<PAGE>
As filed with the Securities and Exchange Commission
on November 30, 1998
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 [_]
Post-Effective Amendment No. 50 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 51 [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)
[X] 60 days after filing pursuant [_] on _________ pursuant
to Rule 485(a)(1), or to Rule 485(a)(1)
[_] 75 days after filing pursuant [_] on _________ pursuant
to Rule 485(a)(2), or to Rule 485(a)(2)
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
EXPLANATORY NOTE
----------------
This Post-Effective Amendment No. 50 (the "Amendment") to the Registration
Statement of Stagecoach Funds, Inc. (the "Company") is being filed to register
the new Class O shares of the Equity Index Fund.
This Post-Effective Amendment does not affect the Registration Statement
for any of the Company's other funds, or any other classes of the Equity Index
Fund.
<PAGE>
STAGECOACH FUNDS, INC.
----------------------
Cross Reference Sheet
---------------------
Form N-1A Item Number
- ---------------------
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Summary of Expenses
3 Financial Highlights
How to Read the Financial Highlights
4 General Investment Risks
Key Information
Organization and Management of the Fund
(Name of) Fund
5 Organization and Management of the Fund
Summary of Expenses
6 Additional Services and Other Information
7 Additional Services and Other Information
Exchanges
Your Account
8 Additional Services and Other Information
Exchanges
Your Account
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Historical Fund Information
13 Additional Permitted Investment Activities
Appendix
Investment Restrictions
Risk Factors
14 Management
15 Management
16 Fund Expenses
Independent Auditors
Management
17 Portfolio Transactions
18 Capital Stock
Other
19 Additional Purchase and Redemption Information
Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Performance Calculations
23 Financial Information
Part C Other Information
- ------ -----------------
24-32 Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Document.
1
<PAGE>
FEBRUARY 1, 1999
Stagecoach Funds
Stagecoach
Equity Index Fund
Prospectus
Class O Please read this Prospectus and keep it for future
reference. It is designed to provide you with
important information and to help you decide if
Investment Advisor the Fund's goals match your own.
and Administrator:
Wells Fargo Bank These securities have not been approved or
disapproved by the U.S. Securities and Exchange
Investment Sub-Advisor Commission ("SEC"), any state securities
commission or any other regulatory authority, nor
Barclays Global Fund have any of these authorities passed upon the
Advisors accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal
offense.
Distributor and
Co-Administrator:
Stephens Inc. 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 Investors, N.A., or any of their
affiliates. Fund 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.
<PAGE>
About This Prospectus
- --------------------------------------------------------------------------------
What Is a Prospectus?
A prospectus provides you with the information you need in order to make an
informed investment decision. It describes how a fund operates and invests its
assets and also contains fee and expense information.
What is different about this Prospectus?
We have rewritten our Prospectus in "plain English" and grouped some of the most
important Fund information together to make it easier to read and
understand.
How is the Fund Information organized?
After important summary information and the expense fee table, the Fund's
investment objective and financial highlights are presented. The icons below
tell you where various types of information about the Fund can be found.
Important information you should look for:
- --------------------------------------------------------------------------------
[LOGO OF Investment Objective and Investment Policies
ARROW]
What is the Fund trying to achieve? How do we intend to invest your
money? Look for the arrow icon to find out.
- --------------------------------------------------------------------------------
[LOGO OF Permitted Investments
PERCENTAGE
SIGN] A summary of the Fund's key permitted investments and practices.
- --------------------------------------------------------------------------------
[LOGO OF Important Risk Factors
EXCLAMATION
POINT] What are key risk factors for this Fund? This will include the
factors described in "General Investment Risks" together with any
special risk factors for the Fund.
- --------------------------------------------------------------------------------
[LOGO OF Additional Fund Facts
ADDITION
SIGN] Provides additional information about the Fund.
- --------------------------------------------------------------------------------
Why is italicized print used throughout the Prospectus?
Words appearing in italicized print and highlighted in color are defined in the
Glossary.
What else do I need to understand about this Fund?
The Fund has a "Statement of Additional Information" that supplements the
disclosures made in this Prospectus. You may also want to review the most recent
Annual or Semi-Annual Report. You can order copies of these documents without
charge by calling 1-800-222-8222. The Statement of Additional Information and
other information for the Fund is also available on the SEC's web site
(http://www.sec.gov).
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Key Information 4
Summary of Expenses 5
- --------------------------------------------------------------------------------
The Fund Equity Index Fund 8
This section contains General Investment Risks 12
important information
about the Fund.
- --------------------------------------------------------------------------------
Your Account Your Account 14
Turn to this section for How To Buy Shares 14
information on how to
open and maintain Selling Shares 16
your account, including
how to buy, sell and Exchanges 17
exchange Fund shares.
Additional Services and
Other Information 18
- --------------------------------------------------------------------------------
Reference Organization and
Management of the Fund 22
Look here for details
on the organization Glossary 25
of the Fund and
term definitions.
</TABLE>
<PAGE>
Key Information
- --------------------------------------------------------------------------------
Summary of the Stagecoach Equity Index Fund
The Fund described in this Prospectus seeks to approximate the total rate of
return of substantially all the common stocks comprising the S&P 500 Index. The
Fund's investment objective is fundamental and cannot be changed without a
majority vote of the shareholders.
Should you consider investing in this Fund? yes, if:
. you are looking to add equity investments to your portfolio;
. you are interested in adding an index investment to your portfolio;
. you have an investment horizon of at least three to five years; and
. you are willing to accept the risks of equity investing, including the risk
that share prices may rise and fall significantly.
You should not invest in this Fund if:
. you are looking for FDIC insurance coverage or guaranteed rates of return;
. you are unwilling or unable to accept the risk that you may lose the money
you invest;
. you are unwilling to accept the risks of investing in the securities
markets;
. you are looking for an actively managed equity fund; or
. you are seeking monthly dividend income.
Who are "We"?
In this Prospectus, "We" generally means the Stagecoach Funds. "We" sometimes
refers to the Investment Advisor or other companies hired by the Fund to perform
services. The section on "Organization and Management of the Fund" further
explains how the Fund is organized.
Who are "You"?
In this Prospectus, "You" means the potential investor or the shareholder.
What is the "Fund"?
In this Prospectus the "Fund" refers to the Stagecoach Equity Index Fund. The
"Funds" also may refer to other mutual funds offered by Stagecoach Funds, Inc.
("Stagecoach").
Key Terms
"Index Funds" are mutual funds that attempt to match the total return of a
particular index or list of securities. Index Funds are not "actively managed"
in that individual securities are not analyzed by traditional methods.
Dividends
We pay dividends, if any, quarterly. Capital gains, if any, are distributed at
least annually.
4 Stagecoach Equity Index Fund Prospectus
<PAGE>
Equity Idex Fund Summary of Expenses
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================
SHAREHOLDER TRANSACTION EXPENSES
================================================================================
These tables are intended to help you understand the various costs and expenses
you will pay as a shareholder in the Fund. These tables do not reflect any
charges that may be imposed by Wells Fargo Bank or other institutions in
connection with an account through which you hold Fund shares. See
"Organization and Management of the Fund" for more details.
- --------------------------------------------------------------------------------
Equity Index
------------
CLASS O
- --------------------------------------------------------------------------------
<S> <C>
Maximum sales charge on a purchase
(as a percentage of offering price) None
- --------------------------------------------------------------------------------
Maximum sales charge on reinvested
dividends None
- --------------------------------------------------------------------------------
Maximum sales charge on:
Redemptions during first year None
Redemptions after first year None
- --------------------------------------------------------------------------------
Exchange fees None
- --------------------------------------------------------------------------------
<CAPTION>
================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
================================================================================
Expenses shown have been restated to reflect contract amounts and amounts
payable by the Fund. Expenses shown "after waivers and reimbursements" reflect
voluntary fee waivers and reimbursements that may be discontinued without prior
notice.
- --------------------------------------------------------------------------------
Equity Index
------------
CLASS O
- --------------------------------------------------------------------------------
<S> <C>
Rule 12b-1 Fee 0.00%
- --------------------------------------------------------------------------------
Management fee 0.25%
- --------------------------------------------------------------------------------
Other expenses
(after waivers or reimbursements) 0.25%
- --------------------------------------------------------------------------------
TOTAL FUND OPERATING EXPENSES
(after waivers or reimbursements) 0.50%
- --------------------------------------------------------------------------------
Other expenses
(before waivers or reimbursement) 0.15%
- --------------------------------------------------------------------------------
TOTAL FUND OPERATING EXPENSES
(before waivers or reimbursements) 0.65%
- --------------------------------------------------------------------------------
</TABLE>
Stagecoach Equity Index Fund Prospectus 5
<PAGE>
Equity Index Fund Summary of Expenses
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================
EXAMPLE OF EXPENSES -- THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
================================================================================
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000
INVESTMENT ASSUMING A 5% ANNUAL RETURN AND THAT Equity Index
------------
YOU REDEEM YOUR SHARES AT THE END OF EACH PERIOD. CLASS O
- --------------------------------------------------------------------------------
<S> <C>
1 YEAR $ 5
- --------------------------------------------------------------------------------
3 YEARS $16
- --------------------------------------------------------------------------------
5 YEARS $28
- --------------------------------------------------------------------------------
10 YEARS $77
- --------------------------------------------------------------------------------
<CAPTION>
================================================================================
EXAMPLE OF EXPENSES -- THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
================================================================================
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000
INVESTMENT ASSUMING A 5% ANNUAL RETURN AND THAT
YOU DO NOT REDEEM YOUR SHARES AT THE END OF EACH Equity Index
------------
PERIOD. CLASS O
- --------------------------------------------------------------------------------
1 YEAR $ 5
- --------------------------------------------------------------------------------
3 YEARS $16
- --------------------------------------------------------------------------------
5 YEARS $28
- --------------------------------------------------------------------------------
10 YEARS $77
- --------------------------------------------------------------------------------
</TABLE>
6 Stagecoach Equity Index Fund Prospectus
<PAGE>
This page intentionally left blank
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<PAGE>
Equity Index Fund
- --------------------------------------------------------------------------------
Advisor: Wells Fargo Bank
Sub-advisor: Barclays Global Fund Advisors
- --------------------------------------------------------------------------------
[LOGO OF Investment Objective
ARROW]
The Equity Index Fund seeks to approximate to the extent
practicable the total rate of return of substantially all common
stocks comprising the Standard & Poor's 500 Composite Stock Index
(the "S&P 500 Index").
Investment Policies
In attempting to approximate the total rate of return of the S&P
500 Index, we use a statistical process known as "sampling." We
select and hold a relative sample of the common stocks listed on
the S&P 500 Index and attempt to achieve a 95% correlation between
the price and total return performance of the S&P 500 Index and our
investment results, before expenses. This correlation is sought
regardless of market conditions.
A precise duplication of the performance of the S&P 500 Index would
mean that the net asset value of Fund shares, including dividends
and capital gains, would increase or decrease in exact proportion
to changes in the S&P 500 index. Such a 100% correlation is not
feasible. Our ability to track the performance of the S&P 500 Index
may be affected by, among other things, transaction costs and
shareholder purchases and redemptions. We will regularly monitor
the performance and composition of the S&P 500 Index and adjust the
Fund's portfolio as necessary in order to achieve the 95%
correlation.
- --------------------------------------------------------------------------------
[LOGO OF Permitted Investments
PERCENTAGE Under normal market conditions, we invest:
SIGN]
. in a diversified portfolio of common stocks designed to provide
a relative sample of the stocks listed on the S&P 500 Index;
. in stock index futures and options on stock indexes as a
substitute for a comparable position in the underlying
securities; and
. in interest-rate futures contracts, options on interest rate
swaps and index swaps.
We may temporarily hold assets in cash or in money market
instruments, including U.S. Government obligations, shares of other
8 Stagecoach Equity Index Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
mutual funds and repurchase agreements, or make other short-term
investments, either to maintain liquidity or for short-term
defensive purposes when we believe it is in the best interest of
shareholders to do so.
- --------------------------------------------------------------------------------
[LOGO OF Important Risk Factors
EXCLAMATION You should consider both the General Investment Risks beginning on
POINT] page 12 and the specific risks listed below. They are equally
important to your investment choice.
The Fund attempts to match as closely as possible the total return
of the S&P 500 Index. Therefore, during periods when the S&P 500
Index is losing value, your investment will also lose value.
- --------------------------------------------------------------------------------
[LOGO OF Additional Fund Facts
ADDITION The S&P 500 Index is an index of 500 widely held common stocks
SIGN] representing, among others, industrial, financial, utility and
transportation companies listed or traded on national exchanges or
over-the-counter markets. It is one of the most widely used
benchmarks of U.S. equity performance.
"Standard & Poor's(R)," "S & P(R)," "S & P 500(R)" and "Standard &
Poor's 500" are trademarks of McGraw-Hill, Inc. The Equity Index
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.
For information on Fund fees and expenses, see "Summary of
Expenses" on page 5.
Stagecoach Equity Index Fund Prospectus 9
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
Understanding the risks involved in mutual fund investing will help you make an
informed decision that takes into account your risk tolerance and preferences.
You should carefully consider risks common to all mutual funds, including the
Stagecoach Funds. Chief among these risks are the following:
. Unlike bank deposits such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
. We cannot guarantee that we will meet our investment objectives.
. We do not guarantee the performance of the Fund, nor can we assure you that
the market value of your investment will not decline. We will not "make good"
any investment loss you may suffer, nor can anyone we contract with to
perform certain functions such as selling agents or investment advisors,
offer or promise to make good any such losses.
. Share prices--and therefore the value of your investment--will increase and
decrease with changes in the value of the underlying securities and other
investments. This is referred to as price volatility.
. Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
. An investment in a single Fund, by itself, does not constitute a complete
investment plan.
The Fund invests in securities that involve particular kinds of risk.
. The Fund invests in equities that are subject to equity market risk. This is
the risk that stock prices will fluctuate and can decline and reduce the
value of the portfolio. Certain types of stock and certain stocks selected
for the Fund's portfolio may underperform or decline in value more than the
overall market.
. The Fund may invest a portion of its assets in U.S. Government obligations.
It is important to recognize that the U.S. Government does not guarantee the
market value or current yield of those obligations. Not all U.S. Government
obligations are backed by the full faith and credit of the U.S. Treasury, and
the U.S. Government's guarantee does not extend to the Fund itself.
. The Fund may also use certain derivative instruments such as stock index
futures and options on stock index futures. The term "derivatives" covers a
wide number of investments, but in general it refers to any financial
10 Stagecoach Equity Index Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
instrument whose value is derived, at least in part, from the price of
another security or a specified index, asset or rate. Some derivatives may be
more sensitive to interest rate changes or market moves, and some may be
susceptible to changes in yields or values due to their structure or contract
terms.
What follows is a general list of the types of risks (some of which are
described above) that apply to the Fund's investments and a table showing some
of the additional investment practices that the Fund may use. Additional
information about these practices is available in the Statement of Additional
Information.
Counter-Party Risk-- The risk that the other party in a repurchase agreement or
the transaction will not fulfill its contract obligation.
Credit Risk-- The risk that the issuer of a debt security will be unable to make
interest payments or repay principal on schedule. If an issuer does default, the
affected security could lose all of its value, or be renegotiated at a lower
interest rate or principal amount. Affected securities might also lose
liquidity. Credit risk also includes the risk that a party in a transaction may
not be able to complete the transaction as agreed.
Experience Risk-- The risk presented by a new or innovative security. The risk
is that insufficient experience exists to forecast how the security's value
might be affected by various economic conditions.
Information Risk-- The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Leverage Risk-- The risk that a practice may increase the Fund's exposure to
Market Risk, Interest Rate Risk or other risks by, in effect, increasing assets
available for investment.
Liquidity Risk-- The risk that a security cannot be sold, or cannot be sold
without adversely affecting the price.
Market Risk-- The risk that the value of a stock, bond or other security will be
reduced by market activity. This is a basic risk associated with all securities.
Political Risk-- The risk that political actions, events or instability may be
unfavorable for investments made in a particular nation's or region's industry,
government or markets.
Regulatory Risk-- The risk that changes in government regulations will adversely
affect the value of a security. Also the risk that an insufficiently regulated
market might permit inappropriate trading practices.
Stagecoach Equity Index Fund Prospectus 11
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
Year 2000 Risk-- Many computer software systems in use today cannot distinguish
the Year 2000 from the Year 1900. Most of the services provided to the Funds
depend on the proper functioning of computer systems. Any failure to adapt these
systems in time could hamper the Funds' operations and services. The Funds'
principal service providers have advised the Funds that they are working on the
necessary changes to their systems and that they expect their systems to be
adapted in time. There can, of course, be no assurance of success. In addition,
because the Year 2000 issue affects virtually all organizations and governments,
the companies or entities in which the Funds invest also could be adversely
impacted by the Year 2000 issue. The extent of such impact cannot be
predicted.
Investment Practice/Risk
The following table lists some of the additional investment practices of the
Fund, including some not disclosed in the Investment Objective and Investment
Policies section of the Prospectus. THE RISKS INDICATED AFTER THE DESCRIPTION
OF THE PRACTICE ARE NOT THE ONLY POTENTIAL RISKS ASSOCIATED WITH THAT PRACTICE,
BUT ARE AMONG THE MORE PROMINENT. Market risk is assumed for each. See the
Investment Objective and Investment Policies for the Fund or the Statement of
Additional Information for more information on these practices.
In addition to the general risks discussed above, you should carefully consider
and evaluate any special risks that may apply to investing in the Fund. See the
"Important Risk Factors" in the summary for the Fund. You should also see the
Statement of Additional Information for additional discussion information about
the investment practices and risks particular to the Fund.
Investment practices and risk levels are carefully monitored. We attempt to
ensure that the risk exposure for the Fund remains within the parameters of its
objective.
12 Stagecoach Equity Index Fund Prospectus
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
INVESTMENT PRACTICE: RISK
==============================================================================================================
<S> <C> <C>
Other Mutual Funds
The temporary investment in shares of another mutual fund. Market Risk .
A pro rata portion or the other fund's expenses, in addition
to the expenses paid by the Fund, will be borne by Fund shareholders.
- --------------------------------------------------------------------------------------------------------------
Options
The right or obligation to receive or deliver a security or cash Credit Information
payments depending on the security's price or the performance of and Liquidity Risk
and index or benchmark.
- --------------------------------------------------------------------------------------------------------------
Stock Index Futures .
Options on Stock Index Futures .
Index Swaps .
Interest Rate Futures .
Interest Rate Swaps .
- --------------------------------------------------------------------------------------------------------------
Privately Issued Securities
Securities that are not publicly traded but which may be resold in Liquidity Risk .
accordance with Rule 144A of the Securities Act of 1933.
- --------------------------------------------------------------------------------------------------------------
Loans Of Portfolio Securities
The practice of loaning securities to brokers, dealers and financial
institutions to increase return on those securities. Loans may be Credit Counter-Party .
made in accordance with existing investment policies. Limited to and Leverage Risk
33 1/3% of assets.
- --------------------------------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow an equivalent of 20% of assets from Leverage Risk .
banks for temporary purposes to meet shareholder redemptions.
- --------------------------------------------------------------------------------------------------------------
Illiquid securities
A security that cannot be readily sold, or cannot be readily Liquidity Risk .
sold without negatively affecting its fair price.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Stagecoach Equity Index Fund Prospectus 13
<PAGE>
Your Account
- --------------------------------------------------------------------------------
This section tells you how to open an account and how to buy, sell or exchange
Fund shares once your account is open.
You can buy Fund shares through an online account established with an approved
selling agent.
Minimum Investments:
. $1,000 per Fund minimum initial investment; or
. $25 per Fund minimum initial investment if you use the periodic investment
plan option.
. $100 per Fund for all investments after your first.
Important Information:
. Read this Prospectus carefully. Discuss any questions you have with your
Selling Agent. You may also obtain copies of the Statement of Additional
Information and Annual Report. Copies are available free of charge from your
Selling Agent or by calling 1-800-222-8222.
. We process requests to buy or sell shares each business day as of the close
of regular trading on the New York Stock Exchange ("NYSE"), which is usually
1:00 PM Pacific time. Any request we receive in proper form before the close
of regular trading on the NYSE is processed the same day. Requests we receive
after the close are processed the next business day.
. As with all mutual fund investments, the price you pay to purchase shares or
the price you receive when you redeem shares is not determined until after a
request has been received in proper form.
14 Stagecoach Equity Index Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
. We determine the NAV of the Fund's shares each business day as of the close
of regular trading on the NYSE. We determine the NAV by subtracting the
Funds' liabilities from its total assets, and then dividing the result by the
total number of outstanding shares. The Fund's assets are generally valued at
current market prices. See the Statement of Additional Information for
further disclosure.
. We will process all requests to buy and sell shares of the first NAV
calculated after the request and proper form is received.
. You may have to complete additional paperwork for certain types of account
registrations, such as a Trust. Please speak to your selling agent for
additional information.
. Once an account has been opened, you can add additional eligible Funds under
the same registration without requiring a new application.
. We reserve the right to cancel any purchase order or delay redemption if your
check does not clear. We may also reserve the right to delay payment of a
redemption for up to 15 days so that we may be reasonably certain that
investments made by check have been collected.
Stagecoach Equity Index Fund Prospectus 15
<PAGE>
Your Account
- --------------------------------------------------------------------------------
================================================================================
GENERAL NOTES FOR SELLING SHARES
================================================================================
We will process all requests to sell shares at the first NAV calculated after a
request in proper form is received. Requests received before the close of
trading on the NYSE are processed on the same business day.
- --------------------------------------------------------------------------------
We determine the NAV each day as of the close of the NYSE, which is generally
1:00 PM Pacific time.
- --------------------------------------------------------------------------------
We reserve the right to delay payment of a redemption for up to 15 days so
that we may be reasonably certain that investments made by check or
systematic purchase plan have been collected. Payments of redemptions also may
be delayed under extraordinary circumstances or as permitted by the SEC in
order to protect remaining shareholders. Payments of redemptions also may be
delayed up to seven days under normal circumstances, although it is not our
policy to delay such payments.
- --------------------------------------------------------------------------------
Generally, we pay redemption requests in cash, unless the redemption request is
for more than $250,000 or 1% of the net assets of the Fund by a single
shareholder over any ninety-day period. If a request for a redemption is over
these limits, it may be to the detriment of existing shareholders to pay such
redemption in cash. Therefore, we may pay all or part of the redemption in
securities of equal value.
- --------------------------------------------------------------------------------
16 Stagecoach Equity Index Fund Prospectus
<PAGE>
Exchanges
- --------------------------------------------------------------------------------
Exchanges between Stagecoach Funds are two transactions: a sale of one Fund and
the purchase of another. In general, the same rules and procedures that apply to
sales and purchases apply to exchanges. There are, however, additional factors
you should keep in mind while making or considering an exchange:
. You should carefully read the Prospectus for the Fund into which you wish to
exchange.
. Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.
. You may make exchanges between Class O shares and shares of certain other
Funds or a money market fund that are available online through a selling
agent.
. If you are making an initial investment into a new Fund through an exchange,
you must exchange at least the minimum first purchase amount of the Fund you
are redeeming, unless your balance has fallen below that amount due to market
conditions.
. Any exchange between Funds you already own must meet the minimum redemption
and subsequent purchase amounts for the Funds involved.
. If you are exchanging from a higher-load Fund to a lower or no-load Fund,
then back to the higher load, it is up to you to inform Stagecoach Funds that
you have already paid the higher load.
. Exchanges from any share class to a money market fund can only be
re-exchanged for the original share class.
. In order to discourage excessive Fund transaction expenses that must be borne
by other shareholders, we reserve the right to limit or reject exchange
orders. Generally, we will notify you 60 days in advance of any changes in
your exchange privileges.
Stagecoach Equity Index Fund Prospectus 17
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
Automatic Program:
This program provides you with a convenient way to purchase shares each month.
. Periodic Investment Plan - with this program, you can regularly purchase
shares of a Stagecoach Fund with money automatically transferred from your
settlement account. Simply select the Fund you would like to purchase,
specify an amount of at least $25, and tell us the day of the month you would
like the money invested.
Dividend and Capital Gain Distribution Options
You may choose to do any of the following:
. Automatic Reinvestment Option - Allows you to buy new shares of the same
class of the Fund that generated the distributions. The new shares are
purchased at NAV generally on the day the income is paid. This option is
automatically assigned to your account unless you specify another plan.
18 Stagecoach Equity Index Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
. Check Payment Option - Allows you to receive checks for distributions mailed
to your address of record or to another name and address which you have
specified in written, signature guaranteed instructions. If checks remain
uncashed for six months or are undeliverable by the Post Office, we will
reinvest the distributions at the earliest date possible.
Two Things to Keep In Mind About Distributions
Remember, distributions have the effect of reducing the NAV per share by the
amount distributed. Also, distributions on new shares shortly after purchase
would be in effect a return of capital, although the distribution may still
be taxable to you.
Taxes
The following discussion regarding taxes is based on laws that were in effect as
of the date of this Prospectus. The discussion summarizes only some of the
important tax considerations that affect the Funds and you as a shareholder. It
is not intended as substitute for careful tax planning. You should consult your
tax advisor about your specific tax situation. Federal income tax considerations
are discussed further in the Statement of Additional Information.
We will pass on to you net investment income and net short-term capital gains
earned by the Fund as dividend distributions. These are taxable to you as
ordinary income. Corporate U.S. shareholders may be able to exclude a portion of
such distributions from their taxable income.
We will pass on to you any net capital gains earned by the Fund as capital gain
distributions. In general, these distributions will be taxable to you as long-
term capital gains, which may qualify for taxation at preferential rates in the
hands of non-corporate shareholders.
In general, all distributions will be taxable to you when paid, even if they are
paid 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 on December 31 of the year in which they were declared. We
will notify you annually as to the status of your Fund distributions.
If you buy shares of a Fund shortly before it distributes its annual gains, your
distribution from the Fund will, in effect, be a taxable return of part of your
investment. Similarly, if you buy shares of a Fund that holds appreciated
securities in its portfolio, you will receive a taxable return of part of your
investment if and when the Fund sells the appreciated securities and realizes
the gain. The Fund has built up, and has the potential to continue to build up,
high levels of unrealized appreciation.
