<PAGE>
As filed with the Securities and Exchange Commission
on June 30, 1997
Registration No. 33-64352; 811-7780
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Post-Effective Amendment No. 7 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 9 [X]
(Check appropriate box or boxes)
STAGECOACH TRUST
(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 Avenue, N.W.
Washington, D.C. 20006
It is proposed that this filling will become effective (check appropriate box):
[X] Immediately upon filing pursuant to Rule 485(b), or [_] on _________,
pursuant to Rule 485(b)
[_] 60 days after filing pursuant to Rule 485(a)(1), or [_] on _________,
pursuant to Rule 485(a)(1)
[_] 75 days after filing pursuant to Rule 485(a)(2), or [_] on _________,
pursuant to Rule 485(a)(2)
<PAGE>
If appropriate, check the following box:
[_] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number of shares of its Common
Stock, $.001 par value, under the Securities Act of 1933, pursuant to Rule 24f-2
under the Investment Company Act 1940, as amended. The Registrant filed the
notice required by Rule 24f-2 for its most recent fiscal year ended February 28,
1997, with the Securities and Exchange Commission on April 28, 1997.
This Post-Effective Amendment to the Registrant's Registration Statement has
also been executed by Master Investment Portfolio (a registered investment
company with separate series in which certain of the Registrant's series invest
substantially all of their assets) and its trustees and principal officer.
<PAGE>
EXPLANATORY NOTE
----------------
This Post-Effective Amendment is being filed to add to the Trust's
Registration Statement the audited financial statements and certain related
financial information for the fiscal year ended February 28, 1997 for the
LifePath 2000, LifePath 2010, LifePath 2020, LifePath 2030 and LifePath 2040
Funds, and corresponding Master Portfolios, and to make certain other non-
material changes to the Registration Statement.
<PAGE>
LIFEPATH FUNDS
--------------
Cross Reference Sheet
---------------------
Form N-1A Item Number
- ---------------------
<TABLE>
<CAPTION>
Part A Prospectus Captions
- ------ -------------------
<S> <C>
1 Cover Page
2 Summary of Fund Expenses
3 Financial Highlights
4 Description of the Funds
Appendix
5 Management of the Funds
6 Management of the Funds
Dividends and Distributions
Taxes
Performance Information
General Information
7 Investing in the Funds
Exchange Privilege
Dividends and Distributions
8 How to Redeem Shares
9 Not Applicable
<CAPTION>
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
<S> <C>
10 Cover Page
11 Table of Contents
12 Management of the Trust
13 Investment Objectives and Management Policies
Appendix
14 Management of the Trust
15 Information About the Funds
Capital Stock
16 Management of the Trust
Independent Auditors
Counsel
17 Portfolio Transactions
18 Capital Stock
19 Purchase and Redemption of Shares
Determination of Net Asset Value
20 Dividends, Distributions and Taxes
21 Management Arrangements
22 Performance Information
23 Financial Information
Financial Statements
<CAPTION>
Part C General Information
- ------ -------------------
<S> <C>
24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
</TABLE>
<PAGE>
[LOGO OF STAGECOACH FUNDS(R) APPEARS HERE]
------------------------------------
PROSPECTUS
------------------------------------
STAGECOACH LIFEPATH(TM)FUNDS
LIFEPATH 2000(TM) FUND
LIFEPATH 2010(TM) FUND
LIFEPATH 2020(TM) FUND
LIFEPATH 2030(TM) FUND
LIFEPATH 2040(TM) FUND
CLASS A AND CLASS B
June 30, 1997
<PAGE>
STAGECOACH FUNDS(R)
STAGECOACH LIFEPATH(TM) FUNDS
CLASS A AND CLASS B SHARES
The LIFEPATH FUNDS consist of five asset allocation funds (the "LifePath
Funds") offered by Stagecoach Trust (the "Trust"), an open-end, management
investment company. By this Prospectus, the Trust is offering Class A and Class
B shares of the LifePath Funds. The LifePath Funds seek to provide investors
with an asset allocation strategy designed to maximize assets for retirement or
for other purposes consistent with the quantitatively measured risk that
investors, on average, may be willing to accept given their investment time
horizons.
Investors are encouraged to select a particular LifePath Fund based on the
decade of their anticipated retirement or when they anticipate beginning to
withdraw substantial portions of their investment.
. LIFEPATH 2000 FUND is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2000.
. LIFEPATH 2010 FUND is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2010.
. LIFEPATH 2020 FUND is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2020.
. LIFEPATH 2030 FUND is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2030.
. LIFEPATH 2040 FUND is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2040.
Please read this Prospectus before investing and retain it for future
reference. It sets forth concisely information about the Funds that a
prospective investor should know before investing. A Statement of Additional
Information ("SAI") dated June 30, 1997 has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus. For a free copy, write to the Trust c/o Wells Fargo Bank, N.A. -
Stagecoach Shareholder Services, P.O. Box 7066, San Francisco, California
94120-7066, or call 1-800-222-8222. The SAI and other information is available
on the SEC's Web site (http://www.sec.gov). If you hold shares in an IRA,
please call 1-800-BEST-IRA (1-800-237-8472) for information or assistance.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY WELLS FARGO BANK, N.A., BARCLAYS GLOBAL FUND ADVISORS OR ANY OF
THEIR AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, 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.
PROSPECTUS DATED JUNE 30, 1997
PROSPECTUS
<PAGE>
Each Fund invests all of its assets in a separate series (each, a "Master
Portfolio") of Master Investment Portfolio ("MIP"), an open-end, management
investment company, rather than in a portfolio of securities. Each Fund has the
same investment objective as the Master Portfolio bearing the corresponding
name, and each Fund's investment experience corresponds directly with the
relevant Master Portfolio's investment experience. References to the
investments and investment policies and risks of the Funds, unless otherwise
indicated, should be understood as references to the investments and investment
policies and risks of the corresponding Master Portfolios. Interests in a
Master Portfolio may be purchased only by investment companies or accredited
investors.
BARCLAYS GLOBAL FUND ADVISORS SERVES AS EACH MASTER PORTFOLIO'S INVESTMENT
ADVISER AND, TOGETHER WITH ITS AFFILIATES, PROVIDES OTHER SERVICES FOR WHICH IT
IS COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED WITH BARCLAYS GLOBAL
FUND ADVISORS, SERVES AS THE TRUST'S CO-ADMINISTRATOR AND AS DISTRIBUTOR OF
EACH FUND'S SHARES.
PROSPECTUS
<PAGE>
Table of Contents
-------
<TABLE>
<S> <C>
Summary of Fund Expenses 1
Financial Highlights 5
Description of the Funds 7
Management of the Funds 13
Investing in the Funds 18
How to Redeem Shares 28
Exchange Privilege 33
Dividends and Distributions 34
Taxes 36
Performance Information 36
General Information 38
Appendix A-1
</TABLE>
PROSPECTUS
<PAGE>
Summary of Fund Expenses
SHAREHOLDER TRANSACTION EXPENSES
CLASS A SHARES
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge on
Purchases (as a percentage
of offering price)........ None 4.50% 4.50% 4.50% 4.50%
Maximum Sales Charge on
Reinvested Dividends...... None None None None None
Maximum Sales Charge on
Redemptions............... None None None None None
Exchange Fees.............. None None None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Management Fees/1/........ .55% .55% .55% .55% .55%
12b-1 Fees................ .25% .25% .25% .25% .25%
Other Expenses............ .40% .40% .40% .40% .40%
----- ----- ----- ----- -----
TOTAL FUND OPERATING
EXPENSES................. 1.20% 1.20% 1.20% 1.20% 1.20%
</TABLE>
--------------
/1/ A portion of these fees is covered by a "defensive" Rule 12b-1
Distribution Plan that does not result in additional expenses to the
Funds or Master Portfolios. (See "Management of the Funds -- MIP 12b-1
Plan" for further information.)
EXAMPLE OF EXPENSES
An investor would pay the following expenses on a $1,000 investment in Class
A shares of a Fund, assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 YEAR................... $ 12 $ 57 $ 57 $ 57 $ 57
3 YEARS.................. $ 38 $ 81 $ 81 $ 81 $ 81
5 YEARS.................. $ 66 $108 $108 $108 $108
10 YEARS.................. $145 $184 $184 $184 $184
</TABLE>
PROSPECTUS
1
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES
CLASS B SHARES
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a percentage of offering
price)............................ None None None None
Maximum Sales Charge on Reinvested
Dividends......................... None None None None
Maximum Sales Charge on
Redemptions....................... 5.00% 5.00% 5.00% 5.00%
Exchange Fees...................... None None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Management Fees/1/................... .55% .55% .55% .55%
12b-1 Fees........................... .75% .75% .75% .75%
Other Expenses....................... .40% .40% .40% .40%
----- ----- ----- -----
TOTAL FUND OPERATING EXPENSES........ 1.70% 1.70% 1.70% 1.70%
</TABLE>
--------------
/1/ A portion of these fees is covered by a "defensive" Rule 12b-1
Distribution Plan that does not result in additional expenses to the
Funds or Master Portfolios. (See "Management of the Funds -- MIP 12b-1
Plan" for further information.)
EXAMPLE OF EXPENSES
An investor would pay the following expenses on a $1,000 investment in Class
B shares of a Fund, assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 YEAR............................. $ 67 $ 67 $ 67 $ 67
3 YEARS............................ $ 84 $ 84 $ 84 $ 84
5 YEARS............................ $112 $112 $112 $112
10 YEARS............................ $175 $175 $175 $175
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class
B shares of a Fund, assuming (1) 5% annual return and (2) no redemption:
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 YEAR............................. $ 17 $ 17 $ 17 $ 17
3 YEARS............................ $ 54 $ 54 $ 54 $ 54
5 YEARS............................ $ 92 $ 92 $ 92 $ 92
10 YEARS............................ $175 $175 $175 $175
</TABLE>
EXPLANATION OF TABLES
The purpose of the foregoing tables is to help a shareholder understand the
various costs and expenses that an investor in a Fund will bear directly or
indirectly. The foregoing tables reflect expenses at both the Fund and Master
Portfolio levels. The tables do not reflect any charges that may be imposed by
Wells Fargo Bank or other shareholder servicing agents directly on customer
accounts in connection with an investment in a Fund. Long-term shareholders of
the Funds could pay more in sales charges than the economic equivalent of the
maximum front-end sales charges applicable to mutual funds sold by members of
the National Association of Securities Dealers, Inc. ("NASD").
PROSPECTUS
2
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell Fund
shares. You are subject to a front-end sales charge on purchases of a Fund's
Class A shares (except for the LifePath 2000 Fund) and may be subject to a
contingent-deferred sales charge on a Fund's Class B shares if you redeem such
shares within a specified period. The Trust reserves the right to impose a
charge for wiring redemption proceeds. In certain instances you may qualify for
a reduction or waiver of the front-end sales charge. There are no other sales
charges, exchange fees or redemption fees. See "Investing In The Funds."
ANNUAL FUND OPERATING EXPENSES for Class A shares are based on each Fund's
actual expenses for the fiscal year ended February 28, 1997. The amounts shown
under "Management Fees" and "12b-1 Fees" for Class B shares are based on
contract amounts. The amounts shown under "Other Expenses" for the Class B
shares are based on estimated amounts expected to be in effect for the current
fiscal year. Barclays Global Fund Advisors ("BGFA"), Wells Fargo Bank, N.A.
("Wells Fargo Bank") and Stephens Inc. ("Stephens") at their sole discretion
may waive or reimburse all or a portion of their respective fees charged to, or
expenses paid by, a Fund or Master Portfolio. Any waivers or reimbursements
would reduce a Fund's or Master Portfolio's total expenses and accordingly,
have a favorable impact on its performance. For more complete descriptions of
the various costs and expenses you can expect to incur as an investor in the
Funds, please see "Management of the Funds."
EXAMPLE OF EXPENSES is a hypothetical illustration of the expenses associated
with a $1,000 investment over stated periods, based on the expenses in the
above tables and an assumed annual rate of return of 5%. This annual rate of
return should not be considered an indication of actual or expected performance
of a Fund nor a representation of past or future expenses; actual expenses and
returns may be greater or less than those shown.
With regard to the combined fees and expenses of the Funds and their
corresponding Master Portfolios, the Trust's Board of Trustees has considered
whether the various costs and benefits of investing each Fund's assets in the
corresponding Master Portfolio rather than directly in a portfolio of
securities would be more or less than if the Fund invested in portfolio
securities directly. The Trust's Board of Trustees believes that the aggregate
per share expenses of each Fund will not be more than the expenses incurred if
the Fund invested directly in the type of securities held by its corresponding
Master Portfolio. The Trust's Board of Trustees believes that if other
investors invest their assets in the Master Portfolios, certain economic
efficiencies may be realized with respect to the Master Portfolios. For
example, fixed expenses that otherwise would have been borne solely by a Fund
would be spread across a larger assets base provided by more than one fund
investing in a Master Portfolio. There can be no assurance that these economic
efficiencies will be achieved.
The Trust is currently authorized to issue a third class of LifePath shares --
the Institutional Class shares -- which are no longer offered for sale or in
connection with the Trust's dividend reinvestment plan. In addition, each
Master Portfolio may sell its interests to other mutual funds or accredited
investors. The expenses and corresponding
PROSPECTUS
3
<PAGE>
returns of these other funds may differ from the expenses and returns of the
shares described herein. Information regarding these and any other investment
options in the Funds or the Master Portfolios may be obtained by calling
Stephens at 1-800-643-9691. For additional information, see "Management of the
Funds."
PROSPECTUS
4
<PAGE>
Financial Highlights
The following information has been derived from the Financial Highlights of
the Class A shares in the Funds' financial statements for the fiscal year
ended February 28, 1997. The financial statements are incorporated by
reference into the SAI and have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report dated April 11, 1997 also is incorporated
by reference into the SAI. This information should be read in conjunction with
the financial statements and notes thereto. Financial information is not
provided for the Class B shares because the Class B shares were not offered
during the periods presented.
FOR A CLASS A SHARE OUTSTANDING
<TABLE>
<CAPTION>
LIFEPATH 2000 FUND LIFEPATH 2010 FUND LIFEPATH 2020 FUND
-------------------------------------- -------------------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1997 1996 1995 1997 1996 1995 1997 1996
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of
period......... $ 10.64 $ 9.92 $ 10.00 $ 11.42 $ 9.99 $ 10.00 $ 11.98 $ 10.17
Income from
investment
operations:
Net investment
income......... 0.42 0.40 0.34 0.34 0.32 0.34 0.27 0.27
Net realized and
unrealized
gain/(loss) on
investments.... 0.28 0.86 (0.14) 0.95 1.58 (0.02) 1.43 2.03
------- -------- ------- ------- ------- ------- -------- --------
Total from
investment
operations..... 0.70 1.26 0.20 1.29 1.90 0.32 1.70 2.30
Less
distributions:
From net
investment
income......... (0.42) (0.41) (0.27) (0.34) (0.33) (0.28) (0.28) (0.28)
From net
realized
capital gains.. (0.21) (0.13) (0.01) (0.17) (0.14) (0.05) (0.42) (0.21)
------- -------- ------- ------- ------- ------- -------- --------
Total
Distributions.. (0.63) (0.54) (0.28) (0.51) (0.47) (0.33) (0.70) (0.49)
------- -------- ------- ------- ------- ------- -------- --------
Net Asset Value,
end of period.. $ 10.71 $ 10.64 $ 9.92 $ 12.20 $ 11.42 $ 9.99 $ 12.98 $ 11.98
======= ======== ======= ======= ======= ======= ======== ========
Total Return
(not
annualized).... 6.74% 12.98% 2.10% 11.60% 19.40% 3.31% 14.65% 22.94%
Ratios/Supplemental
Data:
Net assets, end
of period
(000).......... $84,949 $100,070 $54,617 $82,971 $67,178 $36,764 $146,226 $122,488
Number of shares
outstanding,
end of period
(000).......... 7,934 9,406 5,503 6,801 5,883 3,679 11,264 10,224
Ratios to
average net
assets
(annualized)/1/
Ratio of
expenses to
average net
assets......... 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of net
investment
income to
average net
assets......... 3.93% 4.00% 4.62% 3.16% 3.06% 4.40% 2.33% 2.45%
Portfolio
Turnover
Rate/2/........ 108% 84% 17% 73% 39% 24% 61% 49%
Average
Commission Rate
Paid/3/........ $0.0401 -- -- $0.0404 -- -- $ 0.0451 --
</TABLE>
- -------------
/1/ Ratios include expenses charged to the Master Portfolio.
/2/ The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
/3/ The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning
on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are
charged. This amount may vary depending on, among other things, the mix of
trades, trading practices and commission rate structures.
(Continued)
PROSPECTUS
5
<PAGE>
<TABLE>
<CAPTION>
LIFEPATH
2020 FUND LIFEPATH 2030 FUND LIFEPATH 2040 FUND
------------ -------------------------------------- --------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1995 1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $ 10.00 $ 12.34 $ 10.17 $ 10.00 $ 12.84 $ 10.37 $ 10.00
Income from investment
operations:
Net investment income... 0.28 0.22 0.21 0.26 0.16 0.15 0.18
Net realized and
unrealized gain/(loss)
on investments......... 0.12 1.83 2.45 0.13 2.35 2.82 0.34
------- -------- ------- ------- -------- -------- -------
Total from investment
operations............. 0.40 2.05 2.66 0.39 2.51 2.97 0.52
Less distributions:
From net investment
income................. (0.23) (0.23) (0.22) (0.22) (0.16) (0.16) (0.15)
From net realized
capital gains.......... 0.00 (0.33) (0.27) 0.00 (0.69) (0.34) 0.00
------- -------- ------- ------- -------- -------- -------
Total Distributions..... (0.23) (0.56) (0.49) (0.22) (0.85) (0.50) (0.15)
------- -------- ------- ------- -------- -------- -------
Net Asset Value, end of
period................. $ 10.17 $ 13.83 $ 12.34 $ 10.17 $ 14.50 $ 12.84 $ 10.37
======= ======== ======= ======= ======== ======== =======
Total Return (not
annualized)............ 4.12% 17.01% 26.53% 4.03% 20.17% 28.91% 5.26%
Ratios/Supplemental
Data:
Net assets, end of
period (000)........... $66,036 $101,078 $83,012 $41,153 $189,560 $142,738 $56,737
Number of shares
outstanding, end of
period (000)........... 6,494 7,307 6,728 4,045 13,073 11,114 5,472
Ratios to average net
assets (annualized)/1/
Ratio of expenses to
average net assets..... 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of net investment
income to average net
assets................. 3.64% 1.81% 1.92% 3.35% 1.22% 1.29% 2.35%
Portfolio Turnover
Rate/2/................ 28% 42% 39% 40% 48% 29% 5%
Average Commission Rate
Paid/3/................ -- $ 0.0364 -- -- $ 0.0351 -- --
</TABLE>
- --------------
/1/ Ratios include expenses charged to the Master Portfolio.
/2/ The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
/3/ The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning
on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are
charged. This amount may vary depending on, among other things, the mix of
trades, trading practices and commission rate structures.
PROSPECTUS
6
<PAGE>
Description of the Funds
GENERAL
Each LifePath Fund offers Class A shares and the LifePath 2010, 2020, 2030 and
2040 Funds also offer Class B shares. Each LifePath Fund invests all of its
assets in a separate Master Portfolio of MIP with the same investment objective
as the Fund. For simplicity, references to the investments and investment
policies and risks of the Funds, unless otherwise indicated, should be
understood as references to the investments and investment policies and risks
of the Master Portfolios.
INVESTMENT OBJECTIVES
Each LifePath Fund seeks to provide long-term investors with an asset
allocation strategy designed to maximize assets for retirement or for other
purposes consistent with the quantitatively measured risk that investors, on
average, may be willing to accept given their investment time horizons.
Specifically:
. LifePath 2000 Fund is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2000.
. LifePath 2010 Fund is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2010.
. LifePath 2020 Fund is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2020.
. LifePath 2030 Fund is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2030.
. LifePath 2040 Fund is managed for investors planning to retire (or begin
to withdraw substantial portions of their investment) approximately in the
year 2040.
ABOUT THE FUNDS
You are encouraged to invest in a particular LifePath Fund based on the decade
of your anticipated retirement or when you anticipate beginning to withdraw
substantial portions of your account. For example, the LifePath 2000 Fund is
designed for investors in their 50s and 60s who plan to retire (or begin to
withdraw substantial portions of their investment) in approximately 2000; the
LifePath 2010 Fund is designed for investors in their 40s and 50s who plan to
retire (or begin to withdraw as described above) in approximately 2010; and so
on. In addition, when making your investment decision, you should evaluate your
own risk profile, recognizing, for example, that the LifePath 2040 Fund is
designed for investors with a high tolerance for risk while the LifePath 2000
Fund is designed for investors with a low tolerance for risk. The LifePath
Funds were the first mutual funds of their kind to offer a flexible investment
strategy designed to change over specific time horizons.
PROSPECTUS
7
<PAGE>
The LifePath Funds follow an asset allocation strategy among three broad
investment classes: equity securities and debt instruments of issuers located
throughout the world and cash in the form of money market instruments. Each
LifePath Fund invests varying percentages of its portfolio in equity
securities, debt instruments and money market instruments. The later-dated
Funds tend to be more heavily invested in equity securities and generally bear
more risk than the earlier-dated Funds. The later-dated Funds generally have an
expectation of greater total return. The investment class weightings of the
LifePath 2040 Fund at a given time might be 100%, 0% and 0% among equity
securities, debt securities and cash, respectively, while the weightings of the
LifePath 2000 Fund might be 25%, 50% and 25%, respectively. These weightings
will change periodically. The difference in the investment class weightings is
based on the statistically determined risk that investors, on average, may be
willing to accept given their investment time horizons in an effort to maximize
assets in anticipation of retirement or for other purposes. As each LifePath
Fund approaches its designated time horizon, it generally is managed more
conservatively, on the premise that individuals investing for retirement desire
to reduce investment risk in their retirement accounts as they age.
As of June 1, 1997, asset allocations in the LifePath Funds were approximately
as follows:
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 2010 2020 2030 2040
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Securities
Domestic........................ 14% 35% 49% 58% 69%
International................... 7% 12% 15% 19% 20%
Debt Securities.................. 79% 52% 35% 22% 10%
Cash............................. 0% 1% 1% 1% 1%
</TABLE>
The relative weightings for each of the various investment classes are
expected to change over time, with the LifePath 2040 Fund adopting in the 2030s
characteristics similar to the LifePath 2000 Fund today. BGFA may in the future
refine the Model, or the financial and economic data analyzed by the Model, in
ways that could result in changes to recommended allocations.
MANAGEMENT POLICIES
The LifePath Funds may invest in a wide range of U.S. and foreign investments
and market sectors and may shift their allocations among investments and
sectors from time to time. To manage the LifePath Funds, BGFA employs a
proprietary investment model (the "Model") that analyzes extensive financial
and economic data, including risk correlation and expected return statistics.
The Model selects indices representing segments of the global equity and debt
markets and the Funds invest to create market exposure by purchasing
representative samples of the indices in an attempt to replicate their
performance.
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The Model has broad latitude to allocate the Funds' investments among equity
securities, debt securities and money market instruments. The LifePath Funds
are not managed as balanced portfolios and are not required to maintain a
portion of their investments in each of the permitted investment categories at
all times. Until a LifePath Fund attains an asset level of approximately $100
to $150 million, the Model allocates assets across fewer of the investment
categories identified below than it otherwise would. As a LifePath Fund
approaches this minimum asset level, the Model adds investment categories from
among those identified below, thereby approaching the desired investment mix
over time.
Each LifePath Fund's investments are compared from time to time to the Model's
recommended allocation. Recommended reallocations are implemented subject to
BGFA's assessment of current economic conditions and investment opportunities.
BGFA may change from time to time the criteria and methods it uses to implement
the recommendations of the Model. Recommended reallocations are implemented in
accordance with trading policies designed to take advantage of market
opportunities and reduce transaction costs. The asset allocation mix selected
by the Model is a primary determinant in the respective LifePath Fund's
investment performance.
BGFA manages other portfolios which also invest in accordance with the Model.
The performance of each of those other portfolios is likely to vary from the
performance of each LifePath Fund. Such variation in performance is primarily
due to different equilibrium asset mix assumptions used for the various
portfolios, timing differences in the implementation of the Model's
recommendations and differences in expenses and liquidity requirements. The
overall management of each LifePath Fund is based on the recommendation of the
Model, and no person is primarily responsible for recommending the mix of asset
classes in each Fund or the mix of securities within the asset classes.
Decisions relating to the Model are made by BGFA's investment committee.
EQUITY SECURITIES -- The LifePath Funds seek U.S. equity market exposure
through investment in securities representative of the following indices of
common stocks:
. The S&P/BARRA Value Stock Index (consisting of primarily large-
capitalization U.S. stocks with lower-than-average price/book ratios).
. The S&P/BARRA Growth Stock Index (consisting of primarily large-
capitalization U.S. stocks with higher-than-average price/book ratios).
. The Intermediate Capitalization Value Stock Index (consisting of primarily
medium-capitalization U.S. stocks with lower-than-average price/book
ratios).
. The Intermediate Capitalization Growth Stock Index (consisting of
primarily medium-capitalization U.S. stocks with higher-than-average
price/book ratios).
. The Intermediate Capitalization Utility Stock Index (consisting of
primarily medium-capitalization U.S. utility stocks).
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. The Micro Capitalization Market Index (consisting of primarily small-
capitalization U.S. stocks).
. The Small Capitalization Value Stock Index (consisting of primarily small-
capitalization U.S. stocks with lower-than-average price/book ratios).
. The Small Capitalization Growth Stock Index (consisting of primarily
small-capitalization U.S. stocks with higher-than-average price/book
ratios).
The LifePath Funds seek foreign equity market exposure through investment in
equity securities, American Depositary Receipts or European Depositary
Receipts of issuers whose securities are representative of the following
indices of foreign equity securities:
. The Morgan Stanley Capital International (MSCI) Japan Index (consisting of
primarily large-capitalization Japanese stocks).
. The Morgan Stanley Capital International Europe, Australia, Far East Index
(MSCI EAFE) Ex-Japan Index (consisting of primarily large-capitalization
foreign stocks, excluding Japanese stocks).
The LifePath Funds also may seek U.S. and foreign equity market exposure
through investment in equity securities of U.S. and foreign issuers that are
not included in the indices listed above.
DEBT SECURITIES -- The LifePath Funds seek U.S. debt market exposure through
investment in securities representative of the following indices of U.S.
debt securities:
. The Lehman Brothers Long-Term Government Bond Index (consisting of all
U.S. Government bonds with maturities of at least ten years).
. The Lehman Brothers Intermediate-Term Government Bond Index (consisting of
all U.S. Government bonds with maturities of less than ten years and
greater than one year).
. The Lehman Brothers Long-Term Corporate Bond Index (consisting of all U.S.
investment-grade corporate bonds with maturities of at least ten years).
. The Lehman Brothers Intermediate-Term Corporate Bond Index (consisting of
all U.S. investment-grade corporate bonds with maturities of less than ten
years and greater than one year).
. The Lehman Brothers Mortgage-Backed Securities Index (consisting of all
fixed-coupon mortgage pass-throughs issued by the Federal National
Mortgage Association, Government National Mortgage Association and Federal
Home Loan Mortgage Corporation with maturities greater than one year).
The LifePath Funds seek foreign debt market exposure through investment in
securities representative of the following index of foreign debt securities:
. The Salomon Brothers Non-U.S. World Government Bond Index (consisting of
foreign government bonds with maturities of greater than one year).
Each U.S. and foreign debt security is expected to be part of an issuance
with a minimum outstanding amount at the time of purchase of approximately
$50 million
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and $100 million, respectively. Each security in which a LifePath Fund
invests must be rated at least Baa by Moody's Investors Service, Inc.
("Moody's"), or BBB by Standard & Poor's Corporation ("S&P"), Fitch
Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("Duff") or, if
unrated, deemed to be of comparable quality by BGFA. See "Risk
Considerations."
MONEY MARKET INSTRUMENTS -- The money market instruments held by each Fund
generally consist of high-quality money market instruments, including U.S.
Government obligations, obligations of domestic and foreign banks, short-
term corporate debt instruments and repurchase agreements. See "Appendix"
below for a more complete description of the money market instruments in
which each Fund may invest.
RISK CONSIDERATIONS
General
Since the investment characteristics and, therefore, investment risks directly
associated with each LifePath Fund correspond to those of the Master Portfolio
in which such Fund invests, the following is a discussion of the risks
associated with the investments of the Master Portfolios. Once again, unless
otherwise specified, references to the investment policies and risks of a Fund
also should be understood as references to the investment policies and risks of
the corresponding Master Portfolio.
The net asset value per share of each class of a LifePath Fund is neither
insured nor guaranteed, is not fixed and should be expected to fluctuate.
Equity Securities
The stock investments of the LifePath Funds are subject to equity market risk.
Equity market risk is the possibility that common stock prices will fluctuate
or decline over short or even extended periods. The U.S. stock market tends to
be cyclical, with periods when stock prices generally rise and periods when
prices generally decline. Throughout the first six months of 1997, the stock
market, as measured by the S&P 500 Index and other commonly used indices, was
trading at or close to record levels. There can be no guarantee that these
performance levels will continue.
Debt Securities
The debt instruments in which the LifePath Funds invest are subject to credit
and interest rate risk. Credit risk is the risk that issuers of the debt
instruments in which the Funds invest 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 Funds invest. The value of the debt instruments generally
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changes inversely to market interest rates. Debt securities with longer
maturities, which tend to produce higher yields, are subject to potentially
greater capital appreciation and depreciation than obligations with shorter
maturities. Changes in the financial strength of an issuer or changes in the
ratings of any particular security may also affect the value of these
investments.
Although some of the Funds' portfolio securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
Funds' daily net asset value is based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
or instrumentalities where it is not obligated to do so.
Foreign Securities
The LifePath Funds may invest in debt obligations and equity securities of
foreign issuers and may invest in American Depositary Receipts ("ADRs") and
European Depositary Receipts ("EDRs") of such issuers. Investing in the
securities of issuers of any foreign country, including through ADRs and EDRs
and similar securities, involves special risks and considerations not typically
associated with investing in U.S. companies. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political, social and
monetary or diplomatic developments that could affect U.S. investments in
foreign countries. Additionally, dispositions of foreign securities and
dividends and interest payable on those securities may be subject to foreign
taxes, including withholding taxes. Foreign securities often trade with less
frequency and volume than domestic securities and, therefore, may exhibit
greater price volatility. Additional costs associated with an investment in
foreign securities may include higher custodial fees than apply to domestic
custodial arrangements and transaction costs of foreign currency conversions.
Changes in foreign exchange rates also will affect the value of securities
denominated or quoted in currencies other than the U.S. dollar. A Fund's
performance may be affected either unfavorably or favorably by fluctuations in
the relative rates of exchange between the currencies of different nations, by
exchange control regulations and by indigenous economic and political
developments.
Other Investment Considerations
Because the Funds may shift investment allocations significantly from time to
time, their performance may differ from funds which invest in one asset class
or from funds with a stable mix of assets. Further, shifts among asset classes
may result in relatively high turnover and transaction (i.e., brokerage
commission) costs. Portfolio turnover also can generate short-term capital
gains tax consequences. During those
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periods in which a high percentage of a Fund's assets are invested in long-term
bonds, the Fund's exposure to interest-rate risk will be greater because the
longer maturity of such securities means they are generally more sensitive to
changes in market interest rates than short-term securities.
Each LifePath Fund also may lend its portfolio securities and enter into
futures transactions, each of which involves risk. The futures contracts and
options on futures contracts that each Fund may purchase may be considered
derivatives. Derivatives are financial instruments whose values are derived, at
least in part, from the prices of other securities or specified assets, indices
or rates. Each Fund may use some derivatives as part of its short-term
liquidity holdings and/or as substitutes for comparable market positions in the
underlying securities. Some derivatives may be more sensitive than direct
securities to changes in interest rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield or value due to
their structure or contract terms. A Fund may not use derivatives to create
leverage without establishing adequate "cover" in compliance with SEC leverage
rules.
Asset allocation and modeling strategies are employed by BGFA for other
investment companies and accounts advised or sub-advised by BGFA. If these
strategies indicate particular securities should be purchased or sold, at the
same time, by a LifePath Fund and one or more of these investment companies or
accounts, available investments or opportunities for sales will be allocated
equitably to each by BGFA. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by a LifePath Fund or the
price paid or received by such Fund.
Management of the Funds
GENERAL
The Trust has not retained the services of an investment adviser because each
Fund's assets are invested in a Master Portfolio that has retained investment
advisory services (see "Investment Adviser"). Each LifePath Fund bears a pro
rata portion of the fees paid to the corresponding Master Portfolio.
BOARD OF TRUSTEES
The business and affairs of the Trust are managed under the direction of its
Board of Trustees. Certain of the Trust's Trustees are also MIP's Trustees and
also serve as Directors of MasterWorks Funds Inc., another open-end investment
company whose LifePath Fund series are wholly invested in the Master
Portfolios. The Trust's Board, including a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust, has adopted
procedures to address potential conflicts of interest that may arise as a
result of the structure of the Boards. Additional information regarding the
Officers and Trustees of the Trust and MIP is included in the SAI under
"Management of the Trust."
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INVESTMENT ADVISER
BGFA serves as investment adviser to each LifePath Master Portfolio. BGFA
provides investment guidance and policy direction in connection with the
management of each Master Portfolio's assets. BGFA is an indirect subsidiary of
Barclays Bank PLC ("Barclays") and is located at 45 Fremont Street, San
Francisco, California 94105. As of April 30, 1997, BGFA and its affiliates
provided investment advisory services for approximately $429 billion of assets.
MIP has agreed to pay to BGFA a monthly fee at the annual rate of 0.55% of each
LifePath Master Portfolio's average daily net assets as compensation for its
advisory services.
BGFA, Barclays and their affiliates may deal, trade and invest for their own
account in the types of securities in which a Master Portfolio may invest and
may have deposit, loan and commercial banking relationships with the issuers of
securities purchased by a Master Portfolio. BGFA has informed MIP that in
making investment decisions the Adviser does not obtain or use material inside
information in its possession.
Morrison & Foerster LLP, counsel to the Trust and MIP and special counsel to
BGFA, has advised the Trust, MIP and BGFA that BGFA and its affiliates may
perform the services contemplated by the Investment Advisory Contracts and this
Prospectus without violation of the Glass-Steagall Act. Such counsel has
pointed out, however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state
statutes, including the Glass-Steagall Act, and relating to the permissible
activities of banks and their subsidiaries or affiliates, as well as future
changes in such statutes, regulations and judicial or administrative decisions
or interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.
CO-ADMINISTRATORS
Wells Fargo Bank and Stephens serve as co-administrators to the Trust. Wells
Fargo Bank and Stephens generally supervise all aspects of the operation of the
Trust other than providing investment advice. The administration services
provided to the LifePath Funds also include coordination of the other services
provided to the LifePath Funds, compilation of information for reports to the
SEC and state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the Trust's Board of Trustees and officers.
Stephens also furnishes office space and certain facilities to conduct the
Trust's business and compensates the Trust's Trustees, officers and employees
who are affiliated with Stephens. Wells Fargo Bank and Stephens may delegate
the performance of their administration duties to third parties. In addition,
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except as noted below, Wells Fargo Bank and Stephens have assumed all ordinary
expenses incurred by a LifePath Fund other than the fees payable by such Fund
pursuant to the Trust's various service contracts. For providing co-
administration services to the Trust, the Trust has agreed to pay Wells Fargo
Bank and Stephens a monthly fee at the annual rate of 0.10% of each LifePath
Fund's average daily net assets. Stephens previously provided substantially the
same services as sole administrator to the Funds.
Wells Fargo Bank has delegated certain of its duties as co-administrator to
Investors Bank & Trust Company ("IBT"). IBT, as sub-administrator, is
compensated by Wells Fargo Bank for performing certain administration services.
DISTRIBUTOR
Stephens is the distributor of the Funds' shares. Stephens is a full service
broker/dealer and investment advisory firm located at 111 Center Street, Little
Rock, Arkansas 72201. Stephens and its predecessor have been providing
securities and investment services for more than 60 years, including
discretionary portfolio management services since 1983. Stephens currently
manages investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.
Stephens, as the principal underwriter within the meaning of the 1940 Act, has
entered into a Distribution Agreement with the Trust pursuant to which Stephens
has responsibility for distributing the Funds' shares. The Company also has
adopted a Distribution Plan on behalf of each Fund or class of shares under the
SEC's Rule 12b-1 ("Plans"). Under the Plan for Class A shares, each Fund may
defray all or part of the cost of preparing and printing prospectuses and other
promotional materials and of delivering prospectuses and those materials to
prospective Class A shareholders, and may be compensated for other
distribution-related services. Stephens, for providing these services as the
Distributor, is entitled to receive a fee of up to 0.25% of the average daily
net assets attributable to the Class A shares. Under the Class B Plans, each
Fund may defray all or part of such costs and pay compensation to the
Distributor and Selling Agents for sales support services. The Class B Plans
provide for payments, on an annual basis, of up to 0.75% of the average daily
net assets attributable to the Class B shares. Other distribution-related
services may include, among other services, costs and expenses for
advertisements, sales literature, direct mail or any other form of advertising
expenses for advertisements, sales literature, direct mail or any other form of
advertising; expenses of sales employees or agents of the Distributor,
including salary, commissions, travel and related expenses; payments to
broker/dealers and financial institutions for services in connection with the
distribution of shares, including
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promotional incentives and fees calculated with reference to the average daily
net asset value of shares held by shareholders who have a brokerage or other
service relationship with the broker/dealer or other institution receiving such
fees; and other similar services as the Directors determine to be reasonably
calculated to result in the sale of a Fund's shares.
In addition, the Plans contemplate that, to the extent any fees payable
pursuant to a shareholder servicing agreement (discussed above) are deemed to
be for distribution-related services, such payments are approved and payable
pursuant to the Plans, subject to any limits under applicable law, regulations
or rules, including the NASD Rules. Financial institutions acting as Selling
Agents, Shareholder Servicing Agents or in certain other capacities may be
required to register as dealers pursuant to applicable state securities laws
which may differ from federal law and any interpretations expressed herein.
The Distribution Agreement provides that Stephens shall act as agent for the
Funds for the sale of their shares, and may enter into selling agreements with
Selling Agents that wish to make available shares of the Funds to their
respective customers. The Funds may participate in joint distribution
activities with any of the other funds of the Company, in which event, expenses
reimbursed out of the assets of the Funds may be attributable, in part, to the
distribution-related activities of another fund of the Company. Generally, the
expenses attributable to joint distribution activities will be allocated among
each Fund and the other funds of the Company in proportion to their relative
net assets sizes, although the Company's Board of Directors may allocate such
expenses in any other manner that it deems fair and equitable.
Stephens has established a cash and non-cash compensation program, pursuant to
which broker/dealers or financial institutions that sell shares of the
Company's funds may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise or the cash value of a non-cash
compensation item.
CUSTODIAN
IBT acts as custodian to each Fund and Master Portfolio. The principal
business address of IBT is 200 Clarendon Street, Boston, MA 02116. IBT is not
entitled to receive compensation for its custodial services so long as IBT is
entitled to receive compensation for providing sub-administration services.
Prior to October 21, 1996, Wells Fargo Bank acted as the Funds' custodian, and
similarly was not entitled to receive compensation for its custodial services.
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TRANSFER AGENT
Wells Fargo Bank serves as the Company's transfer and dividend disbursing
agent (the "Transfer Agent"). Wells Fargo Bank provides transfer agency
services at 525 Market Street, San Francisco, California 94105.
SHAREHOLDER SERVICING PLAN
The Trust has adopted Shareholder Servicing Plans for Class A and Class B
shares pursuant to which it may enter into shareholder servicing agreements
with certain financial institutions, securities dealers and other industry
professionals (collectively, "Shareholder Servicing Agents") for the provision
of certain services to Fund shareholders. The services provided may include
aggregating and transmitting purchase, exchange and redemption orders,
providing personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Funds, providing reports and other
information, and providing services related to the maintenance of shareholder
accounts. For the services provided pursuant to a Shareholder Servicing
Agreement, the Trust may pay each Shareholder Servicing Agent a monthly fee at
the annual rate of up to 0.20% of the average daily net assets of each Fund
represented by shares owned during the period for which payment is being made
by investors with whom the Shareholder Servicing Agent maintains a servicing
relationship, or an amount which equals the maximum amount payable to the
Shareholder Servicing Agent under applicable laws, regulation or rules,
including the Conduct Rules of the National Association of Securities Dealers,
Inc., whichever is less.
A Shareholder Servicing Agent also may impose certain conditions on its
customers, subject to the terms of this Prospectus, in addition to or different
from those imposed by the Trust, such as requiring a minimum initial investment
or payment of a separate fee for additional services. Each Shareholder
Servicing Agent is required to agree to disclose any fees it may directly
charge its customers who are Fund shareholders and to notify them in writing at
least 30 days before it imposes any transaction fees.
MIP 12B-1 PLAN
MIP's Board of Trustees has adopted, on behalf of each Master Portfolio, a
"defensive" distribution plan under Section 12(b) of the 1940 Act and Rule 12b-
1 thereunder (the "Plan"). The Plan does not result in any additional expenses
being borne by a Master Portfolio or a Fund. The Plan was adopted by a majority
of MIP's Board of Trustees (including a majority of those Trustees who are not
"interested persons" of MIP as defined in the 1940 Act) on October 10, 1995.
The Plan was intended as a precaution designed to address the possibility that
certain ongoing payments by Barclays to Wells Fargo Bank in connection with the
sale of a former affiliate of Wells Fargo Bank may be characterized as indirect
payments by each Master Portfolio to finance activities primarily intended to
result in the sale of interests in such
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Master Portfolio. The Plan provides that if any portion of a Master Portfolio's
advisory fees (up to 0.25% of the average daily net assets of each Master
Portfolio on an annual basis) were deemed to constitute an indirect payment for
activities that are primarily intended to result in the sale of interests in a
Master Portfolio, such payment would be authorized pursuant to the Plan.
EXPENSES
Under the Co-Administration Agreement, Wells Fargo Bank and Stephens have
agreed to assume the operating expenses of each LifePath Fund, except for
extraordinary expenses and those fees and expenses payable pursuant to the
various service contracts described above that are borne by the Trust.
Investing in the Funds
OPENING AN ACCOUNT
You may purchase shares in one of the several ways described below. You must
complete and sign an Account Application to open an account. Additional
documentation may be required from corporations, associations and certain
fiduciaries. Do not mail cash. For more information or additional forms call 1-
800-222-8222. For more information about buying shares in an IRA, call 1-800-
BEST-IRA, (1-800-237-8472). The Trust or Stephens may make the Prospectus
available in an electronic format. Upon receipt of a request from you or your
representative, the Trust or Stephens will transmit or cause to be transmitted
promptly, without charge, a paper copy of the electronic Prospectus.
To invest in a Fund's shares through a tax-deferred retirement plan through
which the Fund's shares are available, please contact a Shareholder Servicing
Agent to receive information and an application. See "Tax-Deferred Retirement
Plans" below.
SHARE VALUE
Shares of each Fund are sold on a continuous basis at the applicable offering
price (net asset value per share plus any applicable sales charges) next
determined after an order in proper form is received by the Transfer Agent. Net
asset value ("NAV") per share is determined as of the close of regular trading
on the New York Stock Exchange ("NYSE") (currently 1:00 p.m., Pacific time).
The Funds are open on each day the NYSE is open for business (a "Business
Day").
The NAV of a share of each class of the LifePath Funds is the value of total
net assets attributable to such class divided by the number of outstanding
shares of that class. The value of the net assets per class is determined daily
by adjusting the net assets per class at the beginning of the day by the value
of each class's shareholder activity, net
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investment income and net realized and unrealized gains or losses for that day.
