and
proxies containing any proposals regarding this Agreement or the Shareholder
Administrative Servicing Plan related hereto; (viii) developing and monitoring
investor programs offered from time to time; (ix) providing dedicated walk-in
and telephone facilities to handle Client inquiries and service Client needs;
(x) providing and maintaining specialized systems for the automatic investments
of Clients; (xi) maintaining the registration or qualification of a Class for
sale under state securities laws; (xii) paying for the operation of arrangements
that facilitate same-day purchases by Clients; (xiii) assuming the expense of
payments made to third parties for services provided in connection with the
investments of their customers in a Class; (xiv) providing various other
services (such as the provision of a facility to receive purchase and redemption
orders) for shareholders who have made a minimum initial investment of less than
$500,000; and (xv) providing such other similar services as we may reasonably
request to the extent you are permitted to do so under applicable statutes,
rules or regulations.

2. We recognize that you may be subject to the provisions of the Glass-
Steagall Act and other laws governing, among other things, the conduct of
activities by Federally

- --------------
* Services may be modified or omitted in the particular case and items
renumbered.

4
<PAGE>

chartered and supervised banks and other banking organizations. As such, you are
restricted in the activities you may undertake and for which you may be paid
and, therefore, you will perform only those activities which are consistent with
your statutory and regulatory obligations. You will act solely as agent for,
upon the order of, and for the account of your Clients.

3. You will provide such office space and equipment, telephone facilities
and personnel (which may be any part of the space, equipment and facilities
currently used in your business, or any personnel employed by you) as may be
reasonably necessary or beneficial in order to provide such services to Clients.

4. Neither you nor any of your officers, employees or agents are
authorized to make any representations concerning us or such shares except those
contained in our then current prospectuses for such shares, copies of which will
be supplied by us to you, or in such supplemental literature or advertising as
may be authorized by us in writing.

5. For all purposes of this Agreement, you will be deemed to be an
independent contractor, and will have no authority to act as agent for us in any
matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of such shares by or on behalf of Clients. You and
your employee will, upon request, be available during normal business hours to
consult with us or our designees concerning the performance of your
responsibilities under this Agreement.

6. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee at the particular annual rate set forth in the Appendix to the Plan, such
rate being a percentage of the average daily net asset value of the shares of
the particular Class of the particular Fund beneficially owned by your Clients
for whom you are the dealer of record or holder of record or with whom you have
a servicing relationship (the "Clients Shares"), which fee will be computed
daily and payable monthly; provided that, in no event shall any fees be payable
-------------
hereunder with respect to shares of any Class to the extent that such shares
were sold pursuant to a Fund's Rule 12b-1 distribution plan. By your written
acceptance of this Agreement, you agree to and do waive such portion of the fee
payable under this Section 6 as is necessary to assure that the amount of such
fee which is required to be accrued on any day with respect to your Clients does
not exceed the income to be accrued to your Clients Shares on that day. For
purposes of determining the fees payable under this Section 6, the average daily
net asset value of the Clients Shares will be computed in the manner specified
in our registration statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of the particular Class
of the particular Fund for purposes of purchases and redemptions. The fee rate
stated above may be prospectively increased or decreased by us, in our sole
discretion, at any time

5
<PAGE>

upon notice to you. Further, we may, in our discretion and without notice,
suspend or withdraw the sale of any particular Fund or any particular Class of a
particular Fund, including the sale of such Fund or such Class of such Fund to
you for the account of any Client or Clients.

7. Any person authorized to direct the disposition of monies paid or
payable by us pursuant to this Agreement will provide to our Board of Directors,
and our Directors will review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made. In
addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Directors concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required bylaw. You will be responsible for promptly
reporting to us and our Board of Directors any potential or existing conflicts
with respect to the investments of your customers in any particular Fund or any
particular Class of a particular Fund.

8. We may enter into other similar Administrative Servicing Agreements
with any other person or persons without your consent.