19 Stagecoach Equity Index Fund Prospectus
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
Your redemption and exchange of Fund shares will ordinarily result in a taxable
capital gain or loss, depending on the amount you receive for your shares and
the amount you paid for them. Foreign shareholders may be subject to different
tax treatment, including withholding taxes. In certain circumstances, U.S.
shareholders may be subject to back-up withholding taxes.
Historical Fund Information
From the period from April 28, 1996 to December 15, 1997, the Fund invested all
of its assets in a Master Portfolio with a corresponding investment objective;
the Fund no longer invests in a Master Portfolio. Currently, and for periods
prior to April 28, 1996, the Fund invests directly in a portfolio of securities.
Performance information for periods prior to January 1, 1992, reflects the
performance of the Equity Index Fund of the Wells Fargo Investment Trust for
Retirement Programs. The Fund's manager has voluntarily waived fees or
reimbursed expenses to the Fund; without these reductions the Fund's performance
would have been lower.
Share Class-- This Prospectus contains information about Class O shares. The
Fund may offer additional share classes with different expenses and returns than
those described here. Call Stephens at 1-800-643-9691 for information on these
or other investment options in Stagecoach Funds.
Minimum Account Value-- Due to the expense involved in maintaining low-balance
accounts, we reserve the right to close accounts that have fallen below the
$1,000 minimum balance due to redemptions (as opposed to
Stagecoach Equity Index Fund Prospectus 20
<PAGE>
- --------------------------------------------------------------------------------
market conditions). You will be given an opportunity to make additional
investments to prevent account closure before any action is taken.
Statements-- We mail statements after any account activity, including
transactions, dividends or capital gains, and at year-end. We do not send
statements for Funds held in brokerage, retirement or other similar accounts.
You must check with the administrators of these accounts for statement policies.
The Fund will also send any necessary tax reporting documents in January, and
will send Annual and Semi-Annual Reports each year.
Statement of Additional Information-- Additional information about some of the
topics discussed in this Prospectus as well as details about performance
calculations, distribution plans, servicing plans, tax issues and other
important issues are available in the Statement of Additional Information for
the Fund. The Statement of Additional Information should be read along with this
Prospectus and may be obtained free of charge by calling Investor Services at 1-
800-222-8222.
Glass-Steagall Act-- Morrison & Foerster LLP, counsel to the Fund and special
counsel to Wells Fargo Bank, has advised us and Wells Fargo Bank that Wells
Fargo Bank and its affiliates may perform the services contemplated by the
Advisory Contracts and detailed in this Prospectus and the Statement of
Additional Information without violation of the Glass-Steagall Act. Counsel has
pointed out that future judicial or administrative decisions, or future federal
or state laws may prevent these entities from continuing in their roles.
Wells Fargo & Company/Norwest Merger-- On November 2, 1998, Wells Fargo &
Company, the parent company of Wells Fargo Bank, merged with Norwest
Corporation. The combined company is called Wells Fargo & Company. Wells Fargo
Bank, which provides investment advice and other services to the Fund, became
an indirect wholly-owned subsidiary of the new combined company. Wells Fargo
Bank has advised the Fund that the merger will not reduce the level or quality
of advisory and other services provided by Wells Fargo Bank to the Fund.
Stagecoach Equity Index Fund Prospectus 21
<PAGE>
Organization and Management of the Fund
- --------------------------------------------------------------------------------
A number of different entities provide services to the Fund. This section shows
how the Fund is organized, the entities that perform different services, and how
they are compensated. Further information is available in the Statement of
Additional Information for the Fund.
About Stagecoach
The Fund is one of over 30 Funds of Stagecoach Funds, Inc., an open-end
management investment company. Stagecoach was organized on
September 9, 1991, as a Maryland Corporation.
The Board of Directors of Stagecoach supervises the Fund's activities and
approves the selection of various companies hired to manage the Fund's
operation. The major service providers are described in the diagram below. If
the Board believes that it is in the best interests of the shareholders it may
make a change in one of these companies.
================================================================================
SHAREHOLDERS
================================================================================
================================================================================
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
================================================================================
Advise current and prospective shareholders on their Fund investments
- --------------------------------------------------------------------------------
================================================================================
TRANSFER AND
DISTRIBUTOR & DIVIDEND DISBURSING SHAREHOLDER
CO-ADMINISTRATOR ADMINISTRATOR AGENT SERVICING AGENTS
================================================================================
Stephens Inc. Wells Fargo Bank Wells Fargo Bank Various Agents
111 Center St. 525 Market St. 525 Market St.
Little Rock, AR San Francisco, CA San Francisco, CA
Markets the Fund, Manages the Fund's Maintains records of Provide services
distributes shares, business activities of shares and to customers
and manages the supervises the
Fund's business paying of dividends
activities
- --------------------------------------------------------------------------------
================================================================================
INVESTMENT SUB-ADVISOR
================================================================================
Barclays Global Fund Advisor's 45 Fremont Street, San Francisco, CA
Manages the Fund's Investment activities
- --------------------------------------------------------------------------------
================================================================================
INVESTMENT ADVISOR CUSTODIAN
================================================================================
Wells Fargo Bank, 525 Markets St. Barclays Global Investors, N.A.,
San Francisco, CA 45 Fremont St.
Manages the Fund's investment activities San Francisco, CA
Provides safekeeping for the
Funds' assets
- --------------------------------------------------------------------------------
================================================================================
BOARD OF DIRECTORS
================================================================================
Supervises the Funds' activities
- --------------------------------------------------------------------------------
22 Stagecoach Equity Index Fund Prospectus
<PAGE>
Organization and Management of the Fund
- --------------------------------------------------------------------------------
We do not hold annual shareholder meetings. We may hold special shareholder
meetings to ask shareholders to vote on items such as electing or removing board
members or amending fundamental investment strategies or policies.
In the following sections, the percentages shown are the percentages of the
average daily net assets of the Fund class spent on an annual basis for the
services described. The Statement of Additional Information has more detailed
information about the Investment Advisor and the other service providers and
plans described here.
THE INVESTMENT ADVISOR
Wells Fargo Bank is the advisor for the Fund. Wells Fargo Bank, founded in 1852,
is the oldest bank in the western United States and is one of the largest banks
in the United States. Wells Fargo Bank is a wholly owned subsidiary of Wells
Fargo & Company, a national bank holding company. As of August 1, 1998 Wells
Fargo Bank and its affiliates managed over $63 billion in assets. The Fund paid
Wells Fargo Bank the following for advisory services (after fee waivers) for the
fiscal period ended March 31, 1998:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Equity Index Fund .25%
- --------------------------------------------------------------------------------
The Sub-Advisor
Barclays Global Fund Advisors ("BGFA"), a wholly owned subsidiary of Barclays
Global Investors and an indirect subsidiary of Barclays Bank PLC, is the sub-
advisor for the Fund. BGFA was created from the reorganization of Wells Fargo
Nikko Investment Advisors, a former affiliate of Wells Fargo Bank. As of April
30, 1998, BGFA managed or provided investment advice for assets aggregating in
excess of $575 billion. For its sub-advisory services, BGFA is entitled to
receive from Wells Fargo Bank .02% of the Fund's assets up to $500 million and
.01% of the Fund's assets in excess of $500 million. The Fund paid BGFA the
following for sub-advisory services for the fiscal period ended March 31,
1998:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Equity Index Fund .06%
- --------------------------------------------------------------------------------
Stagecoach Equity Index Fund Prospectus 23
<PAGE>
- --------------------------------------------------------------------------------
The Administrator
Wells Fargo Bank is the administrator of the Fund. Wells Fargo Bank is paid .03%
of the Fund's assets for this service.
The Distributor and Co-Administrator
Stephens is the Fund's distributor and co-administrator. Stephens receives .04%
of the Fund's assets for its role as co-administrator.
Shareholder Servicing Plan
We have Shareholder Servicing Plans for the Fund. We have agreements with
various shareholder servicing agents to process purchase and redemption
requests, to service shareholder accounts, and to provide other related
services. For these services the Fund pays .20%.
24 Stagecoach Equity Index Fund Prospectus
<PAGE>
Glossary
- --------------------------------------------------------------------------------
We provide the following definitions to assist you in reading this prospectus.
For a more complete understanding of these terms you should consult your
financial adviser.
ACH
Refers to the "Automated Clearing House" system maintained by the Federal
Reserve Bank which allows banks to process checks, transfer funds and perform
other tasks.
Annual and Semi-Annual Report
A document that provides certain financial and other information for the most
recent reporting period and the Fund's portfolio of investments.
Business Day
Any day the NYSE is open is a business day for the Fund.
Derivatives
Securities whose values are derived in part from the value of another security
or index. An example is a stock option.
Distributions
Dividends and/or capital gains paid by a Fund on its shares.
Diversified
A diversified fund or portfolio, as defined by the Investment Company Act of
1940, is one that invests in cash, Government securities, other investment
companies, and no more than 5% of its total assets in a single issuer. These
policies must apply to 75% of the Fund's total assets.
FDIC
The Federal Deposit Insurance Corporation. This is the company that provides
federally sponsored insurance covering bank deposits such as savings accounts
and CDs. Mutual funds are not FDIC insured.
Illiquid Security
A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.
Interest Rate Futures
The Agreements to buy or sell finance instruments or cash at a particular time
and price based on movements in interest rate. Unlike Options, in which the
holder may or may not execute the right, a futures contract must be
fulfilled.
Interest Rate Swaps
Involve the exchange between parties of their respective commitments to pay or
receive interest.
Stagecoach Equity Index Fund Prospectus 25
<PAGE>
- --------------------------------------------------------------------------------
Index Swaps
The exchange with another party of cash flows based on the performance of an
index of securities or a portion of an index that usually includes dividends or
income.
Liquidity
The ability to readily sell a security at its fair price.
Net Asset Value (NAV)
The value of a single fund share. It is determined by adding together all of a
Fund's assets, subtracting expenses and other liabilities, then dividing by the
total number of shares. The NAV is calculated separately for each class of the
Fund, and is determined as of the close of regular trading on each business day
the NYSE is open, typically 1:00 p.m. Pacific time.
Options
An option is the right to buy or sell a security based on an agreed upon price
at a specified time. For example, an option may give the holder of a stock
the right to sell the stock to another party, allowing the seller to profit if
the price has fallen below the agreed price. Options may also be based on the
movement of an index such as the S&P 500.
Public Offering Price (POP)
The NAV with the sales load added.
Repurchase Agreements
An agreement between a buyer and seller of a security in which the seller agrees
to repurchase the security at an agreed upon price and time.
Selling Agent
A person who has an agreement with the Fund's distributor that allows them to
sell a Fund's shares.
Shareholder Servicing Agent
An entity appointed by the Fund to maintain shareholder accounts and records,
assist and provide information to shareholders or perform similar functions.
Signature Guarantee
A guarantee given by a financial institution that has verified the identity of
the maker of the signature.
26 Stagecoach Equity Index Fund Prospectus
<PAGE>
Glossary
- --------------------------------------------------------------------------------
S&P 500 Index
An unmanaged index of stocks comprised of 500 companies, including industrial,
financial, utility and transportation companies.
Statement of Additional Information
A document that supplements the disclosures made in the Prospectus.
Stock Index Futures and Options on Stock Index Futures
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.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
Total Return
The total value of capital growth and the value of all distributions, assuming
that distributions were used to purchase additional shares of the Fund.
Turnover Ratio
The percentage of the securities held in a Fund's portfolio, other than short-
term securities, that were bought or sold within a year.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Stagecoach Equity Index Fund Prospectus 27
<PAGE>
STAGECOACH FUNDS/TM/
You may wish to review the following documents:
Statement of Additional Information
supplements the disclosures made by this Prospectus. The Statement of Additional
Information has been filed with the SEC and is incorporated by reference into
this Prospectus and is legally part of this Prospectus.
Annual/Semi-Annual Report
provides certain financial and other important information for the most recent
reporting period and the Fund's portfolio of investments.
These are available free of
charge by calling
1-800-222-8222, or from
Stagecoach Funds
PO Box 7066
San Francisco, CA
94120-7066
===========================================================================
STAGECOACH FUNDS:
---------------------------------------------------------------------------
. are NOT insured by the FDIC
. 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] SC IX P
Printed On Recycled Paper SCIXOLP 2/99
<PAGE>
STAGECOACH FUNDS, INC.
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated February 1, 1999
EQUITY INDEX FUND
CLASS O
Stagecoach Funds, Inc. (the "Company") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
additional information about a fund in the Stagecoach Family of Funds (the
"Fund") the EQUITY INDEX FUND. This SAI relates to the Class O shares of the
Fund.
This SAI is not a Prospectus and should be read in conjunction with the
Fund's Prospectus, also dated February 1, 1999. All terms used in this SAI that
are defined in the Prospectus have the meaning assigned in the Prospectus. A
copy of the Prospectus may be obtained without charge by calling 1-800-222-8222
or writing to Stagecoach Funds, P.O. Box 7066, San Francisco, CA 94120-7066.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Historical Fund Information...................... 1
Investment Restrictions.......................... 1
Additional Permitted Investment Activities....... 3
Risk Factors..................................... 15
Management....................................... 17
Performance Calculations......................... 27
Determination of Net Asset Value................. 32
Additional Purchase and Redemption Information... 33
Portfolio Transactions........................... 34
Fund Expenses.................................... 35
Federal Income Taxes............................. 36
Capital Stock.................................... 42
Other............................................ 43
Counsel.......................................... 44
Independent Auditors............................. 44
Financial Information............................ 44
Appendix......................................... A-1
i
</TABLE>
<PAGE>
HISTORICAL FUND INFORMATION
The Equity Index Fund commenced operations on January 1, 1992, as successor
to the Corporate Stock Fund of the Wells Fargo Investment Trust for Retirement
Programs. The predecessor Fund's commencement of operations was January 25,
1984. During the period from April 28, 1996 to December 12, 1997, the Fund
invested all of its assets in a Master Portfolio with a corresponding investment
objective. Prior to December 12, 1997, the Equity Index Fund was known as the
"Corporate Stock Fund."
The Class O shares of the Fund commenced operations on February 1, 1999.
INVESTMENT RESTRICTIONS
Fundamental Investment Policies
-------------------------------
The Fund has adopted the following investment restrictions, all of which
are fundamental policies; that is, they may not be changed without approval by
the vote of the holders of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of the outstanding voting securities of
the Fund.
The Fund may not:
(1) purchase the securities of issuers conducting its principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund's investments in that industry would be 25% or
more of the current value of its 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) any industry in which the
S&P 500 Index becomes concentrated to the same degree during the same period;
and provided further, that the Fund may invest all of its assets in a
diversified, open-end management investment company, or a series thereof, with
substantially the same investment objective, policies and restrictions as the
Fund, without regard to the limitations set forth in this paragraph (1);
(2) purchase or sell real estate or real estate limited partnerships (other
than securities secured by real estate or interests therein or securities issued
by companies that invest in real estate or interests therein);
(3) purchase or sell 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 and index swaps;
(4) purchase interests, leases, or limited partnership interests in oil,
gas, or other mineral exploration or development programs;
1
<PAGE>
(5) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions and except for margin payments in connection
with transactions in options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices) or make
short sales of securities;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Fund's investment program may be deemed to be an
underwriting; and provided further, that the purchase by the Fund of securities
issued by a diversified, open-end management investment company, or a series
thereof, with substantially the same investment objective, policies and
restrictions as the Fund shall not constitute an underwriting for purposes of
this paragraph (6);
(7) make investments for the purpose of exercising control or management;
(8) issue senior securities, except to the extent the activities permitted
in Investment Restrictions Nos. 3 and 5 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 up to 20% of the current value of the Fund's net
assets for temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 20% of the current value of the
Fund's net assets (but investments may not be purchased by the Fund while any
such outstanding borrowings exceed 5% of the Fund's net assets);
(9) write, purchase or sell puts, calls, straddles, spreads, warrants,
options or any combination thereof, except that the Fund may engage in options
transactions to the extent permitted in Investment Restrictions Nos. 3 and 5,
and except that the Fund may purchase securities with put rights in order to
maintain liquidity; nor
(10) 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 the Fund's total assets would be invested
in the securities of any one issuer or the Fund's ownership would be more than
10% of the outstanding voting securities of such issuer, provided that the Fund
may invest all its assets in a diversified, open-end management investment
company, or a series thereof, with substantially the same investment objective,
policies and restrictions as the Fund, without regard to the limitations set
forth in this paragraph (10).
The Fund may make loans in accordance with its investment policies.
As a fundamental policy, the Fund may invest, notwithstanding any other
investment restrictions (whether or not fundamental), all of its assets in the
securities of a single open-end, management investment company with
substantially the same fundamental investment objectives, policies and
restrictions as the Fund. A decision to so
2
<PAGE>
invest all of its assets may, depending on the circumstances applicable at the
time, require approval of shareholders.
Non-Fundamental Investment Policies
-----------------------------------
The Fund has adopted the following non-fundamental policies which may be
changed by a majority vote of the Board of Directors of the Company at any time
and without shareholder approval.
(1) 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.
Under the 1940 Act, a Fund's investment in such securities currently is limited
to, subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company, and (iii) 10% of such Fund's net assets in the aggregate.
Other investment companies in which the Funds invest can be expected to charge
fees for operating expenses, such as investment advisory and administration
fees, that would be in addition to those charged by a Fund.
(2) The Fund may not invest or hold more than 15% of the Fund's net assets
in illiquid securities. For this purpose, illiquid securities include, among
others, (a) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (b) fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, and (c) repurchase agreements not terminable within seven
days.
(3) The Fund may invest up to 25% of its net assets in securities of
foreign governmental and foreign private issuers that are denominated in and pay
interest in U.S. dollars.
(4) The Fund may lend securities from its portfolio to brokers, dealers and
financial institutions, in amounts not to exceed (in the aggregate) one-third of
the Fund's total assets. Any such 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.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Set forth below are descriptions of certain investments and additional
investment policies for the Fund.
Convertible Securities
----------------------
The Fund may invest in convertible securities that provide current income
and are issued by companies with the characteristics described above for the
Fund and that have a strong earnings and credit record. The Fund may purchase
convertible securities that are
3
<PAGE>
fixed-income debt securities or preferred stocks, and which may be converted at
a stated price within a specified period of time into a certain quantity of the
common stock of the same issuer. Convertible securities, while usually
subordinate to similar nonconvertible securities, are senior to common stocks in
an issuer's capital structure. Convertible securities offer flexibility by
providing the investor with a steady income stream (which generally yield a
lower amount than similar nonconvertible securities and a higher amount than
common stocks) as well as the opportunity to take advantage of increases in the
price of the issuer's common stock through the conversion feature. Fluctuations
in the convertible security's price can reflect changes in the market value of
the common stock or changes in market interest rates. At most, 5% of the Fund's
net assets will be invested, at the time of purchase, in convertible securities
that are not rated in the four highest rating categories by one or more
Nationally Recognized Statistical Ratings Organizations ("NRSROs"), such as
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Rating Group
("S&P"), or unrated but determined by the advisor to be of comparable quality.
Corporate Reorganizations
-------------------------
The Fund may invest in securities for which a tender or exchange offer has
been made or announced, and in securities of companies for which a merger,
consolidation, liquidation or similar reorganization proposal has been announced
if, in the judgment of Wells Fargo Bank, N.A. ("Wells Fargo Bank"), there is a
reasonable prospect of capital appreciation significantly greater than the added
portfolio turnover expenses inherent in the short term nature of such
transactions. The principal risk associated with such investments is that such
offers or proposals may not be consummated within the time and under the terms
contemplated at the time of the investment, in which case, unless such offers or
proposals are replaced by equivalent or increased offers or proposals which are
consummated, the Fund may sustain a loss.
Custodial Receipts for Treasury Securities
------------------------------------------
The Fund may purchase participations in trusts that hold U.S. Treasury
securities (such as TIGRs and CATS) or other obligations where the trust
participations evidence ownership in either the future interest payments or the
future principal payments on the obligations. These participations are normally
issued at a discount to their "face value," and can exhibit greater price
volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors. Investments by the Fund in
such participations will not exceed 5% of the value of the Fund's total assets.
Derivatives
-----------
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
4
<PAGE>
only purchase or sell these contracts or options as substitutes for comparable
market positions in the underlying securities. Also, asset-backed securities
issued or guaranteed by U.S. Government agencies or instrumentalities and
certain floating- and variable-rate instruments can be considered derivatives.
Some derivatives may be more sensitive than direct securities to 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 Barclays Global Fund Advisors ("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 risk and is closely monitored. These procedures include providing periodic
reports to the Board of Trustees concerning the use of derivatives.
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 the U.S.
Securities and Exchange Commission ("SEC") rules limiting the use of leverage.
Floating- and Variable-Rate Instruments
---------------------------------------
The Fund may purchase debt instruments with interest rates that are
periodically adjusted at specified intervals or whenever a benchmark rate or
index changes. These adjustments generally limit the increase or decrease in the
amount of interest received on the debt instruments. The floating- and variable-
rate instruments that the Fund may purchase include certificates of
participation in such instruments. Floating- and variable-rate instruments are
subject to interest-rate risk and credit risk.
Foreign Currency Transactions
-----------------------------
If the Fund enters into a foreign currency transaction or forward contract,
the Fund deposits, if required by applicable regulations, in a segregated
account of the Fund an amount at least equal to the value of the Fund's total
assets committed to the consummation of the forward contract. If the value of
the securities placed in the segregated account declines, additional cash or
securities are placed in the account so that the value of the account equals the
amount of the Fund's commitment with respect to the contract.
At or before the maturity of a forward contract, the Fund either may sell a
portfolio security and make delivery of the currency, or may retain the security
and offset its contractual obligation to deliver the currency by purchasing a
second contract pursuant to which the Fund obtains, on the same maturity date,
the same amount of the currency which it is obligated to deliver. If the Fund
retains the portfolio security and engages in
5
<PAGE>
an offsetting transaction, the Fund, at the time of execution of the offsetting
transaction, incurs a gain or a loss to the extent that movement has occurred in
forward contract prices. Should forward prices decline during the period between
the Fund's entering into a forward contract for the sale of a currency and the
date it enters into an offsetting contract for the purchase of the currency, the
Fund will realize a gain to the extent the price of the currency it has agreed
to sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell.
The cost to the Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period and the
market conditions then prevailing. Because transactions in currency exchange
usually are conducted on a principal basis, no fees or commissions are involved.
Wells Fargo Bank or Barclays Global Fund Advisors ("BGFA"), as appropriate,
considers on an ongoing basis the creditworthiness of the institutions with
which the Fund enters into foreign currency transactions. The use of forward
currency exchange contracts does not eliminate fluctuations in the underlying
prices of the securities, but it does establish a rate of exchange that can be
achieved in the future. If a devaluation generally is anticipated, the Fund may
not be able to contract to sell the currency at a price above the devaluation
level it anticipates.
The purchase of options on currency futures allows the Fund, for the price
of the premium it must pay for the option, to decide whether or not to buy (in
the case of a call option) or to sell (in the case of a put option) a futures
contract at a specified price at any time during the period before the option
expires.
Foreign Obligations and Securities
----------------------------------
The Fund may invest up to 25% of its assets in high-quality, short-term
debt obligations of foreign branches of U.S. banks or U.S. branches of foreign
banks that are denominated in and pay interest in U.S. dollars, and similar
obligations of foreign governmental and private issuers. The Fund also may
invest in foreign securities through American Depositary Receipts ("ADRs"),
Canadian Depositary Receipts ("CDRs"), European Depositary Receipts ("EDRs"),
International Depositary Receipts ("IDRs") and Global Depositary Receipts
("GDRs") or other similar securities convertible into securities of foreign
issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs (sponsored or
unsponsored) are receipts typically issued by a U.S. bank or trust company and
traded on a U.S. stock exchange, and CDRs are receipts typically issued by a
Canadian bank or trust company that evidence ownership of underlying foreign
securities. Issuers of unsponsored ADRs are not contractually obligated to
disclose material information in the U.S. and, therefore, such information may
not correlate to the market value of the unsponsored ADR. EDRs and IDRs are
receipts typically issued by European banks and trust companies, and
6
<PAGE>
GDRs are receipts issued by either a U.S. or non-U.S. banking institution, that
evidence ownership of the underlying foreign securities. Generally, ADRs in
registered form are designed for use in U.S. securities markets and EDRs and
IDRs in bearer form are designed primarily for use in Europe.
Investments in foreign securities involve certain considerations that are
not typically associated with investing in domestic securities. There may be
less publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
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.
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 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
Fund will generally purchase securities with the intention of acquiring them,
the Fund may dispose of securities purchased on a when-issued, delayed-delivery
or a forward commitment basis before settlement when deemed appropriate by the
advisor. Securities purchased on a when-issued or forward commitment basis may
expose the relevant Fund to risk because they may experience price fluctuations
prior to their actual delivery. Purchasing securities on a when-issued or
forward commitment basis can involve the additional risk that the yield
available in the market when the delivery takes place actually may be higher
than that obtained in the transaction itself.
The Fund will segregate cash, U.S. Government obligations or other high-
quality debt instruments in an amount at least equal in value to the Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will segregate additional liquid assets on a daily basis so
that the value of the segregated assets is equal to the amount of such
commitments.
Futures Contracts and Options Transactions
------------------------------------------
In General. The Fund may engage in futures and options transactions as
discussed below. 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 of financial instrument at a
particular price on a specified future
7
<PAGE>
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.
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 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 U.S. Securities and Exchange Commission ("SEC"), the Fund may
be required to segregate cash, U.S. Government obligations or other high-quality
debt instruments in connection with its futures transactions in an amount
generally equal to the entire value of the underlying commitment.
Initially, when purchasing or selling futures contracts 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
8
<PAGE>
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 subject 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.
The Fund may enter into futures contracts and may purchase and write
options thereon. Upon the exercise, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in the
writer's futures margin account, which represents the amount by which the market
price of the futures contract 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.
The potential loss related to the purchase of options on futures contracts is
limited to the premium paid for the option (plus transaction costs). Because the
value of the option is fixed at the time of sale, there are no daily cash
payments to reflect changes in the value of the underlying contract; however,
the value of the option may change daily, and that change would be reflected in
the net asset value of the Fund.
Options. The Fund may purchase or sell options on individual securities or
options on indices of securities as described below. The purchaser of an option
risks a total loss of the premium paid for the option if the price of the
underlying security does not increase or decrease sufficiently to justify
exercise. The seller of an option, on the other hand, will recognize the premium
as income if the option expires unrecognized but foregoes any capital
appreciation in excess of the exercise price in the case of a call option and
may be required to pay a price in excess of current market value in the case of
a put option.