Net investment income is calculated each day for each class by attributing to
each class a pro rata share of daily income and common expenses, and by
assigning class-specific expenses to each class as appropriate. The NAV of each
class of shares is expected to fluctuate daily and is expected to differ. The
Master Portfolio's investments are valued each Business Day generally by using
available market quotations or at fair value determined in good faith by BGFA
pursuant to guidelines approved by MIP's Board of Trustees. For further
information regarding the methods employed in valuing each Master Portfolio's
investments, see "Determination of Net Asset Value" in the SAI.
HOW TO BUY SHARES
The minimum initial investment amount is generally $1,000. The minimum initial
investment amount is $100 by the AutoSaver Plan purchase method (described
below), $250 for any tax-deferred retirement account for which a Shareholder
Servicing Agent serves as trustee or custodian under a prototype trust approved
by the Internal Revenue Service ("IRS") (a "Plan Account"), and $1,000 by all
other methods or for all other investors. Generally, subsequent investments
must be made in amounts of $100 or more. Where Fund shares are acquired in
exchange for shares of another fund in the Stagecoach Family of Funds, the
minimum initial investment amount applicable to the shares being exchanged
generally carries over. However, if the value of your investment in the shares
you are exchanging has been reduced below the minimum initial investment amount
by changes in market conditions or sales charges (and not by redemptions), you
may carry over the lesser amount into one of the Funds. Plan Accounts that
invest in the Fund through Wells Fargo ExpressInvest(TM) (available to certain
Wells Fargo tax-deferred retirement plans) are not subject to the minimum
initial investment amount or the subsequent investment amount requirements. In
addition, the minimum initial or subsequent purchase amount requirements may be
waived or lowered for investments effected on a group basis by certain entities
and their employees, such as pursuant to a payroll deduction or other
accumulation plan. If you have any questions regarding purchases of shares call
1-800-222-8222. If you have questions regarding ExpressInvest please contact
the Company at 1-800-237-8472. For additional information on tax-deferred
accounts, please refer to the section "Investing In The Funds -- Tax-Deferred
Retirement Plans" or contact a Shareholder Servicing Agent or Selling Agent.
All investments in a Fund's shares are subject to a determination by the Trust
that the investment instructions are complete. Payment for shares purchased
through a selling agent is not due from the selling agent until the settlement
date, which is normally three Business Days after the order is placed. If
shares are purchased by a check which does not clear, the Trust reserves the
right to cancel the purchase and hold the investor responsible for any losses
or fees incurred. The Trust reserves the right in its sole discretion to
suspend the availability of any Fund's shares and to reject any purchase
requests. Certificates for Fund shares are not issued.
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Purchase orders that are received by the Transfer Agent before the close of
regular trading on the NYSE generally are executed on the same day. Orders
received by the Transfer Agent after the close of regular trading on the NYSE
are executed on the next Business Day.
Federal regulations require that an investor provide a valid taxpayer
identification number ("TIN"), which is usually the investor's social security
number or employee identification number, upon opening or reopening an account.
See "Dividends, Distributions and Taxes" for further information concerning
this requirement.
SALES CHARGES
Set forth below is a Front-end Sales Charge Schedule listing the front-end
sales charges applicable to purchases of Class A shares of the LifePath Funds
(other than LifePath 2000). As shown below, reductions in the rate of front-end
sales charges ("Volume Discounts") are available as you purchase additional
shares (contingent-deferred sales charges applicable to Class B shares are
described below). You should consider the front-end sales charge information
set forth below and the other information contained in this Prospectus when
making your investment decisions.
FRONT-END SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
DEALER
FRONT-END FRONT-END ALLOWANCE
SALES CHARGE SALES CHARGE AS % OF
AS % OF AS % OF NET OFFERING
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED PRICE
------------------ -------------- --------------- ---------
<S> <C> <C> <C>
Less than $50,000.................... 4.50% 4.71% 4.00%
$50,000 up to $100,000............... 4.00 4.17 3.55
$100,000 up to $249,999.............. 3.50 3.63 3.125
$250,000 up to $499,999.............. 2.50 2.56 2.00
$500,000 up to $999,999.............. 2.00 2.04 1.75
$1,000,000 and over.................. 0.00/1/ 0.00 1.00
</TABLE>
--------------
/1/Class A shares that are redeemed within one year from the receipt of a
purchase order for such shares are subject to a contingent-deferred
sales charge of 1.00% of the dollar amount equal to the lesser of the
NAV at the time of purchase or the NAV of such shares at the time of
redemption.
If Class A shares are purchased through a selling agent, Stephens reallows the
portion of the front-end sales charge shown above as the Dealer Allowance.
Stephens also compensates selling agents for sales of Class B shares and is
then reimbursed out of Rule 12b-1 Fees and contingent-deferred sales charges
applicable to such shares. When shares are purchased directly through the
Transfer Agent and no selling agent is involved with the purchase, the entire
sales charge is paid to Stephens.
A selling agent or Shareholder Servicing Agent and any other person entitled
to receive compensation for selling or servicing shares may receive different
compensation
PROSPECTUS
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for selling or servicing Class A shares as compared with Class B shares of the
same fund.
REDUCED SALES CHARGES -- CLASS A SHARES
Discounts described below pertaining to reduced sales charge for Class A
shares are based on your holdings or purchases of shares on which you have paid
or will pay a front-end sales charge. Because Class B shares do not assess a
front-end sales charge, the amount of Class B shares you hold is not considered
in determining any Volume Discount.
Volume Discounts
The Volume Discounts described in the Front-end Sales Charge Schedule are
available to you based on the combined dollar amount you invest in shares
(including the Funds Class A shares) of one or more of the Trust's Funds which
assess a front-end sales charge (the "Load Funds").
Right of Accumulation
The Right of Accumulation allows you to combine the amount you invest in a
Fund's Class A shares with the total NAV of shares in other Load Funds to
determine reduced front-end sales charges in accordance with the above Front-
end Sales Charge Schedule. In addition, you also may combine the total NAV of
shares that you currently have invested in any other mutual fund in the
Stagecoach Family of Funds that is sponsored by Stephens. For example, if you
own Class A shares of the Load Funds with an aggregate NAV of $90,000 and you
invest an additional $20,000 in Class A shares of another Load Fund, the front-
end sales charge on the additional $20,000 investment would be 3.50% of the
offering price. To obtain the discount, you must provide sufficient information
at the time of your purchase to verify that your purchase qualifies for the
reduced front-end sales charge. Confirmation of the order is subject to such
verification. The Right of Accumulation may be modified or discontinued at any
time without prior notice with respect to all subsequent shares purchased.
Letter of Intent
A Letter of Intent allows you to purchase shares of a Load Fund over a 13-
month period at a reduced front-end sales charge based on the total amount of
Class A shares you intend to purchase plus the total NAV of shares in the Load
Funds that you already own. Each investment in shares of a Load Fund that you
make during the period may be made at the reduced front-end sales charge that
is applicable to the total amount you intend to invest. If you do not invest
the total amount within the period, you must pay the difference between the
higher front-end sales charge rate that would have been applied to the
purchases you made and the reduced front-end sales charge rate you
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have paid. The minimum initial investment for a Letter of Intent is 5% of the
total amount you intend to purchase, as specified in the Letter. Shares of the
Load Fund you purchased equal to 5% of the total amount you intend to invest
will be held in escrow and, if you do not pay the difference within 20 days
following the mailing of a request, a sufficient amount of escrowed shares will
be redeemed for payment of the additional front-end sales charge. Dividends and
capital gains paid on such shares held in escrow are reinvested in additional
Fund shares.
Reinvestment
You may reinvest proceeds from a redemption of Class A shares in Class A
shares of another of the Trust's Funds or another of the Stagecoach Family of
Funds that is registered in your state of residence at NAV, without a front-end
sales charge, within 120 days after your redemption. However, if the other fund
charges a front-end sales charge that is higher than the front-end sales charge
that you paid in connection with the Class A shares you redeemed, you must pay
the difference between the dollar amount of the two front-end sales charges.
You may reinvest at this NAV price up to the total amount of your redemption
proceeds. A written purchase order for the shares must be delivered to the
Trust, a selling agent, a Shareholder Servicing Agent, or the Transfer Agent at
the time of reinvestment.
Reductions for Families or Fiduciaries
Reductions in front-end sales charges apply to purchases by an individual,
members of a family unit, including a husband, wife and children under the age
of 21 purchasing securities for their own account, or a trustee or other
fiduciary purchasing for a single fiduciary account or single trust estate.
Waivers for Investments of Proceeds From Other Investments
Purchases may be made at NAV, without payment of a front-end sales charge, to
the extent that: (i) you are investing proceeds from a redemption of shares of
another open-end investment company on which you paid a front-end sales charge,
and (ii) such redemption occurred within thirty (30) days prior to the date of
the purchase order. You must notify the Fund and/or the Transfer Agent at the
time you place such purchase order of your eligibility for the waiver of front-
end sales charges and provide satisfactory evidence thereof (e.g., a
confirmation of the redemption and the sales charges paid).
Reductions for Qualified Groups
Reductions in front-end sales charges also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate
dollar amount of Class A shares purchased by all members of the qualified
group. For purposes of this
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paragraph, a qualified group consists of a "company," as defined in the 1940
Act, which has been in existence for more than six months and which has a
primary purpose other than acquiring Fund shares at a reduced sales charge, and
"related parties" of such company. For purposes of this paragraph, a "related
party" of a company is: (i) any individual or other company who directly or
indirectly owns, controls or has the power to vote 5% percent or more of the
outstanding voting securities of such company; (ii) any other company of which
such company directly or indirectly owns, controls or has the power to vote 5%
or more of its outstanding voting securities; (iii) any other company under
common control with such company; (iv) any executive officer, director or
partner of such company or of a related party; and (v) any partnership of which
such company is a partner. Investors seeking to rely on their membership in a
qualified group to purchase shares at a reduced sales load must provide
evidence satisfactory to the transfer agent of the existence of a bona fide
qualified group and their membership therein.
Waivers for Certain Parties
The Funds' Class A shares may be purchased at NAV, without a front-end sales
charge, by (i) trustees, officers and employees (and their spouses, parents,
children and siblings) of the Trust, Stephens, its affiliates and selling
agents; (ii) present and retired directors, officers and employees (and their
spouses, parents, children and siblings) of Wells Fargo Bank and its affiliates
if Wells Fargo Bank and/or the respective affiliates agree; (iii) employee
benefit and thrift plans for such persons and investment advisory, trust or
other fiduciary accounts, including certain Plan Accounts that are maintained,
managed or advised by Wells Fargo Bank or its affiliates ("Fiduciary
Accounts"); (iv) investors using proceeds from a required minimum distribution
from any Individual Retirement Account ("IRA"), Simplified Employee Pension
Plan or other self-directed retirement plan for which Wells Fargo Bank serves
as trustee, provided that the proceeds are invested in the Funds within 30 days
of such distribution and such distribution is required as a result of reaching
age 70 1/2; Investors who purchase Class A shares through Internet providers
approved by Wells Fargo Bank may purchase such shares without a front-end sales
charge.
Reductions for Certain Existing Shareholders
As of the date of this Prospectus, investors who held fund shares as of the
close of business on February 28, 1997, are entitled to purchase Fund shares
without a sales charge for so long as they continuously hold Class A shares.
CONTINGENT-DEFERRED SALES CHARGE -- CLASS B SHARES
Class B shares may be subject to a contingent-deferred sales charge ("CDSC").
A CDSC is an amount you pay if you redeem your shares within a specified
period. The
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CDSC will be equal to a percentage of the lesser of the NAV of your shares at
the time of purchase or the NAV of your shares at redemption.
Except as described below, if you purchase Class B shares and redeem such
shares within six years of the date of purchase the Class B shares are subject
to a CDSC as follows:
<TABLE>
<CAPTION>
REDEMPTION WITHIN: 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS
------------------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDSC: 5% 4% 3% 3% 2% 1%
</TABLE>
Class B shares of a Fund purchased prior to March 3, 1997, are subject to a
CDSC if redeemed within four years of purchase. For so long as you hold Class B
shares of such Fund, any new Class B shares of the Fund that you acquire are
subject to a CDSC if redeemed within four years. In addition, if you exchange
Class B shares of the Fund for Class B shares of another fund, upon redemption
the CDSC applicable to the original Class B shares of the Fund will apply. The
CDSCs applicable to such shares are as follows:
<TABLE>
<CAPTION>
REDEMPTION WITHIN: 1 YEAR 2 YEARS 3 YEARS 4 YEARS
------------------ ------ ------- ------- -------
<S> <C> <C> <C> <C>
CDSC: 3% 2% 1% 1%
</TABLE>
Contingent-deferred sales charges will not be imposed on amounts representing
increases in NAV above the NAV at the time of purchase. Contingent-deferred
sales charges will not be assessed on Class B shares purchased through
reinvestment of dividends or capital gain distributions. Class B shares
automatically convert into Class A shares of the same Fund six years after the
end of the month in which such Class B shares were acquired.
The amount of any contingent-deferred sales charge paid upon redemption of
Class B shares is determined in a manner designed to result in the lowest
sales-charge rate being assessed. When a redemption request is made, Class B
shares acquired pursuant to the reinvestment of dividends and capital-gain
distributions are considered to be redeemed first. After this, Class B shares
are considered redeemed on a first-in, first-out basis so that Class B shares
held for a longer period of time are considered redeemed prior to more recently
acquired Class B shares. For a discussion of the interaction between the
optional Exchange Privilege and contingent-deferred sales charges on Class B
shares, see "Exchange Privilege."
Contingent-deferred sales charges are waived on redemptions of Class B shares
of a Fund (i) following the death or disability (as defined in the Internal
Revenue Code of 1986, as amended (the "Code")) of a shareholder, (ii) to the
extent that the redemption represents a scheduled distribution from an
individual retirement account or other retirement plan to a shareholder who has
reached age 59 1/2, (iii) effected pursuant to the Trust's right to liquidate a
shareholder's account if the aggregate NAV of
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the shareholder's account is less than the minimum account size, or (iv) in
connection with the combination of the Trust with any other registered
investment company by a merger, acquisition of assets or any other transaction.
In deciding whether to purchase Class A or Class B shares, you should compare
the fees assessed on Class A shares (including front-end sales charges) against
those assessed on Class B shares (including potential contingent-deferred sales
charges and higher Rule 12b-1 fees) in light of the amount to be invested and
the time that you anticipate owning the shares. If your purchase amount would
qualify you for a reduced sales charge on Class A shares, you should consider
carefully whether you would pay lower fees ultimately on Class A shares or on
Class B shares. (See "Investing in the Funds-- Reduced Sales Charges" for
information on reduced sales charges for Class A shares.)
You may buy shares on any Business Day by any of the methods described below.
The Company reserves the right to reject any purchase order or suspend sales at
any time. Payment for orders that are not received is returned after prompt
inquiry. The issuance of shares is recorded on the Company's books, and share
certificates are not issued.
INITIAL PURCHASES BY WIRE
1. Telephone toll free 1-800-222-8222. Give the name of the Fund in which an
investment is being made, and the name(s) in which the shares are to be
registered, address, TIN, amount to be wired, name of the wiring bank and
name and telephone number of the person to be contacted in connection with
the order. Some banks may impose wiring fees.
2. Instruct the wiring bank to transmit the specified amount in federal funds
($1,000 or more) to:
Wells Fargo Bank, N.A.
San Francisco, California
Bank Routing Number: 121000248
Wire Purchase Account Number: 4068-000587
Attention: Stagecoach Trust (Name of Fund -- designate Class
A or Class B)
Account Name(s): (name(s) in which to be registered)
Account Number: (if investing into an existing account)
3. A completed Account Application should be mailed, or sent by telefacsimile
with the original subsequently mailed, to the following address immediately
after the funds are wired and must be received and accepted by the Transfer
Agent before an account can be opened:
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PROSPECTUS
Wells Fargo Bank, N.A.
Stagecoach Shareholder Services
P.O. Box 7066
San Francisco, California 94120-7066
Telefacsimile: 1-415-543-9538
4. Share purchases are effected at the NAV next determined after the Account
Application is received and accepted, less any applicable sales charge.
INITIAL PURCHASES BY MAIL
1. Complete an Account Application. Indicate the services to be used.
2. Mail the Account Application and a check for $1,000 or more, payable to
"Stagecoach Trust/(Name of Fund -- designate Class A or Class B)," to the
address above.
3. Share purchases are effected at the NAV next determined after the Account
Application is received and accepted, less any applicable sales charge.
AUTOSAVER PLAN
The Trust's AutoSaver Plan provides you with a convenient way to establish and
automatically add to a Fund account on a monthly basis. To participate in the
AutoSaver Plan, you must specify an amount ($100 or more) to be withdrawn
automatically by the Transfer Agent on a monthly basis from an account with a
bank designated in your Account Application and approved by the Transfer Agent
("Approved Bank Account"). You may open an Approved Bank Account with Wells
Fargo Bank. The Transfer Agent withdraws and uses the amount you designate to
purchase specified shares of the designated Fund on your behalf each month on
or about the day that you have selected, or, if you have not selected a day, on
or about the 20th day of each month. The Transfer Agent requires a minimum of
ten (10) Business Days to implement your AutoSaver Plan purchases. If you hold
shares through a brokerage account, your AutoSaver Plan will comply with the
terms of your brokerage agreement. There are no separate fees charged to you by
the Trust for participating in the AutoSaver Plan.
You may change your investment amount, or the date on which your AutoSaver
purchase is effected, suspend purchases or terminate participation in the
AutoSaver Plan at any time by providing written notice to the Transfer Agent at
least five (5) Business Days prior to any scheduled transaction. Participation
in the AutoSaver Plan will be terminated automatically if an Approved Bank
Account balance is insufficient to make a scheduled withdrawal, or if either
the Approved Bank Account or Fund account is closed.
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TAX-DEFERRED RETIREMENT PLANS
You may be entitled to invest in shares of a Fund through a tax-deferred
retirement plan. Contact a Shareholder Servicing Agent for materials describing
plans available through it, and their benefits, provisions and fees related to
such plans. The minimum initial investment amount for Fund Shares acquired
through a plan is $250 (the minimum initial investment amount is not applicable
if you participate in ExpressInvest through a Plan Account).
Application materials for opening a tax-deferred retirement plan can be
obtained from a Shareholder Servicing Agent or selling agent. Completed tax-
deferred retirement plan applications should be returned to the investor's
Shareholder Servicing Agent or selling agent for approval and processing. If an
investor's tax-deferred retirement plan application is incomplete or improperly
filled out, there may be a delay before the Fund account is opened. Certain
features described herein, such as the AutoSaver Plan, may not be available to
individuals or entities who invest through a tax-deferred retirement plan.
Investors should consult their Shareholder Servicing Agent or selling agent.
ADDITIONAL PURCHASES
You may make additional purchases of $100 or more by instructing the Fund's
Transfer Agent to debit your Approved Bank Account by wire by using the
procedures described under initial purchases by wire, above, or by mail with a
check payable to "Stagecoach Funds/(Name of Fund -- designate Class A or Class
B)" to the above address. Write your Fund account number on the check and
include the detachable stub from your Statement of Account or a letter
providing your Fund account number.
PURCHASES THROUGH SELLING AGENTS
You may place a purchase order for shares of the Funds through a broker/dealer
or financial institution that has entered into a Selling Agreement with
Stephens, as the Funds' Distributor ("Selling Agent"). If your purchase order
is placed by the close of trading on the NYSE, the purchase order generally is
executed on the same day if the order is received by the Transfer Agent before
the close of business. If your purchase order is received by a Selling Agent
after the close of trading on the NYSE or by the Transfer Agent after the close
of business, then your purchase order is executed on the next Business Day.
Because payment for shares is not due until settlement date, normally three
Business Days after your order is placed, the Selling Agent might benefit from
temporary use of your payment.
The Selling Agent is responsible for the prompt transmission of your purchase
order to the Trust. A financial institution acting as a selling agent,
Shareholder Servicing Agent or in certain other capacities may be required to
register as a dealer pursuant to applicable state securities laws, which may
differ from federal law and any interpretations expressed herein.
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<PAGE>
PURCHASES THROUGH SHAREHOLDER SERVICING AGENTS
Purchase orders for Fund shares may be transmitted to the Transfer Agent
through a Shareholder Servicing Agent, such as Wells Fargo Bank. The
Shareholder Servicing Agent may transmit a purchase order to the Transfer
Agent, on your behalf, including a purchase order for which payment is to be
transferred from an Approved Bank Account or wired from a financial
institution. If your order is transmitted by the Shareholder Servicing Agent,
on your behalf, to the Transfer Agent before the close of trading on the NYSE,
the purchase order will be executed on the same day. If your Shareholder
Servicing Agent transmits your purchase order to the Transfer Agent after the
close of trading on the NYSE, then the order generally is executed on the next
Business Day following the day your order is received. The Shareholder
Servicing Agent is responsible for the prompt transmission of your purchase
order to the Transfer Agent.
STATEMENTS AND REPORTS
The Trust, or a Shareholder Servicing Agent on its behalf, will typically send
you a confirmation or statement of your account after every transaction that
affects your share balance or your Fund account registration. A statement with
tax information for the previous year will be mailed to you each year, and also
will be filed with the IRS. At least twice a year, you will receive financial
statements.
How to Redeem Shares
GENERAL
You may redeem Fund shares on any Business Day. The redemption price of the
shares is the next determined NAV of the relevant Class calculated after the
Trust has received a redemption request in proper form.
The Trust ordinarily remits redemption proceeds, net of any contingent-
deferred sales charge applicable with respect to Class B shares (the
"redemption proceeds"), from a Fund within seven days after a redemption order
is received in proper form, absent extraordinary circumstances. Such
extraordinary circumstances could include a period during which an emergency
exists as a result of which (a) disposal by the Master Portfolio in which such
Fund invests of securities owned by the Master Portfolio is not reasonably
practicable or (b) it is not reasonably practicable for the Fund fairly to
determine the value of its net assets, or a period during which the Securities
and Exchange Commission by order permits deferral of redemptions for the
protection of Fund shareholders. In addition, the Trust may defer payment of a
shareholder's redemption until reasonably satisfied that such shareholder's
investments made by check have been collected (which can take up to ten (10)
days from the purchase date). Payment of redemption proceeds may be made in
portfolio securities, subject to regulation by some state securities
commissions.
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All redemptions of shares generally are made in cash, except that the
commitment to redeem shares in cash extends only to redemption requests made by
each Fund shareholder during any 90-day period of up to the lesser of $250,000
or 1% of the net asset value of the Fund at the beginning of such period. This
commitment is irrevocable without the prior approval of the SEC and is a
fundamental policy of the Funds that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have a Fund make payment,
in whole or in part, in securities or other assets, in case of an emergency or
any time a cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In this event, the securities would be
valued in the same manner as the securities of the Fund are valued. If the
recipient were to sell such securities, he or she would incur brokerage costs
in converting such securities in cash.
Due to the high cost of maintaining Fund accounts with small balances, the
Trust reserves the right to close an investor's account and send the proceeds
to such investor if the balance falls below $1,000 because of a redemption
(including a redemption of Fund shares after an investor has made only the
$1,000 minimum initial investment). However, investors will be given 30 days'
notice to make an additional investment to increase their account balance to
$1,000 or more. Plan Accounts are not subject to minimum Fund account balance
requirements.
Redemption orders that are received by the Transfer Agent before the close of
regular trading on the NYSE generally are executed at the net asset value
determined as of the close of regular trading on the NYSE on that day.
Redemption orders that are received by the Transfer Agent after the close of
trading on the NYSE are executed on the next Business Day.
REDEMPTIONS BY TELEPHONE
Telephone redemption or exchange privileges are made available to shareholders
automatically upon opening an account, unless the shareholder specifically
declines the privileges. These privileges authorize the Transfer Agent to act
on telephone instructions from any person representing himself or herself to be
the investor and reasonably believed by the Transfer Agent to be genuine. The
Trust requires the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Trust or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Trust nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions you may experience
difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, you should consider using
the other redemption
PROSPECTUS
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procedures made available to you. Use of these other redemption procedures may
result in your redemption request being processed at a later time than it would
have been if telephone redemption had been used. During the delay, the NAV of a
Class of shares of a LifePath Fund may fluctuate.
REDEMPTIONS BY MAIL
1. Write a letter of instruction. Indicate the Class and the dollar amount or
number of Fund shares to be redeemed, the Fund account number and TIN.
2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all owners must sign.
3. If shares to be redeemed have a value of $5,000 or more, or redemption
proceeds are to be paid to someone other than you at your address of record
or your Approved Bank Account, the signature(s) must be guaranteed by an
"eligible guarantor institution," which generally includes a commercial bank
whose deposits are insured by the Federal Deposit Insurance Corporation
("FDIC"), a trust company, a member firm of a domestic stock exchange, a
savings association, or a credit union that is authorized by its charter to
provide a signature guarantee. Signature guarantees by notaries public are
not acceptable. Further documentation may be requested from corporations,
administrators, executors, personal representatives, trustees or custodians.
4. Mail the redemption letter to the Transfer Agent at the mailing address set
forth under "Investing In The Funds -- Initial Purchases By Wire."
Unless other instructions are given in proper form, a check for the redemption
proceeds is sent to your address of record.
SYSTEMATIC WITHDRAWAL PLAN
The Systematic Withdrawal Plan provides you with a convenient way to have Fund
shares redeemed from your account and the proceeds distributed to you on a
monthly basis. You may participate in the Systematic Withdrawal Plan only if
you have a Fund account valued at $10,000 or more as of the date of your
election to participate, you have an account at an Approved Bank, your
dividends and capital gain distributions are being reinvested automatically,
and you are not participating in the AutoSaver Plan at any time while
participating in the Systematic Withdrawal Plan. You may specify an amount
($100 or more) to be distributed by check to your address of record or
deposited in your Approved Bank Account. The Transfer Agent redeems sufficient
shares and mails or deposits net redemption proceeds as instructed on or about
the fifth Business Day prior to the end of each month. There are no separate
fees charged to you by the Fund for participating in the Systematic Withdrawal
Plan. However, you
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should not participate in the Systematic Withdrawal Plan if you also are
purchasing shares of a Fund subject to a sales charge.
It may take up to ten (10) days after receipt of your request to establish
your participation in the Systematic Withdrawal Plan. You may change your
withdrawal amount, suspend withdrawals or terminate your participation in the
Systematic Withdrawal Plan at any time by providing written notice to the
Transfer Agent at least five (5) Business Days prior to any scheduled
transaction. Your participation in the Systematic Withdrawal Plan is terminated
automatically if your Fund account, or, in some cases, Approved Bank Account,
is closed.
EXPEDITED REDEMPTIONS BY MAIL OR TELEPHONE
You may request an expedited redemption of Fund shares by letter, in which
case your receipt of redemption proceeds, but not the Fund's receipt of your
redemption request, would be expedited. Telephone redemption or exchange
privileges are made available to you automatically upon the opening of an
account unless you decline the privilege. You also may request an expedited
redemption of Fund shares by telephone on any Business Day, in which case both
your receipt of redemption proceeds and the Fund's receipt of your redemption
request would be expedited. You may call 1-800-222-8222 to request expedited
redemption by telephone. You may mail an expedited redemption request to the
Transfer Agent at the mailing address set forth under "Investing In The
Funds -- Initial Purchases by Wire."
Upon request, net redemption proceeds of expedited redemptions of $5,000 or
more are wired or credited to your Approved Bank Account or wired to the
Selling Agent designated in the Account Application. The Trust reserves the
right to impose a charge for wiring redemption proceeds. When proceeds of your
expedited redemption are to be paid to someone else, to an address other than
that of record, or to an Approved Bank Account or Selling Agent that you have
not predesignated in your Account Application, the expedited redemption request
must be made by letter and the signature(s) on the letter must be guaranteed,
regardless of the amount of the redemption. If your expedited redemption
request is received by the Transfer Agent by the close of the NYSE on a
Business Day, your redemption proceeds are transmitted to your Approved Bank
Account or Selling Agent on the next Business Day (assuming your investment
check has cleared as described above), absent extraordinary circumstances. Such
extraordinary circumstances could include those described above as potentially
delaying redemptions, and also could include situations involving an unusually
heavy volume of wire transfer orders on a national or regional basis or
communication or transmittal delays that could cause a brief delay in the
wiring or crediting of funds. A check for proceeds of less than $5,000 is
mailed to your address of record or, at your election, credited to your
Approved Bank Account.
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During periods of drastic economic or market activity or changes, you may
experience problems implementing an expedited redemption by telephone. In the
event you are unable to reach the Transfer Agent by telephone, you should
consider using overnight mail to implement an expedited redemption. The Trust
reserves the right to modify or terminate the expedited telephone redemption
privilege at any time.
REDEMPTIONS THROUGH SELLING AGENTS
If your redemption order is received by a Selling Agent before the close of
trading on the NYSE and received by the Transfer Agent before the close of
business on the same day, the order is executed at the NAV determined as of the
close of trading on the NYSE on that day. If your redemption order is received
by a Selling Agent after the close of trading on the NYSE, or not received by
the Transfer Agent prior to the close of business, your order is executed at
the NAV determined as of the close of trading on the NYSE on the next Business
Day. The Selling Agent is responsible for the prompt transmission of your
redemption order to the Trust.
Unless you have made other arrangements with a Selling Agent, and the Transfer
Agent has been informed of such arrangements, net proceeds of a redemption
order made by you through a Selling Agent are credited to your Approved Bank
Account. If no such account is designated, a check for the net redemption
proceeds is mailed to your address of record or, if such address is no longer
valid, the net redemption proceeds are credited to your account with the
Selling Agent. You may request a check from the Selling Agent or elect to
retain the net redemption proceeds in such account. The Selling Agent may
charge you a service fee. In addition, it may benefit from the use of your
redemption proceeds until the check it issues to you has cleared or until such
proceeds have been disbursed or reinvested on your behalf.
REDEMPTIONS THROUGH SHAREHOLDER SERVICING AGENTS
You may request a redemption of Fund shares through your Shareholder Servicing
Agent. If your redemption order is transmitted by the Shareholder Servicing
Agent, on your behalf, to the Transfer Agent before the close of regular
trading on the NYSE, the redemption order is executed at the NAV determined as
of the close of regular trading on the NYSE on that day. If your Shareholder
Servicing Agent transmits your redemption order to the Transfer Agent after the
close of trading on the NYSE, then your order is executed on the next Business
Day following the date your order is received. The Shareholder Servicing Agent
is responsible for the prompt transmission of redemption orders to the Funds.
Unless you have made other arrangements with your Shareholder Servicing Agent,
and the Transfer Agent has been informed of such arrangements, net redemption
proceeds of a redemption order made by you through your Shareholder Servicing
Agent are credited to your Approved Bank Account. If no such account is
designated, a check
PROSPECTUS
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<PAGE>
for the proceeds is mailed to your address of record or, if such address is no
longer valid, the proceeds are credited to your account with your Shareholder
Servicing Agent or to another account designated in your agreement with your
Shareholder Servicing Agent. The Shareholder Servicing Agent may charge you a
fee. In addition, the Shareholder Servicing Agent may benefit from the use of
proceeds credited to your account until any check it issues to you has cleared
or until such proceeds have been disbursed or reinvested on your behalf.
Exchange Privilege
The exchange privilege is a convenient way to buy shares in Stagecoach Funds
to respond to changes in your investment needs. You can exchange between the
various funds in the Stagecoach Family of Funds as follows:
<TABLE>
<CAPTION>
EXCHANGES BETWEEN YES NO
----------------- --- ---
<S> <C> <C>
Class A shares and a Money Market Mutual Fund....................... X
Class A shares and Class A shares................................... X
Class B shares and a Money Market Mutual Fund....................... X
Class B shares and Class B shares................................... X
Class A shares and Class B shares................................... X
</TABLE>
Important factors that you should consider:
. You will need to read the prospectus of the fund into which you want to
exchange.
. Every exchange is a redemption of shares of one fund and a purchase of
shares of another fund. The redemption may produce a gain or loss for
federal income tax purposes.
. You must exchange at least the minimum initial purchase amount of the fund
you are redeeming, unless your balance has fallen below that amount due to
market conditions or you have already met the minimum initial purchase
amount of the fund you are purchasing.
. If you exchange Class A shares, you will need to pay any difference
between the load that you have already paid and the load that you are
subject to in the new fund (less the difference between any load already
paid under the maximum 3% load schedule and the maximum 4.50% schedule).
. You will not pay a contingent deferred sales charge on any exchange from
Class B shares into other Class B shares or a Money Market Mutual Fund.
The new shares will continue to age while they are in the new fund and
will be charged the
PROSPECTUS
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<PAGE>
contingent deferred sales charge applicable to the original shares upon
redemption.
. The Trust may limit the number of times shares may be exchanged or may
reject any telephone exchange order. Subject to limited exceptions, the
Trust will notify you 60 days before discontinuing or modifying the
exchange privilege.
You may exchange shares by writing the Transfer Agent or, if you have
telephone privileges, you may call the Transfer Agent. Exchanges are subject to
the procedures and conditions applicable to purchasing and redeeming shares.
CONVERSION
A Fund's Class B shares that have been outstanding for six years after the end
of the month in which the shares were initially purchased automatically convert
to Class A shares of such Fund and, consequently, will no longer be subject to
the higher Rule 12b-1 Fees applicable to Class B shares. Such conversion is on
the basis of the relative NAV of the two Classes, without the imposition of any
sales charge or other charge except that the lower Rule 12b-1 Fees applicable
to Class A shares shall thereafter be applied to such converted shares. Because
the per share NAV of the Class A shares may be higher than that of the Class B
shares at the time of conversion, a shareholder may receive fewer Class A
shares than the number of Class B shares converted, although the dollar value
will be the same. Reinvestments of dividends and distributions on Class B
shares are considered new purchases for purposes of the conversion feature. A
conversion should not produce a gain or loss for federal income tax purposes.
If a shareholder effects one or more exchanges among Class B shares of any
Fund or Class A shares of a Money Market Mutual Fund during the six-year
period, and exchanges back into Class B shares, the holding period for shares
so exchanged is counted toward the six-year period, and any Class B shares held
at the end of six years are converted into Class A shares.
Dividends and Distributions
Each Fund declares and pays quarterly dividends of substantially all of its
net investment income. Each Fund's net investment income available for
distribution to the holders of Class A or B shares is reduced by the amount of
the distribution-related expenses payable under the applicable Distribution
Plan. Each Fund makes distributions from any net realized gains at least once a
year, in all events in a manner consistent with the provisions of the 1940 Act
and the Internal Revenue Code. No Fund will make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. Dividends are automatically reinvested in additional
Fund shares at net asset value, unless payment in cash has been requested.
PROSPECTUS
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<PAGE>
Dividends and capital gain distributions have the effect of reducing the NAV
per share by the amount distributed on the record date. Although such a
dividend or distribution paid to you on newly issued shares shortly after
purchase would represent, in substance, a return of capital, the dividend or
distribution would consist of net investment income or net realized capital
gain and, accordingly, would be taxable to you.
DIVIDEND AND DISTRIBUTION OPTIONS
When you fill out your Account Application, you can choose from the following
dividend and distribution options:
A. The Automatic Reinvestment Option provides for the reinvestment of your
dividends and capital-gain distributions in additional shares of the same class
of the Fund which paid such dividends or capital gain distributions. Dividends
and distributions declared in a month generally are reinvested at NAV on the
last Business Day of such month. You are assigned this option automatically if
you make no choice on your Account Application.
B. The Fund Purchase Option lets you use your dividends and/or capital-gain
distributions from the Funds to purchase, at NAV plus any applicable sales
charge, shares of another fund in the Stagecoach Family of Funds offered in
your state of residence with which you have an established account that has met
the applicable minimum initial investment requirement. Dividends and
distributions paid on Class A or Class B shares may be invested in Class A or
Class B shares, respectively, of another LifePath Fund or another fund of the
Stagecoach Family of Funds.
C. The Automatic Clearing House Option permits you to have dividends and
capital-gain distributions deposited in your Approved Bank Account. In the
event your Approved Bank Account is closed and such distribution is returned to
the Funds' dividend disbursing agent, the distribution will be reinvested in
your Fund account at the NAV next determined after the distribution has been
resumed. Your Automatic Clearing House Option will be converted to the
Automatic Reinvestment Option.
D. The Check Payment Option lets you receive a check for all dividends and/or
capital gain distributions, which is mailed either to your designated address
or your designated Approved Bank shortly following declaration. If the U.S.
Postal Service cannot deliver such checks, or if such checks remain uncashed
for six months, those checks will be reinvested in your Fund account at the NAV
next determined after the earlier of the date the checks have been returned to
the dividend disbursing agent or the date six months after the payment of such
dividend or distribution. Your Check Payment Option will be converted to the
Automatic Reinvestment Option.
The Trust takes reasonable efforts to locate investors whose checks are
returned or uncashed after six months.
PROSPECTUS
35
<PAGE>
Taxes
Distributions from a Fund's net investment income and net short-term capital
gains, if any, are designated as dividend distributions and taxable to the
Fund's shareholders as ordinary income. Distributions from a Fund's net long-
term capital gains are designated as capital gain distributions and taxable to
the Fund's shareholders as long-term capital gains. In general, your
distributions will be taxable when paid, whether you take such distributions in
cash or have them automatically reinvested in additional Fund shares. However,
distributions declared in October, November, and December and distributed by
the following January will be taxable as if they were paid by December 31.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares
will ordinarily result in a taxable capital gain or loss, depending on the
amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the cost of your shares. See "Federal Income Taxes --
Disposition of Fund Shares" in the SAIs.
Foreign shareholders may be subject to different tax treatment, including
withholding taxes. See "Federal Income Taxes -- Foreign Shareholders" in the
SAIs. In certain circumstances, U.S. residents may also be subject to
withholding taxes. See "Federal Income Taxes -- Backup Withholding" in the
SAIs.
The foregoing discussion regarding taxes is based on tax laws which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal tax considerations generally affecting the Funds and their
shareholders. It is not intended as a substitute for careful tax planning; you
should consult your tax advisor with respect to your specific tax situation as
well as with respect to foreign, state and local taxes. Further federal tax
considerations are discussed in the SAI for each Fund.
Performance Information
For purposes of advertising, performance of the LifePath Funds may be
calculated on the basis of average annual total return, cumulative total return
and/or yield of a class of shares.
Average annual total return of a class of shares is calculated pursuant to a
standardized formula which assumes that an investment in that class of shares
of the Fund was purchased with an initial payment of $1,000 and that the
investment was redeemed at the end of a stated period of time, after giving
effect to the reinvestment of dividends and distributions during the period.
The return of a class of shares is expressed as a percentage rate which, if
applied on a compounded annual basis, would
PROSPECTUS
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<PAGE>
result in the redeemable value of the investment in a class of shares at the
end of the period. Advertisements of the performance of a class of shares of a
LifePath Fund includes the Fund's average annual total return of a class of
shares for one, five and ten year periods, or for shorter time periods
depending upon the length of time during which such Fund has operated.
Cumulative total return of a class of shares is computed on a per share basis
and assumes the reinvestment of dividends and distributions. Cumulative total
return of a class of shares generally is expressed as a percentage rate which
is calculated by combining the income and principal changes for a specified
period and dividing by the net asset value per share at the beginning of the
period. Advertisements may include the percentage rate of total return of a
class of shares or may include the value of a hypothetical investment in a
class of shares at the end of the period which assumes the application of the
percentage rate of total return.
The performance of the LifePath Funds may be advertised in terms of yield. The
yield on shares of these Funds is calculated by dividing each Fund's net
investment income per share earned during a specified period (usually 30 days)
by its net asset value per share on the last day of such period and annualizing
the result.
Performance of a class of shares varies from time to time, and past results
are not predictive of future performance. Investors should remember that
performance is a function of the type and quality of portfolio securities held
by the Master Portfolio in which the Fund invests and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing a Fund's shares, including data from Lipper Analytical
Services, Inc., Bank Rate Monitor, Bond 20-Bond Index, Moody's Bond Survey Bond
Index, Lehman Brothers Aggregate Bond Index and components thereof,
IBC/Donoghue's Money Fund Report, Standard & Poor's 500 Stock Index, Wilshire
5000 Index, the Dow Jones Industrial Average, CDA Investment Technologies,
Inc., Wiesenberger Investment Companies Service, Mutual Fund Values; Mutual
Fund Forecaster, Schabacker Investment Management, Inc., Morningstar, Inc. and
other industry publications.
Total return and yield quotations are computed separately for each class of
the Funds' shares. Because of the difference in the fees and expenses borne by
a class of shares of the Funds, the performance of each class can be expected,
at any given time, to differ from the performance of another class of shares.
Additional information about the performance of each Fund is contained in the
Funds' SAI and the Annual Report, which may be obtained free of charge by
calling the Trust at 1-800-222-8222.
PROSPECTUS
37
<PAGE>
General Information
The Trust was organized as an unincorporated business trust under the laws of
the Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust (the "Trust Agreement") dated May 14, 1993. The Trust is authorized to
issue an unlimited number of shares of beneficial interest. Each LifePath Fund
of the Trust offers Class A, Class B (except LifePath 2000 Fund) and
Institutional Class shares. Each share has one vote. Institutional Class shares
are no longer offered to the public, although a limited number of such shares
were outstanding as of the date of this Prospectus.
To date, the Board of Trustees has authorized the creation of ten separate
portfolios of shares, including the five Funds offered hereby. All
consideration received by the Trust for shares of one of the portfolios and all
assets in which such consideration is invested belong to that portfolio
(subject only to the rights of creditors of the Trust) and are subject to the
liabilities related thereto. The income attributable to, and the expenses of,
one portfolio are treated separately from those of the other portfolios. The
Trust has the ability to create, from time to time, new portfolios without
shareholder approval.
Under the terms of a License Agreement between the Trust and Wells Fargo Bank,
Wells Fargo Bank has granted the Trust a non-exclusive license to use the name
"Stagecoach." If the License Agreement is terminated, the Trust, at the request
of Wells Fargo Bank, will cease using the name "Stagecoach." BGFA has granted
the Trust a non-exclusive license to use the name "LifePath." If the license
agreement is terminated, the Trust, at BGFA's request, will cease using the
"LifePath" name.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a Trustee.
The Trust Agreement provides for indemnification from the Trust's property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Trust itself is unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Trust, the shareholder paying such liability is entitled to reimbursement from
the general assets of the Trust. The Trustees intend to conduct the operations
of the Trust in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Trust. As described under
"Management of the Trust" in the SAI, the Trust ordinarily does not hold
shareholder meetings; however, shareholders under certain circumstances have
the right to call a meeting of shareholders for the purpose of voting to remove
Trustees.
PROSPECTUS
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<PAGE>
Each LifePath Fund currently invests all of its assets in a LifePath Master
Portfolio of MIP with a corresponding investment objective. Whenever a Fund, as
a Master Portfolio's interestholder, is requested to vote on matters submitted
to interestholders of the Master Portfolio, the Funds will hold a meeting of
its shareholders to consider such matters and the Fund will cast its votes in
proportion to the votes received from Fund shareholders. Each LifePath Fund
will vote Master Portfolio shares for which it receives no voting instructions
in the same proportion as the votes received from Fund shareholders. If a
Master Portfolio's investment objective or policies are changed, the
corresponding LifePath Fund could subsequently change its objective or policies
to correspond to those of the Master Portfolio. The Fund may also elect to
redeem its interests in the Master Portfolios and either seek a new investment
company with a substantially matching objective in which to invest or retain
its own investment adviser to manage the Fund's portfolio in accordance with
its objective. In the latter case, the Fund's inability to find a substitute
investment company in which to invest or equivalent management services could
adversely affect shareholders' investments in the Fund.
Investor inquiries may be made by writing to the Trust c/o Wells Fargo Bank,
N.A. --Shareholder Services, P.O. Box 7066, San Francisco, California 94120-
7066 or by calling 1-800-222-8222.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN THE FUNDS'
SAI, AND IN THE TRUST'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUNDS' SHARES AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
PROSPECTUS
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<PAGE>
APPENDIX -- ADDITIONAL INVESTMENT POLICIES
PORTFOLIO SECURITIES
To the extent set forth in this Prospectus, each Fund through its investment
in the corresponding Master Portfolio may invest in the securities described
below. To avoid the need to refer to both the Funds and the Master Portfolios
in every instance, the following sections generally refer to the Funds only.
