<PAGE>
As filed with the Securities and Exchange Commission
on November 30, 1998
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. 12 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 14 [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)
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
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 to the Registration Statement of Stagecoach Trust
is being filed to register the definitive form of prospectus and statement of
additional information for the new Class C shares of the Company's LifePath
Opportunity (formerly LifePath 2000), LifePath 2010, LifePath 2020, and LifePath
2030 Funds, and to update the Part C of the Registration Statement.
This Amendment does not affect the Registration Statement for any other class of
shares of these Funds, or any other Fund of the Company.
<PAGE>
LIFEPATH FUNDS
--------------
Retail Classes
--------------
Cross Reference Sheet
---------------------
Form N-1A Item Number
- ---------------------
Part A Prospectus Captions
- ------ -------------------
1 Cover Page
2 Summary of Fund Expenses
3 Financial Highlights
How to Read the Financial Highlights
4 General Investment Risks
Key Information
Organization and Management of the Funds
(Name of) Fund
5 Organization and Management of the Funds
Summary of Expenses
6 Additional Services and Other Information
7 Additional Services and Other Information
Exchanges
Your Account
8 Additional Services and Other Information
Exchanges
Your Account
9 Not Applicable
Part B Statement of Additional Information Captions
- ------ --------------------------------------------
10 Cover Page
11 Table of Contents
12 Historical Fund Information
13 Additional Permitted Investment Activities
Appendix
Investment Restrictions
Risk Factors
14 Management
15 Management
16 Fund Expenses
Independent Auditors
Management
17 Portfolio Transactions
18 Capital Stock
Other
19 Additional Purchase and Redemption Information
Determination of Net Asset Value
20 Federal Income Taxes
21 Management
22 Performance Calculations
23 Financial Information
<PAGE>
Part C Other Information
- ------ -----------------
24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE>
STAGECOACH FUNDS(R)
November 30, 1998
Stagecoach
LifePath Funds
Prospectus
LifePath Please read this Prospectus and keep it for future
Opportunity Fund reference. It is designed to provide you with
important information and to help you decide if a
LifePath 2010 Fund Funds' goals match your own.
LifePath 2020 Fund Fund shares are NOT deposits or other obligations
of, or issued, endorsed or guaranteed by, Wells
LifePath 2030 Fund Fargo Bank, N.A. ("Wells Fargo Bank"), Barclays
Global Investors, N.A. ("BGI"), or any of their
LifePath 2040 Fund affiliates. Fund shares are NOT insured or
guaranteed by the U.S. Government, the Federal
Class A, Class B and Deposit Insurance Corporation ("FDIC"), the Federal
Class C Reserve Board or any other governmental agency. AN
INVESTMENT IN A FUND INVOLVES CERTAIN RISKS,
Investment Advisor INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Barclays Global THESE SECURITIES HAVE NOT BEEN APPROVED OR
Fund Advisors DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE
COMMISSION ("SEC"), ANY STATE SECURITIES COMMISSION
Co-Administrators OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF
THESE AUTHORITIES PASSED UPON THE ACCURACY OR
Wells Fargo Bank ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
Stephens Inc. THE CONTRARY IS A CRIMINAL OFFENSE.
Distributor
Stephens Inc.
<PAGE>
About this Prospectus
- --------------------------------------------------------------------------------
What is a prospectus?
A prospectus provides you with the information you need in order to make an
informed investment decision. It describes how a fund operates and invests its
assets and also contains fee and expense information. You should keep this
prospectus for future reference.
What is different about this Prospectus?
We have rewritten our Prospectus in "plain English" and grouped some of the most
important Fund information together to make it easier to read and
understand.
How is the Fund information organized?
After important summary information and the expense fee table, each Fund's
investment objective and financial highlights are presented. The icons below
tell you where various types of information about a Fund can be found.
Important information you should look for:
- --------------------------------------------------------------------------------
Investment Objective and Investment Policies
[LOGO OF What is the Fund trying to achieve? How do we intend to invest
ARROW] your money? What makes a Fund different from the other Funds
offered in this Prospectus? Look for the arrow icon to find out.
- --------------------------------------------------------------------------------
[LOGO OF Permitted Investments
PERCENTAGE
SIGN] A summary of a Fund's key permitted investments and practices.
- --------------------------------------------------------------------------------
[LOGO OF Important Risk Factors
EXCLAMATION
POINT] What are key risk factors for the Fund? This will include the
factors described in "General Investment Risks" together with
any special risk factors for the Fund.
- --------------------------------------------------------------------------------
[LOGO OF Additional Fund Facts
ADDITION
SIGN] Provides additional information about the Fund.
- --------------------------------------------------------------------------------
Why is italicized print used throughout the Prospectus?
Words appearing in italicized print and highlighted in color are defined in the
Glossary.
What else do I need to understand about these Funds?
Each Fund has a "Statement of Additional Information" that supplements the
disclosures made in this Prospectus. You may also want to review the most recent
Annual or Semi-Annual Report. You can order copies of these documents without
charge by calling 1-800-222-8222. The Statement of Additional Information and
other information for the Funds is also available on the SEC's web site
(http://www.sec.gov).
<PAGE>
Table of Contents
Key Information 4
Summary of Expenses 6
- --------------------------------------------------------------------------------
The Funds LifePath Opportunity Fund 10
This section contains LifePath 2010 Fund 10
important information
about the individual LifePath 2020 Fund 10
Funds.
LifePath 2030 Fund 10
LifePath 2040 Fund 10
General Investment Risks 20
- --------------------------------------------------------------------------------
Your Account A Choice of Share Classes 25
Turn to this section for Reduced Sales Charges 28
information on how to
open and maintain Your Account 31
your account, including
how to buy, sell and How to Buy Shares 33
exchange Fund shares.
Selling Shares 34
Exchanges 36
Additional Services and
Other Information 37
- --------------------------------------------------------------------------------
Reference Organization and
Management of the Funds 42
Look here for details
on the organization How to Read the Financial Highlights 45
of the Funds and term
definitions. Glossary 47
<PAGE>
Key Information
- --------------------------------------------------------------------------------
Summary of the Stagecoach LifePath Funds
The Funds described in this Prospectus pursue a strategy of allocating and
reallocating investments among various asset classes to capture returns and
reduce risk consistent with a stated investment horizon. Each Fund has a
different investment objective intended to meet different investment needs. You
should consider each Fund's objective, investment practices, permitted
investments and risks carefully before investing in a Fund. The investment
objective of each Fund is fundamental and may not be changed without the
approval of a majority of shareholders.
Should you consider investing in these Funds? Yes, if:
. you are investing with a general time horizon in mind or if you wish to use a
time horizon as a measure of the investment risk you are willing
to accept;
. you are looking for the diversification an asset allocation strategy
provides; and
. you are willing to accept the risks of investing, including the risk that
share prices may rise and fall.
You should not invest in these Funds if:
. you are looking for FDIC insurance coverage or guaranteed rates of return;
. you are unwilling to accept the risk that you may lose money on your
investment; or
. you are looking for an investment limited to a single asset class.
Who are "We"?
In this Prospectus, "We" generally means the Stagecoach fund family,
consisting of the funds offered by Stagecoach Trust and Stagecoach Funds, Inc.
"We" sometimes refers to Barclays Global Fund Advisors ("BGFA") in their role as
the Investment Advisor or other companies hired by the Funds to
perform services. The section on "Organization and Management of the Funds"
further explains how the Funds are organized.
Who are "You"?
In this Prospectus, "You" means the potential investor or the shareholder.
4 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
What are the "Funds"?
In this Prospectus, the "Funds" refers to the Stagecoach Funds listed on the
cover of this Prospectus. The "Funds" also may refer to other mutual funds
offered by Stagecoach Funds, Inc.
What is a "Master/Feeder Fund Arrangement" and why is it used?
The Funds in this prospectus are feeder funds in a master/feeder fund
arrangement. In a master/feeder fund arrangement, a "feeder" fund invests all of
its assets in a "master" fund that has an identical investment objective and
policies as the feeder fund. Feeder funds investing in the same master fund can
reduce their expenses through sharing the costs of managing a large pool of
assets. References to the activities of the LifePath Funds are understood to be
references to the master fund (also described as the "Master Portfolio") as
applicable. See "Additional Services and Information" on page 37 for additional
details.
Key Terms
An "asset class" is a broad category of investments such as "bonds" or
"equities". "Allocation" refers to the distribution of portfolio assets among
two or more asset classes. The LifePath Funds offered in this Prospectus are
managed using a computer model that recommends the allocation of assets
according to a Fund's investment objective and risk tolerance.
Dividends
We pay dividends, if any, quarterly, and distribute capital gains, if any, at
least annually.
Stagecoach LifePath Funds Prospectus 5
<PAGE>
LifePath Funds Summary of Expenses
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==========================================================================================================
SHAREHOLDER TRANSACTION EXPENSES
==========================================================================================================
These tables are intended to help you understand the various costs and expenses you will pay as a
shareholder in a Fund. These tables do not reflect any charges that may be imposed by Wells Fargo Bank
or other institutions in connection with an account through which you hold Fund shares. See
"Organization and Management of the Funds" for more details.
- ----------------------------------------------------------------------------------------------------------
LifePath Opportunity LifePath 2010 LifePath 2020
-----------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum sales charge on a
purchase (as a
percentage of offering
price) 4.50% None None 4.50% None None 4.50% None None
- ----------------------------------------------------------------------------------------------------------
Maximum sales charge on
reinvested dividends None None None None None None None None None
- ----------------------------------------------------------------------------------------------------------
Maximum sales charge on:
Redemption during first
year None 5.00% 1.00% None 5.00% 1.00% None 5.00% 1.00%
Redemption after first
year None 4.00% None None 4.00% None None 4.00% None
- ----------------------------------------------------------------------------------------------------------
Exchange fees None None None None None None None None None
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
==========================================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
==========================================================================================================
Expenses shown reflect contract amounts and amounts payable by each Fund or Master Portfolio. No
expenses are waived for the Funds. The expenses shown under "Other Expenses" and "Total Fund Operating
Expenses" have been estimated or restated to reflect current fees. Long-term shareholders may pay more
than the equivalent of the maximum front-end sales charge allowed by the National Association of
Securities Dealers, Inc.
- ----------------------------------------------------------------------------------------------------------
LifePath Opportunity LifePath 2010 LifePath 2020
-----------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ----------------------------------------------------------------------------------------------------------
Rule 12b-1 fee 0.25% 0.75% 0.75% 0.25% 0.75% 0.75% 0.25% 0.75% 0.75%
- ----------------------------------------------------------------------------------------------------------
Management fee/1/ 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55%
- ----------------------------------------------------------------------------------------------------------
Other expenses 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
- ----------------------------------------------------------------------------------------------------------
Total Fund Operating
Expenses 1.30% 1.80% 1.80% 1.30% 1.80% 1.80% 1.30% 1.80% 1.80%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Reflects the fees paid by each Fund's respective Master Portfolio.
6 Stagecoach LifePath Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=================================================================================
SHAREHOLDER TRANSACTION EXPENSES
=================================================================================
These tables are intended to help you understand the various costs and
expenses you will pay as a shareholder in a Fund. These tables do not reflect
any charges that may be imposed by Wells Fargo Bank or other institutions in
connection with an account through which you hold Fund shares. See
"Organization and Management of the Funds" for more details.
- ---------------------------------------------------------------------------------
LifePath 2030 Life Path 2040
----------------------------------------------------
Class A Class B Class C Class A Class B Class C
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maximum sales charge on a
purchase (as a
percentage of offering
price) 4.50% None None 4.50% None None
- ---------------------------------------------------------------------------------
Maximum sales charge on
reinvested dividends None None None None None None
- ---------------------------------------------------------------------------------
Maximum sales charge on:
Redemption during first
year None 5.00% 1.00% None 5.00% 1.00%
Redemption after first
year None 4.00% None None 4.00% None
- ---------------------------------------------------------------------------------
Exchange fees None None None None None None
- ---------------------------------------------------------------------------------
<CAPTION>
=================================================================================
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
=================================================================================
Expenses shown reflect contract amounts and amounts payable by each Fund or
Master Portfolio. No expenses are waived for the Funds. The expenses shown
under "Other Expenses" and "Total Fund Operating Expenses" have been estimated
or restated to reflect current fees. Long-term shareholders may pay more than
the equivalent of the maximum front-end sales charge allowed by the National
Association of Securities Dealers, Inc.
- ---------------------------------------------------------------------------------
LifePath 2030 Life Path 2040
----------------------------------------------------
Class A Class B Class C Class A Class B Class C
- ---------------------------------------------------------------------------------
Rule 12b-1 fee 0.25% 0.75% 0.75% 0.25% 0.75% 0.75%
- ---------------------------------------------------------------------------------
Management fee/1/ 0.55% 0.55% 0.55% 0.55% 0.55% 0.55%
- ---------------------------------------------------------------------------------
Other expenses 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
- ---------------------------------------------------------------------------------
Total Fund Operating
Expenses 1.30% 1.80% 1.80% 1.30% 1.80% 1.80%
- ---------------------------------------------------------------------------------
</TABLE>
/1/ Reflects the fees paid by each Fund's respective Master Portfolio.
Stagecoach LifePath Funds Prospectus 7
<PAGE>
LifePath Funds Summary of Expenses (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
======================================================================================================
EXAMPLE OF EXPENSES--THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL
EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
======================================================================================================
You would pay the following expenses on a $1,000 investment assuming a 5% annual return and that you
redeem your shares at the end of each period.
- ------------------------------------------------------------------------------------------------------
LifePath Opportunity LifePath 2010 LifePath 2020
----------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 58 $ 68 $ 28 $ 58 $ 68 $ 28 $ 58 $ 68 $ 28
- ------------------------------------------------------------------------------------------------------
3 years $ 84 $ 87 $ 57 $ 84 $ 87 $ 57 $ 84 $ 87 $ 57
- ------------------------------------------------------------------------------------------------------
5 years $113 $117 $ 97 $113 $117 $ 97 $113 $117 $ 97
- ------------------------------------------------------------------------------------------------------
10 years $195 $186 $212 $195 $186 $212 $195 $186 $212
- ------------------------------------------------------------------------------------------------------
<CAPTION>
======================================================================================================
EXAMPLE OF EXPENSES--THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL
EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
======================================================================================================
You would pay the following expenses on a $1,000 investment assuming a 5% annual return and that
you do not redeem your shares at the end of each period.
- ------------------------------------------------------------------------------------------------------
LifePath Opportunity LifePath 2010 LifePath 2020
----------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ------------------------------------------------------------------------------------------------------
1 year $ 58 $ 18 $ 18 $ 58 $ 18 $ 18 $ 58 $ 18 $ 18
- ------------------------------------------------------------------------------------------------------
3 years $ 84 $ 57 $ 57 $ 84 $ 57 $ 57 $ 84 $ 57 $ 57
- ------------------------------------------------------------------------------------------------------
5 years $113 $ 97 $ 97 $113 $ 97 $ 97 $113 $ 97 $ 97
- ------------------------------------------------------------------------------------------------------
10 years $195 $186 $212 $195 $186 $212 $195 $186 $212
- ------------------------------------------------------------------------------------------------------
</TABLE>
8 Stagecoach LifePath Funds Prospectus
<PAGE>
LifePath Funds Summary of Expenses (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================
EXAMPLE OF EXPENSES--THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
===================================================================================
You would pay the following expenses on a $1,000 investment assuming a 5% annual
return and that you redeem your shares at the end of each period.
- -----------------------------------------------------------------------------------
LifePath 2030 LifePath 2040
---------------------------------------------------------
Class A Class B Class C Class A Class B Class C
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year $ 58 $ 68 $ 28 $ 58 $ 68 $ 28
- -----------------------------------------------------------------------------------
3 years $ 84 $ 87 $ 57 $ 84 $ 87 $ 57
- -----------------------------------------------------------------------------------
5 years $113 $117 $ 97 $113 $117 $ 97
- -----------------------------------------------------------------------------------
10 years $195 $186 $212 $195 $186 $212
- -----------------------------------------------------------------------------------
<CAPTION>
===================================================================================
EXAMPLE OF EXPENSE--THIS EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
===================================================================================
You would pay the following expenses on a $1,000 investment assuming a 5% annual
return and that you do not redeem your shares at the end of each period.
- -----------------------------------------------------------------------------------
LifePath 2030 LifePath 2040
---------------------------------------------------------
Class A Class B Class C Class A Class B Class C
- -----------------------------------------------------------------------------------
1 year $ 58 $ 18 $ 18 $ 58 $ 18 $ 18
- -----------------------------------------------------------------------------------
3 years $ 84 $ 57 $ 57 $ 84 $ 57 $ 57
- -----------------------------------------------------------------------------------
5 years $113 $ 97 $ 97 $113 $ 97 $ 97
- -----------------------------------------------------------------------------------
10 years $195 $186 $212 $195 $186 $212
- -----------------------------------------------------------------------------------
</TABLE>
Stagecoach LifePath Funds Prospectus 9
<PAGE>
LifePath Funds
- --------------------------------------------------------------------------------
Investment Advisor: Barclays Global Fund Advisors
- --------------------------------------------------------------------------------
[LOGO OF Investment Objectives
ARROW]
Each LifePath Fund seeks 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 their
investment time horizon. Specifically:
. LifePath Opportunity Fund is managed for investors who have
retired or who are planning to retire (or begin to withdraw
substantial portions of their investment) approximately in
the year 2000.
The Fund also may be appropriate for investors with a shorter
time horizon. The Fund does not terminate in the Year 2000,
but will continue with the lowest risk profile of all the
LifePath Funds. It is expected that when the LifePath 2010
Fund's target date arrives, the LifePath 2010 Fund will be
combined with the LifePath Opportunity Fund under the same
investment strategy. The LifePath Opportunity Fund will
continue to follow an asset allocation strategy that will
invest approximately 20% equity securities, with the
remainder in debt securities and cash.
. 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.
10 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Investment Policies
The LifePath Funds were the first Funds of their kind to offer a
flexible investment strategy designed to change over specific
time horizons. Typically, long-term investment goals are pursued
with a more aggressive mix of equities and fixed-income
securities than short-term goals. The allocation of each Fund
gradually grows more conservative as the year in the Fund's
title approaches. You are encouraged to choose the LifePath Fund
whose title year most closely matches the year during which you
expect to begin regularly redeeming shares. Keep in mind,
however, that the year in each Fund's title also serves as a
guide to the relative aggressiveness of each Fund, where the
LifePath 2040 Fund has the most aggressive asset allocation and
the LifePath Opportunity Fund has the least aggressive asset
allocation. If you have a low risk tolerance, you may not wish
to invest in the LifePath 2040 Fund, for example, even if you do
not expect to retire for another forty years. Conversely, you
may feel comfortable choosing a more aggressive LifePath Fund
for a near-term investment goal.
We allocate and reallocate assets among a wide range of U.S. and
international common stocks, fixed-income securities and money
market instruments according to the recommended mix suitable for
each Fund's risk level. Under normal conditions, the LifePath
Opportunity Fund will typically invest 80% of its assets in
fixed-income classes and up to 20% in equities as it seeks
stable income production and reduced volatility. The more
aggressive Funds may invest in up to 100% stocks, but as their
title year approaches, their allocation will increasingly
resemble the current allocation of the LifePath Opportunity
Fund.
The LifePath Opportunity Fund will not terminate when it reaches
the year 2000. Instead, the Fund will enter its "post target"
strategy during which it will seek to maximize total return
consistent with assuming the lowest risk of any LifePath series.
The Fund will continue to follow an asset allocation strategy
among three broad investment classes: equity and debt securities
of domestic and foreign issuers and cash in the form of money
market instruments. However, unlike the remaining LifePath Funds
with target dates, during its post target strategy the LifePath
Opportunity Fund will no longer reduce its investment risk
through time. Instead, the Fund is expected to have a long-term
average mix of approximately 20%
Stagecoach LifePath Funds Prospectus 11
<PAGE>
LifePath Funds
- --------------------------------------------------------------------------------
equity securities, with the remainder in debt securities and
cash. In the same manner as all LifePath Funds, the LifePath
Opportunity Fund will continue to employ a tactical asset
allocation component, which will alter the investment mix to
account for changing expected risks and opportunities. When
other LifePath Funds reach their target date, it is expected
that shareholders will be asked to approve combining such Funds
with the LifePath Opportunity Fund.
- --------------------------------------------------------------------------------
[LOGO OF Permitted Investments
PERCENTAGE
SIGN] We do not select individual securities based on traditional
investment analysis. Instead, we allocate investments across as
many as 17 asset classes, as represented by the indexes listed
below and money market instruments.
We use a statistical method know as "sampling" in order to try
to recreate the total return of the following stock indexes as
closely as possible:
. The S&P/BARRA Value Stock Index, which consists primarily of
large-capitalization U.S. stocks with lower than average
price-to-book ratios;
. The S&P/BARRA Growth Stock Index, which consists primarily of
large-capitalization U.S. stocks with higher than average
price-to-book ratios;
. The Intermediate Capitalization Value Index, which consists
primarily of medium-capitalization U.S. stocks with lower
than average price-to-book ratios;
. The Intermediate Capitalization Growth Index, which consists
primarily of medium-capitalization U.S. stocks with higher
than average price-to-book ratios;
. The Intermediate Capitalization Utility Stock Index, which
consists primarily of medium-capitalization U.S. utility
stocks;
. The Micro Capitalization Market Index, which consists
primarily of small-capitalization U.S. stocks;
. The Small Capitalization Value Stock Index, which consists
primarily of small-capitalization U.S. stocks with lower than
average price-to-book ratios;
. The Small Capitalization Growth Stock Index, which consists
primarily of small-capitalization U.S. stocks with higher
than average price-to-book ratios;
12 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
. The Morgan Stanley Capital International Japan Index,
consisting of primarily large-capitalization Japanese stocks;
and
. The Morgan Stanley Capital International Europe, Australia,
Far East exJapan Index, consisting primarily of non-Japanese
foreign stocks.
We seek exposure to the U.S. fixed-income markets by investing
in securities representative of the following indexes:
. The Lehman Brothers Long-Term Government Bond Index, which
consists of all U.S. Government bonds with maturities of at
least ten years;
. The Lehman Brothers Intermediate-Term Government Bond Index,
which consists of all U.S. Government bonds with maturities
of less than ten years but more than one year;
. The Lehman Brothers Long-Term Corporate Bond Index, which
consists of all investment-grade U.S. corporate bonds with
maturities of at least ten years;
. The Lehman Brothers Intermediate-Term Corporate Bond Index,
which consists of all investment-grade U.S. corporate bonds
with maturities of less than ten years but more than one
year; and
. The Lehman Brothers Mortgage-Backed Securities Index, which
consists of all fixed-coupon mortgage pass throughs issued by
or backed by the U.S. Government or its agencies.
We seek foreign debt market exposure through investment in
securities representative of the Solomon Brothers Non-U.S. World
Government Bond Index, which consists of a range of foreign
government bonds with maturities of greater than one year.
We also invest in high-quality money market instruments,
including U.S. Government obligations, obligations of foreign
and domestic banks, short-term corporate debt instruments and
repurchase agreements.
We may also invest in stocks of U.S. and foreign issuers not
included in the indexes listed above. Foreign equity exposure
may be through stocks purchased on foreign exchanges or through
American Depository Receipts or similar instruments sold on U.S.
exchanges.
Stagecoach LifePath Funds Prospectus 13
<PAGE>
LifePath Funds
- --------------------------------------------------------------------------------
In addition, under normal market conditions, we may invest:
. in call and put options on stock indexes, stock index
futures, options on stock index futures, interest rate and
interest rate futures contracts as a substitute for a
comparable market position in stocks; and
. in interest rate and index swaps.
We are not required to keep a minimum investment in any of the
asset classes, nor are we prohibited from investing
substantially all of our assets in a single class. The
allocation may shift at any time. As part of our investment
strategy, we may invest varying portions of our assets in money
market instruments. In addition, we may temporarily hold assets
in cash or in money market instruments, including U.S.
Government obligations, repurchase agreements and other short-
term investments, to maintain liquidity or when we believe it is
in the best interest of shareholders to do so. Each Fund is a
diversified portfolio.
- --------------------------------------------------------------------------------
[LOGO OF Important Risk Factors
EXCLAMATION
POINT] You should consider both the General Investment Risks beginning
on page 20 and the specific risks listed below. They are all
important to your investment choice.
We may incur a higher than average portfolio turnover ratio due
to allocation shifts recommended by the investment model.
Foreign obligations may entail additional risks. The value of
investments in options on stock indexes is affected by price
level movements for a particular index, rather than price
movements for an individual issue.
- --------------------------------------------------------------------------------
[LOGO OF Additional Fund Facts
ADDITION
SIGN] The allocations across asset classes are recommended by a
proprietary investment model that analyzes extensive financial
and economic data, including relative risk and return
statistics. We have broad latitude in allocating the Funds'
investments and in refining the model. No person is primarily
responsible for recommending either the asset mix or the mix of
securities within a class. We may invest in fewer asset classes
than listed above, particularly for any Fund with less than $150
million in total assets.
For information on Fund fees and expenses, see "Summary of
Expenses" on page 6.
14 Stagecoach LifePath Funds Prospectus
<PAGE>
This page intentionally left blank
- --------------------------------------------------------------------------------
Stagecoach LifePath Funds Prospectus 15
<PAGE>
LifePath Funds Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
The following information has been derived from the Financial Highlights of the Class A and B shares in the Funds' financial
statements for the fiscal year ended February 28, 1998. 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 3, 1998 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 of the LifePath Opportunity Fund or the Class C shares of the
Funds because those shares were not offered during the periods presented.
===============================================================================================================================
FOR A SHARE OUTSTANDING
===============================================================================================================================
LIFEPATH OPPORTUNITY FUND LIFEPATH 2010 FUND
CLASS A SHARES--COMMENCED ON CLASS A SHARES--COMMENCED ON
MARCH 1, 1994 MARCH 1, 1994
---------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28, Feb. 28, Feb. 29, Feb. 28,
1998 1997 1996 1995 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.71 $ 10.64 $ 9.92 $ 10.00 $ 12.20 $ 11.42 $ 9.99 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.43 0.42 0.40 0.34 0.36 0.34 0.32 0.34
Net realized and
unrealized gain (loss)
on investments 0.81 0.28 0.86 (0.14) 1.82 0.95 1.58 (0.02)
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations (loss) 1.24 0.70 1.26 0.20 2.18 1.29 1.90 0.32
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions:
From net investment
income (0.44) (0.42) (0.41) (0.27) (0.38) (0.34) (0.33) (0.28)
From net realized
capital gain (0.68) (0.21) (0.13) (0.01) (0.84) (0.17) (0.14) (0.05)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.12) (0.63) (0.54) (0.28) (1.22) (0.51) (0.47) (0.33)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 10.83 $ 10.71 $ 10.64 $ 9.92 $ 13.16 $ 12.20 $ 11.42 $ 9.99
- --------------------------------------------------------------------------------------------------------------------------------
Total return (not
annualized) 11.99% 6.74% 12.98% 2.10% 18.45% 11.60% 19.40% 3.31%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of
period (000) $67,609 $84,949 $100,070 $54,617 $89,659 $82,971 $67,178 $36,764
Number of shares
outstanding,
end of period (000) 6,272 7,934 9,406 5,503 6,815 6,801 5,883 3,679
- --------------------------------------------------------------------------------------------------------------------------------
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 3.83% 3.93% 4.00% 4.62% 2.85% 3.16% 3.06% 4.40%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/2/ 39% 108% 84% 17% 46% 73% 39% 24%
- --------------------------------------------------------------------------------------------------------------------------------
Average commission rate
paid/3/ $0.0300 $0.0401 N/A N/A $0.0304 $0.0404 N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
</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.