9. By your written acceptance of this Agreement, you represent, warrant
and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares of any
particular Class of a particular Fund issued by us; (ii) the compensation
payable to you hereunder, together with any other compensation payable to you by
Clients in connection with the investment of their assets in any particular
Class of a particular Fund will be disclosed by you to your Clients, will be
authorized by your Clients and will not result in an excessive or unreasonable
fee to you; (iii) you will not advertise or otherwise promote your Client
accounts primarily as a means of investing in any particular Class of a
particular Fund or establish or maintain Client accounts for the primary purpose
of investing in such Class of such Fund; (iv) in the event an issue pertaining
to this Agreement or our Shareholder Administrative Servicing Plan related
hereto is submitted for shareholder approval, you will vote shares of the
particular Class of the particular Fund held for your own account in the same
proportion as the vote of shares of the particular Class of the particular Fund
held for your Clients' benefit; and (v) you will not engage in activities
pursuant to this Agreement which constitute acting as a broker or dealer under
state law unless you have obtained the licenses required by such law.

10. This Agreement will become effective on the date a fully executed copy
of this Agreement is received by us or our designee. Unless sooner terminated,
this Agreement will continue until ________________, 1998 and thereafter will
continue automatically for successive annual periods ending on provided such
continuance is specifically approved at least annually by us in the manner
described in Section 13. This

6
<PAGE>

Agreement is terminable with respect to any Fund or any Class of any Fund
without penalty, at any time by us (which termination may be by vote of a
majority of our Board of Directors) or by your upon notice to the other party
hereto.

11. All notices and other communications to either you or us will be duly
given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address shown above, or to such
other address as either party shall so provide the other.

12. This Agreement shall be construed in accordance with the laws of the
State of California without giving effect to principles of conflict of laws, and
is non-assignable by the parties hereto.

13. This Agreement has been approved by vote of a majority of our Board of
Directors.

If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us at the address first stated above.

STAGECOACH FUNDS, INC. on behalf of the
classes of shares of the Funds listed in the
attached Appendix

By:
--------------------------------
Name: Richard H. Blank, Jr.
---------------------
Title: Chief Operating Officer,
------------------------
Secretary and Treasurer
-----------------------

By:
------------------------
Name:
----------------------
Title:
---------------------

<PAGE>

EXHIBIT 99.B10

[MORRISON & FOERSTER LLP LETTERHEAD]

September 25, 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. 34 and Amendment No. 35 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 Index
Allocation, Overland Express Sweep, Short-Term Government-Corporate Income,
Short-Term Municipal Income and Variable Rate Government Funds 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 through June 30, 1997.

Based upon and subject to the foregoing, we are of the opinion that:

The issuance and sale of the Shares by the Company has been duly and
validly authorized by all appropriate corporate action, and assuming delivery by
sale or in accord with the Company's dividend reinvestment plan in accordance
with the description set forth in the Funds' current prospectuses under the
Securities Act of 1933, as amended, the Shares will be legally issued, fully
paid and nonassessable by the Company.
<PAGE>

We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.

In addition, we hereby consent to the use of our name and to the reference
to our firm under the caption "Legal Counsel" and the description of advice
rendered by our firm under the headings "Management, Distribution and Servicing
Fees" in the Prospectuses, which are included as part of the Registration
Statement.

Very truly yours,

/s/ MORRISON & FOERSTER LLP

MORRISON & FOERSTER LLP

<PAGE>

EX-99.B11

Independent Auditor's Consent
-----------------------------

The Board of Directors
Stagecoach Funds, Inc.:

We consent to the incorporation by reference in Stagecoach Funds, Inc. Post-
Effective Amendment No. 34 to the Registration Statement No. 33-42927 filed on
Form N-1A under the Securities Act of 1933 and Amendment No. 35 to the
Registration Statement No. 811-6419 filed on Form N-1A under the Investment
Company Act of 1940 of our reports dated February 14, 1997, on the financial
statements and financial highlights of Asset Allocation Fund (subsequently
renamed Index Allocation Fund), California Tax-Free Bond Fund, California Tax-
Free Money Market Fund, Money Market Fund, Municipal Income Fund, Overland Sweep
Fund, Short-Term Government-Corporate Income Fund, Short-Term Municipal Income
Fund, Small Cap Strategy Fund, Strategic Growth Fund, U.S. Government Income
Fund, U.S. Treasury Money Market Fund and Variable Rate Government Fund
(comprising Overland Express Funds, Inc.) for the periods indicated therein,
which reports have been incorporated by reference into the statements of
additional information.