REFERENCES TO THE INVESTMENTS AND INVESTMENT POLICIES AND RISKS OF THE LIFEPATH
FUNDS, UNLESS OTHERWISE INDICATED, SHOULD BE UNDERSTOOD AS REFERENCES TO THE
INVESTMENTS AND INVESTMENT POLICIES AND RISKS OF THE CORRESPONDING MASTER
PORTFOLIOS.
U.S. GOVERNMENT OBLIGATIONS -- The LifePath Funds may invest in various types
of U.S. Government obligations. U.S. Government obligations include securities
issued or guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities. 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 obligations and GNMA certificates) or (ii)
may be backed solely by the issuing or guaranteeing agency or instrumentality
itself (as with FNMA notes). In the latter case, the investor 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 would
provide financial support to its agencies or instrumentalities where it is not
obligated to do so. 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.
SECURITIES OF NON-U.S. ISSUERS -- The Funds may invest in certain securities
of non-U.S. issuers as discussed below.
Obligations of Foreign Governments, Supranational Entities and Banks -- Each
LifePath Fund may invest in U.S. dollar-denominated short-term obligations
issued or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities that are determined by
BGFA to be of comparable quality to the other obligations in which such Fund
may invest. The Funds may also invest in debt obligations of supranational
entities. Supranational entities include international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of each
Fund's assets invested in obligations of foreign governments and
A-1 PROSPECTUS
<PAGE>
supranational entities will vary depending on the relative yields of such
securities, the economic and financial markets of the countries in which the
investments are made and the interest rate climate of such countries.
Each Fund may invest a portion of its total assets in high-quality, short-term
(one year 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.
Foreign Equity Securities and Depositary Receipts -- Each LifePath Fund's
assets may be invested in equity securities of foreign issuers and in American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs") of such
issuers.
ADRs and EDRs may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are receipts issued in Europe
typically by non-United States banks and trust companies that evidence
ownership of either foreign or domestic securities. Generally, ADRs in
registered form are designed for use in the United States securities markets
and EDRs and CDRs in bearer form are designed for use in Europe. Each LifePath
Fund may invest in ADRs, EDRs and CDRs through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depositary, whereas a depositary may establish an
unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored depositary receipts generally bear all the
costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- Each LifePath Fund may purchase
debt instruments with interest rates that are periodically adjusted at
specified intervals or whenever a benchmark rate or index changes. These
adjustments generally limit the increase or decrease in the amount of interest
received on the debt instruments. Floating- and variable-rate instruments are
subject to interest-rate risk and credit risk.
MORTGAGE-RELATED SECURITIES -- Each LifePath Fund may invest in mortgage-
related securities ("MBSs"), which are securities representing interests in a
pool of loans secured by mortgages. The resulting cash flow from these
mortgages is used to pay principal and interest on the securities. MBSs are
assembled for sale to investors by various government-sponsored enterprises
such as the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") or are guaranteed by such governmental
agencies as the Government National Mortgage Association ("GNMA"). Regardless
of the type of guarantee, all MBSs are subject to interest rate risk (i.e.,
exposure to loss due to changes in interest rates).
PROSPECTUS A-2
<PAGE>
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the full and timely payment of
principal and interest by GNMA and such guarantee is backed by the authority of
GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development and, as such, Ginnie Maes are
backed by the full faith and credit of the federal government. In contrast,
MBSs issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates
("Fannie Maes") which are solely the obligations of FNMA and are neither backed
by nor entitled to the full faith and credit of the federal government). FNMA
is a government-sponsored enterprise which is also a private corporation whose
stock trades on the NYSE. Fannie Maes are guaranteed as to timely payment of
principal and interest by FNMA. MBSs issued by FHLMC include FHLMC Mortgage
Participation Certificates ("Freddie Macs" or "PCs"). FHLMC is a government-
sponsored enterprise whose MBSs are solely obligations of FHLMC. Therefore,
Freddie Macs are not guaranteed by the United States or by any Federal Home
Loan Bank and do not constitute a debt or obligation of the United States or of
any Federal Home Loan Bank. FHLMC guarantees timely payment of interest, but
only ultimate payment of principal due under the obligations it issues. FHLMC
may, under certain circumstances, remit the guaranteed payment of principal at
any time after default on an underlying mortgage, but in no event later than
one year after the guarantee becomes payable.
FUTURES CONTRACTS AND OPTIONS TRANSACTIONS -- Each LifePath Fund may use
futures as a substitute for a comparable market position in the underlying
securities.
A futures contract is an agreement between two parties, a buyer and a seller,
to exchange a particular commodity or financial statement at a specific price
on a specific date in the future. An option transaction generally involves a
right, which may or may not be exercised, to buy or sell a commodity or
financial instrument at a particular price on a specified future date. Futures
contracts and options are standardized and traded on exchanges, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the primary credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are subject to market risk (i.e., exposure to
adverse price changes).
Although each of the indicated Funds intends to purchase or sell futures
contracts only if there is an active market for such contracts, no assurance
can be given that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move to
the limit for several consecutive trading days with little or no
A-3 PROSPECTUS
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trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting a Fund to substantial losses. If it is not possible, or
if a Fund determines not to close a futures position in anticipation of adverse
price movements, the Fund will be required to make daily cash payments on
variation margin.
Stock Index Futures and Options on Stock Index Futures -- Each LifePath Fund
may invest in stock index futures and options on stock index futures as a
substitute for a comparable market position in the underlying securities. A
stock index future obligates the seller to deliver (and the purchaser to take),
effectively, an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. With respect
to stock indices that are permitted investments, each Fund intends to purchase
and sell futures contracts on the stock index for which it can obtain the best
price with consideration also given to liquidity. There can be no assurance
that a liquid market will exist at the time when a Fund seeks to close out a
futures contract or a futures option position. Lack of a liquid market may
prevent liquidation of an unfavorable position.
Interest-Rate Futures Contracts and Options on Interest-Rate Futures
Contracts -- Each LifePath Fund may invest in interest-rate futures contracts
and options on interest-rate futures contracts as a substitute for a comparable
market position in the underlying securities. The Funds may also sell options
on interest-rate futures contracts as part of closing purchase transactions to
terminate their options positions. No assurance can be given that such closing
transactions can be effected or the degree of correlation between price
movements in the options on interest rate futures and price movements in the
Funds' portfolio securities which are the subject of the transaction.
Interest-Rate and Index Swaps -- Each LifePath Fund may enter into interest-
rate and index swaps in pursuit of their investment objectives. Interest-rate
swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating-
rate payments on fixed-rate payments). Index swaps involve the exchange by a
Fund with another party of cash flows based upon the performance of an index of
securities or a portion of an index of securities that usually include
dividends or income. In each case, the exchange commitments can involve
payments to be made in the same currency or in different currencies. A Fund
will usually enter into swaps on a net basis. In so doing, the two payment
streams are netted out, with a Fund receiving or paying, as the case may be,
only the net amount of the two payments. If a Fund enters into a swap, it will
maintain a segregated account on a gross basis, unless the contract provides
for a segregated account on a net basis. If there is a default by the other
party to such a transaction, a Fund will have contractual remedies pursuant to
the agreements related to the transaction.
PROSPECTUS A-4
<PAGE>
The use of interest-rate and index swaps is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio security transactions. There is no limit, except as
provided below, on the amount of swap transactions that may be entered into by
a Fund. These transactions generally do not involve the delivery of securities
or other underlying assets or principal. Accordingly, the risk of loss with
respect to swaps generally is limited to the net amount of payments that a Fund
is contractually obligated to make. There is also a risk of a default by the
other party to a swap, in which case a Fund may not receive net amount of
payments that a Fund contractually is entitled to receive.
Foreign Currency and Futures Transactions -- Foreign currency transactions may
occur on a spot (i.e., cash) basis at the rate prevailing in the currency
exchange market or on a forward basis. A forward currency exchange contract
involves an obligation to purchase or sell a specific currency at a set price
on a future date which must be more than two days from the date of the
contract. The forward foreign currency market offers less protection against
default than is available when trading currencies on an exchange, since a
forward currency contract is not guaranteed by an exchange or clearinghouse.
Therefore, a default on a forward currency contract would deprive a LifePath
Fund of unrealized profits or force such Fund to cover its commitments for
purchase or resale, if any, at the current market price.
Each LifePath Fund may combine forward currency exchange contracts with
investments in securities denominated in other currencies.
Each LifePath Fund also may maintain short positions in forward currency
exchange transactions, which would involve the Fund agreeing to exchange an
amount of a currency it did not currently own for another currency at a future
date in anticipation of a decline in the value of the currency sold relative to
the currency such Fund contracted to receive in the exchange.
Unlike trading on domestic futures exchanges, trading on foreign futures
exchanges is not regulated by the Commodity Futures Trading Commission (the
"CFTC") and generally is subject to greater risks than trading on domestic
exchanges. For example, some foreign exchanges are principal markets so that no
common clearing facility exists and an investor may look only to the broker for
performance of the contract. BGFA, however, considers on an ongoing basis the
creditworthiness of such counterparties. In addition, any profits that a
LifePath Fund might realize in trading could be eliminated by adverse changes
in the exchange rate; adverse exchange rate changes also could cause a Fund to
incur losses. Transactions on foreign exchanges may include both futures
contracts which are traded on domestic exchanges and those which are not. Such
transactions may also be subject to withholding and other taxes imposed by
foreign governments.
A-5 PROSPECTUS
<PAGE>
INVESTMENT COMPANY SECURITIES -- Each Master Portfolio may invest in
securities issued by other investment companies which principally invest in
securities of the type in which the Master Portfolio invests. Under the 1940
Act, a Master Portfolio'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 Master Portfolio's net assets with respect
to any one investment company and (iii) 10% of the Master Portfolio's net
assets in the aggregate. Investments in the securities of other investment
companies generally will involve duplication of advisory fees and certain other
expenses. The Fund may also purchase shares of exchange listed closed-end
funds.
ILLIQUID SECURITIES -- Each LifePath Fund may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Fund cannot exercise the related demand feature described above on not more
than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice.
SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS
Each LifePath Fund may invest in the following high-quality money market
instruments on an ongoing basis to provide liquidity, for temporary purposes
when there is an unexpected level of shareholder purchases or redemptions or
when "defensive" strategies are appropriate: (i) short-term obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
(including government-sponsored enterprises); (ii) negotiable certificates of
deposit ("CDs"), bankers' acceptances, fixed time deposits and other
obligations of domestic banks (including foreign branches) that have more than
$1 billion in total assets at the time of investment and that are members of
the Federal Reserve System or are examined by the Comptroller of the Currency
or whose deposits are insured by the FDIC; (iii) commercial paper rated at the
date of purchase "Prime-1" by Moody's or "A-1+" or "A-1" by S&P, or, if
unrated, of comparable quality as determined by BGFA or Wells Fargo Bank; (iv)
non-convertible corporate debt securities (e.g., bonds and debentures) with
remaining maturities at the date of purchase of not more than one year that are
rated at least "Aa" by Moody's or "AA" by S&P; (v) repurchase agreements; and
(vi) short-term, U.S. dollar-denominated obligations of foreign banks
(including U.S. branches) that, at the time of investment have more than $10
billion, or the equivalent in other currencies, in total assets and in the
opinion of BGFA are of comparable quality to obligations of U.S. banks which
may be purchased by the Fund.
PROSPECTUS A-6
<PAGE>
Bank Obligations -- Each 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.
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 a Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation.
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 and Short-Term Corporate Debt Instruments -- Each Fund may
invest in commercial paper (including variable amount master demand notes),
which consists of short-term, unsecured promissory notes issued by corporations
to finance short-term credit needs. Commercial paper is usually sold on a
discount basis and has a maturity at the time of issuance not exceeding nine
months. Variable amount master demand notes are demand obligations that permit
the investment of fluctuating amounts at varying market rates of interest
pursuant to arrangements between the issuer and a commercial bank acting as
agent for the payee of such notes whereby both parties have the right to vary
the amount of the outstanding indebtedness on the notes. The investment adviser
and/or sub-adviser to each Fund monitors on an ongoing basis the ability of an
issuer of a demand instrument to pay principal and interest on demand.
Each Fund also may invest in non-convertible corporate debt securities (e.g.,
bonds and debentures) with not more than one year remaining to maturity at the
date of settlement. A Fund will invest only in such corporate bonds and
debentures that are rated at the time of purchase at least "Aa" by Moody's or
"AA" by S&P. Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Fund. The investment adviser and/or sub-adviser to
each Fund will consider such an event in determining whether the Fund should
continue to hold the obligation. To the extent the Fund continues to hold such
obligations, it may be subject to additional risk of default.
A-7 PROSPECTUS
<PAGE>
Repurchase Agreements -- Each Fund may enter into repurchase agreements
wherein the seller of a security to a Fund agrees to repurchase that security
from the Fund at a mutually-agreed upon time and price. The period of maturity
is usually quite short, often overnight or a few days, although it may extend
over a number of months. A Fund may enter into repurchase agreements only with
respect to securities that could otherwise be purchased by the Fund, and all
repurchase transactions must be collateralized. A Fund may incur a loss on a
repurchase transaction if the seller defaults and the value of the underlying
collateral declines or is otherwise limited or if receipt of the security or
collateral is delayed. The Funds may participate in pooled repurchase agreement
transactions with other funds advised by BGFA.
FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY
TRANSACTIONS -- Each Fund may purchase or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment
basis involve a risk of loss if the value of the security to be purchased
declines, or the value of the security to be sold increases, before the
settlement date. Although a Fund will generally purchase securities with the
intention of acquiring them, a Fund may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the adviser.
BORROWING MONEY -- As a fundamental policy, each Fund is permitted to borrow
to the extent permitted under the 1940 Act. However, each Fund currently
intends to borrow money only for temporary or emergency (not leveraging)
purposes, and may borrow up to one-third of the value of its total assets
(including the amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of a Fund's total assets, the Fund will not
make any investments.
LOANS OF PORTFOLIO SECURITIES -- Each Fund may lend securities from their
portfolios to brokers, dealers and financial institutions (but not individuals)
in order to increase the return on such Fund's portfolio. The value of the
loaned securities may not exceed one-third of a Fund's total assets and loans
of portfolio securities are fully collateralized based on values that are
market-to-market daily. The Funds will not enter into any portfolio security
lending arrangement having a duration of longer than one year. The principal
risk of portfolio lending is potential default or insolvency of the borrower.
In either of these cases, a Fund could experience delays in recovering
securities or collateral or could lose all or part of the value of the loaned
securities. The Funds may pay reasonable administrative and custodial fees in
connection with loans of portfolio securities and may pay a portion of the
interest or fee earned thereon the borrower or a placing broker.
PROSPECTUS A-8
<PAGE>
CONVERTIBLE SECURITIES -- Each LifePath Fund may purchase fixed-income
convertible securities, such as bonds or preferred stock, which may be
converted at a stated price within a specified period of time into a specified
number of shares of common stock of the same or a different issuer.
Convertible securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt securities.
While providing a fixed-income stream (generally higher in yield than the
income from a common stock but lower than that afforded by a non-convertible
debt security), a convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of the common stock into which it is convertible.
In general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common stock
if the security is converted). As a fixed-income security, the market value of
a convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the
common stock of the same issuer.
RATINGS -- The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, BGFA also evaluates such obligations and
the ability of their issuers to pay interest and principal. Each Fund relies
on BGFA's judgment, analysis and experience in evaluating the creditworthiness
of an issuer. In this evaluation, BGFA takes into consideration, among other
things, the issuer's financial resources, its sensitivity to economic
conditions and trends, the quality of the issuer's management and regulatory
matters. It also is possible that a rating agency might not timely change the
rating on a particular issue to reflect subsequent events.
CERTAIN FUNDAMENTAL POLICIES
Each Fund and Master Portfolio may (i) borrow money to the extent permitted
under the 1940 Act; (ii) invest up to 5% of its total assets in the
obligations of any single issuer, except that up to 25% of the value of the
total assets of such Fund or Master Portfolio may be invested and obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
may be purchased, without regard to any such limitation; and (iii) invest up
to 25% of the value of its total assets in the
A-9 PROSPECTUS
<PAGE>
securities of issuers in a particular industry or group of closely related
industries, provided there is no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
This paragraph describes fundamental policies that cannot be changed as to a
Fund or Master Portfolio without approval by the holders of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Fund or
Master Portfolio, as the case may be. See "Investment Objectives and Management
Policies -- Investment Restrictions" in the SAI.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each Fund and Master Portfolio may (i) purchase securities of any company
having less than three years' continuous operation (including operations of any
predecessors) if such purchase does not cause the value of its investments in
all such companies to exceed 5% of the value of its total assets; (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (iii) invest up to 15% of the value of its net assets
in repurchase agreements providing for settlement in more than seven days after
notice and in other illiquid securities. See "Investment Objectives and
Management Policies -- Investment Restrictions" in the SAI.
PROSPECTUS A-10
<PAGE>
Sponsored/Distributed by
Stephens Inc., Member NYSE/SIPC
NOT FDIC INSURED
SCF094(6/97)
<PAGE>
STAGECOACH FUNDS(R)
P.O. Box 7066
San Francisco, CA 94120-7066
STAGECOACH FUNDS:
--------------------------------------------------------------------------
. are NOT INSURED BY THE FDIC or U.S. Government
. are NOT obligations or deposits of Wells Fargo Bank
nor guaranteed by the Bank
. involve investment risk, including possible loss of principal.
[RECYCLED PAPER LOGO APPEARS HERE]
Printed on Recycled Paper SCF094 (6/97)
<PAGE>
STAGECOACH FUNDS(R)
STAGECOACH LIFEPATH(TM) FUNDS
INSTITUTIONAL CLASS
The LIFEPATH FUNDS consist of five asset allocation funds (the "LifePath
Funds") offered by Stagecoach Trust (the "Trust"), an open-end, management
investment company. The LifePath Funds seek to provide investors with an asset
allocation strategy designed to maximize assets for retirement or for other
purposes consistent with the quantitatively measured risk that investors, on
average, may be willing to accept given their investment time horizons.
INSTITUTIONAL SHARES OF THE FUNDS ARE NO LONGER BEING OFFERED FOR SALE, ALTHOUGH
A LIMITED NUMBER OF SUCH SHARES REMAIN OUTSTANDING AS OF THE DATE OF THIS
PROSPECTUS. THIS PROSPECTUS PROVIDES INFORMATION TO THE EXISTING SHAREHOLDERS
OF INSTITUTIONAL CLASS SHARES OF THE FUNDS.
Investors are encouraged to select a particular LifePath Fund based on the
decade of their anticipated retirement or when they anticipate beginning to
withdraw substantial portions of their investment.
. LIFEPATH 2000 FUND is managed for investors planning to retire (or
begin to withdraw substantial portions of their investment)
approximately in the year 2000.
. LIFEPATH 2010 FUND is managed for investors planning to retire (or
begin to withdraw substantial portions of their investment)
approximately in the year 2010.
. LIFEPATH 2020 FUND is managed for investors planning to retire (or
begin to withdraw substantial portions of their investment)
approximately in the year 2020.
. LIFEPATH 2030 FUND is managed for investors planning to retire (or
begin to withdraw substantial portions of their investment)
approximately in the year 2030.
. LIFEPATH 2040 FUND is managed for investors planning to retire (or
begin to withdraw substantial portions of their investment)
approximately in the year 2040.
Please read this Prospectus and retain it for future reference. A Statement
of Additional Information ("SAI") dated June 30, 1997 has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference into
this Prospectus. For a free copy, write to the Trust c/o Wells Fargo Bank, N A
- -- Stagecoach Shareholder Services, P.O. Box 7066, San Francisco, California
94120-7066, or call 1-800-222-8222. The SAI and other information is available
on the SEC's Web site (http://www.sec.gov). If you hold shares in an IRA,
please call 1-800-BEST-IRA (1-800-237-8472) for information or assistance.
FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY WELLS FARGO BANK, N.A., BARCLAYS GLOBAL FUND ADVISORS OR ANY OF
THEIR AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, 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.
PROSPECTUS DATED JUNE 30, 1997
<PAGE>
The LifePath Funds also offer Class A and Class B shares. Investors may be
eligible to invest in the Class A or Class B shares. A free copy of the current
Prospectus for the Class A and Class B shares is available by writing to the
Trust c/o Wells Fargo Bank, N.A. -- Shareholder Services, P.O. Box 7066, San
Francisco, California 94120-7066 or by calling 1-800-222-8222.
Each Fund invests all of its assets in a separate series (each, a "Master
Portfolio") of Master Investment Portfolio ("MIP"), an open-end, management
investment company, rather than in a portfolio of securities. Each Fund has the
same investment objective as the Master Portfolio bearing the corresponding
name, and each Fund's investment experience corresponds directly with the
relevant Master Portfolio's investment experience. References to the investments
and investment policies and risks of the Funds in this prospectus, unless
otherwise indicated, should be understood as references to the investments and
investment policies and risks of the corresponding Master Portfolios. Interests
in a Master Portfolio may be purchased only by investment companies or
accredited investors.
_______________
BARCLAYS GLOBAL FUND ADVISERS SERVES AS EACH MASTER PORTFOLIO'S INVESTMENT
ADVISER, AND TOGETHER WITH ITS AFFILIATES, PROVIDES OTHER SERVICES FOR WHICH IT
IS COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED WITH BARCLAYS GLOBAL FUND
ADVISORS, SERVES AS THE TRUST'S CO-ADMINISTRATOR AND AS DISTRIBUTOR OF EACH
FUND'S SHARES.
<PAGE>
TABLE OF CONTENTS
_________
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES..................................... 1
FINANCIAL HIGHLIGHTS......................................... 3
DESCRIPTION OF THE FUNDS..................................... 7
MANAGEMENT OF THE FUNDS...................................... 14
DESCRIPTION OF SHARES........................................ 16
HOW TO REDEEM SHARES......................................... 16
EXCHANGE PRIVILEGE........................................... 18
SHARE VALUE.................................................. 19
DIVIDENDS, DISTRIBUTIONS AND TAXES........................... 19
PERFORMANCE INFORMATION...................................... 20
GENERAL INFORMATION.......................................... 21
APPENDIX..................................................... A-1
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge on Purchases
(as a percentage of offering price)................................... None
Maximum Sales Charge on Reinvested
Dividends............................................................. None
Maximum Deferred Sales Charge on Redemptions........................... None
Exchange Fees.......................................................... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Master Portfolio
Management Fees/1/............... .55% .55% .55% .55% .55%
Other Expenses..................... .40% .40% .40% .40% .40%
--- --- --- --- ---
TOTAL FUND OPERATING EXPENSES...... .95% .95% .95% .95% .95%
</TABLE>
/1/ A portion of these fees is covered by a "defensive" Rule 12b-1 Distribution
Plan that does not result in additional expenses to the Funds or Master
Portfolios. (See "Management of the Funds -- MIP 12b-1 Plan" for further
information.)
EXAMPLE OF EXPENSES
An investor would pay the following expenses on a $1,000 investment in
Institutional Class shares of the Fund, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1 YEAR...... $ 10 $ 10 $ 10 $ 10 $ 10
3 YEARS..... $ 30 $ 30 $ 30 $ 30 $ 30
5 YEARS..... $ 53 $ 53 $ 53 $ 53 $ 53
10 YEARS..... $117 $117 $117 $117 $117
</TABLE>
EXPLANATION OF TABLES
The purpose of the foregoing tables is to help a shareholder understand the
various costs and expenses that an investor in the Funds will bear directly or
indirectly. The foregoing tables reflect expenses at both the Fund and Master
Portfolio levels. The tables do not reflect any charges that may be imposed by
Wells Fargo Bank or other shareholder servicing agents directly on customers
accounts in connection with an investment in a Fund.
ANNUAL FUND OPERATING EXPENSES are based on each Fund's actual expenses for
the fiscal year ended February 28, 1997. The tables do not reflect any fee
waivers or expense reimbursement arrangements. Barclays Global Fund Advisors
("BGFA"), Wells Fargo Bank, N.A. ("Wells Fargo Bank") and Stephens Inc.
("Stephens"), at their sole discretion may waive or reimburse all or a portion
of their respective fees charged to, or expenses paid by,
1
<PAGE>
a Fund or Master Portfolio. Any such waivers or reimbursements would reduce a
Fund's or Master Portfolio's total expenses and accordingly, have a favorable
impact on its performance. For more complete descriptions of the various costs
and expenses you can expect to incur as an investor in the Funds, please see
"Management of the Funds."
EXAMPLE OF EXPENSES is a hypothetical illustration of the expenses
associated with a $1,000 investment over stated periods, based on the expenses
in the above tables and an assumed annual rate of return of 5%. This annual
rate of return should not be considered an indication of actual or expected
performance of a Fund nor a representation of past or future expenses; actual
expenses and returns may be greater or lesser than those shown.
With regard to the combined fees and expenses of the Funds and Master
Portfolios, the Trust's Board of Trustees has considered whether the various
costs and benefits of investing each Fund's assets in the corresponding Master
Portfolio rather than directly in a portfolio of securities would be more or
less than if the Fund invested in portfolio securities directly. The Trust's
Board of Trustees believes that the aggregate per share expenses of a Fund and
its corresponding Master Portfolio will not be more than the expenses such Fund
would incur if it directly acquired and managed the type of securities held by
its corresponding Master Portfolio. The Trust's Board of Trustees believes that
if other investors invest their assets in the Master Portfolios, certain
economic efficiencies may be realized with respect to the Master Portfolios.
For example, fixed expenses that otherwise would have been borne solely by a
Fund would be spread across a larger assets base provided by more than one fund
investing in a Master Portfolio. There can be no assurance that these economic
efficiencies will be achieved.
The Trust also offers Class A and Class B shares of the LifePath Funds. In
addition, MasterWorks Funds Inc., an open-end, series investment company,
currently offers series of shares which invest in the Master Portfolios. The
expenses, and accordingly the investment returns, of the Class A and Class B
shares, and the MasterWorks series may differ from those of the Institutional
Class shares. Information about these other investment options in the Master
Portfolios may be obtained by calling Stephens at 1-800-643-9691. For
additional information see "Management of the Funds."
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been derived from the Financial Highlights of the
Institutional Class shares in the Funds' financial statements for the fiscal
year ended February 28, 1997. The financial statements are incorporated by
reference into the SAI and have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report dated April 11, 1997 also is incorporated by
reference into the SAI. This information should be read in conjunction with the
financial statements and notes thereto. The SAI has been incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
LIFEPATH 2000 FUND
---------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, beginning of period........... $ 10.67 $ 9.94 $10.00
Income from investment operations:
Net investment income.......................... 1.29 0.42 0.35
Net realized and unrealized gain/(loss)
on investments.............................. (0.60) 0.86 (0.12)
------- ------- ------
Total from investment operations............... 0.69 1.28 0.23
Less distributions:
From net investment income..................... (1.36) (0.42) (0.28)
From net realized capital gains................ (0.21) (0.13) (0.01)
------- ------- ------
Total Distributions............................ (1.57) (0.55) (0.29)
------- ------- ------
Net Asset Value, end of period................. $ 9.79 $ 10.67 $ 9.94
======= ======= ======
Total Return (not annualized).................. 7.23% 13.19% 2.38%
Ratios/Supplemental Data:
Net assets, end of period (000)................ $ 12 $17,262 $7,499
Number of shares outstanding,
end of period (000)......................... 1 1,618 754
Ratios to average net assets
(annualized)(1)
Ratio of expenses to average net assets........ 0.95% 0.95% 0.95%
Ratio of net investment income to
average net assets.......................... 4.17% 4.23% 4.89%
Portfolio Turnover Rate (2).................... 108% 84% 17%
Average Commission Rate Paid (3)............... $0.0401 ------ ------
- ----------
</TABLE>
(1) Ratios include expenses charged by the Master Portfolio.
(2) The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
(3) The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning
on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are
charged. This amount may vary depending on, among other things, the mix of
trades, trading practices and commission rate structures.
3
<PAGE>
<TABLE>
<CAPTION>
LIFEPATH 2010 FUND
-------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, beginning of period............... $ 11.47 $ 10.02 $ 10.00
Income from investment operations:
Net investment income.............................. 1.57 0.34 0.33
Net realized and unrealized gain/(loss)
on investments.................................. (0.36) 1.60 0.01
------- ------- -------
Total from investment operations................... 1.21 1.94 0.34
Less distributions:
From net investment income......................... (1.57) (0.35) (0.27)
From net realized capital gains.................... (0.17) (0.14) (0.05)
------- ------- -------
Total Distributions................................ (1.74) (0.49) (0.32)
------- ------- -------
Net Asset Value, end of period..................... $ 10.94 $ 11.47 $ 10.02
======= ======= =======
Total Return (not annualized)...................... 11.89% 19.69% 3.53%
Ratios/Supplemental Data:
Net assets, end of period (000)................... $ 49 $34,458 $13,028
Number of shares outstanding,
end of period (000)............................. 4 3,004 1,300
Ratios to average net assets
(annualized)(1)
Ratio of expenses to average net assets............ 0.95% 0.95% 0.95%
Ratio of net investment income to
average net assets.............................. 3.41% 3.27% 4.61%
Portfolio Turnover Rate (2)........................ 73% 39% 24%
Average Commission Rate Paid (3)................... $0.0404 ------ ------
- ----------
</TABLE>
(1) Ratios include expenses charged by the Master Portfolio.
(2) The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
(3) The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning
on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are
charged. This amount may vary depending on, among other things, the mix of
trades, trading practices and commission rate structures.
4
<PAGE>
<TABLE>
<CAPTION>
LIFEPATH 2020 FUND
-------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, beginning of period............ $ 11.98 $ 10.17 $ 10.00
Income from investment operations:
Net investment income........................... 0.96 0.29 0.30
Net realized and unrealized gain/(loss)
on investments............................... 0.72 2.03 0.12
------- ------- -------
Total from investment operations................ 1.68 2.32 0.42
Less distributions:
From net investment income...................... (0.96) (0.30) (0.25)
From net realized capital gains................. (0.42) (0.21) 0.00
------- ------- -------
Total Distributions............................. (1.38) (0.51) (0.25)
------- ------- -------
Net Asset Value, end of period.................. $ 12.28 $ 11.98 $ 10.17
======= ======= =======
Total Return (not annualized)................... 15.14% 23.18% 4.39%
Ratios/Supplemental Data:
Net assets, end of period (000)................. $ 69 $40,570 $16,618
Number of shares outstanding,
end of period (000).......................... 6 3,385 1,634
Ratios to average net assets
(annualized)(1)
Ratio of expenses to average net assets......... 0.95% 0.95% 0.95%
Ratio of net investment income
to average net assets........................ 2.57% 2.68% 3.88%
Portfolio Turnover Rate (2)..................... 61% 49% 28%
Average Commission Rate Paid (3)................ $0.0451 ------ ------
- ----------
</TABLE>
(1) Ratios include expenses charged by the Master Portfolio.
(2) The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
(3) The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning on or
after September 1, 1995, a fund is required to disclose its average commission
rate per share for security trades on which commissions are charged. This amount
may vary depending on, among other things, the mix of trades, trading practices
and commission rate structures.
5
<PAGE>
<TABLE>
<CAPTION>
LIFEPATH 2030 FUND
-------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, beginning of period............ $ 12.37 $ 10.18 $10.00
Income from investment operations:
Net investment income........................... 0.49 0.23 0.29
Net realized and unrealized gain/(loss)
on investments............................... 1.66 2.47 0.14
------- ------- ------
Total from investment operations................ 2.15 2.70 0.43
Less distributions:
From net investment income...................... (0.49) (0.24) (0.25)
From net realized capital gains................. (0.33) (0.27) 0.00
------- ------- ------
Total Distributions............................. (0.82) (0.51) (0.25)
------- ------- ------
Net Asset Value, end of period.................. $ 13.70 $ 12.37 $10.18
======= ======= ======
Total Return (not annualized)................... 18.13% 26.88% 4.42%
Ratios/Supplemental Data:
Net assets, end of period (000)................. $ 41 $25,447 $9,682
Number of shares outstanding,
end of period (000).......................... 3 2,058 951
Ratios to average net assets
(annualized) (1)
Ratio of expenses to average net assets......... 0.95% 0.95% 0.95%
Ratio of net investment income to
average net assets........................... 2.06% 2.15% 3.59%
Portfolio Turnover Rate (2)..................... 42% 39% 40%
Average Commission Rate Paid (3)................ $0.0364 ------ ------
- ----------
</TABLE>
(1) Ratios include expenses charged by the Master Portfolio.
(2) The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
(3) The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning
on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are
charged. This amount may vary depending on, among other things, the mix of
trades, trading practices and commission rate structures.
6
<PAGE>
<TABLE>
<CAPTION>
LIFEPATH 2040 FUND
-------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------------- ------------- -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period...... $ 12.86 $ 10.37 $10.00
Income from investment operations:
Net investment income..................... 0.63 0.17 0.20
Net realized and unrealized gain/(loss)
on investments......................... 1.78 2.84 0.34
------- ------- ------
Total from investment operations.......... 2.41 3.01 0.54
Less distributions:
From net investment income................ (0.64) (0.18) (0.17)
From net realized capital gains........... (0.69) (0.34) 0.00
------- ------- ------
Total Distributions....................... (1.33) (0.52) (0.17)
------- ------- ------
Net Asset Value, end of period............ $ 13.94 $ 12.86 $10.37
======= ======= ======
Total Return (not annualized)............. 19.89% 29.32% 5.55%
Ratios/Supplemental Data:
Net assets, end of period (000)........... $ 20 $33,386 $9,976
Number of shares outstanding,
end of period (000).................... 1 2,596 962
Ratios to average net assets
(annualized)(1)
Ratio of expenses to average net assets... 0.95% 0.95% 0.95%
Ratio of net investment income
to average net assets.................. 1.47% 1.53% 2.61%
Portfolio Turnover Rate (2)............... 48% 29% 5%
Average Commission Rate Paid (3).......... $0.0351
- ----------
</TABLE>
(1) Ratios include expenses charged by the Master Portfolio.
(2) The Portfolio Turnover Rate reflects activity by the Master Portfolio. For
the year ended February 28, 1995, the Master Portfolio was audited by other
auditors.
(3) The Average Commission Rate Paid reflects activity by the Master Portfolio
during the fiscal year ended February 28, 1997. For fiscal years beginning
on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are
charged. This amount may vary depending on, among other things, the mix of
trades, trading practices and commission rate structures.
DESCRIPTION OF THE FUNDS
GENERAL
The Trust is a "series fund," which is a mutual fund divided into separate
portfolios. Each portfolio is treated as a separate entity for certain matters
under the Investment Company Act of 1940, as amended (the "1940 Act"), and for
other purposes, and a shareholder of one portfolio is not deemed to be a
shareholder of any other portfolio. Each LifePath Fund (except the LifePath 2000
Fund, which does not offer Class B shares) is comprised of three classes of
shares -- Class A, Class B and Institutional Class shares. As described below,
for certain matters, Trust shareholders vote together as a group, as to others
they vote separately by portfolio, and, in certain instances, they vote by class
of shares within a portfolio. In addition, because of differences between the
fees and expenses borne by the Class A, Class B and Institutional Class shares,
the net asset value of the shares will typically differ. This Prospectus
describes the Institutional Class shares of the LifePath 2000, LifePath 2010,
LifePath 2020, LifePath 2030 and LifePath 2040 Funds, each of which is
diversified. INSTITUTIONAL SHARES OF THE FUNDS ARE NO LONGER BEING OFFERED
7
<PAGE>
FOR SALE, ALTHOUGH A LIMITED NUMBER OF SUCH SHARES REMAIN OUTSTANDING AS OF THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS PROVIDES INFORMATION TO THE EXISTING
SHAREHOLDERS OF INSTITUTIONAL CLASS SHARES OF THE FUNDS.
Each LifePath Fund invests all of its assets in a separate Master Portfolio of
MIP with the same investment objective as the Fund. For simplicity, references
to the investments and investment policies and risks of the Funds, unless
otherwise indicated, should be understood as references to the investments and
investment policies and risks of the Master Portfolios.
MASTER/FEEDER STRUCTURE
Each Fund is a feeder fund in a master/feeder structure, which means it invests
all of its assets in a separate Master Portfolio of MIP with the same investment
objective as such Fund. See "Investment Objectives" and "Management Policies"
below. MIP is organized as a trust under the laws of the State of Delaware. See
"Management of the Funds." In addition to selling its shares to a Fund, each
Master Portfolio may sell its shares to certain other mutual funds or other
qualified investors. Information regarding additional options, if any, for
investment in shares of a Master Portfolio is available from Stephens and may be
obtained by calling 1-800-643-9691. The expenses and, correspondingly, the
returns of other investment options in MIP are expected to differ from those of
the Funds.
The Board of Trustees believes that, if other investors invest their assets in a
Master Portfolio of MIP, certain economic efficiencies may be realized with
respect to such Master Portfolio. For example, fixed expenses that otherwise
would have been borne solely by a Fund would be spread across a larger asset
base provided by more than one fund investing in the Master Portfolio. There can
be no assurance that these economic efficiencies will be achieved. The Fund and
other entities investing in a Master Portfolio will each be liable for all
obligations of the Master Portfolio. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and MIP itself is unable to meet its
obligations. Accordingly, the Trust's Board of Trustees believes that none of
the Funds nor their shareholders will be adversely affected by reason of
investing their assets in a Master Portfolio. However, if a mutual fund or other
investor withdraws its investment from such Master Portfolio, the economic
efficiencies (e.g., spreading fixed expenses across a larger asset base) that
the Trust's Board believes should be available through investment in the Master
Portfolio may not be fully achieved. In addition, given the relatively novel
nature of the master/feeder structure, accounting and operational difficulties
could occur.
Each Master Portfolio's investment objective and other fundamental policies,
which are the same as those of the corresponding Fund, cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of such
Master Portfolio's outstanding voting interests. Whenever a Fund, as a Master
Portfolio interestholder, is requested to vote on matters pertaining to any
fundamental policy of such Master Portfolio, the Fund will hold a meeting of its
shareholders to consider such matters and such Fund will cast its votes in
proportion to the votes received from Fund shareholders. A Fund will vote Master
Portfolio interests for which it receives no voting instructions in the same
proportion as the votes received from Fund shareholders. In addition, certain
policies of the Master Portfolio which are non-fundamental could be changed by
vote of a majority of MIP's Trustees without shareholder vote. If a Master
Portfolio's investment objective or fundamental or non-fundamental policies are
changed, the Fund investing in that Master Portfolio could subsequently change
its objective or policies to correspond to those of the Master Portfolio or the
Fund could redeem its Master Portfolio shares and either seek a new investment
company in which to invest with a matching objective or retain its own
investment adviser to manage such Fund's portfolio in accordance with its
objective. In the latter case, the Fund's inability to find a substitute
investment company in which to invest or equivalent management services could
adversely affect shareholders' investments in that Fund. A Fund will provide
shareholders with 30 days' written notice prior to the implementation of any
change in a non-fundamental policy of such Fund or Master Portfolio, to the
extent possible.
Each class of the Funds has identical rights with respect to the series of which
they are a part, except that there are certain matters which affect one class
but not another. Currently, there is a Distribution Plan pursuant to Rule 12b-1
under the 1940 Act with respect to the Class A and Class B shares but not the
Institutional Class shares. In addition, certain purchase, exchange and dividend
reinvestment options available to Retail Class shareholders are
8
<PAGE>
not available to Institutional Class shareholders. On all such matters the
shareholders of the affected class vote as a class.
INVESTMENT OBJECTIVES
Each LifePath Fund seeks to provide long-term investors with an asset allocation
strategy designed to maximize assets for retirement or for other purposes
consistent with the quantitatively measured risk investors, on average, may be
willing to accept given their investment time horizons. Specifically:
. LifePath 2000 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2000.
. LifePath 2010 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2010.
. LifePath 2020 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2020.
. LifePath 2030 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2030.
. LifePath 2040 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2040.
ABOUT THE FUNDS
Investors are encouraged to invest in a particular LifePath Fund based on the
decade of anticipated retirement or when participants anticipate beginning to
withdraw substantial portions of their account. For example, the LifePath 2000
Fund is designed for investors in their 50s and 60s who plan to retire (or begin
to withdraw substantial portions of their investment) in approximately 2000; the
LifePath 2010 Fund is designed for investors in their 40s and 50s who plan to
retire (or begin to withdraw as described above) in approximately 2010; and so
on. In addition, when making an investment decision, investors should evaluate
their risk profile, recognizing, for example, that the LifePath 2040 Fund is
designed for investors with a high tolerance for risk while the LifePath 2000
Fund is designed for investors with a low tolerance for risk. The LifePath Funds
were the first mutual funds of their kind to offer a flexible investment
strategy designed to change over specific time horizons.
The LifePath Funds follow an asset allocation strategy among three broad
investment classes: equity securities and debt instruments of issuers located
throughout the world and cash in the form of money market instruments. Each
LifePath Fund invests varying percentages of its portfolio in equity securities,
debt instruments and money market instruments. The later-dated Funds tend to be
more heavily invested in equity securities and generally bear more risk than the
earlier-dated Funds. The later-dated Funds generally have an expectation of
greater total return. The investment class weightings of the LifePath 2040 Fund
at a given time might be 100%, 0% and 0% among equity securities, debt
securities and cash, respectively, while the weightings of the LifePath 2000
Fund might be 25%, 50% and 25%, respectively. These weightings will change
periodically. The difference in the investment class weightings is based on the
statistically determined risk that investors, on average, may be willing to
accept given their investment time horizons in an effort to maximize assets in
anticipation of retirement or for other purposes. As each LifePath Fund
approaches its designated time horizon, it generally is managed more
conservatively, on the premise that individuals investing for retirement desire
to reduce investment risk in their retirement accounts as they age.
As of June 1, 1997, asset allocations in the LifePath Funds were approximately
as follows:
9
<PAGE>
<TABLE>
<CAPTION>
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LIFEPATH
2000 2010 2020 2030 2040
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Equity Securities
Domestic............... 14% 35% 49% 58% 69%
International.......... 7% 12% 15% 19% 20%
Debt Securities.......... 79% 52% 35% 22% 10%
Cash..................... 0% 1% 1% 1% 1%
</TABLE>
The relative weightings for each of the various investment classes are expected
to change over time, with the LifePath 2040 Fund adopting in the 2030s
characteristics similar to the LifePath 2000 Fund today. BGFA may in the future
refine the Model, or the financial and economic data analyzed by the Model, in
ways that could result in changes to recommended allocations.
MANAGEMENT POLICIES
The LifePath Funds contain both "strategic" and "tactical" components. The
strategic component of the Funds evaluates the risk that investors, on average,
may be willing to accept given their investment time horizons. The strategic
component thus determines the changing investment risk level of each LifePath
Fund as time passes. The tactical component addresses short-term market
conditions. The tactical component thus adjusts the amount of investment risk
taken by each LifePath Fund without regard to time horizon, but rather in
consideration of the relative risk-adjusted short-term attractiveness of various
asset classes.
The LifePath Funds may invest in a wide range of U.S. and foreign investments
and market sectors and may shift their allocations among investments and sectors
from time to time. To manage the LifePath Funds, BGFA employs a proprietary
investment model (the "Model") that analyzes extensive financial and economic
data, including risk correlation and expected return statistics. The Model
selects indices representing segments of the global equity and debt markets and
the Funds invest to create market exposure by purchasing representative samples
of the indices in an attempt to replicate their performance.
The Model has broad latitude to allocate the Funds' investments among equity
securities, debt securities and money market instruments. The LifePath Funds are
not managed as balanced portfolios and are not required to maintain a portion of
their investments in each of the permitted investment categories at all times.
Until a LifePath Fund attains an asset level of approximately $100 to $150
million, the Model allocates assets across fewer of the investment categories
identified below than it otherwise would. As a LifePath Fund approaches this
minimum asset level, the Model adds investment categories from among those
identified below, thereby approaching the desired investment mix over time.
Each LifePath Fund's investments are compared from time to time to the Model's
recommended allocation. Recommended reallocations are implemented subject to
BGFA's assessment of current economic conditions and investment opportunities.
BGFA may change from time to time the criteria and methods it uses to implement
the recommendations of the Model. Recommended reallocations are implemented in
accordance with trading policies designed to take advantage of market
opportunities and reduce transaction costs. The asset allocation mix selected by
the Model is a primary determinant in the respective LifePath Fund's investment
performance.