This amount may vary depending on, among other things, the mix of trades,
trading practices and commission rate structures.
16 Stagecoach LifePath Funds Prospectus
<PAGE>
LifePath Funds Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
The following information has been derived from the Financial Highlights of the Class A and B shares in the
Funds' financial statements for the fiscal year ended February 28, 1998. 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 3, 1998 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 of the LifePath Opportunity Fund or the Class C shares of the Funds because those shares were not
offered during the periods presented.
=================================================================================================================
FOR A SHARE OUTSTANDING
=================================================================================================================
CLASS B SHARES LIFEPATH 2020 FUND CLASS B SHARES
--COMMENCED ON CLASS A SHARES--COMMENCED ON --COMMENCED ON
MARCH 3, 1997 MARCH 1, 1994 MARCH 3, 1997
-------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
Feb. 28, Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1998 1998 1997 1996 1995 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 12.02 $ 12.98 $ 11.98 $ 10.17 $ 10.00 $ 12.79
- -----------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.19 0.28 0.27 0.27 0.28 0.14
Net realized and
unrealized gain (loss)
on investments 1.88 2.73 1.43 2.03 0.12 2.74
- -----------------------------------------------------------------------------------------------------------------
Total from investment
operations (loss) 2.07 3.01 1.70 2.30 0.40 2.88
- -----------------------------------------------------------------------------------------------------------------
Less distributions:
From net investment
income (0.15) (0.29) (0.28) (0.28) (0.23) (0.12)
From net realized
capital gain (0.84) (1.00) (0.42) (0.21) 0.00 (1.00)
- -----------------------------------------------------------------------------------------------------------------
Total distributions (0.99) (1.29) (0.70) (0.49) (0.23) (1.12)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 13.10 $ 14.70 $ 12.98 $ 11.98 $ 10.17 $ 14.55
- -----------------------------------------------------------------------------------------------------------------
Total return (not
annualized) 17.64% 23.97% 14.65% 22.94% 4.12% 23.05%
- -----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of
period (000) $ 6,248 $166,198 $146,226 $122,488 $66,036 $12,129
Number of shares
outstanding,
end of period (000) 477 11,304 11,264 10,224 6,494 884
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net
assets (annualized)/1/:
Ratio of expenses to
average net assets 1.70% 1.20% 1.20% 1.20% 1.20% 1.70%
Ratio of net investment
income to
average net assets 2.15% 2.05% 2.33% 2.45% 3.64% 1.33%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/2/ 46% 41% 61% 49% 28% 41%
- -----------------------------------------------------------------------------------------------------------------
Average commission rate
paid/3/ $0.0304 $ 0.0300 $ 0.0451 N/A N/A $0.0300
- -----------------------------------------------------------------------------------------------------------------
</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.
This amount may vary depending on, among other things, the mix of trades,
trading practices and commission rate structures.
Stagecoach LifePath Funds Prospectus 17
<PAGE>
LifePath Funds Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===========================================================================================
FOR A SHARE OUTSTANDING
===========================================================================================
LIFEPATH 2030 FUND CLASS B SHARES
CLASS A SHARES--COMMENCED ON --COMMENCED ON
MARCH 1, 1994 MARCH 3, 1997
---------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Feb. 28, Feb 28, Feb. 29, Feb. 28, Feb. 28,
1998 1997 1996 1995 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 13.83 $ 12.34 $ 10.17 $ 10.00 $ 13.63
- -------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.23 0.22 0.21 0.26 0.10
Net realized and
unrealized gain (loss)
on investments 3.54 1.83 2.45 0.13 3.50
- -------------------------------------------------------------------------------------------
Total from investment
operations (loss) 3.77 2.05 2.66 0.39 3.60
- -------------------------------------------------------------------------------------------
Less distributions:
From net investment
income (0.23) (0.23) (0.22) (0.22) (0.09)
From net realized
capital gain (0.86) (0.33) (0.27) 0.00 (0.86)
- -------------------------------------------------------------------------------------------
Total distributions (1.09) (0.56) (0.49) (0.22) (0.95)
- -------------------------------------------------------------------------------------------
Net asset value, end of
period $ 16.51 $ 13.83 $ 12.34 $ 10.17 $ 16.28
- -------------------------------------------------------------------------------------------
Total return (not
annualized) 28.01% 17.01% 26.53% 4.03% 26.93%
- -------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of
period (000) $126,131 $101,078 $83,012 $41,153 $12,469
Number of shares
outstanding,
end of period (000) 7,642 7,307 6,728 4,045 766
- -------------------------------------------------------------------------------------------
Ratios to average net
assets (annualized)/1/:
Ratio of expenses to
average net assets 1.20% 1.20% 1.20% 1.20% 1.70%
Ratio of net investment
income to average
net assets 1.50% 1.81% 1.92% 3.35% 0.76%
- -------------------------------------------------------------------------------------------
Portfolio turnover rate/2/ 27% 42% 39% 40% 27%
- -------------------------------------------------------------------------------------------
Average commission rate
paid/3/ $ 0.0302 $ 0.0364 N/A N/A $0.0302
- -------------------------------------------------------------------------------------------
</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.
This amount may vary depending on, among other things, the mix of trades,
trading practices and commission rate structures.
18 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===========================================================================================
FOR A SHARE OUTSTANDING
===========================================================================================
LIFEPATH 2040 FUND CLASS B SHARES
CLASS A SHARES--COMMENCED ON --COMMENCED ON
MARCH 1, 1994 MARCH 3, 1997
---------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Feb. 28, Feb 28, Feb. 29, Feb. 28, Feb. 28,
1998 1997 1996 1995 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 14.50 $ 12.84 $ 10.37 $ 10.00 $ 14.29
- -------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.13 0.16 0.15 0.18 0.03
Net realized and
unrealized gain (loss)
on investments 4.17 2.35 2.82 0.34 4.06
- -------------------------------------------------------------------------------------------
Total from investment
operations (loss) 4.30 2.51 2.97 0.52 4.09
- -------------------------------------------------------------------------------------------
Less distributions:
From net investment
income (0.14) (0.16) (0.16) (0.15) (0.03)
From net realized
capital gain (1.59) (0.69) (0.34) 0.00 (1.59)
- -------------------------------------------------------------------------------------------
Total distributions (1.73) (0.85) (0.50) (0.15) (1.62)
- -------------------------------------------------------------------------------------------
Net asset value, end of
period $ 17.07 $ 14.50 $ 12.84 $ 10.37 $ 16.76
- -------------------------------------------------------------------------------------------
Total return (not
annualized) 30.66% 20.17% 28.91% 5.26% 29.47%
- -------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of
period (000) $248,195 $189,560 $142,738 $56,737 $30,754
Number of shares
outstanding,
end of period (000) 14,537 13,073 11,114 5,472 1,835
- -------------------------------------------------------------------------------------------
Ratios to average net
assets (annualized)/1/:
Ratio of expenses to
average net assets 1.20% 1.20% 1.20% 1.20% 1.70%
Ratio of net investment
income to
average net assets 0.82% 1.22% 1.29% 2.35% 0.08%
- -------------------------------------------------------------------------------------------
Portfolio turnover rate/2/ 34% 48% 29% 5% 34%
- -------------------------------------------------------------------------------------------
Average commission rate
paid/3/ $ 0.0248 $ 0.0351 N/A N/A $0.0248
- -------------------------------------------------------------------------------------------
</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.
This amount may vary depending on, among other things, the mix of trades,
trading practices and commission rate structures.
Stagecoach LifePath Funds Prospectus 19
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
Understanding the risks involved in mutual fund investing will help you make an
informed decision that takes into account your risk tolerance and
preferences. You should carefully consider risks common to all mutual funds,
including the Stagecoach Funds. Chief among these risks are the following:
. Unlike bank deposits such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
. We cannot guarantee that we will meet our investment objectives.
. We do not guarantee the performance of a Fund, nor can we assure you that the
market value of your investment will not decline. We will not "make good" any
investment loss you may suffer, nor can anyone we contract with to perform
certain functions, such as selling agents or investment advisors, offer or
promise to make good any such losses.
. Share prices--and therefore the value of your investment--will increase and
decrease with changes in the value of the underlying securities and other
investments. This is referred to as price volatility.
. Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
. An investment in a single Fund, by itself, does not constitute a complete
investment plan.
The Funds invest in securities that involve particular kinds of risk.
. The Funds invest in equities which are subject to equity market risk. This is
the risk that stock prices will fluctuate and can decline and reduce the
value of the portfolio. Certain types of stock and certain stocks selected
for a Fund's portfolio may underperform or decline in value more than the
overall market. As of the date of this Prospectus, the equity market, as
measured by the S&P 500 Index and other commonly used indexes, is trading at
or close to record levels. There can be no guarantee that these performance
levels will continue.
. The Funds invest in debt instruments, such as notes and bonds, that are
subject to credit risk and interest rate risk. Credit risk is the possibility
that an issuer of a security will be unable to make interest payments or
repay principal. Changes in the financial strength of an issuer or changes in
the credit rating of a security may affect its value. Interest rate risk is
the possibility that interest rates may increase and reduce the resale value
of securities in a Fund's portfolio. Debt instruments with longer maturities
are generally more sensitive to interest rate changes than those with shorter
maturities. Changes in market interest rates do not affect the rate payable
on debt instruments held in a Fund, unless the instrument has adjustable
20 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
or variable rate features. Changes in market interest rates may also extend
or shorten the duration of certain types of instruments, such as asset-backed
securities, thereby affecting their value and the return on your investment.
. The Funds invest in smaller companies, foreign companies (including
investments made through American Depository Receipts and similar
instruments), and emerging markets that are subject to additional risks,
including less liquidity and greater volatility. A Fund's investment in
foreign and emerging markets may also be subject to special risks associated
with international trade, including currency, political, regulatory and
diplomatic risk.
. The Funds may invest a portion of their assets in U.S. Government
obligations. It is important to recognize that the U.S. Government does not
guarantee the market value or current yield of those obligations. Not all
U.S. Government obligations are backed by the full faith and credit of the
U.S. Treasury, and the U.S. Government's guarantee does not extend to the
Fund itself.
. The Funds may also use certain derivative instruments, such as options or
futures contracts. The term "derivatives" covers a wide number of
investments, but in general it refers to any financial instrument whose value
is derived, at least in part, from the price of another security or a
specified index, asset or rate. Some derivatives may be more sensitive to
interest rate changes or market moves, and some may be susceptible to changes
in yields or values due to their structure or contract terms.
What follows is a general list of the types of risks (some of which are
described above) that may apply to a given Fund and a table showing some of the
additional investment practices that each Fund may use. Additional information
about these practices is available in the Statement of Additional Information.
Counter-Party Risk-- The risk that the other party in a repurchase agreement or
other transaction will not fulfill its contract obligation.
Credit Risk-- The risk that the issuer of a debt security will be unable to make
interest payments or repay principal on schedule. If an issuer does default, the
affected security could lose all of its value, or be renegotiated at a lower
interest rate or principal amount. Affected securities might also lose
liquidity. Credit risk also includes the risk that a party in a transaction may
not be able to complete the transaction as agreed.
Currency Risk-- The risk that a change in the exchange rate between
U.S. dollars and a foreign currency may reduce the value of an investment made
in a security denominated in that foreign currency.
Stagecoach LifePath Funds Prospectus 21
<PAGE>
General Investment Risks
- --------------------------------------------------------------------------------
Diplomatic Risk-- The risk that an adverse change in the diplomatic
relations between the United States and another country, and between other
countries, might reduce the value or liquidity of investments in either
country.
Experience Risk-- The risk presented by a new or innovative security. The risk
is that insufficient experience exists to forecast how the security's value
might be affected by various economic conditions.
Information Risk-- The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Interest Rate Risk-- The risk that changes in interest rates can reduce the
value of an existing security. Generally, when interest rates increase, the
value of a debt security decreases. The effect is usually more pronounced for
securities with longer dates to maturity.
Leverage Risk-- The risk that a practice may increase a Fund's exposure to
Market Risk, Interest Rate Risk or other risks by, in effect, increasing assets
available for investment.
Liquidity Risk-- The risk that a security cannot be sold, or cannot be sold
without adversely affecting the price.
Market Risk-- The risk that the value of a stock, bond or other security will be
reduced by market activity. This is a basic risk associated with all securities.
Political Risk-- The risk that political actions, events or instability may be
unfavorable for investments made in a particular nation's or region's industry,
government or markets.
Regulatory Risk-- The risk that changes in government regulations will adversely
affect the value of a security. Also the risk that an insufficiently regulated
market might permit inappropriate trading practices.
Year 2000 Risks-- Many computer software systems in use today cannot distinguish
the Year 2000 from the Year 1900. Most of the services provided to the Funds
depend on the proper functioning of computer systems. Any failure to adapt these
systems in time could hamper the Funds' operations and services. The Funds'
principal service providers have advised the Funds that they are working on the
necessary changes to their systems and that they expect their systems to be
adapted in time. There can, of course, be no assurance of success. In addition,
because the Year 2000 issue affects virtually all organizations and governments,
the companies or entities in which the Funds invests also could be adversely
impacted by the Year 2000 issue. The extent of such impact cannot be predicted.
22 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
=======================================================================
Investment Practice/Risk
The following table lists some of the additional investment practices
of the Funds, including some not disclosed in the Investment Objective
and Investment Policies sections of the Prospectus. The risks
indicated after the description of the practice are NOT the only
potential risks associated with that practice, but are among the more
prominent. Market risk is assumed for each. See the Investment
Objective and Investment Policies for each Fund or the Statement of
Additional Information for more information on these practices.
Remember, each LifePath Fund has the same investment practices and
available asset classes. The degree to which these practices and
classes, and their attendant risks, are present in each Fund depends
upon how aggressive a Fund's allocation mix is. Funds with a longer
maturity horizon are more aggressive than Funds with a shorter
maturity horizon and are generally more volatile.
In addition to the general risks discussed above, you should carefully
consider and evaluate any special risks that may apply to investing in
a particular Fund. See the "Important Risk Factors" in the summary for
each Fund. You should also see the Statement of Additional Information
for additional information about the investment practices and risks
particular to each Fund.
Investment practices and risk levels are carefully monitored. We
attempt to ensure that the risk exposure for each Fund remains within
the parameters of its objective.
=======================================================================
Stagecoach LifePath Funds Prospectus 23
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
INVESTMENT PRACTICE: RISK:
================================================================================
Floating and Variable Rate Debt
Instruments with interest rates that Interest Rate and *
are adjusted either on a schedule or Credit Risk
when an index or benchmark changes.
- --------------------------------------------------------------------------------
Repurchase Agreements
A transaction in which the seller of a Credit and *
security agrees to buy back a security Counter-Party Risk
at an agreed upon time and price,
usually with interest.
- --------------------------------------------------------------------------------
Other Mutual Funds
The temporary investment in shares of Market Risk *
another mutual fund. A pro rata portion
of the other fund's expenses, in addition
to the expenses paid by the Funds, will be
borne by Fund shareholders.
- --------------------------------------------------------------------------------
Foreign Securities
Securities in a dollar-denominated debt of Information, Political, *
non-U.S. companies or foreign governments. Regulatory, Diplomatic,
Liquidity and
Currency Risk
- --------------------------------------------------------------------------------
Options
The right or obligation to receive or Credit, Information
deliver a security or cash payment depending and Liquidity Risk
on the security's price or the performance
of an index or benchmark.
------------------------------------------------------------------------
Stock Index Futures *
Options on Stock Index Futures *
Index Swaps *
Interest Rate Futures *
Interest Rate Futures Options *
Interest Rate Swaps *
- --------------------------------------------------------------------------------
Loans of Portfolio Securities
The practice of loaning securities to brokers, Credit, Leverage and *
dealers and financial institutions to increase Counter-Party Risk
return on those securities. Loans may be made
in accordance with existing investment policies.
- --------------------------------------------------------------------------------
Borrowing Policies
The ability to borrow an equivalent of 20% of Counter-Party and *
assets from banks for temporary purposes to meet Leverage Risk
shareholder redemptions.
- --------------------------------------------------------------------------------
Illiquid Securities
A security that cannot be readily sold, or Liquidity Risk *
cannot be readily sold without negatively
affecting its fair price. Limited to 15%
of assets.
- --------------------------------------------------------------------------------
24 Stagecoach LifePath Funds Prospectus
<PAGE>
A Choice of Share Classes
- --------------------------------------------------------------------------------
After choosing a Fund, your next most important choice is which share class to
buy. The following classes of shares are available through this Prospectus:
. Class A Shares-- with a front-end sales charge, volume reductions and lower
on-going expenses than Class B and Class C shares.
. Class B Shares-- with a contingent deferred sales charge ("CDSC") that
diminishes over time, and higher on-going expenses than Class A
shares.
. Class C Shares-- with a 1.00% CDSC on redemptions made within one year of
purchase, and higher on-going expenses than Class A shares.
The choice between share classes is largely a matter of preference. You should
consider, among other things, the different fees and sales loads assessed on
each share class and the length of time you anticipate holding your investment.
If you prefer to pay sales charges up front, wish to avoid higher on-going
expenses, or, more importantly, you think you may qualify for volume discounts
based on the amount of your investment, then Class A shares may be the choice
for you.
You may prefer to see "every dollar working" from the moment you invest. If so,
then consider Class B or Class C shares. Please note that Class B shares convert
to Class A shares after six years to avoid the higher on-going expenses assessed
against Class B shares.
Class C shares are similar to Class B shares, with some important differences.
Unlike Class B shares, Class C shares do not convert to Class A shares. The
higher on-going expenses will be assessed as long as you hold the shares. The
choice between Class B and Class C shares may depend on how long you intend to
hold Fund shares before redeeming them.
Please see the expenses listed for each Fund and the following charge schedule
before making your decision. You should also review the "Reduced Sales Charges"
section of this Prospectus. You may wish to discuss this choice with your
financial consultant.
Class A Share Sales Charge Schedule
If you choose to buy Class A shares, you will pay the Public Offering Price
("POP") which is the Net Asset Value ("NAV") plus the applicable sales charge.
Since sales charges are reduced for Class A share purchases above certain
dollar amounts, known as "breakpoint levels", the POP is lower for these
purchases.
Stagecoach LifePath Funds Prospectus 25
<PAGE>
A Choice of Share Classes
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================================================
CLASS A SHARES LISTED IN THIS PROSPECTUS HAVE THE FOLLOWING CHARGE SCHEDULE:
==================================================================================================================
AMOUNT FRONT-END SALES CHARGE AS FRONT-END SALES CHARGE AS DEALER ALLOWANCE AS %
OF PURCHASE % OF PUBLIC OFFERING PRICE % OF NET AMOUNT INVESTED OF PUBLIC OFFERING PRICE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
- ------------------------------------------------------------------------------------------------------------------
$50,000 to $99,999 4.00% 4.17% 3.55%
- ------------------------------------------------------------------------------------------------------------------
$100,000 to $249,999 3.50% 3.63% 3.125%
- ------------------------------------------------------------------------------------------------------------------
$250,000 to $499,999 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75%
- ------------------------------------------------------------------------------------------------------------------
$1,000,000 and over/1/ 0.00% 0.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ We will assess Class A share purchases of $1,000,000 or more a 1.00% CDSC
if they are redeemed within one year from the date of purchase. Charges
are based on the lower of the NAV on the date of purchase or the date of
redemption.
Please note that Class A shares of other Funds listed in other prospectuses have
different loads and breakpoints levels. As of August 1, 1998, certain waivers
applicable to the additional purchases of Class A shares by existing Class A
shareholders have been discontinued.
Class B Share CDSC Schedule
If you choose Class B shares, you buy them at NAV and agree that if you redeem
your shares within six years of the purchase date, you will pay a CDSC based
on how long you have held your shares. Certain exceptions apply (see "Class B
and Class C share CDSC Reductions" and "Waivers for Certain Parties"). The
CDSC schedule is as follows:
================================================================================
CLASS B SHARES LISTED IN THIS PROSPECTUS HAVE THE FOLLOWING CHARGE SCHEDULE:
================================================================================
REDEMPTIONS WITHIN 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS
- --------------------------------------------------------------------------------
CDSC 5.00% 4.00% 3.00% 3.00% 2.00% 1.00%
- --------------------------------------------------------------------------------
The CDSC percentage you pay is based on the lower of the NAV of the shares on
the date of the original purchase, or the NAV of the shares on the date of
redemption. The distributor pays sales commissions of up to 4.00% of the
purchase price of Class B shares to selling agents at the time of the sale.
We always process partial redemptions so that the least expensive shares are
redeemed first in order to reduce your sales charges. After shares are held for
six years, the CDSC expires and the B shares are converted to A shares to reduce
your future on-going expenses.
26 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Class C Share CDSC Schedule
If you choose Class C shares, you buy them at NAV and agree that if you redeem
your shares within one year of the purchase date, you will pay a CDSC of
1.00%.
The CDSC percentage you pay is based on the lower of the NAV on the date of
the original purchase, or the NAV on the date of redemption. The distributor
pays sales commissions of up to 1.00% of the purchase price of Class C shares
to selling agents at the time of the sale.
We always process partial redemptions so that the least expensive shares are
redeemed first in order to reduce your sales charges. Class C shares do not
convert to Class A shares, and therefore continue to pay the higher on-going
expenses.
Stagecoach LifePath Funds Prospectus 27
<PAGE>
Reduced Sales Charges
- --------------------------------------------------------------------------------
Generally, we offer more sales charge reductions for Class A shares than for
Class B and Class C shares, particularly if you intend to invest greater
amounts. You should consider whether you are eligible for any of these potential
reductions when you are deciding which share class to buy.
Class A Share Reductions:
. You pay no sales charges on Fund shares you buy with reinvested
distributions.
. You pay a lower sales charge if you are investing an amount over a breakpoint
level. See the "Class A Share Sales Charge Schedule" above.
. By signing a Letter of Intent ("LOI"), you pay a lower sales charge now in
exchange for promising to invest an amount over a specified breakpoint
within the next 13 months. We will hold in escrow shares equal to
approximately 5% of the amount you intend to buy. If you do not invest the
amount specified in the LOI before the expiration date, we will redeem
enough escrowed shares to pay the difference between the reduced sales load
you paid and the sales load you should have paid. Otherwise, we will
release the escrowed shares when you have invested the agreed amount.
. Rights of Accumulation allow you to combine the amount you invest with the
total NAV of shares you own in other Stagecoach front-end load Funds in
order to reach breakpoint levels for a reduced load. We give you a discount
on the entire amount of the investment that puts you over the breakpoint
level.
. If you are reinvesting the proceeds of a Stagecoach Fund redemption for
shares on which you have already paid a front-end sales charge, you have
120 days to reinvest the proceeds of that redemption with no sales charge
into a Fund that charges the same or a lower front-end sales charge. If you
use such a redemption to purchase shares of a Fund with a higher front-end
sales charge, you will have to pay the difference between the lower and
higher charge.
. If you act within 30 days of a required distribution from a pension,
retirement, benefits, or similar plan for which Wells Fargo Bank acts as
trustee, you may reinvest into a Stagecoach Fund with no sales charge.
If you believe you are eligible for any of these reductions, it is up to you to
ask the selling agent or the shareholder servicing agent for the reduction and
to provide appropriate proof of eligibility.
28 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
You, or your fiduciary or trustee, may also tell us to extend volume discounts,
including the reductions offered for rights of accumulation and letters of
intent, to include purchases made by:
. a family unit, consisting of a husband and wife and children under the age of
twenty-one or single trust estate;
. a trustee or fiduciary purchasing for a single fiduciary relationship; or
. the members of a "qualified group" which consists of a "Company" (as
defined in the Investment Company Act of 1940, as amended (the "1940
Act")), and related parties of such a "Company", which has been in
existence for at least six months and which has a primary purpose other
than acquiring Fund shares at a discount.
========================================================================
How a Letter of Intent Can Save You Money!
If you plan to invest, for example, $100,000 in a Stagecoach Fund in
installments over the next year, by signing a letter of intent you
would pay only a 3.50% sales load on the entire purchase. Otherwise,
you might pay 4.50% on the first $50,000, then 4.00% on the next
$49,999!
========================================================================
Stagecoach LifePath Funds Prospectus 29
<PAGE>
Reduced Sales Charges
- --------------------------------------------------------------------------------
Class B and Class C Share CDSC Reductions:
. You pay no CDSC on Funds shares you purchase with reinvested
distributions.
. We waive the CDSC for all redemptions made because of scheduled or
mandatory distributions for certain retirement plans. (See your retirement
plan disclosure for details.)
. We waive the CDSC for redemptions made in the event of the shareholder's
death or for a disability suffered after purchasing shares. ("Disability"
is defined by the Internal Revenue Code of 1986.)
. We waive the CDSC for redemptions made at the Company's direction in order
to, for example, complete a merger or close an account whose value has
fallen below the minimum balance.
Waivers for Certain Parties
If you are eligible for certain waivers, we will sell you Class A shares so you
can avoid higher on-going expenses. The following people can buy Class A shares
at NAV:
. Current and retired employees, trustees and officers of:
. Stagecoach Trust and its affiliates;
. Wells Fargo Bank and its affiliates;
. Stephens Inc. ("Stephens") and its affiliates; and
. Broker-Dealers who act as selling agents.
. The spouses of any of the above, as well as the grandparents, parents,
siblings, children, grandchildren, aunts, uncles, nieces, nephews, fathers-
in-law, mothers-in-law, brothers-in-law and sisters-in-law of either the
spouse or the current or retired employee, director or officer.
You may also buy Class A Fund shares at NAV if they are to be included in
certain retirement, benefits, pension or investment wrap accounts with whom the
Stagecoach Funds has reached an agreement, or through an omnibus account
maintained with a Fund by a broker/dealer.
We reserve the right to enter into agreements that reduce or eliminate sales
charges for groups or classes of shareholders, or for Fund shares included in
other investment plans such as "wrap accounts". If you own Fund shares as part
of another account or package such as an IRA or a sweep account, you must read
the directions for that account. These directions may supersede the terms and
conditions discussed here.
30 Stagecoach LifePath Funds Prospectus
<PAGE>
Your Account
- --------------------------------------------------------------------------------
This section tells you how to open an account and how to buy, sell or exchange
Fund shares once your account is open.
You can buy Fund shares:
. By opening an account directly with the Fund (simply complete and return a
Stagecoach Funds application with proper payment);
. Through a brokerage account with an approved selling agent; or
. Through certain retirement, benefits and pension plans, or through certain
packaged investment products (please see the providers of the plan for
instructions).
Minimum Investments:
. $1,000 per Fund minimum initial investment; or
. $100 per Fund minimum initial investment if you use the Systematic Purchase
Plan (formerly the AutoSaver Plan) option.
. $100 per Fund for all investments after your first.
. We may waive the minimum for Funds you purchase through certain retirement,
benefit and pension plans, through certain packaged investment products, or
for certain classes of shareholders as permitted by the SEC. Check the
specific disclosure statements and applications for the program through
which you intend to invest.
Important Information:
. Read this Prospectus carefully. Discuss any questions you have with your
selling agent. You may also ask for copies of the Statement of Additional
Information and Annual Report. Copies are available free of charge from
your selling agent or by calling 1-800-222-8222.
. We process requests to buy or sell shares each business day as of the close
of regular trading on the New York Stock Exchange ("NYSE"), which is
usually 1:00 p.m. (Pacific time). Any request we receive in proper form
before the close of regular trading on the NYSE is processed the same day.
Requests we receive after the close are processed the next business day.
. As with all mutual fund investments, the price you pay to purchase shares
or the price you receive when you redeem shares is not determined until
after a request has been received in proper form.
