<PAGE>
As filed with the Securities and Exchange Commission
on June 2, 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. 47 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 48 [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. 47 (the "Amendment") to the Registration
Statement of Stagecoach Funds, Inc. (the "Company") is being filed to register
the "Plain English" Prospectuses and related Statements of Additional
Information ("SAIs") for the Class S shares of the Company's Money Market Fund
and the Class E shares of the Company's Treasury Money Market Fund.
The Amendment does not affect the Registration Statement for the Company's
other classes, prospectuses or SAIs.
<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.
<PAGE>
August 1, 1998
================================================================================
STAGECOACH FUNDS(R)
Stagecoach
Money Market Fund
Prospectus
Money Market
Fund
Class S
Investment Advisor
and Administrator:
Wells Fargo Bank
Distributor and
Co-Administrator:
Stephens Inc.
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 the Fund's
goals match your own.
These securities have not been approved or disapproved by the U.S. Securities
and Exchange Commission, any state securities commission or any other regulatory
authority, nor have any of these authorities passed upon the accuracy or
adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.
Fund shares are NOT deposits or other obligations of, or issued, endorsed or
guaranteed by, Wells Fargo Bank, N.A. ("Wells Fargo Bank"), or any of its
affiliates. 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 A FUND INVOLVES CERTAIN RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL. WE CANNOT ASSURE YOU THAT A FUND WILL
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
================================================================================
<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:
- --------------------------------------------------------------------------------
[GRAPHIC] Investment Objective and Investment Policies
What is the Fund trying to achieve? How do we intend to
invest your money? Look for the arrow icon to find out.
- --------------------------------------------------------------------------------
[GRAPHIC] Permitted Investments
A summary of the Fund's key permitted investments and
practices.
- --------------------------------------------------------------------------------
[GRAPHIC] Important Risk Factors
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 this Fund.
- --------------------------------------------------------------------------------
[GRAPHIC] Additional Fund Facts
Provides additional information about the Fund.
- --------------------------------------------------------------------------------
Why is italicized print used throughout this 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 website
(http://www.sec.gov).
================================================================================
<PAGE>
<TABLE>
Table of Contents
<S> <C> <C>
Key Information 4
Summary of Expenses 5
- --------------------------------------------------------------------------------
The Fund Money Market Fund 6
This section contains General Investment Risks 10
important information
about the Fund.
- --------------------------------------------------------------------------------
Your Account Your Account 14
How to Buy Shares 16
Turn to this section for Selling Shares 17
information on how to Exchanges 19
open and maintain Additional Services and
your account, including Other Information 20
how to buy, sell and
exchange Fund shares.
- --------------------------------------------------------------------------------
Reference Organization and Management
of the Fund 24
Look here for details on the How to Read the Financial Highlights 27
organization of the Fund Glossary 28
and term definitions.
</TABLE>
<PAGE>
Key Information
- --------------------------------------------------------------------------------
Summary of the Stagecoach Money Market Fund
The Fund described in this Prospectus invests in money market instruments, seeks
to maintain a $1.00 per share net asset value in order to preserve principal,
and distributes dividends once a month. The Fund's investment objective is
fundamental and may not be changed without the approval of a majority of
shareholders.
Should you consider investing in this Fund? Yes, if:
o you are looking for a fund in which to invest short-term cash;
o you are looking to preserve principal; and
o you are looking for monthly income.
You should not invest in this Fund if:
o you are looking for FDIC insurance coverage or guaranteed rates of return;
o you are unwilling to accept that you may lose money on your investment;
o you are unwilling to accept the risk that we may be unable to maintain a
$1.00 per share net asset value and that your investment principal may
fluctuate; or
o you are seeking long-term total return.
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 are the "Funds"?
In this Prospectus, the "Fund" refers to the Stagecoach Fund listed on the
cover of this Prospectus. The "Funds" also may refer to other mutual funds
offered by Stagecoach Funds, Inc.
Key Terms
The term "money market instruments" is used in this Prospectus to refer to a
broad variety of short-term debt securities, commercial paper, certificates of
deposit, repurchase agreements and other investment activities described in the
Statement of Additional Information and the Investment Practice/Risk table on
page 29.
Dividends
We declare dividends, if any, daily and pay them monthly. You earn dividends
from the day your purchase of shares is effected and you continue to earn them
until the day before your shares are redeemed. Capital gains, if any, are
declared and paid at least annually.
4 Stagecoach Money Market Fund Prospectus
<PAGE>
Money Market Funds Summary of Expenses
- --------------------------------------------------------------------------------
================================================================================
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.
<TABLE>
<CAPTION>
- -------------------------------------------------
Money
Market
--------
CLASS S
- -------------------------------------------------
<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 imposed on
redemptions None
- -------------------------------------------------
Exchange fees None
</TABLE>
================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
================================================================================
Expenses shown "after waivers" reflect amounts paid by the Fund during the
prior fiscal period. In some cases, they have been restated to reflect expenses
and fee waivers expected to be in effect during the current fiscal year.
Expenses shown "before waivers" reflect contract amounts and amounts paid during
the prior fiscal period. Expense waivers and reimbursements are voluntary and
may be discontinued without prior notice.
<TABLE>
<CAPTION>
- -------------------------------------------------
Money
Market
--------
CLASS S
- -------------------------------------------------
<S> <C>
Rule 12b-1 fee 0.75%
- -------------------------------------------------
Management fee
(after waivers) 0.40%
- -------------------------------------------------
Other expenses
(after waivers or reimbursements) 0.27%
=================================================
TOTAL FUND OPERATING EXPENSES
(after waivers or reimbursements) 1.42%
=================================================
Management fee
(before waivers) 0.40%
- -------------------------------------------------
Other expenses
(before waivers or reimbursements) 0.41%
- -------------------------------------------------
TOTAL FUND OPERATING EXPENSES
(before waivers or reimbursements) 1.56%
- -------------------------------------------------
</TABLE>
================================================================================
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.
================================================================================
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
You would pay the following expenses
on a $1,000 investment assuming a 5%
annual return and that you redeem Money
your shares at the end of each Market
period. --------
CLASS S
- -------------------------------------------------
<S> <C>
1 YEAR $14
- -------------------------------------------------
3 YEARS $45
- -------------------------------------------------
5 YEARS $78
- -------------------------------------------------
10 YEARS $170
- -------------------------------------------------
</TABLE>
Stagecoach Money Market Fund Prospectus 5
<PAGE>
Money Market Fund
- --------------------------------------------------------------------------------
Advisor: Wells Fargo Bank
- --------------------------------------------------------------------------------
[GRAPHIC] Investment Objective
The Money Market Fund seeks to provide investors with a high
level of income, while preserving capital and liquidity, by
investing in high-quality, short-term instruments.
Investment Policies
We actively manage a portfolio of U.S. dollar-denominated, high
quality money market instruments, including debt obligations with
remaining maturities of 397 days or less. We maintain an overall
dollar-weighted average maturity of 90 days or less. We may also
make certain other investments including, for example, repurchase
agreements.
- --------------------------------------------------------------------------------
[GRAPHIC] Permitted Investments
Under normal market conditions, we invest in:
o commercial paper rated at the date of purchase as P-1 by
Moody's or A-1+ or A-1 by S&P;
o negotiable certificates of deposits and banker's acceptances;
o repurchase agreements;
o U.S. Government obligations;
o short-term, U.S. dollar-denominated debt obligations of U.S.
branches of foreign banks and foreign branches of U.S. banks;
o municipal obligations; and
o shares of other money market funds.
6 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
[GRAPHIC] Important Risk Factors
You should consider both the General Investment Risks listed on
page 26 and the specific risks listed below. They are both
important to your investment choice.
There is no guarantee that we will be able to maintain a $1.00
per share net asset value. Fluctuations in share value may cause
a loss or gain in principal. Generally, short-term funds do not
earn as high a level of income as funds that invest in
longer-term instruments. No government agency either directly or
indirectly insures or guarantees the performance of the Fund.
- --------------------------------------------------------------------------------
[GRAPHIC] Additional Fund Facts
For information on Fund fees and expenses, see "Summary of
Expenses" on page 5.
Stagecoach Money Market Fund Prospectus 7
<PAGE>
<TABLE>
<CAPTION>
Money Market Fund Financial Highlights
- -----------------------------------------------------------
===========================================================
FOR A SHARE OUTSTANDING
===========================================================
For the period ended:
===========================================================
<S> <C>
Net asset value, beginning of period
- -----------------------------------------------------------
Income from investment operations:
Net investment income
Net realized and unrealized gain on investments
- -----------------------------------------------------------
Total from investment operations
- -----------------------------------------------------------
Less distributions:
Dividends from net investment income
Distributions from net realized gain
- -----------------------------------------------------------
Total from distributions:
- -----------------------------------------------------------
Net asset value, end of period
- -----------------------------------------------------------
Total return (not annualized)
- -----------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s)
- -----------------------------------------------------------
Ratios to average net assets (annualized):
Ratio of expenses to average net assets
Ratio of net investment income to average net assets
- -----------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses
- -----------------------------------------------------------
Ratio of net investment income to average net
assets prior to waived fees and reimbursed expenses
- -----------------------------------------------------------
<CAPTION>
===========================================================
CLASS S SHARE CALENDAR-YEAR RETURNS
===========================================================
<S>
- -----------------------------------------------------------
These returns reflect fee waivers and reimbursements,
and are not a guarantee of future performance.
- -----------------------------------------------------------
</TABLE>
1 The Fund changed its fiscal year-end from September 30 to March 31.
2 The Fund changed its fiscal year-end from December 31 to September 30.
8 Stagecoach Money Market Fund Prospectus
<PAGE>
<TABLE>
<CAPTION>
See "How to Read the Financial Highlights" on page 43.
- ------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
========================================================================================================================
CLASS S SHARES -- COMMENCED
ON MAY 25, 1995
----------------------------------------------------------------
March 1, March 31 Sept. 30 Dec. 31,
1998 1997(1) 1996(2) 1995
- ---------------------------------------------------------------------
<S> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------
0.04 0.02 0.03 0.03
0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------
0.04 0.02 0.03 0.03
- ---------------------------------------------------------------------
(0.04) (0.02) (0.03) (0.03)
0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------
(0.04) (0.02) (0.03) (0.03)
- ---------------------------------------------------------------------
$1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------
4.37% 2.02% 3.03% 2.73%
- ---------------------------------------------------------------------
$ 951,172 $ 707,781 $ 699,231 $ 618,899
- ---------------------------------------------------------------------
1.42% 1.43% 1.42% 1.43%
4.28% 4.02% 3.98% 4.40%
- ---------------------------------------------------------------------
1.62% 1.56% 1.55% 1.53%
- ---------------------------------------------------------------------
4.08% 3.89% 3.85% 4.30%
- ---------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
<CAPTION>
========================================================================================================================
1997 1996 1995 1994 1993
========================================================================================================================
<S> <C> <C> <C> <C>
4.78% 5.34% 3.74% 2.70%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Stagecoach Money Market 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 tolerance and preferences. You
should carefully consider risks common to all mutual funds, including the
Stagecoach Funds. Chief among these risks are the following:
o Unlike bank deposits, such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
o We cannot guarantee we will meet our investment objectives. In particular,
we cannot guarantee that we will be able to maintain a $1.00 per share net
asset value.
o You cannot recover through insurance any loss due to investment practices,
nor can the Fund, the selling agents or investment advisors "make good" any
losses you might have.
o Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
o An investment in a single Fund, by itself, does not constitute a complete
investment plan.
o The Fund invests in debt instruments, such as notes and bonds, that are
subject to credit risk and interest rate risk. Credit risk is the
possibility that an issuer of a security will be unable to make interest
payments or repay principal. Changes in the financial strength of an issuer
or changes in the credit rating of a security may affect its value.
Interest rate risk is the possibility that interest rates may increase and
reduce the resale value of securities in the Fund's portfolio. Debt
instruments with longer maturities are generally more sensitive to interest
rate changes than those with shorter maturities. Interest rate risk does
not affect the interest paid by a debt instrument unless it is specifically
designed to pay an adjustable rate.
o The Fund's advisor may also use certain derivative instruments such as
options or futures contracts. The term "derivatives" covers a wide number
of investments but in general it refers to any financial 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.
The following types of floating-rate derivative securities are NOT permitted
investments in the Fund:
o Capped floaters on which interest is not paid when market rates move above
a certain level;
10 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
o Leveraged floaters whose interest rates reset based on a formula that
magnifies changes in market interest rates;
o Range floaters on which interest is not paid if market interest rates move
outside a specified range;
o Dual index floaters whose interest rate reset provisions are tied to more
than one index; and
o Inverse floaters which have interest rates that reset in an opposite
direction of their index.
Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for the Fund remains within the parameters
of its objective.
What follows is a general list of the types of risks (some of which are
described above) that may apply to the Fund 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
other 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.
Diplomatic Risk-- The risk that an adverse change in the diplomatic relations
between the United States and another country, or between other countries, might
reduce the value or liquidity of investments in either country.
Information Risk-- The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Interest Rate Risk-- The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer dates to maturity.
Leverage Risk-- The risk that a practice may increase a 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 its fair price.
Stagecoach Money Market Fund Prospectus 11
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 sections 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.
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.
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
information about the investment practices and risks particular to the
Fund.
- --------------------------------------------------------------------------------
12 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET
=========================================================================================
INVESTMENT PRACTICE: RISK:
=========================================================================================
<S> <C> <C>
Floating and Variable Rate Debt
Instruments with interest rates that are adjusted Interest Rate and X
either on a schedule or when an index or benchmark Credit Risk
changes.
- -----------------------------------------------------------------------------------------
Repurchase Agreements
A transaction in which the seller of a security Credit and X
agrees to buy back a security at an agreed upon time Counter-Party Risk
and price, usually with interest.
- -----------------------------------------------------------------------------------------
Other Mutual Funds
The temporary investment in shares of another money Market Risk X
market fund. A pro rata portion of the other fund's
expenses, in addition to the expenses paid by the
Fund, will be borne by Fund shareholders.
- -----------------------------------------------------------------------------------------
Foreign Obligations
Dollar-denominated debt obligations of foreign Information, Currency, X
branches of U.S. banks or U.S. branches of foreign Liquidity, Political,
banks. Regulatory, and Diplomatic
Risk
- -----------------------------------------------------------------------------------------
Loans of Portfolio Securities
The practice of loaning securities to brokers, Credit, Leverage and
dealers, and financial institutions to increase Counter-Party Risk
return on those securities. Loans may be made in
accordance with existing investment policies.
- -----------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow an equivalent of 10% Leverage Risk X
of assets from banks for temporary purposes
to meet shareholder redemptions.
- -----------------------------------------------------------------------------------------
Illiquid Securities
A security that cannot be readily sold, or cannot be Liquidity Risk X
readily sold without negatively affecting its fair
price. Illiquid securities are limited to 10% of total
assets.
- -----------------------------------------------------------------------------------------
</TABLE>
Stagecoach Money Market 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.
Opening an Account
Class S shares of the Fund are offered by this Prospectus to businesses
that establish a Business Dividend Checking Account (an "Account") with Wells
Fargo Bank. Each Account combines a Transaction Account (a non-interest bearing
deposit account) with a periodic sweep of balances to or from the Fund.
Investors may open an Account by completing and signing an Account Application
and appropriate Disclosure Statement. The Disclosure Statement contains
important information about the various features and operations of the Accounts
and should be reviewed in conjunction with this Prospectus. Wells Fargo Bank
may, in the future, permit investors to acquire shares of the Fund through
additional accounts not described in this Prospectus.
14 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Important Information:
o Read this prospectus carefully. Discuss any questions you have with your
Selling Agent. You may also ask for 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.
o We process requests to buy shares each business day. Requests we receive in
proper form for the Money Market Fund before 12:00 Noon (Pacific Time)
generally are processed at 12:00 Noon on the same day.
o Requests we receive in proper form for the Fund before 1:00 PM (Pacific
Time) in connection with certain automated investment programs are
processed at 1:00 PM on the same day.
o Requests we receive after the above-specified times are processed the next
business day at the applicable Net Asset Value (NAV).
o 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.
o We determine the NAV of the Fund's shares by subtracting the Fund
liabilities from its total assets, and then dividing the result by the
total number of outstanding shares of the Fund. See the Statement of
Additional Information for further information.
o You may have to complete additional paperwork for certain types of account
registrations, such as a Trust. Please speak to Investor Services (1-800-
222-8222) if you are investing directly with Stagecoach Funds, or speak to
your selling agent if you are buying shares through a brokerage account.
o Once an account has been opened, you can add additional Funds under the
same registration without requiring a new application.
o On any day the trading markets for both U.S. government securities and
money market instruments close early, the Fund will close early.
o We reserve the right to cancel any purchase order or delay redemption if
your check does not clear.
Stagecoach Money Market Fund Prospectus 15
<PAGE>
Your Account
- --------------------------------------------------------------------------------
How to Buy Shares
Class S shares may be purchased on any day the Fund and Wells Fargo Bank
are open by making a deposit into your Account. On each day Wells Fargo Bank and
the Fund are open Wells Fargo Bank computes the Net Sweep Amount, which is the
net amount of all deposits, withdrawals, charges and credits made to and from a
Transaction Account. If deposits and credits exceed withdrawals and charges, you
authorize Wells Fargo Bank, on your behalf, to transmit a purchase order to the
Fund designated in your Account in the amount of that day's Net Sweep Amount.
For example, if you make a $500 deposit and withdraw $100 on the same day, and
there are no other transactions on that day, the Net Sweep Amount for that day
would be $400. Wells Fargo Bank, on your behalf, would transmit a purchase order
to the designated Fund on the next Business Day in the amount of $400. Your
purchase order will be made effective and full and fractional shares will be
purchased at the next determined NAV, which is expected to remain a constant
$1.00 per share. Deposits and other transactions to your Account are sometimes
not immediately included in the Net Sweep Amount. Cash and items drawn on Wells
Fargo Bank are generally credited to the Net Sweep Amount on the same Business
Day as the day of deposit. Local and non-local checks are usually credited to
your Net Sweep Amount on the first or second Business Day, respectively, after
the day of your deposit. In addition, adjustments may sometimes be made to your
Account to reflect dishonored or returned items. For additional information
refer to the applicable Disclosure Statement and, specifically therein, "Holds
and Funds Availability."
16 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Selling Shares:
If, on any day Wells Fargo Bank and the Fund are open for business,
withdrawals from your Business Dividend Checking Account, including check
transactions, exceed deposits and credits, Wells Fargo Bank will transmit a
redemption order on your behalf to the Fund in the dollar amount of that day's
Net Sweep Amount. If your Business Dividend Checking Account with Wells Fargo
Bank is closed as described in the applicable Disclosure Statement, Wells Fargo
Bank transmits a redemption request on your behalf to the Fund for the balance
of the Class S shares of the Fund held through your Account. Your shares are
normally redeemed at the next NAV, expected to be a constant $1.00 per share,
calculated after the Fund has received the redemption order transmitted on your
behalf. The Fund ordinarily will remit your redemption proceeds within seven
days after your redemption order is received from Wells Fargo Bank unless the
SEC permits a longer period under extraordinary circumstances. Such
extraordinary circumstances could include a period during which an emergency
exists as a result of which (a) disposal by the Fund of securities owned by it
is not reasonably practicable or (b) it is not reasonably practicable for the
Fund to determine fairly the value of its net assets, or a period during which
the SEC by order permits deferral of redemptions for the protection of security
holders of the Fund. In addition, Wells Fargo Bank may withhold redemption
proceeds pending check collection or processing or for other reasons all as set
forth more fully in "Holds and Funds Availability" and elsewhere in the
applicable Disclosure Statement.
Stagecoach Money Market Fund Prospectus 17
<PAGE>
================================================================================
GENERAL NOTES FOR SELLING SHARES
================================================================================
We process requests to sell shares each business day. Requests we receive in
proper form for the Money Market Fund before 12:00 Noon (Pacific Time)
generally are processed at 12:00 Noon on the same day.
- --------------------------------------------------------------------------------
Requests we receive in proper form for the Fund before 1:00 PM (Pacific Time)
in connection with certain automated investment programs are processed at 1:00
PM on the same day.
- --------------------------------------------------------------------------------
Requests we receive after the above-specified times are processed the next
business day at the applicable NAV.
- --------------------------------------------------------------------------------
If you purchased shares through a packaged investment product or retirement
plan, read the directions for selling shares provided by the product or plan.
There may be special requirements that supersede the directions in this
Prospectus.
- --------------------------------------------------------------------------------
We reserve the right to delay payment of a redemption for up to ten days so that
we may be reasonably certain that investments made by check have been collected.
Payments of redemptions also may be delayed under extraordinary circumstances or
as permitted by the Securities and Exchange Commission 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.
- --------------------------------------------------------------------------------
18 Stagecoach Money Market 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:
o You should carefully read the Prospectus for the Fund into which you wish
to exchange.
o Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.
o If you exchange between a money market Fund and a Fund with a sales load,
you will buy shares at the Public Offering Price (POP) of the new Fund and
a sales load may be assessed.
o 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.
o Any exchange between Funds you already own must meet the minimum redemption
and subsequent purchase amounts for the Funds involved.
o Exchanges from any share class to a money market fund can only be
re-exchanged for the original share class.
o 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.
o You may exchange shares of the Funds for class A, B or C shares of a
non-money market fund.
Stagecoach Money Market Fund Prospectus 19
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
Dividend and Capital Gain Distributions
The Fund intends to distribute dividends on a daily basis to
shareholders of record as of 12:00 Noon (Pacific time). You begin earning
dividends on your Class S shares of the Fund on the day your purchase order for
such shares is effective and continue to earn dividends through the day prior to
the date you redeem such shares. Dividends for a Saturday, Sunday or Holiday are
credited on the preceding Business Day. If you redeem shares before the dividend
payment date, any dividends credited to you will be paid on the following
dividend payment date. The Fund distributes any capital gains at least annually.
Dividends declared in a month are reinvested in Class S shares of the Fund early
in the following month.
20 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
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 shareholders may be able to exclude a portion of
dividend income from their taxable income.
We will pass on to you any net capital gains earned by a Fund as a capital gain
distribution. In general, these distributions will be taxable to you as
long-term capital gains and are taxable when paid. 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 as to the status of your Fund
distributions.
Your redemptions, including exchanges, 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. In certain circumstances, U.S. residents
will be subject to back-up withholding.
Stagecoach Money Market Fund Prospectus 21
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
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 market conditions). You
will be given an opportunity to make additional investments to prevent account
closure before any action is taken.
Minimum Account Value Statements - Your Shareholder Servicing Agent mails
statements after any account activity, including dividends or capital gains, and
at year-end. Your Shareholder Servicing Agent 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
each 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 Funds 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
22 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
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.
Voting Rights - All shares of the Funds have equal voting rights and are voted
in the aggregate, rather than by series or class, unless the matter affects only
one series or class. A shareholder of record is entitled to one vote for each
share owned and fractional votes for each fractional share owned. For a detailed
description of voting rights, see the "Capital Stock" section of the Statement
of Additional Information.
Stagecoach Money Market Fund Prospectus 23
<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.
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, amending fundamental investment strategies or policies.
================================================================================
SHAREHOLDERS
================================================================================
================================================================================
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
================================================================================
Advise current and prospective shareholders on their Fund investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=======================================================================================================
TRANSFER AND
DISTRIBUTOR & ADMINISTRATOR DIVIDEND DISBURSING SHAREHOLDER
CO-ADMINISTRATOR AGENTS SERVICING AGENTS
=======================================================================================================
<S> <C> <C> <C>
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, and business activities shares and supervises to customers
manages the Fund's the paying of dividends
business activities
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================================
INVESTMENT ADVISOR CUSTODIAN
=======================================================================================================
<S> <C>
Wells Fargo Bank, 525 Market St., San Francisco, Wells Fargo Bank, 525 Market St., San Francisco,
CA CA
Manages the Fund's investment activities Provides safekeeping for the Fund's assets
- -------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
BOARD OF DIRECTORS
================================================================================
Supervises the Fund's activities
- --------------------------------------------------------------------------------
24 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
In the following sections, the percentages shown are the percentages of the
average daily net assets of the Fund class paid on an annual basis for the
services described. The Statement of Additional Information for each Fund 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
June 30, 1998 Wells Fargo Bank and its affiliates managed over $57 billion in
assets. The Funds paid Wells Fargo Bank 0.36% for advisory services
(after fee waivers) for the fiscal period ended March 31, 1998:
The Administrator
Wells Fargo Bank is the administrator of the Funds. Wells Fargo Bank is paid
.03% of each Fund's assets for these services.