BGFA manages other portfolios which also invest in accordance with the Model.
The performance of each of those other portfolios is likely to vary from the
performance of each LifePath Fund. Such variation in performance is primarily
due to different equilibrium asset mix assumptions used for the various
portfolios, timing differences in the implementation of the Model's
recommendations and differences in expenses and liquidity requirements. The
overall management of each LifePath Fund is based on the recommendation of the
Model, and no person is primarily responsible for recommending the mix of asset
classes in each Fund or the mix of securities within the asset classes.
Decisions relating to the Model are made by BGFA's investment committee.
EQUITY SECURITIES -- The LifePath Funds seek U.S. equity market exposure
through investment in securities representative of the following indices of
common stock:
10
<PAGE>
. The S&P/BARRA Value Stock Index (consisting of primarily large-
capitalization U.S. stocks with lower-than-average price/book ratios).
. The S&P/BARRA Growth Stock Index (consisting of primarily large-
capitalization U.S. stocks with higher-than-average price/book ratios).
. The Intermediate Capitalization Value Stock Index (consisting of primarily
medium-capitalization U.S. stocks with lower-than-average price/book
ratios).
. The Intermediate Capitalization Growth Stock Index (consisting of primarily
medium-capitalization U.S. stocks with higher-than-average price/book
ratios).
. The Intermediate Capitalization Utility Stock Index (consisting of primarily
medium-capitalization U.S. utility stocks).
. The Micro Capitalization Market Index (consisting of primarily small-
capitalization U.S. stocks).
. The Small Capitalization Value Stock Index (consisting of primarily small-
capitalization U.S. stocks with lower-than-average price/book ratios).
. The Small Capitalization Growth Stock Index (consisting of primarily small-
capitalization U.S. stocks with higher-than-average price/book ratios).
The LifePath Funds seek foreign equity market exposure through investment in
foreign equity securities, American Depositary Receipts or European Depositary
Receipts of issuers whose securities are representative of the following
indices of foreign equity securities:
. The Morgan Stanley Capital International (MSCI) Japan Index (consisting of
primarily large-capitalization Japanese stocks).
. The Morgan Stanley Capital International Europe, Australia, Far East Index
(MSCI EAFE) Ex-Japan Index (consisting of primarily large-capitalization
foreign stocks, excluding Japanese stocks).
The LifePath Funds also may seek U.S. and foreign equity market exposure
through investment in equity securities of U.S. and foreign issuers that are
not included in the indices listed above.
. DEBT SECURITIES -- The LifePath Funds seek U.S. debt market exposure through
investment in securities representative of the following indices of U.S. debt
securities:
. The Lehman Brothers Long-Term Government Bond Index (consisting of all U.S.
Government bonds with maturities of at least ten years).
. The Lehman Brothers Intermediate-Term Government Bond Index (consisting of
all U.S. Government bonds with maturities of less than ten years and greater
than one year).
. The Lehman Brothers Long-Term Corporate Bond Index (consisting of all U.S.
investment-grade corporate bonds with maturities of at least ten years).
. The Lehman Brothers Intermediate-Term Corporate Bond Index (consisting of
all U.S. investment-grade corporate bonds with maturities of less than ten
years and greater than one year).
11
<PAGE>
. The Lehman Brothers Mortgage-Backed Securities Index (consisting of all
fixed-coupon mortgage pass-throughs issued by the Federal National Mortgage
Association, Government National Mortgage Association and Federal Home Loan
Mortgage Corporation with maturities greater than one year).
The LifePath Funds seek foreign debt market exposure through investment in
securities representative of the following index of foreign debt
securities:
. The Salomon Brothers Non-U.S. World Government Bond Index (consisting of
foreign government bonds with maturities of greater than one year).
Each U.S. and foreign debt security is expected to be part of an issuance with
a minimum outstanding amount at the time of purchase of approximately $50
million and $100 million, respectively. Each security in which a LifePath
Master Portfolio invests must be rated at least Baa by Moody's Investors
Service, Inc. ("Moody's"), or BBB by Standard & Poor's Corporation ("S&P"),
Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("Duff") or, if
unrated, deemed to be of comparable quality by WFNIA. See "Risk
Considerations" below.
MONEY MARKET INSTRUMENTS -- The money market instruments held by each Fund
generally consist of high-quality money market instruments, including U.S.
Government obligations, obligations of domestic and foreign banks, short-term
corporate debt instruments and repurchase agreements. See "Appendix" below for
a more complete description of the money market instruments in which each Fund
may invest.
RISK CONSIDERATIONS
General
Since the investment characteristics and, therefore, investment risks directly
associated with such characteristics of each LifePath Fund correspond to those
of the Master Portfolio in which such Fund invests, the following is a
discussion of the risks associated with the investments of the Master
Portfolios. Once again, unless otherwise specified, references to the investment
policies and risks of a Fund also should be understood as references to the
investment policies and risks of the corresponding Master Portfolio.
The net asset value per share of each class of a LifePath Fund is neither
insured nor guaranteed, is not fixed and should be expected to fluctuate.
Equity Securities
The stock investments of the LifePath Funds are subject to equity market risk.
Equity market risk is the possibility that common stock prices will fluctuate or
decline over short or even extended periods. The U.S. stock market tends to be
cyclical, with periods when stock prices generally rise and periods when prices
generally decline. Throughout the first six months of 1997, the stock market,
as measured by the S&P 500 Index and other commonly used indices, was trading at
or close to record levels. There can be no guarantee that these performance
levels will continue.
Debt Securities
The debt instruments in which the LifePath Funds invest are subject to credit
and interest rate risk. Credit risk is the risk that issuers of the debt
instruments in which the Funds invest 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 Funds invest. The value of the debt instruments generally changes inversely
to market interest rates. Debt securities with longer maturities, which tend to
produce higher yields, are subject to potentially greater capital appreciation
and depreciation than obligations with shorter maturities. Changes in the
financial strength of an issuer or changes in the ratings of any particular
security may also affect the value of these investments.
Although some of the Funds' portfolio securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
12
<PAGE>
Funds' daily net asset value is based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
or instrumentalities where it is not obligated to do so.
Foreign Securities
The LifePath Funds may invest in debt obligations and equity securities of
foreign issuers and may invest in American Depositary Receipts ("ADRs") and
European Depositary Receipts ("EDRs") of such issuers. Investing in the
securities of issuers of any foreign country, including through ADRs and EDRs,
involves special risks and considerations not typically associated with
investing in U.S. companies. These include differences in accounting, auditing
and financial reporting standards; generally higher commission rates on foreign
portfolio transactions; the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or exchange control
regulations (which may include suspension of the ability to transfer currency
from a country); and political, social and monetary or diplomatic developments
that could affect U.S. investments in foreign countries. Additionally,
dispositions of foreign securities and dividends and interest payable on those
securities may be subject to foreign taxes, including withholding taxes.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additional
costs associated with an investment in foreign securities may include higher
custodial fees than apply to domestic custodial arrangements and transaction
costs of foreign currency conversions. Changes in foreign exchange rates also
will affect the value of securities denominated or quoted in currencies other
than the U.S. dollar. A Fund's performance may be affected either unfavorably
or favorably by fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations and by
indigenous economic and political developments.
Other Investment Considerations
Because the Master Portfolios may shift investment allocations significantly
from time to time, their performance may differ from funds which invest in one
asset class or from funds with a stable mix of assets. Further, shifts among
asset classes may result in relatively high turnover and transaction (i.e.,
brokerage commission) costs. Portfolio turnover also can generate short-term
capital gains tax consequences. During those periods in which a high percentage
of a Master Portfolio's assets are invested in long-term bonds, the Master
Portfolio's exposure to interest-rate risk will be greater because the longer
maturity of such securities means they are generally more sensitive to changes
in market interest rates than short-term securities.
Each LifePath Fund also may lend its portfolio securities and enter into futures
transactions, each of which involves risk. The futures contracts and options on
futures contracts that each Fund may purchase may be considered derivatives.
Derivatives are financial instruments whose values are derived, at least in
part, from the prices of other securities or specified assets, indices or rates.
Each Fund may use some derivatives as part of its short-term liquidity holdings
and/or as substitutes for comparable market positions in the underlying
securities. Some derivatives may be more sensitive than direct securities to
changes in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or contract
terms. A Fund may not use derivatives to create leverage without establishing
adequate "cover" in compliance with SEC leverage rules.
Asset allocation and modeling strategies are employed by BGFA for other
investment companies and accounts advised or sub-advised by BGFA. If these
strategies indicate particular securities should be purchased or sold, at the
same time, by a LifePath Fund and one or more of these investment companies or
accounts, available investments or opportunities for sales will be allocated
equitably to each by BGFA. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by a LifePath Fund or the
price paid or received by such Fund.
13
<PAGE>
MANAGEMENT OF THE FUNDS
GENERAL
The Trust has not retained the services of an investment adviser because each
Fund's assets are invested in a Master Portfolio that has retained investment
advisory services (see "Investment Adviser"). Each LifePath Fund bears a pro
rata portion of the fees paid to the corresponding Master Portfolio.
BOARD OF TRUSTEES
The business and affairs of the Trust are managed under the direction of its
Board of Trustees. The Trust's Trustees are also MIP's Trustees and also serve
as Directors of MasterWorks Funds Inc., another open-end investment company
whose LifePath Fund series are wholly invested in the Master Portfolios. The
Trust's Board, including a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust, has adopted procedures to
address potential conflicts of interest that may arise as a result of the
structure of the Boards. Additional information regarding the Officers and
Trustees of the Trust and MIP is included in the SAI under "Management of the
Trust."
INVESTMENT ADVISER
BGFA serves as investment adviser to each LifePath Master Portfolio. BGFA
provides investment guidance and policy direction in connection with the
management of each Master Portfolio's assets. BGFA is an indirect subsidiary of
Barclays Bank PLC ("Barclays") and is located at 45 Fremont Street, San
Francisco, California 94105. As of April 30, 1997, BGFA and its affiliates
provided investment advisory services for approximately $429 billion of assets.
MIP has agreed to pay to BGFA a monthly fee at the annual rate of 0.55% of each
LifePath Master Portfolio's average daily net assets as compensation for its
advisory services.
BGFA, Barclays and their affiliates may deal, trade and invest for their own
account in the types of securities in which a Master Portfolio may invest and
may have deposit, loan and commercial banking relationships with the issuers of
securities purchased by a Master Portfolio. BGFA has informed MIP that in making
investment decisions the Adviser does not obtain or use material inside
information in its possession.
Morrison & Foerster LLP, counsel to the Trust and MIP and special counsel to
BGFA, has advised the Trust, MIP and BGFA that BGFA and its affiliates may
perform the services contemplated by the Investment Advisory Contracts and this
Prospectus without violation of the Glass-Steagall Act. Such counsel has pointed
out, however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state statutes,
including the Glass-Steagall Act, and regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, as well as future
changes in such statutes, regulations and judicial or administrative decisions
or interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.
CO-ADMINISTRATORS
Wells Fargo Bank and Stephens serve as co-administrators to the Trust. Wells
Fargo Bank and Stephens generally supervise all aspects of the operation of the
Trust other than providing investment advice. The administration services
provided to the LifePath Funds also include coordination of the other services
provided to the LifePath Funds, compilation of information for reports to the
SEC and state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the Trust's Board of Trustees and officers.
Stephens also furnishes office space and certain facilities to conduct the
Trust's business and compensates the Trust's Trustees, officers and employees
who
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are affiliated with Stephens. Wells Fargo Bank and Stephens may delegate the
performance of their administrative duties to third parties. In addition, except
as noted below, Wells Fargo Bank and Stephens have assumed all ordinary expenses
incurred by a LifePath Fund other than the fees payable by such Fund pursuant to
the Trust's various service contracts. For providing co-administration services
to the Trust, the Trust has agreed to pay Wells Fargo Bank and Stephens a
monthly fee at the annual rate of 0.10% of each LifePath Fund's average daily
net assets. Stephens previously provided substantially the same services as
sole administrator to the Funds.
Wells Fargo has delegated certain of its duties as co-administrator to Investors
Bank & Trust Company ("IBT"). IBT, as sub-administrator, is compensated by Wells
Fargo for performing certain administration services.
DISTRIBUTOR
Stephens is the distributor of the Funds' shares. Stephens is a full service
broker/dealer and investment advisory firm located at 111 Center Street, Little
Rock, Arkansas 72201. Stephens and its predecessor have been providing
securities and investment services for more than 60 years, including
discretionary portfolio management services since 1983. Stephens currently
manages investment portfolios for pension and profit sharing plans, individual
investors, foundations, insurance companies and university endowments.
CUSTODIAN
IBT acts as custodian to each Fund and Master Portfolio. The principal business
address of IBT is 200 Clarendon Street, Boston, MA 02116. IBT is not entitled to
receive compensation for its custodial services so long as IBT is entitled to
receive compensation for providing sub-administration services. Prior to October
21, 1996, Wells Fargo Bank acted as the Funds' custodian, but was not entitled
to receive compensation for its custodial services.
TRANSFER AGENT
Wells Fargo Bank serves as the Company's transfer and dividend disbursing agent
(the "Transfer Agent"). Wells Fargo Bank provides transfer agency services at
525 Market Street, San Francisco, California 94105.
SHAREHOLDER SERVICING PLAN
The Trust has adopted Shareholder Servicing Plans for Institutional Class shares
pursuant to which it may enter into shareholder servicing agreements with
certain financial institutions, securities dealers and other industry
professionals (collectively, "Shareholder Servicing Agents") for the provision
of certain services to Fund shareholders. The services provided may include
aggregating and transmitting purchase, exchange and redemption orders, providing
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Funds, providing reports and other
information, and providing services related to the maintenance of shareholder
accounts. For the services provided pursuant to a Shareholder Servicing
Agreement, the Trust may pay each Shareholder Servicing Agent a monthly fee at
the annual rate of up to 0.20% of the average daily value of each LifePath
Fund's Institutional Class shares beneficially owned by customers of the
Shareholder Servicing Agent. The fee payable for such services is intended to be
a "service fee" as defined in the Conduct Rules of the NASD.
A Shareholder Servicing Agent also may impose certain conditions on its
customers, subject to the terms of this Prospectus, in addition to or different
from those imposed by the Trust, such as requiring a minimum initial investment
or payment of a separate fee for additional services. Each Shareholder Servicing
Agent is required to agree to disclose any fees it may directly charge its
customers who are Fund shareholders and to notify them in writing at least 30
days before it imposes any transaction fees.
MIP 12B-1 PLAN
MIP's Board of Trustees has adopted, on behalf of each Master Portfolio, a
"defensive" distribution plan under Section 12(b) of the 1940 Act and Rule 12b-1
thereunder (the "Plan"). The Plan does not result in any additional
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expenses being borne by a Master Portfolio or a Fund. The Plan was adopted by a
majority of MIP's Board of Trustees (including a majority of those Trustees who
are not "interested persons" of MIP as defined in the 1940 Act) on October 10,
1995. The Plan was intended as a precaution designed to address the possibility
that certain ongoing payments by Barclays to Wells Fargo Bank in connection with
the sale of a former affiliate of Wells Fargo Bank may be characterized as
indirect payments by each Master Portfolio to finance activities primarily
intended to result in the sale of interests in such Master Portfolio. The Plan
provides that if any portion of a Master Portfolio's advisory fees (up to 0.25%
of the average daily net assets of each Master Portfolio on an annual basis)
were deemed to constitute an indirect payment for activities that are primarily
intended to result in the sale of interests in a Master Portfolio, such payment
would be authorized pursuant to the Plan.
EXPENSES
Under the Co-Administration Agreement, Wells Fargo Bank and Stephens have agreed
to assume the operating expenses of each LifePath Fund, except for extraordinary
expenses and those fees and expenses payable pursuant to the various service
contracts described above that are borne by the Trust.
DESCRIPTION OF SHARES
GENERAL
INSTITUTIONAL SHARES ARE NO LONGER BEING OFFERED TO INVESTORS. INVESTORS WHO
WISH TO INVEST IN THE FUNDS MAY PURCHASE CLASS A OR CLASS B SHARES OF THE FUNDS.
INVESTORS WISHING TO OBTAIN INFORMATION AND A PROSPECTUS DESCRIBING THE CLASS A
OR CLASS B SHARES OR TO OBTAIN INFORMATION ABOUT THE INSTITUTIONAL SHARES MAY
CALL 1-800-776-0179.
STATEMENTS AND REPORTS
The Funds, or a Shareholder Servicing Agent on their behalf, will typically send
you a confirmation or statement of your account after every transaction that
affects your share balance or your Fund account registration. The Funds do not
issue share certificates. A statement with tax information for the previous year
will be mailed to you each year, and also will be filed with the Internal
Revenue Service ("IRS"). At least twice a year, you will receive financial
statements.
HOW TO REDEEM SHARES
GENERAL
You may redeem Fund shares on any day the Fund is open for business (a "Business
Day"). The Fund is open for business Monday through Friday, and is closed on
federal bank and NYSE holidays. The redemption price of the shares is the next
determined NAV of the Institutional Class calculated after the Trust has
received a redemption request in proper form.
The Trust ordinarily remits redemption proceeds, from a Fund within seven days
after a redemption order is received in proper form, absent extraordinary
circumstances. Such extraordinary circumstances could include a period during
which an emergency exists as a result of which (a) disposal by the Master
Portfolio in which such Fund invests of securities owned by the Master Portfolio
is not reasonably practicable or (b) it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or a period during which
the Securities and Exchange Commission by order permits deferral of redemptions
for the protection of Fund shareholders. In addition, the Trust may defer
payment of a shareholder's redemption until reasonably satisfied that such
shareholder's investments made by check have been collected (which can take up
to ten (10) days from the purchase date). Payment of redemption proceeds may be
made in portfolio securities.
All redemptions of shares generally are made in cash, except that the commitment
to redeem shares in cash extends only to redemption requests made by each Fund
shareholder during any 90-day period of up to the lesser of
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$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This commitment is irrevocable without the prior approval of the SEC and
is a fundamental policy of the Funds that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have a Fund make payment,
in whole or in part, in securities or other assets, in case of an emergency or
any time a cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In this event, the securities would be
valued in the same manner as the securities of the Fund are valued. If the
recipient were to sell such securities, he or she would incur brokerage costs in
converting such securities in cash.
Due to the high cost of maintaining Fund accounts with small balances, the Trust
reserves the right to close an investor's account and send the proceeds to such
investor if the balance falls below $1,000 because of a redemption (including a
redemption of Fund shares after an investor has made only the $1,000 minimum
initial investment). However, investors will be given 30 days' notice to make an
additional investment to increase their account balance to $1,000 or more. Plan
Accounts are not subject to minimum Fund account balance requirements.
Redemption orders that are received by the Transfer Agent before the close of
regular trading on the NYSE generally are executed at the net asset value
determined as of the close of regular trading on the NYSE on that day.
Redemption orders that are received by the Transfer Agent after the close of
trading on the NYSE are executed on the next Business Day.
BENEFIT PLANS, IRAS, KEOGHS AND OTHER INDIVIDUAL RETIREMENT PLANS
Investors in these types of plans are subject to restrictions on withdrawing
their money under the Code. Each type of plan has established withdrawal
procedures that are disclosed to investors at the time of purchase. Investors
may obtain more information by contacting their employer and/or their
Shareholder Servicing Agent. The redemption procedures outlined in the remainder
of this section do not apply to investors in employee benefit plans or
retirement plans, nor do the minimum-balance requirements outlined above.
Investors in these types of plans should contact their Shareholder Servicing
Agent regarding redemption procedures applicable to them.
REDEMPTIONS BY ELIGIBLE INDIVIDUAL AND CORPORATE INVESTORS
Redemptions by Mail
1. Write a letter of instruction. Indicate the Class and the dollar amount or
number of Fund shares to be redeemed, the Fund account number and TIN.
2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all owners must sign.
3. If shares to be redeemed have a value of $5,000 or more, or redemption
proceeds are to be paid to someone other than you at your address of record
or your Approved Bank Account, the signature(s) must be guaranteed by an
"eligible guarantor institution," which generally includes a commercial bank
whose deposits are insured by the Federal Deposit Insurance Corporation
("FDIC"), a trust company, a member firm of a domestic stock exchange, a
savings association, or a credit union that is authorized by its charter to
provide a signature guarantee. Signature guarantees by notaries public are
not acceptable. Further documentation may be requested from corporations,
administrators, executors, personal representatives, trustees or
custodians.
4. Mail the redemption letter to the Transfer Agent at the mailing address set
forth under on the inside back cover of this prospectus.
Unless other instructions are given in proper form, a check for the redemption
proceeds is sent to your address of record.
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Redemptions by Telephone
Telephone redemption or exchange privileges are made available to shareholders
automatically upon opening an account, unless the shareholder specifically
declines the privileges. These privileges authorize the Transfer Agent to act on
telephone instructions from any person representing himself or herself to be the
investor and reasonably believed by the Transfer Agent to be genuine. The Trust
requires the Transfer Agent to employ reasonable procedures, such as requiring a
form of personal identification, to confirm that instructions are genuine and,
if it does not follow such procedures, the Trust or the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions. Neither
the Trust nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions investors may experience
difficulty in contacting the Transfer Agent by telephone to request a redemption
or exchange of Fund shares. In such cases, investors should consider using the
other redemption procedures that are available. Use of these other redemption
procedures may result in your redemption request being processed at a later time
than it would have been if telephone redemption had been used. During the delay,
the NAV of the Institutional Class shares of a LifePath Fund may fluctuate.
Expedited Redemptions by Mail or Telephone
Investors may request an expedited redemption of Fund shares by letter, in which
case receipt of redemption proceeds, but not the Fund's receipt of a redemption
request, would be expedited. Telephone redemption or exchange privileges were
made available automatically upon the opening of an account unless you declined
the privilege. Investors also may request an expedited redemption of Fund shares
by telephone on any Business Day, in which case both the receipt of redemption
proceeds and the Fund's receipt of a redemption request would be expedited.
Investors may call 1-800-222-8222 to request expedited redemption by telephone.
Investors may mail an expedited redemption request to the Transfer Agent at the
mailing address set forth under "Management of the Funds - Transfer Agent."
Upon request, net redemption proceeds of expedited redemptions of $5,000 or more
are wired or credited to an investor's Approved Bank Account or wired to the
Selling Agent designated in the Account Application. The Trust reserves the
right to impose a charge for wiring redemption proceeds. When proceeds of an
expedited redemption are to be paid to someone else, to an address other than
that of record, or to an Approved Bank Account or Selling Agent that has not
been predesignated in the Account Application, the expedited redemption request
must be made by letter and the signature(s) on the letter must be guaranteed,
regardless of the amount of the redemption. If an expedited redemption request
is received by the Transfer Agent by the close of the NYSE on a Business Day,
redemption proceeds are transmitted to the appropriate Approved Bank Account or
Selling Agent on the next Business Day (assuming the investment check has
cleared as described above), absent extraordinary circumstances. Such
extraordinary circumstances could include those described above as potentially
delaying redemptions, and also could include situations involving an unusually
heavy volume of wire transfer orders on a national or regional basis or
communication or transmittal delays that could cause a brief delay in the wiring
or crediting of funds. A check for proceeds of less than $5,000 is mailed to
your address of record or, at your election, credited to your Approved Bank
Account.
During periods of drastic economic or market activity or changes, investors may
experience problems implementing an expedited redemption by telephone. In the
event investors are unable to reach the Transfer Agent by telephone, they should
consider using overnight mail to implement an expedited redemption. The Trust
reserves the right to modify or terminate the expedited telephone redemption
privilege at any time.
EXCHANGE PRIVILEGE
The exchange privilege enables an investor to purchase, in exchange for shares
of the Institutional Class of a Fund, shares of a Fund of MasterWorks Funds Inc.
("MasterWorks"), an open-end, series investment company, provided such shares
are offered for sale in the investor's state of residence. The exchange
privilege may be expanded or modified in the future. Investors will be notified
of any such change. Before any exchange into a fund
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offered by another prospectus, the investor must obtain and should review a copy
of the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained from Stephens.
Shares are exchanged at the next determined net asset value; however, a sales
load may be charged with respect to exchanges into a fund sold with a sales
load. No fees currently are charged shareholders directly in connection with
exchanges although the Trust reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal exchange fee in accordance with
rules promulgated by the Securities and Exchange Commission. The Trust reserves
the right to limit the number of times shares may be exchanged and to reject in
whole or in part any exchange request into a Fund when management believes that
such action would be in the best interests of the Fund's other shareholders,
such as when management believes such action would be appropriate to protect
such Fund against disruptions in portfolio management resulting from frequent
transactions by those seeking to time market fluctuations. Any such rejection
will be made by management on a prospective basis only, upon notice to the
shareholder given not later than 10 days following such shareholder's most
recent exchange. The exchange privilege may be modified or terminated at any
time upon 60 days' written notice to shareholders.
SHARE VALUE
Shares of each Fund are sold on a continuous basis at the applicable offering
price (net asset value per share plus any applicable sales charges) next
determined after an order in proper form is received by the Transfer Agent. Net
asset value ("NAV") per share is determined on each day the Fund is open as of
the close of regular trading on the New York Stock Exchange ("NYSE") (currently
1:00 p.m., Pacific Time). The Funds are open on each day the NYSE is open for
business (a "Business Day").
The NAV of a share of each class of the LifePath Funds is the value of total net
assets attributable to such class divided by the number of outstanding shares of
that class. The value of the net assets per class is determined daily by
adjusting the net assets per class at the beginning of the day by the value of
each class's shareholder activity, net investment income and net realized and
unrealized gains or losses for that day. Net investment income is calculated
each day for each class by attributing to each class a pro rata share of daily
income and common expenses, and by assigning class-specific expenses to each
class as appropriate. The NAV of each class of shares is expected to fluctuate
daily and is expected to differ. The Master Portfolio's investments are valued
each Business Day generally by using available market quotations or at fair
value determined in good faith by BGFA pursuant to guidelines approved by MIP's
Board of Trustees. For further information regarding the methods employed in
valuing each Master Portfolio's investments, see "Determination of Net Asset
Value" in the SAI.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Trust intends to qualify each Fund every year as a regulated investment
company pursuant to Subchapter M of the Code as long as such qualification is in
the best interest of each Fund's shareholders. In addition, net capital gains,
net investment income, and operating expenses will be determined separately for
each Fund. By complying with the applicable provisions of the Code, each Fund
will not be subject to federal income tax with respect to its net investment
income and net realized capital gains distributed to its shareholders. Each Fund
declares and pays dividends quarterly of substantially all of its net investment
income. Each Fund makes distributions from any net realized gains at least once
a year, in all events in a manner consistent with the provisions of the 1940 Act
and the Code. No Fund will make distributions from net realized gains unless
capital loss carryovers, if any, have been utilized or have expired. Since the
Trust is no longer offering Institutional Shares of the LifePath Funds for sale,
dividends and distributions are automatically paid out in cash.
Dividends and capital gain distributions have the effect of reducing the net
asset value per share by the amount distributed on the record date. Although
such a dividend or distribution paid to an investor on newly issued shares
shortly after purchase would represent, in substance, a return of capital, the
dividend or distribution would consist of net investment income or net realized
capital gain and, accordingly, would be taxable to the investor.
Dividends paid by a Fund derived from net investment income and distributions
from any net realized short-term gains of such Fund generally are taxable to
taxable U.S. investors as ordinary income. Distributions from any net
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realized long-term gains generally are taxable to taxable U.S. investors as
long-term capital gain for federal income tax purposes, regardless of how long
shareholders have held their shares.
Dividends paid by a Fund to a foreign investor generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the foreign investor
claims the benefits of a lower rate specified in a tax treaty. Capital gain
distributions paid by a Fund to a foreign investor, as well as the proceeds of
any redemptions from a foreign investor's Fund account, regardless of the extent
to which gain or loss may be recognized, will generally not be subject to U.S.
nonresident withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor certifies a
non-U.S. residency status.
Notice as to the tax status of an investor's dividends and capital gain
distributions will be mailed to such investor annually. Each investor also will
receive periodic summaries of such investor's account which will include
information as to dividends and capital gain distributions, if any, paid during
the year.
If a shareholder fails to certify that the taxpayer identification number
("TIN") furnished in connection with opening an account is correct and that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a federal income tax return, federal regulations may require
the Trust to withhold ("backup withholding") and remit to the IRS 31% of taxable
dividends, capital gain distributions from net realized securities gains and
redemption proceeds, regardless of the extent to which gain or loss may have
been realized, paid to such shareholder. Furthermore, the IRS may notify the
Trust to institute backup withholding if the IRS determines a shareholder's TIN
is incorrect or if a shareholder has failed to properly report taxable dividend
and interest income on a federal income tax return. Any tax withheld as a result
of backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a tax payment on the record
owner's federal income tax return.
MIP is organized as a trust under Delaware law. Under MIP's method of operation
as a partnership, MIP and each Master Portfolio is not subject to any income
tax. However, each investor in a Master Portfolio is allocated its share (as
determined in accordance with the governing instruments of MIP) of such Master
Portfolio's ordinary income and capital gain in determining its income tax
liability. The determination of such share will be made in accordance with the
Code and regulations promulgated thereunder.
It is expected that each Fund will qualify as a "regulated investment company"
under Subchapter M of the Code as long as such qualification is in the best
interests of its shareholders. Such qualification generally relieves the Fund of
any liability for federal income tax to the extent its earnings are distributed
in accordance with applicable provisions of the Code. In addition, each Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of investment income and capital gains.
The foregoing discussion regarding dividends, distributions, and taxes is based
on tax laws and federal regulations which were in effect as of the date of this
Prospectus and summarizes only some of the important federal income tax
considerations generally affecting a Fund and its shareholders. It is not
intended as a substitute for careful tax planning; investors should consult
their tax advisors with respect to their specific tax situations as well as with
respect to state and local taxes. Further tax information is contained in the
SAI.
PERFORMANCE INFORMATION
For purposes of advertising, performance of the LifePath Funds may be calculated
on the basis of average annual total return, cumulative total return and/or
yield of a class of shares.
Average annual total return of a class of shares is calculated pursuant to a
standardized formula which assumes that an investment in that class of shares of
the Fund was purchased with an initial payment of $1,000 and that the investment
was redeemed at the end of a stated period of time, after giving effect to the
reinvestment of dividends and distributions during the period. The return of a
class of shares is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the investment
in a class of shares at the end of the period. Advertisements of the performance
of a class of shares of a LifePath Fund includes the Fund's
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average annual total return of a class of shares for one, five and ten year
periods, or for shorter time periods depending upon the length of time during
which such Fund has operated.
Cumulative total return of a class of shares is computed on a per share basis
and assumes the reinvestment of dividends and distributions. Cumulative total
return of a class of shares generally is expressed as a percentage rate which is
calculated by combining the income and principal changes for a specified period
and dividing by the net asset value per share at the beginning of the period.
Advertisements may include the percentage rate of total return of a class of
shares or may include the value of a hypothetical investment in a class of
shares at the end of the period which assumes the application of the percentage
rate of total return.
The performance of the LifePath Funds may be advertised in terms of yield. The
yield on shares of these Funds is calculated by dividing each Fund's net
investment income per share earned during a specified period (usually 30 days)
by its net asset value per share on the last day of such period and annualizing
the result.
Performance of a class of shares varies from time to time, and past results are
no indication of future performance. Investors should remember that performance
is a function of the type and quality of portfolio securities held by the Master
Portfolio in which the Fund invests and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
Comparative performance information may be used from time to time in advertising
or marketing a Fund's shares, including data from Lipper Analytical Services,
Inc., Bank Rate Monitor, Bond 20-Bond Index, Moody's Bond Survey Bond Index,
Lehman Brothers Aggregate Bond Index and components thereof, IBC/Donoghue's
Money Fund Report, Standard & Poor's 500 Stock Index, Wilshire 5000 Index, the
Dow Jones Industrial Average, CDA Investment Technologies, Inc., Wiesenberger
Investment Companies Service, Mutual Fund Values; Mutual Fund Forecaster,
Schabacker Investment Management, Inc., Morningstar, Inc. and other industry
publications.
Total return and yield quotations are computed separately for each class of the
Funds' shares. Because of the difference in fees and expenses borne by a class
of shares of the Funds, the performance of each class can be expected, at any
given time, to differ from the performance of another class of shares.
Additional information about the performance of each Fund is contained in the
Annual Report, which may be obtained free of charge by calling the Trust at 1-
800-222-8222.
GENERAL INFORMATION
The Trust was organized as an unincorporated business trust under the laws of
the Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust (the "Trust Agreement") dated May 14, 1993. The Trust is authorized to
issue an unlimited number of shares of beneficial interest. Each LifePath Fund
offers Class A, Class B (except LifePath 2000 Fund) and Institutional Class
shares. Each share has one vote. INSTITUTIONAL CLASS SHARES ARE NO LONGER
OFFERED TO THE PUBLIC, ALTHOUGH A LIMITED NUMBER OF SUCH SHARES WERE OUTSTANDING
AS OF THE DATE OF THIS PROSPECTUS.
To date, the Board of Trustees has authorized the creation of ten separate
portfolios of shares, including the five Funds offered hereby. All consideration
received by the Trust for shares of one of the portfolios and all assets in
which such consideration is invested belong to that portfolio (subject only to
the rights of creditors of the Trust) and are subject to the liabilities related
thereto. The income attributable to, and the expenses of, one portfolio are
treated separately from those of the other portfolios. The Trust has the ability
to create, from time to time, new portfolios without shareholder approval.
Under the terms of a License Agreement between the Trust and Wells Fargo Bank,
Wells Fargo Bank has granted the Trust a non-exclusive license to use the name
"Stagecoach." If the License Agreement is terminated, the Trust, at the request
of Wells Fargo Bank, will cease using the name "Stagecoach." BGFA has granted
the Trust a non-exclusive license to use the name "LifePath." If the license
agreement is terminated, the Trust, at BGFA's request, will cease using the
"LifePath" name.
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Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or a Trustee. The
Trust Agreement provides for indemnification from the Trust's property for all
losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Trust itself is unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Trust, the shareholder paying such liability is entitled to reimbursement from
the general assets of the Trust. The Trustees intend to conduct the operations
of the Trust in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Trust. As described under
"Management of the Trust" in the SAI, the Trust ordinarily does not hold
shareholder meetings; however, shareholders under certain circumstances have the
right to call a meeting of shareholders for the purpose of voting to remove
Trustees.
Each LifePath Fund currently invests all of its assets in a LifePath Master
Portfolio of MIP with a corresponding investment objective. Whenever a Fund, as
a Master Portfolio's interestholder, is requested to vote on matters submitted
to interestholders of the Master Portfolio, the Funds will hold a meeting of its
shareholders to consider such matters and the Fund will cast its votes in
proportion to the votes received from Fund shareholders. Each LifePath Fund will
vote Master Portfolio shares for which it receives no voting instructions in the
same proportion as the votes received from Fund shareholders. If a Master
Portfolio's investment objective or policies are changed, the corresponding
LifePath Fund could subsequently change its objective or policies to correspond
to those of the Master Portfolio. The Fund may also elect to redeem its
interests in the Master Portfolios and either seek a new investment company with
a substantially matching objective in which to invest or retain its own
investment adviser to manage the Fund's portfolio in accordance with its
objective. In the latter case, the Fund's inability to find a substitute
investment company in which to invest or equivalent management services could
adversely affect shareholders' investments in the Fund.
Investor inquiries may be made by writing to the Trust c/o Wells Fargo Bank,
N.A. -- Shareholder Services, P.O. Box 7033, San Francisco, California 94120-
9517 or by calling 1-800-222-8222.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE TRUST'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS' SHARES AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
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APPENDIX
PORTFOLIO SECURITIES
To the extent set forth in this Prospectus, each Fund through its investment in
the corresponding Master Portfolio may invest in the securities described below.
To avoid the need to refer to both the Funds and the Master Portfolios in every
instance, the following sections generally refer to the Funds only. REFERENCES
TO THE INVESTMENTS AND INVESTMENT POLICIES AND RISKS OF THE LIFEPATH FUNDS,
UNLESS OTHERWISE INDICATED, SHOULD BE UNDERSTOOD AS REFERENCES TO THE
INVESTMENTS AND INVESTMENT POLICIES AND RISKS OF THE CORRESPONDING MASTER
PORTFOLIOS.
U.S. GOVERNMENT OBLIGATIONS -- The LifePath Funds may invest in various types of
U.S. Government obligations. U.S. Government obligations include securities
issued or guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities. 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 obligations and GNMA certificates) or (ii)
may be backed solely by the issuing or guaranteeing agency or instrumentality
itself (as with FNMA notes). In the latter case, the investor 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 would
provide financial support to its agencies or instrumentalities where it is not
obligated to do so. 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.
SECURITIES OF NON-U.S. ISSUERS -- The Funds may invest in certain securities of
non-U.S. issuers as discussed below.
Obligations of Foreign Governments, Supranational Entities and Banks -- Each
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LifePath Fund may invest in U.S. dollar-denominated short-term obligations
issued or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities that are determined by
BGFA to be of comparable quality to the other obligations in which such Fund may
invest. The Funds may also invest in debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of each
Fund's assets invested in obligations of foreign governments and supranational
entities will vary depending on the relative yields of such securities, the
economic and financial markets of the countries in which the investments are
made and the interest rate climate of such countries.
Each Fund may invest a portion of its total assets in high-quality, short-term
(one year 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.
Foreign Equity Securities and Depositary Receipts -- Each LifePath Fund's assets
- -------------------------------------------------
may be invested in equity securities of foreign issuers and in American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs") of such
issuers.
ADRs and EDRs may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depositary Receipts ("CDRs"), are receipts issued in Europe
typically by non-United States banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs in registered form are
designed for use in the United States securities markets and EDRs and CDRs in
bearer form are designed for use in Europe. Each LifePath Fund may invest in
ADRs, EDRs and CDRs through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the underlying security and
a
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depositary, whereas a depositary may establish an unsponsored facility without
participation by the issuer of the deposited security. Holders of unsponsored
depositary receipts generally bear all the costs of such facilities and the
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts in
respect of the deposited securities.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- Each LifePath Fund may purchase debt
instruments with interest rates that are periodically adjusted at specified
intervals or whenever a benchmark rate or index changes. These adjustments
generally limit the increase or decrease in the amount of interest received on
the debt instruments. Floating- and variable-rate instruments are subject to
interest-rate risk and credit risk.
MORTGAGE-RELATED SECURITIES -- Each LifePath Fund may invest in mortgage-related
securities ("MBSs"), which are securities representing interests in a pool of
loans secured by mortgages. The resulting cash flow from these mortgages is used
to pay principal and interest on the securities. MBSs are assembled for sale to
investors by various government-sponsored enterprises such as the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC") or are guaranteed by such governmental agencies as the
Government National Mortgage Association ("GNMA"). Regardless of the type of
guarantee, all MBSs are subject to interest rate risk (i.e., exposure to loss
due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the full and timely payment of principal and
interest by GNMA and such guarantee is backed by the authority of GNMA to borrow
funds from the U.S. Treasury to make payments under its guarantee. GNMA is a
wholly-owned U.S. Government corporation within the Department of Housing and
Urban Development and, as such, Ginnie Maes are backed by the full faith and
credit of the federal government. In contrast, MBSs issued by FNMA include FNMA
Guaranteed Mortgage Pass-Through Certificates ("Fannie Maes") which are solely
the obligations of FNMA and are neither backed by nor entitled to the full faith
and credit of the federal government). FNMA is a government-sponsored enterprise
which is also a private corporation whose stock trades on the NYSE. Fannie Maes
are guaranteed as to timely payment of principal and interest by FNMA. MBSs
issued by FHLMC include FHLMC Mortgage Participation Certificates ("Freddie
Macs" or "PCs"). FHLMC is a government-sponsored enterprise whose MBSs are
solely obligations of FHLMC. Therefore, Freddie Macs are not guaranteed by the
United States or by any Federal Home Loan Bank and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. FHLMC
guarantees timely payment of interest, but only ultimate payment of principal
due under the obligations it issues. FHLMC may, under certain circumstances,
remit the guaranteed payment of principal at any time after default on an
underlying mortgage, but in no event later than one year after the guarantee
becomes payable.
FUTURES CONTRACTS AND OPTIONS TRANSACTIONS -- Each LifePath Fund may use futures
as a substitute for a comparable market position in the underlying
securities.
A futures contract is an agreement between two parties, a buyer and a seller, to
exchange a particular commodity or financial statement at a specific price on a
specific date in the future. An option transaction generally involves a right,
which may or may not be exercised, to buy or sell a commodity or financial
instrument at a particular price on a specified future date. Futures contracts
and options are standardized and traded on exchanges, where the exchange serves
as the ultimate counterparty for all contracts. Consequently, the primary credit
risk on futures contracts is the creditworthiness of the exchange. Futures
contracts are subject to market risk (i.e., exposure to adverse price
changes).
Although each of the indicated Funds intends to purchase or sell futures
contracts only if there is an active market for such contracts, no assurance can
be given that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move to
the limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and potentially
subjecting a Fund to substantial
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losses. If it is not possible, or if a Fund determines not to close a futures
position in anticipation of adverse price movements, the Fund will be required
to make daily cash margin payments.
Stock Index Futures and Options on Stock Index Futures -- Each LifePath Fund may
- ------------------------------------------------------
invest in stock index futures and options on stock index futures as a substitute
for a comparable market position in the underlying securities. A stock index
future obligates the seller to deliver (and the purchaser to take), effectively,
an amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock index at the close of the last trading day of the
contract and the price at which the agreement is made. No physical delivery of
the underlying stocks in the index is made. With respect to stock indices that
are permitted investments, each Fund intends to purchase and sell futures
contracts on the stock index for which it can obtain the best price with
consideration also given to liquidity. There can be no assurance that a liquid
market will exist at the time when a Fund seeks to close out a futures contract
or a futures option position. Lack of a liquid market may prevent liquidation of
an unfavorable position.
Interest-Rate Futures Contracts and Options on Interest-Rate Futures Contracts
- ------------------------------------------------------------------------------
- -- Each LifePath Fund may invest in interest-rate futures contracts and options
on interest-rate futures contracts as a substitute for a comparable market
position in the underlying securities. The Funds may also sell options on
interest-rate futures contracts as part of closing purchase transactions to
terminate their options positions. No assurance can be given that such closing
transactions can be effected or the degree of correlation between price
movements in the options on interest rate futures and price movements in the
Funds' portfolio securities which are the subject of the transaction.
Interest-Rate and Index Swaps -- Each LifePath Fund may enter into interest-rate
- -----------------------------
and index swaps in pursuit of their investment objectives. Interest-rate swaps
involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating-
rate payments on fixed-rate payments). Index swaps involve the exchange by a
Fund with another party of cash flows based upon the performance of an index of
securities or a portion of an index of securities that usually include dividends
or income. In each case, the exchange commitments can involve payments to be
made in the same currency or in different currencies. A Fund will usually enter
into swaps on a net basis. In so doing, the two payment streams are netted out,
with a Fund receiving or paying, as the case may be, only the net amount of the
two payments. If a Fund enters into a swap, it will maintain a segregated
account on a gross basis, unless the contract provides for a segregated account
on a net basis. If there is a default by the other party to such a transaction,
a Fund will have contractual remedies pursuant to the agreements related to the
transaction.
The use of interest-rate and index swaps is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio security transactions. There is no limit, except as provided
below, on the amount of swap transactions that may be entered into by a Fund.
These transactions generally do not involve the delivery of securities or other
underlying assets or principal. Accordingly, the risk of loss with respect to
swaps generally is limited to the net amount of payments that a Fund is
contractually obligated to make. There is also a risk of a default by the other
party to a swap, in which case a Fund may not receive net amount of payments
that a Fund contractually is entitled to receive.
Foreign Currency and Futures Transactions -- Foreign currency transactions may
occur on a spot (i.e., cash) basis at the rate prevailing in the currency
exchange market or on a forward basis. A forward currency exchange contract
involves an obligation to purchase or sell a specific currency at a set price on
a future date which must be more than two days from the date of the contract.