Stagecoach LifePath Funds Prospectus 31
<PAGE>
Your Account
- --------------------------------------------------------------------------------
. We determine the NAV of each class of the Funds' shares each business day
as of the close of regular trading on the NYSE. We determine the NAV by
subtracting the Fund Class' liabilities from its total assets, and then
dividing the result by the total number of outstanding shares of that
Class. Each Fund's assets are generally valued at current market prices.
See the Statement of Additional Information for further disclosure.
. We will process all requests to buy and sell shares at the first NAV
calculated after the request in proper form is received.
. You may have to complete additional paperwork for certain types of account
registrations, such as a trust. Please speak to Investor Services (1-800-
222-8222) if you are investing directly with Stagecoach Funds, or speak to
your selling agent if you are buying shares through a brokerage account.
. Once an account has been opened, you can add additional Funds under the same
registration without completing a new application.
. We reserve the right to cancel any purchase order or delay redemption if
your check does not clear. We may reserve the right to delay payment of a
redemption for up to 15 days so that we may be reasonably certain that
investments made by check have been collected.
32 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
How to Buy Shares
The following section explains how you can buy shares directly from Stagecoach
Funds. For Funds held through brokerage and other types of accounts, please
consult your selling agent.
================================================================================
BY MAIL
================================================================================
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
- --------------------------------------------------------------------------------
Complete a Stagecoach Funds application. Be
sure to indicate the Fund name and the share
class into which you intend to invest.
- ---------------------------------------------- Mail to:
Enclose a check for at least $1,000 made out Stagecoach Funds
in the full name and share class of the Fund. PO Box 7066
For example, "LifePath 2020 Fund, Class B." San Francisco, CA
- ---------------------------------------------- 94120-9201
You may start your account with $100 if you
elect the Systematic Purchase option on the
application.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
- --------------------------------------------------------------------------------
Make a check payable to the full name and
share class of your Fund for at least $100. Mail to:
Be sure to write your account number on the Stagecoach Funds
check as well. PO Box 7066
- ---------------------------------------------- San Francisco, CA
Enclose the payment stub/card from your 94120-9201
statement if available.
- --------------------------------------------------------------------------------
================================================================================
BY WIRE
================================================================================
IF YOU ARE BUYING FOR THE FIRST TIME:
- --------------------------------------------------------------------------------
If you do not currently have an account,
complete a Stagecoach Funds application. Mail to:
You must wire at least $1,000. Be sure Stagecoach Funds
to indicate the Fund name and the share PO Box 7066
class into which you intend to invest. San Francisco, CA
- ---------------------------------------------- 94120-9201
Mail the completed application.
- ---------------------------------------------- Fax to:
You may also fax the completed application 1-415-546-0280
(with original to follow).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
- --------------------------------------------------------------------------------
Instruct your wiring bank to transmit Wire to:
at least $100 according to the Wells Fargo Bank, N.A.
instructions given to the right. Be San Francisco, California
sure to have the wiring bank include
your current account number and the Bank Routing Number:
name your account is registered in. 121000248
- ----------------------------------------------
Wire Purchase Account Number:
4068-000587
Attention:
Stagecoach Funds
(Name of Fund and Share Class)
Account Name:
(Registration Name Indicated on
Application)
----------------------------------
Stagecoach LifePath Funds Prospectus 33
<PAGE>
Your Account
- --------------------------------------------------------------------------------
================================================================================
BY PHONE
================================================================================
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
- --------------------------------------------------------------------------------
You can only make your first purchase of a
Fund by phone if you already have an existing
Stagecoach Account.
- --------------------------------------------------
Call Investor Services and instruct the
representative to either: Call:
. transfer at least $1,000 from a linked 1-800-222-8222
settlement account, or
. exchange at least $1,000 worth of shares
from an existing Stagecoach Fund. Please
see "Exchanges" for special rules.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
- --------------------------------------------------------------------------------
Call Investor Services and instruct the
representative to either:
. transfer at least $100 from a linked Call:
settlement account, or 1-800-222-8222
. exchange at least $100 worth of shares
from another Stagecoach Fund.
- --------------------------------------------------------------------------------
Selling Shares:
The following section explains how you can sell shares held directly through an
account with Stagecoach Fund by mail or telephone. For Funds held through
brokerage and other types of accounts, please consult your selling agent.
================================================================================
BY MAIL
================================================================================
Write a letter stating your account registration,
your account number, the Fund you wish to redeem
and the dollar amount ($100 or more) of the
redemption you wish to receive (or write "Full
Redemption").
- -------------------------------------------------------
Make sure all the account owners sign the request.
- -------------------------------------------------------
You may request that redemption proceeds be sent
you by check, by ACH transfer into a bank account,
or by wire ($5,000 minimum). Please call Investor
Services regarding requirements for linking bank Mail to:
accounts or for wiring funds. We reserve the right Stagecoach Funds
to charge a fee for wiring funds although it is not PO Box 7066
currently our practice to do so. San Francisco, CA
- ------------------------------------------------------- 94120-9201
Signature Guarantees are required for mailed
redemption requests over $5,000. You can get a
signature guarantee at financial institutions such as
a bank or brokerage house. We do not accept
notarized signatures.
- --------------------------------------------------------------------------------
34 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
BY PHONE
================================================================================
Call Investor Services to request a redemption of
at least $100. Be prepared to provide your account
number and Taxpayer Identification Number.
- ---------------------------------------------------------
Unless you have instructed us otherwise, only one
account owner needs to call in redemption requests.
- ---------------------------------------------------------
You may request that redemption proceeds be sent to
you by check, by transfer into an ACH-linked bank
account, or by wire ($5,000 minimum). Please call
Investor Services regarding requirements for linking
bank accounts or for wiring funds. We reserve the
right to charge a fee for wiring funds although it
is not currently our practice to do so.
- ---------------------------------------------------------
Telephone privileges are automatically made available Call:
to you unless you specifically decline them on your 1-800-222-8222
application or subsequently in writing.
- ---------------------------------------------------------
Phone privileges allow us to accept transaction
instructions by anyone representing themselves as the
shareholder and who provides reasonable confirmation
of their identity, such as providing the Taxpayer
Identification Number on the account. We will not be
liable for any losses incurred if we follow telephone
instructions we reasonably believe to be genuine.
- ---------------------------------------------------------
Telephone requests are not accepted if the address on
your account was changed by phone in the last 15 days.
- --------------------------------------------------------------------------------
================================================================================
GENERAL NOTES FOR SELLING SHARES
================================================================================
We will process requests to sell shares at the first NAV calculated after a
request in proper form is received. Requests received before the close of
trading on the NYSE are processed on the same business day.
- --------------------------------------------------------------------------------
Your redemptions are net of any applicable CDSC.
- --------------------------------------------------------------------------------
We determine the NAV each day as of the close of regular trading on the New
York Stock Exchange, which is generally 1:00 p.m. (Pacific time).
- --------------------------------------------------------------------------------
If you purchased shares through a packaged investment product or retirement
plan, read the directions for selling shares provided by the product or plan.
There may be special requirements that supersede the directions in this
Prospectus.
- --------------------------------------------------------------------------------
We reserve the right to delay payment of a redemption for up to 15 days so that
we may be reasonably certain that investments made by check have been
collected. Payments of redemptions may also be delayed under extraordinary
circumstances or as permitted by the SEC in order to protect remaining
shareholders. Payments of redemptions also may be delayed up to seven days
under normal circumstances, although it is not our policy to delay such
payments.
- --------------------------------------------------------------------------------
Generally, we pay redemption requests in cash, unless the redemption request is
for more than $250,000 or 1% of the net assets of the Fund by a single
shareholder over any ninety-day period. If a request for a redemption is over
these limits, it may be to the detriment of existing shareholders to pay such
redemption in cash. Therefore, we may pay all or part of the redemption in
securities of equal value.
- --------------------------------------------------------------------------------
Stagecoach LifePath Funds Prospectus 35
<PAGE>
Exchanges
- --------------------------------------------------------------------------------
Exchanges between Stagecoach Funds are two transactions: a sale of one Fund and
the purchase of another. In general, the same rules and procedures that apply to
sales and purchases apply to exchanges. There are, however, additional factors
you should keep in mind while making or considering an exchange:
. You should carefully read the Prospectus for the Fund into which you wish to
exchange.
. Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.
. If you exchange between Class A shares, you will have to pay any difference
between a load you have already paid and the load 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 4.5% schedule).
. If you are making an initial investment into a new Fund through an exchange,
you must exchange at least the minimum first purchase amount of the Fund you
are redeeming, unless your balance has fallen below that amount due to market
conditions.
. Any exchange between Funds you already own must meet the minimum redemption
and subsequent purchase amounts for the Funds involved.
. If you are exchanging from a higher-load fund to a lower or no-load fund,
then back to the higher load fund, it is up to you to inform Stagecoach Funds
that you have already paid the higher load.
. Exchanges between Class B shares, between Class C shares or between either
Class B or Class C shares and a Stagecoach Money Market Fund will not trigger
the CDSC. The new shares will continue to age according to their original
schedule while in the new Fund and will be charged the CDSC applicable to the
original shares upon redemption. This also applies to exchanges of Class C
shares that are subject to a CDSC.
. Exchanges from any share class to a money market fund can only be
re-exchanged for the original share class.
. In order to discourage excessive Fund transaction expenses that must be borne
by other shareholders, we reserve the right to limit or reject exchange
orders. Generally, we will notify you 60 days in advance of any changes to a
Fund's exchange privileges.
. You may make exchanges between like share classes. You may also exchange from
an A, B or C share classes and non-Institutional class shares to a non-
Institutional money market fund.
36 Stagecoach LifePath Funds Prospectus
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
Automatic Programs:
These programs help you conveniently purchase and/or redeem shares each month.
Call Investor Services at 1-800-222-8222 for more information.
. Systematic Purchase Plan (formerly the Autosaver Plan) - With this program,
you can regularly purchase shares of a Stagecoach Fund with money
automatically transferred from a linked bank account. Simply select the Fund
you would like to purchase, specify an amount of at least $100, and tell us
the day of the month you would like the money invested. If you do not specify
a date, we will transfer the money and invest in shares of the Fund you
select on or about the 20th day of the month.
. Systematic Exchange Plan - With this program, you can regularly exchange
shares of a Stagecoach Fund you own for shares of another Stagecoach Fund.
The exchange amount must be at least $100, and the exchange will take place
on or about the 25th of each month. See the "Exchanges" section of this
Prospectus for the conditions that apply to your shares. This feature may not
be available for certain types of accounts.
. Systematic Withdrawal Program - With this program, you can regularly redeem
shares and receive the proceeds by check or by transfer to a linked bank
account. Simply specify an amount of at least $100 and we will sell your
shares equal to that amount on or about the 25th of each month. To
participate in this program, you:
. must have a Fund account valued at $10,000 or more;
. must have your distributions reinvested; and
. may not simultaneously participate in the Systematic Purchase Plan.
It generally takes about ten days to establish a plan once we have received your
instructions. It generally takes about five days to change or cancel
participation in a plan. We automatically cancel your program if the linked bank
account you specified is closed.
Dividend and Capital Gain Distribution Options
You may choose to do any of the following:
. Automatic Reinvestment Option-- Lets you buy new shares of the same class of
the Fund that generated the distributions. The new shares are purchased at
NAV generally on the day the income is paid. This option is automatically
assigned to your account unless you specify another plan.
. Fund Purchase Plan-- Uses your distributions to buy shares at NAV of another
Stagecoach Fund of the same share class or a Money Market Fund. You must have
already satisfied the minimum investment
Stagecoach LifePath Funds Prospectus 37
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
requirements of the Fund into which your distributions are being
transferred in order to participate.
. Automatic Clearing House Option-- Deposits your dividends and capital gains
into any bank account you link to your Fund account if it is part of the ACH
system. If your specified bank account is closed, we will reinvest your
distributions.
. Check Payment Option-- Allows you to receive checks for distributions mailed
to your address of record or to another name and address which you have
specified in written, signature guaranteed instructions. If checks remain
uncashed for six months or are undeliverable by the Post Office, we will
reinvest the distributions at the earliest date possible.
========================================================================
Two Things to Keep In Mind About Distributions
Remember, distributions have the effect of reducing the NAV per share by
the amount distributed. Also, distributions on new shares shortly after
purchase would be in effect a return of capital, although the
distribution may still be taxable to you.
========================================================================
Taxes
The following discussion regarding taxes is based on laws that were in effect as
of the date of this Prospectus. The discussion summarizes only some of the
important tax considerations that affect the Funds and you as a shareholder. It
is not intended as substitute for careful tax planning. You should consult your
tax advisor about your specific tax situation. Federal income tax considerations
are discussed further in the Statement of Additional Information.
We will pass on to you net investment income and net short-term capital gains
earned by a Fund as dividend distributions. These are taxable to you as ordinary
income. We will pass on to you any net capital gains earned by a Fund as a
capital gain distribution. In general, these distributions will be taxable to
you as long-term capital gains, which may qualify for taxation at preferential
rates in the hands of non-corporate shareholders.
In general, all distributions will be taxable to you when paid, even if they are
paid in additional Fund Shares. However, distributions declared in October,
November and December and distributed by the following January will be taxable
as if they were paid on December 31 of the year in which they were declared. We
will notify you as to the status of your Fund distributions.
38 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
If you buy shares of a Fund shortly before it distributes its annual gains, your
distribution from the Fund will, in effect, be a taxable return of part of your
investment. Similarly, if you buy shares of a Fund that holds appreciated
securities in its portfolio, you will receive a taxable return of part of your
investment if and when the Fund sells the appreciated securities and realizes
the gain. Some of the Funds have built up, or have the potential to build up,
high levels of unrealized appreciation.
Your redemptions, including exchanges, will ordinarily result in a taxable
capital gain or loss, depending on the amount you receive for your shares and
the amount you paid for them. Foreign shareholders may be subject to different
tax treatment, including withholding. In certain circumstances, U.S. residents
will be subject to back-up withholding.
Historical Fund Information
The Company was organized as an unincorporated Massachusetts business trust on
May 14, 1993. The Class C shares of LifePath Opportunity, 2010, 2020, and 2030
commenced operations on November 30, 1998. The Class B Shares of the LifePath
Opportunity Fund and the Class C shares of the LifePath 2040 Fund commenced
operations as of June 30, 1998. The Class B Shares of the other Funds commenced
operations on March 3, 1997.
Each Fund invests all of its assets in a Master Portfolio of Master Investment
Portfolio ("MIP") with the same investment objective. To achieve its investment
objective, a Fund may decide to move all of its assets into a different master
fund, or to hire an investment advisor to actively manage the Fund's assets. No
action would be taken unless the Board of Trustees of Stagecoach Trust first
determines it is in the best interests of the Fund.
Wells Fargo & Company/Norwest Merger-- On November 2, 1998, Wells Fargo &
Company, the parent company of Wells Fargo Bank, merged with Norwest
Corporation. The combined company is called Wells Fargo & Company. Wells Fargo
Bank, which provides investment advice and other services to the Funds, became
an indirect wholly-owned subsidiary of the new combined company. Wells Fargo
Bank has advised the Funds that the merger will not reduce the level or quality
of advisory and other services provided by Wells Fargo Bank to the Funds.
Share Class-- This Prospectus contains information about Class A, Class B and
Class C shares. Some of the Funds may offer additional share classes with
different expenses and returns than those described here. Call Stephens at
Stagecoach LifePath Funds Prospectus 39
<PAGE>
Additional Services and Other Information
- --------------------------------------------------------------------------------
1-800-643-9691 for information on these or other investment options in
Stagecoach Funds.
Conversion of Class B shares-- We will convert Class B shares into Class A
shares at the month end following the six-year anniversary of their original
purchase. This is done to avoid the higher on-going Rule 12b-1 fees assessed to
Class B shares. The conversion is done at NAV and, since it is unlikely that
Class A and Class B shares of the same Fund will have the same NAV on a given
date, the conversion is on a dollar-value basis, not a share-for-share basis.
Minimum Account Value-- Due to the expense involved in maintaining low-balance
accounts, we reserve the right to close accounts that have fallen below the
$1,000 minimum balance due to redemptions (as opposed to market conditions). You
will be given an opportunity to make additional investments to prevent account
closure before any action is taken.
Statements-- We mail statements after any account activity, including
transactions, dividends or capital gains, and at year-end. We do not send
statements for Funds held in brokerage, retirement or other similar accounts.
You must check with the administrators of these accounts for statement policies.
The Fund will also send any necessary tax reporting documents in January, and
will send Annual and Semi-Annual Reports each year.
Dealer Concessions and Rule 12b-1 fees-- Stephens, as the Funds' distributor,
will pay the portion of the Class A share sales charge shown as the Dealer
Allowance to the selling agent, if any. Stephens also compensates selling agents
for the sale of Class B and Class C shares and is reimbursed through Rule 12b-1
fees and CDSCs. Selling agents may receive different compensation for sales of
Class A, Class B and Class C shares of the same Fund.
Statement of Additional Information-- Additional information about some of the
topics discussed in this Prospectus as well as details about performance
calculations, distribution plans, servicing plans, tax issues and other
important issues are available in the Statement of Additional Information for
each Fund. The Statement of Additional Information should be read along with
this Prospectus and may be obtained free of charge by calling Investor Services
at 1-800-222-8222.
Glass-Steagall Act-- Morrison & Foerster LLP, counsel to the Funds and special
counsel to Wells Fargo Bank, has advised us and Wells Fargo Bank that Wells
Fargo Bank and its affiliates may perform the services contemplated by the
Advisory Contracts and detailed in this Prospectus and the Statement of
Additional Information without violation of the Glass-Steagall Act. Counsel has
40 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
pointed out that future judicial or administrative decisions, or future federal
or state laws may prevent these entities from continuing in their roles.
Voting Rights-- All shares of the Funds have equal voting rights and are voted
in the aggregate, rather than by series or class, unless the matter affects only
one series or class. A shareholder of record is entitled to one vote for each
share owned and fractional votes for each fractional share owned. For a detailed
description of voting rights, see the "Capital Stock" section of the Statement
of Additional Information.
Stagecoach LifePath Funds Prospectus 41
<PAGE>
Organization and Management of the Funds
- --------------------------------------------------------------------------------
A number of different entities provide services to the Funds. This section shows
how the Funds are organized, the entities that perform different services, and
how they are compensated. Further information is available in the Statement of
Additional Information for the Funds.
The Board of Trustees of Stagecoach Trust supervises the Funds' activities and
approves the selection of various companies hired to manage the Funds'
operations. The major service providers are described in the diagram below. If
the Board believes that it is in the best interests of the shareholders it may
make a change in one of these companies.
================================================================================
SHAREHOLDERS
================================================================================
|
================================================================================
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
================================================================================
Advise current and prospective shareholders on their Fund investments
- --------------------------------------------------------------------------------
|
================================================================================
TRANSFER AND
DISTRIBUTOR & DIVIDEND DISBURSING SHAREHOLDER
CO-ADMINISTRATOR CO-ADMINISTRATOR AGENT SERVICING AGENTS
================================================================================
Stephens Inc. Wells Fargo Bank Wells Fargo Bank Various Agents
111 Center St. 525 Market St. 525 Market St.
Little Rock, AR San Francisco, CA San Francisco, CA
Markets the Funds, Manages the Funds' Maintains records Provide services
distributes shares, business activities of shares and to customers
and manages the supervises the
Funds' business paying of dividends
activities
- --------------------------------------------------------------------------------
|
================================================================================
INVESTMENT ADVISOR CUSTODIAN
================================================================================
Barclays Global Fund Advisors, Investors Bank & Trust Company,
45 Fremont Street, San Francisco, CA 200 Clarendon Street, Boston, MA
Manages the Funds' Provides safekeeping for
investment activities the Funds' assets
- --------------------------------------------------------------------------------
|
================================================================================
BOARD OF TRUSTEES
================================================================================
Supervises the Funds' activities
- --------------------------------------------------------------------------------
We do not hold annual shareholder meetings. We may hold special shareholder
meetings to ask shareholders to vote on items such as electing or removing board
members, amending fundamental investment strategies or policies.
42 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
In the following sections, the percentages shown are the percentages of the
average daily net assets of each Fund class paid on an annual basis for the
services described. The Statement of Additional Information has more detailed
information about the Investment Advisor and the other service providers and
plans described here.
The Investment Advisor
BGFA, a wholly owned subsidiary of BGI and an indirect subsidiary of Barclays
Bank PLC, is the advisor for each of the LifePath Master Portfolios. BGFA
invests the Funds' assets according to various asset allocation models. No
particular individuals are responsible for the day-to-day management of the
Funds. BGFA was created from the sale of Wells Fargo Nikko Investment Advisors,
a former affiliate of Wells Fargo Bank, to BGI. As of April 30, 1998, BGFA
managed or provided investment advice for assets aggregating in excess of $575
billion. For providing advisory services to the Master Portfolios, BGFA is
entitled to receive .55% of each Master Portfolio's net assets.
The Administrator
Wells Fargo Bank is the administrator of the Funds. Wells Fargo Bank is paid
.03% of each Fund's average daily net assets for these services. Prior to August
1, 1998, Wells Fargo Bank and Stephens together were entitled to a combined
"all-in" monthly fee at an annual rate of 0.10% of each Fund's average daily net
assets for these services.
The Distributor and Co-Administrator
Stephens is the Funds' distributor and co-administrator. Stephens receives .04%
of each Fund's average daily net assets for its role as co-administrator.
Stephens also receives all loads, CDSCs and distribution plan fees. It uses a
portion of these amounts to compensate selling agents for their role in
marketing the Funds' shares.
Stagecoach LifePath Funds Prospectus 43
<PAGE>
Organization and Management of the Funds
- --------------------------------------------------------------------------------
Distribution Plan
We have adopted distribution plans for the Funds. These plans authorize payment
for distribution-related expenses, and compensation for distribution-related
services, including on-going compensation to selling agents. Each Fund may
participate in joint distribution activities with other Stagecoach Funds. The
cost of these activities is generally allocated among the Funds. Funds with
higher asset levels pay a higher proportion of these costs. The fees paid under
these plans are as follows:
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
LifePath Opportunity Fund .25% .75% .75%
- --------------------------------------------------------------------------------
LifePath 2010 Fund .25% .75% .75%
- --------------------------------------------------------------------------------
LifePath 2020 Fund .25% .75% .75%
- --------------------------------------------------------------------------------
LifePath 2030 Fund .25% .75% .75%
- --------------------------------------------------------------------------------
LifePath 2040 Fund .25% .75% .75%
- --------------------------------------------------------------------------------
MIP Rule 12b-1 Plan
The Board of Trustees of Master Investment Portfolio ("MIP") 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 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 .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.
Shareholder Servicing Plan
We have Shareholder Servicing Plans for each Fund Class. We have agreements with
various shareholder servicing agents to process purchase and redemption
requests, to service shareholder accounts, and to provide other related
services. For these services each Fund pays .20% of its average net
assets.
44 Stagecoach LifePath Funds Prospectus
<PAGE>
How to Read the Financial Highlights
- --------------------------------------------------------------------------------
After the description of the Funds, there is a chart showing important financial
information about the Funds. The chart is called the "Financial Highlights" and
is designed to help you understand the past performance of the Funds. The
financial statements from which these Financial Highlights were derived were
audited by KPMG Peat Marwick LLP, except as indicated. The financial statements
are included in each Fund's most recent Annual Report and are available free of
charge by calling 1-800-222-8222. For the year ended February 28, 1995, the
Master Portfolio was audited by other auditors.
Here is an explanation of some terms that will help you read these charts.
Net Asset Value (NAV)-- The net value of one share of a class of a Fund. See the
Glossary for a more detailed definition.
Net Investment Income-- Net investment income is calculated by subtracting the
aggregate Fund expenses from the Funds' investment income. The number in the
financial highlights is the net investment income of a class divided by the
number of outstanding shares of that class. The amount distributed to
shareholders is listed under the heading "Less Distributions--Dividends from Net
Investment Income."
Net Realized and Unrealized Gains (Loss) on Investments-- We continually buy and
sell investments. The profit on an investment sold for more than its purchase
price is a realized capital gain while a loss on an investment sold for less
than its purchase price is a realized capital loss. An unrealized gain or loss
occurs when an investment gains or loses value but is not sold. The amount of
capital gain or loss per share that was paid to shareholders is listed under the
heading "Less Distributions--Distributions From Net Realized Gains."
Net Assets-- The value of the investments in a Fund's portfolio (after
accounting for expenses) that are attributable to a particular class of the
Fund.
Ratio of Expenses to Average Net Assets--This ratio reflects the amount paid by
a Fund to cover the costs of its daily operations, and includes advisory,
administration and other operating expenses. It is expressed as a percentage of
the average daily net assets of a class.
Ratio of Net Investment Income (Loss) to Average Net Assets--This ratio is the
result of dividing net investment income (or loss) by average net assets.
Stagecoach LifePath Funds Prospectus 45
<PAGE>
How to Read the Financial Highlights
- --------------------------------------------------------------------------------
Portfolio Turnover-- Portfolio turnover reflects the trading activity in the
Fund's portfolio and is expressed as a percentage of a Fund's investment
portfolio. For example, a Fund with a 50% portfolio turnover has sold and bought
half of its investment portfolio during the given period.
Average Commission Rate Paid-- The average brokerage commission paid by a Fund
when it buys or sells shares of securities. The rate is expressed on a per share
basis and the amount paid may vary depending upon trading practices or other
conditions.
Total Return-- The annual return on an investment, including any appreciation or
decline in share value, assumes reinvestment of all dividends and capital gains,
reflects fee waivers, and excludes sales loads.
46 Stagecoach LifePath Funds Prospectus
<PAGE>
Glossary
- --------------------------------------------------------------------------------
We provide the following definitions to assist you in reading this Prospectus.
For a more complete understanding of these terms, you should consult your
financial adviser.
ACH
Refers to the "Automated Clearing House" system maintained by the Federal
Reserve System which allows banks to process checks, transfer funds and perform
other tasks.
American Depository Receipts ("ADRs")
Receipts for non-U.S. company stocks. The stocks underlying ADRs are typically
held in bank vaults. The ADR's owner is entitled to any capital gains or
dividends. ADRs are one way of owning an equity interest in foreign companies.
Annual/Semi-Annual Report
A document that provides certain financial and other important information for
the most recent reporting period and each Fund's portfolio of investments.
Business Day
Any day the NYSE is open is a business day for the Funds.
Capital Appreciation, Capital Growth
The increase in the value of a security. See also "Total Return".
Current Income
Earnings in the form of dividends or interest as opposed to capital growth. See
also "Total Return".
Debt Instruments
Generally, a promise to pay interest and repay principal by an individual or
group of individuals sold as a security. The owner of the security is entitled
to receive any such payments. Examples include bonds and mortgage-backed
securities and can include securities in which the right to receive interest and
principal repayment have been sold separately.
Derivatives
Securities whose values are derived in part from the value of another security
or index. An example is a stock option.
Distributions
Dividends and/or capital gains paid by a Fund on its shares.
Stagecoach LifePath Funds Prospectus 47
<PAGE>
Glossary
- --------------------------------------------------------------------------------
Diversified
A diversified fund, as defined by the 1940 Act , is one that invests in cash,
Government securities, other investment companies and no more than 5% of its
total assets in a single issuer. These policies must apply to 75% of each Fund's
total assets.
Dollar-Denominated
Securities issued by foreign banks, companies or governments in U.S. dollars.
Duration
A measure of a security's or portfolio's sensitivity to changes in interest
rates. Duration is usually expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter durations.
Emerging Markets
Markets associated with a country that is considered by the International
Finance Corporation, the International Bank for Reconstruction and Development
and the international financial community to have an "emerging" stock market.
Such markets may be under-capitalized, have less-developed legal and financial
systems or may have less stable currencies than markets in the developed world.