The Fund may engage in unlisted over-the-counter options with
broker/dealers deemed creditworthy by the advisor. Closing transactions for such
options are usually effected directly with the same broker/dealer that effected
the original option transaction. The Fund bears the risk that the broker/dealer
will fail to meet its obligations. There is no assurance that a liquid secondary
trading market exists for closing out an unlisted option position. Furthermore,
unlisted options are not subject to the protections afforded
9
<PAGE>
purchasers of listed options by the Options Clearing Corporation, which performs
the obligations of its members who fail to perform in connection with the
purchase or sale of options.
Stock Index Options. The Fund may purchase call and put options and write
covered call options on stock indices listed on national securities exchanges or
traded in the over-the-counter market to the extent of 15% of the value of its
net assets. The 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, 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. There can be no assurance that a liquid
market will exist at the time when a Fund seeks to close out a futures contract
or a futures option position. Lack of a liquid market may prevent liquidation of
an unfavorable position.
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.
10
<PAGE>
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 their respective commitments to
pay or receive interest (for example, an exchange of floating-rate payments for
fixed-rate payments). Index swaps involve the exchange by the 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. The Fund may invest
up to 10% of its respective net assets in interest-rate and index swaps.
Future Developments. The 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 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.
Loans of Portfolio Securities
-----------------------------
The Fund may lend securities from its portfolio to brokers, dealers and
financial institutions (but not individuals) if cash, U.S. Government
obligations or other high-
11
<PAGE>
quality debt instruments equal to at least 100% of the current market value of
the securities loan (including accrued interest thereon) plus the interest
payable to such 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, Wells Fargo Bank 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. 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. 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 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 Advisor, or its Distributor.
Other Investment Companies
--------------------------
The Fund may invest in shares of other open-end management investment
companies, up to the limits prescribed in Section 12(d) of the 1940 Act. Under
the 1940 Act, a Fund's investment in such securities currently is limited to,
subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company and (iii) 10% of such Fund's net assets in aggregate. Other
investment companies in which the Fund invest can be expected to charge fees for
operating expenses such as investment advisory and administration fees, that
would be in addition to those charged by the Fund.
Pass-Through Obligations
------------------------
The Fund may invest in pass-through obligations that are supported by the
full faith and credit of the U.S. Government (such as those issued by the
Government National Mortgage Association) or those that are guaranteed by an
agency or instrumentality of the U.S. Government or government-sponsored
enterprise (such as the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation) or bonds collateralized by any of the foregoing.
12
<PAGE>
Privately Issued Securities
---------------------------
The Fund may invest in privately issued securities, including those which
may be resold only in accordance with Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). Rule 144A Securities are restricted securities that
are not publicly traded. Accordingly, the liquidity of the market for specific
Rule 144A Securities may vary. Delay or difficulty in selling such securities
may result in a loss to the Fund. Privately issued or Rule 144A Securities that
are determined by the investment advisor to be "illiquid" are subject to each
Fund's policy of not investing more than 15% of its net assets in illiquid
securities.
The Company's investment advisor, pursuant to guidelines established by the
Board of Directors of the Company will evaluate the liquidity characteristics of
each Rule 144A Security proposed for purchase by the Fund on a case-by-case
basis and will consider the following factors, among others, in their
evaluation: (1) the frequency of trades and quotes for the Rule 144A Security;
(2) the number of dealers willing to purchase or sell the Rule 144A Security and
the number of other potential purchasers; (3) dealer undertakings to make a
market in the Rule 144A Security; and (4) the nature of the Rule 144A Security
and the nature of the marketplace trades (e.g., the time needed to dispose of
the Rule 144A Security, the method of soliciting offers and the mechanics of
transfer). The Fund does not intend to invest more than 15% of its net assets
in privately issued securities or Rule 144A Securities that may be considered
illiquid during the coming year.
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
Federal Deposit Insurance Corporation ("FDIC"); (iii) commercial paper rated at
the date of purchase "Prime1" by Moody's or "A1" or "A1--" by S&P, or, if
unrated, of comparable quality as determined by Wells Fargo Bank, as investment
advisor; (iv) repurchase agreements; and (v) non-convertible 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. The Fund also may invest in short-term U.S. dollar-denominated
obligations of foreign banks (including U.S. branches) that at the time of
investment: (i) have 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
advisor, are of comparable quality to obligations of U.S. banks which may be
purchased by the Fund.
13
<PAGE>
Letters of Credit. Certain of the debt obligations (including certificates
of participation, commercial paper and other short-term obligations) which the
Fund may purchase may be backed by an unconditional and irrevocable letter of
credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of Wells Fargo Bank, are of comparable quality
to issuers of other permitted investments of the Fund may be used for letter of
credit-backed investments.
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 Fund may enter into
repurchase agreements only with respect to securities that could otherwise be
purchased by 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 15% 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 advisor. The
Fund may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.
Unrated Investments
-------------------
The 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 a sale
of such security by the 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 Fund will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in its Prospectus and in this
SAI. The ratings of Moody's and S&P are more fully described in the Appendix.
14
<PAGE>
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 Government National Mortgage Association ("GNMA") certificates) or
(ii) may be backed solely by the issuing or guaranteeing agency or
instrumentality itself (as with Federal National Mortgage Association ("FNMA")
notes). In the latter case investors must look principally to the agency or
instrumentality issuing or guaranteeing the obligation for ultimate repayment,
which agency or instrumentality may be privately owned. There can be no
assurance that the U.S. Government will provide financial support to its
agencies or instrumentalities where it is not obligated to do so. In addition,
U.S. Government obligations are subject to fluctuations in market value due to
fluctuations in market interest rates. As a general matter, the value of debt
instruments, including U.S. Government obligations, declines when market
interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.
Warrants
--------
The Fund may invest in warrants (other than those that have been acquired
in units or attached to other securities). Warrants represent rights to purchase
securities at a specific price valid for a specific period of time. The price of
warrants do not necessarily correlate with the prices of the underlying
securities.
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. Throughout most of 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 adversely affect the value of the debt instruments in
which the Fund invests and hence the value of your investment in the Fund.
15
<PAGE>
There may be some additional risks associated with investments in smaller
and/or newer companies because their shares tend to be less liquid than
securities of larger companies. Further, shares of small and new companies are
generally more sensitive to purchase and sale transactions and changes in the
issuer's financial condition and, therefore, the prices of such stocks may be
more volatile than those of larger company stocks and may be subject to more
abrupt price movements than securities of larger companies.
The Fund may invest in the securities of issuers in any foreign country,
including American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs") and similar securities, in order to replicate the S&P 500 Index. Such
securities 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, social and monetary or
diplomatic developments that 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.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custodial arrangements and
transaction costs of foreign currency conversions. Changes in foreign exchange
rates also will affect the value of securities denominated or quoted in
currencies other than the U.S. dollar. The Fund's performance may be affected
either unfavorably or favorably by fluctuations in the relative rates of
exchange between the currencies of different nations, by exchange control
regulations and by indigenous economic and political developments.
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 advisor 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 portfolio. Derivatives are financial instruments
whose value is derived, at least in part, from the price of another security or
a specified asset, index or rate. Some derivatives may be more sensitive than
direct securities to changes in interest rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield or value due to
their structure or contract terms. If the Fund's advisor judges market
conditions incorrectly, the use of certain derivatives could result in a loss,
regardless of the advisor's intent in using the derivatives.
16
<PAGE>
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.
MANAGEMENT
The following information supplements, and should be read in conjunction
with, the section in the Prospectus entitled "Organization and 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.
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 75 Director Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 46 Director, Executive Vice President of Stephens Inc.;
Chairman and President of Stephens Insurance Services Inc.;
President 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.
Peter G. Gordon, 54 Director Chairman and Co-Founder of Crystal Geyser
Crystal Geyser Water Co. Water Company and President of Crystal Geyser
55 Francisco Street Roxane Water Company since 1977.
San Francisco, CA 94133
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.
*W. Rodney Hughes, 71 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C>
*J. Tucker Morse, 53 Director Private Investor; Chairman of Home Account
4 Beaufain Street Network, Inc. Real Estate Developer; Chairman
Charleston, SC 29401 of Renaissance Properties Ltd.; President of
Morse Investment Corporation; and Co-Managing
Partner of Main Street Ventures.
Richard H. Blank, Jr., 41 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Stephens Sports Management Inc.; and Director
Secretary and of Capo Inc.
Treasurer
</TABLE>
Compensation Table
Year Ended September 30, 1998
-----------------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant and
Name and Position from Registrant Wells Fargo Fund Complex
----------------- ---------------------- ------------------------
<S> <C> <C>
Jack S. Euphrat $25,750 $34,500
Director
R. Greg Feltus $ 0 $ 0
Director
Thomas S. Goho $25,750 $34,500
Director
Peter G. Gordon $24,250 $30,500
Director
Joseph N. Hankin $25,750 $34,500
Director
W. Rodney Hughes $25,250 $33,000
Director
Robert M. Joses $ 1,500 $ 4,000
Director
J. Tucker Morse $25,250 $33,000
Director
</TABLE>
As of January 1, 1998, Peter G. Gordon replaced Robert M. Joses on the
Board of Directors of the Wells Fargo Fund Complex.
18
<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. The Company, Stagecoach Trust and Life & Annuity Trust are considered
to be members of the same fund complexes as such term is defined in Form N-1A
under the 1940 Act (the "Wells Fargo Fund Complex"). Overland Express Funds,
Inc. and Master Investment Trust, two investment companies previously advised by
Wells Fargo Bank, were part of the Wells Fargo Fund Complexes prior to December
12, 1997. These companies are no longer part 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 and Peter G. Gordon, who
only serve the aforementioned members of the Wells Fargo 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 ADVISOR. Wells Fargo Bank provides investment advisory
------------------
services to the Fund. As investment advisor, Wells Fargo Bank furnishes
investment guidance and policy direction in connection with the daily portfolio
management of the Fund. Wells Fargo Bank furnishes to the Company's Board of
Directors periodic reports on the investment strategy and performance of the
Fund. Wells Fargo Bank provides the Fund with, among other things, money market
security and fixed-income research, analysis and statistical and economic data
and information concerning interest rate and securities markets trends,
portfolio composition, and credit conditions.
As compensation for its advisory services, Wells Fargo Bank is entitled to
receive a monthly fee at the annual rate of 0.25% of the Fund's average daily
net assets.
Prior to April 29, 1996, the Fund invested directly in a portfolio of
securities and Wells Fargo Bank provided investment advisory services directly
to the Fund. On April 29, 1996 the Fund was converted to a "master/feeder
structure" and began to invest all of its assets in a corresponding Master
Portfolio, which had an identical investment objective, of Master Investment
Trust, another open-end management investment company. The Master Portfolio was
advised by Wells Fargo Bank and Wells Fargo Bank was entitled to receive a
monthly fee equal to an annual rate of 0.50% of the first $250 million of the
Fund's average daily net assets, 0.40% of the next $250 million, and 0.30% of
the average daily net assets in excess of $500 million. The Fund operated as
part of the
19
<PAGE>
master/feeder structure from April 29, 1996 to December 12, 1997, at which time
the master/feeder structure was dissolved.
For the period indicated below, the Fund paid to Wells Fargo Bank the
following advisory fees and Wells Fargo Bank waived the indicated amounts:
<TABLE>
Six-Month
Period Ended Year-Ended
9/30/98 3/31/98
------------- ----------
Fees Paid Fees Waived Fees Paid Fees Waived
---------- ----------- --------- -----------
<S> <C> <C> <C>
$713,641 $157,723 $1,638,127 $288,393
</TABLE>
For the periods indicated below, the Fund paid to Wells Fargo Bank the
advisory fees indicated. No advisory fees were waived during these periods. For
the period between April 29, 1996 and December 15, 1997, these amounts represent
advisory fees paid by the Master Portfolio on behalf of the Fund.
<TABLE>
<S> <C> <C>
Six-Month Nine-Month
Period Ended Period Ended Year Ended
3/31/97 9/30/96 12/31/95
------------ ---------- ----------
$933,498 $1,249,048 $1,398,439
</TABLE>
General. 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 Fund's
Advisory Contract may be terminated on 60 days' written notice by either party
and will terminate automatically if assigned.
INVESTMENT SUB-ADVISOR. Wells Fargo Bank has engaged BGFA to serve as
----------------------
Investment Sub-Advisor 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 furnishes to Wells Fargo Bank periodic
reports on the investment activity and performance of the Fund, and also
furnishes such additional reports and information as Wells Fargo Bank and the
Company's Board of Directors and officers may reasonably request.
20
<PAGE>
As compensation for its sub-advisory services, BGFA is entitled to receive
a monthly fee equal to an annual rate of 0.02% of the first $500 million of the
Fund's average daily net assets and 0.01% of net assets over $500 million. This
fee may be paid by Wells Fargo Bank or directly by the Fund. If the sub-advisory
fee is paid directly by the Fund, the compensation paid to Wells Fargo Bank for
advisory fees will be reduced accordingly. The predecessor Master Portfolio was
also sub-advised by BGFA, and from October 30, 1997 to December 12, 1997, was
entitled to receive the fee described above. Prior to October 30, 1997, BGFA was
entitled to receive a monthly fee equal to an annual rate of 0.08% of the Master
Portfolio's average daily net assets plus an annual payment of $40,000.
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 January 1,
1996, WFNIA served as sub-advisor to the Fund and the predecessor portfolio
under substantially similar terms to the 0.08%/$40,000 annual payment
arrangement described above.
For the six-month period ended September 30, 1998, the Fund paid to BGFA
$39,172 in sub-advisory fees.
For the year ended March 31, 1998, the Fund paid to BGFA $277,211 in sub-
advisory fees.
For the six-month period ended March 31, 1997, the Master Portfolio paid to
BGFA $182,725 in sub-advisory fees. No sub-advisory fees were waived during this
period.
For the periods indicated below, Wells Fargo paid the following sub-
advisory fees to WFNIA/BGFA. No sub-advisory fees were waived during this
period.
<TABLE>
Six-Month Nine-Month
Period Ended Period Ended Year Ended
3/31/97 9/30/96 12/31/95
------------ --------- ---------
<S> <C> <C>
$182,725 $242,005 $ 269,787
</TABLE>
General. The Fund's Sub-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 (ii) by the Company's Board of Directors, including a majority of
the Directors of the Company who are not parties to the Sub-Advisory Contract or
"interested persons" (as defined in the 1940 Act) of any such party. The Sub-
Advisory Contract may be terminated on 60 days' written notice by either party
and will terminate automatically if assigned.
21
<PAGE>
ADMINISTRATOR AND CO-ADMINISTRATOR. The Company has retained Wells Fargo
----------------------------------
Bank as Administrator and Stephens Inc. ("Stephens") as Co-Administrator on
behalf of the Fund. Under the Administration and Co-Administration Agreements
among Wells Fargo Bank, Stephens and the Company, Wells Fargo Bank and Stephens
shall provide as administration services, among other things: (i) general
supervision of the Fund's operations, including coordination of the services
performed by the Fund's investment advisor, 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 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 of 0.03% and 0.04%, respectively, of the average daily net assets of
the Fund. From February 1, 1997 until February 1, 1998, the Administrator and
CoAdministrator were entitled to receive 0.04% and 0.02%, respectively, of the
average daily net assets of the Fund for administration services.
Prior to February 1, 1997 Stephens served as sole Administrator to the
Fund. Stephens performed substantially the same services now provided by
Stephens and Wells Fargo Bank and was entitled to receive for its services a fee
of 0.05% of the Fund's average daily net assets.
For the periods indicated below, the Fund paid the following dollar amounts
to Wells Fargo Bank and Stephens for administration and co-administration fees:
<TABLE>
<CAPTION>
Total Wells Fargo Stephens
----- ----------- --------
<S> <C> <C> <C>
Six-Month $ 85,637 $ 36,702 $ 48,935
Period Ended
9/30/98
Year-Ended $306,855 $205,593 $101,262
3/31/98
Six-Month $ 80,775 $ 16,155 $ 64,620
Period Ended
3/31/97
</TABLE>
22
<PAGE>
For the periods indicated below, the Fund paid the following dollar amounts
to Stephens for administration fees :
<TABLE>
<S> <C>
Nine-Month
Period Ended Year Ended
9/30/96 12/31/95
-------------- -----------
$ 79,533 $ 92,555
</TABLE>
DISTRIBUTOR. Stephens (the "Distributor"), located at 111 Center Street,
-----------
Little Rock, Arkansas 72201, serves as Distributor for the Fund. Stephens does
not receive compensation for the distribution of Class O shares.
SHAREHOLDER SERVICING AGENT. The Fund has approved a Servicing Plan and
---------------------------
related form of Servicing Agreement, and has entered into a Shareholder
Servicing Agreement with Wells Fargo Bank on behalf of the Class O shares, and
may enter into agreements with other servicing agents. Under the agreement,
Shareholder Servicing Agents (including Wells Fargo Bank) agree to perform, as
agents for their customers, administrative services, with respect to Fund
shares, which include aggregating and transmitting shareholder orders for
purchases, exchanges and redemptions; maintaining shareholder accounts and
records; and providing such other related services as the Company or a
shareholder may reasonably request. For providing shareholder services, a
Servicing Agent is entitled to a fee of up to 0.20%, on an annualized basis, of
the average daily net assets of the Class O shares during the period for which
payment is being made. The Servicing Agreement was approved by the Company's
Board of Directors and provides that the Fund shall not be obligated to make any
payments under such Agreements that exceed the maximum amounts payable under the
Conduct Rules of the NASD.
General. 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,
including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Funds ("Non-Interested Directors"). Any form of
Servicing Agreement related to the Servicing Plan also must be approved by such
vote of the Directors and Non-Interested Directors. Servicing Agreements may be
terminated at any time, without payment of any penalty, by vote of a majority of
the Board of Directors, including a majority of the Non-Interested Directors.
No material amendment to the Servicing Plan or related Servicing Agreement may
be made except by a majority of both the Directors of the Company and the Non-
Interested Directors.
The Servicing Plan requires that the Administrator shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Servicing Plan.
23
<PAGE>
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. For its services as Custodian, BGI is not entitled to
receive a fee so long as its subsidiary, BGFA, receives fees for sub-advisory
services.
FUND ACCOUNTANT. Wells Fargo Bank acts as Fund Accountant for the Fund.
---------------
The Fund Accountant, among other things, computes net asset values on a daily
basis and performance calculations on a regular basis and as requested by the
Funds. For providing such services, Wells Fargo Bank is entitled to receive a
monthly base fee of $2,000, plus a fee equal to an 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.
For the six-month period ended September 30, 1998, the Fund paid $87,126 in
fund accounting fees.
For the year-ended March 31, 1998, the Fund paid $49,394 in fund accounting
fees.
For the six-month period ended March 31, 1997 and the nine-month period
ended September 30, 1996, the Fund did not pay any fund accounting fees.
TRANSFER AND DIVIDEND DISBURSING AGENT. Wells Fargo Bank acts as Transfer
--------------------------------------
and Dividend Disbursing Agent for the Fund. For providing such services, Wells
Fargo Bank is entitled to receive monthly payments at the annual rate of 0.14%
of the Fund's average daily net assets attributable to the Class O shares.
UNDERWRITING COMMISSIONS. The Fund does not pay underwriting commissions
------------------------
in connection with the sales/redemptions of the Class O shares. For the Class A
and Class B shares for the six-month period ended September 30, 1998, the
aggregate dollar amount of underwriting commissions paid to Stephens on
sales/redemptions of those shares was $182,019. For the year ended March 31,
1998, the aggregate dollar amount of underwriting commissions paid to Stephens
on sales/redemptions of the Company's shares was $7,671,295. Stephens retained
$939,892 of such commissions. Wells Fargo Securities Inc. ("WFSI"), an
affiliated broker-dealer of the Company, retained $5,348,626.
For the six-month period ended March 31, 1997, the aggregate amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
Class A shares was $2,296,243. Stephens retained $241,806 of such commissions.
WFSI and its registered representatives retained $1,719,000 and $335,437,
respectively, of such commissions.
24
<PAGE>
For the nine-month period ended September 30, 1996, the aggregate amount of
underwriting commissions paid to Stephens on sales/redemptions of the Company's
Class A shares was $2,917,738. 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 year ended December 31, 1995, the aggregate amount of underwriting
commissions paid to Stephens on sales/redemptions of the Company's Class A
shares was $1,251,311. Stephens retained $162,660 of such commissions. WFSI
and its registered representatives received $399,809 of such commissions.
PERFORMANCE CALCULATIONS
The Fund may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in the Fund or class of shares during the particular
time period shown. Yield and total return vary based on changes in the market
conditions and the level of the Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Performance information for the Fund or Class of shares in the Fund may be
useful in reviewing the performance of such Fund or Class of shares and for
providing a basis for comparison with investment alternatives. The performance
of the Fund and the performance of a Class of shares in the Fund, however, may
not be comparable to the performance from investment alternatives because of
differences in the foregoing variables and differences in the methods used to
value portfolio securities, compute expenses and calculate performance.
Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Fund.
Performance shown or advertised for the Class A shares of the Stagecoach
Equity Index Fund reflects performance of the Stagecoach Corporate Stock Fund, a
predecessor portfolio with the same investment objective and policies as the
Stagecoach Equity Index Fund. Prior to January 1, 1992, performance shown or
advertised for the Class A shares of the Stagecoach Equity Index Fund reflects
performance of the Corporate Stock Fund of the Wells Fargo Investment Trust for
Retirement Programs, a predecessor portfolio of the Stagecoach Corporate Stock
Fund.
25
<PAGE>
Performance shown or advertised for the Class B shares has been calculated
based on performance information for the Class A shares, as described above,
adjusted to reflect Class B share expenses and sales charges.
AVERAGE ANNUAL TOTAL RETURN: The Fund may advertise certain total return
----------------------------
information. 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
shares of the Fund ("P") over a period of years ("n") according to the following
formula: P(1+T)n = ERV.
Average Annual Total Return for the Applicable Period Ended September 30, 1998
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ten Year Five Year Three Year One Year
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Class O/1/ 16.24% 18.91% 21.64% 8.46%
</TABLE>
/1/ The performance of the Class O shares, which commenced operations 2/1/99,
has been calculated based on performance information for the Class A shares
adjusted to reflect Class O share expenses and sales charges.
CUMULATIVE TOTAL RETURN: In addition to the above performance
------------------------
information, the Funds may advertise the cumulative total return for onemonth,
threemonth, sixmonth and yeartodate 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.
Cumulative Total Return for the Applicable Period Ended September 30, 1998
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ten Year Five Year Three Year
No No No
Sales Sales Sales
Charge Charge Charge
-------- -------- ---------
<S> <C> <C> <C>
Class 350.37% 137.73% 79.97%
O/1/
</TABLE>
//1 The performance of the Class O shares, which commenced operations 2/1/99,
has been calculated based on performance information for the Class A shares
adjusted to reflect Class O share expenses and sales charges.
From time to time and only to the extent the comparison is appropriate for
the Fund or the Class O shares, the Company may quote the performance or price-
earning ratio of the Fund or Class in advertising and other types of literature
as compared to the performance of the S&P Index, the Dow Jones Industrial
Average, the Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year
Treasury Index, Donoghue's Money Fund Averages, Real Estate Investment Averages
(as reported by the National
26
<PAGE>
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), other managed or unmanaged indices or performance data of
bonds, municipal securities, stocks or government securities (including data
provided by Ibbotson Associates), or by other services, companies, publications
or persons who monitor mutual 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 Fund or Class, as
appropriate, 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 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. The Fund's
comparative performance will be based on a comparison of yields, as described
above, or total return, as reported by Lipper, Survey Publications, Donoghue or
Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare the
past performance of the Fund 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
27
<PAGE>
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 a Class of shares, 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 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 an NRSRO, such as Standard & Poor's
Corporation. Such rating would assess the creditworthiness of the investments
held by the Fund. The assigned rating would not be a recommendation to purchase,
sell or hold the Fund's shares since the rating would not comment on the market
price of the Fund's shares or the suitability of the Fund for a particular
investor. In addition, the assigned rating would be subject to change,
suspension or withdrawal as a result of changes in, or unavailability of,
information relating to the Fund or its investments. The Company may compare the
Fund's performance with other investments which are assigned ratings by NRSROs.
Any such comparisons may be useful to investors who wish to compare the Fund's
past performance with other rated investments.
From time to time, the Fund may use the following statements, or variations
thereof, in advertisements and other promotional materials: "Wells Fargo Bank,
as a Shareholder Servicing Agent for the Stagecoach Funds, provides various
services to its customers that are also shareholders of the Fund. These
services may include access to Stagecoach Funds' account information through
Automated Teller Machines ("ATMs"), the placement of purchase and redemption
requests for shares of the Fund through ATMs and the availability of combined
Wells Fargo Bank and Stagecoach Funds account statements."
The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management (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 its
investment advisor or sub-advisor and the total amount of assets and mutual fund
assets managed by Wells Fargo Bank. As of August 1, 1998, Wells Fargo Bank and
its affiliates provided investment advisory
28
<PAGE>
services for approximately $63 billion of assets of individuals, trusts, estates
and institutions and $32 billion of mutual fund assets.
The Company also may disclose in sales literature the distribution rate on
the shares of a Fund. Distribution rate, which may be annualized, is the amount
determined by dividing the dollar amount per share of the most recent dividend
by the most recent NAV or maximum offering price per share as of a date
specified in the sales literature. Distribution rate will be accompanied by the
standard 30-day yield as required by the SEC.