The forward foreign currency market offers less protection against default than
is available when trading currencies on an exchange, since a forward currency
contract is not guaranteed by an exchange or clearinghouse. Therefore, a default
on a forward currency contract would deprive a LifePath Fund of unrealized
profits or force such Fund to cover its commitments for purchase or resale, if
any, at the current market price.
Each LifePath Fund may combine forward currency exchange contracts with
investments in securities denominated in other currencies.
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Each LifePath Fund also may maintain short positions in forward currency
exchange transactions, which would involve the Fund agreeing to exchange an
amount of a currency it did not currently own for another currency at a future
date in anticipation of a decline in the value of the currency sold relative to
the currency such Fund contracted to receive in the exchange.
Unlike trading on domestic futures exchanges, trading on foreign futures
exchanges is not regulated by the Commodity Futures Trading Commission (the
"CFTC") and generally is subject to greater risks than trading on domestic
exchanges. For example, some foreign exchanges are principal markets so that no
common clearing facility exists and an investor may look only to the broker for
performance of the contract. BGFA, however, considers on an ongoing basis the
creditworthiness of such counterparties. In addition, any profits that a
LifePath Fund might realize in trading could be eliminated by adverse changes in
the exchange rate; adverse exchange rate changes also could cause a Fund to
incur losses. Transactions on foreign exchanges may include both futures
contracts which are traded on domestic exchanges and those which are not. Such
transactions may also be subject to withholding and other taxes imposed by
foreign governments.
INVESTMENT COMPANY SECURITIES -- Each Master Portfolio may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the Master Portfolio invests. Under the 1940 Act, a Master
Portfolio'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 Master Portfolio's net assets with respect to any one
investment company and (iii) 10% of the Master Portfolio's net assets in the
aggregate. Investments in the securities of other investment companies generally
will involve duplication of advisory fees and certain other expenses. The Fund
may also purchase shares of exchange listed closed-end funds.
ILLIQUID SECURITIES -- Each LifePath Fund may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with its investment objective. Such
securities may include securities that are not readily marketable, such as
privately issued securities and other securities that are subject to legal or
contractual restrictions on resale, floating- and variable-rate demand
obligations as to which the Master Portfolio cannot exercise a demand feature on
not more than seven days' notice and as to which there is no secondary market
and repurchase agreements providing for settlement more than seven days after
notice.
SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS -- Each LifePath Fund may
invest in the following high-quality money market instruments on an ongoing
basis to provide liquidity, for temporary purposes when there is an unexpected
level of shareholder purchases or redemptions or when "defensive" strategies are
appropriate: (i) short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises); (ii) negotiable certificates of deposit ("CDs"), bankers'
acceptances, fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and that are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moody's
or "A-1+" or "A-1" by S&P, or, if unrated, of comparable quality as determined
by BGFA or Wells Fargo Bank; (iv) non-convertible corporate debt securities
(e.g., bonds and debentures) with remaining maturities at the date of purchase
of not more than one year that are rated at least "Aa" by Moody's or "AA" by
S&P; (v) repurchase agreements; and (vi) short-term, U.S. dollar-denominated
obligations of foreign banks (including U.S. branches) that, at the time of
investment have more than $10 billion, or the equivalent in other currencies, in
total assets and in the opinion of BGFA are of comparable quality to obligations
of U.S. banks which may be purchased by the Master Portfolio.
Bank Obligations -- Each 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.
Certificates of deposit are negotiable certificates evidencing the obligation of
a bank to repay funds deposited with it for a specified period of time.
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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 a Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation.
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 and Short-Term Corporate Debt Instruments -- Each Fund may
- ----------------------------------------------------------
invest in commercial paper (including variable amount master demand notes),
which consists of short-term, unsecured promissory notes issued by corporations
to finance short-term credit needs. Commercial paper is usually sold on a
discount basis and has a maturity at the time of issuance not exceeding nine
months. Variable amount master demand notes are demand obligations that permit
the investment of fluctuating amounts at varying market rates of interest
pursuant to arrangements between the issuer and a commercial bank acting as
agent for the payee of such notes whereby both parties have the right to vary
the amount of the outstanding indebtedness on the notes. The investment adviser
and/or sub-adviser to each Fund monitors on an ongoing basis the ability of an
issuer of a demand instrument to pay principal and interest on demand.
Each Fund also may invest in non-convertible corporate debt securities (e.g.,
bonds and debentures) with not more than one year remaining to maturity at the
date of settlement. A Fund will invest only in such corporate bonds and
debentures that are rated at the time of purchase at least "Aa" by Moody's or
"AA" by S&P. Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by the Fund. The investment adviser and/or sub-adviser to each Fund
will consider such an event in determining whether the Fund should continue to
hold the obligation. To the extent the Fund continues to hold such obligations,
it may be subject to additional risk of default.
Repurchase Agreements -- Each Fund may enter into repurchase agreements wherein
- ---------------------
the seller of a security to a Fund agrees to repurchase that security from the
Fund at a mutually-agreed upon time and price. The period of maturity is usually
quite short, often overnight or a few days, although it may extend over a number
of months. A Fund may enter into repurchase agreements only with respect to
securities that could otherwise be purchased by the Fund, and all repurchase
transactions must be collateralized. A Fund may incur a loss on a repurchase
transaction if the seller defaults and the value of the underlying collateral
declines or is otherwise limited or if receipt of the security or collateral is
delayed. The Funds may participate in pooled repurchase agreement transactions
with other funds advised by BGFA.
FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS --
Each Fund may purchase or sell securities on a when-issued or delayed-delivery
basis and make contracts to purchase or sell securities for a fixed price at a
future date beyond customary settlement time. Securities purchased or sold on a
when-issued, delayed-delivery or forward commitment basis involve a risk of loss
if the value of the security to be purchased declines, or the value of the
security to be sold increases, before the settlement date. Although a Fund will
generally purchase securities with the intention of acquiring them, a Fund may
dispose of securities purchased on a when-issued, delayed-delivery or a forward
commitment basis before settlement when deemed appropriate by the adviser.
BORROWING MONEY -- As a fundamental policy, each Fund is permitted to borrow to
the extent permitted under the 1940 Act. However, each Fund currently intends to
borrow money only for temporary or emergency (not leveraging) purposes, and may
borrow up to one-third of the value of its total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of a Fund's total assets, the Fund will not make any
investments.
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LOANS OF PORTFOLIO SECURITIES -- Each Fund may lend securities from their
portfolios to brokers, dealers and financial institutions (but not individuals)
in order to increase the return on such Fund's portfolio. The value of the
loaned securities may not exceed one-third of a Fund's total assets and loans of
portfolio securities are fully collateralized based on values that are market-
to-market daily. The Funds will not enter into any portfolio security lending
arrangement having a duration of longer than one year. The principal risk of
portfolio lending is potential default or insolvency of the borrower. In either
of these cases, a Fund could experience delays in recovering securities or
collateral or could lose all or part of the value of the loaned securities. The
Funds may pay reasonable administrative and custodial fees in connection with
loans of portfolio securities and may pay a portion of the interest or fee
earned thereon the borrower or a placing broker.
CONVERTIBLE SECURITIES -- Each LifePath Fund may purchase fixed-income
convertible securities, such as bonds or preferred stock, which may be converted
at a stated price within a specified period of time into a specified number of
shares of common stock of the same or a different issuer. Convertible securities
are senior to common stock in a corporation's capital structure, but usually are
subordinated to non-convertible debt securities. While providing a fixed-income
stream (generally higher in yield than the income from a common stock but lower
than that afforded by a non-convertible debt security), a convertible security
also affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation of the common stock into which it is
convertible.
In general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common stock if
the security is converted). As a fixed-income security, the market value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
RATINGS -- The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and, although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of such obligations.
Therefore, although these ratings may be an initial criterion for selection of
portfolio investments, BGFA also evaluates such obligations and the ability of
their issuers to pay interest and principal. Each Fund relies on BGFA's
judgment, analysis and experience in evaluating the creditworthiness of an
issuer. In this evaluation, BGFA takes into consideration, among other things,
the issuer's financial resources, its sensitivity to economic conditions and
trends, the quality of the issuer's management and regulatory matters. It also
is possible that a rating agency might not timely change the rating on a
particular issue to reflect subsequent events.
CERTAIN FUNDAMENTAL POLICIES
Each Fund and Master Portfolio may (i) borrow money to the extent permitted
under the 1940 Act; (ii) invest up to 5% of its total assets in the obligations
of any single issuer, except that up to 25% of the value of the total assets of
such Fund or Master Portfolio may be invested and obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities may be
purchased, without regard to any such limitation; and (iii) invest up to 25% of
the value of its total assets in the securities of issuers in a particular
industry or group of closely related industries, provided there is no limitation
on the purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. This paragraph describes fundamental policies
that cannot be changed as to a Fund or Master Portfolio without approval by the
holders of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such Fund or Master Portfolio, as the case may be. See "Investment
Objectives and Management Policies -- Investment Restrictions" in the SAI.
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CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each Fund and Master Portfolio may (i) purchase securities of any company having
less than three years' continuous operation (including operations of any
predecessors) if such purchase does not cause the value of its investments in
all such companies to exceed 5% of the value of its total assets; (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (iii) invest up to 15% of the value of its net assets
in repurchase agreements providing for settlement in more than seven days after
notice and in other illiquid securities. See "Investment Objectives and
Management Policies -- Investment Restrictions" in the SAI.
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<PAGE>
SPONSOR, DISTRIBUTOR AND CO-ADMINISTRATOR
Stephens Inc.
Little Rock, Arkansas
INVESTMENT ADVISER
Barclays Global Fund Advisors
San Francisco, California
CO-ADMINISTRATOR
Barclays Global Investors, N.A.
San Francisco, California
TRANSFER AND DIVIDEND DISBURSING AGENT
Wells Fargo Bank, N.A.
San Francisco, California
CUSTODIAN
Investors Bank & Trust Company
Boston, Massachusetts
LEGAL COUNSEL
Morrison & Foerster LLP
Washington, D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
San Francisco, California
FOR MORE INFORMATION ABOUT THE FUNDS WRITE OR CALL:
Stagecoach Funds
c/o Wells Fargo Bank, N.A. -- Transfer Agent
525 Market Street
San Francisco, California 94105
1-800-776-0179
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
STAGECOACH LIFEPATH/TM/ FUNDS
LIFEPATH 2000/TM/ FUND
LIFEPATH 2010/TM/ FUND
LIFEPATH 2020/TM/ FUND
LIFEPATH 2030/TM/ FUND
LIFEPATH 2040/TM/ FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JUNE 30, 1997
This Statement of Additional Information ("SAI"), contains additional
information about Class A (formerly, the Retail Class) and Institutional Class
shares of the LifePath 2000 Fund, LifePath 2010 Fund, LifePath 2020 Fund,
LifePath 2030 Fund and LifePath 2040 Fund and the Class B shares of the LifePath
2010, LifePath 2020, LifePath 2030 and LifePath 2040 Funds (the "LifePath Funds"
or the "Funds") of Stagecoach Trust (the "Trust"). This SAI is not a prospectus
and should be read in conjunction with the current Prospectus describing the
Funds, also dated June 30, 1997, as it may be revised from time to time. A copy
of the Funds' Prospectus may be obtained without charge by writing Stephens Inc.
("Stephens") at 111 Center Street, Little Rock, Arkansas 72201, or by calling at
1-800-643-9691.
As described in the Prospectus, each Fund invests all of its assets in a
separate master portfolio (each, a "Master Portfolio") of Master Investment
Portfolio ("MIP"), an open-end, series investment company. Each Fund has the
same investment objective as the corresponding Master Portfolio. Barclays Global
Fund Advisors ("BGFA") serves as investment adviser to each Master Portfolio.
References to the investments, investment policies and risks of the Funds,
unless otherwise indicated, should be understood as references to the
investments, investment policies and risks of the corresponding Master
Portfolios.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Investment Objectives and Management Policies.......... 1
Management of the Trust................................ 10
Management Arrangements................................ 13
Purchase and Redemption of Shares...................... 18
Determination of Net Asset Value....................... 19
Dividends, Distributions and Taxes..................... 20
Capital Stock.......................................... 24
Performance Information................................ 26
Portfolio Transactions................................. 30
Information About the Funds............................ 33
Counsel................................................ 33
Independent Auditors................................... 33
Financial Information.................................. 33
Appendix............................................... A-1
Financial Statements................................... F-1
</TABLE>
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INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The investment objective of each LifePath Fund is described in the Prospectus
under "Description of the Funds -- Investment Objectives". Each LifePath Fund
seeks to achieve its investment objective by investing all of its assets in a
corresponding Master Portfolio of MIP. A Fund may withdraw its investment in
such Master Portfolio at any time if the Trust's Board of Trustees determines
that it is in the best interest of the Fund and its shareholders to do so. Since
the investment characteristics of a Fund correspond directly to those of the
relevant Master Portfolio, the following is a discussion of the various
investment policies and techniques employed by each corresponding LifePath
Master Portfolio.
Investment Restrictions. Each Fund and Master Portfolio has adopted investment
-----------------------
restrictions numbered 1 through 10 as fundamental policies. These restrictions
cannot be changed, as to a Fund or Master Portfolio, without approval by the
holders of a majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the outstanding voting securities of such Fund or
Master Portfolio, as the case may be. Whenever a Fund is requested to vote on a
fundamental policy of the Master Portfolio in which it invests, such Fund holds
a meeting of its shareholders and casts its votes as instructed by such Fund's
shareholders. Investment restrictions numbered 11 through 20 are not fundamental
policies and may be changed by vote of a majority of the Trustees of the Trust
or MIP, as the case may be, at any time. No Fund or Master Portfolio may:
1. Invest more than 5% of its assets in obligations of any single issuer,
except that up to 25% of the value of its total assets may be invested, and
securities issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such limitation.
2. Hold more than 10% of the outstanding voting securities of any single
issuer. This Investment Restriction applies only with respect to 75% of its
total assets.
3. Invest in commodities, except that each Fund or Master Portfolio may
purchase and sell (i.e., write) options, forward contracts, futures contracts,
including those relating to indices and options on futures contracts or indices.
4. Purchase, hold or deal in real estate, or oil, gas or other mineral leases
or exploration or development programs, but each Fund or Master Portfolio may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.
5. Borrow money, except to the extent permitted under the 1940 Act. For
purposes of this investment restriction, a Fund's or Master Portfolio's entry
into options, forward contracts, futures contracts, including those relating to
indices and options on futures contracts or indices shall not constitute
borrowing to the extent certain segregated accounts are established and
maintained by the Fund or Master Portfolio as described in the Prospectus.
1
<PAGE>
6. Make loans to others, except through the purchase of debt obligations and
the entry into repurchase agreements. However, each Fund or Master Portfolio may
lend its portfolio securities in an amount not to exceed one- third of the value
of its total assets. Any loans of portfolio securities will be made according to
guidelines established by the SEC and the Board of Trustees of the Trust or MIP,
as the case may be.
7. Act as an underwriter of securities of other issuers, except to the extent
the Fund or Master Portfolio, as the case may be, may be deemed an underwriter
under the Securities Act of 1933, as amended, by virtue of disposing of
portfolio securities.
8. Invest 25% or more of its total assets in the securities of issuers in any
particular industry or group of closely related industries, except that, in the
case of each Fund or Master Portfolio, there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
9. Issue any senior security (as such term is defined in Section 18(g) of the
1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 3, 5, 12 and 13 may be deemed to give rise to a senior security
or as otherwise permitted under the rules and regulations or an exemptive order
of the SEC.
10. Purchase securities on margin, but each Fund or Master Portfolio may make
margin deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on futures
contracts or indices.
11. Invest in securities of a company for the purpose of exercising management
or control, but each Fund or Master Portfolio will vote the securities it owns
in its portfolio as a shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except to the extent necessary
to secure permitted borrowings and to the extent related to the purchase of
securities on a when-issued or forward commitment basis and the deposit of
assets in escrow in connection with writing covered put and call options and
collateral and initial or variation margin arrangements with respect to options,
forward contracts, futures contracts, including those relating to indices, and
options on futures contracts or indices.
13. Purchase, sell or write puts, calls or combinations thereof, except as may
be described in the Funds' Prospectus and this SAI.
14. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of its investments in all such companies to
exceed 5% of the value of its total assets.
15. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid, if, in the
aggregate, more than 15%, in the case of a LifePath Fund and LifePath Master
Portfolio, of the value of its net assets would be so
2
<PAGE>
invested. Although each Fund and LifePath Master Portfolio reserves the right to
invest up to 15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice and in other
illiquid securities, as long as such Fund's shares are registered for sale in a
state that imposes a lower limit on the percentage of a Fund's assets that may
be so invested, such Fund and LifePath Master Portfolio will comply with the
lower limit. Each Fund currently is limited to investing up to 10% of the value
of its net assets in such securities due to limits applicable in several states.
16. Purchase securities of other investment companies, except to the extent
permitted under the 1940 Act.
17. Purchase, hold or deal in real estate limited partnerships.
18. Purchase warrants that exceed 2% of the value of the Fund's or Master
Portfolio's net assets, if those warrants are not listed on the New York or
American Stock Exchanges.
19. Purchase or retain securities of any issuer if the officers, trustees of
the Trust or MIP, its advisers or managers owning beneficially more than one-
half of one percent of the securities of an issuer together own beneficially
more than five percent of the securities of that issuer.
20. Engage in any short sales other than short sales against the box.
As a fundamental policy, each LifePath Fund may invest, notwithstanding any
other investment restriction (whether or not fundamental), all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
restrictions as such Fund.
As a matter of general operating policy, each Fund and Master Portfolio may
invest up to 20% of the value of its total assets in foreign securities that are
not publicly traded in the United States.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from a change in values or assets, except with
respect to compliance with Investment Restriction No. 5, will not constitute a
violation of such restriction.
The Trust may make commitments more restrictive than the restrictions listed
above so as to permit the sale of shares of a LifePath Fund in certain states.
Should the Trust determine that a commitment is no longer in the best interest
of the LifePath Fund and its shareholders, the Trust reserves the right to
revoke the commitment by terminating the sale of such LifePath Fund's shares in
the state involved.
The LifePath Funds contain both "strategic" and "tactical" components, with
the strategic component weighted more heavily than the tactical component. The
strategic component of the Funds evaluates the risk that investors, on average,
may be willing to accept given their investment time horizons. The strategic
component thus determines the changing investment
3
<PAGE>
risk level of each LifePath Fund as time passes. The tactical component
addresses short-term market conditions. The tactical component thus adjusts the
amount of investment risk taken by each LifePath Fund without regard to horizon,
but rather in consideration of the relative risk-adjusted short-term
attractiveness of various asset classes.
PORTFOLIO SECURITIES
Bank Obligations. Each Master Portfolio may invest in bank obligations,
----------------
including certificates of deposit, time deposits and other short-term
obligations of domestic banks, obligations of foreign branches of domestic banks
and obligations of domestic and foreign branches of foreign banks. Domestic
commercial banks organized under federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal Deposit
Insurance Corporation (the "FDIC"). Domestic banks organized under state law are
supervised and examined by state banking authorities, but are members of the
Federal Reserve System only if they elect to join. In addition, state banks
whose certificates of deposit ("CDs") may be purchased by each Master Portfolio
are insured by the FDIC (although such insurance may not be of material benefit
to the Master Portfolio, depending on the principal amount of the CDs of each
bank held by the Master Portfolio) and are subject to federal examination and to
a substantial body of federal law and regulation. As a result of federal or
state laws and regulations, domestic branches of domestic banks whose CDs may be
purchased by each Master Portfolio generally are required, among other things,
to maintain specified levels of reserves, are limited in the amounts which they
can loan to a single borrower and are subject to other regulations designed to
promote financial soundness. However, not all of such laws and regulations apply
to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries of
domestic banks and domestic and foreign branches of foreign banks, such as CDs
and time deposits ("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms of a specific
obligation and/or governmental regulation. Such obligations are subject to
different risks than are those of domestic banks. These risks include foreign
economic and political developments, foreign governmental restrictions that may
adversely affect payment of principal and interest on the obligations, foreign
exchange controls and foreign withholding and other taxes on interest income.
These foreign branches and subsidiaries are not necessarily subject to the same
or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial record keeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a foreign
bank than about a domestic bank.
Obligations of U.S. branches of foreign banks may be general obligations of the
parent bank in addition to the issuing branch, or may be limited by the terms of
a specific obligation or by federal or state regulation as well as governmental
action in the country in which the foreign bank has its head office. A domestic
branch of a foreign bank with assets in excess of $1 billion may be subject to
reserve requirements imposed by the Federal Reserve System or by the state in
which the branch is located if the branch is licensed in that state.
4
<PAGE>
In addition, federal branches licensed by the Comptroller of the Currency and
branches licensed by certain states ("State Branches") may be required to: (1)
pledge to the appropriate regulatory authority, by depositing assets with a
designated bank within the relevant state, a certain percentage of their assets
as fixed from time to time by such regulatory authority; and (2) maintain assets
within the relevant state in an amount equal to a specified percentage of the
aggregate amount of liabilities of the foreign bank payable at or through all of
its agencies or branches within the state. The deposits of federal and State
Branches generally must be insured by the FDIC if such branches take deposits of
less than $100,000.
In view of the foregoing factors associated with the purchase of CDs and TDs
issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, BGFA carefully evaluates such investments on a case-by-case
basis.
Each Master Portfolio may purchase CDs issued by banks, savings and loan
associations and similar thrift institutions with less than $1 billion in
assets, provided that such institutions are members of the FDIC, and further
provided that such Master Portfolio purchases any such CD in a principal amount
of not more than $100,000, which amount would be fully insured by the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
FDIC. Interest payments on such a CD are not insured by the FDIC. No Master
Portfolio will own more than one such CD per issuer.
Futures Contracts. The LifePath Master Portfolios may use futures contracts as
-----------------
a hedge against the effects of interest rate changes or changes in the market
value of the stocks comprising the index in which such Master Portfolio invests.
In managing their cash flows, these Master Portfolios also may use futures
contracts as a substitute for holding the designated securities underlying the
futures contract. A futures contract is an agreement between two parties, a
buyer and a seller, to exchange a particular commodity at a specific price on a
specific date in the future. At the time it enters into a futures transaction, a
Master Portfolio is required to make a performance deposit (initial margin) of
cash or liquid securities in a segregated account in the name of the futures
broker. Subsequent payments of "variation margin" are then made on a daily
basis, depending on the value of the futures position which is continually
"marked to market."
A Master Portfolio may engage only in futures contract transactions involving
(i) the sale of a futures contract (i.e., short positions) to hedge the value of
securities held by such Master Portfolio; (ii) the purchase of a futures
contract when such Master Portfolio hold a short position having the same
delivery month (i.e., a long position offsetting a short position); or (iii) the
purchase of a futures contract to permit the Master Portfolio to, in effect,
participate in the market for the designated securities underlying the futures
contract without actually owning such designated securities. When a Master
Portfolio purchases a futures contract, it will create a segregated account
consisting of cash or other liquid assets in an amount equal to the total market
value of such futures contract, less the amount of initial margin for the
contract.
5
<PAGE>
If a Master Portfolio enters into a short position in a futures contract as a
hedge against anticipated adverse market movements and the market then rises,
the increase in the value of the hedged securities will be offset, in whole or
in part, by a loss on the futures contract. If instead a Master Portfolio
purchases a futures contract as a substitute for investing in the designated
underlying securities, a Master Portfolio experiences gains or losses that
correspond generally to gains or losses in the underlying securities. The latter
type of futures contract transactions permits a Master Portfolio to experience
the results of being fully invested in a particular asset class, while
maintaining the liquidity needed to manage cash flows into or out of the Master
Portfolio (e.g., from purchases and redemptions of Master Portfolio shares).
Under normal market conditions, futures contract positions may be closed out on
a daily basis. The LifePath Master Portfolios expect to apply a portion of their
cash or cash equivalents maintained for liquidity needs to such activities.
Transactions by a Master Portfolio in futures contracts involve certain risks.
One risk in employing futures contracts as a hedge against cash market price
volatility is the possibility that futures prices will correlate imperfectly
with the behavior of the prices of the securities in the Master Portfolio's
investment portfolio. Similarly, in employing futures contracts as a substitute
for purchasing the designated underlying securities, there is a risk that the
performance of the futures contract may correlate imperfectly with the
performance of the direct investments for which the futures contract is a
substitute. In addition, commodity exchanges generally limit the amount of
fluctuation permitted in futures contract prices during a single trading day,
and the existence of such limits may prevent the prompt liquidation of futures
positions in certain cases. Limits on price fluctuations are designed to
stabilize prices for the benefit of market participants; however, there could be
cases where the Master Portfolio could incur a larger loss due to the delay in
trading than it would have if no limit rules had been in effect.
In order to comply with undertakings made by the Master Portfolio pursuant to
Commodity Futures Trading Commission ("CFTC") Regulation 4.5, the Master
Portfolios will use futures and option contracts solely for bona fide hedging
purposes within the meaning and intent of CFTC Reg. 1.3(z); provided, however,
that in addition, with respect to positions in commodity futures or commodity
option contracts which do not come within the meaning and intent of CFTC Reg.
1.3(z), the aggregate initial margin and premiums required to establish such
positions will not exceed five percent of the liquidation value of the Master
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any such contract it has entered into; and provided
further, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount as defined in CFTC Reg. 190.01(x) may be
excluded in computing such five percent.
Foreign Currency Transactions. Currency exchange rates may fluctuate
-----------------------------
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by the
intervention of U.S. or foreign governments or central banks, or by the failure
to intervene, or by currency controls or political developments in the United
States or abroad. The LifePath Portfolios intend
6
<PAGE>
to engage in foreign currency transactions to maintain the same foreign currency
exposure as the relevant foreign securities index through which the Master
Portfolios seek foreign equity market exposure, but not as part of a defensive
strategy to protect against fluctuations in exchange rates. If a LifePath Master
Portfolio enters into a foreign currency transaction or forward contract, such
Master Portfolio deposits, if required by applicable regulations, with MIP's
custodian cash or high-grade debt securities in a segregated account of the
LifePath Master Portfolio in an amount at least equal to the value of the Master
Portfolio's total assets committed to the consummation of the forward contract.
If the value of the securities placed in the segregated account declines,
additional cash or securities is placed in the account so that the value of the
account equals the amount of the LifePath Master Portfolio's commitment with
respect to the contract.
At or before the maturity of a forward contract, a LifePath Master Portfolio
either may sell a portfolio security and make delivery of the currency, or may
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which such Master Portfolio
obtains, on the same maturity date, the same amount of the currency which it is
obligated to deliver. If the Master Portfolio retains the portfolio security and
engages in an offsetting transaction, such Master Portfolio, at the time of
execution of the offsetting transaction, incurs a gain or a loss to the extent
that movement has occurred in forward contract prices. Should forward prices
decline during the period between the Master Portfolio's entering into a forward
contract for the sale of a currency and the date it enters into an offsetting
contract for the purchase of the currency, the Master Portfolio realizes a gain
to the extent the price of the currency it has agreed to sell exceeds the price
of the currency it has agreed to purchase. Should forward prices increase, the
Master Portfolio suffers a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The cost to a LifePath Master Portfolio of engaging in currency transactions
varies with factors such as the currency involved, the length of the contract
period and the market conditions then prevailing. Because transactions in
currency exchange usually are conducted on a principal basis, no fees or
commissions are involved. BGFA considers on an ongoing basis the
creditworthiness of the institutions with which a LifePath Master Portfolio
enters into foreign currency transactions. The use of forward currency exchange
contracts does not eliminate fluctuations in the underlying prices of the
securities, but it does establish a rate of exchange that can be achieved in the
future. If a devaluation generally is anticipated, the Master Portfolio may not
be able to contract to sell the currency at a price above the devaluation level
it anticipates.
The purchase of options on currency futures allows a LifePath Master
Portfolio, for the price of the premium it must pay for the option, to decide
whether or not to buy (in the case of a call option) or to sell (in the case of
a put option) a futures contract at a specified price at any time during the
period before the option expires.
Future Developments. Each LifePath Master Portfolio may take advantage of
-------------------
opportunities in the areas of options and futures contracts and options on
futures contracts and any other derivative investments which are not presently
contemplated for use by such Master Portfolio or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with a LifePath Master Portfolio's investment objective and legally
7
<PAGE>
permissible for the Master Portfolio. Before entering into such transactions or
making any such investment, a LifePath Master Portfolio would provide
appropriate disclosure in its Prospectus or this SAI.
Lending Portfolio Securities. To a limited extent, each Master Portfolio may
----------------------------
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which is maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned. By lending its portfolio securities, a Master Portfolio can
increase its income through the investment of the cash collateral or by receipt
of a loan premium from the borrower. For purposes of this policy, each Master
Portfolio considers collateral consisting of U.S. Government obligations or
irrevocable letters of credit issued by banks whose securities meet the
standards for investment by such Master Portfolio to be the equivalent of cash.
From time to time, a Master Portfolio may return to the borrower, or to a third
party which is unaffiliated with MIP, and which is acting as a "placing broker,"
a part of the interest earned from the investment of collateral received in
exchange for securities loaned.
The Securities and Exchange Commission ("SEC') currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Master Portfolio must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the market
value of the securities loaned rises above the level of such collateral; (3) the
Master Portfolio must be able to terminate the loan at any time; (4) the Master
Portfolio must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions payable on the loaned securities, and
any increase in market value; (5) the Master Portfolio may pay only reasonable
custodian fees in connection with the loan; and (6) while voting rights on the
loaned securities may pass to the borrower, MIP's Board of Trustees must
terminate the loan and regain the right to vote the securities if a material
event adversely affecting the investment occurs. These conditions may be subject
to future modification.
Warrants -- Each LifePath Master Portfolio may invest generally up to 5% of
--------
its net assets at the time of purchase in warrants, except that this limitation
does not apply to warrants acquired in units or attached to securities. A
warrant is an instrument issued by a corporation which gives the holder the
right to subscribe to a specified amount of the corporation's capital stock at a
set price for a specified period of time. The prices of warrants do not
necessarily correlate with the prices of the underlying securities.
Fixed-Income Securities -- Investors should be aware that even though
-----------------------
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Long-term securities are affected to a greater extent by interest
rates than shorter-term securities. The values of fixed-income securities also
may be affected by changes in the credit rating or financial condition of the
issuing entities. Once the rating of a portfolio security has been changed to a
rating below investment grade, the particular LifePath Master Portfolio
considers all circumstances deemed relevant in determining whether to continue
to hold the security. Certain securities that may be purchased by the LifePath
Master Portfolio, such as those rated "Baa" by Moody's and "BBB" by S&P, Fitch
and Duff, may be subject to such risk
8
<PAGE>
with respect to the issuing entity and to greater market fluctuations than
certain lower yielding, higher rated fixed-income securities. Securities which
are rated "Baa" by Moody's are considered medium-grade obligations; they are
neither highly protected nor poorly secured, and are considered by Moody's to
have speculative characteristics. Securities rated "BBB" by S&P are regarded as
having adequate capacity to pay interest and repay principal, and, while such
debt securities ordinarily exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for securities in this
category than in higher rated categories. Securities rated "BBB" by Fitch are
considered investment grade and of satisfactory credit quality; however, adverse
changes in economic conditions and circumstances are more likely to have an
adverse impact on these securities and, therefore, impair timely payment.
Securities rated "BBB" by Duff have below average protection factors but
nonetheless are considered sufficient for prudent investment. If a security held
by a LifePath Master Portfolio is downgraded to a rating below investment grade,
such Master Portfolio may continue to hold the security until such time as BGFA
determines it to be advantageous for the LifePath Master Portfolio to sell the
security. If such a policy would cause a LifePath Master Portfolio to have 5% or
more of its net assets invested in securities that have been downgraded below
investment grade, the Master Portfolio promptly would seek to dispose of such
securities in an orderly manner.
Floating- and Variable-Rate Obligations -- Each Master Portfolio may purchase
---------------------------------------
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 13 months, but which permit the
holder to demand payment of principal at any time or at specified intervals not
exceeding 13 months. Variable-rate demand notes include master demand notes
which are obligations that permit a Master Portfolio to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the Master Portfolio, as lender, and the borrower. The interest rates
on these notes 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. 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 Master Portfolio'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 each Master Portfolio may invest in obligations which are not so rated only
if the Adviser determines that at the time of investment the obligations are of
comparable quality to the other obligations in which such Master Portfolio may
invest. The Adviser, on behalf of each Master Portfolio, considers an ongoing
basis the creditworthiness of the issuers of the floating- and variable-rate
demand obligations in such Master Portfolio's portfolio. No Master
Portfolio
9
<PAGE>
invests more than 15% of the value of its net assets in illiquid securities
including 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.
MANAGEMENT OF THE TRUST
The following information supplements and should be read in conjunction with the
Prospectus section entitled "Management of the Funds." Trustees and officers of
the Trust, together with information as to their principal business occupations
during at least the last five years, are shown below. The address of each,
unless otherwise indicated, is 111 Center Street, Little Rock, Arkansas 72201.
Trustees who are deemed to be an "interested person" of the Trust for purposes
of the 1940 Act are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 75 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 46 Trustee, Executive Vice President of Stephens,
Chairman Manager of Financial Services Group,
and President President of Stephens Insurance Services Inc.; Senior
Vice President of Stephens Sports Management Inc.;
and President of Investors Brokerage Insurance Inc.
Thomas S. Goho, 55 Trustee Associate Professor of Finance, Calloway School of
P.O. Box 7285 Business and Accounting at Wake Forest University
Reynolda Station since 1982.
Winston-Salem, NC 27109
*Zoe Ann Hines, 48 Trustee Senior Vice President of Stephens and Secretary of
(resigned as of September 6, Stephens Resource Management and Senior Vice
1996) President of Link Investments Inc.
*W. Rodney Hughes, 70 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 79 Trustee Private Investor
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 52 Trustee Chairman of Home Account Network, Inc.; Real
4 Beaufain Street Estate Developer; Chairman of Renaissance
Charleston, SC 29401 Properties Ltd., President of Morse Investment
Corporation; and Co- Managing Partner of Main
Street Ventures.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
Richard H. Blank, Jr., 40 Chief Operating Associate of Financial Services Group of Stephens,
Officer, Secretary Director of Stephens Sports Management Inc.; and
and Treasurer Director of Capo Inc.
Joseph N. Hankin, 57 Trustee President of Westchester Community College since
75 Grasslands Road 1971; Adjunct Professor of Columbia University
Valhalla, NY 10595 Teachers College since 1976.
(appointed as of
September 6, 1996
</TABLE>
COMPENSATION TABLE
For the Fiscal Year Ended February 28, 1997
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEX
<S> <C> <C>
Jack S. Euphrat 0 $33,750
Trustee
R. Greg Feltus 0 0
Trustee
Thomas S. Goho 0 $33,750
Trustee
Zoe Ann Hines 0 0
Trustee
W. Rodney Hughes 0 $27,750
Trustee
Robert M. Joses 0 $33,750
Trustee
J. Tucker Morse 0 $27,750
Trustee
Joseph N. Hankin 0 $26,250
Trustee
</TABLE>
Trustees of the Trust are compensated annually by the Trust 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 Trust, Stagecoach Funds, Inc., Overland Express Funds, Inc., Life
& Annuity Trust and Master Investment Trust are considered to be members of the
same fund complex as such term is defined in Form N-1A under the 1940 Act (the
"Wells Fargo Fund Complex"). MasterWorks Funds Inc., Master Investment
Portfolio, and Managed Series Investment Trust together form a separate fund
complex (the "BGFA Fund Complex").
11
<PAGE>
Each of the Trustees and Officers of the Trust serves in the identical capacity
as trustees and officers or as trustees and/or officers of each registered open-
end management investment company in both the Wells Fargo and BGFA Fund
Complexes, except for Joseph N. Hankin, who only serves the aforementioned
members of the Wells Fargo Fund Complex, and Zoe Ann Hines who, after September
6, 1996, only serves the aforementioned members of the BGFA Fund Complex. The
Trustees are compensated by other companies and trusts within a fund complex for
their services as Directors to such companies and trusts. Currently the Trustees
do not receive any retirement benefits or deferred compensation from the Trust
or any other member of each fund complex.
As the date of this SAI, the Trustees Officers of the Trust as a group
beneficially owned less than 1% of the outstanding shares of the Trust.
MASTER/FEEDER STRUCTURE. Each LifePath Fund seeks to achieve its investment
objective by investing all of its assets in a corresponding LifePath Master
Portfolio of MIP. The Funds and other entities investing in a Master Portfolio
are each liable for all obligations of the Master Portfolio. However, the risk
of a Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and MIP itself is
unable to meet its obligations. Accordingly, the Trust's Board of Trustees
believes that neither a Fund nor its shareholders will be adversely affected by
investing Fund assets in the Master Portfolio. However, if a mutual fund or
other investor withdraws its investment from the Master Portfolio, the economic
efficiencies (e.g., spreading fixed expenses among a larger asset base) that the
Board believes may be available through investment in the Master Portfolio may
not be fully achieved. In addition, given the relative novelty of the
master/feeder structure, accounting or operational difficulties, although
unlikely, could arise. See "Management of the Funds" in the Prospectus for
additional description of the Fund's and Master Portfolio's expenses and
management.
Each Fund may withdraw its investment in the corresponding Master Portfolio
only if the Trust's Board of Trustees determines that such action is in the best
interests of such Fund and its shareholders. Upon such withdrawal, the Board
would consider alternative investments, including investing all of the Fund's
assets in another investment company with the same investment objective as the
Fund or hiring an investment adviser to manage the Fund's assets in accordance
with the investment policies described below with respect to the Master
Portfolio.
The investment objective and other fundamental policies of a Master Portfolio
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of the Master Portfolio's outstanding interests. See "Investment
Objectives and Policies" in the Prospectus. Whenever a Fund, as an
interestholder of a Master Portfolio, is requested to vote on any matter
submitted to interestholders of the Master Portfolio, the Fund will hold a
meeting of its shareholders to consider such matters. The Fund will cast its
votes in proportion to the votes received from its shareholders. Shares for
which the Fund receives no voting instructions will be voted in the same
proportion as the votes received from the other Fund shareholders.
Certain policies of a Master Portfolio which are non-fundamental may be
changed by vote of a majority of MIP's Trustees without interestholder approval.
If a Master Portfolio's investment
12
<PAGE>
objective or fundamental or non-fundamental policies are changed, the
corresponding Fund may elect to change its objective or policies to correspond
to those of the Master Portfolio. The Fund may also elect to redeem its
interests in the Master Portfolio and either seek a new investment company with
a matching objective in which to invest or retain its own investment adviser to
manage the Fund's portfolio in accordance with its objective. In the latter
case, a Fund's inability to find a substitute investment company in which to
invest or equivalent management services could adversely affect shareholders'
investments in the Fund. Each Fund will provide shareholders with 30 days'
written notice prior to the implementation of any change in the investment
objective of the Fund or the Master Portfolio, to the extent possible. See
"Investment Objectives and Policies" in the Prospectus for additional
information regarding the Funds' and the Master Portfolios' investment
objectives and policies.
MANAGEMENT ARRANGEMENTS
INVESTMENT ADVISER. BGFA provides investment advisory services to each
------------------
LifePath Master Portfolios. For providing investment advisory services, BGFA is
entitled to receive a monthly fee of 0.55% of each LifePath Master Portfolio's
average daily net assets. The Master Portfolios' Advisory Contract is subject to
annual approval by (i) MIP's Board of Trustees or (ii) vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Master
Portfolio, provided that in either event the continuance also is approved by a
majority of MIP's Board of Trustees who are not "interested persons" (as defined
in the 1940 Act) of MIP or BGFA, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Master Portfolio, the
applicable Advisory Contract is terminable without penalty, on 60 days' written
notice, by either party and will terminate automatically, as to the relevant
Master Portfolio, in the event of its assignment (as defined in the 1940 Act).
BGFA was created by the reorganization of Wells Fargo Nikko Investment
Advisors ("WFNIA") with and into an affiliate of Wells Fargo Institutional Trust
Company ("WFITC"), the former custodian to the Funds. BGFA is now a subsidiary
of WFITC which, effective January 1, 1996, changed its name to Barclays Global
Investors, N.A. ("BGI").
For the period beginning January 1, 1996 and ended February 29, 1996, and for
the fiscal year ended February 28, 1997, the advisory fees paid to BGFA by the
corresponding Master Portfolio of each LifePath Fund and the amount of such fees
waived by BGFA is shown below.
<TABLE>
<CAPTION>
FISCAL YEAR
1/1/96- 2/29/96 END 2/28/97
--------------- -----------
FEES FEES FEES FEES
MASTER PORTFOLIO PAID WAIVED PAID WAIVED
- ---------------- --------- ------ ---------- -----------
<S> <C> <C> <C> <C>
LifePath 2000 Master Portfolio $ 99,511 $0 $ 689,347 $0
LifePath 2010 Master Portfolio $ 86,919 $0 $ 757,505 $0
LifePath 2020 Master Portfolio $141,075 $0 $1,149,160 $0
LifePath 2030 Master Portfolio $ 93,240 $0 $ 714,647 $0
LifePath 2040 Master Portfolio $148,324 $0 $1,154,337 $0
</TABLE>
13
<PAGE>
Prior to January 1, 1996, Wells Fargo Bank, N.A. ("Wells Fargo Bank") provided
investment advisory services to each Master Portfolio.
For the fiscal year ended February 28, 1995 and the period beginning March 1,
1995 and ended December 31, 1995, the advisory fees paid to Wells Fargo Bank by
the corresponding Master Portfolio of each LifePath Fund and the amount of such
fees waived by Wells Fargo Bank is shown below.
<TABLE>
<CAPTION>
FISCAL YEAR
END 2/28/95 3/31/95 - 12/31/95
----------- ------------------
FEES FEES FEES FEES
MASTER PORTFOLIO PAID WAIVED PAID WAIVED
- ---------------- --------- ------ --------- ------
<S> <C> <C> <C> <C>
LifePath 2000 Master Portfolio $217,676 $0 $363,537 $0
LifePath 2010 Master Portfolio $158,218 $0 $312,434 $0
LifePath 2020 Master Portfolio $252,413 $0 $520,296 $0
LifePath 2030 Master Portfolio $156,397 $0 $343,850 $0
LifePath 2040 Master Portfolio $189,121 $0 $503,315 $0
</TABLE>
SUB-INVESTMENT ADVISER. Prior to January 1, 1996 WFNIA provided sub-investment
----------------------
advisory services to each Master Portfolio. As of January 1, 1996, the Funds,
no longer retain a sub-investment adviser.
For the fiscal year ended February 28, 1995 and for the period beginning March
1, 1995 and ended December 31, 1995, Wells Fargo Bank paid sub-advisory fees to
WFNIA as follows:
<TABLE>
<CAPTION>
FISCAL YEAR 3/1/95 -
END 2/28/95 12/31/95
----------- --------
FEES FEES FEES FEES
MASTER PORTFOLIO PAID WAIVED PAID WAIVED
- ---------------- --------- ------ --------- ---------
<S> <C> <C> <C> <C>
LifePath 2000 Master Portfolio $159,494 $0 $261,344 $0
LifePath 2010 Master Portfolio $115,647 $0 $224,903 $0
LifePath 2020 Master Portfolio $184,341 $0 $374,802 $0
LifePath 2030 Master Portfolio $114,426 $0 $247,703 $0
LifePath 2040 Master Portfolio $138,511 $0 $361,673 $0
</TABLE>
CO-ADMINISTRATORS. The Trust has engaged Wells Fargo Bank and Stephens to
-----------------
provide certain administration services. Pursuant to a Co-Administration
Agreement with the Trust, Wells Fargo Bank and Stephens provide as
administrative services, among other things: (i) general supervision of the
operation of the Trust and the Funds, including coordination of the services
performed by the investment adviser, transfer and dividend disbursing agent,
custodian, shareholder servicing agent(s), independent auditors and legal
counsel; (ii) general supervision of regulatory compliance matters, including
the compilation of information for documents such as reports to, and filings
with, the SEC and state securities commissions, and preparation of proxy
statements and shareholder reports for the Funds; and (iii) general supervision
relative to the compilation of data required for the preparation of periodic
reports distributed to the Trust's officers and Board of Trustees. Stephens also
furnishes office space and certain facilities required for conducting the
business of the Trust together with those ordinary clerical and bookkeeping
14
<PAGE>
services that are not being furnished by the Trust's investment adviser.