FDIC
The Federal Deposit Insurance Corporation. This is the company that provides
federally-sponsored insurance covering bank deposits such as savings accounts
and CDs. Mutual funds are not FDIC insured.
Illiquid Security
A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.
Investment Grade Debt
A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment grade bonds may have some speculative characteristics.
Lehman Brothers 20+ Bond Index
An unmanaged index composed of U.S. Treasury bonds with 20 years or longer dates
to maturity.
48 Stagecoach LifePath Funds Prospectus
<PAGE>
- --------------------------------------------------------------------------------
Liquidity
The ability to readily sell a security at its fair price.
Moody's
One of the largest nationally recognized ratings organizations.
Nationally Recognized Rating Organization ("NRRO")
A company that examines the ability of a bond issuer to meet its obligations and
which rates the bonds accordingly.
Net Asset Value ("NAV")
The value of a single Fund share. It is determined by adding together all of a
Fund's assets, subtracting expenses and other liabilities, then dividing by the
total number of shares. The NAV is calculated separately for each class of the
Fund, and is determined as of the close of regular trading on each business day
the NYSE is open, typically 1:00 p.m. (Pacific time).
Non-Diversified
Any fund that does not have a policy as described under "diversified" in this
Glossary.
Options
An option is the right to buy or sell a security based on an agreed upon price
at a specified time. For example, an option may give the holder of a stock the
right to sell the stock to another party, allowing the seller to profit if the
price has fallen below the agreed price. Options can also be based on the
movement of an index such as the S&P 500.
Public Offering Price ("POP")
The NAV with the sales load added.
Repurchase Agreement
An agreement between a buyer and seller of a security in which the seller agrees
to repurchase the security at an agreed upon price and time.
Selling Agent
A person who has an agreement with the Fund's distributor that allows them to
sell a Fund's shares.
Shareholder Servicing Agent
Anyone appointed by the Funds to maintain shareholder accounts and records,
assist and provide information to shareholders or perform similar
functions.
Stagecoach LifePath Funds Prospectus 49
<PAGE>
Glossary
- --------------------------------------------------------------------------------
Signature Guarantee
A guarantee given by a financial institution that has verified the identity of
the maker of the signature.
S&P, S&P 500 Index
One of the largest nationally recognized ratings organizations. Standard and
Poor's also publishes various indexes or lists of companies representative of
sectors of the U.S. economy.
Statement of Additional Information
A document that supplements the disclosures made in the Prospectus.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
Total Return
The total value of capital growth and the value of all distributions, assuming
that distributions were used to purchase additional shares of the Fund.
Turnover Ratio
The percentage of the securities held in a Fund's portfolio, other than
short-term securities, that were bought or sold within a year.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
50 Stagecoach LifePath Funds Prospectus
<PAGE>
STAGECOACH FUNDS(R)
You may wish to review the following documents:
Statement of Additional Information
supplements the disclosures made by this Prospectus. The Statement of Additional
Information has been filed with the SEC and is incorporated by reference into
this Prospectus and is legally part of this Prospectus.
Annual/Semi-Annual Report
provides certain financial and other important information for the most recent
reporting period and each Fund's portfolio of investments.
These are available free of
charge by calling
1-800-222-8222, or from
Stagecoach Funds
PO Box 7066
San Francisco, CA
94120-7066
================================================================
STAGECOACH FUNDS:
----------------------------------------------------------------
. are NOT insured by the FDIC.
. are NOT obligations or deposits of Wells Fargo Bank, nor
guaranteed by the Bank.
. involve investment risk, including possible loss of
principal.
================================================================
[LOGO OF RECYCLED PAPER] SC LP P (11/98)
Printed on Recycled Paper
<PAGE>
STAGECOACH TRUST
Telephone: 1-800-222-8222
STATEMENT OF ADDITIONAL INFORMATION
November 30, 1998
LIFEPATH OPPORTUNITY/TM/ FUND
LIFEPATH 2010/TM/ FUND
LIFEPATH 2020/TM/ FUND
LIFEPATH 2030/TM/ FUND
LIFEPATH 2040/TM/ FUND
Class A, Class B and Class C
Stagecoach Trust (the "Company") is an open-end management investment company.
This Statement of Additional Information ("SAI"), contains additional
information about the LIFEPATH OPPORTUNITY, LIFEPATH 2010, LIFEPATH 2020,
LIFEPATH 2030 and LIFEPATH 2040 FUNDS. Each Fund offers Class A, Class B, and
Class C shares.
This SAI is not a prospectus and should be read in conjunction with the Funds'
Prospectus, also dated November 30, 1998. All terms used in this SAI that are
defined in the Prospectus have the meanings assigned in the Prospectus. A copy
of the Prospectus may be obtained without charge by calling 1-800-222-8222 or
writing to Stagecoach Trust, P.O. Box 7066, San Francisco, CA 94120-7066.
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 advisor 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 of MIP.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Historical Fund Information....................................................... 1
Investment Restrictions........................................................... 2
Additional Permitted Investment Activities........................................ 4
Risk Factors...................................................................... 19
Management........................................................................ 21
Performance Calculations.......................................................... 30
Determination of Net Asset Value.................................................. 35
Additional Purchase and Redemption Information.................................... 37
Portfolio Transactions............................................................ 37
Fund Expenses..................................................................... 40
Federal Income Taxes.............................................................. 40
Capital Stock..................................................................... 46
Other............................................................................. 48
Counsel........................................................................... 48
Independent Auditors.............................................................. 49
Financial Information............................................................. 49
Appendix.......................................................................... A-1
</TABLE>
i
<PAGE>
HISTORICAL FUND INFORMATION
The Company was organized as an unincorporated business Company under the laws
of the Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust (the "Company Agreement") dated May 14, 1993. The Company is authorized to
issue an unlimited number of shares of beneficial interest. Each LifePath Fund
of the Company offers Class A, Class B and Class C shares. The Class B shares of
the LifePath Opportunity Fund commenced operations C on June 30, 1998. The Class
B shares of all other LifePath Funds commenced operations on March 3, 1997. The
Class C shares of the LifePath 2040 Fund commenced operations on June 30, 1998.
The Class C shares of all other LifePath Funds commenced operations on November
30, 1998. 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.
As of June 24, 1998, the LifePath 2000 Fund changed its name to the LifePath
Opportunity Fund.
Under the terms of a License Agreement between the Company and Wells Fargo
Bank, N.A ("Wells Fargo Bank"), Wells Fargo Bank has granted the Company a non-
exclusive license to use the name "Stagecoach." If the License Agreement is
terminated, the Company, at the request of Wells Fargo Bank, will cease using
the name "Stagecoach."
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Company. However, the Company
Agreement disclaims shareholder liability for acts or obligations of the Company
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Company or a Trustee.
The Company Agreement provides for indemnification from the Company's property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Company. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Company itself is unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Company, the shareholder paying such liability is entitled to reimbursement from
the general assets of the Company. The Trustees intend to conduct the operations
of the Company in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Company. As described under
the "Management" section in this SAI, the Company 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. The LifePath
Opportunity Fund invests its assets in the LifePath 2000 Master Portfolio.
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
1
<PAGE>
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 advisor 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.
INVESTMENT RESTRICTIONS
Fundamental Investment Policies
- -------------------------------
Each LifePath Fund seeks to achieve its investment objective by investing all
of its assets in a corresponding master portfolio of MIP, with a substantially
similar investment objective and policies. Each Fund has adopted the following
fundamental investment restrictions, which cannot be changed 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.
The LifePath Funds may not:
(1) purchase securities of any issuer (except securities issued or guaranteed
by the U.S. Government, its agencies and instrumentalities, including
government-sponsored enterprises) if, as a result, more than 5% of the value of
a Fund's total assets would be invested in the securities of any one issuer or
such Fund would hold more than 10% of the outstanding voting securities of such
issuer, except that up to 25% of such Fund's total assets may be invested
without regard to these limitations, and provided that each Fund may invest all
of its assets in a diversified, open-end management investment company, or a
series thereof, with substantially the same investment objective, policies and
restrictions as the Fund, without regard to the limitations set forth in this
paragraph(1);
(2) invest in commodities, except that each Fund or Master Portfolio may
purchase and sell (i.e., write) options, forward contracts, and futures
contracts, including those relating to indices and options on futures contracts
or indices;
(3) 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;
(4) borrow money, except as permitted by applicable law (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 "Risk Factors" section);
2
<PAGE>
(5) make loans, except as permitted by applicable law, including through the
purchase of debt obligations and the entry into repurchase agreements, 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;
(6) underwrite securities of other issuers, except to the extent that the
purchase of securities directly from the issuer thereof or from an underwriter
for an issuer and the later disposition of such securities in accordance with a
Fund's investment program may be deemed to be an underwriting;
(7) invest 25% or more of their 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;
(8) issue senior securities, except as permitted by applicable law;
(9) purchase securities on margin, although 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;
(10) make investments for the purpose of exercising control or management.
Non-Fundamental Investment Policies
-----------------------------------
The Funds have adopted the following non-fundamental policies which may be
changed by a majority vote of the Board of Trustees of the Company at any time
and without shareholder approval.
(1) The Funds may invest in shares of other open-end management investment
companies, subject to the limitations of Section 12(d)(1) of the 1940 Act.
Under the 1940 Act, a Fund's investment in such securities currently is limited
to, subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's net assets with respect to any one
investment company, and (iii) 10% of such Fund's net assets in the aggregate.
Other investment companies in which the Funds invest can be expected to charge
fees for operating expenses, such as investment advisory and administration
fees, that would be in addition to those charged by a Fund.
Notwithstanding any other investment policy or limitation (whether or not
fundamental), each Fund may invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the Fund. A
decision to so invest all of its assets may, depending on the circumstances
applicable at the time, require approval of shareholders.
(2) The Funds may not invest or hold more than 15% of their respective net
assets in illiquid securities. For this purpose, illiquid securities include,
among others, (a) securities that
3
<PAGE>
are illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale, (b) fixed time deposits that are subject to
withdrawal penalties and that have maturities of more than seven days, and (c)
repurchase agreements not terminable within seven days.
(3) The Funds may lend portfolio securities to brokers, dealers and financial
institutions, in amounts not to exceed (in the aggregate) one-third of the
respective Fund's total assets. Any such loans of portfolio securities will be
fully collateralized based on values that are marked to market daily. The Funds
will not enter into any portfolio security lending arrangement having a duration
of longer than one year.
The Funds do not invest in the following types of derivatives that generally
are considered to be potentially volatile: capped floaters, leveraged floaters,
range floaters, dual index floaters or inverse floaters. Additionally, the
Funds will not invest in securities whose interest rate reset provisions
materially lag short-term interest rates, such as Cost of Funds Index Floaters
or other derivative instruments the Funds consider to have the potential for
excessive volatility.
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 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.
Set forth below are descriptions of certain investments and additional
investment policies of the Funds.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Bank Obligations
----------------
The Funds may invest in bank obligations, including certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, a Fund may
be subject to additional investment risks that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment
4
<PAGE>
of principal and interest on these securities and the possible seizure or
nationalization of foreign deposits. In addition, foreign branches of U.S. banks
and foreign banks may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic branches of U.S. banks.
Certificates of deposit are negotiable certificates evidencing the obligation
of a bank to repay funds deposited with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by 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 ("FDIC"). Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. The other short-
term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.
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 Investors Service, Inc. ("Moody's") and "BBB" by Standard &
Poor's Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") and Duff &
Phelps Credit Rating Co. ("Duff"), may be subject to such risk 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 an 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
5
<PAGE>
Portfolio to sell the security. If such a policy would cause an 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
---------------------------------------
The Funds may purchase floating- and variable-rate obligations. Each Fund may
purchase floating- and variable-rate demand notes and bonds. These obligations
may have stated maturities in excess of thirteen months, but they permit the
holder to demand payment of principal at any time, or at specified intervals not
exceeding thirteen months. Variable-rate demand notes include master demand
notes that are obligations that permit a Fund to invest fluctuating amounts,
which may change daily without penalty, pursuant to direct arrangements between
the Fund, as lender, and the borrower. The interest rates on these notes may
fluctuate from time to time. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders of such obligations. The
interest rate on a floating-rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable-rate demand obligation is
adjusted automatically at specified intervals. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, a Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations frequently
are not rated by credit rating agencies and each Fund may invest in obligations
which are not so rated only if BGFA determines that at the time of investment
the obligations are of comparable quality to the other obligations in which such
Fund may invest. BGFA, on behalf of each Fund, considers on an ongoing basis
the creditworthiness of the issuers of the floating- and variable-rate demand
obligations in such Fund's portfolio. No Fund will invest more than 10% of the
value of its total net assets in floating- or variable-rate demand obligations
whose demand feature is not exercisable within seven days. Such obligations may
be treated as liquid, provided that an active secondary market exists.
Foreign Currency Transactions
-----------------------------
The Funds may enter into foreign currency exchange contracts in order to
protect against uncertainty in the level of future foreign exchange rates. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are entered into the interbank market
conducted between currency traders (usually large commercial banks) and their
customers. Forward foreign currency exchange contracts may be bought or sold to
protect a Fund against a possible loss resulting from
6
<PAGE>
an adverse change in the relationship between foreign currencies and the U.S.
dollar, or between foreign currencies. Although such contracts are intended to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
Because the Funds may invest in securities denominated in currencies other
than the U.S. dollar and may temporarily hold funds in bank deposits or other
money market investments denominated in foreign currencies, they may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. Changes in foreign
currency exchange rates influence values within a Fund from the perspective of
U.S. investors. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and any net investment income and gains to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors.
Investments in foreign securities also involve certain inherent risks, such as
political or economic instability of the issuer or the country of issue, the
difficulty of predicting international trade patterns and the possibility of
imposition of exchange controls. Such securities may also be subject to greater
fluctuations in price than securities of domestic corporations. In addition,
there may be less publicly available information about a foreign company than
about a domestic company. Foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic companies. Investments in foreign securities and
forward contracts may also be subject to withholding and other taxes imposed by
foreign governments. With respect to certain foreign countries, there is also a
possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investments in those countries.
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 each 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
advisor. Securities purchased on a when-issued or forward commitment basis may
expose the relevant Fund to risk because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued or
forward commitment basis can involve the additional risk that the yield
available in the market when the delivery takes place actually may be higher
than that obtained in the transaction itself.
7
<PAGE>
Each Fund will segregate cash, U.S. Government obligations or other high-
quality debt instruments in an amount at least equal in value to the Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will segregate additional liquid assets on a daily basis so
that the value of the segregated assets is equal to the amount of such
commitments.
Futures Contracts
-----------------
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.
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
8
<PAGE>
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.
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 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.
Loans of Portfolio Securities
-----------------------------
Each Fund may lend its portfolio securities to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or letters of credit maintained
on a daily marked-to-market basis in an amount at least equal to the current
market value of the securities loaned; (2) the Fund may at any time call the
loan and obtain the return of the securities loaned within five business days;
(3) the Fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not at
any time exceed one third of the total assets of the Fund.
A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested in short-term money market instruments.
In connection with lending securities, a Fund may pay reasonable finders,
administrative and custodial fees. A Fund will not enter into any
9
<PAGE>
security lending arrangement having a duration longer than one year. Loans of
securities involve a risk that the borrower may fail to return the securities or
may fail to provide additional collateral. In either case, a Fund could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. When a Fund lends its securities, it
continues to receive interest or dividends on the securities loaned and may
simultaneously earn interest on the collateral received from the borrower or
from the investment of cash collateral in readily marketable, high-quality,
short-term obligations. Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by a Fund if a material
event affecting the investment is to occur. A Fund may pay a portion of the
interest or fees earned from securities lending to a borrower or placing broker.
Borrowers and placing brokers may not be affiliated, directly or indirectly,
with BGFA, Stephens Inc. or any of their affiliates.
Money Market Instruments and Temporary Investments
--------------------------------------------------
The Funds may invest in the following types of high quality money market
instruments that have remaining maturities not exceeding one year: (i) U.S.
Government obligations; (ii) negotiable certificates of deposit, bankers'
acceptances and fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime-1" by Moody's
or "A-1" or "A-1--" by S&P, or, if unrated, of comparable quality as determined
by BGFA, as investment advisor; and (iv) repurchase agreements. The Funds also
may invest in short-term U.S. dollar-denominated obligations of foreign banks
(including U.S. branches) that at the time of investment: (i) have more than $10
billion, or the equivalent in other currencies, in total assets; (ii) are among
the 75 largest foreign banks in the world as determined on the basis of assets;
(iii) have branches or agencies in the United States; and (iv) in the opinion of
BGFA, as investment advisor, are of comparable quality to obligations of U.S.
banks which may be purchased by the Funds.
Letters of Credit. Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Funds may purchase may be backed by an unconditional and irrevocable letter of
credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of BGFA, are of comparable quality to issuers of
other permitted investments of the Fund may be used for letter of credit-backed
investments.
Repurchase Agreements. A Fund may enter into repurchase agreements, wherein
the seller of a security to the Fund agrees to repurchase that security from the
Fund at a mutually agreed upon time and price. A Fund may enter into repurchase
agreements only with respect to securities that could otherwise be purchased by
the Fund. All repurchase agreements will be fully collateralized at 102% based
on values that are marked to market daily. The maturities of the underlying
securities in a repurchase agreement transaction may be greater than twelve
months, although the maximum term of a repurchase agreement will always be less
than twelve months. If the seller defaults and
10
<PAGE>
the value of the underlying securities has declined, a Fund may incur a loss. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the security, the Fund's disposition of the security may be delayed or limited.
A Fund will only enter into repurchase agreements with primary broker/dealers
and commercial banks that meet guidelines established by the Board of Trustees
and that are not affiliated with the investment advisor. The Funds may
participate in pooled repurchase agreement transactions with other funds advised
by BGFA.
Mortgage-Related Securities
---------------------------
The Funds may invest in mortgage-related securities. Mortgage pass-through
securities are securities representing interests in "pools" of mortgages in
which payments of both interest and principal on the securities are made
monthly, in effect "passing through" monthly payments made by the individual
borrowers on the residential mortgage loans which underlie the securities (net
of fees paid to the issuer or guarantor of the securities). Early repayment of
principal on mortgage pass-through securities (arising from prepayments of
principal due to sale of the underlying property, refinancing, or foreclosure,
net of fees and costs which may be incurred) may expose a Fund to a lower rate
of return upon reinvestment of principal. Also, if a security subject to
prepayment has been purchased at a premium, in the event of prepayment the value
of the premium would be lost. Like other fixed-income securities, when interest
rates rise, the value of a mortgage-related security generally will decline;
however, when interest rates decline, the value of mortgage-related securities
with prepayment features may not increase as much as other fixed-income
securities. Payment of principal and interest on some mortgage pass-through
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U.S. Government or its agencies
or instrumentalities. Mortgage pass-through securities created by non-
government issuers (such as commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other secondary
market issuers) may be supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance, and letters of
credit, which may be issued by governmental entities, private insurers or the
mortgage poolers. The Funds may also invest in investment grade Collateralized
Mortgage Obligations ("CMOs"). CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage pass-
through securities guaranteed by the Government National Mortgage Association
("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") or the Federal
National Mortgage Association ("FNMA"). CMOs are structured into multiple
classes, with each class bearing a different stated maturity. Payments of
principal, including prepayments, are first returned to investors holding the
shortest maturity class; investors holding the longer maturity classes receive
principal only after the first class has been retired. As new types of
mortgage-related securities are developed and offered to investors, the advisor
will, consistent with a Fund's investment objective, policies and quality
standards, consider making investments in such new types of mortgage-related
securities.
There are risks inherent in the purchase of mortgage-related securities. For
example, these securities are subject to a risk that default in payment will
occur on the underlying mortgages. In addition to default risk, these
securities are subject to the risk that prepayment on the underlying
11
<PAGE>
mortgages will occur earlier or later or at a lessor or greater rate than
expected. To the extent that the advisor's assumptions about prepayments are
inaccurate, these securities may expose the Funds to significantly greater
market risks than expected.
Nationally Recognized Statistical Ratings Organizations ("NRSROs")
------------------------------------------------------------------
The ratings of Moody's, S&P, Duff, Fitch and IBCA Inc. represent their
opinions as to the quality of debt securities. It should be emphasized, however,
that ratings are general and not absolute standards of quality, and debt
securities with the same maturity, interest rate and rating may have different
yields while debt securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to purchase by a Fund, an
issue of debt securities may cease to be rated or its rating may be reduced
below the minimum rating required for purchase by a Fund. The advisor will
consider such an event in determining whether the Fund involved should continue
to hold the obligation.
The payment of principal and interest on debt securities purchased by the
Funds depends upon the ability of the issuers to meet their obligations. An
issuer's obligations under its debt securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be
enacted by federal or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or, in the case of governmental entities, upon the ability
of such entities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest and principal of its debt securities may
be materially adversely affected by litigation or other conditions. Further, it
should also be, noted with respect to all municipal obligations issued after
August 15, 1986 (August 31, 1986 in the case of certain bonds), the issuer must
comply with certain rules formerly applicable only to "industrial development
bonds" which, if the issuer fails to observe them, could cause interest on the
municipal obligations to become taxable retroactive to the date of issue.
Options Trading
---------------
The Funds may purchase or sell options on individual securities or options on
indices of securities as described below. The purchaser of an option risks a
total loss of the premium paid for the option if the price of the underlying
security does not increase or decrease sufficiently to justify exercise. The
seller of an option, on the other hand, will recognize the premium as income if
the option expires unrecognized but foregoes any capital appreciation in excess
of the exercise price in the case of a call option and may be required to pay a
price in excess of current market value in the case of a put option.
Call and Put Options on Specific Securities. The Funds may invest in call and
put options on a specific security. A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, an underlying
security at the exercise price at any time during the option period.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, an underlying security at the exercise price at
any time during the option period.
12
<PAGE>
Investments by a Fund in off-exchange options will be treated as "illiquid" and
therefore subject to the Fund's policy of not investing more than 15% of its net
assets in illiquid securities.
The Funds may write covered call option contracts and secured put options as
BGFA deems appropriate. A covered call option is a call option for which the
writer of the option owns the security covered by the option. Covered call
options written by a Fund expose the Fund during the term of the option (i) to
the possible loss of opportunity to realize appreciation in the market price of
the underlying security or (ii) to possible loss caused by continued holding of
a security which might otherwise have been sold to protect against depreciation
in the market price of the security. If a Fund writes a secured put option, it
assumes the risk of loss should the market value of the underlying security
decline below the exercise price of the option. The aggregate value of the
securities subject to options written by a Fund will not exceed 25%. The use of
covered call options and securities put options will not be a primary investment
technique of the Funds, and they are expected to be used infrequently. If the
advisor is incorrect in its forecast of market value or other factors when
writing the foregoing options, a Fund would be in a worse position than it would
have been had the foregoing investment techniques not been used.
Each Fund may engage in unlisted over-the-counter options with broker/dealers
deemed creditworthy by the advisor. Closing transactions for such options are
usually effected directly with the same broker/dealer that effected the original
option transaction. A Fund bears the risk that the broker/dealer will fail to
meet its obligations. There is no assurance that a liquid secondary trading
market exists for closing out an unlisted option position. Furthermore,
unlisted options are not subject to the protections afforded purchasers of
listed options by the Options Clearing Corporation, which performs the
obligations of its members who fail to perform in connection with the purchase
or sale of options.
Each Fund may buy put and call options and write covered call and secured put
options. Options trading is a highly specialized activity which entails greater
than ordinary investment risk. Options may be more volatile than the underlying
instruments, and therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
instruments themselves. Purchasing options is a specialized investment
technique that entails a substantial risk of a complete loss of the amounts paid
as premiums to the writer of the option.
The Funds may also write covered call and secured put options from time to
time as the advisor deems appropriate. By writing a covered call option, a Fund
forgoes the opportunity to profit from an increase in the market of the
underlying security above the exercise price except insofar as the premium
represents such a profit, and it is not able to sell the underlying security
until the option expires or is exercised or the Fund effects a closing purchase
transaction by purchasing an option of the same series. If a Fund writes a
secured put option, it assumes the risk of loss should the market value of the
underlying security decline below the exercise price of the option. If the
advisor is incorrect in its forecast of market value or other factors when
writing the foregoing options, the Fund would be in a worse position than it
would have been had the foregoing investment techniques not been used.
13
<PAGE>
A call option for a particular security gives the purchaser of the option the
right to buy, and a writer the obligation to sell, the underlying security at
the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligation under the option
contract. A put option for a particular security gives the purchaser the right
to sell the security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
Options on indices provide the holder with the right to make or receive a cash
settlement upon exercise of the option. With respect to options on indices, the
amount of the settlement equals the difference between the closing price of the
index at the time of exercise and the exercise price of the option expressed in
dollars, times a specified multiple.
The Funds will write call options only if they are "covered." In the case of
a call option on a security or currency, the option is "covered" if a Fund owns
the instrument underlying the call or has an absolute and immediate right to
acquire that instrument without additional cash consideration (or, if additional
cash consideration is required, cash, U.S. Government securities or other liquid
high grade debt obligations, in such amount are held in a segregated account by
the Fund's custodian) upon conversion or exchange of other securities held by
it. For a call option on an index, the option is covered if a Fund maintains
with its custodian a diversified portfolio of securities comprising the index or
liquid assets equal to the contract value. A call option is also covered if a
Fund holds a call on the same instrument or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the Fund in liquid assets in a
segregated account with its custodian. The Funds will write put options only if
they are "secured" by liquid assets maintained in a segregated account by the
Funds' custodian in an amount not less than the exercise price of the option at
all times during the option period.
A Fund's obligation to sell an instrument subject to a covered call option
written by it, or to purchase an instrument subject to a secured put option
written by it, may be terminated prior to the expiration date of the option by
the Fund's execution of a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
instrument, exercise price and expiration date) as the option previously
written. Such a purchase does not result in the ownership of an option. A
closing purchase transaction is ordinarily effected to realize a profit on an
outstanding option, to prevent an underlying instrument from being called, to
permit the sale of the underlying instrument or to permit the writing of a new
option containing different terms on such underlying instrument. The cost of
such a liquidation purchase plus transaction costs may be greater than the
premium received upon the original option, in which event the Fund will have
incurred a loss in the transaction. There is no assurance that a liquid
secondary market will exist for any particular option. An option writer, unable
to effect a closing purchase transaction, will not be able to sell the
underlying instrument (in the case of a covered call option) or liquidate the
segregated account (in the case of a secured put option) until the option
expires or the optioned instrument or currency is delivered upon exercise with
the result that the writer in such circumstances will be subject to the risk of
market decline or appreciation in the instrument during such period.
14
<PAGE>
When a Fund purchases an option, the premium paid by it is recorded as an
asset of the Fund. When a Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by a Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the current bid price. If an option
purchased by a Fund expires unexercised the Fund realizes a loss equal to the
premium paid. If a Fund enters into a closing sale transaction on an option
purchased by it, the Fund realizes a gain if the premium received by the Fund on
the closing transaction is more than the premium paid to purchase the option, or
a loss if it is less. If an option written by a Fund expires on the stipulated
expiration date or if a Fund enters into a closing purchase transaction, it
realizes a gain (or loss if the cost of a closing purchase transaction exceeds
the net premium received when the option is sold) and the deferred credit
related to such option is eliminated. If an option written by a Fund is
exercised, the proceeds of the sale are increased by the net premium originally
received and the Fund realizes a gain or loss.
There are several risks associated with transactions in options. For example,
there are significant differences between the securities, currency and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. In addition, a liquid
secondary market for particular options, whether traded over-the-counter or on
an exchange, may be absent for reasons that include the following: there may be
insufficient trading interest in certain options; restrictions may be imposed by
an exchange on opening transactions or closing transactions or both; trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities or currencies;
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; the facilities of an exchange or the Options Clearing Corporation may
not be adequate at all times to handle current trading value; or one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or in
that class or series of options) would cease to exist, although outstanding
options that had been issued by the Options Clearing Corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms. A Fund is likely to be unable to control losses by closing its
position where a liquid secondary market does not exist. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.