The Company may disclose in advertising and other types of literature that
investors can open and maintain Sweep Accounts over the Internet or through
other electronic channels (collectively, "Electronic Channels"). Such
advertising and other literature may discuss the investment options available to
investors, including the types of accounts and any applicable fees. Such
advertising and other literature may disclose that Wells Fargo Bank is the first
major bank to offer an on-line application for a mutual fund account that can be
filled out completely through Electronic Channels. Advertising and other
literature may disclose that Wells Fargo Bank may maintain Web sites, pages or
other information sites accessible through Electronic Channels (an "Information
Site") and may describe the contents and features of the Information Site and
instruct investors on how to access the Information Site and open a Sweep
Account. Advertising and other literature may also disclose the procedures
employed by Wells Fargo Bank to secure information provided by investors,
including disclosure and discussion of the tools and services for accessing
Electronic Channels. Such advertising or other literature may include
discussions of the advantages of establishing and maintaining a Sweep Account
through Electronic Channels and testimonials from Wells Fargo Bank customers or
employees and may also include descriptions of locations where product
demonstrations may occur. The Company may also disclose the ranking of Wells
Fargo Bank as one of the largest money managers in the United States.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each class of the Fund is determined as of
the close of regular trading (currently 1:00 p.m., Pacific time) on each day the
New York Stock Exchange ("NYSE") is open for business. Expenses and fees,
including advisory fees, are accrued daily and are taken into account for the
purpose of determining the net asset value of the Fund's shares.
Securities of the Fund for which market quotations are available are valued
at latest prices. Any security for which the primary market is an exchange is
valued at the last sale price on such exchange on the day of valuation or, if
there was no sale on such day, the latest bid price quoted on such day. In the
case of other securities, including U.S. Government securities but excluding
money market instruments maturing in 60 days or less, the valuations are based
on latest quoted bid prices. Money market instruments and
29
<PAGE>
debt securities maturing in 60 days or less are valued at amortized cost. The
assets of the Fund, other than money market instruments or debt securities
maturing in 60 days or less, are valued at latest quoted bid prices. Futures
contracts will be marked to market daily at their respective settlement prices
determined by the relevant exchange. Prices may 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 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 Directors.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund may be purchased on any day the Fund is open for
business. The Fund is open for business each day the NYSE is open for trading (a
"Business Day"). Currently, the NYSE is closed on New Year's Day, 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 advisor, be made in the
form of securities that are permissible investments for the Fund. For further
information about this form of payment please contact Stephens. In connection
with an in-kind securities payment, the Fund will require, among other things,
that the securities be valued on the day of purchase in accordance with the
pricing methods used by the Fund and that the Fund receives satisfactory
assurances that (i) it will have good and marketable title to the securities
received by it; (ii) that the securities are in proper form for transfer to the
Fund; and (iii) adequate information will be provided concerning the basis and
other matters relating to the securities.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than customary weekend and holiday closings, or during
which trading is restricted, or during which as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such periods as the
SEC may permit. The Company may 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
30
<PAGE>
of a shareholder which is applicable to shares of the Fund as provided from time
to time in the Prospectus.
PORTFOLIO TRANSACTIONS
The Company has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to policies
established by the Company's Board of Directors, Wells Fargo Bank is responsible
for each Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Company to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Fund will not necessarily be
paying the lowest spread or commission available.
Purchases and sales of equity securities on a securities exchange are
effected through brokers who charge a negotiated commission for their services.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Stephens or Wells Fargo Securities Inc. In the
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. The Fund will not deal with Stephens,
Wells Fargo Bank or their affiliates in any transaction in which any of them
acts as principal without an exemptive order from the SEC.
In placing orders for portfolio securities of the Fund, Wells Fargo Bank is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that Wells Fargo Bank will seek to execute each
transaction at a price and commission, if any, that provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. Commission
rates are established pursuant to negotiations with the broker based on the
quality and quantity of execution services provided by the broker in the light
of generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Board of Directors.
Wells Fargo Bank, as Investment Advisor to the Fund, may, in circumstances
in which two or more dealers are in a position to offer comparable results for a
Fund portfolio transaction, give preference to a dealer that has provided
statistical or other research services to Wells Fargo Bank. By allocating
transactions in this manner, Wells Fargo Bank is able to supplement its research
and analysis with the views and information of securities firms. Information so
received will be in addition to, and not in lieu of, the services required to be
performed by Wells Fargo Bank under the Advisory
31
<PAGE>
Contract, and the expenses of Wells Fargo Bank will not necessarily be reduced
as a result of the receipt of this supplemental research information.
Furthermore, research services furnished by dealers through which Wells Fargo
Bank places securities transactions for the Fund may be used by Wells Fargo Bank
in servicing its other accounts, and not all of these services may be used by
Wells Fargo Bank in connection with advising the Fund.
For the fiscal year ended March 31, 1998, the Company paid $6,871,000 in
commissions to various broker/dealers in connection with such allocated
transactions.
Brokerage Commissions. The Fund does not pay brokerage commissions
---------------------
related to the sales/redemptions of the Class O shares.
Securities of Regular Broker/Dealers. As of September 30, 1998, the Fund
------------------------------------
held the following securities of its "regular brokers or dealers" or any of
their parents, as defined in the 1940 Act:
<TABLE>
<S> <C>
Merrill Lynch, Pierce Fenner & Smith $4,593,291
Morgan Stanley/Dean Witter $7,080,982
Charles E. Schwab & Co. $2,935,288
J.P. Morgan Securities, Inc. $4,220,333
</TABLE>
Portfolio Turnover. The portfolio turnover rate is not a limiting factor
------------------
when Wells Fargo Bank deems portfolio changes appropriate. Changes may be made
in the portfolios consistent with the investment objectives and policies of the
Fund whenever such changes are believed to be in the best interests of the Fund
and its shareholders. The portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of portfolio securities by the average monthly
value of the Fund's portfolio securities. For purposes of this calculation,
portfolio securities exclude all securities having a maturity when purchased of
one year or less. Portfolio turnover generally involves some expenses to the
Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and the reinvestment in other securities.
Portfolio turnover also can generate short-term capital gain tax consequences.
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.
32
<PAGE>
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 the 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 the Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio transactions; fees and expenses of its
custodian, including those for keeping books and accounts and calculating the
NAV per share of the Fund; expenses of shareholders' meetings; expenses relating
to the issuance, registration and qualification of Fund shares; pricing
services, and any extraordinary expenses. Expenses attributable to the Fund are
charged against the Fund's assets. General expenses of the Company are
allocated among all of the funds of the Company, including the Fund, in a manner
proportionate to the net assets of the Fund, on a transactional basis, or on
such other basis as the Company's Board of Directors deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectuses of each Fund
describe generally the tax treatment of distributions by the Funds. This section
of the SAI includes additional information concerning Federal income taxes.
General. The Company intends to qualify each 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. Each Fund will be treated as a separate entity for
Federal income tax purposes. Thus, the provisions of the Code applicable to
regulated investment companies generally will be applied to each 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 each Fund. As a
regulated investment company, each Fund will not be taxed on its net investment
income and capital gains distributed to its shareholders.
Qualification as a regulated investment company under the Code requires,
among other things, that each Fund (a) 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
33
<PAGE>
investing in such stock, securities or currencies; and (b) 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 with respect to 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.
The Funds also must distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income (which, for this
purpose, includes net short-term capital gains) 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. Furthermore, distributions declared
in October, November or December of one taxable year and paid by January 31 of
the following taxable year will be treated as paid by December 31 of the first
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.
In addition, a regulated investment company 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 a regulated investment company's taxable years
beginning after August 5, 1997.
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. Each 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.
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 gains and
losses if the securities have been held by the Fund for more than one year at
the time of disposition of the securities.
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.
34
<PAGE>
If an option granted by a 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 the Fund pursuant to the exercise of a call option
written by it, the Fund will add the premium received to the sale price of the
securities delivered in determining the amount of gain or loss on the sale. If
securities are purchased by a Fund pursuant to the exercise of a put option
written by it, such Fund will subtract the premium received from its cost basis
in the securities purchased.
The amount of any gain or loss realized by a Fund on closing out a
regulated futures contract will generally result in a realized capital gain or
loss for Federal income tax purposes. Regulated 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, will generally be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss. Transactions that qualify as designated hedges are
excepted from the "mark-to-market" rule and the "60%/40%" rule.
Under Section 988 of the Code, a Fund generally will recognize ordinary
income or loss to the extent that gain or loss realized on the disposition of
portfolio securities is attributable to changes in foreign currency exchange
rates. In addition, gain or loss realized on the disposition of a foreign
currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, will generally be treated as ordinary
income or loss. The Funds will attempt to monitor Section 988 transactions,
where applicable, to avoid adverse Federal income tax impact.
Offsetting positions held by a Fund 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 Fund were treated as entering into
"straddles" by 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 Fund 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 Fund may differ. Generally, to the extent the
straddle rules apply to positions established by the Fund, losses realized by
the Fund 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
35
<PAGE>
recharacterized as long-term capital loss, and long-term capital gain may be
characterized as short-term capital gain or ordinary income.
If a 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 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.
If a Fund purchases shares in a "passive foreign investment company"
("PFIC"), the Fund may be subject to Federal income tax and an interest charge
imposed by the IRS upon certain distributions from the PFIC or the Fund's
disposition of its PFIC shares. If a Fund invests in a PFIC, the Fund intends to
make an available election to mark-to-market its interest in PFIC shares. Under
the election, the Fund will be treated as recognizing at the end of each taxable
year the difference, if any, between the fair market value of its interest in
the PFIC shares and its basis in such shares. In some circumstances, the
recognition of loss may be suspended. The Fund will adjust its basis in the PFIC
shares by the amount of income (or loss) recognized. Although such income (or
loss) will be taxable to the Fund as ordinary income (or loss) notwithstanding
any distributions by the PFIC, the Fund will not be subject to Federal income
tax or the interest charge with respect to its interest in the PFIC.
Income and dividends received by the Funds from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries.
Capital Gain Distributions. Distributions which are designated by a Fund
--------------------------
as capital gain distributions will be taxed to shareholders as long-term term
capital gain (to the extent such dividends do 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 its shareholders not
later than 60 days after the close of the Fund's taxable year.
Disposition of Fund Shares. A disposition of Fund shares pursuant to a
--------------------------
redemption (including a redemption in-kind) or an exchange will ordinarily
result in a taxable capital gain or loss, depending on the amount received for
the shares (or are deemed to be received in the case of an exchange) and the
cost of the 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 on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred in acquiring the Fund's shares shall not be
taken into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated
36
<PAGE>
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.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the designated capital gain
distribution. In addition, 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. The loss disallowance
rules described in this paragraph 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 gain is 20%; and the maximum corporate tax rate applicable to
ordinary income and net capital gain 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.
Backup Withholding. The Company may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on dividends,
capital gain distributions, and redemption proceeds (including proceeds from
exchanges and redemptions in-kind) paid or credited to an individual Fund
shareholder, if the shareholder fails to certify that the Taxpayer
Identification Number ("TIN") provided is correct and that the shareholder is
not subject to backup withholding, or if the IRS notifies the Company that the
shareholder's TIN is incorrect or that 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.
37
<PAGE>
Corporate Shareholders. Corporate shareholders of the Funds may be
----------------------
eligible for the dividends-received deduction on dividends distributed out of a
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 generally hold the shares upon which the
dividend is made for at least 46 days prior to and following the time the
corporate shareholder becomes entitled to receive the dividend.
Foreign Shareholders. Under the Code, distributions of net investment
--------------------
income by the Funds 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. fiduciaries 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 (or, if an income tax treaty applies,
is attributable to a U.S. permanent establishment of the foreign shareholder),
in which case the reporting and withholding requirements applicable to U.S.
persons will apply. Distributions of net long-term capital gains are generally
not subject to tax withholding.
New Regulations. On October 6, 1997, the Treasury Department issued new
---------------
regulations (the "New Regulations") which make certain modifications to the
backup withholding, U.S. income tax withholding and information reporting rules
applicable to foreign shareholders. The New Regulations will generally be
effective for payments made after December 31, 1998, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders that will be subject to U.S. income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
Tax-Deferred Plans. The shares of the Funds are available for a variety
------------------
of tax-deferred retirement and other plans, including Individual Retirement
Accounts ("IRA"), Simplified Employee Pension Plans ("SEP-IRA"), Savings
Incentive Match Plans for Employees ("SIMPLE plans"), Roth IRAs, and Education
IRAs, which permit investors to defer some of their income from taxes. Investors
should contact their selling agents for details concerning retirement plans.
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 Funds without corresponding current cash receipts.
Although the Funds will seek to avoid significant noncash income, such noncash
income could be recognized by the
38
<PAGE>
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 is urged to consult
his or her tax advisor regarding specific questions as to Federal, state, local
or foreign taxes.
CAPITAL STOCK
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, 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 the Fund represents an equal, proportionate
interest in the Fund with other shares of the same class. Shareholders of each
class bear their pro rata portion of the Fund's operating expenses, except for
certain class-specific expenses (e.g., any state securities registration fees,
shareholder servicing fees or distribution fees that may be paid under Rule
12b1) that are allocated to a particular class. Please contact Investor
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. Subject to the foregoing, all shares of the Fund have equal
voting rights and will be voted in the aggregate, and not by series, except
where voting by a series is required by law or where the matter involved only
affects one series. For example, a change in the Fund's fundamental investment
policy affects only one series and would be voted upon only by shareholders of
the Fund involved. Additionally, approval of an advisory contract, since it
affects only one Fund, is a matter to be determined separately by Series.
Approval by the shareholders of one Series is effective as to that Series
whether or not sufficient votes are received from the shareholders of the other
Series to approve the proposal as to those Series.
As used in the Prospectus 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 such 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
39
<PAGE>
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.
Each share of a class represents an equal proportional interest in the Fund
with each other share in the same class and is entitled to such dividends and
distributions out of the income earned on the assets belonging to the Fund as
are declared in the discretion of the Directors. In the event of the
liquidation or dissolution of the Company, shareholders of the Fund are entitled
to receive the assets attributable to the Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular investment portfolio that are available for distribution in such
manner and on such basis as the Directors in their sole discretion may
determine.
Set forth below, as of November 30, 1998, 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 the Fund as a whole.
5% OWNERSHIP AS OF NOVEMBER 30, 1998
------------------------------------
<TABLE>
<CAPTION>
NAME AND CLASS; TYPE PERCENTAGE PERCENTAGE
Address OF OWNERSHIP of Class of Fund
- -------------------------------- ------------------ --------------- --------------
<S> <C> <C> <C>
Stephens Inc. Class O 100.00% N/A
111 Center Street Record Holder
Little Rock, AR
72201
</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 the Fund, or is identified as the holder of record of
more than 25% of the Fund and has voting and/or investment powers, it may be
presumed to control the Fund.
40
<PAGE>
OTHER
The Company's Registration Statements, including the Prospectus and SAI for
the Fund and the exhibits filed therewith, may be examined at the office of the
U.S. Securities and Exchange Commission in Washington, D.C. Statements contained
in a Prospectus or the SAI as to the contents of any contract or other document
referred to herein or in a Prospectus are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference.
COUNSEL
Morrison & Forester LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Company, has rendered its opinion as
to certain legal matters regarding the due authorization and valid issuance of
the shares of beneficial interest being sold pursuant to the Funds' Prospectus.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serves as the independent auditors for the Company.
KPMG Peat Marwick LLP provides audit services, tax return preparation and
assistance and consultation in connection with review of certain SEC filings.
KPMG Peat Marwick LLP's address is Three Embarcadero Center, San Francisco,
California 94111.
FINANCIAL INFORMATION
The portfolio of investments, audited financial statements and independent
auditors' report for the Fund as of and for the year ended March 31, 1998 are
hereby incorporated by reference to the Company's Annual Report as filed with
the SEC on June 9, 1998.
Annual and Semi-Annual Reports may be obtained by calling 1-800-222-8222.
41
<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 four highest ratings for corporate bonds are "Aaa," "Aa,"
-------
"A" and "Baa." Bonds rated "Aaa" are judged to be of the "best quality" and
carry the smallest amount of investment risk. Bonds rated "Aa" are of "high
quality by all standards," but margins of protection or other elements make
long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds rated "A"
possess many favorable investment attributes and are considered to be upper
medium grade obligations. Bonds rated "Baa" are considered to be medium grade
obligations; interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds have
speculative characteristics as well. Moody's applies numerical modifiers: 1, 2
and 3 in each rating category from "Aa" through "Baa" in its rating system. The
modifier 1 indicates that the security ranks in the higher end of its category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end.
S&P: The four highest ratings for corporate bonds are "AAA," "AA," "A" and
---
"BBB." Bonds rated "AAA" have the highest ratings assigned by S&P and have an
extremely strong capacity to pay interest and repay principal. Bonds rated "AA"
have a "very strong capacity to pay interest and repay principal" and differ
"from the highest rated issued only in small degree." Bonds rated "A" have a
"strong capacity" to pay interest and repay principal, but are "somewhat more
susceptible" to adverse effects of changes in economic conditions or other
circumstances than bonds in higher rated categories. Bonds rated "BBB" are
regarded as having an "adequate capacity" to pay interest and repay principal,
but changes in economic conditions or other circumstances are more likely to
lead to a "weakened capacity" to make such repayments. The ratings from "AA" to
"BBB" may be modified by the addition of a plus or minus sign to show relative
standing within the category.
Corporate Commercial Paper
- --------------------------
Moody's: The highest rating for corporate commercial paper is "P-1"
-------
(Prime-1). Issuers rated "P-1" have a "superior capacity for repayment of short-
term promissory obligations." Issuers rated "P-2" (Prime-2) "have a strong
capacity for repayment of short-term promissory obligations," but earnings
trends, while sound, will be subject to more variation.
A-1
<PAGE>
S&P: The "A-1" rating for corporate commercial paper indicates that the
---
"degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
A-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 Corporate Bond Fund, Short-Intermediate U.S.
Government Income Fund, Strategic Income Fund, U.S. Government Income
Fund, Variable Rate Government Fund, Arizona Tax-Free Fund, California
Tax-Free Bond Fund, California Tax-Free Income Fund, National Tax-Free
Fund and Oregon Tax-Free Fund. The portfolio of investments, audited
financial statements and independent auditors' report for the year ended
June 30, 1998, 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 September 9, 1998.
With respect to the Asset Allocation Fund, Balanced Fund, California Tax-
Free Money Market Fund, Diversified Equity Income Fund, Equity Index
Fund, Equity Value Fund, Government Money Market Fund, Growth Fund, Index
Allocation Fund, International Equity Fund, Money Market Mutual Fund,
National Tax-Free Money Market Fund, Prime Money Market Fund, Small Cap
Fund, Treasury Plus Money Market Fund and U.S. Government Allocation
Fund, the portfolio of investments, audited financial statements and
independent auditors' report for the year ended March 31, 1998, 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 9, 1998.
With respect to the California Tax-Free Money Market Trust, Money Market
Trust, National Tax-Free Money Market Trust, Overland Express Sweep Fund,
Prime Money Market Fund - Service Class, Treasury Plus Money Market Fund
- Class E and Treasury Plus Money Market Fund - Service Class, the
portfolio of investments, audited financial statements and independent
auditors' report for the year ended March 31, 1998, are incorporated in
the respective statements of additional information for such Fund by
reference to the Company's Annual Reports, as filed with the SEC on June
10, 1998.
With respect to the Index Allocation, Overland Express Sweep, Short-Term
Government-Corporate Income, Short-Term Municipal Income, and Strategic
Growth Funds, the portfolio of investments, audited financial statements
and independent auditors' report for the year ended December 31, 1997,
are incorporated in the
C-1
<PAGE>
respective statements of additional information for such Funds by
reference to the Company's Annual Reports, as filed with the SEC on March
3, 1998.
(b) Exhibits:
--------
Exhibit
Number Description
------ -----------
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, incorporated by reference to Post-
Effective Amendment No. 43 to the Registration Statement
filed March 30, 1998.
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) - Form of Advisory Contract with Wells Fargo Bank,
N.A. on behalf of the Arizona Tax-Free, Asset Allocation,
Balanced, California Tax-Free Bond, California Tax-Free
Income, California Tax-Free Money Market, California Tax-Free
Money Market Trust, Corporate Bond, Diversified Equity
Income, Equity Index, Equity Value, Government Money Market,
Growth, Index Allocation, International Equity, Money Market,
Money Market Trust, National Tax-Free, National Tax-Free
Money Market, National Tax-Free Money Market Trust, 100%
Treasury Money Market, Oregon Tax-Free, Overland Express
Sweep, Prime Money Market, Short-Intermediate U.S. Government
Income, Short-Term Government-Corporate Income, Short-Term
Municipal Income, Small Cap, Strategic Growth, Strategic
Income, Treasury Plus Money Market, U.S. Government
Allocation, U.S. Government Income, and Variable Rate
Government Funds, filed herewith.
5(a)(ii) - Sub-Advisory Contract with Wells Capital Management on behalf
of various Funds, incorporated by reference to Post-Effective
Amendment No. 48 to the Registration Statement, filed July
31, 1998.
5(a)(iii) - Sub-Advisory Contract with Barclays Global Fund
Advisors on behalf of the Asset Allocation, Equity Index,
Index Allocation, and U.S. Government Allocation Funds,
incorporated by reference to Post-Effective Amendment No. 48,
filed July 31, 1998.
6(a) - Amended Distribution Agreement with Stephens Inc.,
filed herewith.
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
C-2
<PAGE>
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(a)(i) - Addendum No. 1 to the 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. 48 to the Registration Statement, filed July
31, 1998.
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(b)(i) - Addendum No. 1 to the 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. 48 to the Registration
Statement, filed July 31, 1998.
8(c) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the Equity Index, (formerly,
Corporate Stock) Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
8(c)(i) - Addendum No. 1 to the Custody Agreement with Wells Fargo
Institutional Trust Company, N.A. on behalf of the Equity
Index (formerly, Corporate Stock) Fund, incorporated by
reference to Post-Effective Amendment No. 48 to the
Registration Statement, filed July 31, 1998.
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(d)(i) - Amendment No. 2 to the Custody Agreement with Wells Fargo
Institutional Trust Company, N.A. on behalf of the California
Tax-Free Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 48 to the Registration
Statement, filed July 31, 1998.
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(e)(i) - Amendment No. 2 to the 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. 48
to the Registration Statement, filed July 31, 1998.
8(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Growth (formerly, Growth and Income) Fund, incorporated
by reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
8(f)(i) - Amendment No. 2 to the Custody Agreement with Wells Fargo
Bank, N.A. on behalf of the Growth (formerly, Growth and
Income) Fund, incorporated by reference to Post-Effective
Amendment No. 48 to the Registration Statement, filed July
31, 1998.
C-3
<PAGE>
8(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the U.S. Government Income (formerly, Ginnie Mae) Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
8(g)(i) - Amendment No. 2 to the Custody Agreement with Wells Fargo
Bank, N.A. on behalf of the U.S. Government Income (formerly,
Ginnie Mae) Fund, incorporated by reference to Post-Effective
Amendment No. 48 to the Registration Statement, filed July
31, 1998.
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(h)(i) - Amendment No. 1 to the Custody Agreement with Wells Fargo
Bank, N.A. on behalf of the Money Market Fund, incorporated
by reference to Post-Effective Amendment No. 48 to the
Registration Statement, filed July 31, 1998.
8(h)(ii) - Amendment No. 2 to the Custody Agreement with Wells Fargo
Bank, N.A. on behalf of the Money Market Mutual Fund
(formerly, the Money Market Fund), incorporated by reference
to Post-Effective Amendment No. 48 to the Registration
Statement, filed July 31, 1998.
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 Equity (formerly, 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(k)(i) - Amendment No. 1 to the 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. 48 to the Registration Statement,
filed July 31, 1998.
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.
C-4
<PAGE>
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 September 25, 1997.
8(o) - Form of Custody Agreement with Wells Fargo Bank, N.A. on
behalf of the 100% Treasury Money Market Fund, incorporated
by reference to Post-Effective Amendment No. 48 to the
Registration Statement, filed July 31, 1998.
9(a)(i) - Administration Agreement with Wells Fargo Bank, N.A. on
behalf of the Funds, incorporated by reference to Post-
Effective Amendment No. 48 to the Registration Statement,
filed July 31, 1998.
9(a)(ii) Co-Administration Agreement with Wells Fargo Bank, N.A. and
Stephens Inc. on behalf of the Funds, filed herewith.
9(b) Agency Agreement with Wells Fargo Bank, N.A. on behalf of the
Funds, filed herewith.
9(c) Form of Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Funds, filed herewith.
9(d) Servicing Plan as consolidated to include all classes of
the 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) - Distribution Plan on behalf of various classes and Funds,
incorporated by reference to Post-Effective Amendment No. 48
to the Registration Statement, filed July 31, 1998.
15(b) - Distribution Plan on behalf of the Asset Allocation Fund,
California Tax-Free Bond Fund, California Tax-Free Income
Fund, California Tax-Free Money Market Mutual Fund,
Diversified Equity Income Fund, Growth Fund, Money Market
Mutual Fund, Short-Intermediate U.S. Government Income Fund,
U.S. Government Allocation Fund and U.S. Government Income
Fund, incorporated by reference to Post-Effective Amendment
No. 48 to the Registration Statement, filed July 31, 1998.
15(c) - Distribution Plan on behalf of the California Tax-Free Money
Market Trust and National Tax-Free Money Market Trust,
incorporated by reference to Post-Effective Amendment No. 48
to the Registration Statement, filed July 31, 1998.
C-5
<PAGE>
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 18f3 Multi-Class Plan, as amended, filed herewith.
19 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat, Thomas
S. Goho, Joseph N. Hankin, W. Rodney Hughes, Robert M. Joses and
J. Tucker Morse, incorporated by reference to Post-Effective
Amendment No. 32, filed May 30, 1997; Power of Attorney for
Peter G. Gordon, incorporated by reference to Post-Effective
Amendment No. 41, filed January 30, 1998.
27 - Financial Data Schedules for the Overland predecessor portfolios
for the period ended December 31, 1996, incorporated by
reference to the Form N-SAR filed February 9, 1997; Financial
Data Schedules for the fiscal period ended March 31, 1997,
incorporated by reference to the Form NSAR, filed May 29, 1997.
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
As of November 30, 1998 the Registrant did not directly or indirectly
control, and were not under common control with, any other person or entity.