Stephens also pays the compensation of the Trust's Trustees, Officers and
employees who are affiliated with Stephens. For providing such services, Wells
Fargo Bank and Stephens are entitled to a combined all-in fee of 0.10% of each
Funds average daily net assets. Wells Fargo Bank has contracted with Investors
Bank & Trust Company ("IBT") to provide certain sub-administrative services in
connection with its co-administration services to the Trust. Prior to February
1, 1997, Stephens served as sole administrator to the Trust.
For the fiscal years ended February 28, 1995, February 29, 1996 and February
28, 1997, the Funds paid administration and co-administration fees to Stephens
as follows:
<TABLE>
<CAPTION>
FYE FYE FYE
2/29/95 2/29/96 2/28/97
FUND FEES PAID FEES PAID FEES PAID
- ---- --------- --------- ---------
<S> <C> <C> <C>
LifePath 2000 Fund $39,834 $ 84,548 $ 92,243
LifePath 2010 Fund $28,945 $ 72,832 $ 81,180
LifePath 2020 Fund $46,153 $120,505 $135,162
LifePath 2030 Fund $28,565 $ 79,564 $ 89,938
LifePath 2040 Fund $34,460 $118,468 $164,384
</TABLE>
For the period beginning February 1, 1997 and ended February 28, 1997, the
Funds paid administration fees to Well Fargo Bank as follows:
<TABLE>
<CAPTION>
2/1/97-2/28/97
FUND FEES PAID
- ---- ---------
<S> <C>
LifePath 2000 Fund $39,834
LifePath 2010 Fund $28,945
LifePath 2020 Fund $46,153
LifePath 2030 Fund $28,565
LifePath 2040 Fund $34,460
</TABLE>
Under the Co-Administration Agreement, Wells Fargo Bank and Stephens have
agreed to assume the operating expenses of each LifePath Fund and a pro rata
share of the operating expenses of each LifePath Master Portfolio, except for
advisory fees, expenses in connection with securities purchases, sales or other
related transactions, extraordinary expenses and fees and expenses payable
pursuant to certain service contracts, as described in the Prospectus.
DISTRIBUTION PLANS. The following information supplements and should be read
------------------
in conjunction with the Prospectus Sections entitled "Management of the Funds --
Distributor."
As indicated in the Prospectus, Class A and Class B shares of the LifePath
Funds have each adopted a Distribution Plan (the "Plans") under Section 12(b) of
the 1940 Act and Rule 12b-1 thereunder. The Plans were adopted by the Board of
Trustees, including a majority of the Trustees who were not "interested persons"
(as defined in the 1940 Act) of the Funds and who
15
<PAGE>
had no direct or indirect financial interest in the operation of the Plans or in
any agreement related to the Plans (the "Qualified Trustees").
Under the Plans and pursuant to a Distribution Agreement with Stephens, the
Funds may pay the Distributor, as compensation for distribution-related
services, monthly fees at annual rates of up to 0.25% of the average daily net
assets of the Class A shares of each Fund and 0.75% of the average daily net
assets of the Class B shares of each Fund offering Class B shares. The actual
fee payable to the Distributor is determined, within such limit, from time to
time by mutual agreement between the Trust 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 NASD Conduct
Rules. The Distributor may enter into selling agreements with one or more
selling agents under which such agents may receive compensation for
distribution-related services from the Distributor, including, but not limited
to, commissions or other payments to such agents based on the average daily net
assets of a Fund's shares attributable to them. 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.
Each Plan will continue in effect from year to year if such continuance is
approved by a majority vote of both the Trustees of the Trust and the Qualified
Trustees. Any Distribution Agreement related to the Plans also must be approved
by such vote of the Trustees and the Qualified Trustees. The Distribution
Agreement terminates automatically if assigned, and may be terminated at any
time, without payment of any penalty, by a vote of a majority of the outstanding
voting securities of the Fund involved. The Plans may not be amended to increase
materially the amounts payable thereunder without the approval of a majority of
the outstanding voting securities of the Fund involved, and no material
amendments to the Plans may be made except by a majority of both the Trustees of
the Trust and the Qualified Trustees.
Each Plan requires that the Treasurer of the Trust shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plans. The Rule also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be made by such disinterested Trustees.
For the fiscal year ended February 28, 1997, the Class A shares of the Funds
paid to Stephens as compensation for distribution related services the amounts
shown below. All of the compensation to underwriters was retained by Wells Fargo
Securities Inc.
<TABLE>
<CAPTION>
PRINTING &
MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUSES BROCHURES UNDERWRITERS
- ---- ----- ------------ --------- ------------
<S> <C> <C> <C> <C>
LifePath 2000 Fund $266,871 N/A N/A $266,871
LifePath 2010 Fund $185,565 N/A N/A $185,565
LifePath 2020 Fund $328,345 N/A N/A $328,345
LifePath 2030 Fund $222,802 N/A N/A $222,802
LifePath 2040 Fund $402,732 N/A N/A $402,732
</TABLE>
16
<PAGE>
SHAREHOLDER SERVICES AGREEMENT. Wells Fargo Bank acts as the shareholder
------------------------------
servicing agent ("Agent") for Class A and Class B shares of the Funds pursuant
to a Shareholder Services Agreement and the related Shareholder Services Plans.
Wells Fargo Bank, as Agent, has agreed to perform certain shareholder liaison
services such as answering shareholder inquiries regarding account status and
history, and the manner in which purchases, exchanges and redemptions of Fund
shares may be made. For the services provided pursuant to a Shareholder
Servicing Agreement, shareholder servicing agents are entitled to receive a
monthly fee at the annual rate of up to 0.20% of the average daily value of each
Fund's shares beneficially owned by customers of the Shareholder Servicing
Agent.
For the fiscal year ended February 28, 1997, Class A shares of the Funds paid
shareholder services fees to Wells Fargo Bank as follows:
<TABLE>
<CAPTION>
FUND FEES PAID
- ---- ---------
<S> <C>
LifePath 2000 Fund $184,488
LifePath 2010 Fund $150,749
LifePath 2020 Fund $270,324
LifePath 2030 Fund $179,876
LifePath 2030 Fund $328,770
</TABLE>
SELLING GROUP AGREEMENT. Wells Fargo Securities Inc., ("WFSI") an interested
-----------------------
person (as such term is defined in Section 2(a)(19) of the 1940 Act) of the
Trust, acts as a Selling Agent for Class A and Class B shares of the Funds
pursuant to a Selling Group Agreement with Stephens authorized pursuant to
Shareholder Servicing Plans. As a Selling Agent, WFSI has an indirect financial
interest in the operation of the Plans. The Board of Trustees believes that it
is reasonably likely that the Plans will benefit the Funds and their
shareholders because the Plans authorizes the relationship with WFSI, and WFSI
has previously developed distribution channels and relationships with the types
of business and corporate customers that the Funds are designed to serve. These
relationships and distribution channels are believed by the Board of Trustees to
be responsible for significantly increased Fund assets and corresponding
economic efficiencies (i.e., lower per-share transaction costs and fixed
expenses) that are generated by increased assets under management.
CUSTODIAN. IBT currently acts as custodian to each Fund and Master Portfolio.
---------
The principal business address of IBT is 200 Clarendon Street, Boston,
Massachusetts 02116. IBT is not entitled to receive a fee for providing
custodial services so long as it is entitled to receive fees from Wells Fargo
Bank for providing sub-administrative services to the Funds. The custodian,
among other things, maintains a custody account or accounts in the name of the
Funds, receives and delivers all assets for the Funds upon purchase and upon
sale or maturity; collects and receives all income and other payments and
distributions on account of the assets of the Funds. IBT will also act as
securities lending agent on behalf of the Funds. Prior to October 21, 1996,
BGI was custodian of each Fund's investments. For its services as custodian,
BGI was not entitled to receive a fee so long as BGFA received fees for
providing advisory services to the Master Portfolios.
17
<PAGE>
TRANSFER AND DIVIDEND DISBURSING AGENT. Wells Fargo Bank acts as the Trust's
--------------------------------------
transfer and dividend disbursing agent and performs such services at 525 Market
Street, San Francisco, California 94105. Wells Fargo Bank is entitled to receive
from the Trust for its services as transfer and dividend disbursing agent, a
monthly fee at the annual rate of 0.10% of each Fund's average daily net assets.
For the fiscal year ended February 28, 1997, the Trust paid dividend
disbursing agency fees to Wells Fargo Bank as follows:
<TABLE>
<CAPTION>
FUND FEES PAID
---- ---------
<S> <C>
LifePath 2000 Fund $ 92,243
LifePath 2010 Fund $ 75,374
LifePath 2020 Fund $135,162
LifePath 2030 Fund $ 89,938
LifePath 2040 Fund $164,385
</TABLE>
PURCHASE AND REDEMPTION OF SHARES
Shares may be purchased on any day the Fund is open for business. The Fund is
open for business each day the NYSE is open for trading (a "Business Day").
Currently, the NYSE is closed on New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day (each a "Holiday"). When any Holiday falls on
a weekend, the NYSE typically is closed on the weekday immediately before or
after such Holiday.
Payment for shares may, in the discretion of the adviser, be made in the form
of securities that are permissible investments for the Fund as described in the
Prospectus. For further information about this form of payment please contact
Stephens. In connection with an in-kind securities payment, the Fund will
require, among other things, that the securities be valued on the day of
purchase in accordance with the pricing methods used by the Fund and that the
Fund receives satisfactory assurances that (i) it will have good and marketable
title to the securities received by it; (ii) that the securities are in proper
form for transfer to the Fund; and (iii) adequate information will be provided
concerning the basis and other matters relating to the securities.
Under the 1940 Act, the Fund may suspend the right of redemption or postpone
the date of payment upon redemption for any period during which the NYSE is
closed (other than customary weekend and holiday closings, or during which
trading is restricted, or during which as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such periods as the
SEC may permit.
The Company may suspend redemption rights or postpone redemption payments for
such periods as are permitted under the 1940 Act. The Company may also redeem
shares involuntarily or make payment for redemption in securities or other
property if it appears appropriate to do so in light of the Company's
responsibilities under the 1940 Act.
18
<PAGE>
In addition, the Company may redeem shares involuntarily to reimburse the Fund
for any losses sustained by reason of the failure of a shareholders to make full
payment for shares purchased or to collect any charge relating to a transaction
effected for the benefit of a shareholder which is applicable to shares of the
Fund as provided from time to time in the Prospectus.
DETERMINATION OF NET ASSET VALUE
LifePath Master Portfolios. The securities of the LifePath Master Portfolios,
--------------------------
including covered call options written by a LifePath Master Portfolio, are
valued at the last sale price on the securities exchange or national securities
market on which such securities primarily are traded. Securities not listed on
an exchange or national securities market, or securities in which there were no
transactions, are valued at the most recent bid prices. Portfolio securities
which are traded primarily on foreign securities exchanges generally are valued
at the preceding closing values of such securities on their respective
exchanges, except that when an occurrence subsequent to the time a value was so
established is likely to have changed such value, then the fair value of those
securities is determined by consideration of other factors by or under the
direction of MIP's Board of Trustees or its delegates. Short-term investments
are carried at amortized cost, which approximates market value. Any securities
or other assets for which recent market quotations are not readily available are
valued at fair value as determined in good faith by MIP's Board of Trustees.
Restricted securities, as well as securities or other assets for which market
quotations are not readily available, or are not valued by a pricing service
approved by MIP's Board of Trustees, are valued at fair value as determined in
good faith by or under the direction of MIP's Board of Trustees or its
delegates. MIP's Board of Trustees reviews the method of valuation on a current
basis. Restricted securities that are, or are convertible into, securities of
the same class of securities for which a public market exists usually are valued
at market value less the same percentage discount at which such securities were
purchased. This discount may be revised periodically if BGFA believes that the
discount no longer reflects the value of the restricted securities. Restricted
securities not of the same class as securities for which a public market exists
usually are valued initially at cost. Any subsequent adjustment from cost is
based upon considerations deemed relevant by or under the direction of MIP's
Board of Trustees or its delegates.
Any assets or liabilities initially expressed in terms of foreign currency are
translated into dollars using information provided by pricing entities, such as
Morgan Stanley Capital International or Gelderman Data Service, or at a quoted
market exchange rate as may be determined to be appropriate by BGFA. Forward
currency contracts are valued at the current cost of offsetting the contract.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of net asset value does not take
place contemporaneously with the determination of prices of the foreign
securities held by a LifePath Master Portfolio. In addition, foreign securities
held by a LifePath Master Portfolio may be traded actively in securities markets
which are open for trading on days when the Master Portfolio does not determine
its net asset value. Accordingly, there may be occasions when a
19
<PAGE>
LifePath Master Portfolio does not calculate its net asset value but when the
value of such Master Portfolio's portfolio securities is affected by such
trading activity.
Fixed-income securities are valued each business day using available market
quotations or at fair value as determined by one or more independent pricing
services (collectively, the "Service") approved by MIP's Board of Trustees. The
Service may use available market quotations, employ electronic data processing
techniques and/or a matrix system to determine valuations. The Service's
procedures are reviewed by MIP's officers under the general supervision of MIP's
Board of Trustees.
Expenses and fees, including advisory fees, are accrued daily and are taken
into account for the purpose of determining the net asset value of each LifePath
Master Portfolio's shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each LifePath Fund intends to qualify each year as a "regulated investment
company" under the Code so long as such qualification is in the best interests
of its shareholders. Such qualification requires, among other things, that (a)
at least 90% of each Fund's annual gross income be derived from interest,
payments with respect to securities loans, dividends, and gains from the sale or
other disposition of securities, or foreign currencies, or other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to each Fund's business of investing in such securities or
currencies; (b) each Fund generally derives less than 30% of its gross income
from gains from the sale or other disposition of securities, options, futures or
forward contracts held for less than three months; and (c) each Fund diversifies
its holdings so that, at the end of each quarter of the taxable year, (i) at
least 50% of the market value of each 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 each Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities and the securities of other regulated investment
companies), or of two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses or related
trades or businesses.
For purposes of complying with these qualification requirements, each LifePath
Fund will be deemed to own a proportionate share of its corresponding Master
Portfolio's assets. As a regulated investment company, each Fund will not be
subject to federal income tax on its net investment income and net capital gains
distributed to its shareholders, provided that it distributes to its
shareholders at least 90% of its net investment income (including its net tax-
exempt income) earned in each year.
Generally, dividends and capital gain distributions are taxable to
shareholders when they are received. However, such dividends and distributions
declared payable as of a record date in October, November or December of any
calendar year are deemed under the Code to have been paid by the Fund and
received by the shareholder on December 31 of that calendar year if the
20
<PAGE>
dividend is actually paid in the following January. Such dividends and
distributions will, accordingly, be taxable to the recipient shareholders in the
year in which the record date falls.
In addition, a 4% nondeductible excise tax will be imposed on each Fund to the
extent it does not meet certain minimum distribution requirements of its net
investment income and net realized capital gains by the end of each calendar
year, but each Fund will either actually or be deemed to distribute
substantially all of this income and therefore expects not to be subject to the
excise.
Depending on the composition of a regulated investment company's income, a
portion of the dividends paid by the regulated investment company from its net
investment income may qualify for the dividends-received deduction allowable to
certain U.S. corporate shareholders. In general, dividend income of the
regulated investment company distributed to qualifying corporate shareholders is
eligible for the dividends-received deduction only to the extent that (i) the
regulated investment company's income consists of dividends paid by U.S.
corporations and (ii) the regulated investment company would have been entitled
to the dividends received deduction with respect to such dividend income if the
regulated investment company were not a regulated investment company under the
Code. A corporate shareholder of the Fund must hold the Fund shares upon which
the qualifying dividend is paid for at least 46 days to be entitled to the
dividends-received deduction. The Code also provides other limitations with
respect to the ability of a qualifying corporate shareholder to claim the
dividends-received deduction.
Income received by each Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Because not more than 50% of the value of the total assets
of any Fund is expected to consist of securities of foreign issuers, no Fund
will be eligible to elect to "pass through" foreign tax credits to its
shareholders.
Ordinarily, gains and losses realized from portfolio transactions are treated
as capital gain or loss, except in certain cases, including where a Master
Portfolio acquires a put or grants a call thereon. Gain recognized on the
disposition of a debt obligation (including tax-exempt obligations purchased
after April 30, 1993) purchased by the Master Portfolio at a market discount
(generally, at a price less than its principal amount) will generally be treated
as ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Master Portfolio held the debt obligation.
Other gains or losses on the sale of securities will generally be short-term
capital gains or losses. To the extent that a Fund recognizes long-term capital
gains, such gains will be distributed at least annually. Distributions of long-
term capital gains will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held Fund shares.
If a shareholder receives a designated capital gain distribution on a Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the designated capital gain
distribution. In addition, any loss realized by a shareholder upon the sale or
redemption of Fund shares held less than six months will be disallowed to the
extent of any
21
<PAGE>
tax-exempt interest dividends received by the shareholder thereon. These rules
shall not apply to losses incurred under a periodic redemption plan.
As of the printing of this SAI, the maximum individual tax rate applicable to
ordinary income is 39.6% (marginal rates may be higher for some individuals due
to phase out of exemptions and elimination of deductions); the maximum
individual tax rate applicable to net capital gains is 28%; and the maximum
corporate tax rate applicable to ordinary income and net capital gains is 35%
(however, to eliminate the benefit of lower marginal corporate income tax rates,
corporations which have taxable income in excess of $100,000 for a taxable year
will be required to pay an additional amount of income tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of tax of up to $100,000).
If a shareholder disposes of Fund shares with reinvestment rights within 90
days of acquiring such shares and subsequently reacquires Fund shares or shares
of another regulated investment company with a reduced or eliminated sales
charge pursuant to the reinvestment rights, the sales charge incurred, if any,
to acquire the disposed shares (to the extent such previous sales charges do not
exceed the reduction or elimination of sales charges incurred on the subsequent
acquisition) shall not be taken into account for the purpose of determining the
amount of gain or loss on the initial disposition. To the extent any sales
charge is consequently not taken into account, it will be treated as having been
incurred in the subsequent acquisition. In addition, any loss realized on a
redemption or exchange of shares of a Fund will be disallowed to the extent that
substantially identical shares are reacquired within the 61-day period beginning
30 days before and ending 30 days after the shares are disposed of.
If an option granted by a Master Portfolio lapses or is terminated through a
closing transaction, such as a repurchase by the Master Portfolio of the option
from its holder, the Master Portfolio will realize a short-term capital gain or
loss, depending on whether the premium income is greater or less than the amount
paid by the Master Portfolio in the closing transaction. Recognition of capital
losses may be deferred if they result from a position which is part of a tax
"straddle," as discussed below. If securities are sold by a Master Portfolio
pursuant to the exercise of a call option granted by it, such Master Portfolio
will add the premium received to the sale price of the securities delivered in
determining the amount of gain or loss on the sale. If securities are purchased
by a Master Portfolio pursuant to the exercise of a put option granted by it,
the Master Portfolio will subtract the premium received from its cost basis in
the securities purchased.
Under Section 1256 of the Code, gain or loss realized by a regulated
investment company from certain financial forward, futures and options
transactions is treated as 60% long-term capital gain (or loss) and 40% short-
term capital gain (or loss) (the "60%/40% rule"). Gain or loss may arise upon
the exercise or lapse of such forward contracts, futures and options as well as
from closing transactions. In addition, any such forward contracts, futures or
options remaining unexercised at the end of the regulated investment company's
taxable year are treated as sold for their then fair market value, resulting in
additional gain or loss to the regulated investment company characterized in the
manner described above (the "marked-to-market rule").
22
<PAGE>
Transactions that qualify as designated hedges are exempted from the marked-to-
market rule and the 60%/40% rule.
All or a portion of the gain or loss from the disposition of non-U.S. dollar
denominated securities (including debt instruments, certain financial forward,
futures and option contracts, and certain preferred stock) may be treated as
ordinary income or loss under Section 988 of the Code (relating to the taxation
of foreign currency transactions). Furthermore, all or a portion of the gain
realized from engaging in "conversion transactions" may be treated as ordinary
income under Section 1258. Conversion transactions are defined to include
certain forward, futures, option and straddle transactions, transactions
marketed or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Offsetting positions held by a regulated investment company involving certain
financial forward, futures or option contracts may be considered, for tax
purposes, to constitute straddles. Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of straddles
is governed by Section 1092 of the Code which, in certain circumstances,
overrides or modifies the provisions of Section 1256.
If a regulated investment company was treated as entering into straddles by
reason of its engaging in certain financial forward, futures or option
contracts, such straddles could be characterized as "mixed straddles" if the
futures, forwards, or options comprising a part of such straddles were governed
by Section 1256. The regulated investment company may make one or more elections
with respect to mixed straddles, and, depending upon which elections are made,
if any, the tax consequences with respect to the transaction may differ.
Generally, to the extent the straddle rules apply to positions established by
the regulated investment company, losses realized by the regulated investment
company may be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the conversion transaction
rules, short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gain may be characterized as
short-term capital gain or ordinary income.
Foreign Shareholders. Under the Code, distributions of net investment income
by a Fund to a nonresident alien individual, nonresident alien fiduciary of a
trust or estate, foreign corporation, or foreign partnership (a "foreign
shareholder") will be subject to U.S. withholding tax (at a rate of 30% or a
lower treaty rate). Withholding will not apply if a dividend paid by a Fund to a
foreign shareholder is "effectively connected" with a U.S. trade or business, in
which case the reporting and withholding requirements applicable to U.S.
citizens, U.S. residents or domestic corporations will apply. Distributions of
net long-term capital gains are not subject to tax withholding, but in the case
of a foreign shareholder who is a nonresident alien individual, such
distributions ordinarily will be subject to U.S. withholding tax at a rate of
30% if the individual is physically present in the U.S. for more than 182 days
during the taxable year.
Other Matters. Investors should be aware that the investments to be made by a
Master Portfolio may involve sophisticated tax rules such as the original issue
discount and real estate mortgage investment conduit ("REMIC") rules that would
result in income or gain recognition by the Master Portfolio, and its
corresponding Fund, without corresponding cash receipts.
23
<PAGE>
Although the Funds will seek to avoid significant noncash income, such noncash
income could be recognized by the Funds, in which case a Fund may distribute
cash derived from other sources in order to meet the minimum distribution
requirements described above.
CAPITAL STOCK
As of May 30, 1997, the shareholders identified below were known by the Trust
to own 5% or more of a LifePath Fund or 5% or more of the Class A, Class B and
Institutional Class shares of a LifePath Fund's outstanding shares in the
following capacity:
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE PERCENTAGE CAPACITY
NAME OF FUND OF SHAREHOLDER OF CLASS OF FUND OWNED
- ------------ -------------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
LifePath 2000 Wells Fargo Bank 15.61% 15.61% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
LifePath 2000 Stephens Inc. 100% N/A Record
Institutional Class 111 Center Street
Little Rock, AR 72201
LifePath 2010 Wells Fargo Bank 26.91% 26.75% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
LifePath 2010 Dorothy J. Duncan 5.70% N/A Beneficial
Class B 11707 Judy Ave.
Bakersfield, CA 93312
LifePath 2010 Stephens Inc. 7.15% N/A Record
Class B FBO Account 77379072
P.O. Box 34127
Little Rock, AR 72203
LifePath 2010 Stephens Inc. 11.39% N/A Record
Class B FBO Account 74037384
P.O. Box 34127
Little Rock, AR 72203
LifePath 2010 Stephens Inc. 14.47% N/A Record
Class B FBO Account 76167325
P.O. Box 34127
Little Rock, AR 72203
LifePath 2010 Stephens Inc. 42.41% N/A Beneficial
Institutional Class 111 Center Street
Little Rock, AR 72201
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
LifePath 2010 Charles Schwab & Co., Inc. 57.59% N/A Record
Institutional Class Special Custody A/C FEBO Customers
101 Montgomery Street
San Francisco, CA 94104
LifePath 2020 Wells Fargo Bank 32.09% 31.71% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
</TABLE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE PERCENTAGE CAPACITY
NAME OF FUND OF SHAREHOLDER OF CLASS OF FUND OWNED
- ------------ --------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LifePath 2020 Herman Goldstein 6.97% N/A Beneficial
Class B 150 Font Blvd. Apt. 5-L
San Francisco, CA 94132
LifePath 2020 Fred S. and Barbara J. Holmes 24.66% N/A Beneficial
Class B 801 A Street
Taft, CA 93268
LifePath 2020 Stephens Inc. 21.48% N/A Beneficial
Institutional Class 111 Center Street
Little Rock, AR 72201
LifePath 2020 Charles Schwab & Co., Inc. 78.52% N/A Record
Institutional Class Special Custody A/C FEBO Customers
101 Montgomery Street
San Francisco, CA 94104
LifePath 2030 Wells Fargo Bank 35.25% 34.72% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
LifePath 2030 Stephens Inc. 6.88% N/A Record
Class B FBO Account 75910760
P.O. Box 34127
Little Rock, AR 72203
LifePath 2030 Stephens Inc. 8.17% N/A Record
Class B FBO Account 75922715
P.O. Box 34127
Little Rock, AR 72203
LifePath 2030 Nirmal S. Gill 8.21% N/A Beneficial
Class B 3404 McKee Road
Bakersfield, CA 93313
LifePath 2030 Fred S. and Barbara J. Holmes 9.17% N/A Beneficial
Class B 801 A Street
Taft, CA 93268
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
LifePath 2030 Stephens Inc. 38.98% N/A Beneficial
Institutional Class 111 Center Street
Little Rock, AR 72201
LifePath 2030 Charles Schwab & Co, Inc. 61.02% N/A Record
Institutional Class Special Custody A/C FEBO Customers
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE PERCENTAGE CAPACITY
NAME OF FUND OF SHAREHOLDER OF CLASS OF FUND OWNED
- ------------ -------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LifePath 2040 Wells Fargo Bank 38.05% 37.52% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
LifePath 2040 Stephens Inc. 6.77% N/A Beneficial
Class B FBO Account 74023594
P.O. Box 34127
Little Rock, AR 72203
LifePath 2040 Stephens Inc. 80.22 N/A Beneficial
Institutional Class 111 Center Street
Little Rock, AR 72201
LifePath 2040 Charles Schwab & Co., Inc. 19.78% N/A Record
Institutional Class Special Custody AC FEBO Customers
101 Montgomery Street
San Francisco, CA 94101
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one or
more controlled companies more than 25% of the voting securities of a company is
presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund), or is identified as the holder of
record of more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).
PERFORMANCE INFORMATION
Net asset value, total return and yield quotations are computed separately for
each class of Fund shares. Because of the differences in the fees and expenses
borne by Class A and Class B shares of the Funds, the return/yield on such
shares can be expected, at any given time, to be lower than the return/yield on
Institutional Class shares. Distributions to holders of Class A and Class B
shares are reduced by the amount of distribution-related expenses payable under
the Distribution Plan for each such Class. The performance information for the
Class B shares reflects the maximum contingent deferred sales charge for the
applicable period ("CDSC").
26
<PAGE>
Average annual total return is calculated by determining the ending redeemable
value of an investment purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return is calculated by subtracting the amount of the net asset value
per share of a class at the beginning of a stated period from the net asset
value per share of a class at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period), and dividing the
result by the net asset value per share of a class at the beginning of the
period.
CLASS B SHARES COMMENCED OPERATIONS ON MARCH 3, 1997. THE CLASS B PERFORMANCE
INFORMATION SHOWN BELOW FOR PERIODS PRIOR TO THIS TIME, REFLECTS THE PERFORMANCE
OF THE CLASS A SHARES OF THE LIFEPATH FUNDS DURING THE APPLICABLE PERIOD,
ADJUSTED TO REFLECT CLASS B SHARE EXPENSE LEVELS IN EFFECT ON MARCH 3, 1997.
For the fiscal year ended February 28, 1997, the average annual total returns
on shares of each class of the Funds were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B INSTITUTIONAL
FUND WITH LOAD W/O LOAD WITH CDSC W/O CDSC CLASS
- ---- ---------- --------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C>
LifePath 2000 Fund n/a 6.74% n/a n/a 7.23%
LifePath 2010 Fund 6.56% 11.60% 6.06% 11.06% 11.89%
LifePath 2020 Fund 9.53% 14.65% 9.14% 14.14% 15.14%
LifePath 2030 Fund 11.76% 17.01% 11.48% 16.48% 18.13%
LifePath 2040 Fund 14.72% 20.17% 14.66% 19.66% 19.89%
</TABLE>
For the period from inception (March 1, 1994) to February 28, 1997, the
average annual total returns on shares of each class of the Funds were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B INSTITUTIONAL
FUND WITH LOAD W/O LOAD WITH CDSC W/O CDSC CLASS
- ---- ---------- --------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C>
LifePath 2000 Fund n/a 7.18% n/a n/a 7.51%
LifePath 2010 Fund 9.55% 11.24% 9.89% 10.72% 11.52%
LifePath 2020 Fund 11.92% 13.64% 9.14% 14.14% 13.98%
LifePath 2030 Fund 13.73% 15.49% 14.18% 14.94% 16.11%
LifePath 2040 Fund 15.91% 17.70% 16.41% 17.14% 17.86%
</TABLE>
The Funds may advertise the cumulative total return on a class of its shares.
Cumulative total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Cumulative total return generally
is expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset value
per share of a class at the beginning of the period. Advertisements may include
the percentage rate of total return on a class of shares or may include the
value of a hypothetical investment in shares at the end of the period which
assumes the application of the percentage rate of total return.
27
<PAGE>
In addition to the above performance information, the Funds may also advertise
the cumulative total return for one-month, three-month, six-month, and year-to-
date periods. The cumulative total return for such periods is based on the
overall percentage change in value of a hypothetical investment in a class of
shares of the Fund, assuming all 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.
For the period from inception (March 1, 1994) to February 28, 1997, the
cumulative total returns on shares of each class of the Funds were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
FUND WITH LOAD W/O LOAD WITH CDSC W/O CDSC
- ---- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
LifePath 2000 Fund n/a 23.12 n/a n/a
LifePath 2010 Fund 31.48% 37.66% 32.71% 35.71%
LifePath 2020 Fund 40.18% 46.77% 41.69% 44.69%
LifePath 2030 Fund 47.11% 54.02% 48.85% 51.85%
LifePath 2040 Fund 55.73% 63.05% 57.74% 60.74%
</TABLE>
As indicated in the Prospectus, the Funds may advertise certain yield
information. As, and to the extent required by the SEC, yield will be
calculated based on a 30-day (or one-month) period, computed by dividing the
net investment income per share earned during the period by the maximum
offering price per share on the last day of the period, according to the
following formula: YIELD=2[(((a-b)/cd)+1)/6/-1], where a=dividends and
interest earned during the period; b=expenses accrued for the period (net of
reimbursements); c=the average daily number of shares 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. The net investment income of a
Fund includes actual interest income, plus or minus amortized purchase
discount (which may include original issue discount) or premium, less accrued
expenses. Realized and unrealized gains and losses on portfolio securities are
not included in a Fund's net investment income. For purposes of sales
literature, yield also may be calculated on the basis of the net asset value
per share rather than public offering price, provided that the yield data
derived pursuant to the calculation described above also are presented.
From time to time, the Trust may use, in advertisements and other types of
literature, information and statements describing the LifePath Funds as the
first mutual funds to offer a flexible investment strategy designed to change
over specific time horizons.
From time to time and only to the extent the comparison is appropriate for the
LifePath Funds, the Trust may quote performance or price-earning ratios for a
class of the Funds in advertising and other types of literature as compared to
the performance of the Lehman Brothers Municipal Bond Index, 1-Year Treasury
Bill Rate, S&P Index, the Dow Jones Industrial Average, the Lehman Brothers 20+
Treasury Index, the Lehman Brothers 5-7 Year Treasury Index, Donoghue's Money
Fund Averages, Real Estate Investment Averages (as reported by the National
Association of Real Estate Investment Trusts), Gold Investment Averages
(provided by the World Gold Council), Bank Averages (which is calculated from
figures supplied by the U.S. League of Savings Institutions based on effective
annual rates of interest on both passbook and certificate accounts), average
annualized certificate of deposit rates (from the Federal Reserve G-13
Statistical Releases or the Bank Rate Monitor), the Salomon One Year Treasury
Benchmark Index, the Consumer Price Index (as published by the U.S. Bureau of
Labor Statistics), Ten Year U.S. Government Bond Average, S&P's Corporate Bond
Yield Averages, Schabacter Investment Management Indices, Salomon Brothers High
Grade Bond Index, Lehman Brothers Long-Term High Quality Government/Corporate
Bond Index, other managed or unmanaged indices or performance data of bonds,
stocks or government securities (including data provided by Ibbotson
Associates), or by other services, companies, publications or persons who
monitor mutual 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 Funds' performance also may be compared to the performance of other
mutual funds having similar objectives. This comparative performance could be
expressed as a ranking prepared by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent
28
<PAGE>
services which monitor the performance of mutual funds. The performance of a
class of the Funds will be calculated by relating net asset value per share of a
class at the beginning of a stated period to the net asset value of the
investment, assuming reinvestment of all gains, distributions and dividends
paid, at the end of the period. Any such comparisons may be useful to investors
who wish to compare the Funds' past performance with that of its competitors. Of
course, past performance cannot be a guarantee of future results. The Trust also
may include, from time to time, a reference to certain marketing approaches of
the Distributor, including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.
In addition, the Trust 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 Trust 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 Trust also may disclose in advertising and other types of sales
literature the assets and categories of assets under management by the Master
Portfolios' investment adviser or its affiliates.
From time to time the Trust may reprint, reference or otherwise use material
from magazines, newsletters, newspapers and books including, but not limited to
the Wall Street Journal, Money Magazine, Barrons, Kiplingers, Business Week,
Fortune, Forbes, the San Francisco Chronicle, the San Jose Mercury News, The New
York Times, the Los Angeles Times, the Boston Globe, the Washington Post, the
Chicago Sun-Times, Investor Business Daily, Worth, Bank Investor, American
Banker, Smart Money, the 100 Best Mutual Funds (Adams Publishing), Morningstar
or Value Line.
The Trust may use the following information in advertisements and other types
of literature, only to the extent the information is appropriate for the Funds:
(i) the Consumer Price Index may be used to assess the real rate of return from
an investment in a Fund; (ii) other government statistics, including, but not
limited to, The Survey of Current Business, may be used to illustrate investment
attributes of the Funds or the general economic, business, investment, or
financial environment in which the Funds operate; (iii) the effect of tax-
deferred compounding on the investment returns of the Funds, or on returns in
general, may be illustrated by graphs, charts, etc., where such graphs or charts
would compare, at various points in time, the return from an investment in the
Funds (or returns in general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates) with the return
on a taxable basis; and (iv) the sectors or industries in which a Fund invests
may be compared to relevant indices of stocks or surveys (e.g., S&P Industry
Surveys) to evaluate the historical performance of the Funds or current or
potential value with respect to the particular industry or sector.
The Trust also may discuss in advertising and other types of literature that
the Funds have been assigned a rating by a nationally recognized statistical
rating organization ("NRSRO"), such
29
<PAGE>
as Standard & Poor's Corporation. Such rating would assess the creditworthiness
of the investments held by a Fund. The assigned rating would not be a
recommendation to purchase, sell or hold the Funds' shares since the rating
would not comment on the market price of the Funds' shares or the suitability of
a 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 a Fund or its investments. The Trust
may compare the Funds' performance with other investments which are assigned
ratings by NRSROs. Any such comparisons may be useful to investors who wish to
compare the Funds' past performance with other rated investments.
From time to time, the Funds may use the following statements, or variations
thereof, in advertisements and other promotional materials: "Wells Fargo Bank,
as a Shareholder Servicing Agent for the Stagecoach Funds, provides various
services to its customers that are also shareholders of the Funds. These
services may include access to Stagecoach Funds' account information through
Automated Teller Machines (ATMs), the placement of purchase and redemption
requests for shares of the Funds through ATMs and the availability of combined
Wells Fargo Bank and Stagecoach Funds account statements." The Trust may also
disclose in advertising and other types of sales literature the assets and
categories of assets under management by the Trust's investment adviser. The
Trust may also disclose in advertising and other types of sales literature the
assets and categories of assets under management by a Fund's investment adviser
or sub-adviser. The Trust may disclose in advertising, statements and other
literature the amount of assets and mutual fund assets managed by Wells Fargo
Bank, BGFA or their affiliates. As of March 31, 1997, Wells Fargo Bank provided
investment advisory services for approximately $56 billion of assets of
individuals, trusts, estates and institutions and $17 billion of mutual fund
assets. As of April 30, 1997, BGFA and its affiliates provided investment
advisory services for approximately $429 billion of assets.
PORTFOLIO TRANSACTIONS
Since each Fund invests all of its assets in a corresponding Master Portfolio
of MIP, set forth below is a description of the Master Portfolios' policies
governing portfolio securities transactions.
Purchases and sales of equity securities on a securities exchange usually are
effected through brokers who charge a negotiated commission for their services.
Commission rates are established pursuant to negotiations with the broker based
on the quality and quantity of execution services provided by the broker in
light of generally prevailing rates. Orders may be directed to any broker
including, to the extent and in the manner permitted by applicable law, Stephens
or Barclays Global Investors Services. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.
30
<PAGE>
Purchases of debt securities generally are principal transactions. Debt
securities normally are purchased or sold from or to dealers serving as market
makers for the securities at a net price. Debt securities may also be purchased
in underwritten offerings or directly from an issuer. Generally debt obligations
are traded on a net basis and do not involve brokerage commissions. The cost of
executing transactions in debt securities consists primarily of dealer spreads
and underwriting commissions. Under the 1940 Act, persons affiliated with MIP
are prohibited from dealing with MIP as a principal in the purchase and sale of
portfolio securities unless an exemptive order allowing such transactions is
obtained from the Commission or an exemption is otherwise available. The Master
Portfolios may purchase securities from underwriting syndicates of which
Stephens or BGFA 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 MIP's Board of Trustees.
MIP 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 MIP's Board of Trustees, BGFA, as adviser, is responsible for the
Master Portfolio's investment decisions and the placing of portfolio
transactions. In placing orders, it is MIP's policy to obtain the best overall
terms taking into account the dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
dealer's risk in positioning the securities involved. BGFA generally seeks
reasonably competitive spreads or commissions.
In assessing the best overall terms available for any transaction, BGFA
considers factors deemed relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. As a result, a
Master Portfolio may pay a broker/dealer which furnishes brokerage services a
higher commission than that which might be charged by another broker/dealer for
effecting the same transaction, provided that such commission is determined to
be reasonable in relation to the value of the brokerage services provided by
such broker/dealer. Certain of the broker/dealers with whom the Master
Portfolios may transact business may offer commission rebates to the Master
Portfolios. BGFA considers such rebates in assessing the best overall terms
available for any transaction. MIP's Board of Trustees will periodically review
the commissions paid by the Master Portfolios to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Master Portfolios.
Under Section 28(e) of the Securities Exchange Act of 1934, an adviser shall
not be "deemed to have acted unlawfully or to have breached its fiduciary duty"
solely because under certain circumstances it has caused the account to pay a
higher commission than the lowest available. To obtain the benefit of Section
28(e), an adviser must make a good faith determination that the commissions paid
are "reasonable in relation to the value of the brokerage and research services
provided . . . viewed in terms of either that particular transaction or its
overall responsibilities with respect to the accounts as to which it exercises
investment discretion and that the services provided by a broker provide an
adviser with lawful and appropriate assistance in the performance of its
investment decision-making responsibilities." Accordingly, the price to a Master
Portfolio in any
31
<PAGE>
transaction may be less favorable than that available from another broker/dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered.
BROKERAGE COMMISSIONS. For the fiscal years ended February 28, 1995, February
---------------------
29, 1996 and February 28, 1997, the corresponding Master Portfolio of each
LifePath Fund paid the dollar amounts of brokerage commissions indicated below.
None of these brokerage commissions were paid to affiliated brokers.
<TABLE>
<CAPTION>
COMMISSIONS PAID
MASTER PORTFOLIO 1995 1996 1997
- ---------------- ------- -------- -------
<S> <C> <C> <C>
LifePath 2000 Master Portfolio $24,231 $ 8,311 $ 3,639
LifePath 2010 Master Portfolio $28,830 $12,053 $ 8,837
LifePath 2020 Master Portfolio $56,540 $29,666 $12,383
LifePath 2030 Master Portfolio $37,890 $33,786 $ 6,927
LifePath 2040 Master Portfolio $56,183 $71,608 $28,047
</TABLE>
SECURITIES OF REGULAR BROKER DEALERS. As of February 28, 1997, the
------------------------------------
corresponding Master Portfolio of each LifePath Fund owned securities of its
"regular brokers or dealers" or their parents, as defined in the 1940 Act, as
follows:
<TABLE>
<CAPTION>
MASTER PORTFOLIO BROKER/DEALER AMOUNT
- ---------------- -------------- -----------
<S> <C> <C>
LifePath 2000 Salomon Inc. $ 6,619
Goldman Sachs $15,000,000
Morgan Stanley $ 12,499
LifePath 2010 Salomon Inc. $ 52,065
Goldman Sachs $13,000,000
Morgan Stanley $ 81,431
LifePath 2020 Salomon Inc. $ 101,238
Goldman Sachs $27,000,000
Morgan Stanley $ 164,756
LifePath 2030 Salomon Inc. $ 78,209
Goldman Sachs $15,000,000
Morgan Stanley $ 126,124
LifePath 2040 Salomon Inc. $ 144,347
Goldman Sachs $19,000,000
Morgan Stanley $ 227,313
</TABLE>
32
<PAGE>
INFORMATION ABOUT THE FUNDS
Each Fund share, irrespective of class, has one vote and when issued and paid
for in accordance with the terms of the offering, is fully paid and non-
assessable. Shares have no preemptive, subscription or conversion rights and are
freely transferable. Each share of a class has identical voting rights with
respect to the Fund of which it is a part provided that there are certain
matters which affect one class but not another. Currently, the only such matters
are the existence of a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act and Shareholder Servicing Plans with respect to the Class A and Class B
shares, but not the Institutional Class shares. On this matter the shareholders
of the affected class vote as a class.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an investment
trust, such as the Trust, will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of each
Fund affected by such matter. Rule 18f-2 further provides that a Fund shall be
deemed to be affected by a matter unless it is clear that the interests of such
Fund in the matter are identical or that the matter does not affect any interest
of such Fund. However, the Rule exempts the selection of independent accountants
and the election of Trustees from the separate voting requirements of the Rule.
Each Fund sends annual and semi-annual financial statements to all its
shareholders of record.
COUNSEL
Morrison & Forester LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Funds' Prospectus.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Three Embarcadero Center, San Francisco, California
94111, independent auditors, have been selected as each Fund's independent
auditors. KPMG Peat Marwick LLP provides audit services, tax return preparation
and assistance and consultation in connection with review of certain Securities
and Exchange Commission filings.
FINANCIAL INFORMATION
The portfolio of investments, audited financial statements and independent
auditors' report for the fiscal year ended February 28, 1997 for each LifePath
Fund of the Trust and each corresponding LifePath Master Portfolio of MIP are
hereby incorporated by reference to the Trust's Annual Reports, as filed with
the SEC on May 2, 1997. The portfolio of investments, audited financial
statements and independent auditors' report for the Funds are attached to all
SAIs delivered to shareholders or prospective shareholders.
33
<PAGE>
APPENDIX
Description of certain ratings assigned by Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors Service,
Inc. ("Fitch"), Duff & Phelps, Inc. ("Duff") and IBCA Inc. and IBCA Limited
("IBCA"):
S&P
BOND RATINGS
AAA
Bonds rated "AAA" have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A
Bonds rated "A" have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.
BBB
Bonds rated "BBB" are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
S&P's letter ratings may be modified by the addition of a plus (+) or minus
(-) sign designation, which is used to show relative standing within the major
rating categories, except in the "AAA" (Prime Grade) category.