The Funds may purchase or sell options on individual securities or options on
indices of securities as described below. The purchaser of an option risks a
total loss of the premium paid for the option if the price of the underlying
security does not increase or decrease sufficiently to justify exercise. The
seller of an option, on the other hand, will recognize the premium as income if
the option expires unrecognized but foregoes any capital appreciation in excess
of the exercise price in the case of a call option and may be required to pay a
price in excess of current market value in the case of a put option.
15
<PAGE>
The Funds may engage in unlisted over-the-counter options with broker/dealers
deemed creditworthy by the advisor. Closing transactions for such options are
usually effected directly with the same broker/dealer that effected the original
option transaction. A Fund bears the risk that the broker/dealer will fail to
meet its obligations. There is no assurance that a liquid secondary trading
market exists for closing out an unlisted option position. Furthermore, unlisted
options are not subject to the protections afforded purchasers of listed options
by the Options Clearing Corporation, which performs the obligations of its
members who fail to perform in connection with the purchase or sale of options.
Stock Index Options. The Funds may purchase call and put options and write
covered call options on stock indices listed on national securities exchanges or
traded in the over-the-counter market to the extent of 25% of the value of its
net assets.
The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in a Fund's investment portfolio
correlate with price movements of the stock index selected. Because the value of
a stock index option depends upon changes to the price of all stocks comprising
the index rather than the price of a particular stock, whether a Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the price of all stocks in the index, rather than
movements in the price of a particular stock. Accordingly, successful use by a
Fund of options on stock indexes will be subject to BGFA's ability to correctly
analyze movements in the direction of the stock market generally or of
particular industry or market segments.
Stock Index Futures Contracts and Options on Stock Index Futures Contracts.
The Funds may participate in stock index futures contracts and options on stock
index futures contracts. A futures transaction involves a firm agreement to buy
or sell a commodity or financial instrument at a particular price on a specified
future date, while an option transaction generally involves a right, which may
or may not be exercised, to buy or sell a commodity of financial instrument at a
particular price on a specified future date. Futures contracts and options are
standardized and exchange-traded, where the exchange serves as the ultimate
counterparty for all contracts. Consequently, the only credit risk on futures
contracts is the creditworthiness of the exchange. Futures contracts, however,
are subject to market risk (i.e., exposure to adverse price changes).
A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount
multiplied by 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. As the aggregate market value of the stocks in the index
changes, the value of the index also changes. In the event that the index level
rises above the level at which the stock index futures contract was sold, the
seller of the stock index futures contract realizes a loss determined by the
difference between the two index levels at the time of expiration of the stock
index futures contract, and the purchaser realizes a gain in that amount. In the
event the index level falls below the level at which the stock index futures
contract was sold, the seller recognizes a gain determined by the difference
between the two index levels at the expiration of the stock index futures
contract, and the purchaser realizes a loss. Stock index futures contracts
expire on a fixed
16
<PAGE>
date, currently one to seven months from the date of the contract, and are
settled upon expiration of the contract.
Stock index futures contracts may be purchased to protect a Fund against an
increase in the prices of stocks that Fund intends to purchase. If a Fund is
unable to invest its cash (or cash equivalents) in stock in an orderly fashion,
a Fund may purchase a stock index futures contract to offset any increase in the
price of the stock. However, it is possible that the market may decline instead,
resulting in a loss on the stock index futures contract. If Fund then concludes
not to invest in stock at that time, or if the price of the securities to be
purchased remains constant or increases, a Fund realizes a loss on the stock
index futures contract that is not offset by a reduction in the price of
securities purchased. The Funds also may buy or sell stock index futures
contracts to close out existing futures positions.
The Funds may also purchase put options on stock index futures contracts.
Sales of such options may also be made to close out an open option position. The
Funds may, for example, purchase a put option on a particular stock index
futures contract or stock index to protect against a decline in the value of the
common stocks it holds. If the stocks in the index decline in value, the put
should become more valuable and the Funds could sell it to offset losses in the
value of the common stocks. In this way, put options may be used to achieve the
same goals the Funds seek in selling futures contracts. A put option on a stock
index future gives the purchaser the right, in return for a premium paid, to
assume a short (i.e., the right to sell stock index futures) position in a stock
index futures contract at a specified exercise price ("strike price") at any
time during the period of the option. If the option is exercised by the holder
before the last trading date during the option period, the holder receives the
futures position, as well as any balance in the futures margin account. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement is made entirely in cash in an amount equal to the
difference between the strike price and the closing level of the relevant index
on the expiration date.
BGFA expects that an increase or decrease in the index in relation to the
strike price level would normally correlate to an increase or decrease (but not
necessarily to the same extent) in the value of a Fund's common stock portfolio
against which the option was written. Thus, any loss in the option transaction
may be offset by an increase in the value of the common stock portfolio to the
extent changes in the index correlate to changes in the value of that portfolio.
The Funds may liquidate the put options they have purchased by effecting a
closing sale transaction rather than exercising the option. This is accomplished
by selling an option of the same series as the option previously purchased.
There is no guarantee that the Funds will be able to effect the closing sale
transaction. The Funds realize a gain from a closing sale transaction if the
price at which the transaction is effected exceeds the premium paid to purchase
the option and, if less, the Funds realize a loss.
The Funds may each invest in stock index futures in order to protect the value
of common stock investments or to maintain liquidity, provided not more than 5%
of a Fund's net assets are committed to such transactions. 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
17
<PAGE>
stocks in the index is made. With respect to stock indices that are permitted
investments, the Funds intend 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.
Other Asset-Backed Securities
-----------------------------
The Funds may purchase asset-backed securities unrelated to mortgage loans.
These asset-backed securities may consist of undivided fractional interests in
pools of consumer loans or receivables held in Company. Examples include
certificates for automobile receivables (CARS) and credit card receivables
(CARDS). Payments of principal and interest on these asset-backed securities
are "passed through" on a monthly or other periodic basis to certificate holders
and are typically supported by some form of credit enhancement, such as a letter
of credit, surety bond, limited guaranty, or subordination. The extent of
credit enhancement varies, but usually amounts to only a fraction of the asset-
backed security's par value until exhausted. Ultimately, asset-backed
securities are dependent upon payment of the consumer loans or receivables by
individuals, and the certificate holder frequently has no recourse to the entity
that originated the loans or receivables. The actual maturity and realized
yield will vary based upon the prepayment experience of the underlying asset
pool and prevailing interest rates at the time of prepayment. Asset-backed
securities are relatively new instruments and may be subject to greater risk of
default during periods of economic downturn than other instruments. Also, the
secondary market for certain asset-backed securities may not be as liquid as the
market for other types of securities, which could result in a Fund experiencing
difficulty in valuing or liquidating such securities.
Other Investment Companies
--------------------------
Each LifePath 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.
Privately Issued Securities
---------------------------
The Funds may invest in privately issued securities, including those which may
be resold only in accordance with Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). Rule 144A Securities are restricted securities that
are not publicly traded. Accordingly, the liquidity of the market for specific
Rule 144A Securities may vary. Delay or difficulty in selling such securities
may result in a loss to a Fund. Privately issued or Rule 144A securities that
are determined by the investment advisor to be "illiquid" are subject to the
Funds' policy of not investing more than 15% of its net assets in illiquid
securities. The investment advisor, under guidelines approved by
18
<PAGE>
Board of Trustees of the Company, will evaluate the liquidity characteristics of
each Rule 144A Security proposed for purchase by a Fund on a case-by-case basis
and will consider the following factors, among others, in their evaluation: (1)
the frequency of trades and quotes for the Rule 144A Security; (2) the number of
dealers willing to purchase or sell the Rule 144A Security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the Rule
144A Security; and (4) the nature of the Rule 144A Security and the nature of
the marketplace trades (e.g., the time needed to dispose of the Rule 144A
Security, the method of soliciting offers and the mechanics of transfer).
U.S. Government Obligations
---------------------------
The Funds may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government obligations").
Payment of principal and interest on U.S. Government obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the U.S.
Government will provide financial support to its agencies or instrumentalities
where it is not obligated to do so. In addition, U.S. Government obligations are
subject to fluctuations in market value due to fluctuations in market interest
rates. As a general matter, the value of debt instruments, including U.S.
Government obligations, declines when market interest rates increase and rises
when market interest rates decrease. Certain types of U.S. Government
obligations are subject to fluctuations in yield or value due to their structure
or contract terms.
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.
RISK FACTORS
Investments in a Fund are not bank deposits or obligations of BGFA, are not
insured by the FDIC and are not insured against loss of principal. When the
value of the securities that a Fund owns declines, so does the value of your
Fund shares. You should be prepared to accept some risk with the money you
invest in a Fund.
The portfolio equity securities of each Fund are subject to equity market
risk. Equity market risk is the risk that stock prices will fluctuate or
decline over short or even extended periods.
19
<PAGE>
Throughout the first six months of 1998, the stock market, as measured by the
S&P 500 Index and other commonly used indices, has been trading at or close to
record levels. There can be no guarantee that these performance levels will
continue. The portfolio debt instruments of a Fund are subject to credit and
interest-rate risk. Credit risk is the risk that issuers of the debt instruments
in which a Fund invests may default on the payment of principal and/or interest.
Interest-rate risk is the risk that increases in market interest rates may
adversely affect the value of the debt instruments in which the Funds invest and
hence the value of your investment in a Fund.
The market value of a Fund's investment in fixed-income securities will change
in response to various factors, such as changes in market interest-rates and the
relative financial strength of an issuer. During periods of falling interest
rates, the value of fixed-income securities generally rises. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. Debt securities with longer maturities, which tend to produce higher
yields, are subject to potentially greater capital appreciation and depreciation
than obligations with shorter maturities. Fluctuations in the market value of
fixed-income securities can be reduced, but not eliminated, by variable and
floating-rate features.
Securities rated in the fourth highest rating category are regarded by S&P as
having an adequate capacity to pay interest and repay principal, but changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make such repayments. Moody's considers such securities as having
speculative characteristics. Subsequent to its purchase by the Fund, an issue of
securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase by the Fund. The advisor will consider such an
event in determining whether a Fund should continue to hold the obligation.
Securities rated below the fourth highest rating category (sometimes called
"junk bonds") are often considered to be speculative and involve greater risk of
default or price changes due to changes in the issuer's credit-worthiness. The
market prices of these securities may fluctuate more than higher quality
securities and may decline significantly in periods of general economic
difficulty.
There may be some additional risks associated with investments in smaller
and/or newer companies because their shares tend to be less liquid than
securities of larger companies. Further, shares of small and new companies are
generally more sensitive to purchase and sale transactions and changes in the
issuer's financial condition and, therefore, the prices of such stocks may be
more volatile than those of larger company stocks and may be subject to more
abrupt price movements than securities of larger companies.
Investing in the securities of issuers in any foreign country, including
American Depository Receipts ("ADRs") and European Depository Receipts ("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.
20
<PAGE>
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.
Illiquid securities, which may include certain restricted securities, may be
difficult to sell promptly at an acceptable price. Certain restricted securities
may be subject to legal restrictions on resale. Delay or difficulty in selling
securities may result in a loss or be costly to a Fund.
The advisor may use certain derivative investments or techniques, such as
buying and selling options and futures contracts and entering into currency
exchange contracts or swap agreements, to adjust the risk and return
characteristics of a Fund's portfolio. Derivatives are financial instruments
whose value is derived, at least in part, from the price of another security or
a specified asset, index or rate. Some derivatives may be more sensitive than
direct securities to changes in interest rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield or value due to
their structure or contract terms. If a Fund's advisor judges market conditions
incorrectly, the use of certain derivatives could result in a loss, regardless
of the advisor's intent in using the derivatives.
There is, of course, no assurance that a Fund will achieve its investment
objective or be successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of investment products.
MANAGEMENT
The following information supplements and should be read in conjunction with
the Prospectus section entitled "Organization and Management of the Funds."
Trustees and officers of the Company, together with information as to their
principal 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
Company for purposes of the 1940 Act are indicated by an asterisk.
21
<PAGE>
<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, Senior Vice President of Stephens Inc.;
Chairman President of Stephens Insurance Services Inc.;
and President Senior Vice President of Stephens Sports Management Inc.;
and President of Investors Brokerage Insurance Inc.
Thomas S. Goho, 55 Trustee Associate Professor of Finance,
321 Beechcliff Court Calloway School of Business and Accounting at
Winston-Salem, NC 27104 Wake Forest University since 1994.
Peter G. Gordon, 54 Trustee Chairman and Co-Founder of Crystal Geyser Water Company
Crystal Geyser Water Co. and President of Crystal Geyser Roxane Water Company
55 Francisco Street since 1977.
San Francisco, CA 94133
Joseph N. Hankin, 57 Trustee President of Westchester Community College since 1971;
75 Grasslands Road Adjunct Professor of Columbia University Teachers College
Valhalla, NY 10595 since 1976.
*W. Rodney Hughes, 71 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
*J. Tucker Morse, 53 Trustee Private Investor; Chairman of Home Account Network, Inc.;
4 Beaufain Street Real Estate Developer; Chairman of Renaissance Properties
Charleston, SC 29401 Ltd., President of Morse Investment Corporation; and
Co-Managing Partner of Main Street Ventures.
Richard H. Blank, Jr., 41 Chief Operating Vice-President of Stephens Inc.; Director of Stephens
Officer, Secretary Sports Management Inc.; and Director of Capo Inc.
and Treasurer
</TABLE>
22
<PAGE>
COMPENSATION TABLE
For the Fiscal Year-ended February 28, 1998
-------------------------------------------
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEXES
- ----------------------- -------------------------- -------------------------------------
<S> <C> <C>
Jack S. Euphrat $0 $34,500
Trustee
R. Greg Feltus $0 0
Trustee
Thomas S. Goho $0 $34,500
Trustee
Peter G. Gordon $0 $30,500
Trustee
Joseph N. Hankin $0 $34,500
Trustee
W. Rodney Hughes $0 $33,000
Trustee
Robert M. Joses $0 $ 4,000
Trustee
J. Tucker Morse $0 $33,000
Trustee
</TABLE>
As of January 1, 1998, Peter G. Gordon replaced Robert M. Joses on the Boards
of the Wells Fargo Fund Complex.
Trustees of the Company are compensated annually by the Company and by all the
registrants in each fund complex they serve as indicated below and also are
reimbursed for all out-of-pocket expenses relating to attendance at board
meetings. The Company, Stagecoach Funds, Inc. and Life & Annuity Trust are
considered to be members of the same fund complex as such term is defined in
Form N-1A under the 1940 Act (the "Wells Fargo Fund Complex"). MasterWorks Funds
Inc., Master Investment Portfolio, and Managed Series Investment Trust together
form a separate fund complex (the "BGFA Fund Complex"). Each of the Trustees and
Officers of the Company serves in the identical capacity as Trustees and
officers or as Directors and/or officers of each registered open-end management
investment company in both the Wells Fargo and BGFA Fund Complexes, except for
Joseph N. Hankin and Peter G. Gordon, who only serve the aforementioned members
of the Wells Fargo Fund Complex. The Trustees are compensated by other companies
and trusts within a fund complex for their services as Directors/Trustees to
such companies and trusts. Currently the Trustees do not receive
23
<PAGE>
any retirement benefits or deferred compensation from the Company or any other
member of each fund complex.
As the date of this SAI, the Trustees and Officers of the Company as a group
beneficially owned less than 1% of the outstanding shares of the Company.
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 LifePath Opportunity Fund invests its assets in the
LifePath 2000 Master Portfolio. 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 Company'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 "Organization and Management
of the Funds" in the Prospectus for additional description of the Funds' and
Master Portfolios' expenses and management.
Each Fund may withdraw its investment in the corresponding Master Portfolio
only if the Company'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 advisor 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 "Investment 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 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 advisor 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
24
<PAGE>
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.
INVESTMENT ADVISOR. BGFA provides investment advisory services to each
------------------
LifePath Master Portfolio. As Investment Advisor, BGFA furnishes investment
guidance and policy direction in connection with the daily portfolio management
of the Master Portfolios. BGFA furnishes to the Company's Board of Trustees
periodic reports on the investment strategy and performance of each Master
Portfolio. BGFA provides the Master Portfolios with, among other things, money
market security and fixed-income research, analysis and statistical and economic
data and information concerning interest rate and securities markets trends,
portfolio composition, and credit conditions. 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.
BGFA was created by the reorganization of Wells Fargo Nikko Investment
Advisors ("WFNIA") with and into an affiliate of Wells Fargo Institutional
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 periods indicated below, the corresponding Master Portfolios of each
LifePath Fund paid to Wells Fargo Bank, and for all other periods indicated
below, the corresponding Master Portfolio of each LifePath Fund paid to BGFA,
the following advisory fees:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MASTER PORTFOLIO 3/1/95-12/31/95 1/1/96- 2/29/96 2/28/97 2/28/98
- --------------------------------------- ---------------- ---------------- ---------- ----------
<S> <C> <C> <C> <C>
LifePath 2000 Master Portfolio $ 363,537 $ 99,511 $ 689,347 $ 656,142
LifePath 2010 Master Portfolio $ 312,434 $ 86,919 $ 757,505 $1,018,984
LifePath 2020 Master Portfolio $ 520,296 $ 141,075 $1,149,160 $1,572,634
LifePath 2030 Master Portfolio $ 343,850 $ 93,240 $ 714,647 $1,048,151
LifePath 2040 Master Portfolio $ 503,315 $ 148,324 $1,154,337 $1,767,632
</TABLE>
GENERAL. 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).
INVESTMENT SUB-ADVISOR. Prior to January 1, 1996 WFNIA provided investment
----------------------
sub-advisory services to each Master Portfolio. As of January 1, 1996, the
Funds, no longer retain an investment sub-advisor.
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>
MASTER PORTFOLIO 3/1/95-12/31/95
- ---------------- ---------------
<S> <C>
LifePath 2000 Master Portfolio $261,344
LifePath 2010 Master Portfolio $224,903
LifePath 2020 Master Portfolio $374,802
LifePath 2030 Master Portfolio $247,703
LifePath 2040 Master Portfolio $361,673
</TABLE>
25
<PAGE>
ADMINISTRATOR AND CO-ADMINISTRATOR. The Company has retained Wells Fargo Bank
----------------------------------
as Administrator and Stephens Inc. ("Stephens") as Co-Administrator on behalf
of the Funds. Under the Administration and Co-Administration Agreements among
Wells Fargo Bank, Stephens and the Company, Wells Fargo Bank and Stephens
provide as administration services, among other things: (i) general supervision
of the operation of the Company and the Funds, including coordination of the
services performed by the investment advisor, 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 U.S. Securities and Exchange Commission ("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 Company's
officers and Board of Trustees. Wells Fargo Bank and Stephens also furnish
office space and certain facilities required for conducting the business of the
Company together with those ordinary clerical and bookkeeping services. Stephens
pays the compensation of the Company's Trustees, Officers and employees who are
affiliated with Stephens. For providing such services, Wells Fargo Bank and
Stephens are entitled to receive fees of 0.03% and 0.04%, respectively, of each
Fund's average daily net assets. Prior to February 1, 1997, Stephens served as
sole administrator to the Company.
Wells Fargo Bank has delegated certain administration duties to Investors Bank
and Trust Company ("IBT") pursuant to a Sub-Administration Agreement with IBT.
Wells Fargo Bank remains fully liable for the performance of these
administration services. Compensation for sub-administration services is
entirely the responsibility of Wells Fargo Bank, but can be made directly to IBT
by the Fund, in which case, the compensation paid to Wells Fargo Bank for
administration services will be reduced accordingly.
For the periods indicated below, the Funds paid to Stephens the following
administration and co-administration fees:
<TABLE>
YEAR ENDED YEAR ENDED
FUND 2/29/96 2/28/97
- -------------- -------- --------
<S> <C> <C>
LifePath Opportunity Fund $ 84,548 $ 92,243
LifePath 2010 Fund $ 72,832 $ 81,180
LifePath 2020 Fund $120,505 $135,162
LifePath 2030 Fund $ 79,564 $ 89,938
LifePath 2040 Fund $118,468 $164,384
</TABLE>
For the period begun February 1, 1997 and ended February 28, 1997, the Funds
paid administration fees to Well Fargo Bank, and for the fiscal year ended
February 28, 1998, the Funds paid administration fees to Wells Fargo Bank and
Stephens as follows:
<TABLE>
<CAPTION>
YEAR ENDED
2/28/98
-------
Fund 2/1/97-2/28/97 WELLS FARGO STEPHENS
--------------- ----------------------- -----------------
<S> <C> <C> <C>
LifePath Opportunity 39,834 $14,649 $ 58,594
LifePath 2010 Fund 28,945 $17,577 $ 70,309
LifePath 2010 Fund 46,153 $32,004 $128,017
LifePath 2010 Fund 28,565 $23,443 $ 93,771
LifePath 2010 Fund 34,460 $45,597 $182,388
</TABLE>
26
<PAGE>
DISTRIBUTOR. Stephens (the "Distributor"), located at 111 Center Street,
-----------
Little Rock, Arkansas 72201, serves as Distributor for the Funds. Each Fund
has adopted a distribution plan (a "Plan") under Section 12(b) of the 1940 Act
and Rule 12b-1 thereunder (the "Rule") for its shares. The Plan was adopted
by the Company's 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
had no direct or indirect financial interest in the operation of the Plan or in
any agreement related to the Plan (the "Non-Interested Trustees").
Under the Plan and pursuant to the related 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 and Class C shares of each Fund.
The actual fee payable to the Distributor is determined, within such limit,
from time to time by mutual agreement between the Company and the Distributor
and will not exceed the maximum sales charges payable by mutual funds sold by
members of the National Association of Securities Dealers, Inc. ("NASD") under
the NASD Conduct Rules. The Distributor may enter into selling agreements with
one or more selling agents (which may include Wells Fargo Bank and its
affiliates) under which such agents may receive compensation for distribution-
related services from the Distributor, including, but not limited to,
commissions or other payments to such agents based on the average daily net
assets of Fund shares attributable to their customers. The Distributor may
retain any portion of the total distribution fee payable thereunder to
compensate it for distribution-related services provided by it or to reimburse
it for other distribution-related expenses.
For the fiscal year ended February 28, 1998, the Class A and Class B 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.
27
<PAGE>
<TABLE>
<CAPTION>
PRINTING &
MAILING MARKETING COMPENSATION TO
FUND TOTAL PROSPECTUSES BROCHURES UNDERWRITERS
- ------------------------------ ------------- ------------ --------- ------------
<S> <C> <C> <C> <C>
LifePath Opportunity Fund
Class A $183,075 N/A N/A $183,075
Class B* N/A N/A N/A N/A
Class C* N/A N/A N/A N/A
LifePath 2010 Fund
Class A $213,875 N/A N/A $213,875
Class B $ 17,269 N/A N/A $ 17,269
Class C* N/A N/A N/A N/A
LifePath 2020 Fund
Class A $387,413 N/A N/A $387,413
Class B $ 37,350 N/A N/A $ 37,350
Class C* N/A N/A N/A N/A
LifePath 2030 Fund
Class A $280,561 N/A N/A $280,561
Class B $ 37,091 N/A N/A $ 37,091
Class C* N/A N/A N/A N/A
LifePath 2040 Fund
Class A $540,814 N/A N/A $540,814
Class B $ 87,274 N/A N/A $ 87,274
Class C* N/A N/A N/A N/A
</TABLE>
* The Class B shares of the LifePath Opportunity Fund and the Class C shares of
each Fund commenced operations after February 28, 1998 and did not pay any
distribution related fees during the reporting period.
General. 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 Company
and the Non-Interested Trustees. Any Distribution Agreement related to the
Plans also must be approved by such vote of the Trustees and the Non-Interested
Trustees. The Distribution Agreement will terminate automatically if assigned
and may be terminated at any time, without payment of any penalty, by a vote of
a majority of the outstanding voting securities of the relevant Fund or by vote
of a majority of the Non-Interested Trustees on not more than 60 days' written
notice. 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 Company and the Non-
Interested Trustees.
Each Plan requires that the Treasurer of the Company 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 Company be made by such disinterested Trustees.
Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Company, acts as a selling agent for the Funds'
shares pursuant to selling agreements with Stephens authorized under the Plans.
As a selling agent, Wells Fargo Bank has an indirect financial interest in the
operation of the Plans. The Board of Trustees has concluded that the Plans are
reasonably likely to benefit the Funds and their shareholders because the Plans
authorize the relationships with selling agents, including Wells Fargo Bank,
that have previously developed distribution channels and relationships with the
retail customers that the Funds are designed to serve. These relationships and
distribution channels are believed by the Board to provide potential for
increased Fund assets and ultimately corresponding economic efficiencies (i.e.,
lower per-share transaction costs and fixed expenses) that are generated by
increased assets under management.
28
<PAGE>
SHAREHOLDER SERVICING AGENT. The Funds have approved a Shareholder Servicing
---------------------------
Plan and have entered into related Shareholder Servicing Agreements with
financial institutions, including Wells Fargo Bank, on behalf of the Class A,
Class B and Class C shares. Under the agreements, Shareholder Servicing Agents
(including Wells Fargo Bank) agree to perform, as agents for their customers,
administrative services, with respect to Fund shares, which include aggregating
and transmitting shareholder orders for purchases, exchanges and redemptions;
maintaining shareholder accounts and records; and providing such other related
services as the Company or a shareholder may reasonably request. For providing
shareholder services, a Servicing Agent is entitled to a monthly fee from the
applicable Fund, on an annualized basis, at the annual rate of up to 0.20% of
the average daily net assets of the class of shares owned of record or
beneficially by the customers of the Servicing Agent during the period for which
payment is being made. The Servicing Plan and related Shareholder Servicing
Agreements were approved by the Company's Board of Trustees and provide that a
Fund shall not be obligated to make any payments under such Plan or related
Agreements that exceed the maximum amounts payable under the Conduct Rules of
the NASD.
For the fiscal year ended February 28, 1998, Class A and Class B shares of the
Funds paid to Wells Fargo Bank the following shareholder servicing fees:
<TABLE>
<CAPTION>
FUND YEAR ENDED 2/28/98
---------- ---------------------
<S> <C>
LifePath Opportunity Fund $146,486
LifePath 2010 Fund $175,771
LifePath 2020 Fund $320,043
LifePath 2030 Fund $234,428
LifePath 2030 Fund $455,970
</TABLE>
General. The Servicing Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of the Trustees of the Company,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Funds ("Non-Interested Trustees"). Any form of
Servicing Agreement related to the Servicing Plan also must be approved by such
vote of the Trustees and the Non-Interested Trustees. Servicing Agreements may
be terminated at any time, without payment of any penalty, by vote of a majority
of the Board of Trustees, including a majority of the Non-Interested Trustees.
No material amendment to the Servicing Plan or related Servicing Agreements may
be made except by a majority of both the Trustees of the Company and the Non-
Interested Trustees.
The Servicing Plan requires that the Administrator 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 Servicing Plan.
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
Company, acts as a Selling Agent for the Class A, Class B and Class C shares of
the Funds pursuant to a Selling Group Agreement with Stephens authorized
pursuant to the Shareholder Servicing Plan. As a Selling Agent, WFSI has an
indirect financial interest in the operation of the Plan. The Board of Trustees
believes that it is reasonably likely that the Plan will benefit the Funds and
their shareholders because the Plan
29
<PAGE>
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 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. 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-administration services to
the Funds. Prior to October 21, 1996, BGI was custodian of each Fund's
investments. For its services as custodian, BGI is not entitled to receive a fee
so long as BGFA receives fees for providing advisory services to the Master
Portfolios.