Item 26. Number of Holders of Securities
-------------------------------
As of June 30, 1998, the number of record holders of each class of
Securities of the Registrant was as follows:
<PAGE>
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
Institutional
Class A/1/ Class B Class C Class
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Arizona Tax-Free Fund 176 35 N/A 6
Asset Allocation Fund 12,857 13,245 54 N/A
Balanced Fund 1,595 645 N/A 191
California Tax-Free Bond Fund 10,403 1,866 108 48
California Tax-Free Income Fund 2,836 N/A N/A 7
California Tax-Free Money Market Fund 7,501 N/A N/A N/A
California Tax-Free Money Market Trust 8 N/A N/A N/A
Corporate Bond Fund 61 74 13 N/A
Diversified Equity Income Fund 12,022 3,917 N/A N/A
Equity Index Fund 2,523 930 N/A N/A
Equity Value Fund 2,598 6,217 34 174
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Government Money Market Fund 127 N/A N/A N/A
Growth Fund 12,897 3,959 N/A 37
Index Allocation Fund 1,431 298 1,200 N/A
International Equity Fund 1,143 2,855 18 N/A
Intermediate Bond Fund 153 294 N/A 9
Money Market Fund 5,485 2/2/ N/A N/A
Money Market Trust 5 N/A N/A N/A
National Tax-Free Fund 881 45 139 6
National Tax-Free Money Market Fund 47 N/A N/A 13
National Tax-Free Money Market Trust 2 N/A N/A N/A
Oregon Tax-Free Fund 603 112 N/A 10
Overland Express Sweep Fund 4 N/A N/A N/A
Prime Money Market Fund 327 659/3/ 327/5/ 104
Short-Intermediate U.S. Government Income Fund 829 313 N/A 77
Short-Term Government-Corporate Income Fund 18 N/A N/A N/A
Short-Term Municipal Income Fund 13 N/A N/A N/A
Small Cap Fund 855 2,147 131 15
Strategic Growth Fund 13,248 3,097 1,369 N/A
Treasury Plus Money Market Fund 200 156/3/ 2/4/ 221
U.S. Government Allocation Fund 1,229 538 N/A N/A
U.S. Government Income Fund 10,240 901 88 104
Variable Rate Government Fund 665 N/A 57 N/A
</TABLE>
/1/ For purposes of this chart, shares of single class Funds are included
under the designation "Class A".
/2/ Designates the number of Class S recordholders.
/3/ Designates the number of Service Class recordholders.
/4/ Designates the number of Class E recordholders.
/5/ Designates the number of Administrative Class recordholders.
C-7
<PAGE>
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 ByLaws 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 ByLaws, resolutions or contracts implementing such provisions or
such further indemnification arrangements as may be permitted by law. No
amendment of these Articles of Incorporation of the Corporation shall limit
or eliminate the right to indemnification provided hereunder with respect to
acts or omissions occurring prior to such amendment or repeal. Nothing
contained herein shall be construed to authorize the Corporation to indemnify
any Director or officer of the Corporation against any liability to the
Corporation or to any holders of securities of the Corporation to which he is
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office. Any
indemnification by the Corporation shall be consistent with the requirements
of law, including the 1940 Act.
(i) To the fullest extent permitted by Maryland statutory and
decisional law and the 1940 Act, as amended or interpreted, no Director or
officer of the Corporation shall be personally liable to the Corporation or
its stockholders for money damages; provided, however, that nothing herein
shall be construed to protect any Director or officer of the Corporation
against any liability to which such Director or officer would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office. No
amendment, modification or repeal of this Article VIII shall adversely affect
any right or protection of a Director or officer that exists at the time of
such amendment, modification or repeal.
Item 28. Business and Other Connections of Investment Advisor.
----------------------------------------------------
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned subsidiary
of Wells Fargo & Company, currently serves as investment advisor to several of
the Registrant's investment portfolios and to certain other registered openend
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
C-8
<PAGE>
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
- ------------------- -----------------------------------------
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, McGee,
Director Willis & Greene
455 Market Street
San Francisco, CA 94105
Director of Armstrong World Industries, Inc.
5037 Patata Street
South Gate, CA 90280
Director of Eastman Chemical Corporation
12805 Busch Place
Santa Fe Springs, CA 90670
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
Michael R. Bowlin Chairman of the Board of Directors, Chief
Director Executive Officer, 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 of
Director Officer 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
C-9
<PAGE>
Director of Terra Industries, Inc.
1321 Mount Pisgah Road
Walnut Creek, CA 94596
William S. Davilla President (Emeritus) and a Director of
Director The Vons Companies, Inc.
618 Michillinda Ave.
Arcadia, CA 91007
Director of Pacific Gas & Electric Company
788 Taylorville Road
Grass Valley, CA 95949
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Company
P.O. Box 1000
Lebec, CA 93243
Director of The Bakersfield Californian
1707 I Street
P.O. Box 440
Bakersfield, CA 93302
Trustee of Whittier College
13406 East Philadelphia Ave.
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Board of Wells Fargo & Company
Directors 420 Montgomery Street
San Francisco, CA 94105
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
C-10
<PAGE>
Director of Bailard Biehl & Kaiser
Real Estate Investment Trust, Inc.
2755 Campus Dr.
San Mateo, CA 94403
Director of Boise Cascade Corporation
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Enron Corporation
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108
Thomas L. Lee Chairman and Chief Executive Officer of
Director The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622
Director of Calmat Co.
501 El Charro Road
Pleasanton, CA 94588
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
C-11
<PAGE>
Director of the California Chamber of Commerce
1201 K Street
12th Floor
Sacremento, CA 95814
Philip J. Quigley Chairman, President and Chief Executive Officer of
Director Pacific Telesis Group
130 Kearney Street Rm. 3700
San Francisco, CA 94108
Carl E. Reichardt Director of Columbia/HCA Healthcare Corporation
Director One Park Plaza
Nashville, TN 37203
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Retired Chairman of the Board of Directors
and Chief Executive Officer of Wells Fargo
& Company
420 Montgomery Street
San Francisco, CA 94105
Donald B. Rice President and Chief Executive Officer of
Director Teledyne, Inc.
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
C-12
<PAGE>
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
Director Cellular One
651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Retired Chairman of the Board and Chief
Director Executive Officer of
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
Director at Berkeley
Director of Raychem Corporation
300 Constitution Drive
Menlo Park, CA 94025
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<PAGE>
John A. Young President, Chief Executive Officer and Director
Director of Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 9434
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
Director of Lucent Technologies
25 John Glenn Drive
Amherst, NY 14228
Director of Novell, Inc.
11300 West Olympic Blvd.
Los Angeles, CA 90064
Director of Shaman Pharmaceuticals Inc.
213 East Grand Ave. South
San Francisco, CA 94080
William F. Zuendt President of Wells Fargo & Company
President 420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corporation
5400 Bayfront Plaza, P.O. Box 58145
Santa Clara, CA 95052
Director of the California Chamber of Commerce
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-advisor to the Asset
Allocation, Corporate Stock and U.S. Government Allocation Funds of the Company
and to certain other open-end management investment companies. From May 1, 1996
to December 15, 1997 BGFA served as sub-advisor to the corresponding Asset
Allocation, U.S. Government Allocation and Corporate Stock Master Portfolios of
Master Investment Trust, in which such funds invested substantially all of their
assets. These Funds currently invest directly in a portfolio of securities and
no longer invest in the Master Portfolios. BGFA currently serves as sub-advisor
to these Funds.
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-advisor 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
C-14
<PAGE>
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.
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ------- -------------------------------
Frederick L.A. Grauer Director of BGFA and Co-Chairman and
Director Director of BGI
45 Fremont, San Francisco, CA 94105
Patricia Dunn Director of BGFA and C-Chairman and
Director Director of BGI
45 Fremont, 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, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI
Chief Financial Officer since May 1997
45 Fremont, San Francisco, CA 94105
Managing Director and Principal Accounting
Officer at Bankers Trust Company from
1988 - 1997 505 Market Street,
San Francisco, CA 94105
Prior to January 1, 1996 WFNIA served as subadvisor to the Asset
Allocation, Corporate Stock and U.S. Government Allocation Funds of the Company
and as advisor or subadvisor to various other openend management investment
companies.
For additional information, "Organization and Management of the Fund(s)"
in the Prospectuses for the Funds as well as "Management" in the Statements of
Additional Information of such Funds. For information as to the business,
profession, vocation or employment of a substantial nature of each of the
officers and management committees of WFNIA, reference is made to WFNIA's Form
ADV and Schedules A and D filed under the Investment Advisors Act of 1940, File
No. 80136479, incorporated herein by reference.
Item 29. Principal Underwriters.
----------------------
(a) Stephens Inc., distributor for the Registrant, does not presently
act as investment advisor for any other registered investment companies, but
does act as principal underwriter for Life & Annuity Trust, MasterWorks Funds,
Inc. Stagecoach Trust, Nations Fund, Inc., Nations Fund Trust, Nations Fund
Portfolios, Inc., Nations LifeGoal Funds, Inc. and Nations Institutional
Reserves, and is the exclusive placement agent for Managed Series Investment
Trust and Master Investment Portfolio, all of which are registered open-end
management investment companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens
C-15
<PAGE>
Inc. with the Securities and Exchange Commission pursuant to the Investment
Advisors Act of 1940 (file No. 50115510).
(c) Not applicable.
Item 30. Location of Accounts and Records.
--------------------------------
(a) The Registrant maintains accounts, books and other documents required
by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder
(collectively, "Records") at the offices of Stephens Inc., 111 Center Street,
Little Rock, Arkansas 72201.
(b) Wells Fargo Bank maintains all Records relating to its services as
investment advisor, 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-advisor 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-
advisor and custodian, respectively, for the period beginning January 1, 1996 at
45 Fremont Street, San Francisco, California 94105.
(e) Stephens maintains all Records relating to its services as sponsor,
co-administrator and distributor at 111 Center Street, Little Rock, Arkansas
72201.
Item 31. Management Services.
-------------------
Other than as set forth under the captions "Organization and Management
of the Fund(s)" in the Prospectuses for the Funds as well as "Management" in the
Statements of Additional Information of such Funds, the Registrant is not a
party to any managementrelated service contract.
Item 32. Undertakings.
------------
(a) Not applicable.
(b) Not applicable.
(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
C-16
<PAGE>
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-17
<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 30th day of November, 1998.
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
--------- ----- ----
*
- ----------------------- Director, Chairman and President
(R. Greg Feltus) (Principal Executive Officer)
/s/Richard H. Blank, Jr. Secretary and Treasurer 11/30/98
- ----------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)
* Director
- -----------------------
(Jack S. Euphrat)
* Director
- -----------------------
(Thomas S. Goho)
* Director
- ------------------------
(Peter G. Gordon)
* Director
- -----------------------
(Joseph N. Hankin)
* Director
- -----------------------
(W. Rodney Hughes)
* Director
- ------------------------
(Tucker Morse)
*By /s/Richard H. Blank, Jr.
-----------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
November 30, 1998
<PAGE>
STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
EX-99.B5(a)(i) Form of Advisory Contract
EX-99.B6(a) Amended Distribution Agreement
EX-99.B9(a)(ii) Co-Administration Agreement
EX-99.B9(b) Agency Agreement
EX-99.B9(c) Form of Shareholder Servicing Agreement
EX-99.B9(d) Servicing Plan
EX-99.B10 Opinion Letter
EX-99.B18 Rule 18f-3 Multi-Class Plan
<PAGE>
EXHIBIT 99.B5(a)(i)
FORM OF
ADVISORY CONTRACT
for various portfolios of
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
[November __, 1998]
Wells Fargo Bank, N.A.
525 Market Street
San Francisco, California 94163
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company"), on
behalf of each of the Company's investment portfolios, each listed on Schedule A
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
"Administration Agreements"), 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, 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 Administrators 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 A 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
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
3
<PAGE>
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 A
By:
------------------------
Name: Richard H. Blank, Jr.
---------------------
Title: Chief Operating Officer
-----------------------
ACCEPTED as of the date
set forth above:
WELLS FARGO BANK, N.A.
By:
-------------------------
Name: Elizabeth A. Gottfried
----------------------
Title: Vice President
--------------
By:
-------------------------
Name: Michael J. Hogan
----------------
Title: Senior Vice President
---------------------
5
<PAGE>
SCHEDULE A
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>
ADVISORY FEE
FUND (AS % OF NET ASSETS)
---- --------------------
<S> <C>
Arizona Tax-Free 0.50%
Asset Allocation 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
Balanced 0.60%
California Tax-Free Bond 0.50%
California Tax-Free Income 0.50%
California Tax-Free Money Market 0.50%
California Tax-Free Money Market Trust 0.50%
Corporate Bond 0.50%
Diversified Equity Income 0.50%
Equity Index 0.25%
Equity Value 0.50%
Government Money Market 0.25%
Growth 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
Index Allocation 0.70% of first $500 million
0.60% over $500 million
International Equity 1.00%
Money Market 0.40%
Money Market Trust 0.25%
National Tax-Free 0.50%
National Tax-Free Money Market 0.30%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ADVISORY FEE
FUND (AS % OF NET ASSETS)
---- --------------------
<S> <C>
National Tax-Free Money Market Trust 0.25%
100% Treasury Money Market Fund 0.25%
Oregon Tax-Free 0.50%
Overland Express Sweep 0.45%
Prime Money Market 0.25%
Short-Intermediate U.S. Government Income 0.50%
Short-Term Govt-Corporate Income Fund 0.50%
Short-Term Municipal Income Fund 0.50%
Small Cap 0.60%
Strategic Growth 0.50%
Strategic Income 0.60%
Treasury Plus Money Market 0.25%
U.S. Government Allocation 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
U.S. Government Income 0.50% of first $250 million
0.40% of next $250 million
0.30% over $500 million
Variable Rate Government 0.50%
</TABLE>
Approved: July 23, 1997 for the Asset Allocation, Index Allocation, National
Tax-Free Money Market, Overland Express Sweep, Short-Term Government-Corporate
Income, Short-Term Municipal Income, Small Cap, Strategic Growth, U.S.
Government Allocation and Variable Rate Government Funds.
Approved as Amended: October 30, 1997 for the Equity Index Fund.
Approved as Amended: November 19, 1998 for all funds.
7
<PAGE>
EXHIBIT 99.B6(a)
AMENDED DISTRIBUTION AGREEMENT
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
December 15, 1994
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company")
on behalf of each of its portfolios (each, a "Fund") and you ("Distributor") as
follows:
1. As the Company's agent, Distributor shall be the exclusive
distributor for the unsold portion of shares of the Fund that are registered
under the Securities Act of 1933 (the "1933 Act").
2. The Company shall sell through Distributor, as the Company's agent,
and deliver, upon the terms set forth herein, Fund shares that Distributor
orders from the Company and for which Distributor has received and confirmed
unconditional purchase orders. All orders from Distributor shall be subject to
acceptance and confirmation by the Company. The Company shall have the right,
at its election, to deliver either shares issued upon original issue or treasury
shares.
3. As the Company's agent, Distributor may sell and distribute Fund
shares in such manner not inconsistent with the provisions hereof as Distributor
may determine from time to time. In that connection Distributor shall comply
with all laws, rules and regulations applicable to it, including, without
limiting the generality of the foregoing, all applicable rules or regulations
under the Investment Company Act of 1940 (the "1940 Act") and of any securities
association registered under the Securities Exchange Act of 1934 (the "1934
Act").
4. The Company reserves the right to sell Fund shares to purchasers to
the extent that it or the transfer agent for Fund shares receives purchase
applications therefor. Distributor's right to accept purchase orders for Fund
shares or to make sales thereof shall not apply to Fund shares that may be
offered by the Company to shareholders for the reinvestment of cash distributed
to shareholders by the Company or Fund shares that may otherwise be offered by
the Company to shareholders, unless Distributor is otherwise notified by the
Company.
5. All shares offered for sale and sold by Distributor shall be offered
for sale and sold by Distributor to or through securities dealers or banks and
other depository institutions
1
<PAGE>
having agreements with Distributor ("Selling Agents") upon the terms and
conditions set forth in paragraph 7(b) hereof or to investors at the price per
share (the "offering price", which is the net asset value per share plus the
applicable sales charge, if any) specified and determined as provided in the
Prospectus (the "Prospectus") included in the Company's Registration Statement,
as amended from time to time, under the 1933 Act and the 1940 Act (the
"Registration Statement"), relating to the offering of its shares for sale. If
the offering price is not an exact multiple of one cent, it shall be adjusted to
the nearest full cent. The Company shall determine and furnish promptly to
Distributor a statement of the offering price at least once on each day on which
the Prospectus states the Company is required to determine the Company's net
asset value for the purpose of pricing purchase orders. Each offering price
shall become effective at the time and shall remain in effect during the period
specified in the statement. Each such statement shall show the basis of its
computation. For purposes of establishing the offering price, the Company shall
consider a purchase order to have been presented to it at the time it was
originally entered by Distributor for transmission to it, provided the original
purchase order and Distributor's fulfilling order to the Company are
appropriately time stamped or evidenced to show the time of original entry and
that Distributor's fulfilling order to the Company is received by the Company
within a time deemed by it to be reasonable after the purchase order was
originally entered. Purchases of shares shall be made for full and fractional
shares, carried to the third decimal place.
6. Ownership of Fund shares sold hereunder shall be registered in such
names and denominations as are specified in writing to the Company or to its
agent designated for the purpose. No certificates for shares of the Fund will
be issued.
7. (a) Distributor shall from time to time employ or associate with it
such persons as it believes necessary to assist it in carrying out its
obligations under this agreement. The compensation of such persons shall be
paid by Distributor.
(b) Distributor shall have the right to enter into selling agreements
with Selling Agents of its choice for the sale or marketing of Fund shares at
the offering price and upon the terms and conditions set forth in the
Prospectus. The initial form of selling agreement is attached hereto as an
Exhibit. Distributor may amend those agreements, or modify the form of
agreement, only upon approval of the Company.
(c) Distributor shall pay all expenses incurred in connection with its
qualification as a dealer or broker under Federal or state laws.
(d) Distributor shall pay for all expenses incurred in connection with
(i) printing and distributing such number of copies of the Prospectus as the
Distributor deems necessary for use in connection with offering Fund shares to
prospective investors, (ii) preparing, printing and distributing any other
literature and advertising deemed appropriate by Distributor for use in
connection with offering Fund shares for sale and (iii) all other expenses
incurred in connection with the sale of Fund shares as contemplated by this
agreement, except as otherwise specifically provided in this agreement. In
addition, it is understood and agreed that, so long as a plan of distribution of
the Fund adopted pursuant to Rule 12b-1 of the 1940 Act (the "Plan") continues
in effect, any expenses incurred by the Distributor hereunder may be paid from
2
<PAGE>
amounts received by it from the Fund under the Plan. So long as the Plan
continues in effect, Distributor shall be entitled to receive reimbursement from
the Company under the Plan for actual expenses incurred in connection with the
Fund to the extent such expenses are reimbursable under the Plan. The Treasurer
of the Company shall provide to the Board of Directors of the Company and the
Board of Directors shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made.
(e) The Company shall pay all expenses incurred in connection with (i)
the preparation, printing and distribution to stockholders of the Prospectus and
reports and other communications to Fund shareholders; (ii) registrations of
Fund shares under the 1933 Act and the Fund under the 1940 Act; (iii) amendments
to the Registration Statement; (iv) qualification of Fund shares for sale in
jurisdictions designated by Distributor; (v) qualification of the Company as a
dealer or broker under the laws of jurisdictions designated by Distributor; (vi)
qualification of the Company as a foreign corporation authorized to do business
in any jurisdiction if Distributor determines that such qualification is
necessary or desirable for the purpose of facilitating sales of Fund shares;
(vii) maintaining facilities for the issue and transfer of Fund shares; (viii)
supplying information, prices and other data to be furnished by the Company
under this agreement; and (ix) original issue taxes or transfer taxes applicable
to the sale or delivery of Fund shares.
(f) The Company shall execute all documents and furnish any
information which may be reasonably necessary in connection with the
qualification of Fund shares of the Company for sale in a jurisdiction
designated by Distributor.
(g) The Company shall pay to the Distributor the amount that is
payable pursuant to, and in accordance with, the Distribution Plan applicable to
a Fund or class of shares of a Fund, or the maximum amount payable under
applicable laws, regulations and rules, whichever is less. The actual amount
payable with respect to such Fund in any month is to be determined by mutual
agreement.
8. The Company shall furnish Distributor from time to time, for use in
connection with the sale of Fund shares, such written information with respect
to the Company as Distributor may reasonably request. In each case such written
information shall be signed by an authorized officer of the Company. The
Company represents and warrants that such information, when signed by one of its
officers, shall be true and correct. The Company shall also furnish to
Distributor copies of its reports to its stockholders and such additional
information regarding the Company's financial condition as Distributor may
reasonably request from time to time.
9. The Registration Statement and the Prospectus have been or will be,
as the case may be, carefully prepared in conformity with the 1933 Act, the 1940
Act and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC"). The company represents and
warrants to Distributor that the Registration Statement and the Prospectus
contain or will contain all statements required to be stated therein in
accordance with the 1933 Act, the 1940 Act and the Rules and Regulations, that
all statements of fact contained or to be contained therein are or will be true
and correct at the time indicated or the effective date, as the case may be, and
that neither the Registration Statement nor the Prospectus,
3
<PAGE>
when it shall become effective under the 1933 Act or be authorized for use,
shall include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Fund shares. The Company shall from time to
time file such amendment or amendments to the Registration Statement and the
Prospectus as, in the light of future developments, shall, in the opinion of the
Company's counsel, be necessary in order to have the Registration Statement and
the Prospectus at all times contain all material facts required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of Fund shares. If the Company shall not file such amendment or
amendments within 15 days after receipt by the Company of a written request from
Distributor to do so, Distributor may, at its option, terminate this agreement
immediately. The Company shall not file any amendment to the Registration
Statement or the Prospectus without giving Distributor reasonable notice thereof
in advance, provided that nothing in this agreement shall in any way limit the
Company's right to file at any time such amendments to the Registration
Statement or the Prospectus as the Company may deem advisable. The Company
represents and warrants to Distributor that any amendment to the Registration
Statement or the Prospectus filed hereafter by the Company will, when it becomes
effective under the 1933 Act, contain all statements required to be stated
therein in accordance with the 1933 Act, the 1940 Act and the Rules and
Regulations, that all statements of fact contained therein will, when the same
shall become effective, be true and correct, and that no such amendment, when it
becomes effective, will include an untrue statement of a material fact or will
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of Fund shares.
10. Subject to the provisions of paragraph 7, the Company shall prepare
and furnish to Distributor from time to time such number of copies of the most
recent form of the Prospectus filed with the SEC as Distributor may reasonably
request. The Company authorizes Distributor and Selling Agents to use the
Prospectus, in the form furnished to Distributor from time to time, in
connection with the sale of Fund shares. The Company shall indemnify, defend
and hold harmless Distributor, its officers and partners and any person who
controls Distributor within the meaning of the 1933 Act, from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its officers or
partners or any such controlling person, may incur under the 1933 Act, the 1940
Act, the common law or otherwise, arising out of or based upon any alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus or arising out of or based upon any alleged omission to state a
material fact required to be stated in either thereof or necessary to make the
statements in either thereof not misleading. Notwithstanding the foregoing,
this indemnity agreement, to the extent that it might require indemnity of any
person who is an officer or partner of Distributor and who is also a director of
the Company, shall not inure to the benefit of such officer or partner unless a
court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act or the 1940 Act, and in no event
shall anything contained herein be so construed as to protect Distributor
against any liability to the Company or its stockholders to which Distributor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this agreement. This indemnity
agreement is expressly conditioned upon the
4
<PAGE>
Company's being notified of any action brought against Distributor, its officers
or partners or any such controlling person, which notification shall be given by
letter or by telegram addressed to the Company at its principal office in Little
Rock, Arkansas, and sent to the Company by the person against whom such action
is brought within 10 days after the summons or other first legal process shall
have been served. The failure to notify the Company of any such action shall not
relieve the company from any liability which it may have to the person against
whom such action is brought by reason of any such alleged untrue statement or
omission otherwise than on account of the indemnity agreement contained in this
paragraph. The Company shall be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, the
defense shall be conducted by counsel chosen by the Company and approved by
Distributor. If the Company elects to assume the defense of any such suit and
retain counsel approved by Distributor, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any of
them, but in case the Company does not elect to assume the defense of any such
suit, or in case Distributor does not approve of counsel chosen by the Company,
the Company will reimburse Distributor, its officers and partners or the
controlling person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by Distributor or them. In
addition, Distributor shall have the right to employ one separate counsel to
represent it, its officers and partners and any such controlling person who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by Distributor against the Company hereunder if in the reasonable
judgment of Distributor it is advisable because of actual or potential differing
interests between the Distributor, its officers and partners or such controlling
person and the Company in the conduct of the defense of such action, for
Distributor, its officers and partners or such controlling person to be
represented by separate counsel, in which event the fees and expenses of such
separate counsel shall be borne by the Company. This indemnity agreement and the
Company's representations and warranties in this agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of Distributor, its officers and partners or any such controlling
person and shall survive the delivery of any shares as provided in this
agreement. This indemnity agreement shall inure exclusively to the benefit of
Distributor and its successors, Distributor's officers and partners and their
respective estates and any such controlling persons and their successors and
estates. The Company shall promptly notify Distributor of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any Fund shares.
11. Distributor agrees to indemnify, defend and hold harmless the
Company, its officers and directors and any person who controls the Company
within the meaning of the 1933 Act, from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which the Company, its officers or directors or any such
controlling person, may incur under the 1933 Act, the 1940 Act, the common law
or otherwise, but only to the extent that such liability or expense incurred by
the Company, its officers or directors or such controlling person resulting from
such claims or demands shall arise out of or be based upon (a) any alleged
untrue statement of a material fact contained in information furnished in
writing by Distributor to the Company specifically for use in the Registration
Statement or the Prospectus or shall arise out of or be based upon any alleged
omission required to be stated in the Registration Statement or the Prospectus
or necessary to make such information not misleading and (b) any alleged act or
omission on Distributor's part as the Company's agent that has not been
5
<PAGE>
expressly authorized by the Company in writing. This indemnity agreement is
expressly conditioned upon Distributor's being notified of any action brought
against the Company, its officers and directors or any such controlling person,
which notification shall be given by letter or telegram, addressed to
Distributor at its principal office in Little Rock, Arkansas, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served. The
failure to notify Distributor of any such action shall not relieve Distributor
from any liability which it may have to the Company, its officers or directors
or such controlling person by reason of any such alleged misstatement or
omission on Distributor's part otherwise than on account of the indemnity
agreement contained in this paragraph. Distributor shall have a right to
control the defense of such action with counsel of its own choosing and approved
by the Company if such action is based solely upon such alleged misstatement or
omission on Distributor's part, and in any other event the Company, its officers
and directors or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any such action at
their own expense.