The Distributor and Co-Administrator
Stephens Inc. is the Funds' distributor and co-administrator. Stephens Inc.
receives .04% of each Fund's assets for its role as co-administrator. Stephens
Inc. also receives all distribution plan fees.
Distribution Plan
We have adopted a distribution plan for the Fund. This plan is used to defray
all or part of the cost of preparing and distributing prospectuses and
promotional materials. The
Stagecoach Money Market Fund Prospectus 25
<PAGE>
Organization and Management of the Funds
- --------------------------------------------------------------------------------
Fund may participate in joint distribution activities with other Stagecoach
Funds. The cost of these activities is generally allocated among the Fund.
Funds with higher asset levels pay a higher proportion of these costs. The Fund
may pay up to 0.75% under the distribution plan for the Class S shares.
Shareholder Servicing Plan
We have a Shareholder Servicing Plan for the Class S shares. 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 we pay 0.25%.
26 Stagecoach Money Market Fund Prospectus
<PAGE>
How to Read the Financial Highlights
- --------------------------------------------------------------------------------
After the description of the Fund, there are charts showing important financial
information about the Fund. The charts are called "Financial Highlights" and are
designed to help you understand the past performance of the Fund. The financial
statements from which these Financial Highlights were derived were audited by
KPMG Peat Marwick LLP, except as indicated. The financial statements are
included in the Fund's most recent Annual or Semi-Annual Report and are
available free of charge by calling 1-800-222-8222.
Here is an explanation of some terms that will help you read these charts.
Net Asset Value (NAV)-- The net value of one share of a class of the Fund. See
the Glossary for a fuller definition.
Net Investment Income-- Net investment income is calculated by subtracting the
aggregate Fund expenses from the Fund's investment income. The number in the
financial highlights is the net investment income of a class divided by the
number of outstanding shares of that class. The amount distributed to
shareholders is listed under the heading "Less Distributions--Dividends from Net
Investment Income."
Net Realized and Unrealized Gain (Loss) on Investments-- We continually buy and
sell investments. The profit on an investment sold for more than its purchase
price is a realized capital gain while a loss on an investment sold for less
than its purchase price is a realized capital loss. An unrealized gain or loss
occurs when an investment gains or loses value but is not sold. The number in
this category is the total gains or losses of a class divided by the number of
outstanding shares for that class. The amount of capital gain or loss per share
that was paid to shareholders is listed under the heading "Less
Distributions--Distributions From Net Realized Gains."
Net Assets-- The value of the investments in the Fund's portfolio (after
accounting for expenses) that are attributable to a particular class of the
Fund.
Ratio of Expenses to Average Net Assets-- This ratio reflects the amount paid by
the Fund to cover the costs of its daily operations, and includes advisory,
administration and other operating expenses. It is expressed as a percentage of
the average daily net assets of a class.
Ratio of Net Investment Income (Loss) to Average Net Assets-- This ratio is the
result of dividing net investment income (or loss) by average net assets.
Stagecoach Money Market Fund Prospectus 27
<PAGE>
Glossary
- --------------------------------------------------------------------------------
Annual Report
A document that provides certain financial and other important information for
the most recent reporting period and the Fund's portfolio of investments.
Business Day
Any day the Fund is open. The Fund is generally open Monday through Friday
and is closed weekends and federal bank holidays.
Commercial Paper
Debt instruments issued by banks, corporations and other issuers to finance
short-term credit needs. Commercial Paper typically is of high credit quality
and offers below market interest rates.
Current Income
Earnings in the form of dividends or interest as opposed to capital growth.
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 the Fund on its shares.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S. dollars.
Duration
A measure of a security's or portfolio's sensitivity to changes in interest
rates. Duration is usually expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter durations.
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.
28 Stagecoach Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Investment-Grade Debt
A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment-grade bonds may have some speculative characteristics.
Liquidity
The ability to readily sell a security at its fair price.
Moody's
One of the largest nationally recognized ratings organizations.
Nationally Recognized Ratings Organization (NRRO)
A company that examines the ability of a bond issuer to meet its obligations and
which rates the bonds accordingly.
Net Asset Value (NAV)
The value of a single fund share. It is determined by adding together all of the
Fund's assets, subtracting expenses and other liabilities, then dividing by the
total number of shares. The NAV per share of the Money Market Fund is determined
each business day at 12:00 noon and 1:00 PM (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 can 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 Agreement
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.
Stagecoach Money Market Fund Prospectus 29
<PAGE>
Glossary
- --------------------------------------------------------------------------------
Selling Agent
A person who has an agreement with the Fund's distributor that allows them to
sell Fund shares.
Shareholder Servicing Agent
An entity appointed by the Fund to maintain shareholder accounts and record,
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.
S&P
One of the largest nationally recognized ratings organizations. Standard and
Poor's also publishes various indexes or lists of companies representative of
sectors of the U.S. economy.
Statement of Additional Information
A document that supplements the disclosures made in the Prospectus.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Weighted-Average Maturity
The average maturity for the debt securities in a portfolio on a dollar-for-
dollar basis.
30 Stagecoach Money Market Fund Prospectus
<PAGE>
This page intentionally left blank
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
STAGECOACH FUNDS(R)
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 MONEY MARKET FUNDS:
- --------------------------------------------------------------------------------
o are not insured by the FDIC.
o are not obligations or deposits of Wells Fargo Bank, nor guaranteed by
Wells Fargo Bank.
o involve investment risk, including possible loss of principal.
o seek to maintain a stable net asset value of $1.00 per share, however,
there can be no assurance that a fund will meet this goal. Yields will vary
with market conditions.
- --------------------------------------------------------------------------------
[RECYCLE LOGO]
Printed on Recycled Paper
SC 228 P (8/98)
================================================================================
<PAGE>
August 1,1998
================================================================================
STAGECOACH FUNDS(R)
Stagecoach
Money Market Funds
Prospectus
Treasury Money Market Fund
Class E
Investment Advisor
and Administrator:
Wells Fargo Bank
Distributor and
Co-Administrator:
Stephens Inc.
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 the Fund's
goals match your own.
These securities have not been approved or disapproved by the U.S. Securities
and Exchange Commission, any state securities commission or any other regulatory
authority, nor have any of these authorities passed upon the accuracy or
adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.
Fund shares are NOT deposits or other obligations of, or issued, endorsed or
guaranteed by, Wells Fargo Bank, N.A. ("Wells Fargo Bank"), or any of its
affiliates. 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 A FUND INVOLVES CERTAIN RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL. WE CANNOT ASSURE YOU THAT A FUND WILL
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
================================================================================
<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 the 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:
- --------------------------------------------------------------------------------
[GRAPHIC] Investment Objective and Investment Policies
What is the Fund trying to achieve? How do we intend to
invest your money? Look for the arrow icon to find out.
- --------------------------------------------------------------------------------
[GRAPHIC] Permitted Investments
A summary of the Fund's key permitted investments and
practices.
- --------------------------------------------------------------------------------
[GRAPHIC] Important Risk Factors
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 this Fund.
- --------------------------------------------------------------------------------
[GRAPHIC] Additional Fund Facts
Provides additional information about the Fund.
- --------------------------------------------------------------------------------
Why is italicized print used throughout this 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 website
(http://www.sec.gov).
================================================================================
<PAGE>
<TABLE>
Table of Contents
<S> <C> <C>
Key Information 4
Summary of Expenses 5
- --------------------------------------------------------------------------------
The Fund
This section contains Treasury Money Market Fund 22
important information General Investment Risks 26
about the Fund.
- --------------------------------------------------------------------------------
Your Account Your Account 30
How to Buy Shares 32
Turn to this section for Selling Shares 33
information on how to Exchanges 35
open and maintain Additional Services and
your account, including Other Information 36
how to buy, sell and
exchange Fund shares.
- --------------------------------------------------------------------------------
Reference Organization and Management
of the Fund 40
Look here for details on the How to Read the Financial Highlights 43
organization of the Fund Glossary 44
and term definitions.
</TABLE>
<PAGE>
Key Information
- --------------------------------------------------------------------------------
Summary of the Stagecoach Treasury Money Market Fund
The Fund described in this Prospectus invests in money market instruments, seeks
to maintain a $1.00 per share net asset value in order to preserve principal,
and distributes dividends once a month. You should consider the Fund's
objective, investment practices, permitted investments and risks carefully
before investing in the Fund. The investment objective of this Fund is
fundamental and may not be changed without the approval of a majority of
shareholders.
Should you consider investing in this Fund? Yes, if:
o you are looking for a fund in which to invest short-term cash;
o you are looking to preserve principal; and
o you are looking for monthly income.
You should not invest in this Fund if:
o you are looking for FDIC insurance coverage or guaranteed rates of return;
o you are unwilling to accept that you may lose money on your investment;
o you are unwilling to accept the risk that we may be unable to maintain a
$1.00 per share net asset value and that your investment principal may
fluctuate; or
o you are seeking long-term total return.
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 Fund listed on the
cover of this Prospectus. The "Funds" also may refer to other mutual funds
offered by Stagecoach Funds, Inc.
Key Terms
The term "money market instruments" is used in this Prospectus to refer to a
variety of short-term debt securities, repurchase agreements and other
investment activities described in the Statement of Additional Information and
the Investment Practice/Risk table on page 13.
Dividends
We declare dividends, if any, daily and pay them monthly. You earn dividends
from the day your purchase of shares is effected and you continue to earn them
until the day before your shares are redeemed. Capital gains, if any, are
declared and paid at least annually.
4 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Money Market Fund Summary of Expenses
- --------------------------------------------------------------------------------
================================================================================
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.
<TABLE>
<CAPTION>
- -------------------------------------------------
Treasury
--------
CLASS E
- -------------------------------------------------
<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 imposed on
redemptions None
- -------------------------------------------------
Exchange fees None
</TABLE>
================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
================================================================================
Expenses shown "after waivers" reflect amounts paid by the Fund during the
prior fiscal period. In some cases, they have been restated to reflect expenses
and fee waivers expected to be in effect during the current fiscal year.
Expenses shown "before waivers" reflect contract amounts and amounts paid during
the prior fiscal period. Expense waivers and reimbursements are voluntary and
may be discontinued without prior notice.
<TABLE>
<CAPTION>
- -------------------------------------------------
Treasury
--------
CLASS E
- -------------------------------------------------
<S> <C>
Rule 12b-1 fee 0.00%
- -------------------------------------------------
Management fee
(after waivers) 0.12%
- -------------------------------------------------
Other expenses
(after waivers or reimbursements) 0.53%
=================================================
TOTAL FUND OPERATING EXPENSES
(after waivers or reimbursements) 0.65%
=================================================
Management fee
(before waivers) 0.25%
- -------------------------------------------------
Other expenses
(before waivers or reimbursements) 0.63%
- -------------------------------------------------
TOTAL FUND OPERATING EXPENSES
(before waivers or reimbursements) 0.88%
- -------------------------------------------------
</TABLE>
================================================================================
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.
================================================================================
<TABLE>
<CAPTION>
- ------------------------------------------------
You would pay the following expenses
on a $1,000 investment assuming a 5%
annual return and that you redeem
your shares at the end of each Treasury
period. ---------
CLASS E
- ------------------------------------------------
<S> <C>
1 YEAR $7
- ------------------------------------------------
3 YEARS $21
- ------------------------------------------------
5 YEARS $36
- ------------------------------------------------
10 YEARS $81
- ------------------------------------------------
</TABLE>
Stagecoach Treasury Money Market Fund Prospectus 5
<PAGE>
Treasury Money Market Fund
- --------------------------------------------------------------------------------
Advisor: Wells Fargo Bank
- --------------------------------------------------------------------------------
[GRAPHIC] Investment Objective
The Treasury Money Market Fund seeks to provide investors with
current income and stability of principal.
Investment Policies
We actively manage a portfolio composed of obligations issued or
guaranteed by the U.S. Treasury. We also invest in notes,
repurchase agreements and other instruments collateralized or
secured by Treasury obligations. We buy obligations with
remaining maturities of 397 days or less. We maintain an overall
dollar-weighted average maturity of 90 days or less.
- --------------------------------------------------------------------------------
[GRAPHIC] Permitted Investments
Under normal market conditions, we invest:
o in U.S. Treasury obligations;
o in repurchase agreements collateralized by U.S. Treasury
obligations; and
o in floating and variable rate instruments
As a temporary defensive measure, or to maintain liquidity, we
may invest in shares of other money market funds that have
similar investment objectives.
6 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
- --------------------------------------------------------------------------------
[GRAPHIC] Important Risk Factors
You should consider both the General Investment Risks listed on
page 26 and the specific risks listed below. They are both
important to your investment choice.
There is no guarantee that we will be able to maintain a $1.00
per share net asset value. Fluctuations in share value may cause
a loss or gain in principal. Generally, short-term funds do not
earn as high a level of income as funds that invest in
longer-term instruments. The U.S. Treasury does not directly or
indirectly insure or guarantee the performance of the Fund.
- --------------------------------------------------------------------------------
[GRAPHIC] Additional Fund Facts
Treasury obligations have historically involved little risk of
loss of principal if held to maturity. However, fluctuations in
market interest rates may cause the market value of Treasury
obligations in the Fund's portfolio to fluctuate.
For information on Fund fees and expenses, see "Summary of
Expenses" on page 5.
Stagecoach Treasury Money Market Fund Prospectus 7
<PAGE>
Treasury Money Market Fund
See "Historical Fund Information" on page 21.
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
============================================================================
FOR A SHARE OUTSTANDING
============================================================================
For the period ended: CLASS E SHARES -- COMMENCED
ON MARCH 24, 1997
----------------------------
March 31, March 31,
1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $1.00 $1.00
- ----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.05 0.00
Net realized and unrealized gain
(loss) on investments 0.00 0.00
- ----------------------------------------------------------------------------
Total from investment operations 0.05 0.00
- ----------------------------------------------------------------------------
Less Distributions:
Dividends from net
investment income (0.05) 0.00
Distributions from net
realized gain 0.00 0.00
- ----------------------------------------------------------------------------
Total from distributions: (0.05) 0.00
- ----------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00
- ----------------------------------------------------------------------------
Total return (not annualized) 4.99% 0.11%
- ----------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s) $715,554 $820,657
- ----------------------------------------------------------------------------
Ratios to average net assets (annualized):
Ratio of expenses to average
net assets 0.65% 0.65%
Ratio of net investment income
to average net assets 4.87% 4.86%
Ratio of expenses to average
net assets prior to waived fees
and reimbursed expenses 0.84% 0.88%
Ratio of net investment income to
average net assets prior to
waived fees and reimbursed
expenses 4.65% 4.63%
- ----------------------------------------------------------------------------
<CAPTION>
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
============================================================================
<S> <C>
CLASS E SHARE CALENDAR-YEAR RETURNS 1996
============================================================================
4.66%
These returns reflect fee waivers and reimbursements,
and are not a guarantee of future performance.
Performance shown since the inception of Class E
Shares.
- ----------------------------------------------------------------------------
</TABLE>
8 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
Understanding the risks involved in mutual fund investing will help you make an
informed decision that takes into account your tolerance and preferences. You
should carefully consider risks common to all mutual funds, including the
Stagecoach Funds. Chief among these risks are the following:
o Unlike bank deposits, such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
o We cannot guarantee we will meet our investment objectives. In particular,
we cannot guarantee that we will be able to maintain a $1.00 per share net
asset value.
o You cannot recover through insurance any loss due to investment practices,
nor can the Fund, the selling agents or investment advisors "make good" any
losses you might have.
o Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
o An investment in a single Fund, by itself, does not constitute a complete
investment plan.
o The Fund invests in debt instruments, such as notes and bonds, that are
subject to credit risk and interest rate risk. Credit risk is the
possibility that an issuer of a security will be unable to make interest
payments or repay principal. Changes in the financial strength of an issuer
or changes in the credit rating of a security may affect its value.
Interest rate risk is the possibility that interest rates may increase and
reduce the resale value of securities in the Fund's portfolio. Debt
instruments with longer maturities are generally more sensitive to interest
rate changes than those with shorter maturities. Interest rate risk does
not affect the interest paid by a debt instrument unless it is specifically
designed to pay an adjustable rate.
o The Fund's advisor may also use certain derivative instruments such as
options or futures contracts. The term "derivatives" covers a wide number
of investments but in general it refers to any financial 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.
The following types of floating-rate derivative securities are NOT permitted
investments in the Fund:
o Capped floaters on which interest is not paid when market rates move above
a certain level;
Stagecoach Treasury Money Market Fund Prospectus 9
<PAGE>
- --------------------------------------------------------------------------------
o Leveraged floaters whose interest rates reset based on a formula that
magnifies changes in market interest rates;
o Range floaters on which interest is not paid if market interest rates move
outside a specified range;
o Dual index floaters whose interest rate reset provisions are tied to more
than one index; and
o Inverse floaters which have interest rates that reset in an opposite
direction of their index.
Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for the Fund remains within the
parameters of its objective.
What follows is a general list of the types of risks (some of which are
described above) that may apply the given Fund 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
other 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.
Diplomatic Risk-- The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value or
liquidity of investments in either country.
Information Risk-- The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Interest Rate Risk-- The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer dates to maturity.
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 its fair price.
10 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 sections 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.
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.
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
information about the investment practices and risks particular to the
Fund.
- --------------------------------------------------------------------------------
Stagecoach Treasury Money Market Fund Prospectus 11
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
=========================================================================================
INVESTMENT PRACTICE: RISK:
=========================================================================================
<S> <C> <C>
Floating and Variable Rate Debt
Instruments with interest rates that are adjusted Interest Rate and X
either on a schedule or when an index or benchmark Credit Risk
changes.
- -----------------------------------------------------------------------------------------
Repurchase Agreements
A transaction in which the seller of a security Credit and X
agrees to buy back a security at an agreed upon time Counter-Party Risk
and price, usually with interest.
- -----------------------------------------------------------------------------------------
Other Mutual Funds
The temporary investment in shares of another money Market Risk X
market fund. A pro rata portion of the other fund's
expenses, in addition to the expenses paid by the
Fund, will be borne by Fund shareholders.
- -----------------------------------------------------------------------------------------
Foreign Obligations
Dollar-denominated debt obligations of foreign Information, Currency, X
branches of U.S. banks or U.S. branches of foreign Liquidity, Political,
banks. Regulatory, and
Diplomatic Risk
- -----------------------------------------------------------------------------------------
Loans of Portfolio Securities
The practice of loaning securities to brokers, Credit, Leverage and X
dealers, and financial institutions to increase Counter-Party Risk
return on those securities. Loans may be made in
accordance with existing investment policies.
- -----------------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow an equivalent of 20% Leverage Risk X
of assets from banks for temporary purposes
to meet shareholder redemptions.
- -----------------------------------------------------------------------------------------
Illiquid Securities
A security that cannot be readily sold, or cannot be Liquidity Risk X
readily sold without negatively affecting its fair
price. Illiquid securities are limited to 10% of
total assets.
- -----------------------------------------------------------------------------------------
</TABLE>
12 Stagecoach Treasury Money Market Fund Prospectus
<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:
o By opening an account directly with the Fund (simply complete and return a
Stagecoach Funds application with proper payment);
o Through a brokerage account with an approved selling agent; or
o Through certain retirement, benefits and pension plans, or through certain
packaged investment products (please see the providers of the plan for
instructions).
Minimum Investments:
o $1,000 per Fund minimum initial investment; or
o $100 per Fund minimum initial investment if you use the AutoSaver option.
o $100 per Fund for all investments after your first.
o We may waive the minimum for Funds you purchase through certain retirement,
benefit and pension plans, through certain packaged investment products, as
"settlement accounts" for certain brokerage accounts or for certain classes
of shareholders as permitted by the Securities and Exchange Commission.
Check the specific disclosure statements and applications for the program
through which you intend to invest.
Stagecoach Treasury Money Market Fund Prospectus 13
<PAGE>
- --------------------------------------------------------------------------------
Important Information:
o Read this prospectus carefully. Discuss any questions you have with your
Selling Agent. You may also ask for 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.
o We process requests to buy shares each business day. Requests we receive in
proper form for the Treasury Money Market Fund before 12:00 Noon (Pacific
Time) generally are processed at 12:00 Noon on the same day.
o Requests we receive in proper form for the Fund before 1:00 PM (Pacific
Time) in connection with certain automated investment programs are
processed at 1:00 PM on the same day.
o Requests we receive after the above-specified times are processed the next
business day at the applicable Net Asset Value (NAV).
o 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.
o We determine the NAV of the Fund's shares by subtracting the Fund
liabilities from its total assets, and then dividing the result by the
total number of outstanding shares of the Fund. See the Statement of
Additional Information for further information.
o You may have to complete additional paperwork for certain types of account
registrations, such as a Trust. Please speak to Investor Services (1-800-
222-8222) if you are investing directly with Stagecoach Funds, or speak to
your selling agent if you are buying shares through a brokerage account.
o Once an account has been opened, you can add additional Funds under the
same registration without requiring a new application.
o On any day the trading markets for both U.S. government securities and
money market instruments close early, the Fund will close early.
o We reserve the right to cancel any purchase order or delay redemption if
your check does not clear.
14 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Your Account
- --------------------------------------------------------------------------------
How to Buy Shares
The following section explains how you can buy shares directly from Stagecoach
Funds. For Funds held through brokerage and other types of accounts, please
consult your Selling Agent.
================================================================================
BY MAIL
================================================================================
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
- --------------------------------------------------------------------------------
Complete a Stagecoach Funds application. Be sure to indicate the Fund name and
the share class into which you intend to invest.
- --------------------------------------------------------------------------------
Enclose a check for at least $1,000 made out in the full name and share class of
the Fund. For example, "Stagecoach Treasury Money Market Fund, Class E".
- --------------------------------------------------------------------------------
You may start your account with $100 if you elect the AutoSaver option on the
application.
- --------------------------------------------------------------------------------
Mail to:
Stagecoach Funds
PO Box 7066
San Francisco, CA
94120-9201
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
- --------------------------------------------------------------------------------
Make a check payable to the full name and share class of your Fund for at least
$100. Be sure to write your account number on the check as well.
- --------------------------------------------------------------------------------
Enclose the payment stub/card from your statement if available.
- --------------------------------------------------------------------------------
Mail to:
Stagecoach Funds
PO Box 7066
San Francisco, CA
94120-9201
- --------------------------------------------------------------------------------
================================================================================
BY WIRE
================================================================================
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
- --------------------------------------------------------------------------------
If you do not currently have an account, complete a Stagecoach Funds
application. You must wire at least $1,000. Be sure to indicate the Fund name
and the share class into which you intend to invest.
- --------------------------------------------------------------------------------
Mail the completed application.
- --------------------------------------------------------------------------------
You may also fax the completed application (with original to follow).
- --------------------------------------------------------------------------------
Mail to:
Stagecoach Funds
PO Box 7066
San Francisco, CA
94120-9201
Fax to: 1-415-546-0280
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
- --------------------------------------------------------------------------------
Instruct your wiring bank to transmit at least $100 according to the
instructions given to the right. Be sure to have the wiring bank include your
current account number and the name your account is registered in.
- --------------------------------------------------------------------------------
Wire to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number
121000248
Wire Purchase Account Number:
4068-000587
Attention:
Stagecoach Funds (Name of Fund and Share Class)
Account Name:
(Registration Name Indicated on Application)
- --------------------------------------------------------------------------------
Stagecoach Treasury Money Market Fund Prospectus 15
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
BY PHONE
================================================================================
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
- --------------------------------------------------------------------------------
You can only make your first purchase of a Fund by phone if you already have an
existing Stagecoach Account.