We also consent to the incorporation by reference in Stagecoach Funds, Inc.
Post-Effective Amendment No. 34 to the Registration Statement No. 33-42927 filed
on Form N-1A under the Securities Act of 1933 and Amendment No. 35 of the
Registration Statement No. 811-6419 filed on Form N-1A under the Investment
Company Act of 1940 of our reports dated February 14, 1997, on the financial
statements and financial highlights of Capital Appreciation Master Portfolio,
Short-Term Government-Corporate Income Master Portfolio, Short-Term Municipal
Income Master Portfolio, and Small Cap Master Portfolio, and the financial
statements of Cash Investment Trust Master Portfolio (five of the portfolios
comprising Master Investment Trust), for the periods indicated therein, which
reports have been incorporated by reference into the statements of additional
information.

We also consent to the reference to our Firm under the heading "Financial
Highlights" in each prospectus and under the heading "Independent Auditors" in
each statement of additional information.

San Francisco, California
September 25, 1997

<PAGE>

EXHIBIT 99.B15(a)(xvi)

STAGECOACH FUNDS, INC.

DISTRIBUTION PLAN
-----------------
CLASS A SHARES
--------------

WHEREAS, Stagecoach Funds, Inc. ("Company") is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended ("Act"); and

WHEREAS, the Company desires to adopt a Distribution Plan ("Plan") pursuant
to Rule 12b-1 under the Act on behalf of the Class A shares (or the single
unnamed Class of shares, as the case may be)(hereinafter referred to
collectively as "Class A shares") of each Fund listed on the attached Appendix A
as it may be amended from time to time (each, a "Fund" and collectively, the
"Funds") and the Board of Directors, including a majority of the Qualified
Directors (as defined below), has determined that there is a reasonable
likelihood that adoption of the Plan will benefit the Fund and its Class A
shareholders;

NOW THEREFORE, the Fund hereby adopts the Plan in accordance with
Rule 12b-1 under the Act on the following terms and conditions:

Section 1. Pursuant to the Plan, the Company may pay to Stephens Inc.
("Distributor"), as compensation for distribution-related services provided, or
reimbursement for distribution-related expenses incurred, a monthly fee at
annual rates as set forth on Appendix A. The actual fee payable to the
Distributor shall, within such limit, be determined from time to time by mutual
agreement between the Company and the Distributor. The Distributor may enter
into selling agreements with one or more selling agents under which such agents
may receive compensation for distribution-related services from the Distributor,
including, but not limited to, commissions or other payments to such agents
based on the average daily net assets of Fund shares attributable to them. The
Distributor may retain any portion of the total distribution fee payable
hereunder to compensate it for distribution-related services provided by it or
to reimburse it for other distribution-related expenses.

Section 2. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities" (as
defined below) of Class A shares of the Fund and a majority of the Directors of
the Company, including a majority of the Qualified Directors, pursuant to a vote
cast in person at a meeting or meetings called for the purpose of voting on the
approval of the Plan, or the date the Fund commences operations, if such date is
later.

Section 3. The Plan (and each related agreement) will continue in effect
for one year from its effective date, unless earlier terminated in accordance
with its terms, and will remain in effect from year to year thereafter if such
continuance is specifically approved at least annually by vote of a majority of
both (a) the Directors of the Company and (b) the Qualified Directors, cast in
person at a meeting (or meetings) called for the purpose of voting on such
approval.
<PAGE>

Section 4. The Company shall provide to the Company's Board of Directors
and the Directors shall review, at least quarterly, a written report of the
amounts expended by the Company under the Plan and each related agreement and
the purposes for which such expenditures were made.

Section 5. The Plan may be terminated at any time by vote of a majority of
the Qualified Directors or by vote of a majority of the outstanding voting
securities of Class A shares of the Fund.

Section 6. All agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Directors of the Company
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval. Any agreement related to the Plan shall
provide:

A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Qualified Directors or by vote
of a majority of the outstanding voting securities of Class A shares of
the Fund, on not more than 60 days' written notice to any other party to
the agreement; and

B. That such agreement shall terminate automatically in the event of its
"assignment" (as defined below).

Section 7. The Plan may not be amended to increase materially the amount
that may be expended by the Fund pursuant to the Plan without the approval by a
vote of a majority of the outstanding voting securities of Class A shares of the
Fund, and no material amendment to the Plan shall be made unless approved by
vote of a majority of both (a) the Directors of the Company and (b) the
Qualified Directors, cast in person at a meeting (or meetings) called for the
purpose of voting on such approval.

Section 8. While the Plan is in effect, the selection and nomination of
each Director who is not an "interested person" (as defined below) of the
Company shall be committed to the discretion of the Directors who are not
interested persons.