12. No Fund shares shall be sold through Distributor or by the Company
under this agreement and no orders for the purchase of Fund shares shall be
confirmed or accepted by the Company if and so long as the effectiveness of the
Registration Statement shall be suspended under any of the provisions of the
1933 Act. Nothing contained in this paragraph 12 shall in any way restrict,
limit or have any application to or bearing upon the Company's obligation to
redeem Fund shares from any shareholder in accordance with the provisions of its
Articles of Incorporation. The Company will use its best efforts at all times
to have Fund shares effectively registered under the 1933 Act.
13. The Company agrees to advise Distributor immediately:
(a) of any request by the SEC for amendments to the Registration
Statement or the Prospectus or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the Prospectus
under the 1933 Act or the initiation of any proceedings for that purpose;
(c) of the happening of any material event that makes untrue any
statement made in the Registration Statement or the Prospectus or that requires
the making of a change in either thereof in order to make the statements therein
not misleading; and
(d) of any action of the SEC with respect to any amendments to the
Registration Statement or the Prospectus that may from time to time be filed
within the SEC under the 1933 Act or the 1940 Act.
14. Insofar as they concern the Company, the Company shall comply with
all applicable laws, rules and regulations, including, without limiting the
generality of the foregoing, all rules or regulations made or adopted pursuant
to the 1933 Act, the 1940 Act or by any securities association registered under
the 1934 Act.
6
<PAGE>
15. Distributor may, if it desires and at its own cost and expense,
appoint or employ agents to assist it in carrying out its obligations under this
agreement, but no such appointment or employment shall relieve Distributor of
any of its responsibilities or obligations to the Company under this agreement.
16. Subject to the provisions of paragraph 9, this agreement shall
continue in effect until such time as there shall remain no unsold balance of
Fund shares registered under the 1933 Act, provided that this agreement shall
continue in effect for a period of more than one year from the date hereof only
so long as such continuance is specifically approved at least annually in
accordance with the 1940 Act and the rules thereunder. This agreement shall
terminate automatically in the event of its assignment (as defined in the 1940
Act). This agreement may, in any event, be terminated at any time, without the
payment of any penalty, by the Company upon 60 days' written notice to
Distributor or by Distributor at any time after the second anniversary of the
effective date of this agreement on 60 days' written notice to the Company.
17. This agreement shall be governed by and construed in accordance with
the laws of the State of Arkansas.
If the foregoing correctly sets forth the agreement between the Company
and Distributor, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
STAGECOACH FUNDS, INC.
By: /s/ Richard H. Blank, Jr.
--------------------------
Richard H. Blank, Jr.
Chief Operating Officer,
Secretary and Treasurer
ACCEPTED as of the date
set forth above:
STEPHENS INC.
By: /s/ R. Greg Feltus
-------------------
R. Greg Feltus
Senior Vice President
7
<PAGE>
EX-99.B9(a)(ii)
CO-ADMINISTRATION AGREEMENT
STAGECOACH FUNDS, INC.
111 Center Street
Little Rock, Arkansas 72201
THIS AGREEMENT is made as of this 1st day of February, 1998, by and among
the Stagecoach Funds, Inc., a Maryland corporation ("Stagecoach"), Stephens Inc.
("Stephens"), an Arkansas corporation, and Wells Fargo Bank, N.A., a national
banking association ("Wells Fargo").
WHEREAS, Stagecoach is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Stagecoach desires to retain Stephens to render certain co-
administrative services to Stagecoach's investment portfolios listed in Appendix
A (individually, a "Fund" and collectively, the "Funds"), and Stephens is
willing to render such services; and
WHEREAS, Stagecoach is retaining Wells Fargo pursuant to a separate
Administration Agreement to provide certain other administrative services.
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed by the parties as follows:
1. Appointment. Stagecoach hereby appoints Stephens to act as Co-
-----------
Administrator of the Funds, subject to the control and supervision of Wells
Fargo and the overall supervision of the Board of Directors of Stagecoach.
Stephens hereby accepts such appointment and agrees to render such services and
duties set forth in Paragraph 3, for the compensation and on the terms herein
provided, the performance of which Wells Fargo agrees to supervise. Each new
investment portfolio established in the future by Stagecoach shall automatically
become a "Fund" for all purposes hereunder as if it were listed in Appendix A,
absent written notification to the contrary by either Stagecoach, Wells Fargo,
or Stephens.
2. Delivery of Documents. Stagecoach and Wells Fargo shall furnish
---------------------
Stephens with originals of, or copies of, all books, records, and other
documents and papers related in any way to the administration of Stagecoach.
3. Duties as Co-Administrator. Stephens shall, at its expense, provide
--------------------------
the following co-administrative services in connection with the operations of
Stagecoach and the Funds:
(a) prepare and file with the states registration statements, notices,
reports, and other material required to be filed under applicable laws;
(b) prepare and file Form 24F-2s and N-SARs;
1
<PAGE>
(c) after Administrator reviews bills submitted to the Funds and
determines that a bill is appropriate, pay all such bills, allocate amounts to
the appropriate Funds and instruct the Funds' custodian to reimburse the Co-
Administrator;
(d) provide officers at no cost to the Funds;
(e) provide office space and facilities;
(f) provide reports to the Funds' board of directors ("Board")
regarding its activities;
(g) assist in the preparation and assembly of Board meeting materials,
including comparable fee information, as required;
(h) prepare and retain original minutes of Board meetings, shareholder
meetings, and other official corporate records;
(i) maintain and preserve the records of the Funds, including
financial and corporate records;
(j) coordinate (or assist in) the preparation of shareholder reports
and other information materials regarding the Funds;
(k) provide legal and regulatory advice to the Funds in connection
with its other administrative functions;
(l) provide liaison with the Funds' independent auditors;
(m) establish and maintain a service desk to assist in handling Fund
administrative activities; and
(n) provide any other administrative services reasonably necessary for
the operation of the Funds, as Stagecoach, Wells Fargo, and Stephens shall agree
from time to time, other than those services that are to be provided by Wells
Fargo pursuant to its Administration Agreement with Stagecoach, and by
Stagecoach's transfer and dividend disbursing agent, custodian, and fund
accountant.
In performing all services under this agreement, Stephens shall: (a) act in
conformity with Stagecoach's Articles of Incorporation and By-Laws, the 1940
Act, the Investment Advisers Act of 1940, as applicable, and any other
applicable laws as may be amended from time to time; and Stagecoach's
registration statement under the Securities Act of 1933 and the 1940 Act, as may
be amended from time to time; (b) consult and coordinate with legal counsel to
Stagecoach as necessary and appropriate; and (c) advise and report to Stagecoach
and its legal counsel, as necessary and appropriate, with respect to any
compliance or other matters that come to its attention.
2
<PAGE>
Nothing in this Agreement shall be deemed to require Wells Fargo to provide
any supervisory services that may not be provided by it under applicable banking
laws and regulations.
In connection with its duties under this Paragraph 3, Stephens may, at its
own expense, enter into sub-administration agreements with other service
providers, provided that: (a) each such service provider agrees with Stephens
to comply with all relevant provisions of the 1940 Act, the Investment Advisers
Act of 1940, any other applicable laws as may be amended from time to time, and
all relevant rules thereunder; and (b) Wells Fargo agrees to the appointment of
such service provider. Stephens will provide Stagecoach and Wells Fargo with a
copy of each sub-administration agreement it executes relating to Stagecoach.
Stephens will be liable for acts or omissions of any such sub-administrators
under the standards of care described herein under Paragraph 5.
In performing its services under this agreement, Stephens shall cooperate
and coordinate with Wells Fargo as necessary and appropriate and shall provide
such information to Wells Fargo as is reasonably necessary or appropriate for
Wells Fargo to perform its obligations to Stagecoach. Similarly, Wells Fargo
shall cooperate and coordinate with Stephens as necessary and appropriate and
shall provide such information to Stephens as is reasonably necessary or
appropriate for Stephens to perform its obligations to Stagecoach.
4. Compensation. In consideration of the administration services to be
------------
rendered by Stephens under this agreement, Stagecoach shall pay Stephens a
monthly fee, as shown in Appendix A, of the average daily value (as determined
on each business day at the time set forth in the Prospectus for determining net
asset value per share) of the Funds' net assets during the preceding month. If
the fee payable to Stephens pursuant to this Paragraph 4 begins to accrue before
the end of any month or if this agreement 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 each Fund's net assets shall be computed in
the manner specified in the Prospectus and Stagecoach'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. For
purposes of this agreement, a "business day" is any day that Stagecoach is open
for trading.
5. Limitation of Liability; Indemnification.
----------------------------------------
(a) Stephens shall not be liable for any error of judgment or mistake
of law or for any loss suffered by Stagecoach in connection with the performance
of its obligations and duties under this agreement, except a loss resulting from
Stephens' willful misfeasance, bad faith, or negligence in the performance of
its obligations and duties, or by reason of its reckless disregard thereof. Any
person, even though also an officer, director, employee or agent of Stephens,
shall be deemed, when rendering services to Stagecoach or acting on any business
of Stagecoach (other than services or business in connection with Stephens'
duties as Co-Administrator hereunder) to be acting solely for Stagecoach and not
as an officer, director, employee, or agent or one under the control or
discretion of Stephens even though paid by it.
3
<PAGE>
Wells Fargo shall not be liable for any error of judgment or
mistake of law or for any loss suffered by Stagecoach in connection with
Stephen's performance of its obligations and duties under this Agreement, except
a loss resulting from Wells Fargo's willful misfeasance, bad faith, or
negligence in failing to supervise Stephens as required by this Agreement.
(b) Stagecoach, on behalf of each Fund, will indemnify Stephens
against and hold it harmless from any and all losses, claims, damages,
liabilities, or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action, or suit relating to the particular
Fund and not resulting from willful misfeasance, bad faith, or negligence of
Stephens in the performance of such obligations and duties, or by reason of its
reckless disregard thereof. Stephens will not confess any claim or settle or
make any compromise in any instance in which Stagecoach will be asked to provide
indemnification, except with Stagecoach's prior written consent. Any amounts
payable by Stagecoach under this Paragraph 5(b) shall be satisfied only against
the assets of the Fund involved in the claim, demand, action, or suit and not
against the assets of any other Fund.
6. Stagecoach expenses. Except as provided in each of Stagecoach's
-------------------
advisory contracts and its Administration Agreement with Wells Fargo, Stagecoach
shall bear all costs of its operations, including the compensation of its
directors who are not affiliated with Stephens or any of their affiliates;
advisory and administration fees; payments of distribution-related expenses
pursuant to any Rule 12b-1 Plan under the 1940 Act; governmental fees; 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 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 Funds; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of shares of the Funds; pricing services, if any; organizational
expenses; and any extraordinary expenses. Expenses attributable to one or more,
but not all, of the Funds are charged against the assets of the relevant Funds.
General expenses of the Funds 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.
7. Amendment. This agreement may be amended at any time by mutual
---------
agreement in writing of Stagecoach, Stephens, and Wells Fargo, provided that the
Board of Directors of Stagecoach approve any such amendment in advance.
8. Co-Administrator's other businesses. Except to the extent necessary
-----------------------------------
to perform Stephens' obligations under this agreement, nothing herein shall be
deemed to limit or restrict the right of Stephens, or any affiliate or employee
of Stephens, 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
4
<PAGE>
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
9. Duration. This agreement shall become effective on its execution date
--------
and shall remain in full force and effect for one year or until terminated
pursuant to the provisions in Paragraph 10, and it may be reapproved at least
annually by the Board of Directors, including a majority of the directors who
are not interested persons of Stagecoach or any party to this agreement, as
defined by the 1940 Act.
10. Termination of Agreement. This agreement may be terminated at any
------------------------
time, without the payment of any penalty by a vote of a majority of the members
of Stagecoach's Board of Directors, on 60 days' written notice to Stephens and
Wells Fargo; or by Stephens on 60 days' written notice to Stagecoach and Wells
Fargo; or by Wells Fargo on 60 days' written notice to Stagecoach and Stephens.
11. Confidentiality. Stephens shall keep confidential all books, records,
---------------
information, and data pertaining to the business of Stagecoach and its prior,
present, or potential shareholders that are exchanged or received pursuant to
the performance of Stephens' duties under this agreement and Stephens shall not
disclose the aforementioned to any other person, except as Stagecoach shall
specifically authorize or as required by law, and the aforementioned documents,
information, and data shall not be used for any purpose other than performance
of its responsibilities and duties under this agreement.
12. Stagecoach not bound to violate its Articles. Nothing in this
--------------------------------------------
agreement shall require Stagecoach to take any action contrary to any provision
of its Articles of Incorporation or to any applicable statute or regulation.
13. Miscellaneous.
-------------
(a) Any notice or other instrument authorized or required by this
agreement to be given in writing to Stagecoach, Wells Fargo, or Stephens shall
be sufficiently given if addressed to that party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.
To Stagecoach: Stagecoach Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank
To Stephens: Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank
5
<PAGE>
To Wells Fargo: Wells Fargo Bank, N.A.
525 Market Street, 19th Floor
San Francisco, California 94105
Attention: Michael J. Hogan
(b) This agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
agreement shall not be subject to assignment (as that term is defined under the
1940 Act) without the written consent of the other party.
(c) This agreement shall be governed by and construed in accordance
with the laws of the State of California.
(d) This agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one agreement.
(e) The captions of this agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
In witness whereof, the parties have caused this agreement to be executed
by their duly authorized officers in the day and year first above written.
STAGECOACH FUNDS, INC.
By:_________________________________________
Richard H. Blank
Chief Operating Officer
STEPHENS INC.
By:_________________________________________
Richard H. Blank
Vice President
WELLS FARGO BANK, N.A.
By:_________________________________________
Michael J. Hogan
Senior Vice President
By:_________________________________________
Elizabeth A. Gottfried
Vice President
6
<PAGE>
Appendix A
Stagecoach Funds
<TABLE>
<CAPTION>
Fee of 0.03% of average daily Fee of 0.04% of average daily
- ----------------------------- -----------------------------
net assets on an annual basis: net assets on an annual basis:
- ----------------------------- -----------------------------
<S> <C>
Arizona Tax-Free Fund International Equity Fund
Asset Allocation Fund
Balanced Fund
California Tax-Free Bond Fund
California Tax-Free Income Fund
California Tax-Free Money Market Mutual Fund
California Tax-Free Money Market Trust
Corporate Bond Fund
Diversified Equity Income Fund
Equity Index Fund
Equity Value Fund
Government Money Market Mutual Fund
Growth Fund
Index Allocation Fund
Intermediate Bond Fund
Money Market Mutual Fund
Money Market Trust
National Tax-Free Fund
National Tax-Free Money Market Mutual Fund
National Tax-Free Money Market Trust
Oregon Tax-Free Fund
Overland Express Sweep Fund
Prime Money Market Mutual Fund
Short-Intermediate U.S. Government Income Fund
Short-Term Government-Corporate Income Fund
Short-Term Municipal Income Fund
Small Cap Fund
Strategic Growth Fund
Strategic Income Fund
Treasury Money Market Mutual Fund
U.S. Government Allocation Fund
U.S. Government Income Fund
Variable Rate Government Fund
100% Treasury Money Market Fund
</TABLE>
Approved: January 16, 1997
Approved as Amended: April 29, 1997 to include the International Equity Fund
Approved as Amended: July 23, 1997 to include the Index Allocation, Overland
Express Sweep, Short-Term Government-Corporate Income,
Short-Term Municipal Income, and Variable Rate Government
Funds
Approved as Amended: January 29, 1998 to change the fee rate, and to include
the Corporate Bond and Strategic Income Funds
Approved as Amended: April 30, 1998 to include the 100% Treasury Money Market
Fund
A-1
<PAGE>
Approved as Amended: November 19, 1998 to clarify certain bill-paying
responsibilities
A-2
<PAGE>
EXHIBIT 99.B9(b)
AGENCY AGREEMENT
----------------
This agreement is made and entered into as of this 1st day of February,
1997 (the "Agreement"), by and between Stagecoach Funds, Inc., a registered
management investment company incorporated in the State of Maryland (the
"Company"), and Wells Fargo Bank, N.A., ("Agent"), for transfer agency and
dividend disbursing agency services as follows:
I. SERVICES.
A. Appointment of Agent. The Company hereby appoints Agent as its
---------------------
transfer and dividend disbursing agent for the Funds (each, a "Fund" and
collectively, the "Funds") listed in Appendix A, as such Appendix may be amended
from time to time, and Agent accepts such appointment.
B. Description of Services. As consideration for the compensation
------------------------
hereinafter described in Section I (C), Agent agrees to provide each Fund with
the facilities and services described and set forth on Appendix B attached
hereto and incorporated herein by reference.
C. Compensation. As consideration for the services described in
-------------
Section I (B), above, the Company shall pay to Agent, on behalf of each Fund,
fees at the rates specified on Appendix A.
II. EXPENSES. Agent shall be responsible for expenses incurred by it
pursuant to this Agreement and shall not be reimbursed for expenses incurred in
connection with the performance of services under this Agreement.
III. TERM. This Agreement shall become effective as of the date first above
written and shall continue until terminated pursuant to its provisions.
IV. INSURANCE. Agent agrees to procure and maintain such fidelity bond
coverage as may be required by the Investment Company Act of 1940 (the "1940
Act"), in the amounts and with such deductibles as are required by or permitted
under the 1940 Act, as it may be amended from time to time.
V. REGISTRATION AND COMPLIANCE.
A. Agent represents that it is registered as a transfer agent with the
Securities and Exchange Commission ("SEC") pursuant to Section 17A of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations promulgated thereunder, and Agent agrees to maintain said
registration current and comply with all of the requirements of the Exchange
Act, rules and regulations during the term of this Agreement.
B. The Company represents that it is a diversified management
investment company registered with the SEC in accordance with the 1940 Act and
the rules and regulations promulgated thereunder. The Company is authorized to
offer and sell its shares pursuant to the 1940 Act, the Securities Act of 1933,
as amended ("1933 Act"), and the rules and regulations promulgated thereunder.
The Company will furnish Agent with a list of those jurisdictions in the United
States and elsewhere in which it is authorized to offer and sell its shares to
the general public and will maintain the currency of such list by amendment.
The Company agrees promptly to advise Agent of any change in or limitation upon
its authority to carry on business as an investment company pursuant to the 1940
Act, the Exchange Act and the 1933 Act and the statutes, rules and regulations
of each and every jurisdiction to which it is subject.
VI. DOCUMENTATION. The Company and Agent shall each supply to the other
upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles of incorporation, bylaws, codes of ethics, registration statements,
permits, financial reports, third party audits, certificates of authority,
computer tapes and related items.
<PAGE>
VII. PROPRIETARY INFORMATION. It is agreed that all records and documents,
excepting computer data processing programs and any related documentation used
or prepared by, or on behalf of Agent for the performance of its services
hereunder, are the property of the Company and shall be open to audit or
inspection by the Company or its agents during the normal business hours of
Agent; shall be maintained in a manner designed to preserve the confidentiality
thereof and to comply with applicable federal and state laws and regulations;
and shall, in whole or any specified part, be surrendered to the Company or its
duly authorized agents upon receipt by Agent of reasonable notice of and request
therefor.
VIII. INDEMNITY. The Company, on behalf of the Funds, shall indemnify and
hold Agent harmless against any losses, claims, damages, liabilities or expenses
(including reasonable attorney's fees and expenses) resulting from any claim,
demand, action or suit brought by any person other than the Company (including a
shareholder naming the Company as a party) and not resulting from Agent's bad
faith, willful misfeasance, reckless disregard of its obligations and duties,
gross negligence or breach of this Agreement, and arising out of, or in
connection with:
A. Agent's performance hereunder;
B. Any error or omission in any record (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm or microfiche
copies) delivered, or caused to be delivered, by the Company to Agent in
connection with this Agreement;
C. Bad faith, willful misfeasance, reckless disregard of its
obligations and duties or negligence of the Company, or Agent's acting upon any
instructions reasonably believed by it to have been properly executed or
communicated by any person duly authorized by the Company;
D. Agent's acting in reliance upon advice given by counsel for Agent
or upon advice reasonably believed by it to have been given by counsel for the
Company; or
E. Agent's acting in reliance upon any instrument reasonably believed
by it to have been genuine and signed, countersigned or executed by the proper
person(s) in accordance with the currently effective certificate(s) of authority
delivered to Agent by the Company.
In the event that Agent requests the Company to indemnify or hold it
harmless hereunder, agent shall use its best efforts to inform the Company of
the relevant facts concerning the matter in question. Agent shall use
reasonable care to identify and promptly notify the Company concerning any
matter which presents, or appears likely to present, a claim for indemnification
against the Company or the Funds.
The Company shall have the election of defending Agent against any
claim which may be the subject of indemnification hereunder. In the event the
Company so elects, it will so notify Agent and thereupon the Company shall take
over defense of the claim, and (if so requested by the Company) Agent shall
incur no further legal or other expenses related thereto for which it would be
entitled to indemnity hereunder; provided, however, that nothing herein
contained shall prevent Agent from retaining, at its own expense, counsel to
defend any claim. Except with the Company's prior consent, Agent shall in no
event confess any claim or make any compromise in any matter in which the
Company will be asked to indemnify or hold harmless hereunder.
IX. LIABILITY
A. Damages. Agent shall not be liable to the Company, or any third
-------
party, for punitive, exemplary, indirect, special or consequential damages (even
if Agent has been advised of the possibility of such damages) arising from its
obligations and the services provided under this Agreement, including but not
limited to loss of profits, loss of use of the shareholder accounting system,
cost of capital and expenses of substitute facilities, programs or services.
2
<PAGE>
B. Force Majeure. Anything in this Agreement to the contrary
-------------
notwithstanding, Agent shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts or
civil or military authority, national emergencies, work stoppage, fire, flood,
catastrophe, earthquake, acts of God, insurrection, war, riot, data processing
and communications downtime (where such downtime occurs for reasons other than
Agent's gross negligence or willful misconduct) or interruption of power supply.
X. AMENDMENT. This Agreement and the Appendices attached hereto and made
a part hereof may be amended at any time, with or without shareholder approval
(except as otherwise required by law), in writing signed by each of the parties
hereto. Any change in the Company's registration statements or other documents
of compliance or in the forms relating to any plan, program or service offered
by its current prospectus which would require a change in Agent's obligations
hereunder shall be subject to Agent's approval, which approval shall not be
unreasonably withheld.
XI. DELEGATION. In connection with its responsibilities under this
Agreement, Agent may, at its own expense, enter into sub-agency agreements with
other eligible and qualified service providers, provided that each such sub-
agent agrees with Agent to comply with all relevant provisions of the 1940 Act,
the Investment Advisers Act of 1940, any other applicable laws, and all relevant
rules and regulations thereunder. Agent will provide the Company with a copy of
each sub-agency agreement it executes relating to the Company. Agent remains
solely responsible for the provision of the transfer agency services described
in this Agreement; and will remain liable for the acts or omissions of any such
sub-agents under the standards of care described herein.
XII. TERMINATION. This Agreement may be terminated by either party without
cause upon one hundred twenty (120) days' prior written notice to the other, and
at any time for cause in the event that such cause remains unremedied for more
than thirty (30) days after receipt by the other party of written specification
of such cause.
In the event the Company designates a successor to any of Agent's
obligations hereunder, Agent shall, at the expense and pursuant to the direction
of the Company, transfer promptly to such successor all relevant books, records
and other data of the Company in the possession or under the control of Agent.
XIII. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall continue
in full force and effect.
XIV. APPLICABLE LAW. This Agreement shall be subject to and construed in
accordance with the laws of the State of California without giving effect to the
choice of law provisions thereof.
XV. ENTIRE AGREEMENT. Except as otherwise provided herein, this Agreement
constitutes the entire and complete agreement of the parties hereto relating to
the subject matter hereof and supersedes and merges all prior contracts and
discussions between the parties.
XVI. COUNTERPARTS. This Agreement may be executed in one or more
counterparts; all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
3
<PAGE>
STAGECOACH FUNDS, INC. WELLS FARGO BANK, N.A.
By: /s/Richard H. Blank, Jr. By: /s/Elizabeth Gottfried
------------------------ ----------------------
Name: Richard H. Blank, Jr. Name: Elizabeth Gottfried
--------------------- -------------------
Title: Chief Operating Officer Title: Vice President
----------------------- --------------
By: /s/James Nolan
--------------
Name: James Nolan
-----------
Title: Vice President
--------------
Approved: January 16, 1997
4
<PAGE>
APPENDIX A
----------
Name of Fund
- ------------
Arizona Tax-Free Fund
Asset Allocation Fund
Balanced Fund
California Tax-Free Bond Fund
California Tax-Free Income Fund
Corporate Bond Fund
Diversified Equity Income Fund
Equity Index Fund
Equity Value Fund
Growth Fund
Index Allocation Fund
Intermediate Bond Fund
International Equity Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Short-Intermediate U.S. Government Income Fund
Short-Term Government-Corporate Income Fund
Short-Term Municipal Income Fund
Small Cap Fund
Strategic Growth Fund
Strategic Income Fund
U.S. Government Allocation Fund
U.S. Government Income Fund
Variable Rate Government Fund
<PAGE>
Fees will be payable by the above-referenced Funds on each indicated Class
of shares as listed below. The fees are expressed as a percentage of average
daily net assets of each Class. Funds with a single class of shares are herein
considered Class A shares.
Class Rate
- ----- ----
Class A 0.14%
Class B 0.14%
Class C 0.14%
Class O 0.14%
Institutional Class 0.06%
Name of Fund
- ------------
100% Treasury Money Market Fund
Fees will be payable by the above-referenced Fund on each indicated Class
of shares as listed below. The fees are expressed as a percentage of average
daily net assets of each Class.
Class Rate
- ----- ----
Class A 0.10%
Service Class 0.02%
Name of Fund
- ------------
California Tax-Free Money Market Fund
California Tax-Free Money Market Trust
Government Money Market Fund
Money Market Fund
Money Market Trust
National Tax-Free Money Market Fund
National Tax-Free Money Market Trust
Overland Express Sweep Fund
Fees will be payable by the above-referenced money market Funds on each
indicated Class of shares as listed below. The fees are expressed as a
percentage of average daily net assets of each Class. Funds with a single class
of shares are herein considered Class A shares, other than the California Tax-
Free Money Market Trust, Money Market Trust and National Tax-Free Money Market
Trust, which are herein considered Institutional Class shares.