- --------------------------------------------------------------------------------
Call Investor Services and instruct the representative to either:
o transfer at least $1,000 from a linked settlement account, or
o exchange at least $1,000 worth of shares from an existing Stagecoach Fund.
Please see "Exchanges" for special rules.
- --------------------------------------------------------------------------------
Call:
1-800-222-8222
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
- --------------------------------------------------------------------------------
Call Investor Services and instruct the representative to either:
o transfer at least $100 from a linked settlement account, or
o exchange at least $100 worth of shares from another Stagecoach Fund.
- --------------------------------------------------------------------------------
Call:
1-800-222-8222
- --------------------------------------------------------------------------------
Selling Shares:
The following section explains how you can sell shares held directly through an
account with Stagecoach Funds. For Funds held through brokerage and other types
of accounts, please consult your Selling Agent.
================================================================================
BY MAIL
================================================================================
Write a letter stating your account registration, your account number, the Fund
you wish to redeem and the dollar amount ($100 or more) of the redemption you
wish to receive (or write "Full Redemption").
- --------------------------------------------------------------------------------
Make sure all the account owners sign the request.
- --------------------------------------------------------------------------------
You may request that redemption proceeds be sent to you by check, by ACH
transfer into a bank account, or by wire ($5,000 minimum). Please call Investor
Services regarding requirements for linking bank accounts or for wiring funds.
We reserve the right to charge a fee for wiring funds although it is not
currently our practice to do so.
- --------------------------------------------------------------------------------
Signature Guarantees are required for mailed redemption requests over $5,000.
You can get a signature guarantee at financial institutions such as a bank or
brokerage house. We do not accept notarized signatures.
- --------------------------------------------------------------------------------
Mail to:
Stagecoach Funds
PO Box 7066
San Francisco, CA
94120-9201
- --------------------------------------------------------------------------------
16 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Your Account
- --------------------------------------------------------------------------------
================================================================================
BY PHONE
================================================================================
Call Investor Services to request a redemption of at least $100. Be prepared to
provide your account number and Tax Identification Number.
- --------------------------------------------------------------------------------
Unless you have instructed us otherwise, only one account owner needs to call in
redemption requests.
- --------------------------------------------------------------------------------
You may request that redemption proceeds be sent to you by check, by transfer
into an ACH-linked bank account, or by wire ($5,000 minimum). Please call
Investor Services regarding requirements for linking bank accounts or for wiring
funds. We reserve the right to charge a fee for wiring funds although it is not
currently our practice to do so.
- --------------------------------------------------------------------------------
Telephone privileges are automatically made available to you unless you
specifically decline them on your application or subsequently in writing.
- --------------------------------------------------------------------------------
Phone privileges allow us to accept transaction instructions by anyone
representing themselves as the shareholder and who provides reasonable
confirmation of their identity, such as providing the Taxpayer Identification
Number on the account. We will not be liable for any losses incurred if we
follow telephone instructions we reasonably believe to be genuine.
- --------------------------------------------------------------------------------
Call:
1-800-222-8222
- --------------------------------------------------------------------------------
================================================================================
GENERAL NOTES FOR SELLING SHARES
================================================================================
We process requests to sell shares each business day. Requests we receive in
proper form for the Treasury Money Market Funds before 12:00 Noon (Pacific Time)
generally are processed at 12:00 Noon on the same day.
- --------------------------------------------------------------------------------
Requests we receive in proper form for the Fund before 1:00 PM (Pacific Time)
in connection with certain automated investment programs are processed at 1:00
PM on the same day.
- --------------------------------------------------------------------------------
Requests we receive after the above-specified times are processed the next
business day at the applicable NAV.
- --------------------------------------------------------------------------------
If you purchased shares through a packaged investment product or retirement
plan, read the directions for selling shares provided by the product or plan.
There may be special requirements that supersede the directions in this
Prospectus.
- --------------------------------------------------------------------------------
We reserve the right to delay payment of a redemption for up to ten days so that
we may be reasonably certain that investments made by check have been collected.
Payments of redemptions also may be delayed under extraordinary circumstances or
as permitted by the Securities and Exchange Commission 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.
- --------------------------------------------------------------------------------
Stagecoach Treasury Money Market Fund Prospectus 17
<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:
o You should carefully read the Prospectus for the Fund into which you wish
to exchange.
o Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.
o If you exchange between a money market Fund and a Fund with a sales load,
you will buy shares at the Public Offering Price (POP) of the new Fund and
a sales load may be assessed.
o 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.
o Any exchange between Funds you already own must meet the minimum redemption
and subsequent purchase amounts for the Funds involved.
o Exchanges from any share class to a money market fund can only be
re-exchanged for the original share class.
o 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.
o You may exchange shares of the Fund for class A, B or C shares of a
non-money market fund.
18 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
Automatic Programs:
These programs help you conveniently purchase or redeem shares each month:
o AutoSaver Plan - you need only specify an amount of at least $100 and a day
of the month. We will automatically transfer that amount from your linked
bank account each month to purchase additional shares. We will transfer the
amount on or about the day you specify, or on or about the 20th of each
month if you have not specified a day. Please call Investor Services at 1-
800-222-8222 if you wish to change or add linked accounts.
o Systematic Withdrawal Program - Stagecoach will automatically redeem enough
shares to equal a specified dollar amount of at least $100 on or about the
fifth business day prior to the end of each month and either send you the
proceeds by check or transfer it into your linked bank account. In order to
set up a Systematic Withdrawal Program, you :
o must have a Fund account valued at $10,000 or more;
o must have distributions reinvested; and
o may not simultaneously participate in an AutoSaver Plan.
It generally takes about ten days to set up either plan once we have received
your instructions. It generally takes about five days to change or cancel
participation in either plan. We automatically cancel your program if the linked
account you specified is closed.
Dividend and Capital Gain Distribution Options
You may choose to do any of the following:
o Automatic Reinvestment Option - Lets you 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.
o Automatic Clearing House Option - Deposits your dividends and capital gains
into any bank account you link to your Fund account if it is part of the
ACH system. If your specified bank account is closed, we will reinvest your
distributions.
o 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.
Stagecoach Treasury Money Market Fund Prospectus 19
<PAGE>
- --------------------------------------------------------------------------------
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 Fund 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.
We will pass on to you any net capital gains earned by the Fund as a capital
gain distribution. In general, these distributions will be taxable to you as
long-term capital gains and are taxable when paid. 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 as to the status of your Fund
distributions.
Your redemptions, including exchanges, 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. In certain circumstances, U.S. residents
will be subject to back-up withholding.
20 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
Historical Fund Information
Treasury Money Market Fund--Prior to August 1, 1990, the Treasury Money Market
Fund was known as the Short-Term Government Fund, which commenced operations on
October 1, 1985, and invested in obligations issued or guaranteed by agencies
and instrumentalities of the U.S. Government. The Fund operated as a portfolio
of Pacific American Funds through October 1, 1994, when it was reorganized as
the Pacific American U.S. Treasury Portfolio, a portfolio of Pacifica Funds
Trust. In July 1995, the Fund was renamed the Pacifica Treasury Money Market
Fund, and on September 6, 1996, the Fund was reorganized the Treasury Money
Market Fund, as a series of Stagecoach Funds. Prior to April 1, 1996, First
Interstate Capital Management, Inc. ("FICM") served as the Fund's adviser. In
connection with the merger of First Interstate Bancorp into Wells Fargo &
Company on April 1, 1996, FICM was renamed Wells Fargo Investment Management,
Inc.
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 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 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 Funds 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
Stagecoach Treasury Money Market Fund Prospectus 21
<PAGE>
- --------------------------------------------------------------------------------
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.
Voting Rights - All shares of the Fund have equal voting rights and are voted
in the aggregate, rather than by series or class, unless the matter affects only
one series or class. A shareholder of record is entitled to one vote for each
share owned and fractional votes for each fractional share owned. For a detailed
description of voting rights, see the "Capital Stock" section of the Statement
of Additional Information.
22 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Organization and Management of the Funds
- --------------------------------------------------------------------------------
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 Funds was organized on September 9,
1991, as a Maryland Corporation.
The Board of Directors of Stagecoach Funds supervises the Fund's activities and
approves the selection of various companies hired to manage the Funds'
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.
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, amending fundamental investment strategies or policies.
================================================================================
SHAREHOLDERS
================================================================================
================================================================================
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
================================================================================
Advise current and prospective shareholders on their Fund investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=======================================================================================================
TRANSFER AND
DISTRIBUTOR & ADMINISTRATOR DIVIDEND DISBURSING SHAREHOLDER
CO-ADMINISTRATOR AGENT SERVICING AGENTS
=======================================================================================================
<S> <C> <C> <C>
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, and business activities shares and supervises to customers
manages the Fund's the paying of dividends
business activities
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================================
INVESTMENT ADVISOR CUSTODIAN
=======================================================================================================
<S> <C>
Wells Fargo Bank, 525 Market St., San Francisco, Wells Fargo Bank, 525 Market St., San Francisco,
CA CA
Manages the Fund's investment activities Provides safekeeping for the Fund's assets
- -------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
BOARD OF DIRECTORS
================================================================================
Supervises the Fund's activities
- --------------------------------------------------------------------------------
Stagecoach Treasury Money Market Fund Prospectus 23
<PAGE>
- --------------------------------------------------------------------------------
In the following sections, the percentages shown are the percentages of the
average daily net assets of the Fund paid on an annual basis for the services
described. The Statement of Additional Information for the Fund 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 June 30, 1998, Wells
Fargo Bank and its affiliates managed over $? billion in assets. The Fund paid
Wells Fargo Bank a fee of .17% for advisory services (after fee waivers) for the
fiscal period ended March 31, 1998.
<TABLE>
- --------------------------------------------------------------------------------
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Treasury Money Market Fund .17%
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</TABLE>
The Administrator
Wells Fargo Bank is the administrator of the Fund. Wells Fargo Bank is paid
.03% of the Fund's assets for these services.
The Distributor and Co-Administrator
Stephens Inc. is the Fund's distributor and co-administrator. Stephens Inc.
receives .04% of the Fund's assets for its role as co-administrator. Stephens
Inc. does not receive any distribution fees for the Class E Shares.
24 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Organization and Management of the Funds
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Shareholder Servicing Plan
We have Shareholder Servicing Plans for each Fund class. 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 we pay .30% of Class E Share assets.
Stagecoach Treasury Money Market Fund Prospectus 25
<PAGE>
How to Read the Financial Highlights
- --------------------------------------------------------------------------------
After the description of the Fund, there are charts showing important financial
information about the Fund. The charts are called "Financial Highlights" and are
designed to help you understand the past performance of the Fund. The financial
statements from which these Financial Highlights were derived were audited by
KPMG Peat Marwick LLP, except as indicated. The financial statements are
included in the Fund's most recent Annual or Semi-Annual Report and are
available free of charge by calling 1-800-222-8222. Other auditors audited
statements for the Treasury Money Market Fund for periods prior to October 1,
1995.
Here is an explanation of some terms that will help you read these charts.
Net Asset Value (NAV)-- The net value of one share of a class of the Fund. See
the Glossary for a fuller definition.
Net Investment Income-- Net investment income is calculated by subtracting the
aggregate Fund expenses from the Fund's investment income. The number in the
financial highlights is the net investment income of a class divided by the
number of outstanding shares of that class. The amount distributed to
shareholders is listed under the heading "Less Distributions--Dividends from Net
Investment Income."
Net Realized and Unrealized Gain (Loss) on Investments-- We continually buy and
sell investments. The profit on an investment sold for more than its purchase
price is a realized capital gain while a loss on an investment sold for less
than its purchase price is a realized capital loss. An unrealized gain or loss
occurs when an investment gains or loses value but is not sold. The number in
this category is the total gains or losses of a class divided by the number of
outstanding shares for that class. The amount of capital gain or loss per share
that was paid to shareholders is listed under the heading "Less
Distributions--Distributions From Net Realized Gains."
Net Assets-- The value of the investments in the Fund's portfolio (after
accounting for expenses) that are attributable to a particular class of the
Fund.
Ratio of Expenses to Average Net Assets-- This ratio reflects the amount paid by
the Fund to cover the costs of its daily operations, and includes advisory,
administration and other operating expenses. It is expressed as a percentage of
the average daily net assets of a class.
Ratio of Net Investment Income (Loss) to Average Net Assets-- This ratio is the
result of dividing net investment income (or loss) by average net assets.
26 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Glossary
- --------------------------------------------------------------------------------
ACH
Refers to the "Automated Clearing House" system maintained by the Federal
Reserve System which allows banks to process checks, transfer funds and perform
other tasks.
Annual Report
A document that provides certain financial and other important information for
the most recent reporting period and the Fund's portfolio of investments.
Business Day
Any day the Fund is open. The Fund is generally open Monday through Friday
and is closed weekends and federal bank holidays.
Commercial Paper
Debt instruments issued by banks, corporations and other issuers to finance
short-term credit needs. Commercial Paper typically is of high credit quality
and offers below market interest rates.
Current Income
Earnings in the form of dividends or interest as opposed to capital growth.
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 the Fund on its shares.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S. dollars.
Duration
A measure of a security's or portfolio's sensitivity to changes in interest
rates. Duration is usually expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter durations.
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.
Stagecoach Treasury Money Market Fund Prospectus 27
<PAGE>
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Investment-Grade Debt
A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment-grade bonds may have some speculative characteristics.
Liquidity
The ability to readily sell a security at its fair price.
Moody's
One of the largest nationally recognized ratings organizations.
Nationally Recognized Ratings Organization (NRRO)
A company that examines the ability of a bond issuer to meet its obligations and
which rates the bonds accordingly.
Net Asset Value (NAV)
The value of a single fund share. It is determined by adding together all of the
Fund's assets, subtracting expenses and other liabilities, then dividing by the
total number of shares. The NAV per share of the Treasury Money Market Fund is
determined each business day at 12:00 noon and 1:00 PM (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 can 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 Agreement
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.
28 Stagecoach Treasury Money Market Fund Prospectus
<PAGE>
Glossary
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Selling Agent
A person who has an agreement with the Fund's distributor that allows them to
sell Fund shares.
Shareholder Servicing Agent
An entity appointed by the Fund to maintain shareholder accounts and record,
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.
S&P
One of the largest nationally recognized ratings organizations. Standard and
Poor's also publishes various indexes or lists of companies representative of
sectors of the U.S. economy.
Statement of Additional Information
A document that supplements the disclosures made in the Prospectus.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Weighted-Average Maturity
The average maturity for the debt securities in a portfolio on a dollar-for-
dollar basis.
Stagecoach Treasury Money Market Fund Prospectus 29
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<PAGE>
================================================================================
STAGECOACH FUNDS(R)
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
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STAGECOACH MONEY MARKET FUNDS:
- --------------------------------------------------------------------------------
o are not insured by the FDIC.
o are not obligations or deposits of Wells Fargo Bank, nor guaranteed by
Wells Fargo Bank.
o involve investment risk, including possible loss of principal.
o seek to maintain a stable net asset value of $1.00 per share, however,
there can be no assurance that a fund will meet this goal. Yields will vary
with market conditions.
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[RECYCLE LOGO]
Printed on Recycled Paper
SC 400 P (8/98)
================================================================================
<PAGE>
STAGECOACH FUNDS, INC.
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
Dated August 1, 1998
MONEY MARKET SHARES FUND
Class S Shares
Stagecoach Funds, Inc. (the "Company") is an open-end, management
investment company. This Statement of Additional Information ("SAI") contains
information about one Fund in the Stagecoach Family of Funds -- the Money Market
Fund (the "Fund"). This SAI relates to the Class S shares of the Fund.
This SAI is not a Prospectus and should be read in conjunction with the
Fund's Prospectus, dated August 1, 1998. All terms used in this SAI that are
defined in the Prospectus have the meanings assigned in the Prospectus. A copy
of the Prospectus may be obtained without charge by calling 1-800-222-8222 or by
writing to Stagecoach Funds, Inc. P.O. Box 7066, San Francisco, CA 94120-7066.
<PAGE>
TABLE OF CONTENTS
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Page
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Historical Fund Information............................................. 1
Investment Restrictions................................................. 1
Additional Permitted Investment Activities.............................. 3
Risk Factors............................................................ 8
Management.............................................................. 10
Performance Calculations................................................ 17
Determination of Net Asset Value........................................ 23
Additional Purchase and Redemption Information.......................... 24
Portfolio Transactions.................................................. 25
Fund Expenses........................................................... 26
Federal Income Taxes.................................................... 27
Capital Stock........................................................... 31
Other................................................................... 33
Independent Auditors.................................................... 33
Financial Information................................................... 33
Appendix................................................................ A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
The Money Market Fund was originally organized as a fund of the Company.
The Fund commenced operations on July 1, 1992. The Class S shares of the Fund
commenced operations on May 25, 1995.
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 (the "1940 Act") of the outstanding voting securities of the Fund.
The Money Market Fund may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund's investments in that industry would be 25% or
more of the current value of the Fund's total assets, provided that there is no
limitation with respect to investments in (i) the obligations of the United
States Government, its agencies or instrumentalities, and (ii) the obligations
of domestic banks (for the purpose of this restriction, domestic bank
obligations do not include obligations of U.S. branches of foreign banks or
obligations of foreign branches of U.S. banks);
(2) purchase or sell real estate or real estate limited partnerships
(other than money market securities or other securities secured by real estate
or interests therein or securities issued by companies that invest in real
estate or interests therein), commodities or commodity contracts (including
futures contracts);
(3) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions) or make short sales of securities;
(4) underwrite securities of other issuers, except to the extent that the
purchase of municipal securities or other permitted investments directly from
the issuer thereof or from an underwriter for an issuer and the later
disposition of such securities in accordance with the Fund's investment program
may be deemed to be an underwriting;
(5) make investments for the purpose of exercising control or management;
(6) issue senior securities, except that the Fund may borrow from banks up
to 10% of the current value of its net assets for temporary purposes only in
order to meet redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of its net assets
1
<PAGE>
(but investments may not be purchased while any such outstanding borrowings
exceed 5% of its net assets);
(7) write, purchase or sell puts, calls, options, warrants or any
combination thereof, except that the Fund may purchase securities with put
rights in order to maintain liquidity; nor
In addition, the Fund may not make loans of portfolio securities or other
assets, except that loans for purposes of this restriction will not include the
purchase of fixed time deposits, repurchase agreements, commercial paper and
other short-term obligations, and other types of debt instruments commonly sold
in public or private offerings.
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 approval of such Fund's shareholders.
(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, the 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 the Fund's net assets with respect to any
one investment company, and (iii) 10% of the Fund's net assets in the 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.
(2) The Fund may not invest or hold more than 10% of its 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 branches of U.S. Banks and U.S. Branches of foreign banks that are
denominated in and pay interest in U.S. dollars.
(4) The Fund may lend securities from its portfolios 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.
2
<PAGE>
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Set forth below are descriptions of certain investments and additional
investment policies for the Fund.
Bank Obligations
----------------
The Fund may invest in bank obligations, including certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, the Fund may
be subject to additional investment risks that are different in some respects
from those incurred by the Fund which invests only in debt obligations of U.S.
domestic issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on
income (including interest, distributions and disposition proceeds), the
possible establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on these securities and the possible seizure or nationalization of
foreign deposits. In addition, foreign branches of U.S. banks and foreign banks
may be subject to less stringent reserve requirements and to different
accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic branches of U.S. banks.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Fund will not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the Federal Deposit Insurance Corporation ("FDIC"). Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft drawn on
it by a customer. These instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
Commercial Paper
----------------
The Fund may invest in commercial paper. Commercial paper includes short-
term unsecured promissory notes, variable rate demand notes and variable rate
master demand notes issued by domestic and foreign bank holding companies,
corporations and financial institutions as well as similar taxable instruments
issued by government agencies and instrumentalities.
Floating- and Variable-Rate Obligations
---------------------------------------
The Fund may purchase floating- and variable-rate obligations. The Fund
may purchase floating- and variable-rate demand notes and bonds. These
obligations may have stated
3
<PAGE>
maturities in excess of thirteen months, but they permit the holder to demand
payment of principal at any time, or at specified intervals not exceeding
thirteen months. Variable-rate demand notes include master demand notes that are
obligations that permit the Fund to invest fluctuating amounts, which may change
daily without penalty, pursuant to direct arrangements between the Fund, as
lender, and the borrower. The interest rates on these notes may fluctuate from
time to time. The issuer of such obligations ordinarily has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders of such obligations. The interest rate on
a floating-rate demand obligation is based on a known lending rate, such as a
bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable-rate demand obligation is adjusted
automatically at specified intervals. Frequently, such obligations are secured
by letters of credit or other credit support arrangements provided by banks.
Because these obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be traded,
and there generally is no established secondary market for these obligations,
although they are redeemable at face value. Accordingly, where these obligations
are not secured by letters of credit or other credit support arrangements, the
Fund's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated by
credit rating agencies and the Fund may invest in obligations which are not so
rated only if Wells Fargo Bank determines that at the time of investment the
obligations are of comparable quality to the other obligations in which such
Fund may invest. Wells Fargo Bank, on behalf of the Fund, considers on an
ongoing basis the creditworthiness of the issuers of the floating- and variable-
rate demand obligations in such Fund's portfolio. The Fund will not invest more
than 10% of the value of its total net assets in floating- or variable-rate
demand obligations whose demand feature is not exercisable within seven days.
Such obligations may be treated as liquid, provided that an active secondary
market exists.
Foreign Obligations
-------------------
The Fund may invest up to 25% of its assets in high-quality, short-term
(thirteen months or less) debt obligations of foreign branches of U.S. banks or
U.S. branches of foreign banks that are denominated in and pay interest in U.S.
dollars. Investments in foreign obligations involve certain considerations that
are not typically associated with investing in domestic obligations. There may
be less publicly available information about a foreign issuer than about a
domestic issuer. Foreign issuers also are not subject to the same uniform
accounting, auditing and financial reporting standards or governmental
supervision as domestic issuers. In addition, with respect to certain foreign
countries, taxes may be withheld at the source under foreign income tax laws and
there is a possibility of expropriation or confiscatory taxation, political or
social instability, or diplomatic developments that could affect adversely
investments in, the liquidity of, and the ability to enforce contractual
obligations with respect to, securities of issuers located in those
countries.
4
<PAGE>
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.
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.
Illiquid Securities
-------------------
The Fund may invest in securities not registered under the Securities Act
of 1933 (the "1933 Act") and other securities subject to legal or other
restrictions on resale. Because such securities may be less liquid than other
investments, they may be difficult to sell promptly at an acceptable price.
Delay or difficulty in selling securities may result in a loss or be costly to
the Fund. The Fund may hold up to 10% of its assets in net illiquid securities.
Letters of Credit
-----------------
Certain of the debt obligations (including municipal securities,
certificates of participation, commercial paper and other short-term
obligations) which the Fund may purchase may be backed by an unconditional and
irrevocable letter of credit of a bank, savings and loan association or
insurance company which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Only banks, savings and loan
associations and insurance companies which, in the opinion of Wells Fargo Bank,
are of comparable quality to issuers of other permitted investments of the Fund
may be used for letter of credit-backed investments.
Loans of Portfolio Securities
-----------------------------
The Fund may lend its portfolio securities to brokers, dealers and
financial institutions, provided: (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or letters of credit
maintained on a daily marked-to-market basis in an amount at least equal to the
current market value of the securities loaned; (2) the Fund may at any time call
the loan and obtain the return of the securities loaned within five business
days; (3) the Fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not at
any time exceed one third of the total assets of the Fund.
5
<PAGE>
The Fund will earn income for lending its securities because cash
collateral pursuant to such loans will be invested in short-term money market
instruments. In connection with lending securities, the Fund may pay reasonable
finders, administrative and custodial fees. The Fund will not enter into any
security lending arrangement having a duration longer than one year. Loans of
securities involve a risk that the borrower may fail to return the securities or
may fail to provide additional collateral. In either case, the Fund could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. When the Fund lends its securities,
it continues to receive interest or dividends on the securities loaned and may
simultaneously earn interest on the collateral received from the borrower or
from the investment of cash collateral in readily marketable, high-quality,
short-term obligations. Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by the Fund if a material
event affecting the investment is to occur. The Fund may pay a portion of the
interest and fees earned from securities lending to a borrower or a placing
broker. Borrowers and placing brokers may not be affiliated, directly or
indirectly, with Wells Fargo Bank, Stephens Inc. or any of their
affiliates.