TRANSFER AND DIVIDEND DISBURSING AGENT. Wells Fargo Bank acts as the Company's
--------------------------------------
transfer and dividend disbursing agent. Wells Fargo Bank is entitled to receive
from the Company 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, 1998, the Company paid to Wells Fargo
Bank the following transfer and dividend disbursing agency fees:
<TABLE>
<CAPTION>
YEAR ENDED
FUND 2/28/98
----------------------- --------
<S> <C>
LifePath Opportunity Fund $ 73,243
LifePath 2010 Fund $ 87,886
LifePath 2020 Fund $160,021
LifePath 2030 Fund $117,214
LifePath 2040 Fund $227,985
</TABLE>
PERFORMANCE CALCULATIONS
The Funds may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.
In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund
30
<PAGE>
rating services or to unmanaged indices which may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.
Performance information for a Fund or Class of shares in a Fund may be useful
in reviewing the performance of such Fund or Class of shares and for providing a
basis for comparison with investment alternatives. The yield of a Fund and the
yield of a Class of shares in a Fund, however, may not be comparable to the
yields from investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities,
compute expenses and calculate yield.
Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Funds.
AVERAGE ANNUAL TOTAL RETURN: The Funds may advertise certain total return
---------------------------
information. As and to the extent required by the SEC, an average annual
compound rate of return ("T") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("P")
over a period of years ("n") according to the following formula: P(1+T)n=ERV.
Average Annual Total Return for the Applicable Period Ended February 28,
------------------------------------------------------------------------
1998/1/
- ----
<TABLE>
<CAPTION>
Three One
Fund Inception Year Year
- -------------------------------------------------- -------------- ------------ ------------
<S> <C> <C> <C>
LifePath Opportunity
Class A 7.12% 8.84% 6.99%
Class B** 11.33% 14.50% 12.08%
Class C** N/A N/A N/A
LifePath 2010
Class A 11.71% 14.66% 13.17%
Class B* 11.88% 15.06% 12.64%
Class C** N/A N/A N/A
LifePath 2020
Class A 14.82% 18.61% 18.41%
Class B* 15.02% 19.07% 18.05%
Class C** N/A N/A N/A
LifePath 2030
Class A 17.14% 21.86% 22.26%
Class B* 17.37% 22.36% 21.93%
Class C** N/A N/A N/A
LifePath 2040
Class A 19.43% 24.56% 24.81%
Class B* 19.67% 25.07% 24.47%
Class C** 20.11% 25.71% 28.47%
</TABLE>
31
<PAGE>
_______________
/1/ Return calculations reflect the inclusion of front-end sales charges for
Class A shares and the maximum applicable contingent deferred sales charge
for Class B and Class C shares.
* Class B shares commenced operations on March 3, 1997.
** Class B shares of the LifePath Opportunity Fund and Class C shares of the
LifePath 2040 Fund commenced operations on June 30, 1998. Performance shown
for the Class B shares is for LifePath Opportunity Fund Class A shares
calculated using Class B share expenses. Performance shown for the Class C
shares is for Class B shares calculated using Class C share expenses.
CUMULATIVE TOTAL RETURN: In addition to the above performance information,
-----------------------
each Fund may also advertise the cumulative total return of the Fund.
Cumulative total return is based on the overall percentage change in value of a
hypothetical investment in the Fund, assuming all Fund dividends and capital
gain distributions are reinvested, without reflecting the effect of any sales
charge that would be paid by an investor, and is not annualized.
Cumulative Total Return for the Year Ended February 28, 1998/1/
------------------------------------------------------------
<TABLE>
<CAPTION>
Three
Fund Inception Year
- -------------------------------------------------- -------------- ------------
<S> <C> <C>
LifePath Opportunity
Class A 31.69% 28.94%
Class B* 53.62% 50.11%
Class C* N/A N/A
LifePath 2010
Class A 55.74% 50.75%
Class B** 56.65% 52.31%
Class C* N/A N/A
LifePath 2020
Class A 73.79% 66.87%
Class B** 75.04% 68.83%
Class C* N/A N/A
LifePath 2030
Class A 88.30% 80.98%
Class B** 89.75% 83.19%
Class C* N/A N/A
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
LifePath 2040
<S> <C> <C>
Class A 103.48% 93.27%
Class B** 105.11% 95.66%
Class C* 108.11% 98.66%
</TABLE>
_______________
/1/ Return calculations reflect the inclusion of front-end sales charges for
Class A shares and the maximum applicable contingent deferred sales charge
for Class B and Class C shares.
* Class B shares of the LifePath Opportunity Fund and Class C shares of the
LifePath 2040 Fund commenced operations on June 30, 1998. Class C shares
for the other Funds commenced operations on November 30, 1998. Performance
shown for the Class B shares is for LifePath Opportunity Fund Class A
shares calculated using Class B share expenses. Performance shown for the
Class C shares is for Class B shares calculated using Class C share
expenses.
** Class B shares commenced operations on March 3, 1997. Three-year
performance shown is for Class A shares calculated using Class B share
expenses.
From time to time and only to the extent the comparison is appropriate for a
Fund or a Class of shares, the Company may quote the performance or price-
earning ratio of a Fund or Class in advertising and other types of literature as
compared to the performance of the S&P Index, the Dow Jones Industrial Average,
the Lehman Brothers 20+ Treasury Index, the Lehman Brothers 5-7 Year Treasury
Index, Donoghue's Money Fund Averages, Real Estate Investment Averages (as
reported by the National Association of Real Estate Investment Companies), Gold
Investment Averages (provided by World Gold Council), Bank Averages (which are
calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts), average annualized certificate of deposit rates (from the Federal
Reserve G-13 Statistical Releases or the Bank Rate Monitor), the Salomon One
Year Treasury Benchmark Index, the Consumer Price Index (as published by the
U.S. Bureau of Labor Statistics), other managed or unmanaged indices or
performance data of bonds, municipal securities, stocks or government securities
(including data provided by Ibbotson Associates), or by other services,
companies, publications or persons who monitor mutual funds on overall
performance or other criteria. The S&P Index and the Dow Jones Industrial
Average are unmanaged indices of selected common stock prices. The performance
of the Funds or a Class also may be compared to that of other mutual funds
having similar objectives. This comparative performance could be expressed as a
ranking prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Bloomberg Financial Markets or Morningstar, Inc.,
independent services which monitor the performance of mutual funds. The Funds'
performance will be calculated by relating net asset value per share at the
beginning of a stated period to the net asset value of the investment, assuming
reinvestment of all gains distributions and dividends paid, at the end of the
period. The Funds' comparative performance will be based on a comparison of
yields, as described above, or total return, as reported by Lipper, Survey
Publications, Donoghue or Morningstar, Inc.
33
<PAGE>
Any such comparisons may be useful to investors who wish to compare past
performance of the Funds or a Class with that of competitors. Of course, past
performance cannot be a guarantee of future results. The Company also may
include, from time to time, a reference to certain marketing approaches of the
Distributor, including, for example, a reference to a potential shareholder
being contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.
The Company also may use the following information in advertisements and other
types of literature, only to the extent the information is appropriate for the
Fund: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in a Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes of a Fund or the general economic, business,
investment, or financial environment in which a Fund operates; (iii) the effect
of tax-deferred compounding on the investment returns of a Fund, or on returns
in general, may be illustrated by graphs, charts, etc., where such graphs or
charts would compare, at various points in time, the return from an investment
in a Fund (or returns in general) on a tax-deferred basis (assuming reinvestment
of capital gains and dividends and assuming one or more tax rates) with the
return on a taxable basis; and (iv) the sectors or industries in which a Fund
invests may be compared to relevant indices of stocks or surveys (e.g., S&P
Industry Surveys) to evaluate a Fund's historical performance or current or
potential value with respect to the particular industry or sector.
In addition, the Company also may use, in advertisements and other types of
literature, information and statements: (i) showing that bank savings accounts
offer a guaranteed return of principal and a fixed rate of interest, but no
opportunity for capital growth; and (ii) describing Wells Fargo Bank, and its
affiliates and predecessors, as one of the first investment managers to advise
investment accounts using asset allocation and index strategies. The Company
also may include in advertising and other types of literature information and
other data from reports and studies prepared by the Tax Foundation, including
information regarding federal and state tax levels and the related "Tax Freedom
Day."
The Company also may discuss in advertising and other types of literature that
a Fund has been assigned a rating by an NRSRO, such as Standard & Poor's
Corporation. Such rating would assess the creditworthiness of the investments
held by the Fund. The assigned rating would not be a recommendation to
purchase, sell or hold the Fund's shares since the rating would not comment on
the market price of the Fund's shares or the suitability of the Fund for a
particular investor. In addition, the assigned rating would be subject to
change, suspension or withdrawal as a result of changes in, or unavailability
of, information relating to the Fund or its investments. The Company may
compare the Fund's performance with other investments which are assigned ratings
by NRSROs. Any such comparisons may be useful to investors who wish to compare
the Fund's past performance with other rated investments.
From time to time, the 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 LifePath Funds, provides various
services to its customers that are also shareholders of the Funds. These
services may include access to LifePath Funds' account
34
<PAGE>
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 LifePath Funds account
statements."
The Company also may disclose, in advertising and other types of literature,
information and statements that Wells Capital Management (formerly "Wells Fargo
Investment Management"), a division of Wells Fargo Bank, is listed in the top
100 by Institutional Investor magazine in its July 1997 survey "America's Top
300 Money Managers." This survey ranks money managers in several asset
categories. The Company may also disclose in advertising and other types of
sales literature the assets and categories of assets under management by the
Company's investment advisor. The Company may also disclose in advertising and
other types of sales literature the assets and categories of assets under
management by a fund's investment advisor or sub-advisor and the total amount of
assets and mutual fund assets managed by Wells Fargo Bank. As of December 31,
1997, Wells Fargo Bank and its affiliates provided investment Advisory services
for approximately $62 billion of assets of individual, companies, estates and
institutions and $23 billion of mutual fund assets.
The Company may disclose in advertising and other types of literature that
investors can open and maintain Sweep Accounts over the internet or through
other electronic channels (collectively, "Electronic Channels"). Such
advertising and other literature may discuss the investment options available to
investors, including the types of accounts and any applicable fees. Such
advertising and other literature may disclose that Wells Fargo Bank is the first
major bank to offer an on-line application for a mutual fund account that can be
filled out completely through Electronic Channels. Advertising and other
literature may disclose that Wells Fargo Bank may maintain web sites, pages or
other information sites accessible through Electronic Channels (an "Information
Site") and may describe the contents and features of the Information Site and
instruct investors on how to access the Information Site and open a Sweep
Account. Advertising and other literature may also disclose the procedures
employed by Wells Fargo Bank to secure information provided by investors,
including disclosure and discussion of the tools and services for accessing
Electronic Channels. Such advertising or other literature may include
discussions of the advantages of establishing and maintaining a Sweep Account
through Electronic Channels and testimonials from Wells Fargo Bank customers or
employees and may also include descriptions of locations where product
demonstrations may occur. The Company may also disclose the ranking of Wells
Fargo Bank as one of the largest money managers in the United States.
DETERMINATION OF NET ASSET VALUE
The securities of the LifePath Master Portfolios, including covered call
options written by an 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
35
<PAGE>
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 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.
36
<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares may be purchased on any day the Fund is open for business. The Fund is
open for business each day the New York Stock Exchange (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 advisor, 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.
In addition, the Company may redeem shares involuntarily to reimburse the Fund
for any losses sustained by reason of the failure of a shareholders to make full
payment for shares purchased or to collect any charge relating to a transaction
effected for the benefit of a shareholder which is applicable to shares of the
Fund as provided from time to time in the Prospectus.
PORTFOLIO TRANSACTIONS
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
37
<PAGE>
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.
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 advisor, 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 advisor shall
not be "deemed to have acted unlawfully or to have breached its fiduciary duty"
solely because under certain
38
<PAGE>
circumstances it has caused the account to pay a higher commission than the
lowest available. To obtain the benefit of Section 28(e), an advisor 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 advisor with lawful and appropriate
assistance in the performance of its investment decision-making
responsibilities." Accordingly, the price to a Master Portfolio in any
transaction may be less favorable than that available from another broker/dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered.
BROKERAGE COMMISSIONS. For the fiscal years ended February 29, 1996, February
---------------------
28, 1997 and February 28, 1998, 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>
YEAR ENDED YEAR ENDED YEAR ENDED
MASTER PORTFOLIO 2/28/96 2/28/97 2/28/98
- -------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
LifePath 2000 Master Portfolio $ 8,311 $ 3,639 $ 9,361
LifePath 2010 Master Portfolio $ 12,053 $ 8,837 $ 15,306
LifePath 2020 Master Portfolio $ 29,666 $ 12,383 $ 29,153
LifePath 2030 Master Portfolio $ 33,786 $ 6,927 $ 28,908
LifePath 2040 Master Portfolio $ 71,608 $ 28,047 $ 94,717
</TABLE>
SECURITIES OF REGULAR BROKER DEALERS. As of February 28, 1998, 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 Master Portfolio Goldman Sachs $ 5,000,000
J.P. Morgan $ 41,347
Lehman Bros. Holdings $ 31,531
Merrill Lynch $ 37,928
Morgan Stanley $ 68,590
LifePath 2010 Master Portfolio Goldman Sachs $ 9,000,000
J.P. Morgan $ 189,288
Lehman Bros. Holdings $ 50,450
Merrill Lynch $ 198,514
Morgan Stanley $ 328,681
LifePath 2020 Master Portfolio Goldman Sachs $14,000,000
J.P. Morgan $ 426,854
Lehman Bros. Holdings $ 126,125
Merrill Lynch $ 475,032
Morgan Stanley $ 752,033
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
LifePath 2030 Master Portfolio Goldman Sachs $ 9,000,000
J.P. Morgan $ 362,085
Lehman Bros. Holdings $ 132,431
Merrill Lynch $ 407,477
Morgan Stanley $ 650,094
LifePath 2040 Master Portfolio Goldman Sachs $15,000,000
J.P. Morgan $ 609,091
Lehman Bros. Holdings $ 182,881
Merrill Lynch $ 687,859
Morgan Stanley $ 1,606,436
</TABLE>
FUND EXPENSES
Except for the expenses borne by Wells Fargo Bank and Stephens, the Company
bears all costs of its operations, including the compensation of its Trustees
who are not affiliated with Stephens or Wells Fargo Bank or any of their
affiliates; advisory, shareholder servicing and administration fees; payments
pursuant to any Plan; interest charges; taxes; fees and expenses of its
independent accountants, legal counsel, transfer agent and dividend disbursing
agent; expenses of redeeming shares; expenses of preparing and printing
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio transactions; fees and expenses of its
custodian, including those for keeping books and accounts and calculating the
net asset value per share of the Funds; expenses of shareholders' meetings;
expenses relating to the issuance, registration and qualification of a Fund's
shares; pricing services, and any extraordinary expenses. Expenses attributable
to a Fund are charged against Fund assets. General expenses of the Company are
allocated among all of the Funds in a manner proportionate to the net assets of
a Fund, on a transactional basis, or on such other basis as the Company's Board
of Trustees deems equitable.
FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction with
the Prospectus section entitled "Taxes." The Prospectus describes generally the
tax treatment of distributions by the Funds. This section of the SAI includes
additional information concerning income taxes.
General. The Company intends to qualify each Fund as a regulated investment
-------
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), as long as such qualification is in the best interest of the Fund's
shareholders. Each Fund will be treated as a separate entity for tax purposes
and thus the provisions of the Code applicable to regulated investment companies
will generally be applied to each Fund, rather than to the Company as a whole.
In addition, net capital gain, net investment income, and operating expenses
will be
40
<PAGE>
determined separately for each Fund. As a regulated investment company,
each Fund will not be taxed on its net investment income and capital gains
distributed to its shareholders.
Qualification as a regulated investment company under the Code requires, among
other things, that (a) each Fund derive at least 90% of its annual gross income
from dividends, interest, certain payments with respect to securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies (to the extent such currency gains are directly related to the
regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; and (b) the Fund diversify its holdings
so that, at the end of each quarter of the taxable year, (i) at least 50% of the
market value of the Fund's assets is represented by cash, government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. Government
obligations and the securities of other regulated investment companies), or in
two or more issuers which the Fund controls and which are determined to be
engaged in the same or similar trades or businesses.
The Funds must also distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income earned in each taxable
year. In general, these distributions must actually or be deemed to be made in
the taxable year. However, in certain circumstances, such distributions may be
made in the 12 months following the taxable year. The Funds intend to pay out
substantially all of their net investment income and net realized capital gains
(if any) for each year.
In addition, a regulated investment company must, in general, derive less than
30% of its gross income from the sale or other disposition of securities or
options thereon held for less than three months. However, this restriction has
been repealed with respect to a regulated investment company's taxable years
beginning after August 5, 1997.
Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund (other
----------
than to the extent of its tax-exempt interest income) to the extent it does not
meet certain minimum distribution requirements by the end of each calendar year.
Each Fund intends to actually or be deemed to distribute substantially all of
its net investment income and net capital gains by the end of each calendar year
and, thus, expects not to be subject to the excise tax.
Taxation of Fund Investments. Except as provided herein, gains and losses on
----------------------------
the sale of portfolio securities by a Fund will generally be capital gains and
losses. Such gains and losses will ordinarily be long-term capital gains and
losses if the securities have been held by the Fund for more than one year at
the time of disposition of the securities.
Gains recognized on the disposition of a debt obligation (including tax-exempt
obligations purchased after April 30, 1993) purchased by the Fund at a market
discount (generally at a price less than its principal amount) will be treated
as ordinary income to the extent of the portion of
41
<PAGE>
market discount which accrued, but was not previously recognized pursuant to an
available election, during the term the Fund held the debt obligation.
If an option granted by a Fund lapses or is terminated through a closing
transaction, such as a repurchase by the Fund of the option from its holder, the
Fund will realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid by the Fund in the
closing transaction. Some realized capital losses may be deferred if they
result from a position which is part of a "straddle," discussed below. If
securities are sold by a Fund pursuant to the exercise of a call option written
by it, the Fund will add the premium received to the sale price of the
securities delivered in determining the amount of gain or loss on the sale.
Under Section 1256 of the Code, a Fund will be required to "mark to market"
its positions in "Section 1256 contracts," which generally include regulated
futures contracts and listed options. In this regard, Section 1256 contracts
will be deemed to have been sold at market value. Sixty percent (60%) of any
net gain or loss realized on all dispositions of Section 1256 contracts,
including deemed dispositions under the mark-to-market regime, will generally be
treated as long-term capital gain or loss, and the remaining forty percent (40%)
will be treated as short-term capital gain or loss. Transactions that qualify
as designated hedges are excepted from the mark-to-market and 60%/40% rules.
Under Section 988 of the Code, a Fund will generally recognize ordinary income
or loss to the extent gain or loss realized on the disposition of portfolio
securities is attributable to changes in foreign currency exchange rates. In
addition, gain or loss realized on the disposition of a foreign currency forward
contract, futures contract, option or similar financial instrument, or of
foreign currency itself, will generally be treated as ordinary income or loss.
The Funds will attempt to monitor Section 988 transactions, where applicable, to
avoid adverse tax impact.
Offsetting positions held by a regulated investment company involving certain
financial forward, futures or options contracts may be considered, for tax
purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax treatment
of "straddles" is governed by Section 1092 of the Code which, in certain
circumstances, overrides or modifies the provisions of Section 1256. If a
regulated investment company were treated as entering into "straddles" by
engaging in certain financial forward, futures or option contracts, such
straddles could be characterized as "mixed straddles" if the futures, forwards,
or options comprising a part of such straddles were governed by Section 1256 of
the Code. The regulated investment company may make one or more elections with
respect to "mixed straddles." Depending upon which election is made, if any,
the results with respect to the regulated investment company may differ.
Generally, to the extent the straddle rules apply to positions established by
the regulated investment company, losses realized by the regulated investment
company may be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the conversion transaction
rules, short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gain may be characterized as
short-term capital gain or ordinary income.
42
<PAGE>
If a Fund enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose,
a constructive sale occurs when the Fund enters into one of the following
transactions with respect to the same or substantially identical property: (i) a
short sale; (ii) an offsetting notional principal contract; or (iii) a futures
or forward contract.
If a Fund purchases shares in a "passive foreign investment company" ("PFIC"),
the Fund may be subject to federal income tax and an interest charge imposed by
the IRS upon certain distributions from the PFIC or the Fund's disposition of
its PFIC shares. If the Fund invests in a PFIC, the Fund intends to make an
available election to mark-to-market its interest in PFIC shares. Under the
election, the Fund will be treated as recognizing at the end of each taxable
year the difference, if any, between the fair market value of its interest in
the PFIC shares and its basis in such shares. In some circumstances, the
recognition of loss may be suspended. The Fund will adjust its basis in the PFIC
shares by the amount of income (or loss) recognized. Although such income (or
loss) will be taxable to the Fund as ordinary income (or loss) notwithstanding
any distributions by the PFIC, the Fund will not be subject to federal income
tax or the interest charge with respect to its interest in the PFIC.
Foreign Taxes. Income and dividends received by a 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. Although in some circumstances a regulated
investment company can elect to "pass through" foreign tax credits to its
shareholders, the Funds do not expect to be eligible to make such an election.
Capital Gain Distributions. Distributions which are designated by a Fund as
--------------------------
capital gain distributions will be taxed to shareholders as long-term capital
gain (to the extent such dividends do exceed the Fund's actual net capital gain
for the taxable year), regardless of how long a shareholder has held Fund
shares. Such distributions will be designated as capital gain distributions in
a written notice mailed by the Fund to its shareholders not later than 60 days
after the close of the Fund's taxable year.
The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of 28% on net
capital gain (generally, the excess of net long-term capital gain over net
short-term capital loss). Noncorporate taxpayers are now generally taxed at a
maximum rate of 20% on net capital gain attributable to gains realized on the
sale of property held for greater than 18 months, and a maximum rate of 28% on
net capital gain attributable to gain realized on the sale of property held for
greater than one year and not more than 18 months. The 1997 Act retains the
treatment of short term capital gain or loss (generally, gain or loss
attributable to capital assets held for 1 year or less) and did not affect the
taxation of capital gains in the hands of corporate taxpayers.
Under the 1997 Act, the Treasury is authorized to issue regulations for
application of the reduced capital gains tax rates to pass-through entities,
including regulated investment
43
<PAGE>
companies, such as the Funds. The Internal Revenue Service has published a
notice describing temporary Regulations to be issued pursuant to such authority,
permitting the application of the reduced capital gains tax rates to pass-
through entities such as the Funds. Under the Regulations to be issued, if a
regulated investment company designates a dividend as a capital gain dividend
for a taxable year ending on or after May 7, 1997, then such regulated
investment company may also designate the dividends as one of two classes: a 20%
rate gain distribution, or a 28% rate gain distribution. Thus, noncorporate
shareholders of the Funds may qualify for the reduced rate of tax on capital
gain dividends paid by the Funds, subject only to the limitation as to the
maximum amounts which may be designated in each class. Such maximum amount for
each class is determined by performing the computation required by Section 1(h)
of the Code as if the Fund were an individual whose ordinary income is subject
to a marginal rate of at least 28%.
Disposition of Fund Shares. A disposition of Fund shares pursuant to
--------------------------
redemption (including a redemption in-kind) or exchanges will ordinarily result
in a taxable capital gain or loss, depending on the amount received for the
shares (or are deemed to receive in the case of an exchange) and the cost of the
shares.
If a shareholder exchanges or otherwise disposes of Fund shares within 90 days
of having acquired such shares and if, as a result of having acquired those
shares, the shareholder subsequently pays a reduced sales charge on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred acquiring the Fund's shares shall not be taken
into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as long-term capital gain) with respect to any Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as long-term capital loss to the extent of the designated capital gain
distribution. The foregoing loss disallowance rule does not apply to losses
realized under a periodic redemption plan.
Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 28% (however, see "Capital Gain Distributions" above);
and the maximum corporate tax rate applicable to ordinary income and net capital
gain is 35% (marginal tax rates may be higher for some corporations to reduce or
eliminate the benefit of lower marginal income tax rates). Naturally, the
amount of tax payable by an individual or corporation will be affected by a
combination of tax laws covering, for example, deductions, credits, deferrals,
exemptions, sources of income and other matters.
44
<PAGE>
Corporate Shareholders. Corporate shareholders of the Funds may be eligible
----------------------
for the dividends-received deduction on dividends distributed out of a Fund's
net investment income attributable to dividends received from domestic
corporations, which, if received directly by the corporate shareholder, would
qualify for such deduction. A Fund's distribution attributable to dividends of
a domestic corporation will only qualify for the dividends-received deduction if
(i) the corporate shareholder generally holds the Fund shares upon which the
distribution is made for at least 46 days during the 90 day period beginning 45
days prior to the date upon which the shareholder becomes entitled to the
distribution; and (ii) the Fund generally holds the shares of the domestic
corporation producing the dividend income for at least 46 days during the 90 day
period beginning 45 days prior to the date upon which the Fund becomes entitled
to the dividends.
Backup Withholding. The Company may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on dividends,
capital gain distributions, and redemption proceeds (including proceeds from
exchanges and redemptions in-kind) paid or credited to an individual Fund
shareholder, unless the shareholder certifies that the Taxpayer Identification
Number ("TIN") provided is correct and that the shareholder is not subject to
backup withholding, or the IRS notifies the Company that the shareholder's TIN
is incorrect or that the shareholder is subject to backup withholding. Such tax
withheld does not constitute any additional tax imposed on the shareholder, and
may be claimed as a credit or refund on the shareholder's federal income tax
return. An investor must provide a valid TIN upon opening or reopening an
account. Failure to furnish a valid TIN to the Company could subject the
investor to penalties imposed by the IRS. Foreign shareholders of the Funds
(described below) are generally not subject to backup withholding.
Foreign Shareholders. Under the Code, distributions of net investment income
--------------------
by a Fund to a nonresident alien individual, foreign Company (i.e., Company
which a U.S. court is able to exercise primary supervision over administration
of that Company and one or more U.S. persons have authority to control
substantial decisions of that Company), foreign estate (i.e., the income of
which is not subject to U.S. tax regardless of source), foreign corporation, or
foreign partnership (a "foreign shareholder") will be subject to U.S. income tax
withholding (at a rate of 30% or a lower treaty rate, if applicable).
Withholding will not apply if a dividend distribution paid by a Fund to a
foreign shareholder is "effectively connected" with a U.S. trade or business
(or, if an income tax treaty applies, is attributable to a U.S. permanent
establishment of the foreign shareholder), in which case the reporting and
withholding requirements applicable to U.S. residents will apply. Distributions
of net capital gain are generally not subject to U.S. income tax
withholding.
New Regulations. On October 6, 1997, the Treasury Department issued new
---------------
regulations (the "New Regulations") which make certain modifications to the
backup withholding, U.S. income tax withholding and information reporting rules
applicable to foreign shareholders. The New Regulations will generally be
effective for payments made after December 31, 1998, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders which will be subject
45
<PAGE>
to U.S. income tax withholding. Prospective investors are urged to consult their
own tax advisors regarding the New Regulations.
Tax-Deferred Plans. The shares of the Funds are available for a variety of
------------------
tax-deferred retirement and other plans, including Individual Retirement
Accounts ("IRA"), Simplified Employee Pension Plans ("SEP-IRA"), Savings
Incentive Match Plans for Employees ("SIMPLE plans"), Roth IRAs, and Education
IRAs, which permit investors to defer some of their income from taxes. Investors
should contact their selling agents for details concerning retirement plans.