6
<PAGE>
Class Rate
- ----- ----
Class A 0.10%
Class S 0.10%
Institutional Class 0.02%
Name of Fund
- ------------
Prime Money Market Fund
Treasury Money Market Fund
Fees will be payable by the above-referenced money market Funds on each
indicated Class of shares as listed below. The fees are expressed as a
percentage of average daily net assets of each Class.
Class Rate
- ----- ----
Class A 0.10%
Class E 0.10%
Institutional Class 0.02%
Service Class 0.10%
Appendix A Approved: January 16, 1997
Approved as Amended: April 29, 1997, for the International Equity Fund
Approved as Amended: July 23, 1997, for the Index Allocation, Overland Express
Sweep, Short-Term Government-Corporate Income, Short-Term
Municipal Income, and Variable Rate Government Funds
Approved as Amended: September 8, 1997, for the Prime Money Market Mutual and
Treasury Money Market Mutual Funds
Approved as Amended: January 29, 1998, for the Asset Allocation (Class C),
Corporate Bond, Equity Value (Class C), Strategic Income,
and International Equity (Class C) Funds
Approved as Amended: April 30, 1998, for the 100% Treasury Money Market Fund
7
<PAGE>
APPENDIX B
----------
SCHEDULE OF SERVICES
A. Maintaining shareholder accounts, including processing of new accounts.
B. Posting address changes and other file maintenance for shareholder
accounts.
C. Posting all transactions to the shareholder file, including:
- Direct purchase
- Wire order purchases
- Direct redemptions
- Telephone redemption
- Wire order redemption
- Direct exchanges
- Dividend payments
- Dividend reinvestments
- Telephone exchanges
- Transfers
- Certificate issuances
- Certificate deposits.
D. Preparing daily reconciliations of shareholder processing to money
movement instructions.
E. Issuing all checks and stopping and replacing checks.
F. Mailing confirmations and checks.
G. Performing certain of the Funds' other mailings, including:
- Dividend and capital gain distributions
- 1099/year-end shareholder reporting
- Daily confirmations
- Furnish certified list of shareholders (hard copy of microfilm).
H. Maintaining and retrieving all required past history for shareholders and
providing research capabilities as follows:
- Daily monitoring of all processing activity to verify back-up
documentation
- Providing exception reports
- Microfilming
- Storing, retrieving and archiving records in accordance with Rules 31a-
1, 31a-2, and 31a-3 under the 1940 Act.
I. Reporting and remitting as necessary for state escheat requirements.
<PAGE>
J. Answering all service-related inquiries from shareholders and others,
including:
- General and Policy Inquiries (research and resolve problems)
- Fund yield inquiries
- Taking shareholder processing requests and account maintenance changes
as described above.
K. Responding to shareholder inquiries (research and resolve problems),
including:
- Initiate shareholder account reconciliation proceedings when
appropriate
- Notify shareholder of bounced investment checks
- Initiate proceedings regarding lost certificates
- Respond to customer complaints.
9
<PAGE>
EX-99.B9(c)
FORM OF
SHAREHOLDER SERVICING AGREEMENT FOR
STAGECOACH FUNDS, INC. AND
STAGECOACH TRUST
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of November
19, 1998, is made among Stagecoach Funds, Inc. (the "Company"), a Maryland
corporation, Stagecoach Trust (the "Trust"), a Massachusetts business trust,
(sometimes referred to herein as the "Companies"), each having its principal
place of business at 111 Center Street, Little Rock, Arkansas 72201, on behalf
of the classes of shares of the Funds of the Company and the Trust listed in the
attached Appendix, as amended from time to time, (each a "Class" and a "Fund"
and, collectively, the "Classes" and the "Funds"), and Wells Fargo Bank, N.A. as
shareholder servicing agent hereunder ("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, shares of common stock of a Fund of the Company, and shares of
beneficial interest of a Fund of the Trust (hereinafter the "Shares") may be
purchased or redeemed through a broker/dealer or financial institution which has
entered into a shareholder servicing agreement with the Company and the Trust on
behalf of their respective Funds; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate purchases
and redemptions of Shares by its customers (the "Customers") and wishes to act
as the Customers' agent in performing certain administrative functions in
connection with transactions in Shares from time to time for the account of the
Customers and to provide related services to the Customers in connection with
their investments in a Fund; and
WHEREAS, it is in the best interests of the Funds to make the services of
the Shareholder Servicing Agent available to the Customers who, from time to
time, become shareholders of a Fund;
NOW THEREFORE, the Company and the Trust, on behalf of their respective
Funds, and the Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees to
-----------
perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to be Performed.
------------------------
2.1 Types of Services. The Shareholder Servicing Agent shall be
-----------------
responsible for performing shareholder administrative and liaison services,
which shall include, without limitation:
(a) answering Customer inquiries regarding account status and
history, and the manner in which purchases, exchanges and redemptions of Shares
may be effected;
(b) assisting Customers in designating and changing dividend
options, account designations and addresses;
(c) providing necessary personnel and facilities to establish
and maintain Customer accounts and records;
(d) assisting in aggregating and transmitting purchase,
redemption and exchange transactions;
1
<PAGE>
(e) arranging for the wiring of money;
(f) transferring money in connection with Customer orders to
purchase or redeem shares;
(g) verifying and guaranteeing Customer signatures in
connection with redemption and exchange orders and transfers and changes in
Customer accounts with a bank which is designated in the Fund Account
Application and which is approved by a Fund's Transfer Agent;
(h) furnishing (either separately or on an integrated basis
with other reports sent to a Customer by the Shareholder Servicing Agent)
monthly and year-end statements and confirmations of purchases, redemptions and
exchanges;
(i) furnishing, on behalf of the Shares of a Fund, proxy
statements, annual reports, updated prospectuses and other communications to
Customers;
(j) receiving, tabulating and sending to a Fund, proxies
executed by Customers; and
(k) providing such other related services, and necessary
personnel and facilities to provide all of the shareholder services contemplated
hereby, in each case, as the Company or the Trust, as the case may be, or a
Customer may reasonably request.
2.2 Standard of Services. All services to be rendered by the
--------------------
Shareholder Servicing Agent hereunder shall be performed in a professional,
competent and timely manner. Any detailed operating standards and procedures to
be followed by the Shareholder Servicing Agent in performing the services
described above shall be determined from time to time by agreement between the
Shareholder Servicing Agent and the Companies. The Company and the Trust each
acknowledges that the Shareholder Servicing Agent's ability to perform on a
timely basis certain of its obligations under this Agreement depends upon a
Fund's timely delivery of certain materials and/or information to the
Shareholder Servicing Agent. The Company and the Trust each agrees to use its
best efforts to provide, or cause to be provided, such materials to the
Shareholder Servicing Agent in a timely manner.
2.3 Investments through Distributor. The Company, the Trust and
-------------------------------
the Shareholder Servicing Agent each hereby agrees that all purchases of Shares
effected by the Shareholder Servicing Agent on behalf of its Customers shall be
effected by it through Stephens Inc. ("Distributor") in its capacity as the
Funds' principal underwriter.
3. Fees.
----
3.1 Fees from the Funds. In consideration of the services
-------------------
described in Section 2 hereof and the incurring of expenses in connection
therewith, the Shareholder Servicing Agent shall receive a fee, from each of the
Classes of Shares of the Funds identified in the attached Appendix, which shall
be paid in arrears periodically or on a periodic basis to be agreed between the
Company and the Shareholder Servicing Agent, and between the Trust and the
Shareholder Servicing Agent, from time to time (but in no event less frequently
than semi-annually) determined by a formula based upon the number of accounts of
the particular Class in a particular Fund serviced by the Shareholder Servicing
Agent during the period for which payment is being made, the level of assets or
activity in such accounts during such period, and/or the expenses incurred by
the Shareholder Servicing Agent. In no event will the fees charged to a Class of
Shares of a Fund exceed the amount set forth opposite such Class of Shares of
such Fund in the Appendix attached hereto. In addition, all fees paid by Classes
of Shares of the Funds hereunder shall be calculated based on the average daily
net assets of the particular Class of Shares of such Fund owned of record by the
Shareholder Servicing Agent on behalf of the Customers during the period for
which payment is being made. For purposes of determining the fees payable to the
Shareholder Servicing Agent hereunder, the per share value of a Class of a Fund
shall be computed in the manner specified in the Fund's then-current prospectus.
Notwithstanding the foregoing, if applicable laws, regulations or rules impose a
maximum fee amount (a "cap")
2
<PAGE>
with respect to shareholder servicing fees and/or fees for distribution-related
services that may be paid by the Shares of a Fund, the amount payable hereunder
shall be reduced to an amount which, when considered in conjunction with the
fees payable by a Fund for the Shares' distribution-related activities, is the
maximum amount payable to the Shareholder Servicing Agent under applicable laws,
regulations or rules. Notwithstanding anything herein to the contrary, neither
the Company nor the Trust shall be obligated to make any payments under this
Agreement that exceed the maximum amounts payable under Rule 2830 of the Conduct
Rules of the National Association of Securities Dealers, Inc. The above fee
constitutes all fees to be paid to the Shareholder Servicing Agent by a Class of
Shares of a Fund of the Company or the Trust with respect to the shareholder
services contemplated hereby.
3.2 Fees from Customers. It is agreed that the Shareholder
-------------------
Servicing Agent may impose certain conditions on Customers, subject to the terms
of the relevant Fund's then-current prospectus, in addition to or different from
those imposed by the Fund, such as requiring a minimum initial investment or the
payment of additional fees directly by the Customer for additional services
offered by the Shareholder Servicing Agent to the Customer; provided, however,
-------- -------
that the Shareholder Servicing Agent may not charge Customers any direct fee
which would constitute a "sales load" within the meaning of Section 2(a)(35) of
the Investment Company Act of 1940, as amended (the "1940 Act"). The Shareholder
Servicing Agent shall bill Customers directly for any such additional fees. In
the event the Shareholder Servicing Agent charges Customers such additional
fees, it shall notify the Company in advance and make appropriate prior written
disclosure (such disclosure to be in accordance with all applicable laws) to
Customers of any such additional fees charged directly to the Customer. To the
extent required by applicable rules and regulations of the Securities and
Exchange Commission ("SEC"), the Company and the Trust shall make written
disclosure of the fees paid or to be paid by a Fund to the Shareholder Servicing
Agent pursuant to Section 3.1 of this Agreement. In no event shall the
Shareholder Servicing Agent have recourse or access, as Shareholder Servicing
Agent or otherwise, to the assets in the Customer's account, except to the
extent expressly authorized by law or by such Customer, or to any assets of a
Fund, the Company or the Trust, for payment of any additional direct fees
referred to in this Section 3.2.
4. Information Pertaining to the Shares. The Shareholder Servicing
------------------------------------
Agent and its officers, employees and agents are not authorized to make any
representations concerning the Company, the Trust, a Fund or the Shares of any
Class thereof to Customers or prospective Customers, excepting only accurate
communication of any information provided by or on behalf of any administrator
of the Company, the Trust or the Distributor of information contained in the
relevant Fund's then-current prospectus. In furnishing such information
regarding the Company, the Trust, a Fund or the Shares, the Shareholder
Servicing Agent shall act as agent for the Customer only and shall have no
authority to act as agent for the Company, the Trust, a Fund or the Shares.
Advance copies or proofs of all materials which are proposed to be circulated or
disseminated by the Shareholder Servicing Agent to Customers or prospective
Customers and which identify or describe the Company, the Trust, a Fund or the
Shares shall be provided to the Company or the Trust, as the case may be, at
least 10 days prior to such circulation or dissemination (unless the Company or
the Trust, as the case may be, consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Company or the Trust, as the case may be,
shall have given written notice to the Shareholder Servicing Agent of any
objection thereto.
Nothing in this Section 4 shall be construed to make the Company or the
Trust liable for the use (as opposed to the accuracy) of any information about
the Company, the Trust, a Fund or the Shares which is disseminated by the
Shareholder Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. Neither the Company
---------------------------------------------
nor the Trust shall use the name of the Shareholder Servicing Agent, or any of
its affiliates or subsidiaries, in any prospectus, sales literature or other
materials relating to the Company, the Trust, a Fund or the Shares in a manner
not approved by the Shareholder Servicing Agent prior thereto in writing;
provided, however, that the approval of the Shareholder Servicing Agent shall
- -------- -------
not be required for any use of its name which merely refers in accurate and
factual terms to its appointment hereunder or which is required by the SEC or
any state securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such approval
-------- -------
be unreasonably withheld or delayed.
3
<PAGE>
6. Use of the Name of the Company, the Trust or a Fund. The
---------------------------------------------------
Shareholder Servicing Agent shall not use the name of the Company, the Trust, a
Fund or any Class of Shares on any checks, bank drafts, bank statements or forms
for other than internal use in a manner not approved by the Company or the
Trust, as the case may be, prior thereto in writing; provided, however, that the
-------- -------
approval of the Company or the Trust, as the case may be, shall not be required
for (i) the use of the Company's or the Trust's name, or the name of a Fund, in
connection with communications permitted by Section 4 hereof, or (ii) (subject
to Section 4, to the extent the same may be applicable) for any use of the
Company's or the Trust's name or a Fund's name which merely identifies the
Company, the Trust or a Fund, as the case may be, in connection with the
Shareholder Servicing Agent's role hereunder or which is required by the SEC or
any state securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such approval
-------- -------
be unreasonably withheld or delayed.
7. Security. The Shareholder Servicing Agent represents and warrants
--------
that to the best of its knowledge, the various procedures and systems which it
has implemented (including provision for twenty-four hours a day restricted
access) with regard to safeguarding from loss or damage attributable to fire,
theft or any other cause the Companies records and other data within its
possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Company and the Trust shall each, from time to
time, specify the types of records and other data of the Company and the Trust,
respectively, to be safeguarded in accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent shall comply
--------------------
with all applicable federal and state laws and regulations, including securities
laws. The Shareholder Servicing Agent represents and warrants to the Company
and the Trust, respectively, that the performance of all its obligations
hereunder will comply with all applicable laws and regulations, the provisions
of its charter documents and by-laws and all material contractual obligations
binding upon the Shareholder Servicing Agent. The Shareholder Servicing Agent
furthermore undertakes that it will promptly, after the Shareholder Servicing
Agent becomes so aware, inform the Company and the Trust of any change in
applicable laws or regulations (or interpretations thereof) or in its charter or
by-laws or material contracts which would prevent or impair full performance of
any of its obligations hereunder.
9. Reports. To the extent requested by the Company or the Trust from
-------
time to time, but at least quarterly, the Shareholder Servicing Agent will
provide the Treasurer of the Company or the Trust, as the case may be, with a
written report of the amounts expended by the Shareholder Servicing Agent
pursuant to this Agreement and the purposes for which such expenditures were
made. Such written reports shall be in a form satisfactory to the Company or
the Trust, as the case may be, and shall supply all information necessary for
the Company and the Trust to discharge their responsibilities under applicable
laws and regulations. In addition, the Shareholder Servicing Agent shall have a
duty to furnish to the Company's Board of Directors and the Trust's Board of
Trustees such information as may reasonably be necessary to an informed
determination of whether this Agreement should be implemented or continued
pursuant to Section 16.
10. Recordkeeping.
-------------
10.1 Each party shall maintain and preserve records as required by
law to be maintained and preserved by it in connection with providing the
services contemplated by this Agreement. The Shareholder Servicing Agent's
recordkeeping responsibilities shall include those relating to establishing and
maintaining sub-accounts and records on behalf of Customers, and recording
Customers' sub-account balances and changes thereto.
10.2. Upon the request of the Company or the Trust, the Shareholder
Servicing Agent shall provide copies of all records relating to the transactions
between the Funds and the Customers as are maintained by the Shareholder
Servicing Agent in the ordinary course of its business and in compliance with
laws and regulations as may reasonably be requested to enable the Company and
the Trust to comply with any applicable laws or regulations or request of a
governmental body or self-regulatory organization.
4
<PAGE>
10.3. The recordkeeping and access obligations imposed in this
Section 10 shall survive the termination of this Agreement for the shorter of a
period of six years or that minimum period required by applicable rules or
regulations of the SEC.
11. Force Majeure. The Shareholder Servicing Agent shall not be liable
-------------
or responsible for delays or errors by reason of circumstances beyond its
reasonable control, including, but not limited to, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
flood or catastrophe, acts of God, insurrection, war, riots or failure of
communication systems or power supply.
12. Indemnification.
---------------
12.1 Indemnification of the Shareholder Servicing Agent by the
---------------------------------------------------------
Companies. Each of the Company and the Trust will indemnify and hold the
- ---------
Shareholder Servicing Agent harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any claim, demand, action or suit (collectively, "Claims") (a) arising in
connection with misstatements or omissions in the Funds' prospectus, actions or
inactions by the Company or the Trust, as the case may be, or any of its agents
or contractors or the performance of the Shareholder Servicing Agent's
obligations hereunder and (b) not resulting from (i) the bad faith or negligence
of the Shareholder Servicing Agent, its officers, employees or agents, or (ii)
any breach of applicable law by the Shareholder Servicing Agent, its officers,
employees or agents, or (iii) any action of the Shareholder Servicing Agent, its
officers, employees or agents which exceeds the legal authority of the
Shareholder Servicing Agent or its authority hereunder, or (iv) any error or
omission of the Shareholder Servicing Agent, its officers, employees or agents
with respect to the purchase, redemption and transfer of Customers' Shares or
the Shareholder Servicing Agent's verification or guarantee of any Customer
signature. Notwithstanding anything herein to the contrary, each of the Company
and the Trust will indemnify and hold the Shareholder Servicing Agent harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any Claim as a result of
its acting in accordance with any written instructions reasonably believed by
the Shareholder Servicing Agent to have been executed by any person duly
authorized by the Company or the Trust, as the case may be, or as a result of
acting in reliance upon any instrument or stock certificate reasonably believed
by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company or the
Trust, as the case may be, excepting only the gross negligence or bad faith of
the Shareholder Servicing Agent.
In any case in which the Company or the Trust may be asked to indemnify
or hold the Shareholder Servicing Agent harmless, the Company or the Trust, as
the case may be, shall be advised of all pertinent facts concerning the
situation in question and the Shareholder Servicing Agent shall use reasonable
care to identify and notify the Company or the Trust, as the case may be,
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company or the Trust. The Company and the
Trust shall have the option to defend the Shareholder Servicing Agent against
any Claim which may be the subject of indemnification hereunder. In the event
that the Company or the Trust, as the case may be, elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Company or the
Trust, as the case may be, and reasonably satisfactory to the Shareholder
Servicing Agent. The Shareholder Servicing Agent may retain additional counsel
at its expense. Except with the prior written consent of the Company or the
Trust, as the case may be, the Shareholder Servicing Agent shall not confess any
Claim or make any compromise in any case in which the Company or the Trust will
be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Companies by the Shareholder Servicing
-------------------------------------------------------------
Agent. Without limiting the rights of the Companies under applicable law, the
- -----
Shareholder Servicing Agent will indemnify and hold each of the Company and the
Trust harmless from all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) from any Claim (a) resulting
from (i) the bad faith or negligence of the Shareholder Servicing Agent, its
officers, employees or agents, or (ii) any breach of applicable law by the
Shareholder Servicing Agent, its officers, employees or agents, or (iii) any
action of the Shareholder Servicing Agent, its officers, employees or agents
which exceeds the legal authority of the Shareholder Servicing Agent or its
authority hereunder, or (iv) any error or omission of the Shareholder Servicing
Agent, its officers, employees or agents with respect to the purchase,
redemption and transfer of Customers' Shares or the Shareholder Servicing
5
<PAGE>
Agent's verification or guarantee of any Customer signature, and (b) not
resulting from the Shareholder Servicing Agent's actions in accordance with
written instructions reasonably believed by the Shareholder Servicing Agent to
have been executed by any person duly authorized by the Company or the Trust, as
the case may be, or in reliance upon any instrument or stock certificate
reasonably believed by the Shareholder Servicing Agent to have been genuine and
signed, countersigned or executed by a person duly authorized by the Company or
the Trust, as the case may be.
In any case in which the Shareholder Servicing Agent may be asked to
indemnify or hold the Company or the Trust harmless, the Shareholder Servicing
Agent shall be advised of all pertinent facts concerning the situation in
question and the Company or the Trust, as the case may be, shall use reasonable
care to identify and notify the Shareholder Servicing Agent promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Shareholder Servicing Agent. The Shareholder
Servicing Agent shall have the option to defend the Company or the Trust, as the
case may be, against any Claim which may be the subject of indemnification
hereunder. In the event that the Shareholder Servicing Agent elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Shareholder Servicing Agent and satisfactory to the Company or the Trust, as the
case may be. The Company or the Trust may retain additional counsel at its
expense. Except with the prior written consent of the Shareholder Servicing
Agent, neither the Company nor the Trust shall confess any Claim or make any
compromise in any case in which the Shareholder Servicing Agent will be asked to
indemnify the Company or the Trust.
12.3 Indemnification Between the Companies. The Company will
-------------------------------------
indemnify and hold harmless the Trust against any losses, claims, damages and
liabilities to which the Trust may become subject arising in connection with
this Agreement, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any prospectus of
the Company for which the Shareholder Servicing Agent acts as such pursuant to
this Agreement, or arise out of or are based upon actions or inactions by the
Company or any of its agents or contractors or the performance of the
Shareholder Servicing Agent's obligations hereunder and (b) not resulting from
(i) the bad faith or negligence of the Trust, its officers, employees or agents,
or (ii) any breach of applicable law by the Trust, its officers, employees or
agents, or (iii) any action of the Trust, its officers, employees or agents
which exceeds the legal authority of the Trust or its authority hereunder, or
(iv) any error or omission of the Shareholder Servicing Agent, its officers,
employees or agents with respect to the purchase, redemption and transfer of
Customers' Shares or the Shareholder Servicing Agent's verification or guarantee
of any Customer signature.
The Trust will indemnify and hold harmless the Company against any
losses, claims, damages and liabilities to which The Company may become subject
arising in connection with this Agreement, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any the Trust prospectus for which the Shareholder Servicing Agent
acts as such pursuant to this Agreement, or arise out of or are based upon
actions or inactions by the Trust or any of its agents or contractors or the
performance of the Shareholder Servicing Agent's obligations hereunder and (b)
not resulting from (i) the bad faith or negligence of the Company, its officers,
employees or agents, or (ii) any breach of applicable law by the Company, its
officers, employees or agents, or (iii) any action of the Company, its officers,
employees or agents which exceeds the legal authority of the Company or its
authority hereunder, or (iv) any error or omission of the Shareholder Servicing
Agent, its officers, employees or agents with respect to the purchase,
redemption and transfer of Customers' Shares or the Shareholder Servicing
Agent's verification or guarantee of any Customer signature.
In any case in which the Company or the Trust may be asked to indemnify
or hold the other harmless, the indemnifying party shall be advised of all
pertinent facts concerning the situation in question and the party to be
indemnified shall use reasonable care to identify and notify the indemnifying
party promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the indemnifying party. The
indemnifying party shall have the option to defend the indemnified party against
any Claim which may be the subject of indemnification hereunder. In the event
that the indemnifying party elects to defend against such Claim, the defense
shall be conducted by counsel chosen by the indemnifying party and reasonably
satisfactory to the indemnified party. The indemnified party may retain
additional counsel at its expense. Except with the prior
6
<PAGE>
written consent of the indemnifying party, the indemnified party shall not
confess any claim or make any compromise in any case in which indemnifying party
will be asked to indemnify the indemnified party.
12.4 Survival of Indemnities. The indemnities granted by the
-----------------------
parties in this Section 12 shall survive the termination of this Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
---------
reasonable insurance coverage against any and all liabilities which may arise in
connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder shall be in
-------
writing and shall be deemed sufficient if mailed to each other party at the
address of such party set forth in the preamble of this Agreement or at such
other address as such party may have designated by written notice to the others.
15. Further Assurances. Each party agrees to perform such further acts
------------------
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. Implementation and Duration of Agreement. This Agreement is
----------------------------------------
effective upon the date first written above and shall continue in effect with
respect to a Class of Shares of a Fund of the Company and the Trust for a period
of more than one year from the date hereof so long as the Servicing Plan adopted
for such Class and related form of agreement or this Agreement is not
specifically terminated by a vote of the Board of Directors/Trustees of the
Company/Trust (as applicable) and of the Directors/Trustees who are not
"interested persons" of the Company/Trust (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of the relevant
Servicing Plan (the "Plan") pursuant to which the fees are paid, this Agreement,
or any other agreement related to such Plan, cast in person at a meeting called
for the purpose of voting on this Agreement.
17. Termination. This Agreement may be terminated with respect to the
-----------
Company or the Trust, or one or more Funds of the Company or the Trust, by the
Company or the Trust, respectively, without the payment of any penalty, at any
time upon not more than 60 days' nor less than 30 days' notice, by a vote of a
majority of the Board of Directors/Trustees of the Company/Trust (as applicable)
who are not "interested persons" of the Company/Trust (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of the
relevant Plan, this Agreement or any other agreement related to such Plan,
including the Amended Distribution Agreement, or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the relevant
class of shares of the Fund. The Shareholder Servicing Agent may terminate this
Agreement with respect to either the Company or the Trust upon not more than 60
days' nor less than 30 days' notice to the Company or the Trust, as the case may
be. Either the Company, the Trust or the Shareholder Servicing Agent may assign
this Agreement provided that such assigning party obtains the prior written
consent of the other parties hereto. Upon termination hereof, a Fund shall pay
such compensation as may be due the Shareholder Servicing Agent as of the date
of such termination.
18. Changes; Amendments. Except as otherwise provided in this Section
-------------------
18, this Agreement may be supplemented or amended only by written instrument
signed by all parties, but may not be amended to increase materially the maximum
amount payable by a Class of Shares of a Fund without the approval of "a vote of
a majority of the outstanding voting securities" (as defined in the 1940 Act) of
such Class of Shares of such Fund, and all material amendments must be approved
in the manner described in Section 16. From time to time, the Company and the
Trust may, by written notice to the Shareholder Servicing Agent, amend the
Appendix attached hereto to add or delete Funds and/or classes of Shares as
available investment options hereunder. Any such notice shall be effective upon
receipt by the Shareholder Servicing Agent.