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, the 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 the Fund's net assets with respect to any one
investment company and (iii) 10% of the 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.
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 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with
primary
6
<PAGE>
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 and Downgraded Investments
----------------------------------
The Fund may purchase instruments that are not rated if, in the opinion of
Wells Fargo Bank the investment advisor, such obligations are of comparable
quality to other rated investments that are permitted to be purchased by the
Fund. The Fund may purchase unrated instruments only if they are purchased in
accordance with the Fund's procedures adopted by Company's Board of Directors in
accordance with Rule 2a-7 under the 1940 Act. After purchase by the Fund, a
security may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. In the event that a portfolio security
ceases to be an "Eligible Security" or no longer "presents minimal credit
risks," immediate sale of such security is not required, provided that the Board
of Directors has determined that disposal of the portfolio security would not be
in the best interests of the Fund. To the extent the ratings given by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P")
may change as a result of changes in such organizations or their rating systems,
the Fund will attempt to use comparable ratings as standards for investments in
accordance with the investment policies. The ratings of Moody's and S&P are more
fully described in the Appendix.
U.S. Government and U.S. Treasury Obligations
---------------------------------------------
The Fund may invest in obligations of agencies and instrumentalities of the
U.S. Government ("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.
The Fund may attempt to increase yields by trading to take advantage of
short-term market variations. This policy could result in high portfolio
turnover, which should not adversely affect the Fund since it does not
ordinarily pay brokerage commissions on the purchase of short-term debt
obligations.
7
<PAGE>
Nationally Recognized Statistical Ratings Organizations ("NRSROs")
------------------------------------------------------------------
The ratings of Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, Duff & Phelps Credit Rating Co., Fitch Investors Service, Inc., Thomson
Bank Watch and IBCA Inc. represent their opinions as to the quality of debt
securities. It should be emphasized, however, that ratings are general and not
absolute standards of quality, and debt securities with the same maturity,
interest rate and rating may have different yields while debt securities of the
same maturity and interest rate with different ratings may have the same yield.
Subsequent to purchase by the Fund, an issue of debt securities may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The advisor will consider such an event in determining
whether the Fund involved should continue to hold the obligation.
The payment of principal and interest on debt securities purchased by the
Fund depends upon the ability of the issuers to meet their obligations. An
issuer's obligations under its debt securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be
enacted by federal or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or, in the case of governmental entities, upon the ability
of such entities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest and principal of its debt securities may
be materially adversely affected by litigation or other conditions. Further, it
should also be noted with respect to all municipal obligations issued after
August 15, 1986 (August 31, 1986 in the case of certain bonds), the issuer must
comply with certain rules formerly applicable only to industrial development
bonds which, if the issuer fails to observe them, could cause interest on the
municipal obligations to become taxable retroactive to the date of issue.
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 or guaranteed against loss
of principal. Therefore, you should be willing to accept some risk with money
you invest in the Fund. Although the Fund seeks to maintain a stable net asset
value of $1.00 per share, there is no assurance that it will be able to do so.
The Fund may not achieve as high a level of current income as other mutual funds
that do not limit their investment to the high credit quality instruments in
which the Fund invests. As with all mutual funds, there can be no assurance that
the Fund will achieve its investment objective.
The Fund, under the 1940 Act, must comply with certain investment criteria
designed to provide liquidity, reduce risk, and allow the Fund to maintain a
stable net asset value of $1.00 per share. The Fund's dollar-weighted average
portfolio maturity must not exceed 90 days. Any security that the Fund
purchases must have a remaining maturity of not more than 397 days (13 months).
In addition, any security that the Fund purchases must present minimal credit
risks and be of "high quality." "High quality" means to be rated in the top two
rating categories and "highest quality" means to be rated only in the top rating
category, by the requisite NRSROs or,
8
<PAGE>
if unrated, determined to be of comparable quality to such rated securities by
Wells Fargo Bank, as the Fund's investment advisor, under guidelines adopted by
the Board of Directors of the Company.
The Fund seeks to reduce risk by investing its assets in securities of
various issuers. As such, the Fund is considered to be diversified for purposes
of the 1940 Act. In addition, the Fund emphasizes safety of principal and high
credit quality. In particular, the internal investment policies of the
investment advisor prohibit the purchase of many types of floating-rate
derivative securities that are considered potentially volatile. The following
types of derivative securities ARE NOT permitted investments for the Fund:
. capped floaters (on which interest is not paid when market rates move
above a certain level);
. leveraged floaters (whose interest rate reset provisions are based on
a formula that magnifies changes in interest rates);
. range floaters (which do not pay any interest if market interest rates
move outside of a specified range);
. dual index floaters (whose interest rate reset provisions are tied to
more than one index so that a change in the relationship between these
indices may result in the value of the instrument falling below face
value); and
. inverse floaters (which reset in the opposite direction of their
index).
Additionally, the Fund may not invest in securities whose interest rate
reset provisions are tied to an index that materially lags short-term interest
rates, such as Cost of Funds Index floaters. The Fund may invest only in
variable or floating-rate securities that bear interest at a rate that resets
quarterly or more frequently and that resets based on changes in standard money
market rate indices such as U.S. Treasury bills, London Interbank Offered Rate
or LIBOR, the prime rate, published commercial paper rates, federal funds rates,
Public Securities Associates floaters or JJ Kenney index floaters.
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.
Generally, securities in which the Fund invests will not earn as high a
yield as securities of longer maturity and/or of lesser quality that are more
subject to market volatility. The Fund attempts to maintain the value of its
shares at a constant $1.00 per share, although there can be no assurance that
the Fund will always be able to do so.
9
<PAGE>
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.
10
<PAGE>
<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.
Joseph N. Hankin, 57 Director President of Westchester Community College
75 Grasslands Road since 1971; Adjunct Professor of Columbia
Valhalla, NY 10595 University Teachers College since 1976.
*W. Rodney Hughes, 71 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
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
*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 Vice President of Stephens Inc.; Director of
Operating Stephens Sports Management Inc.; and Director
Officer, of Capo Inc.
Secretary and
Treasurer
</TABLE>
11
<PAGE>
Compensation Table
Year Ended March 31, 1998
-------------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and 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
Director $ 25,250 $ 33,000
Robert M. Joses
Director $ 1,500 $ 4,000
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.
Directors of the Company are compensated annually by the Company and by all
the registrants in the Fund complex they serve as indicated above and also are
reimbursed for all out-of-pocket expenses relating to attendance at board
meetings. The Company, Stagecoach Trust and Life & Annuity Trust are considered
to be members of the same fund complex as such term is defined in Form N-1A
under the 1940 Act (the "Wells Fargo Fund Complex"). Overland Express Funds,
Inc. and Master Investment Trust, two investment companies previously advised by
Wells Fargo Bank, were part of the Wells Fargo Fund Complex 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
12
<PAGE>
Directors do not receive any retirement benefits or deferred compensation from
the Company or any other member of the Fund complex.
As of the date of this SAI, Directors and Officers of the Company as a
group beneficially owned less than 1% of the outstanding shares of 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 0.40% of the Fund's average daily
net assets.
For the periods indicated below, the Fund paid to Wells Fargo Bank the
following advisory fees and Wells Fargo Bank waived the indicated amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Six-Month Nine-Month
Period Ended Period Ended Year Ended Year Ended
3/31/97 9/30/96 12/31/95 12/31/94
--------- --------- ---------- ----------
Fees Fees Fees Fees Fees Fees Fees Fees
Paid Waived Paid Waived Paid Waived Waived Paid
---- ------ ---- ------ ---- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
$8,856,102 $979,244 $12,729,506 $0 $11,593,678 $0 $2,073,686 $2,008,946
</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. As of May 1, 1998, Wells Capital Management ("WCM")
serves as sub-advisor to the Fund. As sub-advisor, WCM makes recommendations
regarding the investment and reinvestment of the Fund's assets, furnishes to
Wells Fargo Bank periodic reports on the investment activity and performance of
the Fund, and furnishes such additional reports and information as Wells Fargo
Bank and the Company's Board of Directors and officers may reasonably request.
As compensation for sub-advisory services, WCM is entitled to receive a monthly
fee equal to an annual rate of 0.05% of the first $960 million of the Fund's
average daily net assets and 0.04% of net assets over $960 million.
General. Each 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
Fund's Sub-Advisory Contract may be terminated on 60 days written notice by
either party and will terminate automatically if assigned.
Administrator and Co-Administrator. The Company has retained Wells Fargo
----------------------------------
Bank as Administrator and Stephens Inc. ("Stephens") as Co-Administrator on
behalf of the Fund. Under the respective 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 U. S. Securities and Exchange
Commission ("SEC") and state securities commissions; and preparation of proxy
statements and shareholder reports for the
13
<PAGE>
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. Prior to February 1, 1998, the Administrator and Co-Administrator
were entitled to receive a monthly fee at the annual rate of 0.04% and 0.02%,
respectively, of the Fund's average daily net assets. In connection with the
change in fees, the responsibility for performing various administration
services was shifted to the Co-Administrator.
Prior to February 1, 1997, Stephens served as sole Administrator and
performed substantially the same services now provided by Stephens and Wells
Fargo Bank. Stephens was entitled to receive for its services a fee, payable
monthly, at the annual rate of 0.03% of the Fund's average daily net
assets.
For the period indicated below, the Fund paid the following dollar amounts
to Wells Fargo Bank and Stephens for administration and co-administration
fees:
<TABLE>
<CAPTION>
Six-Month Period Ended 3/31/97
------------------------------
Total Wells Fargo Stephens
----- ----------- --------
<S> <C> <C>
$980,282 $196,056 $784,226
</TABLE>
For the nine-month period ended September 30, 1996 and the fiscal years
ended December 31, 1995 and 1994, the Fund paid to Stephens the following dollar
amounts of administration fees:
<TABLE>
<CAPTION>
Nine-Month
Period Ended Year Ended Year Ended
9/30/96 12/31/95 12/31/94
------------- ----------- -----------
<S> <C> <C>
$872,577 $954,713 $306,209
</TABLE>
Distributor. Stephens (the "Distributor") located at 111 Center Street,
-----------
Little Rock, Arkansas 72201, serves as Distributor for the Fund. The Fund has
adopted a distribution plan (a "Plan") under Section 12(b) of the 1940 Act and
Rule 12b-1 thereunder (the "Rule") for the Class S shares. The Plan was adopted
by the Company's Board of Directors, including a majority of the Directors who
were not "interested persons" (as defined in the 1940 Act) of the Fund and who
had no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan (the "Non-Interested Directors").
Under the Plan and pursuant to the related Distribution Agreement, the Fund
may pay Stephens, as compensation for distribution-related services or as
reimbursement for distribution-related expenses, a monthly fee at an annual rate
of up to 0.75% of the Fund's average daily net assets attributable to Class S
shares.
14
<PAGE>
The actual fee payable to the Distributor by the Fund is determined, within
such limits, from time to time by mutual agreement between the Company and the
Distributor and will not exceed the maximum sales charges payable by mutual
funds sold by members of the National Association of Securities Dealers, Inc.
("NASD") under the Conduct Rules of the NASD. The Distributor may enter into
selling agreements with one or more selling agents (which may include Wells
Fargo Bank and its affiliates) under which such agents may receive compensation
for distribution-related services from the Distributor, including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to their customers. The
Distributor may retain any portion of the total distribution fee payable
thereunder to compensate it for distribution-related services provided by it or
to reimburse it for other distribution-related expenses.
For the six-month period ended March 31, 1997, the nine month period ended
September 30, 1996 the Fund's distributor received the following fees for
distribution-related services, as set forth below, under the Fund's Plan for
Class S shares:
<TABLE>
<CAPTION>
Printing &
Mailing Marketing Compensation to
For The Period Ended: Total Prospectus Brochures Underwriters
- ---------------------------------- ----- ---------- --------- ---------------
<S> <C> <C> <C> <C>
March 31, 1997 $2,678,807 N/A N/A $2,678,807
September 30, 1996 $3,587,118 N/A N/A $3,587,118
</TABLE>
For the periods indicated above, Wells Fargo Securities Inc. (WFSI"), an
affiliated broker-dealer of the Company, and its registered representatives
received no compensation under the Fund's Plan.
General. The Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of both the Directors of the Company
and the Non-Interested Directors. Any Distribution Agreement related to the
Plan also must be approved by such vote of the majority vote of the Directors
and the Non-Interested Directors. Such Agreement will terminate automatically
if assigned, and may be terminated at any time, without payment of any penalty,
by a vote of a majority of the outstanding voting securities of the Class S
shares of the Fund or by vote of a majority of the Non-Interested Directors on
not more than 60 days' written notice. The Plan may not be amended to increase
materially the amounts payable thereunder without the approval of a majority of
the outstanding voting securities of the Fund, and no material amendment to the
Plan may be made except by a majority of both the Directors of the Company and
the Non-Interested Directors.
The Plan requires that the Treasurer of the Company shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Directors who are not "interested
persons" of the Company be made by such disinterested Directors.
15
<PAGE>
Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Company, acts as a selling agent for the Fund's
Class S shares pursuant to selling agreements with Stephens authorized under the
Plan. As a selling agent, Wells Fargo Bank has an indirect financial interest
in the operation of the Plan. The Board of Directors has concluded that the
Plan is reasonably likely to benefit the Fund and its shareholders because the
Plan authorizes the relationships with selling agents, including Wells Fargo
Bank, that have previously developed distribution channels and relationships
with the customers that the Class S shares of the Fund are designed to serve.
These relationships and distribution channels are believed by the Board to
provide potential for increased Fund assets and ultimately corresponding
economic efficiencies (i.e., lower per-share transaction costs and fixed
expenses) that are generated by increased assets under management.
Shareholder Servicing Agent. The Fund has approved a Servicing Plan and
---------------------------
has entered into a related shareholder servicing agreement, with financial
institutions, including Wells Fargo Bank, on behalf of Class S shares. 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 from the Fund, not to exceed 0.25%, on an
annualized basis, of the average daily net assets of the class of shares owned
of record or beneficially by the customers of the Servicing Agent during the
period for which payment is being made. The Servicing Plan and related form of
Shareholder Servicing Agreement were approved by the Company's Board of
Directors and provide that the Fund shall not be obligated to make any payments
under such Plan or related Agreements that exceed the maximum amounts payable
under the Conduct Rules of the NASD.
For the six-month period ended March 31, 1997 and the nine-month period
ended September 30, 1996, the Fund paid to Wells Fargo Bank or its affiliates
$892,936 and $1,176,803, respectively, in shareholder services fees on behalf of
its Class S shares.
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 Fund ("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.
16
<PAGE>
Custodian. Wells Fargo Bank acts as Custodian for the Fund. The
---------
Custodian, among other things, maintains a custody account or accounts in the
name of the Fund, receives and delivers all assets for the Fund upon purchase
and upon sale or maturity, collects and receives all income and other payments
and distributions on account of the assets of the Fund, and pays all expenses of
the Fund. For its services as Custodian, Wells Fargo Bank receives fees as
follows: a net asset charge at the annual rate of 0.0167%, payable monthly,
plus specified transaction charges. Wells Fargo Bank also will provide
portfolio accounting services under the Custody Agreement as follows: a monthly
base fee of $2,000 plus a net asset fee at the annual rate of 0.070% of the
first $50,000,000 of the Fund's average daily net assets, 0.045% of the next
$50,000,000, and 0.200% of the average daily net assets in excess of
$100,000,000.
For the six-month period ended March 31, 1997 and the nine-month period
ended September 30, 1996, the Fund did not pay any custody fees to Wells Fargo
Bank.
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 0.10%
of the average daily net assets of the Class S shares.
For the six-month period ended March 31, 1997 and the nine-month period
ended September 30, 1996, the Fund did not pay any compensation for transfer and
dividend disbursing agency services to Wells Fargo Bank.
Under the prior transfer agency agreement, Wells Fargo Bank was entitled to
receive a per account fee plus transaction fees and reimbursement of out-of-
pocket expenses, with a minimum of $3,000 per month, unless net assets of the
Fund were under $20 million. For as long as the Fund's assets remained under
$20 million, the Fund was not charged any transfer agency fees.
Underwriting Commissions. Front-end sales loads and contingent-deferred
------------------------
sales charges are not assessed in connection with the purchase and redemption of
the Fund's Class S shares. Therefore, no underwriting commissions are paid to
Stephens as the Distributor.
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.
17
<PAGE>
Performance information for the Fund or Class S shares may be useful in
reviewing the performance of the Fund or Class S shares of the Fund and for
providing a basis for comparison with investment alternatives. The performance
of the Fund and the performance of the Class S shares, 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. The inception date
of the Class S shares of the Fund was May 25, 1995.
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") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("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, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Inception One Year
---- --------- --------
<S> <C> <C>
Money Market - Class S 4.14% 4.22%
</TABLE>
Cumulative Total Return: In addition to the above performance information,
-----------------------
the Fund also may advertise its cumulative total return. Cumulative total
return 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, 1997
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Inception
---- ---------
<S> <C>
Money Market - Class S 10.30%
</TABLE>
Yield Calculations: The Fund may, from time to time, include its yield and
------------------
effective yield in advertisements or reports to shareholders or prospective
investors. Quotations of yield for the Fund are based on the investment income
per share earned during a particular seven-day or thirty-day period, less
expenses accrued during a period ("net investment income") and are computed by
dividing net investment income by the offering price per share on the last date
of the period, according to the following formula:
YIELD = 2[(a - b + 1)/6/ -1]
-----
Cd
18
<PAGE>
where a = dividends and interest earned during the period, b = expenses
accrued for the period (net of any reimbursements), c = the average daily number
of shares outstanding during the period that were entitled to receive dividends,
and d = the maximum offering price per share on the last day of the period.
Effective Yield: Effective yield for the Fund is based on the change in
---------------
the value of a hypothetical investment (exclusive of capital changes) over a
particular seven-day (or thirty-day) period, less a pro-rata share of the Fund's
expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized multiplying by 365/7 (or
365/30 for thirty-day yield), with the resulting yield figure carried to at
least the nearest hundredth of one percent. "Effective yield" for the Fund
assumes that all dividends received during the period have been reinvested.
Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:
Effective Seven-Day Yield = [(Base Period Return + 1)365/7]-1.
Yield for the Applicable Period Ended September 30, 1997
--------------------------------------------------------
<TABLE>
<CAPTION>
Seven-Day
Seven-Day Effective Thirty-Day
Fund Yield Yield Yield
---- --------- --------- ----------
<S> <C> <C> <C>
Money Market - Class S 4.30% 4.39% 4.29%
</TABLE>
From time to time and only to the extent the comparison is appropriate for
the Fund or a Class of 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 Association of Real Estate Investment Trusts), Gold
Investment Averages (provided by World Gold Council), Bank Averages (which are
calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), other managed or unmanaged indices or
performance data of bonds, municipal securities, stocks or government securities
(including data provided by Ibbotson Associates), or by other services,
companies, publications or persons who monitor mutual 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 the Class S shares also may be compared to that of other mutual
funds having similar
19
<PAGE>
objectives. This comparative performance could be expressed as a ranking
prepared by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Bloomberg Financial Markets or Morningstar, Inc., independent services which
monitor the performance of mutual funds. The Fund's performance will be
calculated by relating net asset value per share at the beginning of a stated
period to the net asset value of the investment, assuming reinvestment of all
gains distributions and dividends paid, at the end of the period. The Fund's
comparative performance will be based on a comparison of yields, as described
above, or total return, as reported by Lipper, Survey Publications, Donoghue or
Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare past
performance of the Fund or the Class S shares with that of competitors. Of
course, past performance cannot be a guarantee of future results. The Company
also may include, from time to time, a reference to certain marketing approaches
of the Distributor, including, for example, a reference to a potential
shareholder being contacted by a selected broker or dealer. General mutual fund
statistics provided by the Investment Company Institute may also be used.
The Company also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
the Fund: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in the Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of the Fund or the general economic, business,
investment, or financial environment in which the Fund operates; (iii) the
effect of tax-deferred compounding on the investment returns of the Fund, or on
returns in general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the return from an
investment in the Fund (or returns in general) on a tax-deferred basis (assuming
reinvestment of capital gains and dividends and 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.
In addition, the Company also may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Company
also may include in advertising and other types of literature information and
other data from reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the related "Tax Freedom
Day."
The Company also may discuss in advertising and other types of literature
that 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
20
<PAGE>
Fund's shares or the suitability of the Fund for a particular investor. In
addition, the assigned rating would be subject to change, suspension or
withdrawal as a result of changes in, or unavailability of, information relating
to the Fund or its investments. The Company may compare the Fund's performance
with other investments which are assigned ratings by NRSROs. Any such
comparisons may be useful to investors who wish to compare the Fund's past
performance with other rated investments.
From time to time, the Fund may use the following statements, or variations
thereof, in advertisements and other promotional materials: "Wells Fargo Bank,
as a Shareholder Servicing Agent for the Stagecoach Funds, provides various
services to its customers that are also shareholders of the Funds. These
services may include access to Stagecoach Fund's account information through
Automated Teller Machines (ATMs), the placement of purchase and redemption
requests for shares of the Funds through ATMs and the availability of combined
Wells Fargo Bank and Stagecoach Funds account statements."
The Company also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
(formerly, Wells Fargo Investment Management), a division of Wells Fargo Bank,
is listed in the top 100 by Institutional Investor magazine in its July 1997
survey "America's Top 300 Money Managers." This survey ranks money managers in
several asset categories. The Company may also disclose in advertising and
other types of sales literature the assets and categories of assets under
management by the Company's investment advisor. The Company may also disclose
in advertising and other types of sales literature the assets and categories of
assets under management by the Fund's investment advisor or sub-advisor and the
total amount of assets and mutual fund assets managed by Wells Fargo Bank. As of
June 30, 1998, Wells Fargo Bank and its affiliates provided investment Advisory
services for approximately $62 billion of assets of individual, trusts, estates
and institutions and $23 billion of mutual fund assets.
The Company also may discuss in advertising and other types of literature
the features, terms and conditions of Wells Fargo Bank accounts through which
investments in the Fund may be made via a "sweep" arrangement, including,
without limitation, the Managed Sweep Account, Money Market Checking Account,
California Tax-Free Money Market Checking Account, Money Market Access Account
and California Tax-Free Money Market Access Account (collectively, the "Sweep
Accounts"). Such advertisements and other literature may include, without
limitation, discussions of such terms and conditions as the minimum deposit
required to open a Sweep Account, a description of the yield earned on shares of
the Funds through a Sweep Account, a description of any monthly or other service
charge on a Sweep Account and any minimum required balance to waive such service
charges, any overdraft protection plan offered in connection with a Sweep
Account, a description of any ATM or check privileges offered in connection with
a Sweep Account and any other terms, conditions, features or plans offered in
connection with a Sweep Account. Such advertising or other literature may also
include a discussion of the advantages of establishing and maintaining a Sweep
Account, and may include statements from customers as to the reasons why such
customers have established and maintained a Sweep Account.
21
<PAGE>
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 the Class S shares of the Money Market Fund
is determined as of 12:00 noon and 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.
The Fund uses the amortized cost method to determine the value of its
portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
that the Fund would receive if the security were sold. During these periods the
yield to a shareholder may differ somewhat from that which could be obtained
from a similar fund that uses a method of valuation based upon market prices.