COMMERCIAL PAPER RATING
The designation "A-1" by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an "A-2" designation is
strong. However, the relative degree of safety is not as high as for issues
designated "A-1".
A-1
<PAGE>
MOODY'S
BOND RATINGS
AAA
Bonds which are rated "Aaa" are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA
Bonds which are rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what generally are known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
A
Bonds which are rated "A" possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA
Bonds which are rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative standing
within the major rating categories, except in the "Aaa" category. The modifier 1
indicates a ranking for the security in the higher end of a rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking
in the lower end of a rating category.
A-2
<PAGE>
COMMERCIAL PAPER RATING
The rating Prime-1 ("P-1") is the highest commercial paper rating assigned by
Moody's. Issuers of "P-1" paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or relating supporting institutions) rated Prime-2 ("P-2") have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
FITCH
BOND RATINGS
The ratings represent Fitch's assessment of the issuer's ability to meet the
obligations of a specific debt issue or class of debt. The ratings take into
consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated "AAA" are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds rated "AA" are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+".
A
Bonds rated "A" are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more
A-3
<PAGE>
vulnerable to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB
Bonds rated "BBB" are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis, the
short-term rating places greater emphasis than bond ratings on the existence of
liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are regarded
as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than issues rated "F-1+".
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory degree of
assurance for timely payments, but the margin of safety is not as great as the
"F-1+" and "F-1" categories.
A-4
<PAGE>
DUFF
BOND RATINGS
AAA
Bonds rated "AAA" are considered highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA
Bonds rated "AA" are considered high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated "A" have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
BBB
Bonds rated "BBB" are considered to have below average protection factors but
still considered sufficient for prudent investment. Considerable variability in
risk during economic cycles.
Plus (+) and minus (-) signs are used with a rating symbol (except "AAA") to
indicate the relative position of a credit within the rating category.
COMMERCIAL PAPER RATING
The rating "Duff-1" is the highest commercial paper rating assigned by Duff.
Paper rated "Duff-1" is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated "Duff-2" is regarded as having good
certainty of timely payment, good access to capital markets and sound liquidity
factors and Trust fundamentals. Risk factors are small.
IBCA
BOND AND LONG-TERM RATINGS
Obligations rated "AAA" by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated "AA" by
A-5
<PAGE>
IBCA. Capacity for timely repayment of principal and interest is substantial.
Adverse changes in business, economic or financial conditions may increase
investment risk albeit not very significantly.
COMMERCIAL PAPER AND SHORT-TERM RATINGS
The designation "A1" by IBCA indicates that the obligation is supported by a
very strong capacity for timely repayment. Those obligations rated "A1+" are
supported by the highest capacity for timely repayment. Obligations rated "A2"
are supported by a strong capacity for timely repayment, although such capacity
may be susceptible to adverse changes in business, economic or financial
conditions.
INTERNATIONAL AND U.S. BANK RATINGS
An IBCA bank rating represents IBCA's current assessment of the strength of
the bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, IBCA assigns
banks Long- and Short-Term Ratings as used in the corporate ratings discussed
above. Legal Ratings, which range in gradation from 1 through 5, address the
question of whether the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings are considered by
IBCA to be a prime factor in its assessment of credit risk. Individual Ratings,
which range in gradations from A through E, represent IBCA's assessment of a
bank's economic merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support from state
authorities or its owners.
A-6
<PAGE>
STAGECOACH TRUST
File Nos. 33-64352; 811-7780
PART C. OTHER INFORMATION
-------------------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements:
The portfolio of investments, audited financial statements and
independent auditors' reports for the LifePath 2000, LifePath 2010, LifePath
2020, LifePath 2030 and LifePath 2040 Funds of the Trust and corresponding
Master Portfolios of Master Investment Portfolio ("MIP"), for the fiscal year
ended February 28, 1997, are hereby incorporated by reference to the Trust's
Annual Reports, as filed with the SEC on May 2, 1997.
<TABLE>
<CAPTION>
(b) Exhibits:
Exhibit
Number Description
------- -----------
<S> <C>
1 - Amended and Restated Agreement and Declaration of Trust,
filed herewith.
2 - By-Laws, filed herewith.
3 - Not Applicable.
4 - Not Applicable.
5 - Administration Agreement with Stephens Inc.,
incorporated by reference to Post-Effective Amendment
No. 5 to the Registration Statement filed on
June 28, 1996.
6 - Distribution Agreement with Stephens Inc. incorporated
by reference to Post-Effective Amendment No. 5 to the
Registration Statement filed on June 28, 1996.
7 - Not Applicable.
8 - Custody Agreement with Investors Bank & Trust Company,
to be filed by amendment
9(a) - Shareholder Services Agreement with Stephens Inc.
incorporated by reference to Post-Effective Amendment
No. 5 to the Registration Statement filed on
June 28, 1996.
9(b) - Shareholder Services Plan, incorporated by reference to
Post-Effective Amendment No. 5 to the Registration
Statement filed on June 28, 1996.
9(c) - Class B Shares Servicing Plan, incorporated by reference
to Post-Effective Amendment No. 6 to the Registration
Statement filed on November 15, 1996.
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
9(d) - Agency Agreement with Wells Fargo Bank, N.A., filed
herewith.
10 - Opinion and Consent of Counsel, filed herewith.
11 - Consent of Auditors - KPMG Peat Marwick, LLP, filed
herewith.
12 - Not Applicable
13 - Not Applicable
14 - Not Applicable
15(a) - Retail (Class A) Shares Distribution Plan, filed herewith.
15(b) - Class B Shares Distribution Plan, incorporated by
reference to Post-Effective Amendment No. 6 to the
Registration Statement filed on November 15, 1996.
16 - Not Applicable
17 - See Exhibit 27.
18 - Rule 18f-3 Multi-Class Plan, incorporated by reference to
Post-Effective Amendment No. 6 to the Registration
Statement filed on November 15, 1996.
19 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat,
Thomas S. Goho, Joseph N. Hankin, W. Rodney Hughes,
Robert M. Joses and J. Tucker Morse, filed herewith.
27.1 - Financial Data Schedule - LifePath 2000 Fund - Institutional Class
27.2 - Financial Data Schedule - LifePath 2000 Fund -
Retail Class
27.3 - Financial Data Schedule - LifePath 2010 Fund - Institutional Class
27.4 - Financial Data Schedule - LifePath 2010 Fund -
Retail Class
27.5 - Financial Data Schedule - LifePath 2020 Fund - Institutional Class
27.6 - Financial Data Schedule - LifePath 2020 Fund -
Retail Class
27.7 - Financial Data Schedule - LifePath 2030 Fund - Institutional Class
27.8 - Financial Data Schedule - LifePath 2030 Fund -
Retail Class
27.9 - Financial Data Schedule - LifePath 2040 Fund - Institutional Class
27.10 - Financial Data Schedule - LifePath 2040 Fund -
Retail Class
</TABLE>
C-2
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
- ------- -------------------------------------------------------------
As of May 30, 1997, each of the LifePath Funds owned the following
percentages of the corresponding Master Portfolios of MIP and therefore could be
considered a controlling person of the corresponding Master Portfolio for
purposes of the 1940 Act.
<TABLE>
<CAPTION>
Percentage of
Corresponding Outstanding
Fund Master Portfolio Beneficial Interests
- ---- ---------------- --------------------
<S> <C> <C>
LifePath 2000 Fund LifePath 2000 Master Portfolio 63.59%
LifePath 2010 Fund LifePath 2010 Master Portfolio 48.54%
LifePath 2020 Fund LifePath 2020 Master Portfolio 56.64%
LifePath 2030 Fund LifePath 2030 Master Portfolio 62.89%
LifePath 2040 Fund LifePath 2040 Master Portfolio 72.71%
</TABLE>
Item 26. Number of Holders of Securities
- ------- -------------------------------
As of May 30, 1997, the number of record shareholders of each Class of
the Funds were as follows:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
LifePath 2000 Fund
Class A 2,588
Institutional Class 1
LifePath 2010 Fund
Class A 2,645
Class B 36
Institutional Class 2
LifePath 2020 Fund
Class A 4,296
Class B 86
Institutional Class 2
LifePath 2030 Fund
Class A 3,061
Class B 100
Institutional Class 2
LifePath 2040 Fund
Class A 6,381
Class B 296
Institutional Class 2
</TABLE>
C-3
<PAGE>
Item 27. Indemnification
- ------- ---------------
Reference is made to Article 8 of the Registrant's Declaration of
Trust. The application of these provisions is limited by Article 10 of the
Registrant's By-Laws filed as and by the following undertaking set forth in the
rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the registrant pursuant to the foregoing provisions, 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 trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, 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 such Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of the Investment Adviser
- ------- --------------------------------------------------------
Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of
Barclays Global Investors, N.A. ("BGI", formerly, Wells Fargo Institutional
Trust Company), serves as investment adviser to the Funds' corresponding Master
Portfolios and to certain other open-end management investment companies and
various other institutional investors.
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 BGFA and the business of the former sub-adviser to the Funds, Wells Fargo
Nikko Investment Advisors ("WFNIA") and, in some cases, the service business of
BGI. With the exception of Irving Cohen, each of the directors and executive
officers of BGFA will also have substantial responsibilities as directors and/or
officers of BGI. To the knowledge of the Registrant, except as set forth below,
none of the directors or executive officers of BGFA is or has been at any time
during the past two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature.
<TABLE>
<CAPTION>
Name and Principal Business(es) During at
Position 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 Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C>
Lawrence C. Tint Chairman of the Board of Directors
Chairman and Director of BGFA 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 Montgomery Street, San Francisco, CA 94111
</TABLE>
Prior to January 1, 1996, Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a
wholly owned subsidiary of Wells Fargo & Company, served as investment adviser
to each of the Fund's corresponding Master Portfolio'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,
Director Willis & Greene
455 Market Street
San Francisco, CA 94105
Director of Armstrong World Industries, Inc.
5037 Patata Street
South Gate, CA 90280
Director of Eastman Chemical Corporation
12805 Busch Place
Santa Fe Springs, CA 90670
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
</TABLE>
C-5
<PAGE>
<TABLE>
<S> <C>
Michael R. Bowlin Chairman of the Board of Directors, Chief
Director Executive Officer,
Chief Operating Officer and President of
Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060
Edward Carson Chairman of the Board and Chief Executive Officer
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road
Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
Director of Terra Industries, Inc.
1321 Mount Pisgah Road
Walnut Creek, CA 94596
William S. Davilla President (Emeritus) and a Director of
Director The Vons Companies, Inc.
618 Michillinda Ave.
Arcadia, CA 91007
Director of Pacific Gas & Electric Company
788 Taylorville Road
Grass Valley, CA 95949
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Company
P.O. Box 1000
Lebec, CA 93243
Director of The Bakersfield Californian
1707 I Street P.O. Box 440
Bakersfield, CA 93302
Trustee of Whittier College
13406 East Philadelphia Ave.
P.O. Box 634
Whittier, CA 90608
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C>
Paul Hazen Chairman of the Board of Directors of
Chairman of the Board of Wells Fargo & Company
Directors 420 Montgomery Street
San Francisco, CA 94105
Director of Phelps Dodge Corporation
2600 North Central Ave.
Phoenix, AZ 85004
Director of Safeway, Inc.
4th and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Professor (Emeritus) of Accounting
Director Graduate School of Business at Stanford University
MBA Admissions Office
Stanford, CA 94305
Director of Bailard Biehl & Kaiser
Real Estate Investment Trust, Inc.
2755 Campus Dr.
San Mateo, CA 94403
Director of Boise Cascade Corporation
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Enron Corporation
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc
175 Ghent Road
Fairlawn, OH 44333
Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108
Thomas L. Lee Chairman and Chief Executive Officer of
Director The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
and Chief Executive Officer of Wells Fargo &
Company
420 Montgomery Street
San Francisco, CA 94105
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Donald B. Rice President and Chief Executive Officer of Teledyne,
Director Inc.
2049 Century Park East
Los Angeles, CA 90067
Retired Secretary of the Air Force
Director of Vulcan Materials Company
One MetroPlex Drive
Birmingham, AL 35209
Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
Director 44141 Yucca Avenue
Lancaster, CA 93534
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
Director One
651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Retired Chairman of the Board and Chief Executive
Director Officer of
Martin Lockheed Corp
6801 Rockledge Drive
Bethesda, MD 20817
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
Director Berkeley
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-10
<PAGE>
Prior to January 1, 1996, WFNIA served as sub-adviser to the Funds
corresponding Master Portfolios, and as adviser or sub-adviser to various other
open-end management investment companies. For additional information, see
"Management of the Trust" in the Part B. For information as to the business,
profession, vocation or employment of a substantial nature of each of the
officers and management committees of WFNIA, reference is made to WFNIA's Form
ADV and Schedules A and D filed under the Investment Advisers Act of 1940, SEC
File No. 801-36479, incorporated herein by reference.
Item 29. Principal Underwriters
- ------- ----------------------
(a) Stephens Inc., distributor for the Registrant, does not presently
act as investment adviser for any other registered investment companies, but
does act as principal underwriter for Overland Express Funds, Inc., MasterWorks
Funds Inc., Stagecoach Funds, Inc., Nations Fund, Inc., Nations Fund Trust,
Nations Fund Portfolios, Inc., Nations LifeGoal Funds, Inc. and Nations
Institutional Reserves (formerly, The Capitol Mutual Funds), and is the
exclusive placement agent for Master Investment Trust, Managed Series Investment
Trust, Life & Annuity Trust and Master Investment Portfolio, all of which are
registered open-end management investment companies, and has acted as principal
underwriter for Nations Government Income Term Trust 2003, Inc., Nations
Government Income Term Trust 2004, Inc., and Nations Managed Balanced Target
Maturity Fund, Inc., which are closed-end management investment companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens Inc. with the Securities and Exchange Commission
pursuant to The Investment Advisers Act of 1940 (file No. 501-15510).
(c) Not applicable.
Item 30. Location of Accounts and Records
- ------- --------------------------------
(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder (collectively, "Records") at the offices of Stephens Inc., 111 Center
Street, Little Rock, Arkansas 72201.
(b) BGFA maintains all Records relating to its services as investment
adviser at 45 Fremont Street, San Francisco, California 94105.
(c) Wells Fargo Bank maintains all Records relating to its services as
investment adviser and custodian for the period prior to January 1, 1996 and for
its services as co-administrator, and transfer and dividend disbursing agent at
525 Market Street, San Francisco, California 94105.
C-11
<PAGE>
(d) WFNIA and Wells Fargo Institutional Trust Company, N.A. maintain
all Records relating to their services as sub-adviser and custodian,
respectively, for the period prior to January 1, 1996, at 45 Fremont Street, San
Francisco, California 94105.
(e) Stephens maintains all Records relating to its services as
sponsor, co-administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.
(f) Investors Bank & Trust Company maintains all Records relating to
its services as sub-administrator and custodian at 89 South Street, P.O. Box
1537, Boston, MA 02205-1537.
Item 31. Management Services
- ------- -------------------
Other than as set forth under "Management of The Funds" in the
Prospectuses constituting Part A of this Registration Statement and "Management
Arrangements" in the Statement of Additional Information constituting Part B of
this Registration Statement, the Registrant is not a party to any management-
related service contract.
Not Applicable.
Item 32. Undertakings
- ------- ------------
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant hereby undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a trustee or trustees when
requested in writing to do so by the holders of at least 10% of the Registrant's
outstanding shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
(d) Registrant hereby 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.
C-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this 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 27th day of June, 1997
STAGECOACH TRUST
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
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
*
------------------------ Trustee, Chairman and President
(R. Greg Feltus) (Principal Executive Officer)
/s/Richard H. Blank, Jr. Secretary and Treasurer
------------------------
(Richard H. Blank, Jr.) (Principal Financial Officer)
*
------------------------ Trustee
(Jack S. Euphrat)
*
------------------------ Trustee
(Thomas S. Goho)
*
------------------------ Trustee
(Joseph N. Hankin)
*
------------------------ Trustee
(W. Rodney Hughes)
*
------------------------ Trustee
(Robert M. Joses)
*
------------------------ Trustee
(J. Tucker Morse)
</TABLE>
*By: /s/Richard H. Blank, Jr.
------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
June 27, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this 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 27th day of June, 1997
MASTER INVESTMENT PORTFOLIO
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
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
*
------------------------ Trustee, Chairman and President
(R. Greg Feltus) (Principal Executive Officer)
/s/Richard H. Blank, Jr. Secretary and Treasurer
------------------------
(Richard H. Blank, Jr.) (Principal Financial Officer)
*
------------------------ Trustee
(Jack S. Euphrat)
*
------------------------ Trustee
(Thomas S. Goho)
*
------------------------ Trustee
(Zoe Ann Hines)
*
------------------------ Trustee
(W. Rodney Hughes)
*
------------------------ Trustee
(Robert M. Joses)
*
------------------------ Trustee
(J. Tucker Morse)
*By: /s/Richard H. Blank, Jr.
------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
June 27, 1997
</TABLE>
<PAGE>
STAGECOACH TRUST
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
EX-27.1 . Financial Data Schedule - LifePath 2000 Fund - Institutional Class
EX-27.2 . Financial Data Schedule - LifePath 2000 Fund - Retail Class
EX-27.3 . Financial Data Schedule - LifePath 2010 Fund - Institutional Class
EX-27.4 . Financial Data Schedule - LifePath 2010 Fund - Retail Class
EX-27.5 . Financial Data Schedule - LifePath 2020 Fund - Institutional Class
EX-27.6 . Financial Data Schedule - LifePath 2020 Fund - Retail Class
EX-27.7 . Financial Data Schedule - LifePath 2030 Fund - Institutional Class
EX- 27.8 . Financial Data Schedule - LifePath 2030 Fund - Retail Class
EX- 27.9 . Financial Data Schedule - LifePath 2040 Fund - Institutional Class
EX- 27.10 . Financial Data Schedule - LifePath 2040 Fund - Retail Class
EX-99.B1 . Amended and Restated Agreement and Declaration of Trust
EX-99.B2 . By-Laws
EX-99.B9(d) . Agency Agreement with Wells Fargo Bank, N.A.
EX-99.B10 . Opinion and Consent of Counsel - Morrison & Foerster LLP
EX-99.B11 . Consent of Auditors - KPMG Peat Marwick LLP
EX-99.B15(a) . Class A Distribution Plan
EX-99.B19 . 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
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LIFEPATH 2000 FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 84,826,949
<RECEIVABLES> 401,165
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,228,114
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 267,007
<TOTAL-LIABILITIES> 267,007
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79,345,674
<SHARES-COMMON-STOCK> 1,269
<SHARES-COMMON-PRIOR> 79,346,943
<ACCUMULATED-NII-CURRENT> 558,575
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,295,655
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,761,203
<NET-ASSETS> 12,422
<DIVIDEND-INCOME> 394,274
<INTEREST-INCOME> 4,344,855
<OTHER-INCOME> 0
<EXPENSES-NET> 1,102,278
<NET-INVESTMENT-INCOME> 3,636,851
<REALIZED-GAINS-CURRENT> 2,732,074
<APPREC-INCREASE-CURRENT> (959,715)
<NET-CHANGE-FROM-OPS> 5,409,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 570
<DISTRIBUTIONS-OF-GAINS> 48,077
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119,465
<NUMBER-OF-SHARES-REDEEMED> 1,755,819
<SHARES-REINVESTED> 19,942
<NET-CHANGE-IN-ASSETS> (32,370,456)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,102,278
<AVERAGE-NET-ASSETS> 1,211,919
<PER-SHARE-NAV-BEGIN> 10.67
<PER-SHARE-NII> 1.29
<PER-SHARE-GAIN-APPREC> (0.60)
<PER-SHARE-DIVIDEND> (1.36)
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.79
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> LIFEPATH 2000 FUND RETAIL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 84,826,949
<RECEIVABLES> 401,165
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,228,114
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 267,007
<TOTAL-LIABILITIES> 267,007
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79,345,674
<SHARES-COMMON-STOCK> 79,934,090
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 558,575
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,295,655
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,761,203
<NET-ASSETS> 84,948,686
<DIVIDEND-INCOME> 394,274
<INTEREST-INCOME> 4,344,855
<OTHER-INCOME> 0
<EXPENSES-NET> 1,102,278
<NET-INVESTMENT-INCOME> 3,636,851
<REALIZED-GAINS-CURRENT> 2,732,074
<APPREC-INCREASE-CURRENT> (959,715)
<NET-CHANGE-FROM-OPS> 5,409,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,756,715
<DISTRIBUTIONS-OF-GAINS> 1,721,568
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,580,908
<NUMBER-OF-SHARES-REDEEMED> 5,539,884
<SHARES-REINVESTED> 486,593
<NET-CHANGE-IN-ASSETS> (32,370,456)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,102,278
<AVERAGE-NET-ASSETS> 91,335,983
<PER-SHARE-NAV-BEGIN> 10.64
<PER-SHARE-NII> 0.42
<PER-SHARE-GAIN-APPREC> 0.28
<PER-SHARE-DIVIDEND> (0.42)
<PER-SHARE-DISTRIBUTIONS> (0.21)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.71
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> LIFEPATH 2010 FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 82,407,446
<RECEIVABLES> 909,580
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83,317,026
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 297,757
<TOTAL-LIABILITIES> 297,757
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,720,524
<SHARES-COMMON-STOCK> 4,443
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 507,952
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,751,771
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,039,022
<NET-ASSETS> 48,612
<DIVIDEND-INCOME> 817,715
<INTEREST-INCOME> 2,533,708
<OTHER-INCOME> 0
<EXPENSES-NET> 913,345
<NET-INVESTMENT-INCOME> 2,438,078
<REALIZED-GAINS-CURRENT> 2,784,852
<APPREC-INCREASE-CURRENT> 704,734
<NET-CHANGE-FROM-OPS> 5,927,664
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,673
<DISTRIBUTIONS-OF-GAINS> 138,908
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 221,309
<NUMBER-OF-SHARES-REDEEMED> (3,246,296)
<SHARES-REINVESTED> 25,767
<NET-CHANGE-IN-ASSETS> (18,616,742)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 913,345
<AVERAGE-NET-ASSETS> 2,503,278
<PER-SHARE-NAV-BEGIN> 11.47
<PER-SHARE-NII> 1.57
<PER-SHARE-GAIN-APPREC> (0.36)
<PER-SHARE-DIVIDEND> (1.57)
<PER-SHARE-DISTRIBUTIONS> (0.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.94
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> LIFEPATH 2010 FUND RETAIL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 82,407,446
<RECEIVABLES> 909,580
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83,317,026
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 297,575
<TOTAL-LIABILITIES> 297,757
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,720,524
<SHARES-COMMON-STOCK> 6,801,286
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 507,952
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,751,771
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,039,022
<NET-ASSETS> 82,970,657
<DIVIDEND-INCOME> 817,715
<INTEREST-INCOME> 2,533,708
<OTHER-INCOME> 0
<EXPENSES-NET> 913,345
<NET-INVESTMENT-INCOME> 2,408,078
<REALIZED-GAINS-CURRENT> 2,784,852
<APPREC-INCREASE-CURRENT> 704,734
<NET-CHANGE-FROM-OPS> 5,927,664
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,393,878
<DISTRIBUTIONS-OF-GAINS> 999,794
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,915,095
<NUMBER-OF-SHARES-REDEEMED> 2,272,271
<SHARES-REINVESTED> 275,092
<NET-CHANGE-IN-ASSETS> (18,616,742)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 913,345
<AVERAGE-NET-ASSETS> 74,408,432
<PER-SHARE-NAV-BEGIN> 11.42
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 0.95
<PER-SHARE-DIVIDEND> (0.34)
<PER-SHARE-DISTRIBUTIONS> (0.17)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.20
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> LIFEPATH 2020 FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 146,243,012
<RECEIVABLES> 624,760
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 146,867,772
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 573,029
<TOTAL-LIABILITIES> 573,029
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,438,148
<SHARES-COMMON-STOCK> 5,615
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 504,941
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,116,111
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,235,542
<NET-ASSETS> 68,950
<DIVIDEND-INCOME> 1,874,322
<INTEREST-INCOME> 2,898,781
<OTHER-INCOME> 0
<EXPENSES-NET> 1,607,756
<NET-INVESTMENT-INCOME> 3,165,347
<REALIZED-GAINS-CURRENT> 8,285,130
<APPREC-INCREASE-CURRENT> 3,932,094
<NET-CHANGE-FROM-OPS> 15,382,571
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,862
<DISTRIBUTIONS-OF-GAINS> 97,440
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 124,129
<NUMBER-OF-SHARES-REDEEMED> 3,533,425
<SHARES-REINVESTED> 29,678
<NET-CHANGE-IN-ASSETS> (16,762,978)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,607,756
<AVERAGE-NET-ASSETS> 2,987,253
<PER-SHARE-NAV-BEGIN> 11.98
<PER-SHARE-NII> 0.96
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> (0.96)
<PER-SHARE-DISTRIBUTIONS> (0.42)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.28
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> LIFEPATH 2020 FUND RETAIL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 146,243,012
<RECEIVABLES> 624,760
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 146,867,772
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 573,029
<TOTAL-LIABILITIES> 573,029
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,438,148
<SHARES-COMMON-STOCK> 11,263,827
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 504,941
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,116,111
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,235,542
<NET-ASSETS> 146,225,793
<DIVIDEND-INCOME> 1,874,322
<INTEREST-INCOME> 2,898,781
<OTHER-INCOME> 0
<EXPENSES-NET> 1,607,756
<NET-INVESTMENT-INCOME> 3,165,347
<REALIZED-GAINS-CURRENT> 8,285,130
<APPREC-INCREASE-CURRENT> 3,932,094
<NET-CHANGE-FROM-OPS> 15,382,571
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,234,978
<DISTRIBUTIONS-OF-GAINS> 4,457,911
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,270,394
<NUMBER-OF-SHARES-REDEEMED> 3,506,234
<SHARES-REINVESTED> 275,620
<NET-CHANGE-IN-ASSETS> (16,762,978)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,607,756
<AVERAGE-NET-ASSETS> 132,746,065
<PER-SHARE-NAV-BEGIN> 11.98
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 1.43
<PER-SHARE-DIVIDEND> (0.28)
<PER-SHARE-DISTRIBUTIONS> (0.42)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> LIFEPATH 2030 FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 100,672,759
<RECEIVABLES> 673,460
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 101,346,219
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 226,762
<TOTAL-LIABILITIES> 226,762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,761,749
<SHARES-COMMON-STOCK> 2,990
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 239,292
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,429,299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,689,117
<NET-ASSETS> 40,966
<DIVIDEND-INCOME> 1,534,532
<INTEREST-INCOME> 1,203,319
<OTHER-INCOME> 0
<EXPENSES-NET> 1,080,216
<NET-INVESTMENT-INCOME> 1,657,635
<REALIZED-GAINS-CURRENT> 4,461,859
<APPREC-INCREASE-CURRENT> 5,090,075
<NET-CHANGE-FROM-OPS> 11,209,569
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,645)
<DISTRIBUTIONS-OF-GAINS> (61,335)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 156,936
<NUMBER-OF-SHARES-REDEEMED> 2,227,326
<SHARES-REINVESTED> 15,512
<NET-CHANGE-IN-ASSETS> (7,338,770)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,080,216
<AVERAGE-NET-ASSETS> 1,988,663
<PER-SHARE-NAV-BEGIN> 12.37
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 1.66
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> (0.33)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.70
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> LIFEPATH 2030 FUND RETAIL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 100,672,759
<RECEIVABLES> 673,460
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 101,346,219
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 226,762
<TOTAL-LIABILITIES> 226,762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,761,749
<SHARES-COMMON-STOCK> 7,306,805
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 239,292
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,429,299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,689,117
<NET-ASSETS> 101,078,492
<DIVIDEND-INCOME> 1,534,532
<INTEREST-INCOME> 1,203,319
<OTHER-INCOME> 0
<EXPENSES-NET> 1,080,216
<NET-INVESTMENT-INCOME> 1,657,635
<REALIZED-GAINS-CURRENT> 4,461,859
<APPREC-INCREASE-CURRENT> 5,090,075
<NET-CHANGE-FROM-OPS> 11,209,569
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,710,475
<DISTRIBUTIONS-OF-GAINS> 2,265,932
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,403,224
<NUMBER-OF-SHARES-REDEEMED> (2,120,516)
<SHARES-REINVESTED> 296,195
<NET-CHANGE-IN-ASSETS> (7,338,770)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,080,216
<AVERAGE-NET-ASSETS> 89,334,804
<PER-SHARE-NAV-BEGIN> 12.34
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 1.83
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> (0.33)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.83
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> LIFEPATH 2040 FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 188,629,384
<RECEIVABLES> 1,326,211
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 189,955,595
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 375,670
<TOTAL-LIABILITIES> 375,670
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,066,846
<SHARES-COMMON-STOCK> 1,464
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 278,583
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,273,556
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 36,960,940
<NET-ASSETS> 20,405
<DIVIDEND-INCOME> 3,087,936
<INTEREST-INCOME> 890,450
<OTHER-INCOME> 0
<EXPENSES-NET> 1,958,488
<NET-INVESTMENT-INCOME> 2,019,898
<REALIZED-GAINS-CURRENT> 13,884,725
<APPREC-INCREASE-CURRENT> 11,621,464
<NET-CHANGE-FROM-OPS> 27,526,087
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 338
<DISTRIBUTIONS-OF-GAINS> 797,501
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 148,636
<NUMBER-OF-SHARES-REDEEMED> 2,763,338
<SHARES-REINVESTED> 19,679
<NET-CHANGE-IN-ASSETS> 13,456,187
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,058,488
<AVERAGE-NET-ASSETS> 2,304,540
<PER-SHARE-NAV-BEGIN> 12.86
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> 1.78
<PER-SHARE-DIVIDEND> (0.64)
<PER-SHARE-DISTRIBUTIONS> (0.69)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.94
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> LIFEPATH 2040 FUND RETAIL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 188,629,384
<RECEIVABLES> 1,326,211
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 189,955,595
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 375,670
<TOTAL-LIABILITIES> 375,670
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,066,846
<SHARES-COMMON-STOCK> 13,073,372
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 278,583
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,273,556
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 36,960,940
<NET-ASSETS> 189,559,520
<DIVIDEND-INCOME> 3,087,936
<INTEREST-INCOME> 890,450
<OTHER-INCOME> 0
<EXPENSES-NET> 1,958,488
<NET-INVESTMENT-INCOME> 2,019,898
<REALIZED-GAINS-CURRENT> 13,884,725
<APPREC-INCREASE-CURRENT> 11,621,464
<NET-CHANGE-FROM-OPS> 27,526,087
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,045,803
<DISTRIBUTIONS-OF-GAINS> 7,609,699
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,678,582
<NUMBER-OF-SHARES-REDEEMED> 3,916,082
<SHARES-REINVESTED> 196,508
<NET-CHANGE-IN-ASSETS> 13,456,187
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,958,488
<AVERAGE-NET-ASSETS> 162,878,113
<PER-SHARE-NAV-BEGIN> 12.84
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 2.35
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> (0.69)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.50
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EX-99.B1
STAGECOACH TRUST
(formerly, WellsFunds Trust)
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST, made this 3rd
day of January, 1994, hereby amends and restates in entirety the Agreement and
Declaration of Trust dated October 18, 1993, by the Trustees hereunder
(hereinafter with any additional and successor trustees referred to as the
"Trustees") and by the holders of shares of beneficial interest to be issued
hereunder as hereinafter provided.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares, whether or not certificated, in this Trust as hereinafter set
forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "Stagecoach Trust."
--------- ----
Section 2. Definitions. Whenever used herein, unless otherwise required
--------- -----------
by the context or specifically provided:
(a) The term "Commission" shall have the meaning provided in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(c) "Shareholder" means a record owner of Shares of the Trust;
(d) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time or, if more than one series or class of Shares is authorized by the
Trustees, the equal proportionate transferable units into which each series or
class of Shares shall be divided from time to time, and includes a fraction of a
Share as well as a whole Share;
-1-
<PAGE>
(e) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The term "Manager" is defined in Article IV, Section 5;
(g) The term "Person" shall mean an individual or any corporation,
partnership, joint venture, trust or other enterprise;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time;
(j) The term "series" or "series of shares" refers to the one or more
separate investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust representing
the beneficial interest of Shareholders in such respective portfolios; and
(k) The term "class" or "class of Shares" refers to the division of Shares
representing any series into two or more classes as provided in Article III,
Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an investment company;
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and with securities of every
nature, kind, character, type and form, including, without limitation of the
generality of the foregoing, all types of stocks, shares, futures contracts,
bonds, debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, evidences of ownership,
guarantees, warrants, options or evidences of indebtedness issued or created by
or guaranteed as to principal and interest by any state or local government or
any agency or instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory, district or
possession thereof, by any corporation organized under the laws of any state,
the United States or any territory or possession thereof or under the laws of
any foreign country, bank certificates of deposit, bank time deposits, bankers'
acceptances and commercial paper; to pay for the same in cash or by the issue of
stock, including treasury stock, bonds or notes of the Trust or otherwise; and
to exercise any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including,
-2-
<PAGE>
without limitation, the right to consent and otherwise act with respect thereto,
with power to designate one or more persons, firms, associations or corporations
to exercise any of said rights, powers and privileges in respect of any said
instruments;
(c) to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in, Shares including
Shares in fractional denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or other
assets of the appropriate series or class of Shares, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of The
Commonwealth of Massachusetts;
(e) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within and
without The Commonwealth of Massachusetts, in any and all States of the United
States of America, in the District of Columbia, and in any other parts of the
world; and
(f) to do all and everything necessary, suitable, convenient, or proper for
the conduct, promotion, and attainment of any of the businesses and purposes
herein specified or which at any time may be incidental thereto or may appear
conducive to or expedient for the accomplishment of any of such businesses and
purposes and which might be engaged in or carried on by a Trust organized under
the Massachusetts General Laws, and to have and exercise all of the powers
conferred by the laws of The Commonwealth of Massachusetts upon a Massachusetts
business trust.
The foregoing provisions of this Article II shall be construed both as
purposes and powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares of the Trust shall
--------- -----------------------------
be issued in one or more series as the Trustees may, without Shareholder
approval, authorize. Each series shall be separate from all other series in
respect of the assets allocated to that series and shall represent a separate
investment portfolio of the Trust. The beneficial interest in each series at
all times shall be divided into Shares, with or without par value as the
Trustees may from time to time determine, each of which shall, except as
provided in the following sentence, represent an equal proportionate interest in
the series with each other Share of the same series, none having priority or
preference over another. The Trustees may, without Shareholder approval, divide
Shares of any series into two or more classes, Shares of each such class having
such preferences and special or relative rights and privileges (including
conversion rights, if any) as the Trustees may determine. The number of Shares
authorized shall be unlimited, and the Shares so authorized may be represented
-3-
<PAGE>
in part by fractional shares. From time to time, the Trustees may divide or
combine the Shares of any series or class into a greater or lesser number
without thereby changing the proportionate beneficial interests in the series or
class.
Section 2. Ownership of Shares. The ownership of Shares will be recorded
--------- -------------------
in the books of the Trust or a transfer agent. The record books of the Trust or
any transfer agent, as the case may be, shall be conclusive as to who are the
holders of Shares of each series and class and as to the number of Shares of
each series and class held from time to time by each. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time.
Section 3. Issuance of Shares. The Trustees are authorized, from time to
--------- ------------------
time, to issue or authorize the issuance of Shares at not less than the par
value thereof, if any, and to fix the price or the minimum price or the
consideration (in cash and/or such other property, real or personal, tangible or
intangible, as from time to time they may determine) or minimum consideration
for such Shares. Anything herein to the contrary notwithstanding, the Trustees
may issue Shares pro rata to the Shareholders of a series at any time as a stock
dividend, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, and any stock dividend to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall belong irrevocably to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such series.
Shares may be issued in fractional denominations to the same extent as
whole Shares, and Shares in fractional denominations shall be Shares having
proportionately to the respective fractions represented thereby all the rights
of whole Shares, including, without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Trust or of a particular series of Shares.
Section 4. No Preemptive Rights; Derivative Suits. Shareholders shall
--------- --------------------------------------
have no preemptive or other rights to subscribe for any additional Shares or
other securities issued by the Trust. No action may be brought by a Shareholder
on behalf of the Trust or a series unless a prior demand regarding such matter
has been made on the Trustees and the Shareholders of the Trust or such series.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
--------- -----------------------------------------------------
shall be deemed to be personal property giving only the rights provided in this
instrument. Every
-4-
<PAGE>
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto. The death of a Shareholder during the continuance of the Trust shall not
operate to terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere against
the Trust or the Trustees, but only to rights of said descendent under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title in or
to the whole or any part of the Trust property or right to call for a partition
or division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind any
Shareholder or Trustee personally or to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder at any time personally may agree to pay by way of subscription for
any Shares or otherwise. Every note, bond, contract or other undertaking issued
by or on behalf of the Trust shall include a recitation limiting the obligation
represented thereby to the Trust and its assets or the assets of a particular
series (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either by the Trustees or
--------- --------
the Shareholders. The Trustees named herein shall serve until the first meeting
of the Shareholders or until the election and qualification of their successors.
Prior to the first meeting of Shareholders the initial Trustees hereunder may
elect additional Trustees to serve until such meeting and until their successors
are elected and qualified. The Trustees also at any time may elect Trustees to
fill vacancies in the number of Trustees. The number of Trustees shall be fixed
from time to time by the Trustees and, at or after the commencement of the
business of the Trust, shall be not less than three. Each Trustee, whether
named above or hereafter becoming a Trustee, shall serve as a Trustee during the
lifetime of this Trust, until such Trustee dies, resigns, retires, or is
removed, or, if sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and the election and qualification of his
successor. Subject to Section 16(a) of the 1940 Act, the Trustees may elect
their own successors and, pursuant to this Section, may appoint Trustees to fill
vacancies.
Section 2. Powers. The Trustees shall have all powers necessary or
--------- ------
desirable to carry out the purposes of the Trust, including, without limitation,
the powers referred to in Article II hereof. Without limiting the generality of
the foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that they do not reserve that right to
the Shareholders; they may fill vacancies in their number, including vacancies
resulting from increases in their own number, and may elect and remove such
officers and employ, appoint and terminate such employees or agents as they
consider appropriate; they may appoint from their own number and terminate any
one or more
-5-
<PAGE>
committees; they may employ one or more custodians of the assets of the Trust
and may authorize such custodians to employ subcustodians and to deposit all or
any part of such assets in a system or systems for the central handling of
securities, retain a transfer agent and a Shareholder servicing agent, or both,
provide for the distribution of Shares through a principal underwriter or
otherwise, set record dates, and in general delegate such authority as they
consider desirable (including, without limitation, the authority to purchase and
sell securities and to invest funds, to determine the net income of the Trust
for any period, the value of the total assets of the Trust and the net asset
value of each Share, and to execute such deeds, agreements or other instruments
either in the name of the Trust or the names of the Trustees or as their
attorney or attorneys or otherwise as the Trustees from time to time may deem
expedient) to any officer of the Trust, committee of the Trustees, any such
employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the Trustees shall have
full power and authority:
(a) To invest and reinvest cash and to hold cash uninvested;
(b) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not indicating any trust
whether in bearer, unregistered or other negotiable form or in the name of the
Trust or a custodian, subcustodian or other depository or a nominee or nominees
or otherwise;
(d) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(f) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited to,
claims for taxes;
(g) Subject to the provisions of Article III, Section 3, to allocate
assets, liabilities, income and expenses of the Trust to a particular series of
Shares or to apportion
-6-
<PAGE>
the same among two or more series, provided that any liabilities or expenses
incurred by a particular series of Shares shall be payable solely out of the
assets of that series; and to the extent necessary or appropriate to give effect
to the preferences and special or relative rights and privileges of any classes
of Shares, to allocate assets, liabilities, income and expenses of a series to a
particular class of Shares of that series or to apportion the same among two or
more classes of Shares of that series;
(h) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(i) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers or Managers, principal underwriters, or independent
contractors of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such office
or position, or by reason of any action alleged to have been taken or omitted by
any such person as Shareholder, Trustee, officer, employee, agent, investment
adviser or Manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability; and
(j) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
Further, without limiting the generality of the foregoing, the Trustees
shall have full power and authority to incur and pay out of the principal or
income of the Trust such expenses and liabilities as may be deemed by the
Trustees to be necessary or proper for the purposes of the Trust; provided,
--------
however, that all expenses and liabilities incurred by or arising in connection
- -------
with a particular series of Shares, as determined by the Trustees, shall be
payable solely out of the assets of that series.
Any determination made in good faith and, so far as accounting matters are
involved, in accordance with generally accepted accounting principles by or
pursuant to the authority granted by the Trustees, as to the amount of the
assets, debts, obligations or liabilities of the Trust or a particular series or
class of Shares; the amount of any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such reserves or charges; the use,
alteration or cancellation of any reserves or charges (whether or not any debt,
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged); the price or closing bid or asked price of
any investment owned or held by
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<PAGE>
the Trust or a particular series; the market value of any investment or fair
value of any other asset of the Trust or a particular series; the number of
Shares outstanding; the estimated expense to the Trust or a particular series in
connection with purchases of its Shares; the ability to liquidate investments in
an orderly fashion; and the extent to which it is practicable to deliver a
cross-section of the portfolio of the Trust or a particular series in payment
for any such Shares, or as to any other matters relating to the issue, sale,
purchase and/or other acquisition or disposition of investments or Shares of the
Trust or a particular series, shall be final and conclusive, and shall be
binding upon the Trust or such series and its Shareholders, past, present and
future, and Shares are issued and sold on the condition and understanding that
any and all such determinations shall be binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a majority of the
--------- --------
Trustees then in office shall constitute a quorum. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice.
When a quorum is present at any meeting, a majority of the Trustees present
may take any action, except when a larger vote is required by this Declaration
of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of the Trustees
or of any committee thereof may be taken without a meeting, if a written consent
to such action is signed by a majority of the Trustees or members of any such
committee then in office, as the case may be, and such written consent is filed
with the minutes of proceedings of the Trustees or any such committee.
The Trustees or any committee designated by the Trustees may participate in
a meeting of the Trustees or such committee by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other at the same time. Participation by such
means shall constitute presence in person at a meeting.
Notwithstanding anything to the contrary stated in this Section 3, unless
otherwise permitted under the 1940 Act, meetings of the Trustees to approve
advisory agreements or distribution arrangements shall be held in person.
Section 4. Ownership of Assets of the Trust. Title to all of the assets
--------- --------------------------------
of each series of Shares of the Trust at all times shall be considered as vested
in the Trustees.