19. Limitation of Liability. The Shareholder Servicing Agent hereby
-----------------------
agrees that obligations assumed by the Company and the Trust pursuant to this
Agreement shall be limited in all cases to the Funds and their assets and that
the Shareholder Servicing Agent shall not seek satisfaction of any such
obligations from the Board of Directors or any individual Director of the
Company, or from the Board of Trustees or any individual Trustee of the Trust.
The Shareholder Servicing Agent further agrees that all obligations of a Fund
hereunder shall be solely the obligations of such Fund and that in no case will
any Fund of either the Company or the Trust be liable
7
<PAGE>
for the obligations of any other Fund of the Company of the Trust, nor shall any
Fund of the Company be liable for any obligation of a Fund of the Trust, or vice
versa.
20. Subcontracting by Shareholder Servicing Agent. The Shareholder
---------------------------------------------
Servicing Agent may, with the written approval of each of the Company and the
Trust (such approval not to be unreasonably withheld or delayed), subcontract
for the performance of the Shareholder Servicing Agent's obligations hereunder
with any one or more persons, including but not limited to any one or more
persons which is an affiliate of the Shareholder Servicing Agent; provided,
--------
however, that the Shareholder Servicing Agent shall be as fully responsible to
- -------
the Companies for the acts and omissions of any subcontractor as it would be for
its own acts or omissions.
21. Authority to Vote. The Company and the Trust hereby confirm that
-----------------
nothing contained in its Articles of Incorporation or Declaration of Trust,
respectively, would preclude the Shareholder Servicing Agent, at any meeting of
shareholders of the Company, the Trust or of a Fund, from voting any Shares held
in accounts serviced by the Shareholder Servicing Agent and which are otherwise
not represented in person or by proxy at the meeting, proportionately in
accordance with the votes cast by holders of all Shares otherwise represented at
the meeting in person or by proxy and held in accounts serviced by the
Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The Company and the
----------------------------------------------
Trust each hereby agrees that it will comply with all laws and regulations
applicable to operations of Funds thereof and the Shareholder Servicing Agent
agrees that it will comply with all laws and regulations applicable to providing
the services contemplated hereby.
8
<PAGE>
22.1 Miscellaneous. This Agreement shall be construed and
-------------
enforced in accordance with and governed by the laws of the State of California.
The captions in this Agreement are included for convenience of reference only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed simultaneously in
three or more counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument.
STAGECOACH FUNDS, INC. on behalf of the
classes of shares of the Funds listed in the
attached Appendix
By:___________________________________________
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
STAGECOACH TRUST, 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
[SHAREHOLDER SERVICING AGENT]
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
9
<PAGE>
APPENDIX
--------
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
STAGECOACH FUNDS, INC.
----------------------
Arizona Tax-Free Fund
Class A .25%
Class B .25%
Institutional Class .25%
Asset Allocation Fund
Class A .30%
Class B .30%
Class C .25%
Balanced Fund
Class A .25%
Class B .25%
Institutional Class .25%
California Tax-Free Bond Fund
Class A .30%
Class B .30%
Class C .25%
Institutional Class .25%
California Tax-Free Income Fund
Class A .30%
Institutional Class .25%
California Tax-Free Money Market Fund
Single Class .30%
California Tax-Free Money Market Trust
Single Class .20%
Corporate Bond Fund
Class A .25%
Class B .25%
Class C .25%
Diversified Equity Income Fund
Class A .30%
Class B .30%
Equity Index Fund
Class A .25%
Class B .25%
Class O .20%
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
Equity Value Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Government Money Market Fund
Class A .25%
Growth Fund
Class A .30%
Class B .30%
Institutional Class .25%
Index Allocation Fund
Class A .25%
Class B .25%
Class C .25%
International Equity Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Money Market Fund
Class A .30%
Service Class .25%
Institutional Class .25%
Money Market Trust
Single Class .20%
National Tax-Free Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
National Tax-Free Money Market Fund
Class A .25%
Institutional Class .20%
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
National Tax-Free Money Market Trust
Single Class .20%
100% Treasury Money Market Fund
Class A .30%
Service Class .20%
Oregon Tax-Free Fund
Class A .25%
Class B .25%
Institutional Class .25%
Overland Express Sweep Fund
Single Class .30%
Prime Money Market Fund
Class A .30%
Service Class .20%
Institutional Class .25%
Administrative Class .15%
Short-Term Government-Corporate Income Fund
Single Class .25%
Short-Intermediate U.S. Government Income Fund
Class A .30%
Institutional Class .25%
Short-Term Municipal Income Fund
Single Class .25%
Small Cap Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Strategic Growth Fund
Class A .25%
Class B .25%
Class C .25%
Strategic Income Fund
Class A .25%
Class B .25%
Class C .25%
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
Treasury Money Market Fund
Class A .30%
Class E .30%
Service Class .20%
Institutional Class .25%
Administrative Class .15%
U.S. Government Allocation Fund
Class A .30%
Class B .30%
U.S. Government Income Fund
Class A .30%
Class B .30%
Class C .25%
Institutional Class .25%
Variable Rate Government Fund
Class A .25%
Class C .25%
STAGECOACH TRUST
----------------
LifePath Opportunity
Class A .25%
Class C .25%
Institutional Class .25%
LifePath 2010
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
LifePath 2020
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
LifePath 2030
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
LifePath 2040
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Large Cap Alpha Tilt
Class A .25%
Class B .25%
Class C .25%
Small Cap Alpha Tilt
Class A .25%
Class B .25%
Class C .25%
</TABLE>
Approved: July 23, 1997
Approved as Amended: September 8, 1997, for the Prime and Treasury Money Market
Funds
Approved as Amended: October 30, 1997, for the Equity Index Fund
Approved as Amended: January, 1998, for the Asset Allocation, Corporate Bond,
Equity Value, Growth, Strategic Income, and International
Equity Funds.
Approved as Amended: April 30, 1998, for the 100% Treasury Money Market Fund
Approved as Amended: July 30, 1998 for the Stagecoach Trust Large Cap Alpha
Tilt Fund and the Small Cap Alpha Tilt Fund and to
increase all Stagecoach Trust shareholder servicing fees
to 0.25%.
Approved as Amended: November 19, 1998 to include the Class O shares of the
Equity Index Fund and the Class C shares of the LifePath
Opportunity Fund, LifePath 2010 Fund, LifePath 2020 Fund
and LifePath 2030 Fund
A-5
<PAGE>
EXHIBIT 99.B9(d)
STAGECOACH FUNDS, INC.
SERVICING PLAN
--------------
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 ("Servicing Agents") of the various
classes of shares (each a "Class") of the portfolios of the Company (each a
"Fund") listed on the attached Appendix, as amended from time to time. Pursuant
to such Agreements, Servicing Agents 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 Fund's then current prospectus, at the annual rates set forth
on the attached Appendix. 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 a particular
Fund in connection with the Agreements and the implementation of this Servicing
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 Servicing Agents. The Company's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Company shall not be obligated to execute, any Agreement with
any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the Company's
administrator shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to this Servicing Plan and the purposes for which such
expenditures were made.
Section 4. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940, as amended, and rules and
regulations thereunder, of the particular Class of the Fund and a majority of
the Directors of the Company, including a majority of the Qualified Directors,
pursuant to a vote cast in person at a meeting or meetings called for the
purpose of voting on the approval of the Plan, or on the date the Fund commences
operations, if such date is later.
1
<PAGE>
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, including a majority of the Directors who are not "interested
persons," as defined in the Investment Company Act of 1940, of the Company and
have no direct or indirect financial interest in the operation of this Servicing
Plan or in any Agreement related to this Servicing Plan (the "Disinterested
Directors") cast in person at a meeting called for the purpose of voting on such
approval.
Section 6. This Servicing Plan may be amended at any time with respect to
the Fund by the Company's Board of Directors, provided that any material
amendment of the terms of this Servicing Plan (including a material increase of
the fee payable hereunder) shall become effective only upon the approvals set
forth in Section 5.
Section 7. This Servicing Plan is terminable at any time with respect to
the Fund by vote of a majority of the Disinterested Directors.
Section 8. While this Servicing Plan is in effect, the selection and
nomination of the Disinterested Directors shall be committed to the discretion
of such Disinterested Directors.
Section 9. Notwithstanding anything herein to the contrary, the Fund shall
not be obligated to make any payments under this Plan that exceed the maximum
amounts payable under Article III, Section 26 of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc.
Section 10. The Company will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Directors for a period of not less than six years.
Approved: January 29, 1998
2
<PAGE>
APPENDIX
--------
Fees are expressed as a percentage of the average daily net asset value of
the particular Class of the particular Fund beneficially owned by or
attributable to such clients of the Servicing Agent.
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
------------------------ --------
STAGECOACH
----------
Arizona Tax-Free Fund
Class A .25%
Class B .25%
Institutional Class .25%
Asset Allocation Fund
Class A .30%
Class B .30%
Class C .25%
Balanced Fund
Class A .25%
Class B .25%
Institutional Class .25%
California Tax-Free Bond Fund
Class A .30%
Class B .30%
Class C .25%
Institutional Class .25%
California Tax-Free Income Fund
Class A .30%
Institutional Class .25%
California Tax-Free Money Market Fund
Single Class .30%
California Tax-Free Money Market Trust
Single Class .20%
3
<PAGE>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
------------------------ --------
Corporate Bond Fund
Class A .25%
Class B .25%
Class C .25%
Diversified Equity Income Fund
Class A .30%
Class B .30%
Equity Index
Class A .25%
Class B .25%
Class O .20%
Equity Value Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Government Money Market Fund
Single Class .25%
Growth Fund
Class A .30%
Class B .30%
Institutional Class .25%
Index Allocation Fund
Class A See Administrative Plan
Class B .25%
Class C .25%
Intermediate Bond Fund
Class A .25%
Class B .25%
Institutional Class .25%
4
<PAGE>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
------------------------ --------
International Equity Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Money Market Fund
Class A .30%
Service Class .25%
Institutional Class .25%
Money Market Trust
Single Class .20%
National Tax-Free Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
National Tax-Free Money Market Fund
Class A .25%
Institutional Class .20%
National Tax-Free Money Market Trust
Single Class .20%
Oregon Tax-Free Fund
Class A .25%
Class B .25%
Institutional Class .25%
Overland Express Sweep Fund
Single Class .30%
Prime Money Market Fund
Class A .30%
Service Class .20%
Institutional Class .25%
Administrative Class .15%
5
<PAGE>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
------------------------ --------
Short-Intermediate U.S. Government Income Fund
Class A .30%
Institutional Class .25%
Short-Term Government-Corporate Income Fund
Single Class See Administrative Plan
Short-Term Municipal Income Fund
Single Class See Administrative Plan
Small Cap Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Strategic Growth Fund
Class A .25%
Class B .25%
Class C .25%
Strategic Income Fund
Class A .25%
Class B .25%
Class C .25%
Treasury Money Market Fund
Class A .30%
Class E .30%
Service Class .20%
Institutional Class .25%
Administrative Class .15%
U.S. Government Allocation Fund
Class A .30%
Class B .30%
6
<PAGE>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
------------------------ --------
U.S. Government Income Fund
Class A .30%
Class B .30%
Class C .25%
Institutional Class .25%
Variable Rate Government Fund
Class A See Administrative Plan
Class C .25%
100% Treasury Fund
Class A .30%
Institutional Class .20%
Approved: January 29, 1998
Approved as amended: November 19, 1998 to include Class O shares of the Equity
Index Fund
7
<PAGE>
EXHIBIT 99.B10
[MORRISON & FOERSTER LLP LETTERHEAD]
November 30, 1998
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. 50 and Amendment No. 51 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 new Class O shares of the Equity Index Fund of the Company.
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 March 31, 1998.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Company, upon completion of
such corporate action as is deemed necessary or appropriate, will be duly and
validly authorized by such corporate action and assuming delivery by sale or in
accord with the Company's dividend reinvestment plan in accordance with the
description set forth in the Fund's current prospectus under the Securities Act
of 1933, as amended, the Shares will be legally issued, fully paid and
nonassessable by the Company.
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 the description of advice rendered by our firm under the heading
"Additional Services and Other Information - Glass-Steagall Act" in the
Prospectuses, and under the heading "Counsel" in the Statements of Additional
Information, which are included as part of the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
<PAGE>
EXHIBIT 99.B18
STAGECOACH FUNDS, INC.
RULE 18f-3 MULTI-CLASS PLAN
---------------------------
I. INTRODUCTION.
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), the following sets forth the method for allocating fees and
expenses among each class of shares in the separate investment portfolios
("Funds") of Stagecoach Funds, Inc. (Registration Nos. 33-42927 and 811-6419)
(the "Company"). In addition, this Rule 18f-3 Multi-Class Plan (the "Plan")
sets forth the maximum initial sales charges, contingent deferred sales charges
("CDSCs"), Rule 12b-1 distribution fees, shareholder servicing fees, conversion
features, exchange privileges and other shareholder services applicable to a
particular class of shares of the Funds.
The Company is an open-end series investment company registered under the
1940 Act, the shares of which are registered on Form N-1A under the Securities
Act of 1933. Upon the effective date of Rule 18f-3, the Company hereby elects
to offer multiple classes of shares of the Funds pursuant to the provisions of
Rule 18f-3 and the Plan. The Plan has been amended to reflect the offerings of
additional Funds and additional share classes.
The Company currently offers or will offer the following thirty-four
separate Funds: Arizona Tax-Free, Asset Allocation, Balanced, California Tax-
Free Bond, California Tax-Free Income, California Tax-Free Money Market,
California Tax-Free Money Market Trust, Corporate Bond, Diversified Equity
Income, Equity Index, Equity Value, Government Money Market, Growth, Index
Allocation, International Equity, Money Market, Money Market Trust, National
Tax-Free, National Tax-Free Money Market, National Tax-Free Money Market Trust,
Oregon Tax-Free, Overland Express Sweep, Prime Money Market, Short-Intermediate
U.S. Government Income, Short-Term Government-Corporate Income, Short-Term
Municipal Income, Small Cap, Strategic Growth, Strategic Income, Treasury Money
Market, U.S. Government Allocation, U.S. Government Income, Variable Rate
Government, and 100% Treasury Funds.
The Funds listed below are authorized to issue the following classes of
shares representing interests in such Funds:
(i) Class A shares and Class B shares: Diversified Equity Income and U.S.
Government Allocation Funds.
(ii) Class A shares, Class B shares and Class C shares: Asset Allocation,
Corporate Bond, Index Allocation, Strategic Growth, and Strategic
Income Funds.
(iii) Class A shares and Class C shares: Variable Rate Government Fund.
(iv) Class A shares and Institutional Class shares: California Tax-Free
Income, and National Tax-Free Money Market Funds.
(v) Class A shares, Class B shares and Institutional Class shares:
Arizona Tax-Free, Balanced, and Oregon Tax-Free Funds.
<PAGE>
(vi) Class A shares, Class B shares, and Institutional Class shares:
Short-Intermediate U.S. Government Income Fund.
(vii) Class A shares, Class B shares, Class C shares and Institutional
Class shares: California Tax-Free Bond, Equity Value, Growth,
International Equity, National Tax-Free, Small Cap, and U.S.
Government Income Funds.
(viii) Class A shares, Institutional Class shares, Administrative Class
shares and Service Class shares: Prime Money Market Fund.
(ix) Class A shares, Class E shares, Institutional Class shares,
Administrative Class shares, and Service Class shares: Treasury
Money Market Fund.
(x) Class A shares, Class S shares and Institutional Class shares: Money
Market Fund.
(xi) Class A shares and Institutional Class shares: 100% Treasury Fund
(xii) Class A shares, Class B shares, and Class O shares: Equity Index
Fund
All of the Company's Funds other than the California Tax-Free Money Market
Fund, California Tax-Free Money Market Trust, Money Market Trust, National Tax-
Free Money Market Trust, Overland Express Sweep, Short-Term Municipal Income
Fund and Short-Term Government-Corporate Income Fund, which offer a single
unnamed class of shares and the Government Money Market Fund, which offers only
Class A shares, are collectively referred to herein as the "Multi-Class Funds".
The differences among the classes are discussed below.
II. ALLOCATION OF EXPENSES.
----------------------
Pursuant to Rule 18f-3 under the 1940 Act, the Company allocates to each
class of shares of a Multi-Class Fund (i) any fees and expenses incurred by the
Fund in connection with the distribution of such class of shares under a
distribution plan adopted for such class of shares pursuant to Rule 12b-1, and
(ii) any fees and expenses incurred by the Fund under a servicing plan in
connection with the provision of shareholder administrative or liaison services
to the holders of such class of shares. In addition, pursuant to Rule 18f-3,
the Company may allocate the following fees and expenses to a particular class
of shares of a single Multi-Class Fund:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, notices, prospectuses,
reports, and proxies to current shareholders of that class or to
regulatory agencies with respect to such class of shares;
(iii) blue sky registration or qualification fees incurred by such class
of shares;
2
<PAGE>
(iv) Securities and Exchange Commission registration fees incurred by such
class of shares;
(v) the expense of administrative personnel and services as required to
support the shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to such class of
shares; and
(vii) fees of the Company's Directors incurred as result of issues
relating to such class of shares.
The initial determination of the class expenses that will be allocated by
the Company to a particular class of shares and any subsequent changes thereto
will be reviewed by the Board of Directors of the Company and approved by a vote
of the Directors of the Company, including a majority of the Directors who are
not interested persons of the Company.
Income, realized and unrealized capital gains and losses, and any expenses
of a Multi-Class Fund not allocable to a particular class of the Fund pursuant
to this Plan shall be allocated to each class of the Fund based upon the
relative net asset value of that class in relation to the aggregate net asset
value of the Fund. In certain cases, Stephens, the Bank or another service
provider for a Multi-Class Fund may waive or reimburse all or a portion of the
expenses of a specific class of shares of the Multi-Class Fund. The Board of
Directors will monitor any such waivers or reimbursements to ensure that they do
not provide a means for cross-subsidization between classes.
III. CLASS ARRANGEMENTS.
------------------
The following summarizes the maximum initial sales charges, CDSCs, Rule
12b1 distribution fees, shareholder servicing fees, conversion features,
exchange privileges and other shareholder services applicable to a particular
class of shares of the Multi-Class Funds. Additional details and restrictions
regarding such fees and services are set forth in the relevant Fund's current
Prospectus and Statement of Additional Information.
A. CLASS A SHARES -- MULTI-CLASS FUNDS
-----------------------------------
1. Maximum Initial Sales Charge: The maximum initial sales charge
----------------------------
expressed as a percentage of the net asset value at time of purchase
is as follows:
5.25% Balanced, Diversified Equity Income, Equity Value, Growth,
International Equity, Small Cap, and Strategic Growth Funds.
4.50% Asset Allocation, Arizona Tax-Free, California Tax-Free Bond,
Corporate Bond, Equity Index, Index Allocation, Intermediate
Bond, National Tax-Free, Oregon Tax-Free, Strategic Income,
U.S. Government Allocation, and U.S. Government Income Funds.
3.00% California Tax-Free Income, Short-Intermediate U.S. Government
Income, and Variable Rate Government Funds.
3
<PAGE>
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.05% of average daily
------------------------------------------
net assets attributable to Class A shares, except for the Balanced,
Equity Value, International Equity, Small Cap, and Strategic Growth
Funds, which are subject to Rule 12b-1 fees at a rate equal to 0.10%
of average daily net assets attributable to Class A shares of such
Funds, and except for the Index Allocation and Variable Rate
Government Funds, which are subject to Rule 12b-1 fees at a rate equal
to 0.25% of the average daily net assets attributable to Class A
shares of such Funds.
4. Maximum Annual Shareholder Servicing Fee: 0.25% of average daily net
----------------------------------------
assets attributable to Class A shares, except for the Asset
Allocation, California Tax-Free Bond, California Tax-Free Income,
Diversified Equity Income, Growth, Money Market, Prime Money Market,
Short-Intermediate U.S. Government Income, Treasury Money Market, and
U.S. Government Allocation Funds, which have a shareholder servicing
fee equal to 0.30% of the average daily net assets attributable to
Class A shares of such Funds.
5. Conversion Features: None
-------------------
6. Exchange Privileges: As described in current prospectus for each
-------------------
Fund.
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
B. CLASS B SHARES -- MULTI-CLASS FUNDS
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: Class B shares that are redeemed
--------------------------------
within six years from the receipt of a purchase order affecting such
shares are subject to a CDSC equal to the indicated percentage of the
dollar amount equal to the lesser of the net asset value ("NAV") at
the time of purchase of the Class B shares being redeemed or the NAV
of such shares at the time of redemption. No CDSC is imposed on Class
B shares purchased through reinvestment of dividends or capital gain
distributions.
<TABLE>
<CAPTION>
Redemption Within: 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years
----------------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDSC: 5% 4% 3% 3% 2% 1%
</TABLE>
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.75% of average daily
------------------------------------------
net assets attributable to Class B shares, except for the Asset
Allocation, California Tax-Free Bond, Diversified Equity Income,
Growth, U.S. Government Allocation, and U.S. Government Income Funds,
which are subject to Rule 12b-1 fees at a rate equal to 0.70% of the
average daily net assets attributable to Class B shares of such Funds.
4. Maximum Annual Shareholder Servicing Fee: 0.25% of average daily net
----------------------------------------
assets attributable to Class B shares, except for the Asset
Allocation, California Tax-
4
<PAGE>
Free Bond, Diversified Equity Income, Growth, U.S. Government
Allocation, and U.S. Government Income Funds, which have a shareholder
servicing fee equal to 0.30% of the average daily net assets
attributable to Class B Shares of such Funds.
5. Conversion Features: Class B shares of a Multi-Class Fund that have
-------------------
been outstanding for six years after the end of the month in which the
shares were initially purchased automatically convert to Class A
shares of such Fund and, consequently, are no longer subject to the
higher Rule 12b-1 fees applicable to Class B shares. Such conversion
is on the basis of the relative NAVs of the two classes, without the
imposition of any sales charge or other charge, except that the lower
Rule 12b-1 fees applicable to Class A shares shall thereafter be
applied to such converted shares.
6. Exchange Privileges: As described in the current prospectus for each
-------------------
Fund.
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
C. CLASS C SHARES -- MULTI-CLASS FUNDS
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: Class C shares that are redeemed
--------------------------------
within one year of the receipt of a purchase order affecting such
shares are subject to a CDSC equal to 1.00% of an amount equal to the
lesser of NAV at the time of purchase of the Class C shares being
redeemed or the NAV of such shares at the time of redemption. No CDSC
is imposed on Class C shares purchased through reinvestment of
dividends or capital gain distributions.
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.75% of average daily
------------------------------------------
net assets attributable to Class C shares, except for the California
Tax-Free Bond, National Tax-Free, U.S. Government Income, and Variable
Rate Government Funds, which are subject to Rule 12b-1 fees at a rate
equal to 0.50% of the average daily net assets attributable to Class C
shares of such Funds.
4. Maximum Annual Shareholder Servicing Fee: 0.25% of average daily net
----------------------------------------
assets attributable to Class C shares.
5. Conversion Features: None
-------------------
6. Exchange Privileges: As described in the current prospectus for each
-------------------
Fund.
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
D. INSTITUTIONAL CLASS SHARES -- MULTI-CLASS FUNDS
-----------------------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
5
<PAGE>
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
-------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: 0.25% of average daily net
----------------------------------------
assets attributable to Institutional Class shares, except for the
National Tax-Free Money Market Fund, which has a shareholder servicing
fee equal to 0.20% of the average daily net assets attributable to
Institutional Class shares.
5. Conversion Features: None.
--------------------
6. Exchange Privileges: As described in the current prospectus for each
-------------------
Fund.
7. Other Class-Specific Shareholder Services: None
------------------------------------------
E. SERVICE CLASS SHARES -- MULTI-CLASS FUNDS
-----------------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
-------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: 0.20% of the average daily
----------------------------------------
net assets attributable to Service Class shares.
5. Conversion Features: None.
--------------------
6. Exchange Privileges: As described in the current prospectus for each
--------------------
Fund.
7. Other Class-Specific Shareholder Services: None
------------------------------------------
F. CLASS E SHARES -- MULTI-CLASS FUNDS
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.10% of average daily
-------------------------------------------
net assets attributable to Class E shares.
4. Maximum Annual Shareholder Servicing Fee: 0.30% of the average daily
----------------------------------------
net assets attributable to Service Class shares.
5. Conversion Features: None.
--------------------
6. Exchange Privileges: As described in the Fund's current prospectus.
--------------------
6
<PAGE>
7. Other Class-Specific Shareholder Services: None
------------------------------------------
G. ADMINISTRATIVE CLASS SHARES -- MULTI-CLASS FUNDS:
------------------------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
-------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: 0.15% of average daily net
----------------------------------------
assets attributable to Administrative Class shares.
5. Conversion Features: None.
--------------------
6. Exchange Privileges: As described in the current prospectus for each
-------------------
Fund.
7. Other Class-Specific Shareholder Services: None.
------------------------------------------
H. CLASS O SHARES -- MULTI-CLASS FUNDS:
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: 0.20% of average daily net
----------------------------------------
assets attributable to Class O Shares.
5. Conversion Features: None.
-------------------
6. Exchange Privileges: As described in the current prospectus for the
-------------------
Fund.
7. Other Class-Specific Shareholder Services: None.
-----------------------------------------
IV. BOARD REVIEW.
-------------
The Board of Directors of the Company shall review the Plan as it deems
necessary. Prior to any material amendment(s) to the Plan with respect to any
Multi-Class Fund's shares, the Company's Board of Directors, including a
majority of the Directors that are not interested persons of the Company, shall
find that the Plan, as proposed to be amended (including any proposed amendments
to the method of allocating class and/or fund expenses), is in the best interest
of each class of shares of the Fund individually and the Fund as a whole. In
considering whether to approve any proposed amendment(s) to the Plan, the
Directors of the Company shall
7
<PAGE>
request and evaluate such information as it considers reasonably necessary to
evaluate the proposed amendment(s) to the Plan.
Adopted: April 3, 1995
Adopted as Amended: April 25, 1996
Adopted as Amended: January 16, 1997
Adopted as Amended: April 29, 1997
Adopted as Amended: July 23, 1997
Adopted as Amended: October 30, 1997
Adopted as Amended: January, 1998
Adopted as Amended: November , 1998
8