Thus, during periods of declining interest rates, if the use of the amortized
cost method resulted in a lower value of the Fund's portfolio on a particular
day, a prospective investor in the Fund would be able to obtain a somewhat
higher yield than would result from investment in the Fund using solely market
values, and existing Fund shareholders would receive correspondingly less
income. The converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, the Fund must maintain a dollar-weighted average portfolio maturity
of 90 days or less, purchase securities having remaining maturities (as defined
in Rule 2a-7) of thirteen months or less and invest only in those high-quality
securities that are determined by the Board of Directors to
22
<PAGE>
present minimal credit risks. The maturity of an instrument is generally deemed
to be the period remaining until the date when the principal amount thereof is
due or the date on which the instrument is to be redeemed. However, Rule 2a-7
provides that the maturity of an instrument may be deemed shorter in the case of
certain instruments, including certain variable and floating rate instruments
subject to demand features. Pursuant to the Rule, the Board is required to
establish procedures designed to stabilize, to the extent reasonably possible,
the Fund's price per share as computed for the purpose of sales and redemptions
at $1.00. Such procedures include review of the Fund's portfolio holdings by the
Board of Directors, at such intervals as it may deem appropriate, to determine
whether the Fund's net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost. The extent of
any deviation will be examined by the Board of Directors. If such deviation
exceeds 1/2 of 1%, the Board will promptly consider what action, if any, will be
initiated. In the event the Board determines that a deviation exists that may
result in material dilution or other unfair results to investors or existing
shareholders, the Board will take such corrective action as it regards as
necessary and appropriate, including the sale of portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends or establishing a net asset value per share by
using available market quotations. It is the intention of the Fund to maintain a
per share net asset value of $1.00, but there can be no assurance that the Fund
will do so.
Instruments having variable or floating interest rates or demand features
may be deemed to have remaining maturities as follows: (a) a government security
with a variable rate of interest readjusted no less frequently than every
thirteen months may be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate; (b) an instrument with a
variable rate of interest, the principal amount of which is scheduled on the
face of the instrument to be paid in thirteen months or less, may be deemed to
have a maturity equal to the period remaining until the next readjustment of the
interest rate; (c) an instrument with a variable rate of interest that is
subject to a demand feature may be deemed to have a maturity equal to the longer
of the period remaining until the next readjustment of the interest rate or the
period remaining until the principal amount can be recovered through demand; (d)
an instrument with a floating rate of interest that is subject to a demand
feature may be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand; and (e) a repurchase agreement
may be deemed to have a maturity equal to the period remaining until the date on
which the repurchase of the underlying securities is scheduled to occur or,
where no date is specified but the agreement is subject to demand, the notice
period applicable to a demand for the repurchase of the securities.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund may be purchased on any day the Fund is open for
business (a "Business Day"). The Fund is open Monday through Friday and is
closed on federal bank holidays. Currently, those holidays are New Year's Day,
President's Day, Martin Luther King Jr. Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day.
23
<PAGE>
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 shareholders to make full
payment for shares purchased or to collect any charge relating to a transaction
effected for the benefit of a shareholder which is applicable to shares of the
Fund.
PORTFOLIO TRANSACTIONS
The Company has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to policies
established by the Company's Board of Directors, Wells Fargo Bank is responsible
for the Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Company to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably competitive spreads or commissions, the Fund will not necessarily be
paying the lowest spread or commission available.
Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. The Fund
also will purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, municipal obligations
and taxable money market securities are traded on a net basis and do not involve
brokerage commissions. The cost of executing the Fund's portfolio securities
transactions will consist primarily of dealer spreads and underwriting
commissions. Under the 1940 Act, persons affiliated with the Company are
prohibited from dealing with the Company as a principal in the purchase and sale
of securities unless an exemptive order allowing such transactions is obtained
from the Commission or an exemption is otherwise available. The Fund may
purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is
24
<PAGE>
a member under certain conditions in accordance with the provisions of a rule
adopted under the 1940 Act and in compliance with procedures adopted by the
Board of Directors.
Wells Fargo Bank, as the Investment Advisor of the Fund, may, in
circumstances in which two or more dealers are in a position to offer comparable
results for the 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 Contracts, 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 Funds.
Brokerage Commissions. The Fund did not pay any brokerage commissions on
---------------------
portfolio transactions for the six-month period ended March 31, 1997 or the
nine-month period ended September 30, 1996.
Securities of Regular Broker/Dealers. As of March 31, 1997, the Fund owned
------------------------------------
securities of its "regular brokers or dealers" or their parents, as defined in
the 1940 Act, as follows:
<TABLE>
<CAPTION>
Fund Broker/Dealers Amount
- ---- -------------- ------
<S> <C> <C>
Money Market Fund Goldman Sachs & Co. $324,580,500
Merrill Lynch $244,186,473
J.P. Morgan Securities $ 56,309,000
Morgan Stanley $ 24,466,000
</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.
25
<PAGE>
FUND EXPENSES
From time to time, Wells Fargo Bank and Stephens may waive fees from the
Fund in whole or in part. Any such waiver will reduce expenses and,
accordingly, have a favorable impact on the Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, the Company bears all costs of
its operations, including the compensation of its Directors who are not
affiliated with Stephens or Wells Fargo Bank or any of their affiliates;
advisory, shareholder servicing and administration fees; payments pursuant to
any Plan; interest charges; taxes; fees and expenses of its independent
accountants, legal counsel, transfer agent and dividend disbursing agent;
expenses of redeeming shares; expenses of preparing and printing prospectuses
(except the expense of printing and mailing prospectuses used for promotional
purposes, unless otherwise payable pursuant to a Plan), shareholders' reports,
notices, proxy statements and reports to regulatory agencies; insurance premiums
and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio transactions; fees and expenses of its custodian, including those for
keeping books and accounts and calculating the net asset value per share of the
Fund; expenses of shareholders' meetings; expenses relating to the issuance,
registration and qualification of the Fund's shares; pricing services, and any
extraordinary expenses. Expenses attributable to the Fund are charged against
the Fund assets. General expenses of the Company are allocated among all of the
funds of the Company, including the Fund, in a manner proportionate to the net
assets of the Fund, on a transactional basis, or on such other basis as the
Company's Board of Directors deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectus describes generally
the federal income tax treatment of distributions by the Fund. This section of
the SAI includes additional information concerning federal income taxes.
General. The Fund intends to qualify as a regulated investment
-------
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), as long as such qualification is in the best interest of the Fund's
shareholders. The Fund will be treated as a separate entity for federal income
tax purposes and thus the provisions of the Code applicable to regulated
investment companies will generally be applied separately to the Fund, rather
than to the Company as a whole. In addition, net capital gains, net investment
income, and operating expenses will be determined separately for the Fund. As a
regulated investment company, the Fund will not be subject to federal income tax
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 (a) the Fund derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other
26
<PAGE>
income (including but not limited to gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies; and (b) the Fund diversify its holdings so that, at
the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash, government securities and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its assets is invested
in the securities of any one issuer (other than U.S. Government obligations and
the securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are determined to be engaged in the
same or similar trades or businesses.
The Fund must also distribute or be deemed to distribute to its
shareholders at least 90% of its net investment income (which, for this purpose,
includes net short-term capital gains) earned in each taxable year. Although the
Fund must ordinarily make such distributions during the taxable year in which it
realized the net investment income, in certain circumstances, the Fund may make
such distributions in the following taxable year. Furthermore, distributions
declared to a shareholder of record in a day 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. However, in certain
circumstances, such distributions may be made in the 12 months following the
taxable year. The Fund intends to pay out substantially all of its net
investment income and net realized capital gains (if any) for each year.
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 the Fund
----------
to the extent it does not meet certain minimum distribution requirements by the
end of each calendar year. The Fund intends to actually or be deemed to
distribute substantially all of its net investment income and net capital gains
by the end of each calendar year and, thus, expects not to be subject to the
excise tax.
Taxation of Fund Investments. Except as provided herein, gains and losses
----------------------------
on the sale of portfolio securities by the Fund will generally be capital gains
and losses. Such gains and losses will ordinarily be long-term capital 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 the Fund at a
market discount (generally at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of market discount which
accrued, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.
Capital Gain Distributions. Distributions which are designated by the Fund
--------------------------
as capital gain distributions will be taxed to shareholders as long-term capital
gain (to the extent such dividends do exceed the Fund's actual net capital gain
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.
27
<PAGE>
The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of 28% on net
capital gain (generally, the excess of net long-term capital gain over net
short-term capital loss). Noncorporate taxpayers are now generally taxed at a
maximum rate of 20% on net capital gain attributable to gains realized on the
sale of property held for greater than 18 months, and a maximum rate of 28% on
net capital gain attributable to gain realized on the sale of property held for
greater than one year and not more than 18 months. The 1997 Act retains the
treatment of short term capital gain or loss (generally, gain or loss
attributable to capital assets held for 1 year or less) and did not affect the
taxation of capital gains in the hands of corporate taxpayers.
Under the 1997 Act, the Treasury is authorized to issue regulations for
application of the reduced capital gains tax rates to pass-through entities,
including regulated investment companies, such as the Fund. The IRS
has published a notice applying the reduced capital gains rates to pass-through
entities until the regulations are issued. According to the notice, a Fund may
designate the portion of its capital gain distributions, if any, to which the
28% and 20% rates described in the preceding paragraph apply, based on the net
amount of each class of capital gain realized by the Fund, determined as if the
Fund were an individual subject to a marginal tax rate of 28%. Noncorporate
shareholders of the Fund may therefore qualify for the reduced rate of tax on
any capital gains paid by the Fund.
Other Distributions. Although dividends will be declared daily based on
-------------------
the Fund's daily earnings, for federal income tax purposes, the Fund's earnings
and profits will be determined at the end of each taxable year and will be
allocated pro rata over the entire year. For federal income tax purposes, only
amounts paid out of earnings and profits will qualify as dividends. Thus, if
during a taxable year the Fund's declared dividends (as declared daily
throughout the year) exceed the Fund's net income (as determined at the end of
the year), only that portion of the year's distributions which equals the year's
earnings and profits will be deemed to have constituted a dividend. It is
expected that the Fund's net income, on an annual basis, will equal the
dividends declared during the year.
Disposition of Fund Shares. A disposition of Fund shares pursuant to
--------------------------
redemption (including a redemption in-kind) or exchanges will ordinarily result
in a taxable capital gain or loss, depending on the amount received for the
shares (or are deemed to receive in the case of an exchange) and the cost of 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 acquiring the Fund's shares shall not be taken
into account (to the extent such previous sales charges do not exceed the
28
<PAGE>
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as 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 long-term capital loss to the extent of the designated capital gain
distribution. This loss disallowance rule does not apply to losses realized
under a periodic redemption plan.
Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 28% (however, see "Capital Gain Distributions" above);
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, unless the shareholder certifies that the taxpayer identification
number ("TIN") provided is correct and that the shareholder is not subject to
backup withholding, or the IRS notifies the Company that the shareholder's TIN
is incorrect or 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 credit or refund 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. Foreign shareholders of the Fund
(described below) are generally not subject to backup withholding.
Foreign Shareholders. Under the Code, distributions of net investment
--------------------
income by the Fund to a nonresident alien individual, foreign trust (i.e., trust
which a U.S. court is able to exercise primary supervision over administration
of that trust and one or more U.S. persons have
29
<PAGE>
authority to control substantial decisions of that trust), foreign estate (i.e.,
an estate the income of which is not subject to U.S. federal income tax
regardless of source), foreign corporation, or foreign partnership (a "foreign
shareholder") will be subject to U.S. income tax withholding (at a rate of 30%
or a lower treaty rate, if applicable). Withholding will not apply if a dividend
distribution 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.
residents will apply. Distributions of net capital gain to a foreign shareholder
are generally not subject to U.S. income 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 Fund
to estimate the portion of its distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders which will be subject to U.S. income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
Other Matters. Investors should be aware that the investments to be made
-------------
by the Fund may involve sophisticated tax rules that may result in income or
gain recognition by the Fund without corresponding current cash receipts.
Although the Fund will seek to avoid significant noncash income, such noncash
income could be recognized by the Fund, in which case the Fund may distribute
cash derived from other sources in order to meet the minimum distribution
requirements described above.
The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the federal income tax considerations
generally affecting investments in the Fund. Each investor is urged to consult
his or her tax advisor regarding specific questions as to federal, state, local
and 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 other funds.
30
<PAGE>
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 12b-
1) that are allocated to a particular class. Please contact Stagecoach
Shareholder Services at 1-800-260-5969 if you would like additional information
about other funds or classes of shares offered.
With respect to matters that affect one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of the Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in
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 each 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 the Fund,
means the vote of the lesser of (i) 67% of the shares of such class of the Fund
represented at a meeting if the holders of more than 50% of the outstanding
shares of such Class Fund are present in person or by proxy, or (ii) more than
50% of the outstanding shares of such Class of the Fund. The term "majority,"
when referring to the approvals to be obtained from shareholders of the Company
as a whole, means the vote of the lesser of (i) 67% of the Company's shares
represented at a meeting if the holders of more than 50% of the Company's
outstanding shares are present in person or by proxy, or (ii) more than 50% of
the Company's outstanding shares.
Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. 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 of the Fund 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 or class
are entitled to receive the assets attributable to the Fund or class that are
available for distribution, and a distribution of any general assets not
attributable to a particular investment portfolio that are
31
<PAGE>
available for distribution in such manner and on such basis as the Directors in
their sole discretion may determine.
Set forth below as of June 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 Class S shares of the Fund or 5% or more of the
voting securities of the Fund as a whole. The term "N/A" is used where a
shareholder holds 5% or more of a class, but less than 5% of the Fund as a
whole.
<TABLE>
<CAPTION>
5% OWNERSHIP AS OF June 30, 1998
--------------------------------
Name and Class; Type Percentage Percentage
Fund Address of Ownership of Class of Fund
---- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
MONEY Wells Fargo Bank Class S 100.00% 13.60%
MARKET P.O. Box 7066 Beneficially
San Francisco, CA 94120 Owned
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund) or is identified as the holder of
record or more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
OTHER
The Company's Registration Statement, including the Prospectus and SAI for
the Fund and the exhibits filed therewith, may be examined at the office of the
U.S. Securities and Exchange Commission ("SEC") in Washington, D.C. Statements
contained in the Prospectus or the SAI as to the contents of any contract or
other document referred to herein or in the Prospectus are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent 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.
32
<PAGE>
FINANCIAL INFORMATION
The portfolio of investments and unaudited financial statements for the
six-month period ended September 30, 1997, are hereby incorporated by reference
to the Company's Semi-Annual Reports as filed with the SEC on December 5, 1997.
The portfolio of investments, audited financial statements and independent
auditors' report for the Fund for the fiscal period ended March 31, 1997 are
hereby incorporated by reference to the Company's Annual Reports as filed with
the SEC on June 4, 1997.
Annual and Semi-Annual Reports may be obtained by calling 1-800-222-8222.
33
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate and municipal bonds, municipal notes, and corporate and municipal
commercial paper.
Corporate and Municipal Bonds
- -----------------------------
Moody's: The four highest ratings for corporate and municipal bonds are
"Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of the "best
quality" and carry the smallest amount of investment risk. Bonds rated "Aa" are
of "high quality by all standards," but margins of protection or other elements
make long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds
rated "A" possess many favorable investment attributes and are considered to be
upper medium grade obligations. Bonds rated "Baa" are considered to be medium
grade obligations; interest payments and principal security appear adequate for
the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds 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 and municipal 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.
Municipal Notes
- ---------------
Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG 2"
or "VMIG 2" are of "high quality," with margins of protections "ample although
not as large as in the preceding group." Notes rated "MIG 3" or "VMIG 3" are of
"favorable quality," with all security elements accounted for, but lacking the
strength of the preceding grades.
A-1
<PAGE>
S&P: The "SP-1" rating reflects a "very strong or strong capacity to pay
principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
Corporate and Municipal Commercial Paper
Moody's: The highest rating for corporate and municipal commercial paper
is "P-1" (Prime-1). Issuers rated "P-1" have a "superior capacity for repayment
of short-term promissory obligations." Issuers rated "P-2" (Prime-2) "have a
strong capacity for repayment of short-term promissory obligations," but
earnings trends, while sound, will be subject to more variation.
S&P: The "A-1" rating for corporate and municipal 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."
Corporate Notes
S&P: The two highest ratings for corporate notes are "SP-1" and "SP-2."
The "SP-1" rating reflects a "very strong or strong capacity to pay principal
and interest." Notes issued with "overwhelming safety characteristics" will be
rated "SP-1+." The "SP-2" rating reflects a "satisfactory capacity" to pay
principal and interest.
A-2
<PAGE>
STAGECOACH FUNDS(R), INC.
Telephone: 1-800-260-5969
STATEMENT OF ADDITIONAL INFORMATION
Dated August 1, 1998
TREASURY MONEY MARKET SHARES FUND
Class E Shares
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
Treasury Money Market Fund (the "Fund"). This SAI relates to the Class
E shares of the Fund.
This SAI is not a Prospectus and should be read in conjunction with the
Fund's Prospectus, dated August 1, 1998. All terms used in this SAI that are
defined in the Prospectus have the meanings assigned in the Prospectus. A copy
of the Prospectus may be obtained without charge by calling 1-800-260-5969 or by
writing to Stagecoach Funds, Inc. 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................................................................... 7
Management..................................................................... 9
Performance Calculations....................................................... 18
Determination of Net Asset Value............................................... 22
Additional Purchase and Redemption Information................................. 24
Portfolio Transactions......................................................... 24
Fund Expenses.................................................................. 26
Federal Income Taxes........................................................... 26
Capital Stock.................................................................. 31
Other.......................................................................... 34
Independent Auditors........................................................... 35
Financial Information.......................................................... 35
Appendix....................................................................... A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
The Treasury Money Market Fund commenced operations on October 1,
1985, as the Short-Term Government Fund of the Pacific American Funds. The
Fund operated as a portfolio of Pacific American Funds through October 1, 1994,
when it was reorganized as the Pacific American U.S. Treasury Portfolio, a
portfolio of Pacifica Funds Trust ("Pacifica"). In July 1995, the Fund was
renamed the Pacifica Treasury Money Market Fund. On September 6, 1996, the
Pacifica Treasury Money Market Fund was reorganized as the Company's Treasury
Money Market Mutual Fund. The Class E shares of the Fund commenced operations
on March 24, 1997.
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 (defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of the outstanding voting securities of the
Fund.
The Treasury Money Market Fund may not:
(1) purchase common stocks and voting securities (including state,
municipal or industrial revenue bonds) except for securities of other investment
companies;
(2) borrow money or issue senior securities, except that the Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to one-third of the value of its total assets at the time
of such borrowing. The Fund will not purchase securities while its borrowings
(including reverse repurchase agreements) in excess of 5% of its total assets
are outstanding. As a matter of non-fundamental policy, the Fund intends to
limit its investments in reverse repurchase agreements to no more than 20% of
its total assets;
(3) mortgage, pledge, or hypothecate any assets, except in connection with
any such borrowing and in amounts not in excess of one-third of the value of the
Fund's total assets at the time of its borrowing. Securities held in escrow or
separate accounts in connection with the Fund's investment practices are not
deemed to be pledged for purposes of this investment restriction;
(4) purchase securities on margin, except for delayed delivery or when-
issued transactions or such short-term credits as are necessary for the
clearance of transactions; or make short sales of securities or, maintain a
short position;
(5) write put or call options;
1
<PAGE>
(6) underwrite the securities of other issuers, except as the Fund may be
deemed to be an underwriter in connection with the purchase or sale of portfolio
instruments in accordance with its investment objective and portfolio management
policies;
(7) invest in companies for the purpose of exercising control;
(8) make loans, except that the Fund may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
loans of portfolio securities and repurchase agreements;
(9) invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation, acquisition of assets or where
otherwise permitted by the 1940 Act; nor
(10) lend its portfolio securities in excess of one-third of the value of
its total assets.
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 approval of the Fund's shareholders.
(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, the 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 the Fund's net assets with respect to any
one investment company, and (iii) 10% of the Fund's net assets in the 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.
(2) The Fund may not invest or hold more than 10% of its 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 portfolios 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.
2
<PAGE>
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Set forth below are descriptions of certain investments and additional
investment policies for the Fund.
Floating- and Variable-Rate Obligations
---------------------------------------
The Fund may purchase floating- and variable-rate obligations. The Fund
may purchase floating- and variable-rate demand notes and bonds. These
obligations may have stated maturities in excess of thirteen months, but they
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable-rate demand notes include
master demand notes that are obligations that permit a Fund to invest
fluctuating amounts, which may change daily without penalty, pursuant to direct
arrangements between the Fund, as lender, and the borrower. The interest rates
on these notes may fluctuate from time to time. The issuer of such obligations
ordinarily has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days' notice to the holders of such
obligations. The interest rate on a floating-rate demand obligation is based on
a known lending rate, such as a bank's prime rate, and is adjusted automatically
each time such rate is adjusted. The interest rate on a variable-rate demand
obligation is adjusted automatically at specified intervals. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no established
secondary market for these obligations, although they are redeemable at face
value. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies and
the Fund may invest in obligations which are not so rated only if Wells Fargo
Bank determines that at the time of investment the obligations are of comparable
quality to the other obligations in which the Fund may invest. Wells Fargo
Bank, on behalf of the Fund, considers on an ongoing basis the creditworthiness
of the issuers of the floating- and variable-rate demand obligations in the
Fund's portfolio. The Fund will not invest more than 10% of the
3
<PAGE>
value of its total net assets in floating- or variable-rate demand obligations
whose demand feature is not exercisable within seven days. Such obligations
may be treated as liquid, provided that an active secondary market exists.
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.
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.
Illiquid Securities
-------------------
The Fund may invest in securities not registered under the 1933 Act and
other securities subject to legal or other restrictions on resale. Because such
securities may be less liquid than other investments, they may be difficult to
sell promptly at an acceptable price. Delay or difficulty in selling securities
may result in a loss or be costly to the Fund. The Fund may hold up to 10% of
its assets in net illiquid securities.
Loans of Portfolio Securities
-----------------------------
The Fund may lend its portfolio securities to brokers, dealers and
financial institutions, provided: (1) the loan is secured continuously by
collateral consisting of U.S. Government securities or cash or letters of credit
maintained on a daily marked-to-market basis in an amount at least equal to the
current market value of the securities loaned; (2) the Fund may at any time call
the loan and obtain the return of the securities loaned within five business
days; (3) the Fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not
at any time exceed one third of the total assets of the Fund.
The Fund will earn income for lending its securities because cash
collateral pursuant to such loans will be invested in short-term money market
instruments. In connection with lending securities, the Fund may pay reasonable
finders, administrative and custodial fees. The Fund will not enter into any
security lending arrangement having a duration longer than one year. Loans of
securities involve a risk that the borrower may fail to return the securities or
may fail to provide additional collateral. In either case, the Fund could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. When the Fund lends its
4
<PAGE>
securities, it continues to receive interest or dividends on the securities
loaned and may simultaneously earn interest on the collateral received from the
borrower or from the investment of cash collateral in readily marketable, high-
quality, short-term obligations. Although voting rights, or rights to consent,
attendant to securities on loan pass to the borrower, such loans may be called
at any time and will be called so that the securities may be voted by the Fund
if a material event affecting the investment is to occur. The Fund may pay a
portion of the interest and fees earned from securities lending to a borrower or
a placing broker. Borrowers and placing brokers may not be affiliated, directly
or indirectly, with Wells Fargo Bank, Stephens Inc. or any of their
affiliates.
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, the 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 the Fund's net assets with respect to any one
investment company and (iii) 10% of the Fund's net assets in aggregate. Other
investment companies in which the Fund invests 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.
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 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. The Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Directors and that are not affiliated with the investment advisor. The
Fund may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.
Borrowing and Reverse Repurchase Agreements
-------------------------------------------
The Fund intends to limit its borrowings (including reverse repurchase
agreements) during the current fiscal year to not more than 10% of its net
assets. At the time the Fund enters into a reverse repurchase agreement (an
agreement under which the Fund sells portfolio securities and
5
<PAGE>
agrees to repurchase them at an agreed-upon date and price), it will place in a
segregated custodial account liquid assets such as U.S. Government securities or
other liquid high-grade debt securities having a value equal to or greater than
the repurchase price (including accrued interest) and will subsequently monitor
the account to ensure that such value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
the securities. Reverse repurchase agreements are considered to be borrowings
under the 1940 Act.