Section 5. Investment Advice and Management Services. The Trustees shall
--------- -----------------------------------------
not in any way be bound or limited by any present or future law or custom in
regard to investments by trustees. The Trustees from time to time may enter
into a written contract or contracts with any person or persons (herein called
the "Manager"), including any firm, corporation, trust or association in which
any Trustee or Shareholder may be interested, to act as investment advisers
and/or managers of the Trust and to provide such investment
-8-
<PAGE>
advisers and/or managers of the Trust and to provide such investment advice
and/or management as the Trustees from time to time may consider necessary for
the proper management of the assets of the Trust, including, without limitation,
authority to determine from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of the Trust
shall be held uninvested and to make changes in the Trust's investments. Any
such contract shall be subject to the requirements of the 1940 Act with respect
to its continuance in effect, its termination and the method of authorization
and approval of such contract, or any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be associated
also may act as broker for the Trust in making purchases and sales of securities
for or to the Trust for its investment portfolio, and may charge and receive
from the Trust the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as broker for the
Trust shall be responsible only for the proper execution of transactions in
accordance with the instructions of the Trust and shall be subject to no further
liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a distributor for the
sale of Shares by separate contract or may be a person controlled by or
affiliated with any Trustee or any distributor or a person in which any Trustee
or any distributor is interested financially, subject only to applicable
provisions of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving compensation
for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The Trustees or the
--------- -----------------------------------
Shareholders (by vote of 66-2/3% of the outstanding Shares entitled to vote
thereon) may remove any time any Trustee with or without cause, and any Trustee
may resign at any time as Trustee, without penalty by written notice to the
Trust; provided that sixty days' advance written notice shall be given in the
event that there are only three or fewer Trustees at the time a notice of
resignation is submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have power to vote only
--------- -------------
(i) for the election of Trustees as provided in Article IV, Section 1, of this
Declaration of Trust; provided, however, that no meeting of Shareholders is
-------- -------
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) for the removal of Trustees as provided in Article VI,
Section 6, (iii) with respect to any Manager as provided in Article IV, Section
5, (iv) with respect to any amendment of this Declaration of Trust as provided
in Article IX, Section 8, (v) with respect to the termination of the Trust or a
series of Shares as provided in Article IX, Section 5, and (vi) with respect to
such additional matters relating to the Trust as may be required by law, by this
Declaration of
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Trust, or by the By-Laws of the Trust or any registration of the Trust with the
Commission or any state, or as the Trustees may consider desirable. Each whole
Share shall be entitled to one vote as to any matter on which it is entitled to
vote (except that in the election of Trustees said vote may be cast for as many
persons as there are Trustees to be elected), and each fractional Share shall be
entitled to a proportionate fractional vote. Notwithstanding any other provision
of this Declaration of Trust, on any matter submitted to a vote of Shareholders,
all Shares of the Trust then entitled to vote shall be voted in the aggregate as
a single class without regard to series or classes of Shares, except (i) when
required by the 1940 Act or when the Trustees shall have determined that the
matter affects one or more series or classes differently Shares shall be voted
by individual series or class and (ii) when the Trustees have determined that
the matter affects only the interests of one or more series or classes then only
Shareholders of such series or classes shall be entitled to vote thereon. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them, unless at or prior
to exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
Whenever no Shares of any series or class are issued and outstanding, the
Trustees may exercise with respect to such series or class all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or any By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings. Meetings of the Shareholders may be called by the
--------- --------
Trustees or such other person or persons as may be specified in the By-Laws and
shall be called by the Trustees upon the written request of Shareholders owning
at least 10% of the outstanding Shares entitled to vote. Shareholders shall be
entitled to at least ten days' prior notice of any meeting.
Section 3. Quorum and Required Vote. Thirty percent (30%) of the
--------- ------------------------
outstanding Shares shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that holders of any series or class
shall vote as a series or class, then thirty percent (30%) of the aggregate
number of Shares of that series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that series or class.
Any lesser number, however, shall be sufficient for adjournment and any
adjourned session or sessions may be held within 90 days after the date set for
the original meeting without the necessity of further notice. Except when a
larger vote is required by any provision of this Declaration of Trust or by the
By-Laws of the Trust and subject to any applicable requirements of law, a
majority of the Shares voted shall decide any question and a plurality shall
elect a Trustee, provided that where any provision of law or of this Declaration
of Trust permits or requires that the holders of any series or class shall vote
as a series or class, then a majority of the Shares of that series or class
voted on the matter (or a plurality with respect to the election of a Trustee)
shall decide that matter insofar as that series or class is concerned.
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<PAGE>
Section 4. Action by Written Consent. Any action required or permitted to
--------- -------------------------
be taken at any meeting may be taken without a meeting if a consent in writing,
setting forth such action, is signed by a majority of Shareholders entitled to
vote on the subject matter thereof (or such larger proportion thereof as shall
be required by any express provision of this Declaration of Trust) and such
consent is filed with the records of the Trust.
Section 5. Additional Provisions. The By-Laws may include further
--------- ---------------------
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall distribute periodically to
--------- -------------
the Shareholders of each series of Shares an amount approximately equal to the
net income of that series, determined by the Trustees or as they may authorize
and as herein provided. Distributions of income may be made in one or more
payments, which shall be in Shares, cash or otherwise, and on a date or dates
and as of a record date or dates determined by the Trustees. At any time and
from time to time in their discretion, the Trustees also may cause to be
distributed to the Shareholders of any one or more series as of a record date or
dates determined by the Trustees, in Shares, cash or otherwise, all or part of
any gains realized on the sale or disposition of the assets of the series or all
or part of any other principal of the Trust attributable to the series. Each
distribution pursuant to this Section 1 shall be made ratably according to the
number of Shares of the series held by the several Shareholders on the record
date for such distribution, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges of any classes
of Shares of that series, and any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them. No
distribution need be made on Shares purchased pursuant to orders received, or
for which payment is made, after such time or times as the Trustees determine.
Section 2. Determination of Net Income. In determining the net income of
--------- ---------------------------
each series or class of Shares for any period, there shall be deducted from
income for that period (a) such portion of all charges, taxes, expenses and
liabilities due or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier period and (b)
whatever reasonable reserves the Trustees shall consider advisable for possible
future charges, taxes, expenses and liabilities which the Trustees shall
consider properly chargeable and fairly applicable to income for that period or
any earlier period. The net income of each series or class for any period may
be adjusted for amounts included on account of net income in the net asset value
of Shares issued or redeemed or repurchased during that period. In determining
the net income of a series or class for a period ending on a date other than the
end of its fiscal year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under applicable
accounting principles, except in the exercise of the
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<PAGE>
discretionary powers of the Trustees. Any amount contributed to the Trust which
is received as income pursuant to a decree of any court of competent
jurisdiction shall be applied as required by the said decree.
Section 3. Redemptions. Any Shareholder shall be entitled to require the
--------- -----------
Trust to redeem and the Trust shall be obligated to redeem at the option of such
Shareholder all or any part of the Shares owned by said Shareholder, at the
redemption price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth.
(a) Certificates for Shares, if issued, shall be presented for redemption
in proper form for transfer to the Trust or the agent of the Trust appointed for
such purpose, and these shall be presented with a written request that the Trust
redeem all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net asset value per Share
when next determined by the Trust at such time or times as the Trustees shall
designate, following the time of presentation of certificates for Shares, if
issued, and an appropriate request for redemption, or such other time as the
Trustee may designate in accordance with any provision of the 1940 Act, or any
rule or regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934, as determined by the Trustees, less
any applicable charge or fee imposed from time to time as determined by the
Trustees.
(c) Net asset value of each series or class of Shares (for the purpose of
issuance of Shares as well as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of such series or class determined
as provided in paragraph (d) below less, to the extent determined by or
pursuant to the direction of the Trustees in accordance with generally
accepting accounting principles, all debts, obligations and liabilities of
such series or class (which debts, obligations and liabilities shall
include, without limitation of the generality of the foregoing, any and all
debts, obligations, liabilities, or claims, of any and every kind and
nature, fixed, accrued and otherwise, including the estimated accrued
expenses of management and supervision, administration and distribution and
any reserves or charges for any and all of the foregoing, whether for
taxes, expenses, or otherwise, and the price of Shares redeemed but not
paid for) but excluding the Trust's liability upon its Shares and its
surplus, by
(ii) the total number of Shares of such series or class outstanding.
The Trustees are empowered, in their absolute discretion, to establish
other methods for determining such net asset value whenever such other methods
are deemed by them to be necessary to enable the Trust to comply with applicable
law, or are deemed by them to be desirable, provided they are not inconsistent
with any provision of the 1940 Act.
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<PAGE>
(d) In determining for the purposes of this Declaration of Trust the total
value of the assets of each series or class of Shares at any time, investments
and any other assets of such series or class shall be valued in such manner as
may be determined from time to time by or pursuant to the order of the Trustees.
(e) Payment of the redemption price by the Trust may be made either in cash
or in securities or other assets at the time owned by the Trust or partly in
cash and partly in securities or other assets at the time owned by the Trust.
The value of any part of such payment to be made in securities or other assets
of the Trust shall be the value employed in determining the redemption price.
Payment of the redemption price shall be made on or before the seventh day
following the day on which the Shares are properly presented for redemption
hereunder, except that delivery of any securities included in any such payment
shall be made as promptly as any necessary transfers on the books of the issuers
whose securities are to be delivered may be made and, except as postponement of
the date of payment may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct from the
payment made for any Shares redeemed a liquidating charge not in excess of an
amount determined by the Trustees from time to time.
(f) The right of any holder of Shares redeemed by the Trust as provided in
this Article VI to receive dividends or distributions thereon and all other
rights of such Shareholder with respect to such Shares shall terminate at the
time as of which the redemption price of such Shares is determined, except the
right of such Shareholder to receive (i) the redemption price of such Shares
from the Trust in accordance with the provisions hereof, and (ii) any dividend
or distribution to which such Shareholder previously had become entitled as the
record holder of such Shares on the record date for such dividend or
distribution.
(g) Redemption of Shares by the Trust is conditional upon the Trust having
funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may repurchase its
Shares, out of funds legally available therefor, upon such terms and conditions
and for such consideration as the Trustees shall deem advisable, by agreement
with the owner at a price not exceeding the net asset value per Share as
determined by or pursuant to the order of the Trustees at such time or times as
the Trustees shall designate, less any applicable charge, if and as fixed by the
Trustees from time to time, and to take all other steps deemed necessary or
advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be cancelled or held by
the Trust for reissue, as the Trustees from time to time may determine.
(j) The obligations set fort in this Article VI may be suspended or
postponed, (1) for any period (i) during which the New York Stock Exchange is
closed other than for customary weekend and holiday closings, or (ii) during
which trading on the New York
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<PAGE>
Stock Exchange is restricted, (2) for any period during which an emergency
exists as a result of which (i) the disposal by the Trust of investments owned
by it is not reasonably practicable, or (ii) it is not reasonably practicable
for the trust fairly to determine the value of its net assets, or (3) for such
other periods as the Commission or any successor governmental authority by order
may permit.
Notwithstanding any other provision of this Section 3 of Article VI, if
certificates representing such Shares have been issued, the redemption or
repurchase price need not be paid by the Trust until such certificates are
presented in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose; however, the redemption or repurchase shall be
effective, in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The Trust shall have
--------- --------------------------------------
the right at its option and at any time to redeem Shares of any Shareholder at
the net asset value thereof as determined in accordance with Section 3 of
Article VI of this Declaration of Trust: (i) if at such time such Shareholder
owns few shares than, or Shares having an aggregate net asset value of less
than, an amount determined from time to time by the Trustees; or (ii) to the
extent that such Shareholder owns Shares of a particular series or class of
Shares equal to or in excess of a percentage of the outstanding Shares of that
series or class determined from time to time by the Trustees; or (iii) to the
extent that such Shareholder owns Shares of the Trust representing a percentage
equal to or in excess of such percentage of the aggregate number of outstanding
Shares of the Trust or the aggregate net asset value of the Trust determined
from time to time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and Repurchases. No
--------- -----------------------------------------------------
dividend or distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series) with respect to, nor any
redemption or repurchase of, the Shares of any series shall be effected by the
Trust other than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to reasonable
--------- ------------
compensation from the Trust and may fix the amount of their compensation.
Section 2. Limitation of Liability. The Trustees shall not be responsible
--------- -----------------------
or liable in any event for any neglect or wrongdoing of any officer, agent,
employee or Manager of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he 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.
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<PAGE>
Every note, bond, contract, instrument, certificate, share, or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust, shall be
deemed conclusively to have been executed or done only in their or his capacity
as Trustees or Trustee, and such Trustees or Trustee shall not be personally
liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees, Officers, Employees and Agents.
--------- -----------------------------------------------------------
Each person who is or was a Trustee, officer, employee or agent of the Trust or
who serves or has served at the Trust's request as a director, officer or
trustee of another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to indemnification out of
the assets of the Trust to the extent provided in, and subject to the provisions
of, the By-Laws, provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of this Article VIII
--------- -------------------
references to "the Trust" include any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents as well as the resulting
or surviving entity; so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee, director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving entity as he would have
with respect to such a constituent corporation if its separate existence had
continued.
Section 3. Shareholders. In case any Shareholder or former Shareholder
--------- ------------
shall be held to be personally liable solely by reason of his being or having
been a Shareholder and not because of is acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the particular series of Shares of which he is or was a
Shareholder to be held harmless from and indemnified against all losses and
expenses arising from such liability. Upon request, the Trust shall cause its
counsel to assume the defense of any claim which, if successful, would result in
an obligation of the Trust to indemnify the Shareholder as aforesaid.
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<PAGE>
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby expressly declared that
--------- -----------------------
a trust and not a partnership is created hereby. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally either the Trust's Trustees or officers or any Shareholders.
All persons extending credit to, contracting with or having any claim against
the Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees, nor any of
the Trust's officers, employees or agents, whether past, present or future,
shall be personally liable therefor. Nothing in this Declaration of Trust shall
protect any Trustee against any liability to which such Trustee otherwise would
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
--------- -------------------------------------------------------------
The exercise by the Trustees of their powers and discretion hereunder under the
circumstances then prevailing, shall be binding upon everyone interested. a
Trustee shall be liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and subject to the provisions of Section 1 of this Article IX shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
--------- ------------------------------------------------
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees pursuant hereto
or to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not Personally Liable; Notice.
--------- ----------------------------------------------------------
All persons extending credit to, contracting with or having any claim against
the Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Section 5. Termination of Trust. Unless terminated as provided herein,
--------- --------------------
the Trust shall continue without limitation of time. The Trust may be
terminated at any time by vote of Shareholders holding at least a majority of
the Shares of each series entitled to vote or by the Trustees by written notice
to the Shareholders. Any series of Shares may be terminated at any time by vote
of Shareholders holding at least a majority of the Shares of
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<PAGE>
such series entitled to vote or by the Trustee by written notice to the
Shareholders of such series.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated as may be determined by the Trustees, the
Trust shall reduce, in accordance with such procedures as the Trustees consider
appropriate, the remaining assets to distributable form in cash or shares or
other securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the series involved, ratably according to the number of Shares
of such series held by the several Shareholders of such series on the date of
termination, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, provided that any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
Section 6. Filing of Copies, References, Headings. The original or a copy
--------- --------------------------------------
of this instrument and of each amendment hereto and of each Declaration of Trust
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each such
amendment and supplemental Declaration of Trust shall be filed by the Trust with
the Secretary of State of The Commonwealth of Massachusetts and the Boston City
Clerk, as well as any other governmental office where such filing may from time
to time be required. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any such amendments or supplemental
Declarations of Trust have been made and as to matters in connection with the
Trust hereunder; and, with the same effect as if it were the original, may rely
on a copy certified by an officer of the Trust to be a copy of this instrument
or of any such amendment or supplemental Declaration of Trust. In this
instrument or in any such amendment or supplemental Declaration of Trust,
references to this instrument, and all expressions like "herein," "hereof," and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such amendment or supplemental Declaration of Trust. Headings are placed
herein for convenience of reference only and in case of any conflict, the text
of this instrument, rather than the headings, shall control. This instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 7. Applicable Law. The Trust set forth in this instrument is made
--------- --------------
in The Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
Section 8. Amendments. This Declaration of Trust maybe amended at any
--------- ----------
time by an instrument in writing signed by a majority of the then Trustees when
authorized so to do by a vote of Shareholders holding a majority of the Shares
outstanding and entitled to
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<PAGE>
vote, except that an amendment which shall affect the holders of one or more
series or class of Shares but not the holders of all outstanding series or
classes of Shares shall be authorized by vote of the Shareholders holding a
majority of the Shares entitled to vote of the series or classes affected and no
vote of Shareholders of a series or class not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF, each of the undersigned Trustees has hereunto set
his/her hand for himself/herself and his/her assigns as of the day and year
first above written.
/s/ Jack S. Euphrat
-----------------------
Jack S. Euphrat
/s/ R. Greg Feltus
-----------------------
R. Greg Feltus
/s/ Thomas S. Goho
-----------------------
Thomas S. Goho
/s/ Zoe Ann Hines
-----------------------
Zoe Ann Hines
/s/ W. Rodney Hughes
-----------------------
W. Rodney Hughes
/s/ Robert M. Joses
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Robert M. Joses
/s/ J. Tucker Morse
-----------------------
J. Tucker Morse
-18-
<PAGE>
EX-99.B2
BY-LAWS
OF
STAGECOACH TRUST
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to
----------------------------------
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the above-captioned Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
-----------------------------
be located in Little Rock, Arkansas, or in such other city and state as may be
determined from time to time by resolution of the Board of Trustees. Its
resident agent in Massachusetts shall be CT Corporation System, 2 Oliver Street,
Boston, Massachusetts, or such other person as the Trustees from time to time
may select.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
----------------
call or notice at such places and at such times as the Trustees from time to
time may determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
----------------
time and at any place designated in the call of the meeting when called by the
President or the Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant Secretary or by the
officer or the Trustees calling the meeting.
2.3 Notice of Special Meetings. It shall be sufficient notice to a Trustee
--------------------------
of a special meeting to send notice by mail at least forty-eight hours or by
telegram or confirmed telefacsimile at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor
a waiver of a notice need specify the purposes of the meeting.
2.4 Notice of Certain Actions by Consent. If in accordance with the
------------------------------------
provisions of the Declaration of Trust any action is taken by the Trustees by a
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not
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execute such written consent, provided that the effectiveness of such action
shall not be impaired by any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
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President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust also may
have such agents as the Trustees from time to time may in their discretion
appoint. Officers may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall be
--------
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3 Tenure. The President, Treasurer and Secretary shall hold office in each
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case until he or she sooner dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall retain authority at
the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each officer
------
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as commonly are incident to the
office occupied by him or her as if the Trust were organized as a Delaware
corporation or such other duties and powers as the Trustees may from time to
time designate.
3.5 President. Unless the Trustees otherwise provide, the President shall
---------
preside at all meetings of the shareholders and of the Trustees. Unless the
Trustees otherwise provide, the President shall be the chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief financial and accounting
---------
officer of the Trust, and, subject to the provisions of the Declaration of Trust
and to any arrangement made by the Trustees with a custodian, investment adviser
or manager, or transfer, shareholder servicing or similar agent, shall be in
charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
---------
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a temporary Secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
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<PAGE>
3.8 Resignations and Removals. Any Trustee or officer may resign at any time
-------------------------
by written instrument signed by him or her and delivered to the President or
Secretary or to a meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time. The Trustees
may remove any officer elected by them with or without cause. Except to the
extent expressly provided in a written agreement with the Trust, no Trustee or
officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Appointment. The Trustees may appoint from their number an executive
-----------
committee and other committees. Except as the Trustees otherwise may determine,
any such committee may make rules for conduct of its business.
4.2 Quorum; Voting. A majority of the members of any Committee of the
--------------
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the time and in the manner
required by the Declaration of Trust or any applicable law. Officers and
Committees shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
The fiscal year of the Trust shall be fixed, and shall be subject to change,
by the Board of Trustees.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die with the word
"Massachusetts," together with the name of the Trust and the year of its
organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and in its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
3
<PAGE>
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases may authorize the
execution thereof in some other manner, all deeds, leases, contracts, notes and
other obligations made by the Trustees shall be signed by the President, any
Vice President, or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Sale of Shares. Except as otherwise determined by the Trustees, the
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Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share as from time to
time determined in accordance with the Declaration of Trust and these By-Laws
and, in the case of fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such securities shall be
valued in accordance with the provisions for determining value of assets of the
Trust as stated in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 9.1.
9.2 Share Certificates. In lieu of issuing certificates for shares, the
------------------
Trustees or the transfer agent either may issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case, for all purposes hereunder, be deemed to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees at any time may authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him, in such form as shall be prescribed from time to
time by the Trustees. Such certificate shall be signed by the President or Vice
President and by the Treasurer or Assistant Treasurer. Such signatures may be
facsimile if the certificate is signed by a transfer agent, or by a registrar,
other than a Trustee, officer or employee of the Trust. In case any officer who
has signed or whose facsimile signature has been placed on such certificate
shall cease to be such officer before such certificate is issued, it may be
issued by the Trust with the same effect as if he or she were such officer at
the time of its issue.
9.3 Loss of Certificates. The Trust, or if any transfer agent is appointed
--------------------
for the Trust, the transfer agent with the approval of any two officers of the
Trust, is authorized to issue and countersign replacement certificates for the
shares of the Trust which have been lost, stolen or destroyed subject to the
deposit of a bond or other indemnity in such form and with such security, if
any, as the Trustees may require.
9.4 Discontinuance of Issuance of Certificates. The Trustees at any time may
------------------------------------------
discontinue the issuance of share certificates and by written notice to each
shareholder, may require the
4
<PAGE>
surrender of share certificates to the Trust for cancellation. Such surrender
and cancellation shall not affect the ownership of shares in the Trust.
ARTICLE 10
Indemnification
10.1 Trustees, Officers, etc. The Trust shall indemnify each of its
-----------------------
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of organization in which the Trust has any
interest as a shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil, or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in a decision on the merits
in any such action, suit or other proceeding not to have acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust and except that no Covered Person shall be indemnified
against any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees so incurred by
any such Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), shall be paid from time to
time by the Trust in advance of the final disposition of any such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid by the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article, provided
--------
that (a) such Covered Person shall provide security for his undertaking, (b) the
- ----
Trust shall be insured against losses arising by reason of such Covered Person's
failure to fulfill his undertaking, or (c) a majority of the Trustees who are
disinterested persons and who are not Interested Persons (as that term is
defined in the Investment Company Act of 1940) (provided that a majority of such
Trustees then in office act on the matter), or independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(but not a full trial-type inquiry), that there is reason to believe such
Covered Person ultimately will be entitled to indemnification.
10.2 Compromise Payment. As to any matter disposed of (whether by a
------------------
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, indemnification shall be provided if (a) approved as in the
best interest of the Trust, after notice that it involves such indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
5
<PAGE>
Interested Persons (provided that a majority of such Trustees then in office act
on the matter), upon a determination, based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office, or (b)
there has been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its shareholders
by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
10.3 Indemnification Not Exclusive. The right of indemnification hereby
-----------------------------
provided shall not be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article 10, the term "Covered
Person" shall include such person's heirs, executors and administrators, and a
"disinterested person" is a person against whom none of the actions, suits or
other proceedings in question or another action, suit, or other proceeding on
the same or similar grounds is then or has been pending. Nothing contained in
this article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of such person.
10.4 Limitation. Notwithstanding any provisions in the Declaration of Trust
----------
and these By-Laws pertaining to indemnification, all such provisions are limited
by the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is asserted by a
Trustee, officer or controlling person of the Trust in connection with the
registered securities of the Trust, the Trust will not make such
indemnification unless (i) the Trust has submitted, before a court or other
body, the question of whether the person to be indemnified was liable by
reason of wilful misfeasance, bad faith, gross negligence, or reckless
disregard of duties, and has obtained a final decision on the merits that
such person was not liable by reason of such conduct or (ii) in the absence
of such decision, the Trust shall have obtained a reasonable determination,
based upon a review of the facts, that such person was not liable by virtue
of such conduct, by (a) the vote of a majority of Trustees who are neither
interested persons as such term is defined in the Investment Company Act of
1940, nor parties to the proceeding or (b) an independent legal counsel in
a written opinion.
6
<PAGE>
The Trust will not advance attorneys' fees or other expenses
incurred by the person to be indemnified unless the Trust shall have (i)
received an undertaking by or on behalf of such person to repay the advance
unless it is ultimately determined that such person is entitled to
indemnification and one of the following conditions shall have occurred:
(x) such person shall provide security for his undertaking, (y) the Trust
shall be insured against losses arising by reason of any lawful advances or
(z) a majority of the disinterested, non-party Trustees of the Trust, or an
independent legal counsel in a written opinion, shall have determined that
based on a review of readily available facts there is reason to believe
that such person ultimately will be found entitled to indemnification.
ARTICLE 11
Shareholders
11.1 Meetings. A meeting of the shareholders shall be called by the
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Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to vote at
such meeting. If the meeting is a meeting of the shareholders of one or more
series or class of shares, but not a meeting of all shareholders of the Trust,
then only the shareholders of such one or more series or classes shall be
entitled to notice of and to vote at the meeting. If the Secretary, when so
ordered or requested, refuses or neglects for more than five days to call such
meeting, the Trustees, or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2 Access to Shareholder List. Shareholders of record may apply to the
--------------------------
Trustees for assistance in communicating with other shareholders for the purpose
of calling a meeting in order to vote upon the question of removal of a Trustee.
When ten or more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the aggregate shares
having a net asset value of at least $25,000 or at least 1% of the outstanding
shares, whichever is less, so apply, the Trustees shall within five business
days either:
(i) afford to such applicants access to a list of names and addresses
of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of shareholders
of record and the approximate cost of mailing material to them and, within a
reasonable time thereafter, mail, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be obligated to mail
materials which they believe to be misleading or in violation of applicable law.
11.3 Record Dates. For the purpose of determining the shareholders of any
------------
series or class who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any dividend or
of any other distribution, the Trustees from time to time may fix a time, which
shall be not more than 90 days before the date of any meeting of shareholders or
the date of payment of any dividend or of any other distribution, as the record
date for determining the shareholders of such series or class having the right
to notice of and to vote at
7
<PAGE>
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right notwithstanding any transfer of shares on the books
of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer books for all
or part of such period.
11.4 Place of Meetings. All meetings of the shareholders shall be held at
-----------------
the principal office of the Trust or at such other place within the United
States as shall be designated by the Trustees or the President of the Trust.
11.5 Notice of Meetings. A written notice of each meeting of shareholders,
------------------
stating the place, date and hour and the purposes of the meeting, shall be given
at least ten days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the Secretary or an Assistant Secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.
11.6 Ballots. No ballot shall be required for any election unless requested
-------
by a shareholder present or represented at the meeting and entitled to vote in
the election.
11.7 Proxies. Shareholders entitled to vote may vote either in person or by
-------
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in part, by a majority
of the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such a majority.
Dated: October 18, 1993
8
<PAGE>
EX-99.B9(d)
AGENCY AGREEMENT
----------------
This agreement is made and entered into as of this 1st day of February,
1997 (the "Agreement"), by and between Stagecoach Trust, a registered management
investment company incorporated as a Massachusetts Business Trust (the
"Company"), and Wells Fargo Bank, N.A., ("Agent"), for transfer agency and
dividend disbursing agency services as follows:
I. SERVICES.
A. Appointment of Agent. The Company hereby appoints Agent as its
---------------------
transfer and dividend disbursing agent for the Funds (each, a "Fund" and
collectively, the "Funds") listed in Appendix A, as such Appendix may be amended
from time to time, and Agent accepts such appointment.
B. Description of Services. As consideration for the compensation
------------------------
hereinafter described in Section I (C), Agent agrees to provide each Fund with
the facilities and services described and set forth on Appendix B attached
hereto and incorporated herein by reference.
C. Compensation. As consideration for the services described in
-------------
Section I (B), above, the Company shall pay to Agent, on behalf of each Fund,
fees at the rates specified on Appendix A.
II. EXPENSES. Agent shall be responsible for expenses incurred by it
pursuant to this Agreement and shall not be reimbursed for expenses incurred in
connection with the performance of services under this Agreement.
III. TERM. This Agreement shall become effective as of the date first above
written and shall continue until terminated pursuant to its provisions.
IV. INSURANCE. Agent agrees to procure and maintain such fidelity bond
coverage as may be required by the Investment Company Act of 1940 (the "1940
Act"), in the amounts and with such deductibles as are required by or permitted
under the 1940 Act, as it may be amended from time to time.
V. REGISTRATION AND COMPLIANCE.
A. Agent represents that it is registered as a transfer agent with the
Securities and Exchange Commission ("SEC") pursuant to Section 17A of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations promulgated thereunder, and Agent agrees to maintain said
registration current and comply with all of the requirements of the Exchange
Act, rules and regulations during the term of this Agreement.
B. The Company represents that it is a diversified management
investment company registered with the SEC in accordance with the 1940 Act and
the rules and regulations promulgated thereunder. The Company is authorized to
offer and sell its shares pursuant to the 1940 Act, the Securities Act of 1933,
as amended ("1933 Act"), and the rules and regulations promulgated thereunder.
The Company will furnish Agent with a list of those jurisdictions in the United
States and elsewhere in which it is authorized to offer and sell its shares to
the general public and will maintain the currency of such list by amendment.
The Company agrees promptly to advise Agent of any change in or limitation upon
its authority to carry on business as an investment company pursuant to the 1940
Act, the Exchange Act and the 1933 Act and the statutes, rules and regulations
of each and every jurisdiction to which it is subject.
<PAGE>
VI. DOCUMENTATION. The Company and Agent shall each supply to the other
upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles of incorporation, bylaws, codes of ethics, registration statements,
permits, financial reports, third party audits, certificates of authority,
computer tapes and related items.
VII. PROPRIETARY INFORMATION. It is agreed that all records and documents,
excepting computer data processing programs and any related documentation used
or prepared by, or on behalf of Agent for the performance of its services
hereunder, are the property of the Company and shall be open to audit or
inspection by the Company or its agents during the normal business hours of
Agent; shall be maintained in a manner designed to preserve the confidentiality
thereof and to comply with applicable federal and state laws and regulations;
and shall, in whole or any specified part, be surrendered to the Company or its
duly authorized agents upon receipt by Agent of reasonable notice of and request
therefor.
VIII. INDEMNITY. The Company, on behalf of the Funds, shall indemnify and
hold Agent harmless against any losses, claims, damages, liabilities or expenses
(including reasonable attorney's fees and expenses) resulting from any claim,
demand, action or suit brought by any person other than the Company (including a
shareholder naming the Company as a party) and not resulting from Agent's bad
faith, willful misfeasance, reckless disregard of its obligations and duties,
gross negligence or breach of this Agreement, and arising out of, or in
connection with:
A. Agent's performance hereunder;
B. Any error or omission in any record (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm or microfiche
copies) delivered, or caused to be delivered, by the Company to Agent in
connection with this Agreement;
C. Bad faith, willful misfeasance, reckless disregard of its
obligations and duties or negligence of the Company, or Agent's acting upon any
instructions reasonably believed by it to have been properly executed or
communicated by any person duly authorized by the Company;
D. Agent's acting in reliance upon advice given by counsel for Agent
or upon advice reasonably believed by it to have been given by counsel for the
Company; or
E. Agent's acting in reliance upon any instrument reasonably
believed by it to have been genuine and signed, countersigned or executed by the
proper person(s) in accordance with the currently effective certificate(s) of
authority delivered to Agent by the Company.
In the event that Agent requests the Company to indemnify or hold it
harmless hereunder, agent shall use its best efforts to inform the Company of
the relevant facts concerning the matter in question. Agent shall use
reasonable care to identify and promptly notify the Company concerning any
matter which presents, or appears likely to present, a claim for indemnification
against the Company or the Funds.
The Company shall have the election of defending Agent against any
claim which may be the subject of indemnification hereunder. In the event the
Company so elects, it will so notify Agent and thereupon the Company shall take
over defense of the claim, and (if so requested by the Company) Agent shall
incur no further legal or other expenses related thereto for which it would be
entitled to indemnity hereunder; provided, however, that nothing herein
contained shall prevent Agent from retaining, at its own expense, counsel to
defend any claim. Except with the Company's prior consent, Agent shall in no
event
2
<PAGE>
confess any claim or make any compromise in any matter in which the Company will
be asked to indemnify or hold harmless hereunder.
IX. LIABILITY
A. Damages. Agent shall not be liable to the Company, or any third
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party, for punitive, exemplary, indirect, special or consequential damages (even
if Agent has been advised of the possibility of such damages) arising from its
obligations and the services provided under this Agreement, including but not
limited to loss of profits, loss of use of the shareholder accounting system,
cost of capital and expenses of substitute facilities, programs or services.
B. Force Majeure. Anything in this Agreement to the contrary
-------------
notwithstanding, Agent shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts or
civil or military authority, national emergencies, work stoppage, fire, flood,
catastrophe, earthquake, acts of God, insurrection, war, riot, data processing
and communications downtime (where such downtime occurs for reasons other than
Agent's gross negligence or willful misconduct) or interruption of power supply.
X. AMENDMENT. This Agreement and the Appendices attached hereto and made
a part hereof may be amended at any time, with or without shareholder approval
(except as otherwise required by law), in writing signed by each of the parties
hereto. Any change in the Company's registration statements or other documents
of compliance or in the forms relating to any plan, program or service offered
by its current prospectus which would require a change in Agent's obligations
hereunder shall be subject to Agent's approval, which approval shall not be
unreasonably withheld.
XI. TERMINATION. This Agreement may be terminated by either party without
cause upon one hundred twenty (120) days' prior written notice to the other, and
at any time for cause in the event that such cause remains unremedied for more
than thirty (30) days after receipt by the other party of written specification
of such cause.
In the event the Company designates a successor to any of Agent's
obligations hereunder, Agent shall, at the expense and pursuant to the direction
of the Company, transfer promptly to such successor all relevant books, records
and other data of the Company in the possession or under the control of Agent.
XII. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall continue
in full force and effect.
XIII. APPLICABLE LAW. This Agreement shall be subject to and construed in
accordance with the laws of the State of California without giving effect to the
choice of law provisions thereof.
XIV. ENTIRE AGREEMENT. Except as otherwise provided herein, this Agreement
constitutes the entire and complete agreement of the parties hereto relating to
the subject matter hereof and supersedes and merges all prior contracts and
discussions between the parties.
XV. COUNTERPARTS. This Agreement may be executed in one or more
counterparts; all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
3
<PAGE>
STAGECOACH TRUST WELLS FARGO BANK, N.A.
By: /s/Richard H. Blank, Jr. By: /s/Elizabeth Gottfried
- -------------------------------- ----------------------------------
Name: Richard H. Blank, Jr. Name: Elizabeth Gottfried
- -------------------------------- ----------------------------------
Title: Chief Operating Officer Title: Vice President
- -------------------------------- ----------------------------------
By: /s/James Nolan
----------------------------------
Name: James Nolan
----------------------------------
Title: Vice President
----------------------------------
Approved: January 16, 1997
4
<PAGE>
APPENDIX A
----------
Name of Fund
- ------------
LifePath 2000
LifePath 2010
LifePath 2020
LifePath 2030
LifePath 2040
Fees will be payable by the above-referenced Funds on each indicated
Class of shares as listed below. The fees are expressed as a percentage of
average daily net assets of each Class.
Class Rate
- ----- ----
Class A 0.10%
Class B 0.10%
Institutional 0.10%
<PAGE>
APPENDIX B
----------
SCHEDULE OF SERVICES
A. Maintaining shareholder accounts, including processing of new accounts.
B. Posting address changes and other file maintenance for shareholder
accounts.
C. Posting all transactions to the shareholder file, including:
- Direct purchase
- Wire order purchases
- Direct redemptions
- Telephone redemption
- Wire order redemption
- Direct exchanges
- Dividend payments
- Dividend reinvestments
- Telephone exchanges
- Transfers
- Certificate issuances
- Certificate deposits.
D. Preparing daily reconciliations of shareholder processing to money
movement instructions.
E. Issuing all checks and stopping and replacing checks.
F. Mailing confirmations and checks.
G. Performing certain of the Funds' other mailings, including:
- Dividend and capital gain distributions
- 1099/year-end shareholder reporting
- Daily confirmations
- Furnish certified list of shareholders (hard copy of microfilm).
H. Maintaining and retrieving all required past history for shareholders and
providing research capabilities as follows:
- Daily monitoring of all processing activity to verify back-up
documentation
- Providing exception reports
- Microfilming
- Storing, retrieving and archiving records in accordance with Rules 31a-
1, 31a-2, and 31a-3 under the 1940 Act.
I. Reporting and remitting as necessary for state escheat requirements.
6
<PAGE>
J. Answering all service-related inquiries from shareholders and others,
including:
- General and Policy Inquiries (research and resolve problems)
- Fund yield inquiries
- Taking shareholder processing requests and account maintenance changes
as described above.
K. Responding to shareholder inquiries (research and resolve problems),
including:
- Initiate shareholder account reconciliation proceedings when
appropriate
- Notify shareholder of bounced investment checks
- Initiate proceedings regarding lost certificates
- Respond to customer complaints.
7
<PAGE>
EX-99.B10
[MORRISON & FOERSTER LLP LETTERHEAD]
June 30, 1997
Stagecoach Trust
111 Center Street
Little Rock, AR 72201
Re: Shares of Common Stock of Stagecoach Trust
------------------------------------------
Ladies/Gentlemen:
We refer to Post-Effective Amendment No. 7 and Amendment No. 9 to the
Registration Statement on Form N-1A (SEC File Nos. 33-64352 and 811-7780) (the
"Registration Statement") of Stagecoach Trust (the "Trust") relating to the
registration of an indefinite number of shares of common stock of the Trust
(collectively, the "Shares").
We have been requested by the Trust to furnish this opinion as Exhibit 10
to the Registration Statement.
We have examined documents relating to the organization of the Trust and
its series and the authorization and issuance of shares of its series. We have
also verified with the Trust's transfer agent the maximum number of shares
issued by the Trust during the fiscal year ended February 28,1997.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Trust has been duly and validly
authorized by all appropriate corporate action, and assuming delivery by sale or
in accord with the Trust's dividend reinvestment plan in accordance with the
description set forth in the Funds' current prospectuses, the Shares will be
validly issued, fully paid and nonassessable by the Company.
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
<PAGE>
Stagecoach Trust
June 30, 1997
Page Two
In addition, we hereby consent to the use of our name and to the reference
to our firm under the caption "Counsel" in the Statement of Additional
Information and the description of advice rendered by our firm under the heading
"Management of the Funds" in the Prospectuses which are included as part of this
Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
<PAGE>
EX-99.B11
Independent Auditors' Consent
The Board of Trustees and Shareholders
Stagecoach Trust:
We consent to incorporation by reference in the Stagecoach Trust Post-Effective
Amendment No. 7 to the Registration Statement Number 33-64352 on Form N-1A under
the Securities Act of 1933 and Amendment No. 9 to the Registration Statement
Number 811-7780 on Form N-1A under the Investment Company Act of 1940 of our
report dated April 11, 1997 on the financial statements and financial highlights
of the LifePath 2000 Fund, LifePath 2010 Fund, LifePath 2020 Fund, LifePath 2030
Fund and LifePath 2040 Fund (five of the series constituting Stagecoach Trust)
(the "Funds") as of February 28, 1997 and for the periods indicated therein,
which report has been incorporated by reference in the Statement of Additional
Information.
We also consent to incorporation by reference of our report dated April 11,
1997, on the financial statements and portfolios of investments of the LifePath
2000 Master Portfolio, LifePath 2010 Master Portfolio, LifePath 2020 Master
Portfolio, LifePath 2030 Master Portfolio and LifePath 2040 Master Portfolio
(five of the series constituting Master Investment Portfolio) as of February 28,
1997 and for the periods indicated therein, which report has been incorporated
by reference in the Statement of Additional Information.
We also consent to the reference to our firm under the headings "Financial
Highlights" and "Independent Auditors" in the prospectus and "Independent
Auditors" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
San Francisco, California
June 27, 1997
<PAGE>
EX-99.B15(a)
CLASS A SHARES
DISTRIBUTION PLAN
LifePath 2000, LifePath 2010, LifePath 2020,
LifePath 2030 and LifePath 2040 Funds
series of Stagecoach Trust
WHEREAS, Stagecoach Trust (the "Trust") is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, the Trust desires to establish a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act on behalf of the Class A Shares of the
LifePath 2000, LifePath 2010, LifePath 2020, LifePath 2030 and LifePath 2040
Funds (the "Funds"), and the Board of Trustees has determined that there is a
reasonable likelihood that the Plan will benefit the Funds and the holders of
its Class A Shares;
WHEREAS, the Plan becomes effective on the date upon which it is approved
by "vote of a majority of the outstanding voting securities" (as defined below)
of the shares of the Funds and a majority of the Trustees of the Trust,
including a majority of the Qualified Trustees (as defined below), pursuant to a
vote cast in person at a meeting (or meetings) called for the purpose of voting
on the approval of the Plan;
NOW, THEREFORE, the Funds hereby approve the establishment of the Plan in
accordance with Rule 12b-1 under the Act on the following terms and conditions:
Section 1. Pursuant to the Plan, each of the Funds may defray all or
part of the actual cost of preparing and printing prospectuses and other
promotional materials and of providing such prospectuses and other promotional
materials to prospective shareholders of each Fund and may compensate the
distributor or reimburse the distributor for compensation paid to selling agents
for distribution-related or sales support services and may pay for any other
activities primarily intended to result in the sale of Class A Shares of the
Funds. Total payments under the Plan may not exceed .25% of the average daily
net assets of the Class A Shares of each Fund on an annual basis.
Section 2. The Plan (and each related Agreement) will, unless earlier
terminated in accordance with its terms, remain in effect from year to year
after the first anniversary of its effectiveness if such continuance is
specifically approved at least annually by vote of a majority of both (a) the
Trustees of the Trust and (b) the Qualified Trustees, cast in person at a
meeting (or meetings) called for the purpose of voting on such approval.
Section 3. The Trust shall provide to the Trust's Board of Trustees and
the Trustees shall review, at least quarterly, a written report of the amounts
expended by the Trust under the Plan and each related Agreement and the purposes
for which such expenditures were made.
1
<PAGE>
Section 4. The Plan may be terminated at any time by vote of a majority
of the Qualified Trustees or by vote of a majority of the outstanding voting
securities of the Class A Shares of each Fund.
Section 5. All Agreements related to the Plan shall be in writing and
shall be approved by vote of a majority of both (a) the Trustees of the Trust
and (b) the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on such approval. Any Agreement related to the Plan shall
provide:
A. That such Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Qualified Trustees or by vote of a
majority of the outstanding voting securities of the Class A Shares of each
Fund, on not more than 60 days' written notice to any other party to the
Agreement; and
B. That such Agreement shall terminate automatically in the event of its
"assignment" (as defined below).
Section 6. The Plan may not be amended to increase materially the amount
that may be expended by each Fund pursuant to the Plan without the approval by a
vote of a majority of the outstanding voting securities of a Fund, and no
material amendment to the Plan shall be made unless approved by vote of a
majority of both (a) the Trustees of the Trust and (b) the Qualified Trustees,
cast in person at a meeting (or meetings) called for the purpose of voting on
such approval.
Section 7. While the Plan is in effect, the selection and nomination of
each Trustee who is not an "interested person" (as defined below) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons.
Section 8. The Trust shall preserve copies of the Plan, each related
Agreement and each report made pursuant to Section 6 hereof, for a period of not
less than six years from the date of the Plan, such Agreement or such report, as
the case may be, the first two years in an easily accessible place.
Section 9. As used in the Plan, (a) the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemption as may be granted by the Securities and
Exchange Commission and (b) the term "Qualified Trustees" shall mean the
Trustees of the Trust who are not interested persons of the Trust and have no
direct or indirect financial interest in the operation of the Plan or in any
Agreements related to the Plan.
Effective Date of Plan: February 1, 1995
2
<PAGE>
EXHIBIT 99.B19
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 16, 1996 /s/ Joseph N. Hankin
-------------------------- ------------------------------------
Joseph N. Hankin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ Jack S. Euphrat
-------------------------- --------------------------------
Jack S. Euphrat
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr. and Robert M. Kurucza, and each
of them, his true and lawful attorney-in-fact and agent (each, an "Attorney-in
Fact") with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, (i) to execute the
Registration Statement of each of Life & Annuity Trust, Master Investment Trust,
Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach Trust,
(each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ R. Greg Feltus
---------------------------- ----------------------------------
R. Greg Feltus
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ Thomas S. Goho
---------------------------- ----------------------------------
Thomas S. Goho
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ W. Rodney Hughes
---------------------------- ----------------------------------
W. Rodney Hughes
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ Robert M. Joses
---------------------------- ----------------------------------
Robert M. Joses
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of Life & Annuity Trust, Master Investment
Trust, Overland Express Funds, Inc., Stagecoach Funds, Inc. and Stagecoach
Trust, (each, a "Company") and any or all amendments (including post-effective
amendments) thereto and to file the same, with any and all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities commissions or authorities, and (ii) to
execute any and all federal or state regulatory filings, including all
applications with regulatory authorities, state charter or organizational
documents and any amendments or supplements thereto, to be executed by, on
behalf of, or for the benefit of, a Company. The undersigned hereby grants to
each Attorney-in-Fact full power and authority to do and perform each and every
act and thing contemplated above, as fully and to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
Attorney-in-Fact may lawfully do or cause to be done by virtue hereof.
Dated: October 24, 1996 /s/ J. Tucker Morse
---------------------------- ----------------------------------
J. Tucker Morse