Section 9. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Class A shares within the context of
Rule 12b-1 under the Act, such payments shall be deemed to have been approved
pursuant to this Plan. Notwithstanding anything herein to the contrary, the
Fund shall not be obligated to make any payments under this Plan that exceed the
maximum amounts payable under Article III, Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.

Section 10. The Company shall preserve copies of the Plan, each related
agreement and each report made pursuant to Section 4 hereof, for a period of not
less than six years from the date of the Plan; such agreement or such report, as
the case may be, being kept the first two years in an easily accessible place.

2
<PAGE>

Section 11. As used in the Plan, (a) the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemption as may be granted by the Securities and
Exchange Commission and (b) the term "Qualified Directors" shall mean the
Directors of the Company who are not interested persons of the Company and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan.

Dated: July 23, 1997

3
<PAGE>

APPENDIX A
----------

Fee as a Percentage of Average
Fund Name Daily Net Assets
--------- ----------------
<S> <C>
Index Allocation Fund 0.25%
Short-Term Government-Corporate 0.25%
Income Fund
Short-Term Municipal Income 0.25%
Fund
Variable Rate Government Fund 0.25%
</TABLE>

Approved: July 23, 1997

<PAGE>

EXHIBIT 99.B15(d)

STAGECOACH FUNDS, INC.

DISTRIBUTION PLAN
-----------------
OVERLAND EXPRESS SWEEP FUND
---------------------------

WHEREAS, Stagecoach Funds, Inc. ("Company") is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended ("Act"); and

WHEREAS, the Company desires to adopt a Distribution Plan ("Plan") pursuant
to Rule 12b-1 under the Act on behalf of the single class of shares of the
Overland Express Sweep Fund (the "Fund") and the Board of Directors, including a
majority of the Qualified Directors (as defined below), has determined that
there is a reasonable likelihood that adoption of the Plan will benefit the Fund
and its shareholders;

NOW THEREFORE, each Fund hereby adopts the Plan in accordance with Rule
12b-1 under the Act on the following terms and conditions:

Section 1. Pursuant to the Plan, the Company may pay to Stephens Inc.
("Distributor"), as compensation for distribution-related services provided, or
reimbursement for distribution-related expenses incurred, a monthly fee at
annual rate of 0.30% of the Fund's average daily net assets. The actual fee
payable to the Distributor shall, within such limit, be determined from time to
time by mutual agreement between the Company and the Distributor. The
Distributor may enter into selling agreements with one or more selling agents
under which such agents may receive compensation for distribution-related
services from the Distributor, including, but not limited to, commissions or
other payments to such agents based on the average daily net assets of Fund
shares attributable to them. The Distributor may retain any portion of the
total distribution fee payable hereunder to compensate it for distribution-
related services provided by it or to reimburse it for other distribution-
related expenses.

Section 2. The Plan shall be effective on the date upon which it is
approved by a majority of the Directors of the Company, including a majority of
the Qualified Directors, pursuant to a vote cast in person at a meeting or
meetings called for the purpose of voting on the approval of the Plan, or the
date the Fund commences operations, if such date is later.

Section 5. The Plan may be terminated at any time by vote of a majority of
the Qualified Directors or by vote of a majority of the outstanding voting
securities of the Fund.

A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Qualified Directors or by vote
of a majority of the outstanding voting securities of the Fund, on not
more than 60 days' written notice to any other party to the agreement;
and

B. That such agreement shall terminate automatically in the event of its
"assignment" (as defined below).

Section 7. The Plan may not be amended to increase materially the amount
that may be expended by the Fund pursuant to the Plan without the approval by a
vote of a majority of the outstanding voting securities of the Fund, and no
material amendment to the Plan shall be made unless approved by vote of a
majority of both (a) the Directors of the Company and (b) the Qualified
Directors, cast in person at a meeting (or meetings) called for the purpose of
voting on such approval.

Section 9. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of shares of the Fund within the
context of Rule 12b-1 under the Act, such payments shall be deemed to have been
approved pursuant to this Plan. Notwithstanding anything herein to the
contrary, the Fund shall not be obligated to make any payments under this Plan
that exceed the maximum amounts payable under Rule 2830 of the Conduct Rules of
the National Association of Securities Dealers, Inc.

2
<PAGE>

Dated: July 23, 1997