U.S. Government and U.S. Treasury Obligations
---------------------------------------------
The Fund may invest in obligations of agencies and instrumentalities of the
U.S. Government ("U.S. Government obligations"). The Fund may invest only in
U.S. Government obligations issued or guaranteed by the U.S. Treasury. 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 Mortage 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.
The Fund may invest only in obligations issued or guaranteed by the U.S.
Treasury such as bills, notes, bonds and certificates of indebtedness, and in
notes and repurchase agreements collateralized or secured by such obligations
("U.S. Treasury obligations"). U.S. Treasury notes, bills and bonds differ
mainly in the length of their maturity. The U.S. Treasury obligations in which
the Fund invests may also include "U.S. Treasury STRIPS," interests in U.S.
Treasury obligations reflected in the Federal Reserve-Book Entry System that
represent ownership in either the future interest payments or the future
principal payments on the U.S. Treasury obligations. U.S. Treasury Strips are
"stripped securities." Stripped securities are issued at a discount to their
face value and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are paid
to investors. The Fund may invest in U.S. Treasury STRIPS.
The Fund may attempt to increase yields by trading to take advantage of
short-term market variations. This policy could result in high portfolio
turnover, which should not adversely affect the Fund since it does not
ordinarily pay brokerage commissions on the purchase of short-term debt
obligations.
6
<PAGE>
Nationally Recognized Statistical Ratings Organizations ("NRSROs")
------------------------------------------------------------------
The ratings of Moody's Investors Services, Inc. ("Moody's"), Standard &
Poor's Ratings Group ("S&P"), Duff & Phelps Credit Rating Co., Fitch
Investors Service, Inc., Thomson Bank Watch and IBCA Inc. represent their
opinions as to the quality of debt securities. It should be emphasized, however,
that ratings are general and not absolute standards of quality, and debt
securities with the same maturity, interest rate and rating may have different
yields while debt securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to purchase by the Fund,
an issue of debt securities may cease to be rated or its rating may be reduced
below the minimum rating required for purchase by the Fund. The advisor will
consider such an event in determining whether the Fund involved should continue
to hold the obligation.
The payment of principal and interest on debt securities purchased by the
Fund depends upon the ability of the issuers to meet their obligations. An
issuer's obligations under its debt securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be
enacted by federal or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or, in the case of governmental entities, upon the ability
of such entities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest and principal of its debt securities may
be materially adversely affected by litigation or other conditions. Further, it
should also be noted with respect to all municipal obligations issued after
August 15, 1986 (August 31, 1986 in the case of certain bonds), the issuer must
comply with certain rules formerly applicable only to industrial development
bonds which, if the issuer fails to observe them, could cause interest on the
municipal obligations to become taxable retroactive to the date of issue.
RISK FACTORS
Investments in the Fund are not bank deposits or obligations of Wells Fargo
Bank, are not insured by the Federal Deposit Insurance Corporation ("FDIC") and
are not insured or guaranteed against loss of principal. Therefore, you should
be willing to accept some risk with money you invest in the Fund. Although the
Fund seeks to maintain a stable net asset value of $1.00 per share, there is no
assurance that it will be able to do so. The Fund may not achieve as high a
level of current income as other mutual funds that do not limit their investment
to the high credit quality instruments in which the Fund invests. As with all
mutual funds, there can be no assurance that the Fund will achieve its
investment objective.
The Fund, under the 1940 Act, must comply with certain investment criteria
designed to provide liquidity, reduce risk, and allow the Fund to maintain a
stable net asset value of $1.00 per share. The Fund's dollar-weighted average
portfolio maturity must not exceed 90 days. Any security that the Fund
purchases must have a remaining maturity of not more than 397 days (13 months).
In addition, any security that the Fund purchases must present minimal credit
risks and be of the "highest quality." "Highest quality" means to be rated only
in the top rating category, by the requisite NRSROs or, if unrated, determined
to be of comparable quality to such
7
<PAGE>
rated securities by Wells Fargo Bank, as the Fund's investment advisor, under
guidelines adopted by the Board of Directors of the Company.
The Fund seeks to reduce risk by investing its assets in securities of
various issuers. In addition, the Fund emphasizes safety of principal and high
credit quality. In particular, the internal investment policies of the
investment advisor prohibit the purchase of many types of floating-rate
derivative securities that are considered potentially volatile. The following
types of derivative securities ARE NOT permitted investments for the Fund:
. capped floaters (on which interest is not paid when market rates
move above a certain level);
. leveraged floaters (whose interest rate reset provisions are
based on a formula that magnifies changes in interest rates);
. range floaters (which do not pay any interest if market interest
rates move outside of a specified range);
. dual index floaters (whose interest rate reset provisions are
tied to more than one index so that a change in the relationship
between these indices may result in the value of the instrument
falling below face value); and
. inverse floaters (which reset in the opposite direction of their
index).
Additionally, the Fund may not invest in securities whose interest rate
reset provisions are tied to an index that materially lags short-term interest
rates, such as Cost of Funds Index floaters. The Fund may invest only in
variable or floating-rate securities that bear interest at a rate that resets
quarterly or more frequently and that resets based on changes in standard money
market rate indices such as U.S. Treasury bills, London Interbank Offered Rate
or LIBOR, the prime rate, published commercial paper rates, federal funds rates,
Public Securities Associates floaters or JJ Kenney index floaters.
The Fund restricts its investment to U.S. Treasury obligations that meet
all of the standards described above. Obligations issued or guaranteed by the
U.S. Treasury have historically involved little risk of loss of principal if
held to maturity. However, due to fluctuations in interest rates, the market
value of such obligations may vary during the period a shareholder owns shares
of the Fund. It should be noted that neither the United States, nor any agency
or instrumentality thereof, has guaranteed, sponsored or approved the Fund or
its shares.
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.
8
<PAGE>
Generally, securities in which the Fund invests will not earn as high a
yield as securities of longer maturity and/or of lesser quality that are more
subject to market volatility. The Fund attempts to maintain the value of its
shares at a constant $1.00 per share, although there can be no assurance that
the Fund will always be able to do so.
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.
9
<PAGE>
<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.
Joseph N. Hankin, 57 Director President of Westchester Community College
75 Grasslands Road since 1971; Adjunct Professor of Columbia
Valhalla, NY 10595 University Teachers College since 1976.
*W. Rodney Hughes, 71 Director Private Investor.
31 Dellwood Court
San Rafael, CA 94901
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
*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>
10
<PAGE>
Compensation Table
Year Ended March 31, 1998
-------------------------
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and 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.
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 complex 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 Complex 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
11
<PAGE>
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 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, Well Fargo Bank is entitled to
receive a monthly fee at the annual rate of 0.25% of the Fund's average daily
net assets.
For the period indicated below, the Fund paid to Wells Fargo Bank the
following advisory fees and Wells Fargo Bank waived the indicated amounts:
Six-Month Period Ended 3/31/97
------------------------------
Fees Paid Fees Waived
--------- -----------
$1,518,347 $751,971
The Pacifica Treasury Money Market Fund was reorganized as the Company's
Treasury Money Market Mutual Fund on September 6, 1996. Prior to September 6,
1996, Wells Fargo Investment Management, Inc. ("WFIM") and its predecessor,
First Interstate Capital Management, Inc. ("FICM") served as advisor to the
Pacifica Treasury Money Market Fund. As of September 6, 1996, Wells Fargo Bank
has been the advisor to the Company's Treasury Money Market Fund.
For the fiscal year ended September 30, 1996, the Fund paid advisory fees
of $2,442,922 of which $2,073,426 were waived. These amounts include fees paid
by the predecessor portfolio to FICM/WFIM for the period begun April 1, 1996 and
ended September 5, 1996.
For the periods indicated below, the advisory fees paid to the former
advisor by the predecessor portfolio of the Treasury Money Market Fund were as
shown below. These amounts reflect voluntary fee waivers and expense
reimbursements by the advisor. Prior to October 1, 1994, all of these fees were,
in turn, paid by the advisor to its affiliates which served as investment sub-
advisors during the periods indicated.
12
<PAGE>
<TABLE>
<CAPTION>
Six-Month
Year Ended Period Ended Year Ended
9/30/95 9/30/94 3/31/94
------- ------- -------
<S> <C> <C>
$1,160,424 $454,029 $900,919
</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. As of May 1, 1998, Wells Capital Management
----------------------
("WCM") serves as sub-advisor to the Fund. As sub-advisor, WCM makes
recommendations regarding the investment and reinvestment of the Fund's assets,
furnishes to Wells Fargo Bank periodic reports on the investment activity and
performance of the Fund, and furnishes such additional reports and information
as Wells Fargo Bank and the Company's Board of Directors and officers may
reasonably request. As compensation for sub-advisory services, WCM is entitled
to receive a monthly fee equal to an annual rate of 0.05% of the first $960
million of the Fund's average daily net assets and 0.04% of net assets over
$960 million.
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 Fund's
Sub-Advisory Contract may be terminated on 60 days' written notice by either
party and will terminate automatically if assigned.
Administrator and Co-Administrator. The Company has retained Wells Fargo
----------------------------------
Bank as Administrator and Stephens, Inc. ("Stephens") as Co-Administrator on
behalf of the Fund. Under the respective 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 U.S. Securities and Exchange
Commission ("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. Prior to February 1,
1998, the Administrator and Co-Administrator were entitled to receive a monthly
fee at the annual rate of 0.04% and 0.02%, respectively, of the Fund's average
daily net assets. In connection with the change in fees, the responsibility for
performing various administration services was shifted to the Co-Administrator.
Prior to February 1, 1997, Stephens served as the sole Administrator and
performed substantially the same services now provided by Stephens and Wells
Fargo Bank. Stephens was entitled to receive for its services a fee, payable
monthly, at the annual rate of 0.05% of the Fund's average daily net
assets.
For the period indicated below, the Fund paid the following dollar amounts
to Wells Fargo Bank and Stephens for administration and co-administration
fees:
13
<PAGE>
<TABLE>
<CAPTION>
Six-Month Period
Ended 3/31/97
-------------
Total Wells Fargo Stephens
----- ----------- --------
<S> <C> <C>
$483,198 $96,640 $386,558
</TABLE>
Prior to September 6, 1996, the Administrator, Furman Selz LLC ("Furman
Selz"), of the Pacifica predecessor portfolio to the Fund provided management
and administration services necessary for the operation of the Fund, pursuant to
an Administrative Services Contract. For these services, Furman Selz was
entitled to receive a fee, payable monthly, at the annual rate of 0.15% of the
average daily net assets of the predecessor portfolio.
The predecessor portfolio of the Treasury Money Market Fund was
administered through April 14, 1996 by the Dreyfus Corporation ("Dreyfus"), at
the annual rate of 0.10% of the Fund's average daily net assets.
The following table reflects the administration fees which the respective
Administrators of the Fund and its predecessor portfolio paid during the fiscal
year ended September 30, 1996. These amounts also reflect the net
administration fees paid by the respective former Administrator of the
predecessor portfolio during the period begun October 1, 1995 and ended
September 5, 1996. During the fiscal year ended September 30, 1995, the six-
month period ended September 30, 1994 and the fiscal year ended March 31, 1994,
administration fees paid to Dreyfus by the predecessor portfolio of the Treasury
Money Market Fund were as listed below.
<TABLE>
<CAPTION>
Six-Month
Year Ended Year Ended Period Ended Year Ended
9/30/96 9/30/95 9/30/94 3/31/94
------- ------- ------- -------
<S> <C> <C> <C>
$1,745,759 $921,886 $347,499 $690,137
</TABLE>
Distributor. Stephens (the "Distributor"), located at 111 Center Street,
------------
Little Rock, Arkansas 72201 serves as Distributor for the Fund. The Fund has
adopted a distribution plan (a "Plan") under Section 12(b) of the 1940 Act and
Rule 12b-1 thereunder (the "Rule") for the Class E shares. The Plan was adopted
by the Company's Board of Directors, including a majority of the Directors who
were not "interested persons" (as defined in the 1940 Act) of the Fund and who
had no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan (the "Non-Interested Directors").
Under the Plan and pursuant to the Distribution Agreement, the Fund may pay
Stephens, as compensation for distribution-related services or as reimbursement
for distribution-related expenses, a monthly fee at the annual rate of up to
0.10% of the Fund's average daily net assets
14
<PAGE>
attributable to Class E shares. Prior to September 1, 1997, the Distributor was
entitled to a monthly fee at the annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class E shares.
The actual fee payable to the Distributor by the Fund is determined, within
such limits, from time to time by mutual agreement between the Company and the
Distributor and will not exceed the maximum sales charges payable by mutual
funds sold by members of the National Association of Securities Dealers, Inc.
("NASD") under the Conduct Rules of the NASD. The Distributor may enter into
selling agreements with one or more selling agents (which may include Wells
Fargo Bank and its affiliates) under which such agents may receive compensation
for distribution-related services from the Distributor, including, but not
limited to, commissions or other payments to such agents based on the average
daily net assets of Fund shares attributable to their customers. The
Distributor may retain any portion of the total distribution fee payable
thereunder to compensate it for distribution-related services provided by it or
to reimburse it for other distribution-related expenses.
For the six month period ended March 31, 1997, the Fund's distributor
received the following fees for distribution-related services, as set forth
below under the Fund's Plan for Class E shares.
<TABLE>
<CAPTION>
Printing & Mailing Marketing Compensation to
Total Prospectus Brochures Underwriters
----- ---------- --------- ------------
<S> <C> <C> <C>
$46,608 N/A N/A $46,608
</TABLE>
For the six-month period ended March 31, 1997, Wells Fargo Securities Inc.
("WFSI"), an affiliated broker-dealer of the Company, and its registered
representatives received no compensation under the Fund's Plan.
General. The Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of both the Directors of the Company
and the Non-Interested Directors. Any Distribution Agreement related to the
Plan also must be approved by such vote of the Directors and Non-Interested
Directors. Such Agreement will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the outstanding voting securities of the Class E shares of the Fund or by
vote of a majority of the Non-Interested Directors on not more than 60 days'
written notice. The Plan may not be amended to increase materially the amounts
payable thereunder without the approval of a majority of the outstanding voting
securities of the Fund, and no material amendment to the Plan may be made except
by a majority of both the Directors of the Company and the Non-Interested
Directors.
The Plan requires that the Treasurer of the Company shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of
15
<PAGE>
Directors who are not "interested persons" of the Company be made by such
disinterested Directors.
Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Company, acts as a selling agent for the Fund's
Class E shares pursuant to selling agreements with Stephens authorized under the
Plan. As a selling agent, Wells Fargo Bank has an indirect financial interest in
the operation of the Plan. The Board of Directors has concluded that the Plan is
reasonably likely to benefit the Fund and its shareholders because the Plan
authorizes the relationships with selling agents, including Wells Fargo Bank,
that have previously developed distribution channels and relationships with the
customers that the Class E shares of the Fund are designed to serve. These
relationships and distribution channels are believed by the Board to provide
potential for increased Fund assets and ultimately corresponding economic
efficiencies (i.e., lower per-share transaction costs and fixed expenses) that
are generated by increased assets under management.
Shareholder Servicing Agent. The Fund has approved a Servicing Plan and
----------------------------
has entered into a related Shareholder Servicing Agreement, with financial
institutions, including Wells Fargo Bank, on behalf of Class E shares. 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 from the Fund, not to exceed 0.30% (0.25%
prior to September 1, 1997), on an annualized basis, of the average daily net
assets of the class of shares owned of record or beneficially by the customers
of the Servicing Agent during the period for which payment is being made. The
Servicing Plan and related form of shareholder servicing agreement were approved
by the Company's Board of Directors and provide that the Fund shall not be
obligated to make any payments under such Plan or related Agreements that exceed
the maximum amounts payable under the Conduct Rules of the NASD.
For the six-month period ended March 31, 1997, the Fund paid $46,608 in
shareholder servicing fees to Wells Fargo Bank or its affiliates.
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 Fund ("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.
16
<PAGE>
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.
Custodian. Wells Fargo Bank acts as Custodian for the Fund. The Custodian,
----------
among other things, maintains a custody account or accounts in the name of the
Fund, receives and delivers all assets for the Fund upon purchase and upon sale
or maturity, collects and receives all income and other payments and
distributions on account of the assets of the Fund, and pays all expenses of the
Fund. For its services as Custodian, Wells Fargo Bank is entitled to receive
fees as follows: a net asset charge at the annual rate of 0.0167%, payable
monthly, plus specified transaction charges. Wells Fargo Bank also will provide
portfolio accounting services under the Custody Agreement as follows: a monthly
base fee of $2,000 plus a net asset fee at the annual rate of 0.070% of the
first $50,000,000 of the Fund's average daily net assets, 0.045% of the next
$50,000,000, and 0.020% of the average daily net assets in excess of
$100,000,000.
For the six-month period ended March 31, 1997 the Fund did not pay any
custody fees, after waivers, to Wells Fargo Bank.
FICAL, located at 707 Wilshire Blvd., Los Angeles, California 90017, acted
as Custodian of the Pacifica Treasury Money Market Fund. FICAL was entitled to
receive a fee from Pacifica, computed daily and payable monthly, at the annual
rate of 0.021% of the first $5 billion in aggregate average daily net assets of
the Fund; 0.0175% of the next $5 billion in aggregate average daily net assets
of the Fund; and 0.015% of the aggregate average daily net assets of the Fund in
excess of $10 billion.
For the period begun October 1, 1995 and ended September 5, 1996, the
custody fees paid to FICAL, and for the period begun September 6, 1996 and ended
September 30, 1996, the custody fees paid to Wells Fargo Bank, were $252,183.
This amount reflects fee waivers.
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 0.10%
of the average daily net assets of the Class E shares. Prior to September 1,
1997, Wells Fargo Bank was entitled to receive transfer agency fees at an annual
rate of 0.02% of the average daily net assets of the Fund's Class E shares.
For the six-month period ended March 31, 1997 the Fund did not pay any
compensation for transfer and dividend disbursing agency services to Wells Fargo
Bank.
Underwriting Commissions. Front-end sales loads and contingent-deferred
-------------------------
sales charges are not assessed in connection with the purchase and redemption of
Class E shares. Therefore, no underwriting commissions are paid to Stephens as
the Distributor of the Fund's Class E shares.
17
<PAGE>
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 E shares may be useful in
reviewing the performance of the Fund or Class E shares of the Fund and for
providing a basis for comparison with investment alternatives. The performance
of the Fund and the performance of the Class E shares, 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 Funds.
The total return information presented below and advertised by the Fund for
the period prior to March 24, 1997, the date the Class E shares of the Fund
commenced operations, is based upon the prior performance of the Fund's Service
Class shares, which commenced operations on October 1, 1985.
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") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("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, 1997
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Inception One Year Three Year Five Year Ten Year
---- --------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Treasury Money Market
- - Class E 5.44% 4.60% 4.87% 4.06% 5.26%
</TABLE>
Cumulative Total Return: In addition to the above performance information,
-----------------------
the Fund may also advertise its cumulative total return. Cumulative total return
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.
18
<PAGE>
Cumulative Total Return for the Applicable Period Ended September 30, 1997
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Inception Three Year Five Year Ten Year
---- --------- ---------- --------- --------
<S> <C> <C> <C> <C>
Treasury Money Market -
Class E 88.80% 15.34% 22.03% 66.96%
</TABLE>
Yield Calculations: The Fund may, from time to time, include its yield and
------------------
effective yield in advertisements or reports to shareholders or prospective
investors. Quotations of yield for the Fund are based on the investment income
per share earned during a particular seven-day or thirty-day period, less
expenses accrued during a period ("net investment income") and are computed by
dividing net investment income by the offering price per share on the last date
of the period, according to the following formula:
YIELD = 2[(a - b + 1)/6/ -1]
-----
Cd
where a = dividends and interest earned during the period, b = expenses
accrued for the period (net of any reimbursements), c = the average daily number
of shares outstanding during the period that were entitled to receive dividends,
and d = the maximum offering price per share on the last day of the period.
Effective Yield: Effective yields for the Fund are based on the change in
---------------
the value of a hypothetical investment (exclusive of capital changes) over a
particular seven-day (or thirty-day) period, less a pro-rata share of the Fund's
expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized multiplying by 365/7 (or
365/30 for thirty-day yield), with the resulting yield figure carried to at
least the nearest hundredth of one percent. "Effective yield" for the Fund
assumes that all dividends received during the period have been reinvested.
Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:
Effective Seven-Day Yield = [(Base Period Return +1)365/7]-1.
Yield for the Applicable Period Ended September 30, 1997
--------------------------------------------------------
<TABLE>
<CAPTION>
Seven-Day
Seven-Day Effective Thirty-Day
Fund Yield Yield Yield
---- ----- ----- -----
<S> <C> <C> <C>
Treasury Money Market - Class E 4.76% 4.88% 4.86%
</TABLE>
From time to time and only to the extent the comparison is appropriate for
the Fund or a Class of 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
19
<PAGE>
Index, the Dow Jones Industrial Average, the Lehman Brothers 20+ Treasury Index,
the Lehman Brothers 5-7 Year Treasury Index, Donoghue's Money Fund Averages,
Real Estate Investment Averages (as reported by the National Association of Real
Estate Investment Trusts), Gold Investment Averages (provided by World Gold
Council), Bank Averages (which are calculated from figures supplied by the U.S.
League of Savings Institutions based on effective annual rates of interest on
both passbook and certificate accounts), average annualized certificate of
deposit rates (from the Federal Reserve G-13 Statistical Releases or the Bank
Rate Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), other managed or
unmanaged indices or performance data of bonds, municipal securities, stocks or
government securities (including data provided by Ibbotson Associates), or by
other services, companies, publications or persons who monitor mutual 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 the Class E shares also may be compared to that of
other mutual funds having similar objectives. This comparative performance could
be expressed as a ranking prepared by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The Fund's
performance will be calculated by relating net asset value per share at the
beginning of a stated period to the net asset value of the investment, assuming
reinvestment of all gains distributions and dividends paid, at the end of the
period. The Fund's comparative performance will be based on a comparison of
yields, as described above, or total return, as reported by Lipper, Survey
Publications, Donoghue or Morningstar, Inc.
Any such comparisons may be useful to investors who wish to compare past
performance of the Fund or the Class E shares with that of competitors. Of
course, past performance cannot be a guarantee of future results. The Company
also may include, from time to time, a reference to certain marketing approaches
of the Distributor, including, for example, a reference to a potential
shareholder being contacted by a selected broker or dealer. General mutual fund
statistics provided by the Investment Company Institute may also be used.
The Company also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
the Fund: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in the Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of the Fund or the general economic, business,
investment, or financial environment in which the Fund operates; (iii) the
effect of tax-deferred compounding on the investment returns of the Fund, or on
returns in general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the return from an
investment in the Fund (or returns in general) on a tax-deferred basis (assuming
reinvestment of capital gains and dividends and 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.
20
<PAGE>
In addition, the Company also may use, in advertisements and other types of
literature, information and statements: (1) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (2) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Company
also may include in advertising and other types of literature information and
other data from reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the related "Tax Freedom
Day."
The Company also may discuss in advertising and other types of literature
that a Fund has been assigned a rating by 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 Funds 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, Inc.
(formerly, Wells Fargo Investment Management), a division of Wells Fargo Bank,
is listed in the top 100 by Institutional Investor magazine in its July 1997
survey "America's Top 300 Money Managers." This survey ranks money managers in
several asset categories. The Company may also disclose in advertising and other
types of sales literature the assets and categories of assets under management
by the Company's investment advisor. The Company may also disclose in
advertising and other types of sales literature the assets and categories of
assets under management by a fund's investment advisor or sub-advisor and the
total amount of assets and mutual fund assets managed by Wells Fargo Bank. As of
June 30, 1998, Wells Fargo Bank and its affiliates provided investment Advisory
services for approximately $62 billion of assets of individual, trusts, estates
and institutions and $23 billion of mutual fund assets.