Other Matters. Investors should be aware that the investments to be made by a
-------------
Fund may involve sophisticated tax rules that may result in income or gain
recognition by the Fund without corresponding current cash receipts. Although
the Funds will seek to avoid significant noncash income, such noncash income
could be recognized by a Fund, in which case the Fund may distribute cash
derived from other sources in order to meet the minimum distribution
requirements described above.
The foregoing discussion and the discussions in the Prospectus applicable to
each shareholder address only some of the federal income tax considerations
generally affecting investments in a Fund. Each investor is urged to consult
his or her tax advisor regarding specific questions as to federal, state, local
and foreign taxes.
CAPITAL STOCK
The Funds are authorized to issue multiple classes of shares, one class
generally subject to a front-end sales charge and classes subject to a
contingent-deferred sales charge, that are offered to retail investors. Each
class of shares in a fund represents an equal, proportionate interest in a fund
with other shares of the same class. Shareholders of each class bear their pro
rata portion of the fund's operating expenses, except for certain class-specific
expenses (e.g., any state securities registration fees, shareholder servicing
fees or distribution fees that may be paid under Rule 12b-1) that are allocated
to a particular class.
With respect to matters that affect one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of a Fund have equal voting rights and will be voted in the
aggregate, and not by Series, except where voting by a Series is required by law
or where the matter involved only affects one Series. For example, a change in
a Funds' fundamental investment policy affects only one Series and would be
voted upon only by shareholders of the Fund involved. Additionally, approval of
an advisory contract, since it only affects one Fund, is a matter to be
determined separately by each Series. Approval by the shareholders of one
Series is effective as to that Series whether or not sufficient votes are
received from the shareholders of the other series to approve the proposal as to
those Series.
As used in the Prospectus and in this SAI, the term "majority" when referring
to approvals to be obtained from shareholders of a Class of the Fund, means the
vote of the lesser of (i) 67% of the shares of such class the Fund represented
at a meeting if the holders of more than 50% of the
46
<PAGE>
outstanding shares such class of the Fund are present in person or by proxy, or
(ii) more than 50% of the outstanding shares of such class the Fund. The term
"majority," when referring to the approvals to be obtained from shareholders of
the Company as a whole, means the vote of the lesser of (i) 67% of the Company's
shares represented at a meeting if the holders of more than 50% of the Company's
outstanding shares are present in person or by proxy, or (ii) more than 50% of
the Company's outstanding shares. Shareholders are entitled to one vote for each
full share held and fractional votes for fractional shares held.
Shareholders are not entitled to any preemptive rights. All shares, when
issued for the consideration described in the Prospectus, will be fully paid and
non-assessable by the Company. The Company may dispense with an annual meeting
of shareholders in any year in which it is not required to elect directors under
the 1940 Act.
Each share of a class of a Fund represents an equal proportional interest in a
Fund with each other share in the same class and is entitled to such dividends
and distributions out of the income earned on the assets belonging to a Fund as
are declared in the discretion of the Directors. In the event of the
liquidation or dissolution of the Company, shareholders of a Fund are entitled
to receive the assets attributable to the relevant class of shares of the Fund
that are available for distribution, and a distribution of any general assets
not attributable to a particular investment portfolio that are available for
distribution in such manner and on such basis as the Directors in their sole
discretion may determine.
Set forth below as of October 30, 1998, is the name, address and share
ownership of each person known by the Company to have beneficial or record
ownership of 5% or more of a LifePath Fund or 5% or more of a retail class of
shares of a LifePath Fund. The term "N/A" is used where a shareholder holds 5%
or more of a class, but less than 5% of a Fund as a whole.
5% OWNERSHIP AS OF OCTOBER 30, 1998
-----------------------------------
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE PERCENTAGE CAPACITY
NAME OF FUND OF SHAREHOLDER OF CLASS OF FUND OWNED
- ------------------------------- ---------------------------- ----------- ----------- --------
<S> <C> <C> <C> <C>
LifePath Wells Fargo Bank 17.75% 17.75% Record
Opportunity FBO Retirement Plans Omnibus
Class A P.O. Box 63015
San Francisco, CA 94163
Class B Stephanie Sala 5.29% N/A Record
929 Adams Street
Albany, CA 94706
Dean Witter FBO 5.25% N/A Record
Mary Jane Sheets Trustee
The Mary Jane Sheets Trust
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 7.45% N/A Record
Serena K. Wong
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter Custodian For 27.99% N/A Record
Linda L. Guittard
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 9.40% N/A Record
Franklin & Rovenia F. Johnson
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 7.09% N/A Record
Rhonda L. Harnden
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 6.30% N/A Record
Danuta Naglicki
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Class C Stephens Inc. 100% N/A Record
111 Center Street
Little Rock, AR 72201
LifePath 2010 Wells Fargo Bank 26.61% 22.96% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
State Street Bank and Trust 5.53% N/A Record
as Trustee for Various Plans
Two Heritage Drive
Quincy, MA 02171
Class B None -- -- --
Class C Stephens Inc. 100% N/A Record
111 Center Street
Little Rock, AR 72201
</TABLE>
47
<PAGE>
<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 Wells Fargo Bank 29.72% 26.12% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
Class B None -- -- --
Class C Stephens Inc. 100% N/A Record
111 Center Street
Little Rock, AR 7220l
LifePath 2030 Wells Fargo Bank 31.87% 27.39% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
Class B None -- -- --
Class C Stephens Inc. 100% N/A Record
111 Center Street
Little Rock, AR 7220l
LifePath 2040 Wells Fargo Bank 35.51% 29.26% Record
Class A FBO Retirement Plans Omnibus
P.O. Box 63015
San Francisco, CA 94163
Class B None -- -- --
Class C Paris Hold 12.66% N/A Record
1961 S. La Cienega Blvd.
MLPF&S FBO 10.24% N/A Record
Attn. Mutual Fund Administration
4800 Deer Lake Drive East,
3rd Floor
Jacksonville, FL 32246
Dean Witter FBO 5.57% N/A Record
Mehran Senehi
1940 Westwood Blvd. #226
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 18.60% N/A Record
Patricia C. Lapittus
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 5.11% N/A Record
Ted Venia
P.O. Box 250 Church Street Station
New York, NY 10008-0250
Dean Witter FBO 15.10% N/A Record
Antoinette Ballardni-Brown
P.O. Box 250 Church Street Station
New York, NY 10008-0250
</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 or
record holder of more than 25% of a class (or Fund) and has voting and/or
investment powers, it may be presumed to control such class (or Fund).
OTHER
The Company's Registration Statement, including the Prospectus and SAI for the
Funds and the exhibits filed therewith, may be examined at the office of the
Securities and Exchange Commission in Washington, D.C. Statements contained in
the Prospectus or the SAI as to the contents of any contract or other document
referred to herein or in the Prospectus are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
COUNSEL
Morrison & Forester LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Company, has rendered its opinion as
to certain legal matters regarding the due authorization and valid issuance of
the shares of beneficial interest being sold pursuant to the Funds'
Prospectus.
48
<PAGE>
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Three Embarcadero Center, San Francisco, California
94111, independent auditors, serves 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 SEC filings.
FINANCIAL INFORMATION
The audited financial statements, including the portfolio of investments and
independent auditors' report for the fiscal year ended February 28, 1998, for
each LifePath Fund of the Company and each corresponding LifePath Master
Portfolio of MIP are hereby incorporated by reference to the Company's Annual
Reports, as filed with the SEC on April 27, 1998. The audited financial
statements for the Funds are attached to all SAIs delivered to shareholders or
prospective shareholders.
The Company's Annual Report may be obtained by calling 1-800-222-8222.
49
<PAGE>
APPENDIX
The following is a 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.
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
A-2
<PAGE>
obligations, and ordinarily will be evidenced by leading market positions in
well established industries, high rates of return on funds employed, 2000
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 vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
A-3
<PAGE>
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.
DUFF
Bond Ratings
- ------------
AAA
A-4
<PAGE>
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 Company 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 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.
A-5
<PAGE>
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>
DISTRIBUTOR AND CO-ADMINISTRATOR
Stephens Inc.
Little Rock, Arkansas
INVESTMENT ADVISER
Barclays Global Fund Advisors
San Francisco, California
CO-ADMINISTRATOR,
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 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 Opportunity (formerly, 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, 1998, are hereby incorporated by
reference to the Trust's Annual Reports, as filed with the SEC on April 27,
1998.
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit Description
Number --------------------------------------------------------------------------------
- ---------------------------
<C> <S>
1 - Amended and Restated Agreement and Declaration of Trust, incorporated by
reference to Post-Effective Amendment No. 7 filed on June 30, 1997.
2 - By-Laws, incorporated by reference to Post-Effective Amendment No. 7 filed
on June 30, 1997.
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 and Fund Accounting Agreement with Investors Bank & Trust Company,
filed herewith.
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 Servicing Plan, as consolidated to include all classes of the Funds,
filed herewith.
9(b)(i) - Form of Shareholder Servicing Agreement with Wells Fargo Bank, N.A. on behalf
of the Funds, filed herewith.
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
9(c) - Form of Agency Agreement with Wells Fargo Bank, N.A.,
filed herewith.
10 - Not Applicable.
11 - Consent of Independent Auditors, filed herewith.
12 - Not Applicable
13 - Not Applicable
14 - Not Applicable
15(a) - Distribution Plan, for all shares of the Funds, filed herewith.
16 - Not Applicable
17 - See Exhibit 27.
18 - Rule 18f-3 Multi-Class Plan, filed herewith.
19 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat, Thomas S. Goho,
Joseph N. Hankin, W. Rodney Hughes, Robert M. Joses and J. Tucker Morse,
incorporated by reference to Post-Effective Amendment No. 7 filed on June 30,
1997.
27 - Financial Data Schedules for the fiscal period ended February 28, 1998, are hereby incorporated by
reference to the Trust's Annual Reports, as filed with the SEC on April 27, 1998.
</TABLE>
C-2
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
- ------- -------------------------------------------------------------
As of May 31, 1998, 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 Opportunity Fund LifePath 2000 Master Portfolio 58.07%
LifePath 2010 Fund LifePath 2010 Master Portfolio 46.07%
LifePath 2020 Fund LifePath 2020 Master Portfolio 54.64%
LifePath 2030 Fund LifePath 2030 Master Portfolio 59.27%
LifePath 2040 Fund LifePath 2040 Master Portfolio 68.86%
</TABLE>
Item 26. Number of Holders of Securities
- ------- -------------------------------
As of October 30, 1998, 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 Opportunity Fund
Class A 1,587
Class B 6
Class C N/A
Institutional Class 1
LifePath 2010 Fund
Class A 1,748
Class B 24
Class C N/A
Institutional Class 2
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
LifePath 2020 Fund
Class A 3,093
Class B 46
Class C N/A
Institutional Class 2
LifePath 2030 Fund
Class A 2,305
Class B 50
Class C N/A
Institutional Class 2
LifePath 2040 Fund
Class A 4,771
Class B 186
Class C 12
Institutional Class 2
</TABLE>
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
C-4
<PAGE>
some cases, the service business of BGI. 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
Lawrence G. Tint Chairman of the Board of Directors of BGFA and
Chairman and Director Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 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, Willis & Greene
Director 455 Market Street
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
San Francisco, CA 94105
Director of Armstrong World Industries, Inc.
5037 Patata Street
South Gate, CA 90280
Director of Eastman Chemical Corporation
12805 Busch Place
Santa Fe Springs, CA 90670
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
Michael R. Bowlin Chairman of the Board of Directors, Chief Executive Officer,
Director Chief Operating Officer and President of
Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060
Edward Carson Chairman of the Board and Chief Executive Officer of
Director First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road
Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
Director of Terra Industries, Inc.
1321 Mount Pisgah Road
Walnut Creek, CA 94596
William S. Davilla President (Emeritus) and a Director of
Director The Vons Companies, Inc.
618 Michillinda Ave.
Arcadia, CA 91007
Director of Pacific Gas & Electric Company
788 Taylorville Road
Grass Valley, CA 95949
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Company
P.O. Box 1000
Lebec, CA 93243
Director of The Bakersfield Californian
1707 I Street P.O. Box 440
Bakersfield, CA 93302
Trustee of Whittier College
13406 East Philadelphia Ave.
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Board of Wells Fargo & Company
Directors 420 Montgomery Street
San Francisco, CA 94105
Director of Phelps Dodge Corporation
2600 North Central Ave.
Phoenix, AZ 85004
Director of Safeway, Inc.
4th and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Professor (Emeritus) of Accounting
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
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Director of Enron Corporation
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108
Thomas L. Lee Chairman and Chief Executive Officer of
Director The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622
Director of Calmat Co.
501 El Charro Road
Pleasanton, CA 94588
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Ellen Newman President of Ellen Newman Associates
Director 323 Geary Street
Suite 507
San Francisco, CA 94102
Chair (Emeritus) of the Board of Trustees
University of California at San Francisco Foundation
250 Executive Park Blvd.
Suite 2000
San Francisco, CA 94143
Director of the California Chamber of Commerce
1201 K Street
12th Floor
Sacramento, CA 95814
Philip J. Quigley Chairman, President and Chief Executive Officer of
Director Pacific Telesis Group
130 Kearney Street Rm. 3700
San Francisco, CA 94108
Carl E. Reichardt Director of Columbia/HCA Healthcare Corporation
Director One Park Plaza
Nashville, TN 37203
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105
Retired Chairman of the Board of Directors
and Chief Executive Officer of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Donald B. Rice President and Chief Executive Officer of Teledyne, Inc.
Director 2049 Century Park East
Los Angeles, CA 90067
Retired Secretary of the Air Force
Director of Vulcan Materials Company
One MetroPlex Drive
Birmingham, AL 35209
Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp.
Director 44141 Yucca Avenue
Lancaster, CA 93534
Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310
Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201
Director of Northrop Grumman Corp.
1840 Century Park East
Los Angeles, CA 90067
Director of Outboard Marine Corporation
100 SeaHorse Drive
Waukegan, IL 60085
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Director of Pacific Enterprises
555 West Fifth Street
Suite 2900
Los Angeles, CA 90031
Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Retired Chairman of the Board and Chief Executive Officer of
Director Martin Lockheed Corp
6801 Rockledge Drive
Bethesda, MD 20817
Director of Edison International
and Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770
Director of First Interstate
633 West Fifth Street
Los Angeles, CA 90071
Chang-Lin Tien Chancellor of the University of California at Berkeley
Director
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
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Director of Shaman Pharmaceuticals Inc.
213 East Grand Ave. South
San Francisco, CA 94080
William F. Zuendt Director of Wells Fargo & Company
President 420 Montgomery Street
San Francisco, CA 94105
Director of 3Com Corporation
5400 Bayfront Plaza, P.O. Box 58145
Santa Clara, CA 95052
Director of the California Chamber of Commerce
</TABLE>
Prior to 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" in the Statement of Additional Information. 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 MasterWorks Funds Inc., Stagecoach Funds,
Inc., Stagecoach Trust, Nations Fund, Inc., Nations Fund Trust, Nations Fund
Portfolios, Inc., Nations LifeGoal Funds, Inc. and Nations Institutional
Reserves, and is the exclusive placement agent for Managed Series Investment
Trust, Life & Annuity Trust and Master Investment Portfolio, all of which are
registered open-end management investment companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens Inc. with the Securities and Exchange Commission
pursuant to The Investment Advisers Act of 1940 (file No. 501-15510).
(c) Not applicable.
C-11
<PAGE>
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.
(d) BGFA, as successor entity to WFNIA, and on behalf of BGI, as
successor entity to Wells Fargo Institutional Trust Company, N.A., maintains all
Records relating to WFNIA's and Wells Fargo Institutional Trust Company, N.A.'s
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 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 "Organization and Management of the Funds"
in the Prospectus constituting Part A of this Registration Statement and
"Management" in the Statement of Additional Information constituting Part B of
this Registration Statement, the Registrant is not a party to any management-
related service contract.
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
C-12
<PAGE>
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-13
<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 30th day of November, 1998.
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 Date
- --------- ----- ----
<S> <C> <C>
* Trustee, Chairman and President
- ------------------------------ (Principal Executive Officer) ______
(R. Greg Feltus)
/s/ Richard H. Blank, Jr. Secretary and Treasurer 11/30/98
- ------------------------------ (Principal Financial Officer) --------
(Richard H. Blank, Jr.)
* Trustee ______
- ------------------------------
(Jack S. Euphrat)
* Trustee ______
- ------------------------------
(Thomas S. Goho)
* Trustee ______
- ------------------------------
(Peter G. Gordon)
* Trustee ______
- ------------------------------
(Joseph N. Hankin)
* Trustee ______
- ------------------------------
(W. Rodney Hughes)
* Trustee ______
- ------------------------------
(J. Tucker Morse)
</TABLE>
*By: /s/ Richard H. Blank, Jr.
-------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
November 30, 1998
<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 30th day of November, 1998.
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:
Signature Title Date
--------- ----- ----
* Trustee, Chairman and President
------------------------- (Principal Executive Officer)
(R. Greg Feltus) ______
/s/ Richard H. Blank, Jr. Secretary and Treasurer
------------------------- (Principal Financial Officer) 11/30/98
(Richard H. Blank, Jr.) -------
* Trustee
------------------------- ______
(Jack S. Euphrat)
* Trustee
------------------------- ______
(Thomas S. Goho)
* Trustee
------------------------- ______
(W. Rodney Hughes)
* Trustee
------------------------- ______
(J. Tucker Morse)
*By: /s/ Richard H. Blank, Jr.
-------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
November 30, 1998
<PAGE>
STAGECOACH TRUST
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
EX-99.B9(b) * Shareholder Servicing Plan
EX-99.B9(b)(i) * Form of Shareholder Servicing Agreement
EX-99.B9(c) * Form of Agency Agreement
EX-99.B11 * Consent of Auditors - KPMG Peat Marwick LLP
EX-99.B15(a) * Consolidated Distribution Plan
EX-99.B18 * Rule 18f-3 Multi-Class Plan
</TABLE>
<PAGE>
EXHIBIT 99.B9(b)
STAGECOACH TRUST
SHAREHOLDER SERVICING PLAN
Section 1. Each of the proper officers of Stagecoach Trust (the "Trust")
is authorized to execute and deliver, in the name and on behalf of the Trust,
written agreements based substantially on the form attached hereto as Exhibit A
or any other form duly approved by the Trust's Board of Trustees ("Agreements")
with broker/dealers, banks and other financial institutions that are dealers of
record or holders of record or which have a servicing relationship with the
beneficial owners of shares ("Servicing Agents") of the Trust's Funds listed on
the attached Appendix (each a "Fund"). Pursuant to such Agreements, Servicing
Agents shall provide support services as set forth therein to their clients who
beneficially own shares of a Fund in consideration of a fee, computed monthly in
the manner set forth in such Fund's then current prospectus, at the annual rates
set forth in the attached Appendix. The Trust's distributor, administrator and
adviser, if any, and their respective affiliates are eligible to become
Servicing Agents and to receive fees under this Servicing Plan. All expenses
incurred by a class of shares of a Fund in connection with the Agreements and
the implementation of this Servicing Plan shall be borne entirely by the holders
of that class of shares.
Section 2. The Trust's administrator shall monitor the arrangements
pertaining to the Trust's Agreements with Servicing Agents. The Trust's
administrator shall not, however, be obligated by this Servicing Plan to
recommend, and the Trust shall not be obligated to execute, any Agreement with
any qualifying Servicing Agents.
Section 3. So long as this Servicing Plan is in effect, the Trust's
administrator shall provide to the Trust's Board of Trustees, and the Trustees
shall review, at least quarterly, a written report of the amounts expended
pursuant to this Servicing Plan and the purposes for which such expenditures
were made.
Section 4. The Plan shall be effective on the date upon which it is
approved by "vote of a majority of the outstanding voting securities," as
defined in the Investment Company Act of 1940 (the "1940 Act"), as amended, and
rules and regulations thereunder, of a class or classes or shares of a Fund and
a majority of the Trustees of the Trust, including a majority of the Trustees
who are not "interested persons" as defined in the 1940 Act, pursuant to a vote
cast in person at a meeting or meetings called for the purpose of voting on the
approval of the Plan, or on the date the Fund commences operations, if such date
is later, provided that, if a separate Servicing Plan was previously adopted by
a Fund, this consolidated Plan shall be effective on the date upon which it is
approved by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act), pursuant
to a vote cast in person at a meeting or meetings called for the purpose of
voting on the approval of the consolidated Plan.
1
<PAGE>
Section 5. Unless sooner terminated, this Servicing Plan (and each related
agreement) shall continue in effect for a period of one year from its date of
approval and shall continue thereafter for successive annual periods, provided
that such Plan is not specifically terminated by a majority vote of the Board of
Trustees, including a majority of the Trustees who are not "interested persons,"
as defined in the 1940 Act, and who have no direct or indirect financial
interest in the operation of this Servicing Plan or in any Agreement related to
this Servicing Plan, cast in person at a meeting called for the purpose of
voting on such approval.
Section 6. This Servicing Plan may be amended at any time with respect to
a class or classes of shares of a Fund by the Trust's Board of Trustees,
provided that any material amendment of the terms of this Servicing Plan
(including a material increase of the fee payable hereunder) shall become
effective only upon the approvals set forth in Section 5.
Section 7. This Servicing Plan is terminable with respect to any class at
any time by vote of a majority of the Trustees who are not "interested persons"
as defined in the 1940 Act.
Section 8. While this Servicing Plan is in effect, the selection and
nomination of the Trustees who are not "interested persons" shall be committed
to the discretion of such Trustees who are not "interested persons".
Section 9. Notwithstanding anything herein to the contrary, no Fund or
class of shares shall be obligated to make any payments under this Plan that
exceed the maximum amounts payable under Article III, Section 26 of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.
Section 10. The Trust will preserve copies of this Servicing Plan,
Agreements, and any written reports regarding this Servicing Plan presented to
the Board of Trustees for a period of not less than six years.
Dated: October 24, 1996
2
<PAGE>
APPENDIX
--------
Fees are expressed as a percentage of the average daily net asset value of
the class of shares of the particular Fund beneficially owned by or attributable
to such clients of the Servicing Agent.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Fund and Share Class Maximum Permitted Fee
- ------------------------------------------------------------------------------------------
<S> <C>
LifePath Opportunity Fund
Class A 0.25%
Class B 0.25%
Class C 0.25%
LifePath 2010 Fund
Class A 0.25%
Class B 0.25%
Class C 0.25%
LifePath 2020 Fund
Class A 0.25%
Class B 0.25%
Class C 0.25%
LifePath 2030 Fund
Class A 0.25%
Class B 0.25%
Class C 0.25%
LifePath 2040 Fund
Class A 0.25%
Class B 0.25%
Class C 0.25%
</TABLE>
Effective: October 25, 1993 (Retail shares)
Approved: October 24, 1996 (Class B shares, except LifePath 2000 Fund
Approved as Amended: April 30, 1998 to include LifePath Oppurtunity Fund Class
B shares
Approved as Amended: July 30, 1998 to increase the maximum fee to 0.25%
Approved as Amended: November 19, 1998 to include the Class C shares of the
LifePath Opportunity Fund, LifePath 2010 Fund, LifePath
2020 Fund and LifePath 2030 Fund
A-1
<PAGE>
EXHIBIT 99.B9(b)(i)
FORM OF
SHAREHOLDER SERVICING AGREEMENT FOR
STAGECOACH FUNDS, INC. AND
STAGECOACH TRUST
THIS SHAREHOLDER SERVICING AGREEMENT ("Agreement"), dated as of November
19, 1998, is made among Stagecoach Funds, Inc. (the "Company"), a Maryland
corporation, Stagecoach Trust (the "Trust"), a Massachusetts business trust,
(sometimes referred to herein as the "Companies"), each having its principal
place of business at 111 Center Street, Little Rock, Arkansas 72201, on behalf
of the classes of shares of the Funds of the Company and the Trust listed in the
attached Appendix, as amended from time to time, (each a "Class" and a "Fund"
and, collectively, the "Classes" and the "Funds"), and Wells Fargo Bank, N.A. as
shareholder servicing agent hereunder ("Shareholder Servicing Agent");
W I T N E S S E T H:
WHEREAS, shares of common stock of a Fund of the Company, and shares of
beneficial interest of a Fund of the Trust (hereinafter the "Shares") may be
purchased or redeemed through a broker/dealer or financial institution which has
entered into a shareholder servicing agreement with the Company and the Trust on
behalf of their respective Funds; and
WHEREAS, the Shareholder Servicing Agent wishes to facilitate purchases
and redemptions of Shares by its customers (the "Customers") and wishes to act
as the Customers' agent in performing certain administrative functions in
connection with transactions in Shares from time to time for the account of the
Customers and to provide related services to the Customers in connection with
their investments in a Fund; and
WHEREAS, it is in the best interests of the Funds to make the services of
the Shareholder Servicing Agent available to the Customers who, from time to
time, become shareholders of a Fund;
NOW THEREFORE, the Company and the Trust, on behalf of their respective
Funds, and the Shareholder Servicing Agent hereby agree as follows:
1. Appointment. The Shareholder Servicing Agent hereby agrees to
-----------
perform certain services for Customers as hereinafter set forth. The
Shareholder Servicing Agent's appointment hereunder is not exclusive, and the
Shareholder Servicing Agent shall not be entitled to notice of or a right to
consent to the execution of a shareholder servicing agreement with any other
person.
2. Services to be Performed.
------------------------
2.1 Types of Services. The Shareholder Servicing Agent shall be
-----------------
responsible for performing shareholder administrative and liaison services,
which shall include, without limitation:
(a) answering Customer inquiries regarding account status and history,
and the manner in which purchases, exchanges and redemptions of Shares may be
effected;
(b) assisting Customers in designating and changing dividend
options, account designations and addresses;
(c) providing necessary personnel and facilities to establish
and maintain Customer accounts and records;
(d) assisting in aggregating and transmitting purchase,
redemption and exchange transactions;
1
<PAGE>
(e) arranging for the wiring of money;
(f) transferring money in connection with Customer orders to
purchase or redeem shares;
(g) verifying and guaranteeing Customer signatures in connection with
redemption and exchange orders and transfers and changes in Customer accounts
with a bank which is designated in the Fund Account Application and which is
approved by a Fund's Transfer Agent;
(h) furnishing (either separately or on an integrated basis with other
reports sent to a Customer by the Shareholder Servicing Agent) monthly and year-
end statements and confirmations of purchases, redemptions and exchanges;
(i) furnishing, on behalf of the Shares of a Fund, proxy statements,
annual reports, updated prospectuses and other communications to Customers;
(j) receiving, tabulating and sending to a Fund, proxies
executed by Customers; and
(k) providing such other related services, and necessary personnel and
facilities to provide all of the shareholder services contemplated hereby, in
each case, as the Company or the Trust, as the case may be, or a Customer may
reasonably request.
2.2 Standard of Services. All services to be rendered by the
--------------------
Shareholder Servicing Agent hereunder shall be performed in a professional,
competent and timely manner. Any detailed operating standards and procedures to
be followed by the Shareholder Servicing Agent in performing the services
described above shall be determined from time to time by agreement between the
Shareholder Servicing Agent and the Companies. The Company and the Trust each
acknowledges that the Shareholder Servicing Agent's ability to perform on a
timely basis certain of its obligations under this Agreement depends upon a
Fund's timely delivery of certain materials and/or information to the
Shareholder Servicing Agent. The Company and the Trust each agrees to use its
best efforts to provide, or cause to be provided, such materials to the
Shareholder Servicing Agent in a timely manner.
2.3 Investments through Distributor. The Company, the Trust and the
-------------------------------
Shareholder Servicing Agent each hereby agrees that all purchases of Shares
effected by the Shareholder Servicing Agent on behalf of its Customers shall be
effected by it through Stephens Inc. ("Distributor") in its capacity as the
Funds' principal underwriter.