The Company also may discuss in advertising and other types of literature
the features, terms and conditions of Wells Fargo Bank accounts through which
investments in the Fund may be made via a "sweep" arrangement, including,
without limitation, the Managed Sweep Account,
21
<PAGE>
Money Market Checking Account, California Tax-Free Money Market Checking
Account, Money Market Access Account and California Tax-Free Money Market Access
Account (collectively, the "Sweep Accounts"). Such advertisements and other
literature may include, without limitation, discussions of such terms and
conditions as the minimum deposit required to open a Sweep Account, a
description of the yield earned on shares of the Funds through a Sweep Account,
a description of any monthly or other service charge on a Sweep Account and any
minimum required balance to waive such service charges, any overdraft protection
plan offered in connection with a Sweep Account, a description of any ATM or
check privileges offered in connection with a Sweep Account and any other terms,
conditions, features or plans offered in connection with a Sweep Account. Such
advertising or other literature may also include a discussion of the advantages
of establishing and maintaining a Sweep Account, and may include statements from
customers as to the reasons why such customers have established and maintained a
Sweep Account.
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 Class E shares of the Fund is determined as
of 12:00 noon and 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.
The Fund uses the amortized cost method to determine the value of its
portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security. While
22
<PAGE>
this method provides certainty in valuation, it may result in periods during
which the value, as determined by amortized cost, is higher or lower than the
price that the Funds would receive if the security were sold. During these
periods the yield to a shareholder may differ somewhat from that which could be
obtained from a similar fund that uses a method of valuation based upon market
prices. Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in a lower value of the Fund's portfolio on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from investment in a fund using solely
market values, and existing Fund shareholders would receive correspondingly less
income. The converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, the Fund must maintain a dollar-weighted average portfolio maturity
of 90 days or less, purchase securities having remaining maturities (as defined
in Rule 2a-7) of thirteen months or less and invest only in those high-quality
securities that are determined by the Board of Directors to present minimal
credit risks. The maturity of an instrument is generally deemed to be the period
remaining until the date when the principal amount thereof is due or the date on
which the instrument is to be redeemed. However, Rule 2a-7 provides that the
maturity of an instrument may be deemed shorter in the case of certain
instruments, including certain variable and floating rate instruments subject to
demand features. Pursuant to the Rule, the Board is required to establish
procedures designed to stabilize, to the extent reasonably possible, the Fund's
price per share as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Fund's portfolio holdings by the Board of
Directors, at such intervals as it may deem appropriate, to determine whether
the Fund's net asset value calculated by using available market quotations
deviates from $1.00 per share based on amortized cost. The extent of any
deviation will be examined by the Board of Directors. If such deviation exceeds
1/2 of 1%, the Board will promptly consider what action, if any, will be
initiated. In the event the Board determines that a deviation exists that may
result in material dilution or other unfair results to investors or existing
shareholders, the Board will take such corrective action as it regards as
necessary and appropriate, including the sale of portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends or establishing a net asset value per share by
using available market quotations. It is the intention of the Fund to maintain a
per share net asset value of $1.00, but there can be no assurance that the Fund
will do so.
Instruments having variable or floating interest rates or demand features
may be deemed to have remaining maturities as follows: (a) a government security
with a variable rate of interest readjusted no less frequently than every
thirteen months may be deemed to have a maturity equal to the period remaining
until the next readjustment of the interest rate; (b) an instrument with a
variable rate of interest, the principal amount of which is scheduled on the
face of the instrument to be paid in thirteen months or less, may be deemed to
have a maturity equal to the period remaining until the next readjustment of the
interest rate; (c) an instrument with a variable rate of interest that is
subject to a demand feature may be deemed to have a maturity equal to the longer
of the period remaining until the next readjustment of the interest rate or the
period remaining until the principal amount can be recovered through demand; (d)
an instrument with a floating rate of interest that is subject to a demand
feature may be deemed to have a maturity equal to the period remaining until
23
<PAGE>
the principal amount can be recovered through demand; and (e) a repurchase
agreement may be deemed to have a maturity equal to the period remaining until
the date on which the repurchase of the underlying securities is scheduled to
occur or, where no date is specified but the agreement is subject to demand, the
notice period applicable to a demand for the repurchase of the securities.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund may be purchased on any day the Fund is open for
business (a "Business Day"). The Fund is open Monday through Friday and is
closed on federal bank holidays. Currently, those holidays are New Year's Day,
President's Day, Martin Luther King Jr. Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day.
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 shareholders to make full
payment for shares purchased or to collect any charge relating to a transaction
effected for the benefit of a shareholder which is applicable to shares of the
Fund.
PORTFOLIO TRANSACTIONS
The Company has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to policies
established by the Company's Board of Directors, Wells Fargo Bank is responsible
for the Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Company to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While Wells Fargo Bank generally seeks
reasonably
24
<PAGE>
competitive spreads or commissions, the Fund will not necessarily be paying the
lowest spread or commission available.
Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or to
dealers serving as market makers for the securities at a net price. The Fund
also will purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, municipal obligations
and taxable money market securities are traded on a net basis and do not involve
brokerage commissions. The cost of executing the Fund's portfolio securities
transactions will consist primarily of dealer spreads and underwriting
commissions. Under the 1940 Act, persons affiliated with the Company are
prohibited from dealing with the Company as a principal in the purchase and sale
of securities unless an exemptive order allowing such transactions is obtained
from the Commission or an exemption is otherwise available. The Fund may
purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is a member under certain conditions in accordance with the
provisions of a rule adopted under the 1940 Act and in compliance with
procedures adopted by the Board of Directors.
Wells Fargo Bank, as the Investment Advisor of the Fund, may, in
circumstances in which two or more dealers are in a position to offer comparable
results for the 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 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.
Brokerage Commissions. The Fund did not pay any brokerage commissions on
---------------------
portfolio transactions for the six-month period ended March 31, 1997 or the
nine-month period ended September 30, 1996.
Securities of Regular Broker/Dealers. As of March 31, 1997, the Fund owned
------------------------------------
securities of its "regular brokers or dealers" or their parents, as defined in
the Act as follows:
<TABLE>
<CAPTION>
Fund Broker/Dealers Amount
- ---- -------------- ------
<S> <C> <C>
Treasury Money Market Goldman Sachs & Co. $172,575,000
J.P. Morgan Securities $232,766,000
Morgan Stanley $156,530,000
</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
25
<PAGE>
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. Except for the expenses borne
by Wells Fargo Bank and Stephens, the Company bears all costs of its operations,
including the compensation of its Directors who are not affiliated with Stephens
or Wells Fargo Bank or any of their affiliates; advisory, shareholder servicing
and administration fees; payments pursuant to any Plan; interest charges; taxes;
fees and expenses of its independent accountants, legal counsel, transfer agent
and dividend disbursing agent; expenses of redeeming shares; expenses of
preparing and printing prospectuses (except the expense of printing and mailing
prospectuses used for promotional purposes, unless otherwise payable pursuant to
a Plan), shareholders' reports, notices, proxy statements and reports to
regulatory agencies; insurance premiums and certain expenses relating to
insurance coverage; trade association membership dues; brokerage and other
expenses connected with the execution of portfolio transactions; fees and
expenses of its custodian, including those for keeping books and accounts and
calculating the net asset value per share of the Fund; expenses of shareholders'
meetings; expenses relating to the issuance, registration and qualification of
the Fund's shares; pricing services, and any extraordinary expenses. Expenses
attributable to the Fund are charged against the Fund assets. General expenses
of the Company are allocated among all of the funds of the Company, including
the Fund, in a manner proportionate to the net assets of the Fund, on a
transactional basis, or on such other basis as the Company's Board of Directors
deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectus describes generally
the tax treatment of distributions by the Fund. This section of the SAI includes
additional information concerning federal income taxes.
26
<PAGE>
General. The Fund intends to qualify as a regulated investment company
-------
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), as long as such qualification is in the best interest of the Fund's
shareholders. The Fund will be treated as a separate entity for federal income
tax purposes and thus the provisions of the Code applicable to regulated
investment companies will generally be applied separately to the Fund, rather
than to the Company as a whole. In addition, net capital gains, net investment
income, and operating expenses will be determined separately for the Fund. As a
regulated investment company, the Fund will not be subject to federal income
tax 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 (a) the Fund derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) the Fund diversify its holdings
so that, at the end of each quarter of the taxable year, (i) at least 50% of the
market value of the Fund's assets is represented by cash, government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. Government
obligations and the securities of other regulated investment companies), or in
two or more issuers which the Fund controls and which are determined to be
engaged in the same or similar trades or businesses.
The Fund must also distribute or be deemed to distribute to its
shareholders at least 90% of its net investment income (which, for this purpose,
include net short-term capital gains) earned in each taxable
year. Although the Fund must ordinarily make such distributions during the
taxable year in which it realized the net investment income, in certain
circumstances, the Fund may make such distributions in the following taxable
year. Furthermore, distributions declared to a shareholder of record in a day 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. However, in certain circumstances, such distributions may be
made in the 12 months following the taxable year. The Fund intends to pay out
substantially all of its net investment income and net realized capital gains
(if any) for each year.
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 the Fund
----------
to the extent it does not meet certain minimum distribution requirements by the
end of each calendar year. The Fund intends to actually or be deemed to
distribute substantially all of its net investment income and net capital gains
by the end of each calendar year and, thus, expects not to be subject to the
excise tax.
Taxation of Fund Investments. Except as provided herein, gains and losses
----------------------------
on the sale of portfolio securities by the Fund will generally be capital gains
and losses. Such gains and losses
27
<PAGE>
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 the Fund at a
market discount (generally at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of market discount which
accrued, but was not previously recognized pursuant to an available election,
during the term the Fund held the debt obligation.
Capital Gain Distributions. Distributions which are designated by the Fund
--------------------------
as capital gain distributions will be taxed to shareholders as long-term capital
gain (to the extent such dividends do exceed the Fund's actual net capital gain
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.
The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of 28% on net
capital gain (generally, the excess of net long-term capital gain over net
short-term capital loss). Noncorporate taxpayers are now generally taxed at a
maximum rate of 20% on net capital gain attributable to gains realized on the
sale of property held for greater than 18 months, and a maximum rate of 28% on
net capital gain attributable to gain realized on the sale of property held for
greater than one year and not more than 18 months. The 1997 Act retains the
treatment of short term capital gain or loss (generally, gain or loss
attributable to capital assets held for 1 year or less) and did not affect the
taxation of capital gains in the hands of corporate taxpayers.
Under the 1997 Act, the Treasury is authorized to issue regulations for
application of the reduced capital gains tax rates to pass-through entities,
including regulated investment companies, such as the Fund. The IRS has
published a notice applying the reduced capital gains rates to pass-through
entities until the regulations are issued. According to the notice, a Fund may
designate the portion of its capital gain distributions, if any, to which the
28% and 20% rates described in the preceding paragraph apply, based on the net
amount of each class of capital gain realized by the Fund, determined as if the
Fund were an individual subject to a marginal tax rate of 28%. Noncorporate
shareholders of the Fund may therefore qualify for the reduced rate of tax on
any capital gains paid by the Fund.
Other Distributions. Although dividends will be declared daily based on
-------------------
the Fund's daily earnings, for federal income tax purposes, the Fund's earnings
and profits will be determined at the end of each taxable year and will be
allocated pro rata over the entire year. For federal income tax purposes, only
amounts paid out of earnings and profits will qualify as dividends.
28
<PAGE>
Thus, if during a taxable year the Fund's declared dividends (as declared daily
throughout the year) exceed the Fund's net income (as determined at the end of
the year), only that portion of the year's distributions which equals the year's
earnings and profits will be deemed to have constituted a dividend. It is
expected that the Fund's net income, on an annual basis, will equal the
dividends declared during the year.
Disposition of Fund Shares. A disposition of Fund shares pursuant to
--------------------------
redemption (including a redemption in-kind) or exchanges will ordinarily result
in a taxable capital gain or loss, depending on the amount received for the
shares (or are deemed to receive in the case of an exchange) and the cost of 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 acquiring the Fund's shares shall not be taken
into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed
of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as 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 long-term capital loss to the extent of the designated capital gain
distribution. This loss disallowance rule does not apply to losses realized
under a periodic redemption plan.
Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 28% (however, see "Capital Gain Distributions" above);
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.
29
<PAGE>
Backup Withholding. The Company may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on dividends,
capital gain distributions, and redemption proceeds (including proceeds from
exchanges and redemptions in-kind) paid or credited to an individual Fund
shareholder, unless the shareholder certifies that the taxpayer identification
number ("TIN") provided is correct and that the shareholder is not subject to
backup withholding, or the IRS notifies the Company that the shareholder's TIN
is incorrect or 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 credit or refund 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. Foreign shareholders of the Fund
(described below) are generally not subject to backup withholding.
Foreign Shareholders. Under the Code, distributions of net investment
--------------------
income by the Fund to a nonresident alien individual, foreign trust (i.e., trust
which a U.S. court is able to exercise primary supervision over administration
of that trust and one or more U.S. persons have authority to control substantial
decisions of that trust), foreign estate (i.e., an estate the income of which is
not subject to U.S. federal income tax regardless of source), foreign
corporation, or foreign partnership (a "foreign shareholder") will be subject to
U.S. income tax withholding (at a rate of 30% or a lower treaty rate, if
applicable). Withholding will not apply if a dividend distribution paid by a
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. residents will apply.
Distributions of net capital gain to foreign shareholders are generally not
subject to U.S. income 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 Fund
to estimate the portion of its distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders which will be subject to U.S. income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
Other Matters. Investors should be aware that the investments to be made
-------------
by the Fund may involve sophisticated tax rules that may result in income or
gain recognition by the Fund
30
<PAGE>
without corresponding current cash receipts. Although the Fund will seek to
avoid significant noncash income, such noncash income could be recognized by the
Fund, in which case the Fund may distribute cash derived from other sources in
order to meet the minimum distribution requirements described above.
The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the federal income tax considerations
generally affecting investments in the Fund. Each investor is urged to consult
his or her tax advisor regarding specific questions as to federal, state, local
and 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 thirty-one other funds.
Most of the Company's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, classes subject to a contingent-deferred sales charge, that are offered
to retail investors. Certain of the Company's funds also are authorized to
issue other classes of shares, which are sold primarily to institutional
investors. Each class of shares in a fund represents an equal, proportionate
interest in a fund with other shares of the same class. Shareholders of each
class bear their pro rata portion of the fund's operating expenses, except for
certain class-specific expenses (e.g., any state securities registration fees,
shareholder servicing fees or distribution fees that may be paid under Rule 12b-
1) that are allocated to a particular class. Please contact Stagecoach
Shareholder Services at 1-800-222-8222 if you would like additional information
about other funds or classes of shares offered.
With respect to matters that affect one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of the Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in
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 each 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 a Fund,
means the vote of the lesser of (i) 67% of the shares of such class of the Fund
represented at a meeting if the holders of more than 50% of the outstanding
shares of such Class Fund are present in person or by proxy, or (ii) more than
50% of the outstanding shares of such Class 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
31
<PAGE>
Company's outstanding shares are present in person or by proxy, or (ii) more
than 50% of the Company's outstanding shares.
Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. 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 of the Fund 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 a Fund or class
are entitled to receive the assets attributable to the Fund or class 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 June 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 a class of the Fund or 5% or more of the voting
securities of the Fund as a whole. The term "N/A" is used where a shareholder
holds 5% or more of a class, but less than 5% of the Fund as a whole.
32
<PAGE>
5% OWNERSHIP AS OF JUNE 30, 1998
--------------------------------
<TABLE>
<CAPTION>
Class; Type Percentage Percentage
Fund Name and Address of Ownership of Class of Portfolio
- ---- ---------------- ------------ -------- ------------
<S> <C> <C> <C> <C>
TREASURY Virg. & Co. Class A 36.06% 6.22%
MONEY Attn: MF Dept. A88-4 Record Holder
MARKET P.O. Box 8900
MUTUAL Calabasas, CA 91372
Hare & Co. Class A 8.65% N/A
Bank of New York Record Holder
One Wall Street, 2nd Fl.
Attn: STIF/Master Note
New York, NY 10005
Omnibus Account Class A 21.99% N/A
c/o Stephens Inc. Record Holder
Attn Zoe Hines
111 Center Street
Little Rock, AR 72201
WFB - Wholesale Sweep Class A 30.18% 5.21%
155 Fifth Street Record Holder
MAC 0106-066
San Francisco, CA 94103
Virg. & Co. Institutional Class 34.83% 7.63%
Attn: MF Dept. A88-4 Record Holder
P.O. Box 8900
Calabasas, CA 91372
Wells Fargo Bank Institutional Class 33.23% 7.28%
Attn: Investment Sweep T-15 Record Holder
1300 S.W. Fifth Avenue
Portland, OR 97201
Hare & Co. Institutional Class 8.79% N/A
Bank of New York Record Holder
One Wall Street, 2nd Fl.
Attn: STIF/Master Note
New York, NY 10005
Castle Tower Holding Corp. Institutional Class 9.92% N/A
510 Bering Drive, Suite 310 Record Holder
Houston, TX 77057
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Class; Type Percentage Percentage
Fund Name and Address of Ownership of Class of Portfolio
- ---- ---------------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Virg. & Co. Service Class 22.52% N/A
Attn: MF Dept. A88-4 Record Holder
P.O. Box 8900
Calabasas, CA 91372
Wells Fargo Bank Service Class 5.78% N/A
FBO Choicemaker Record Holder
Attn: Mutual Funds
P.O. Box 9800
Calabasas, CA 91372
Hare & Co. Service Class 66.94% 13.47%
Bank of New York Record Holder
One Wall Street, 2nd Fl.
Attn: STIF/Master Note
New York, NY 10005
Hare & Co. Class E 100.00% 32.54%
Bank of New York Record Holder
One Wall Street, 2nd Fl.
Attn: Stiff/Master Note
New York, NY 10005
Wells Fargo Bank Agent Administrative 20.42% N/A
Orlandi No. 143242 Class
Mutual Funds No. 0187-112 Record Holder
AU No. 6971
201 Third Street, 11th Floor
San Francisco, CA 94163
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through
one or more controlled companies more than 25% of the voting securities of a
company is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund) or is identified as the holder of
record or more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
OTHER
The Company's Registration Statement, including the Prospectus and SAI
for the Fund and the exhibits filed therewith, may be examined at the office of
the U.S. Securities and Exchange Commission ("SEC") in Washington, D.C.
Statements contained in the Prospectus or the SAI as to the contents of any
contract or other document referred to herein or in the Prospectus are not
necessarily complete, and, in each instance, reference is made to the copy
of
34
<PAGE>
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent 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 and unaudited financial statements for the
six-month period ended September 30, 1997, are hereby incorporated by reference
to the Company's Semi-Annual Reports as filed with the SEC on December 5, 1997.
The portfolio of investments, audited financial statements and
independent auditors' report for the Fund for the fiscal period ended March 31,
1997 are hereby incorporated by reference to the Company's Annual Reports as
filed with the SEC on June 4, 1997.
Annual and Semi-Annual Reports may be obtained by calling
1-800-260-5969.
35
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P
to corporate and municipal bonds, municipal notes, and corporate and municipal
commercial paper.
Corporate and Municipal Bonds
Moody's: The four highest ratings for corporate and municipal bonds are
"Aaa," "Aa," "A" and "Baa." Bonds rated "Aaa" are judged to be of the "best
quality" and carry the smallest amount of investment risk. Bonds rated "Aa" are
of "high quality by all standards," but margins of protection or other elements
make long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds rated
"A" possess many favorable investment attributes and are considered to be upper
medium grade obligations. Bonds rated "Baa" are considered to be medium grade
obligations; interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds 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 and municipal 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.
Municipal Notes
Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG 2"
or "VMIG 2" are of "high quality," with margins of protections "ample although
not as large as in the preceding group." Notes rated "MIG 3" or "VMIG 3" are of
"favorable quality," with all security elements accounted for, but lacking the
strength of the preceding grades.
S&P: The "SP-1" rating reflects a "very strong or strong capacity to
pay principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
A-1
<PAGE>
Corporate and Municipal Commercial Paper
Moody's: The highest rating for corporate and municipal commercial
paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior capacity for
repayment of short-term promissory obligations." Issuers rated "P-2" (Prime-2)
"have a strong capacity for repayment of short-term promissory obligations," but
earnings trends, while sound, will be subject to more variation.
S&P: The "A-1" rating for corporate and municipal 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."
Corporate Notes
S&P: The two highest ratings for corporate notes are "SP-1" and "SP-2."
The "SP-1" rating reflects a "very strong or strong capacity to pay principal
and interest." Notes issued with "overwhelming safety characteristics" will be
rated "SP-1+." The "SP-2" rating reflects a "satisfactory capacity" to pay
principal and interest.
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 California Tax-Free Bond, Index Allocation,
Overland Express Sweep, Short-Term Government-Corporate Income, Short-
Term Municipal Income, Strategic Growth, U.S. Government Income and
Variable Rate Government Funds, the portfolio of investments, audited
financial statements and independent auditors' report for the year
ended December 31, 1997, are incorporated in the respective statements
of additional information for such Funds by reference to the Company's
Annual Reports, as filed with the SEC on March 3, 1998.
With respect to the International Equity Fund, 4-6 month unaudited
financial statements for the period beginning September 24, 1997
(commencement of operations) and ending March 9, 1998, are incorporated
by reference to Post-Effective Amendment No. 44 to the Company's
Registration Statement, as filed with the SEC on April 17, 1998.
With respect to the Arizona Tax-Free, Asset Allocation, Balanced,
California Tax-Free Bond, California Tax-Free Income, California Tax-
Free Money Market Mutual, Diversified Equity Income, Equity Index,
Equity Value, Government Money Market Mutual, Growth, Intermediate
Bond, Money Market Mutual, Money Market Trust, National Tax-Free,
National Tax-Free Money Market Mutual, Oregon Tax-Free, Prime Money
Market Mutual, Short-Intermediate U.S. Government Income, Small Cap,
Strategic Growth, Treasury Money Market Mutual, U.S. Government
Allocation and U.S. Government Income Funds, the portfolio of
investments, unaudited financial statements and independent auditors'
report for the fiscal period ended September 30, 1997 are incorporated
in the respective statements of additional information for such Funds
by reference to the Company's Semi-Annual Reports, as filed with the
SEC on December 5, 1997.
With respect to the Asset Allocation, Capital Appreciation, Corporate
Stock, Small Cap, Tax-Free Money Market and U.S. Government Allocation
Master Portfolios of Master Investment Trust ("MIT"), the portfolio of
investments, audited financial statements and independent auditors'
report for the fiscal period ended September 30, 1997 are incorporated
in the respective statements of additional information for such
c-1
<PAGE>
Funds by reference to the Company's Semi-Annual Reports, as filed with
the SEC on December 5, 1997.
With respect to the Arizona Tax-Free, Asset Allocation, Balanced,
California Tax-Free Bond, California Tax-Free Income, California Tax-
Free Money Market Mutual, Diversified Equity Income, Equity Index,
Equity Value, Government Money Market Mutual, Growth, Intermediate
Bond, Money Market Mutual, Money Market Trust, National Tax-Free,
National Tax-Free Money Market Mutual, Oregon Tax-Free, Prime Money
Market Mutual, Short-Intermediate U.S. Government Income, Small Cap,
Strategic Growth, Treasury Money Market Mutual, U.S. Government
Allocation and U.S. Government Income Funds, the portfolio of
investments, audited financial statements and independent auditors'
report for the fiscal period ended March 31, 1997 are incorporated in
the respective statements of additional information for such Funds by
reference to the Company's Annual Reports, as filed with the SEC on
June 4, 1997.
With respect to the Asset Allocation, Capital Appreciation, Corporate
Stock, Small Cap, Tax-Free Money Market and U.S. Government Allocation
Master Portfolios of Master Investment Trust ("MIT"), the portfolio of
investments, audited financial statements and independent auditors'
report for the fiscal period ended March 31, 1997 are incorporated in
the respective statements of additional information for such Funds by
reference to the Company's Annual Reports as filed with the SEC on June
4, 1997.
With respect to the National Tax Free Money Market Trust, Corporate
Bond Fund and Strategic Income Fund the financial statements for such
Fund will be incorporated by reference in its respective statements of
additional information when available.
With respect to the predecessor portfolios to the California Tax-Free
Bond, Index Allocation, Overland Express Sweep, Short-Term Government-
Corporate Income, Short-Term Municipal Income, Strategic Growth, U.S.
Government Income and Variable Rate Government Funds, the portfolio of
investments and unaudited financial statements for the six month period
ended June 30, 1997 are hereby incorporated by reference to the Semi-
Annual Reports for Overland Express Funds, Inc. ("Overland") (SEC File
Nos. 33-16296; 811-8275) as filed with the SEC on September 3, 1997.
With respect to the Cash Investment Trust, Short-Term Government-
Corporate Income and Short-Term Municipal Income Master Portfolios of
MIT, the portfolio of investments and unaudited financial statements
for the six month period ended June 30, 1997 are hereby incorporated by
reference to the Semi-Annual Reports for Overland as filed with the SEC
on September 3, 1997.
c-2
<PAGE>
With respect to the predecessor portfolios to the California Tax-Free
Bond, Index Allocation, Overland Express Sweep, Short-Term Government-
Corporate Income, Short-term Municipal Income, Strategic Growth, U.S.
Government Income and Variable Rate Government Funds, the portfolio of
investments, audited financial statements and independent auditors'
report for the year ended December 31, 1996, are hereby incorporated by
reference to the Overland Annual Reports as filed with the SEC on March
11, 1997.
With respect to the Cash Investment Trust, Short-Term Government-
Corporate Income and Short-Term Municipal Income Master Portfolios of
MIT, the portfolio of investments, audited financial statements and
independent auditors' report for the year ended December 31, 1996, are
hereby incorporated by reference to the Overland Annual Reports as
filed with the SEC on March 11, 1997.
(b) Exhibits:
--------
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) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
5(a)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Asset Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.
5(b)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the U.S. Government Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
5(b)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the U.S. Government Allocation Fund, incorporated
by reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.
c-3
<PAGE>
5(c) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
5(d) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
5(e) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
5(f) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
5(g)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
5(g)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Corporate Stock Fund, incorporated by reference
to Post-Effective Amendment No. 21 to the Registration
Statement, filed February 29, 1996.
5(h) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.
5(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Income Fund, incorporated by
reference to Post-Effective Amendment No. 4 to the
Registration Statement, filed September 10, 1992.
5(j) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
5(k) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Arizona Tax-Free Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
5(l) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Balanced Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
5(m) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Equity Value Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
5(n) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Government Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
c-4
<PAGE>
5(o) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Intermediate Bond Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(p) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Money Market Trust Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(q) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the National Tax-Free Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(r) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Oregon Tax-Free Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
5(s) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Prime Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
5(t) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Treasury Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
5(u) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the California Tax-Free Money Market Trust,
incorporated by reference to Post-Effective Amendment No. 28
to the Registration Statement, filed December 3, 1996.
5(v) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the National Tax-Free Money Market Trust,
incorporated by reference to Post-Effective Amendment No. 32
to the Registration Statement, filed May 30, 1997.
5(v)(i) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the Index Allocation, Short-Term Government-
Corporate Income, Short-Term Municipal Income, Overland
Express Sweep and Variable Rate Government Funds, filed
September 25, 1997.
5(v)(ii) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors on behalf of the Index Allocation Fund, filed
September 25, 1997.
5(w) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the International Equity Fund, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.
6(a) - Amended Distribution Agreement with Stephens Inc.,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
6(b) - Selling Agreement with Wells Fargo Bank, N.A. on behalf of
the Funds, incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement, filed April
17, 1992.
7 - Not Applicable
c-5
<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(b) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
8(c) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
8(d) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
8(e) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
8(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
8(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
8(h) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Money Market Fund, incorporated by reference to Post-
Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.
8(i) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Income Fund, incorporated by
reference to Post-Effective Amendment No. 17 to the
Registration Statement, filed November 29, 1995.
8(j) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
8(k) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Short-Intermediate U.S. Government Income Fund,
incorporated by reference to Post-Effective Amendment No. 8
to the Registration Statement, filed February 10, 1994.
8(l) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the National Tax-Free Money Market Mutual Fund, incorporated
by reference to Post-Effective Amendment No. 24 to the
Registration Statement, filed April 29, 1996.
8(m) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Aggressive Growth Fund, incorporated by reference to
Post-Effective Amendment No. 20 to the Registration
Statement, filed February 28, 1996.
c-6
<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.
9(a)(i) - Administration Agreement with Wells Fargo Bank, N.A. on
behalf of the Funds, incorporated by reference to Post-
Effective Amendment No. 33 to the Registration Statement,
filed August 5, 1997.
9(a)(ii) - Co-Administration Agreement with Wells Fargo Bank, N.A. and
Stephens Inc. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement, filed August 5, 1997.
9(b) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the
Funds, incorporated by reference to Post-Effective Amendment
No. 32 to the Registration Statement, filed May 30, 1997.
9(c)(i) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the California Tax-Free Money Market Mutual
Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
9(c)(ii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Corporate Stock Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
9(c)(iii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 3 to the
Registration Statement, filed May 1, 1992.
9(c)(iv) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the California Tax-Free Income Fund,
incorporated by reference to Post-Effective Amendment No. 17
to the Registration Statement, filed November 29, 1995.
9(c)(v) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Short-Intermediate U.S. Government Income
Fund, incorporated by reference to Post-Effective Amendment
No. 8 to the Registration Statement, filed February 10, 1994.
9(c)(vi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the National Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 24
to the Registration Statement, filed April 29, 1996.
9(c)(vii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
9(c)(viii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the California Tax-Free
Bond Fund, incorporated by reference to
c-7
<PAGE>
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(c)(ix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Diversified Income
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(x) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
9(c)(xi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Growth and Income
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the U.S. Government
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(c)(xiii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment
No. 20 to the Registration Statement, filed February 28,
1996.
9(c)(xiv) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(c)(xv) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the California
Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
9(c)(xvi) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Diversified
Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(c)(xvii) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Ginnie Mae
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
9(c)(xviii) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Growth and
Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(c)(xix) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the U.S.
Government Allocation Fund,
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<PAGE>
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
9(c)(xx) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class A Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment
No. 20 to the Registration Statement, filed February 28,
1996.
9(d)(i) - Servicing Plan on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 17 to the Registration Statement,
filed November 29, 1995.
9(d)(ii) - Servicing Plan on behalf of the Class B Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(d)(iii) - Servicing Plan on behalf of the Class B Shares of the
California Tax-Free Bond Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(iv) - Servicing Plan on behalf of the Class B Shares of the
Diversified Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
9(d)(v) - Servicing Plan on behalf of the Class B Shares of the Ginnie
Mae Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(d)(vi) - Servicing Plan on behalf of the Class B Shares of the Growth
and Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
9(d)(vii) - Servicing Plan on behalf of the Class B Shares of the U.S.
Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
9(d)(viii) - Servicing Plan on behalf of the Class A Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
9(d)(ix) - Servicing Plan on behalf of the Class B Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
9(d)(x) - Servicing Plan on behalf of the Class B shares of the Index
Allocation Fund, filed September 25, 1997.
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<PAGE>
9(e)(i) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class A Shares of the Arizona Tax-Free,
Balanced, Equity Value, Government Money Market Mutual,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free, Prime Money Market Mutual, Small Cap and
Treasury Money Market Mutual Funds, incorporated by reference
to Post-Effective Amendment No. 32 to the Registration
Statement, incorporated by reference to Post-Effective
Amendment No. 32 to the Registration Statement, filed May 30,
1997.
9(e)(ii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class B Shares of the Arizona Tax-Free,
Balanced, Equity Value, Intermediate Bond, International
Equity, National Tax-Free, Oregon Tax-Free and Small Cap
Funds, incorporated by reference to Post-Effective Amendment
No. 32 to the Registration Statement, filed May 30, 1997.
9(e)(iii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Institutional Class Shares of the Aggressive
Growth, Arizona Tax-Free, Balanced, California Tax-Free Bond,
California Tax-Free Income, Equity Value, Ginnie Mae, Growth
and Income, Intermediate Bond, International Equity, Money
Market Mutual, National Tax-Free, Oregon Tax-Free, Prime
Money Market Mutual, Short-Intermediate Government, Small Cap
and Treasury Money Market Mutual Funds, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.
9(e)(iv) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Service Class Shares of the Prime Money Market
Mutual and Treasury Money Market Mutual Funds, incorporated
by reference to Post-Effective Amendment No. 25 to the
Registration Statement, filed June 17, 1996.
9(e)(v) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Money Market Trust and California Tax-Free
Money Market Trust, incorporated by reference to Post-
Effective Amendment No. 28 to the Registration Statement,
filed December 3, 1996.
9(e)(vi) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class E Shares of the Treasury Money Market
Mutual Fund, incorporated by reference to Post-Effective
Amendment No. 19 to the Registration Statement, filed January
23, 1997.
9(e)(vii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Administrative Class shares of the Prime Money
Market Mutual and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 33
to the Registration Statement, filed August 5, 1997.
9(e)(viii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class C shares of the Aggressive Growth,
California Tax-Free Bond, Index Allocation, Ginnie Mae,
National Tax-Free Bond, Small Cap and Variable Rate
Government Funds, incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement, filed August
5, 1997.
9(e)(ix) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Institutional Class shares of the National Tax-
Free Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement, filed August 5, 1997.
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<PAGE>
9(f) - Shareholder Administrative Servicing Plan and Form of
Administrative Servicing Agreement on behalf of Class A
shares of Index Allocation and Variable Rate Government Funds
and shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds, filed September 25, 1997.
10 - Opinion and Consent of Counsel, filed herewith.
11 - Not Applicable
12 - Not Applicable
13 - Investment letter, incorporated by reference to Item 24(b) of
Pre-Effective Amendment No. 1 to the Registration Statement,
filed November 29, 1991.
14 - Not Applicable
15(a)(i) - Distribution Plan on behalf of the California Tax-
Free Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
15(a)(ii) - Distribution Plan on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
15(a)(iii) - Distribution Plan on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3
to the Registration Statement, filed May 1, 1992.
15(a)(iv) - Distribution Plan on behalf of the California Tax-Free Income
Fund, incorporated by reference to Post-Effective Amendment
No. 4 to the Registration Statement, filed September 10,
1992.
15(a)(v) - Distribution Plan on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-
Effective Amendment No. 8 to the Registration Statement,
filed February 10, 1994.
15(a)(vi) - Amended Distribution Plan on behalf of the Class A Shares of
the Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
15(a)(vii) - Amended Distribution Plan on behalf of the Class A Shares of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(a)(viii) - Amended Distribution Plan on behalf of the Class A Shares of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(a)(ix) - Amended Distribution Plan on behalf of the Class A Shares of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
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<PAGE>
15(a)(x) - Amended Distribution Plan on behalf of the Class A Shares of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(a)(xi) - Amended Distribution Plan on behalf of the Class A Shares of
the U.S. Government Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
15(a)(xii) - Distribution Plan on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 17 to the Registration Statement,
filed November 29, 1995.
15(a)(xiii) - Distribution Plan on behalf of the Class A Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
15(a)(xiv) - Distribution Plan on behalf of the California Tax-Free Money
Market Trust, incorporated by reference to Post-Effective
Amendment No. 28 to the Registration Statement, filed
December 3, 1996.
15(a)(xv) - Distribution Plan on behalf of the Class A Shares of the
Arizona Tax-Free, Balanced, Equity Value, Government Money
Market Mutual, Intermediate Bond, International Equity,
National Tax-Free, Oregon Tax-Free, Prime Money Market
Mutual, Small Cap and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 32,
filed May 30, 1997.
15(a)(xvi) - Distribution Plan on behalf of the Class A shares of the
Index Allocation and Variable Rate Government Funds and
shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds, filed September 25, 1997.
15(b)(i) - Distribution Plan on behalf of the Class B Shares of the
Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
15(b)(ii) - Distribution Plan on behalf of the Class B Shares of the
California Tax-Free Bond Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
15(b)(iii) - Distribution Plan on behalf of the Class B Shares of the
Diversified Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
15(b)(iv) - Distribution Plan on behalf of the Class B Shares of the
Ginnie Mae Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
15(b)(v) - Distribution Plan on behalf of the Class B Shares of the
Growth and Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
15(b)(vi) - Distribution Plan on behalf of the Class B Shares of the U.S.
Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
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<PAGE>
15(b)(vii) - Distribution Plan on behalf of the Class B Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
15(b)(viii) - Distribution Plan on behalf of the Class B Shares of the
Arizona Tax-Free, Balanced, Equity Value, Index Allocation,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free and Small Cap Funds, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.
15(c) - Distribution Plan on behalf of the Class C Shares of the
Aggressive Growth, California Tax-Free Bond, Index
Allocation, Ginnie Mae, National Tax-Free Bond, Small Cap and
Variable Rate Government Funds, incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement, filed August 5, 1997.
15(d) - Distribution Plan on behalf of the Overland Sweep Fund, filed
September 25, 1997.
15(e) - Distribution Plan on behalf of the Class E Shares of the
Treasury Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 29, filed January 23, 1997.
16 - Schedules for Computation of Performance Data, incorporated
by reference to Post-Effective Amendment No. 15, filed May 1,
1995.
17 - See Exhibit 27.
18 - Rule 18f-3 Multi-Class Plan, as amended, incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement, filed August 5,1997.
19 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat,
Thomas S. Goho, Joseph N. Hankin, W. Rodney Hughes, Robert M.
Joses and J. Tucker Morse, incorporated by reference to Post-
Effective Amendment No. 32, filed May 30, 1997; 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 N-SAR,
filed May 29, 1997.
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
As of May 1, 1998 the Funds 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 April 30, 1998, the number of record holders of each class of
Securities of the Registrant was as follows:
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<PAGE>
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
- ---------------------------------------------------------- -------------------------------------------------
Class A(1) Class B Class C Institutional
---------- ------- ------- -------------
Class
-----
<S> <C> <C> <C> <C>
Arizona Tax-Free Fund 179 36 N/A 6
Asset Allocation Fund 12,659 12,214 10 N/A
Balanced Fund 1,621 597 N/A 196
California Tax-Free Bond Fund 10,694 1,788 95 49
California Tax-Free Income Fund 2,943 N/A N/A 7
California Tax-Free Money Market Mutual Fund 7,770 N/A N/A N/A
California Tax-Free Money Market Trust 2 N/A N/A N/A
Corporate Bond Fund 16 45 5 N/A
Diversified Equity Income Fund 12,295 3,850 N/A N/A
Equity Index Fund 2,319 564 N/A N/A
Equity Value Fund 2,492 5,570 15 171
Government Money Market Mutual Fund 133 N/A N/A N/A
Growth Fund 13,104 3,860 N/A 33
Index Allocation Fund 1,437 216 1,149 N/A
International Equity Fund 1,118 2,665 3 N/A
Intermediate Bond Fund 153 294 N/A 9
Money Market Mutual Fund 5,729 2(2) N/A N/A
Money Market Trust 5 N/A N/A N/A
National Tax-Free Fund 914 36 139 5
National Tax-Free Money Market Mutual Fund 49 N/A N/A 15
National Tax-Free Money Market Trust 2 N/A N/A N/A
Oregon Tax-Free Fund 613 86 N/A 9
Overland Express Sweep Fund 4 N/A N/A N/A
Prime Money Market Mutual Fund 352 508(3) 658(5) 105
Short-Intermediate U.S. Government Income Fund 707 N/A N/A 76
</TABLE>
c-14
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Short-Term Government-Corporate Income Fund 25 N/A N/A N/A
Short-Term Municipal Income Fund 20 N/A N/A N/A
Small Cap Fund 798 1,898 129 14
Strategic Growth Fund 13,694 3,013 1,516 N/A
Treasury Money Market Mutual Fund 204 129(3) 2(4) 223
142(5)
U.S. Government Allocation Fund 1,283 514 N/A N/A
U.S. Government Income Fund 10,546 874 86 105
Variable Rate Government Fund 698 N/A 52 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.
Item 27. Indemnification
---------------
The following paragraphs of Article VIII of the Registrant's
Articles of Incorporation provide:
(h) The Corporation shall indemnify (1) its Directors and
Officers, whether serving the Corporation or at its request any other entity,
to the full extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of expenses under
the procedures and to the full extent permitted by law, and (2) its other
employees and agents to such extent as shall be authorized by the Board of
Directors or the Corporation's By-Laws and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors may
take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time
to time such By-Laws, resolutions or contracts implementing such provisions
or such further indemnification arrangements as may be permitted by law. No
amendment of these Articles of Incorporation of the Corporation shall limit
or eliminate the right to indemnification provided hereunder with respect to
acts or omissions occurring prior to such amendment or repeal. Nothing
contained herein shall be construed to authorize the Corporation to indemnify
any Director or officer of the Corporation against any liability to the
Corporation or to any holders of securities of the Corporation to which he is
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office. Any
indemnification by the Corporation shall be consistent with the requirements
of law, including the 1940 Act.
c-15
<PAGE>
(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 open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.
To the knowledge of Registrant, none of the directors or executive
officers of Wells Fargo Bank, except those set forth below, is or has been at
any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
executive officers also hold various positions with and engage in business for
Wells Fargo & Company. Set forth below are the names and principal businesses of
the directors and executive officers of Wells Fargo Bank who are or during the
past two fiscal years have been engaged in any other business, profession,
vocation or employment of a substantial nature for their own account or in the
capacity of director, officer, employee, partner or trustee. All the directors
of Wells Fargo Bank also serve as directors of Wells Fargo & Company.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, McGee, Willis & Greene
Director 455 Market Street
San Francisco, CA 94105
Director of Armstrong World Industries, Inc.
5037 Patata Street
South Gate, CA 90280
Director of Eastman Chemical Corporation
12805 Busch Place
Santa Fe Springs, CA 90670
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
</TABLE>
c-16
<PAGE>
<TABLE>
<S> <C>
North Palm Beach, FL 33408
Michael R. Bowlin Chairman of the Board of Directors, Chief Executive Officer,
Director Chief Operating Officer and President of
Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060
Edward Carson Chairman of the Board and Chief Executive Officer of
Director First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
Director of Terra Industries, Inc.
1321 Mount Pisgah Road
Walnut Creek, CA 94596
William S. Davilla President (Emeritus) and a Director of
Director The Vons Companies, Inc.
618 Michillinda Ave.
Arcadia, CA 91007
Director of Pacific Gas & Electric Company
788 Taylorville Road
Grass Valley, CA 95949
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Company
P.O. Box 1000
Lebec, CA 93243
Director of The Bakersfield Californian
1707 I Street
P.O. Box 440
Bakersfield, CA 93302
Trustee of Whittier College
13406 East Philadelphia Ave.
</TABLE>
c-17
<PAGE>
<TABLE>
<S> <C>
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Wells Fargo & Company
Board of Directors 420 Montgomery Street
San Francisco, CA 94105
Director of Phelps Dodge Corporation
2600 North Central Ave.
Phoenix, AZ 85004
Director of Safeway, Inc.
4th and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Professor (Emeritus) of Accounting
Director Graduate School of Business at Stanford University
MBA Admissions Office
Stanford, CA 94305
Director of Bailard Biehl & Kaiser
Real Estate Investment Trust, Inc.
2755 Campus Dr.
San Mateo, CA 94403
Director of Boise Cascade Corporation
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Enron Corporation
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108
Thomas L. Lee Chairman and Chief Executive Officer of
Director The Newhall Land and Farming Company
</TABLE>
c-18
<PAGE>
<TABLE>
<S> <C>
10302 Avenue 7 1-2
Firebaugh, CA 93622
Director of Calmat Co.
501 El Charro Road
Pleasanton, CA 94588
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Ellen Newman President of Ellen Newman Associates
Director 323 Geary Street
Suite 507
San Francisco, CA 94102
Chair (Emeritus) of the Board of Trustees
University of California at San Francisco Foundation
250 Executive Park Blvd.
Suite 2000
San Francisco, CA 94143
Director of the California Chamber of Commerce
1201 K Street
12th Floor
Sacremento, CA 95814
Philip J. Quigley Chairman, President and Chief Executive Officer of
Director Pacific Telesis Group
130 Kearney Street Rm. 3700
San Francisco, CA 94108
Carl E. Reichardt Director of Columbia/HCA Healthcare Corporation
Director One Park Plaza
Nashville, TN 37203
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Retired Chairman of the Board of Directors
</TABLE>
c-19
<PAGE>
<TABLE>
<S> <C>
and Chief Executive Officer of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Donald B. Rice President and Chief Executive Officer of Teledyne, Inc.
Director 2049 Century Park East
Los Angeles, CA 90067
Retired Secretary of the Air Force
Director of Vulcan Materials Company
One MetroPlex Drive
Birmingham, AL 35209
Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
Director 44141 Yucca Avenue
Lancaster, CA 93534
Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310
Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201
Director of Northrop Grumman Corp.
1840 Century Park East
Los Angeles, CA 90067
Director of Outboard Marine Corporation
100 SeaHorse Drive
Waukegan, IL 60085
Director of Pacific Enterprises
555 West Fifth Street
Suite 2900
Los Angeles, CA 90031
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Retired Chairman of the Board and Chief Executive Officer of
</TABLE>
c-20
<PAGE>
<TABLE>
<S> <C>
Director Martin Lockheed Corp
6801 Rockledge Drive
Bethesda, MD 20817
Director of Edison International
and Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770
Director of First Interstate
633 West Fifth Street
Los Angeles, CA 90071
Chang-Lin Tien Chancellor of the University of California at Berkeley
Director
Director of Raychem Corporation
300 Constitution Drive
Menlo Park, CA 94025
John A. Young President, Chief Executive Officer and Director
Director of Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 9434
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
Director of Lucent Technologies
25 John Glenn Drive
Amherst, NY 14228
Director of Novell, Inc.
11300 West Olympic Blvd.
Los Angeles, CA 90064
Director of Shaman Pharmaceuticals Inc.
213 East Grand Ave. South
San Francisco, CA 94080
William F. Zuendt President of Wells Fargo & Company
President 420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corporation
5400 Bayfront Plaza, P.O. Box 58145
Santa Clara, CA 95052
Director of the California Chamber of Commerce
</TABLE>
c-21
<PAGE>
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 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 the directors or executive
officers of BGFA is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ------- -------------------------------
<S> <C>
Frederick L.A. Grauer Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Patricia Dunn Director of BGFA and C-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 94105
</TABLE>
Prior to January 1, 1996 WFNIA served as sub-advisor to the Asset
Allocation, Corporate Stock and U.S. Government Allocation Funds of the Company
and as advisor or sub-advisor to various other open-end 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
c-22
<PAGE>
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. 801-36479,
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 Inc. with the Securities and Exchange Commission
pursuant to the Investment Advisors Act of 1940 (file No. 501-15510).
(c) Not applicable.
Item 30. Location of Accounts and Records.
--------------------------------
(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder (collectively, "Records") at the offices of Stephens Inc., 111 Center
Street, Little Rock, Arkansas 72201.
(b) Wells Fargo Bank maintains all Records relating to its services as
investment 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.
c-23
<PAGE>
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 management-related 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 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-24
<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 28th day of May, 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 5/28/98
--------------------------
(Richard H. Blank, Jr.) (Principal Financial Officer)
* 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
May 28, 1998
<PAGE>
STAGECOACH FUNDS, INC.
FILE NOS. 33-42927; 811-6419
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
EX-99.B10 Opinion and Consent of Counsel
<PAGE>
EXHIBIT 99.B10
[MORRISON & FOERSTER LLP LETTERHEAD]
June 2, 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. 47 and Amendment No. 48 to the
Registration Statement on Form N-1A (SEC File Nos. 33-42927 and 811-6419) (the
"Registration Statement") of Stagecoach Funds, Inc. (the "Company") relating to
the registration of an indefinite number of shares of common stock of the Money
Market and Treasury Money Market Funds (the "Shares").
We have been requested by the Company to furnish this opinion as Exhibit
10 to the Registration Statement.
We have examined documents relating to the organization of the Company
and its series and the authorization and issuance of shares of its series. We
have also verified with the Company's transfer agent the maximum number of
shares issued by the Company through May 1, 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
Prospectus, which are included as part of the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