3. Fees.
----
3.1 Fees from the Funds. In consideration of the services described
-------------------
in Section 2 hereof and the incurring of expenses in connection therewith, the
Shareholder Servicing Agent shall receive a fee, from each of the Classes of
Shares of the Funds identified in the attached Appendix, which shall be paid in
arrears periodically or on a periodic basis to be agreed between the Company and
the Shareholder Servicing Agent, and between the Trust and the Shareholder
Servicing Agent, from time to time (but in no event less frequently than semi-
annually) determined by a formula based upon the number of accounts of the
particular Class in a particular Fund serviced by the Shareholder Servicing
Agent during the period for which payment is being made, the level of assets or
activity in such accounts during such period, and/or the expenses incurred by
the Shareholder Servicing Agent. In no event will the fees charged to a Class
of Shares of a Fund exceed the amount set forth opposite such Class of Shares of
such Fund in the Appendix attached hereto. In addition, all fees paid by
Classes of Shares of the Funds hereunder shall be calculated based on the
average daily net assets of the particular Class of Shares of such Fund owned of
record by the Shareholder Servicing Agent on behalf of the Customers during the
period for which payment is being made. For purposes of determining the fees
payable to the Shareholder Servicing Agent hereunder, the per share value of a
Class of a Fund shall be computed in the manner specified in the Fund's then-
current prospectus. Notwithstanding the foregoing, if applicable laws,
regulations or rules impose a maximum fee amount (a "cap")
2
<PAGE>
with respect to shareholder servicing fees and/or fees for distribution-related
services that may be paid by the Shares of a Fund, the amount payable hereunder
shall be reduced to an amount which, when considered in conjunction with the
fees payable by a Fund for the Shares' distribution-related activities, is the
maximum amount payable to the Shareholder Servicing Agent under applicable laws,
regulations or rules. Notwithstanding anything herein to the contrary, neither
the Company nor the Trust shall be obligated to make any payments under this
Agreement that exceed the maximum amounts payable under Rule 2830 of the Conduct
Rules of the National Association of Securities Dealers, Inc. The above fee
constitutes all fees to be paid to the Shareholder Servicing Agent by a Class of
Shares of a Fund of the Company or the Trust with respect to the shareholder
services contemplated hereby.
3.2 Fees from Customers. It is agreed that the Shareholder
-------------------
Servicing Agent may impose certain conditions on Customers, subject to the terms
of the relevant Fund's then-current prospectus, in addition to or different from
those imposed by the Fund, such as requiring a minimum initial investment or the
payment of additional fees directly by the Customer for additional services
offered by the Shareholder Servicing Agent to the Customer; provided, however,
-------- -------
that the Shareholder Servicing Agent may not charge Customers any direct fee
which would constitute a "sales load" within the meaning of Section 2(a)(35) of
the Investment Company Act of 1940, as amended (the "1940 Act"). The
Shareholder Servicing Agent shall bill Customers directly for any such
additional fees. In the event the Shareholder Servicing Agent charges Customers
such additional fees, it shall notify the Company in advance and make
appropriate prior written disclosure (such disclosure to be in accordance with
all applicable laws) to Customers of any such additional fees charged directly
to the Customer. To the extent required by applicable rules and regulations of
the Securities and Exchange Commission ("SEC"), the Company and the Trust shall
make written disclosure of the fees paid or to be paid by a Fund to the
Shareholder Servicing Agent pursuant to Section 3.1 of this Agreement. In no
event shall the Shareholder Servicing Agent have recourse or access, as
Shareholder Servicing Agent or otherwise, to the assets in the Customer's
account, except to the extent expressly authorized by law or by such Customer,
or to any assets of a Fund, the Company or the Trust, for payment of any
additional direct fees referred to in this Section 3.2.
4. Information Pertaining to the Shares. The Shareholder Servicing
------------------------------------
Agent and its officers, employees and agents are not authorized to make any
representations concerning the Company, the Trust, a Fund or the Shares of any
Class thereof to Customers or prospective Customers, excepting only accurate
communication of any information provided by or on behalf of any administrator
of the Company, the Trust or the Distributor of information contained in the
relevant Fund's then-current prospectus. In furnishing such information
regarding the Company, the Trust, a Fund or the Shares, the Shareholder
Servicing Agent shall act as agent for the Customer only and shall have no
authority to act as agent for the Company, the Trust, a Fund or the Shares.
Advance copies or proofs of all materials which are proposed to be circulated or
disseminated by the Shareholder Servicing Agent to Customers or prospective
Customers and which identify or describe the Company, the Trust, a Fund or the
Shares shall be provided to the Company or the Trust, as the case may be, at
least 10 days prior to such circulation or dissemination (unless the Company or
the Trust, as the case may be, consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Company or the Trust, as the case may be,
shall have given written notice to the Shareholder Servicing Agent of any
objection thereto.
Nothing in this Section 4 shall be construed to make the Company or the
Trust liable for the use (as opposed to the accuracy) of any information about
the Company, the Trust, a Fund or the Shares which is disseminated by the
Shareholder Servicing Agent.
5. Use of the Shareholder Servicing Agent's Name. Neither the Company
---------------------------------------------
nor the Trust shall use the name of the Shareholder Servicing Agent, or any of
its affiliates or subsidiaries, in any prospectus, sales literature or other
materials relating to the Company, the Trust, a Fund or the Shares in a manner
not approved by the Shareholder Servicing Agent prior thereto in writing;
provided, however, that the approval of the Shareholder Servicing Agent shall
- -------- -------
not be required for any use of its name which merely refers in accurate and
factual terms to its appointment hereunder or which is required by the SEC or
any state securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such approval
-------- -------
be unreasonably withheld or delayed.
3
<PAGE>
6. Use of the Name of the Company, the Trust or a Fund. The
---------------------------------------------------
Shareholder Servicing Agent shall not use the name of the Company, the Trust, a
Fund or any Class of Shares on any checks, bank drafts, bank statements or forms
for other than internal use in a manner not approved by the Company or the
Trust, as the case may be, prior thereto in writing; provided, however, that the
-------- -------
approval of the Company or the Trust, as the case may be, shall not be required
for (i) the use of the Company's or the Trust's name, or the name of a Fund, in
connection with communications permitted by Section 4 hereof, or (ii) (subject
to Section 4, to the extent the same may be applicable) for any use of the
Company's or the Trust's name or a Fund's name which merely identifies the
Company, the Trust or a Fund, as the case may be, in connection with the
Shareholder Servicing Agent's role hereunder or which is required by the SEC or
any state securities authority or any other appropriate regulatory, governmental
or judicial authority; provided, further, that in no event shall such approval
-------- -------
be unreasonably withheld or delayed.
7. Security. The Shareholder Servicing Agent represents and warrants
--------
that to the best of its knowledge, the various procedures and systems which it
has implemented (including provision for twenty-four hours a day restricted
access) with regard to safeguarding from loss or damage attributable to fire,
theft or any other cause the Companies records and other data within its
possession or control and the Shareholder Servicing Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Company and the Trust shall each, from time to
time, specify the types of records and other data of the Company and the Trust,
respectively, to be safeguarded in accordance with this Section 7.
8. Compliance with Laws. The Shareholder Servicing Agent shall comply
--------------------
with all applicable federal and state laws and regulations, including securities
laws. The Shareholder Servicing Agent represents and warrants to the Company
and the Trust, respectively, that the performance of all its obligations
hereunder will comply with all applicable laws and regulations, the provisions
of its charter documents and by-laws and all material contractual obligations
binding upon the Shareholder Servicing Agent. The Shareholder Servicing Agent
furthermore undertakes that it will promptly, after the Shareholder Servicing
Agent becomes so aware, inform the Company and the Trust of any change in
applicable laws or regulations (or interpretations thereof) or in its charter or
by-laws or material contracts which would prevent or impair full performance of
any of its obligations hereunder.
9. Reports. To the extent requested by the Company or the Trust from
-------
time to time, but at least quarterly, the Shareholder Servicing Agent will
provide the Treasurer of the Company or the Trust, as the case may be, with a
written report of the amounts expended by the Shareholder Servicing Agent
pursuant to this Agreement and the purposes for which such expenditures were
made. Such written reports shall be in a form satisfactory to the Company or
the Trust, as the case may be, and shall supply all information necessary for
the Company and the Trust to discharge their responsibilities under applicable
laws and regulations. In addition, the Shareholder Servicing Agent shall have a
duty to furnish to the Company's Board of Directors and the Trust's Board of
Trustees such information as may reasonably be necessary to an informed
determination of whether this Agreement should be implemented or continued
pursuant to Section 16.
10. Recordkeeping.
-------------
10.1 Each party shall maintain and preserve records as required by
law to be maintained and preserved by it in connection with providing the
services contemplated by this Agreement. The Shareholder Servicing Agent's
recordkeeping responsibilities shall include those relating to establishing and
maintaining sub-accounts and records on behalf of Customers, and recording
Customers' sub-account balances and changes thereto.
10.2. Upon the request of the Company or the Trust, the Shareholder
Servicing Agent shall provide copies of all records relating to the transactions
between the Funds and the Customers as are maintained by the Shareholder
Servicing Agent in the ordinary course of its business and in compliance with
laws and regulations as may reasonably be requested to enable the Company and
the Trust to comply with any applicable laws or regulations or request of a
governmental body or self-regulatory organization.
4
<PAGE>
10.3. The recordkeeping and access obligations imposed in this
Section 10 shall survive the termination of this Agreement for the shorter of a
period of six years or that minimum period required by applicable rules or
regulations of the SEC.
11. Force Majeure. The Shareholder Servicing Agent shall not be
-------------
liable or responsible for delays or errors by reason of circumstances beyond its
reasonable control, including, but not limited to, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown,
flood or catastrophe, acts of God, insurrection, war, riots or failure of
communication systems or power supply.
12. Indemnification.
---------------
12.1 Indemnification of the Shareholder Servicing Agent by the
---------------------------------------------------------
Companies. Each of the Company and the Trust will indemnify and hold the
- ---------
Shareholder Servicing Agent harmless from all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) from
any claim, demand, action or suit (collectively, "Claims") (a) arising in
connection with misstatements or omissions in the Funds' prospectus, actions or
inactions by the Company or the Trust, as the case may be, or any of its agents
or contractors or the performance of the Shareholder Servicing Agent's
obligations hereunder and (b) not resulting from (i) the bad faith or negligence
of the Shareholder Servicing Agent, its officers, employees or agents, or (ii)
any breach of applicable law by the Shareholder Servicing Agent, its officers,
employees or agents, or (iii) any action of the Shareholder Servicing Agent, its
officers, employees or agents which exceeds the legal authority of the
Shareholder Servicing Agent or its authority hereunder, or (iv) any error or
omission of the Shareholder Servicing Agent, its officers, employees or agents
with respect to the purchase, redemption and transfer of Customers' Shares or
the Shareholder Servicing Agent's verification or guarantee of any Customer
signature. Notwithstanding anything herein to the contrary, each of the Company
and the Trust will indemnify and hold the Shareholder Servicing Agent harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any Claim as a result of
its acting in accordance with any written instructions reasonably believed by
the Shareholder Servicing Agent to have been executed by any person duly
authorized by the Company or the Trust, as the case may be, or as a result of
acting in reliance upon any instrument or stock certificate reasonably believed
by the Shareholder Servicing Agent to have been genuine and signed,
countersigned or executed by a person duly authorized by the Company or the
Trust, as the case may be, excepting only the gross negligence or bad faith of
the Shareholder Servicing Agent.
In any case in which the Company or the Trust may be asked to indemnify
or hold the Shareholder Servicing Agent harmless, the Company or the Trust, as
the case may be, shall be advised of all pertinent facts concerning the
situation in question and the Shareholder Servicing Agent shall use reasonable
care to identify and notify the Company or the Trust, as the case may be,
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Company or the Trust. The Company and the
Trust shall have the option to defend the Shareholder Servicing Agent against
any Claim which may be the subject of indemnification hereunder. In the event
that the Company or the Trust, as the case may be, elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Company or the
Trust, as the case may be, and reasonably satisfactory to the Shareholder
Servicing Agent. The Shareholder Servicing Agent may retain additional counsel
at its expense. Except with the prior written consent of the Company or the
Trust, as the case may be, the Shareholder Servicing Agent shall not confess any
Claim or make any compromise in any case in which the Company or the Trust will
be asked to indemnify the Shareholder Servicing Agent.
12.2 Indemnification of the Companies by the Shareholder Servicing
-------------------------------------------------------------
Agent. Without limiting the rights of the Companies under applicable law, the
- -----
Shareholder Servicing Agent will indemnify and hold each of the Company and the
Trust harmless from all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) from any Claim (a) resulting
from (i) the bad faith or negligence of the Shareholder Servicing Agent, its
officers, employees or agents, or (ii) any breach of applicable law by the
Shareholder Servicing Agent, its officers, employees or agents, or (iii) any
action of the Shareholder Servicing Agent, its officers, employees or agents
which exceeds the legal authority of the Shareholder Servicing Agent or its
authority hereunder, or (iv) any error or omission of the Shareholder Servicing
Agent, its officers, employees or agents with respect to the purchase,
redemption and transfer of Customers' Shares or the Shareholder Servicing
5
<PAGE>
Agent's verification or guarantee of any Customer signature, and (b) not
resulting from the Shareholder Servicing Agent's actions in accordance with
written instructions reasonably believed by the Shareholder Servicing Agent to
have been executed by any person duly authorized by the Company or the Trust, as
the case may be, or in reliance upon any instrument or stock certificate
reasonably believed by the Shareholder Servicing Agent to have been
genuine and signed, countersigned or executed by a person duly authorized by the
Company or the Trust, as the case may be.
In any case in which the Shareholder Servicing Agent may be asked to
indemnify or hold the Company or the Trust harmless, the Shareholder Servicing
Agent shall be advised of all pertinent facts concerning the situation in
question and the Company or the Trust, as the case may be, shall use reasonable
care to identify and notify the Shareholder Servicing Agent promptly concerning
any situation which presents or appears likely to present a claim for
indemnification against the Shareholder Servicing Agent. The Shareholder
Servicing Agent shall have the option to defend the Company or the Trust, as the
case may be, against any Claim which may be the subject of indemnification
hereunder. In the event that the Shareholder Servicing Agent elects to defend
against such Claim, the defense shall be conducted by counsel chosen by the
Shareholder Servicing Agent and satisfactory to the Company or the Trust, as the
case may be. The Company or the Trust may retain additional counsel at its
expense. Except with the prior written consent of the Shareholder Servicing
Agent, neither the Company nor the Trust shall confess any Claim or make any
compromise in any case in which the Shareholder Servicing Agent will be asked to
indemnify the Company or the Trust.
12.3 Indemnification Between the Companies. The Company will
------------------------------------
indemnify and hold harmless the Trust against any losses, claims, damages and
liabilities to which the Trust may become subject arising in connection with
this Agreement, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any prospectus of
the Company for which the Shareholder Servicing Agent acts as such pursuant to
this Agreement, or arise out of or are based upon actions or inactions by the
Company or any of its agents or contractors or the performance of the
Shareholder Servicing Agent's obligations hereunder and (b) not resulting from
(i) the bad faith or negligence of the Trust, its officers, employees or agents,
or (ii) any breach of applicable law by the Trust, its officers, employees or
agents, or (iii) any action of the Trust, its officers, employees or agents
which exceeds the legal authority of the Trust or its authority hereunder, or
(iv) any error or omission of the Shareholder Servicing Agent, its officers,
employees or agents with respect to the purchase, redemption and transfer of
Customers' Shares or the Shareholder Servicing Agent's verification or guarantee
of any Customer signature.
The Trust will indemnify and hold harmless the Company against any
losses, claims, damages and liabilities to which The Company may become subject
arising in connection with this Agreement, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any the Trust prospectus for which the Shareholder Servicing Agent
acts as such pursuant to this Agreement, or arise out of or are based upon
actions or inactions by the Trust or any of its agents or contractors or the
performance of the Shareholder Servicing Agent's obligations hereunder and (b)
not resulting from (i) the bad faith or negligence of the Company, its officers,
employees or agents, or (ii) any breach of applicable law by the Company, its
officers, employees or agents, or (iii) any action of the Company, its officers,
employees or agents which exceeds the legal authority of the Company or its
authority hereunder, or (iv) any error or omission of the Shareholder Servicing
Agent, its officers, employees or agents with respect to the purchase,
redemption and transfer of Customers' Shares or the Shareholder Servicing
Agent's verification or guarantee of any Customer signature.
In any case in which the Company or the Trust may be asked to indemnify
or hold the other harmless, the indemnifying party shall be advised of all
pertinent facts concerning the situation in question and the party to be
indemnified shall use reasonable care to identify and notify the indemnifying
party promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the indemnifying party. The
indemnifying party shall have the option to defend the indemnified party against
any Claim which may be the subject of indemnification hereunder. In the event
that the indemnifying party elects to defend against such Claim, the defense
shall be conducted by counsel chosen by the indemnifying party and reasonably
satisfactory to the indemnified party. The indemnified party may retain
additional counsel at its expense. Except with the prior
6
<PAGE>
written consent of the indemnifying party, the indemnified party shall not
confess any claim or make any compromise in any case in which indemnifying party
will be asked to indemnify the indemnified party.
12.4 Survival of Indemnities. The indemnities granted by the
-----------------------
parties in this Section 12 shall survive the termination of this Agreement.
13. Insurance. The Shareholder Servicing Agent shall maintain
---------
reasonable insurance coverage against any and all liabilities which may arise in
connection with the performance of its duties hereunder.
14. Notices. All notices or other communications hereunder shall be in
-------
writing and shall be deemed sufficient if mailed to each other party at the
address of such party set forth in the preamble of this Agreement or at such
other address as such party may have designated by written notice to the others.
15. Further Assurances. Each party agrees to perform such further acts
------------------
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. Implementation and Duration of Agreement. This Agreement is
----------------------------------------
effective upon the date first written above and shall continue in effect with
respect to a Class of Shares of a Fund of the Company and the Trust for a period
of more than one year from the date hereof so long as the Servicing Plan adopted
for such Class and related form of agreement or this Agreement is not
specifically terminated by a vote of the Board of Directors/Trustees of the
Company/Trust (as applicable) and of the Directors/Trustees who are not
"interested persons" of the Company/Trust (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of the relevant
Servicing Plan (the "Plan") pursuant to which the fees are paid, this Agreement,
or any other agreement related to such Plan, cast in person at a meeting called
for the purpose of voting on this Agreement.
17. Termination. This Agreement may be terminated with respect to the
-----------
Company or the Trust, or one or more Funds of the Company or the Trust, by the
Company or the Trust, respectively, without the payment of any penalty, at any
time upon not more than 60 days' nor less than 30 days' notice, by a vote of a
majority of the Board of Directors/Trustees of the Company/Trust (as applicable)
who are not "interested persons" of the Company/Trust (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of the
relevant Plan, this Agreement or any other agreement related to such Plan,
including the Amended Distribution Agreement, or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the relevant
class of shares of the Fund. The Shareholder Servicing Agent may terminate this
Agreement with respect to either the Company or the Trust upon not more than 60
days' nor less than 30 days' notice to the Company or the Trust, as the case may
be. Either the Company, the Trust or the Shareholder Servicing Agent may assign
this Agreement provided that such assigning party obtains the prior written
consent of the other parties hereto. Upon termination hereof, a Fund shall pay
such compensation as may be due the Shareholder Servicing Agent as of the date
of such termination.
18. Changes; Amendments. Except as otherwise provided in this Section
-------------------
18, this Agreement may be supplemented or amended only by written instrument
signed by all parties, but may not be amended to increase materially the maximum
amount payable by a Class of Shares of a Fund without the approval of "a vote of
a majority of the outstanding voting securities" (as defined in the 1940 Act) of
such Class of Shares of such Fund, and all material amendments must be approved
in the manner described in Section 16. From time to time, the Company and the
Trust may, by written notice to the Shareholder Servicing Agent, amend the
Appendix attached hereto to add or delete Funds and/or classes of Shares as
available investment options hereunder. Any such notice shall be effective upon
receipt by the Shareholder Servicing Agent.
19. Limitation of Liability. The Shareholder Servicing Agent hereby
-----------------------
agrees that obligations assumed by the Company and the Trust pursuant to this
Agreement shall be limited in all cases to the Funds and their assets and that
the Shareholder Servicing Agent shall not seek satisfaction of any such
obligations from the Board of Directors or any individual Director of the
Company, or from the Board of Trustees or any individual Trustee of the Trust.
The Shareholder Servicing Agent further agrees that all obligations of a Fund
hereunder shall be solely the obligations of such Fund and that in no case will
any Fund of either the Company or the Trust be liable
7
<PAGE>
for the obligations of any other Fund of the Company of the Trust, nor shall any
Fund of the Company be liable for any obligation of a Fund of the Trust, or vice
versa.
20. Subcontracting by Shareholder Servicing Agent. The Shareholder
---------------------------------------------
Servicing Agent may, with the written approval of each of the Company and the
Trust (such approval not to be unreasonably withheld or delayed), subcontract
for the performance of the Shareholder Servicing Agent's obligations hereunder
with any one or more persons, including but not limited to any one or more
persons which is an affiliate of the Shareholder Servicing Agent; provided,
---------
however, that the Shareholder Servicing Agent shall be as fully
- --------
responsible to the Companies for the acts and omissions of any subcontractor as
it would be for its own acts or omissions.
21. Authority to Vote. The Company and the Trust hereby confirm that
-----------------
nothing contained in its Articles of Incorporation or Declaration of Trust,
respectively, would preclude the Shareholder Servicing Agent, at any meeting of
shareholders of the Company, the Trust or of a Fund, from voting any Shares held
in accounts serviced by the Shareholder Servicing Agent and which are otherwise
not represented in person or by proxy at the meeting, proportionately in
accordance with the votes cast by holders of all Shares otherwise represented at
the meeting in person or by proxy and held in accounts serviced by the
Shareholder Servicing Agent.
22. Compliance with Laws and Policies; Cooperation. The Company and the
----------------------------------------------
Trust each hereby agrees that it will comply with all laws and regulations
applicable to operations of Funds thereof and the Shareholder Servicing Agent
agrees that it will comply with all laws and regulations applicable to providing
the services contemplated hereby.
8
<PAGE>
22.1 Miscellaneous. This Agreement shall be construed and enforced
-------------
in accordance with and governed by the laws of the State of California. The
captions in this Agreement are included for convenience of reference only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously in three
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
STAGECOACH FUNDS, INC. on behalf of the
classes of shares of the Funds listed in the
attached Appendix
By:
---------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
STAGECOACH TRUST, on behalf of the classes of
shares of the Funds listed in the attached
Appendix
By:
---------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
[SHAREHOLDER SERVICING AGENT]
By:
-------------------------
Name:
------------------------
Title:
-----------------------
By:
-------------------------
Name:
-----------------------
Title:
-----------------------
9
<PAGE>
APPENDIX
--------
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
STAGECOACH FUNDS, INC.
----------------------
Arizona Tax-Free Fund
Class A .25%
Class B .25%
Institutional Class .25%
Asset Allocation Fund
Class A .30%
Class B .30%
Class C .25%
Balanced Fund
Class A .25%
Class B .25%
Institutional Class .25%
California Tax-Free Bond Fund
Class A .30%
Class B .30%
Class C .25%
Institutional Class .25%
California Tax-Free Income Fund
Class A .30%
Institutional Class .25%
California Tax-Free Money Market Fund
Single Class .30%
California Tax-Free Money Market Trust
Single Class .20%
Corporate Bond Fund
Class A .25%
Class B .25%
Class C .25%
Diversified Equity Income Fund
Class A .30%
Class B .30%
Equity Index Fund
Class A .25%
Class B .25%
Class O .20%
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
Equity Value Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Government Money Market Fund
Class A .25%
Growth Fund
Class A .30%
Class B .30%
Institutional Class .25%
Index Allocation Fund
Class A .25%
Class B .25%
Class C .25%
International Equity Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Money Market Fund
Class A .30%
Service Class .25%
Institutional Class .25%
Money Market Trust
Single Class .20%
National Tax-Free Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
National Tax-Free Money Market Fund
Class A .25%
Institutional Class .20%
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
National Tax-Free Money Market Trust
Single Class .20%
100% Treasury Money Market Fund
Class A .30%
Service Class .20%
Oregon Tax-Free Fund
Class A .25%
Class B .25%
Institutional Class .25%
Overland Express Sweep Fund
Single Class .30%
Prime Money Market Fund
Class A .30%
Service Class .20%
Institutional Class .25%
Administrative Class .15%
Short-Term Government-Corporate Income Fund
Single Class .25%
Short-Intermediate U.S. Government Income Fund
Class A .30%
Institutional Class .25%
Short-Term Municipal Income Fund
Single Class .25%
Small Cap Fund
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Strategic Growth Fund
Class A .25%
Class B .25%
Class C .25%
Strategic Income Fund
Class A .25%
Class B .25%
Class C .25%
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
Treasury Money Market Fund
Class A .30%
Class E .30%
Service Class .20%
Institutional Class .25%
Administrative Class .15%
U.S. GOVERNMENT ALLOCATION FUND
Class A .30%
Class B .30%
U.S. Government Income Fund
Class A .30%
Class B .30%
Class C .25%
Institutional Class .25%
Variable Rate Government Fund
Class A .25%
Class C .25%
STAGECOACH TRUST
----------------
LifePath Opportunity
Class A .25%
Class C .25%
Institutional Class .25%
LifePath 2010
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
LifePath 2020
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
LifePath 2030
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
FUND AND SHARE CLASS(ES) FEE RATE
- ------------------------ --------
<S> <C>
LifePath 2040
Class A .25%
Class B .25%
Class C .25%
Institutional Class .25%
Large Cap Alpha Tilt
Class A .25%
Class B .25%
Class C .25%
Small Cap Alpha Tilt
Class A .25%
Class B .25%
Class C .25%
</TABLE>
Approved: July 23, 1997
Approved as Amended: September 8, 1997, for the Prime and Treasury Money Market
Funds
Approved as Amended: October 30, 1997, for the Equity Index Fund
Approved as Amended: January, 1998, for the Asset Allocation, Corporate Bond,
Equity Value, Growth, Strategic Income, and International
Equity Funds.
Approved as Amended: April 30, 1998, for the 100% Treasury Money Market Fund
Approved as Amended: July 30, 1998 for the Stagecoach Trust Large Cap Alpha
Tilt Fund and the Small Cap Alpha Tilt Fund and to
increase all Stagecoach Trust shareholder servicing fees
to 0.25%.
Approved as Amended: November 19, 1998 to include the Class O Shares of the
Equity Index Fund and the Class C shares of the Lifepath
Opportunity Fund, Lifepath 2010 Fund, Lifepath 2020 Fund
and Lifepath 2030 Fund
A-5
<PAGE>
EXHIBIT 99.B9(c)
FORM OF
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
1
<PAGE>
Act and the 1933 Act and the statutes, rules and regulations of each and every
jurisdiction to which it is subject.
VI. DOCUMENTATION. The Company and Agent shall each supply to the other
upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles of incorporation, bylaws, codes of ethics, registration statements,
permits, financial reports, third party audits, certificates of authority,
computer tapes and related items.
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
2
<PAGE>
thereupon the Company shall take over defense of the claim, and (if so requested
by the Company) Agent shall incur no further legal or other expenses related
thereto for which it would be entitled to indemnity hereunder; provided,
however, that nothing herein contained shall prevent Agent from retaining, at
its own expense, counsel to defend any claim. Except with the Company's prior
consent, Agent shall in no event confess any claim or make any compromise in any
matter in which the Company will be asked to indemnify or hold harmless
hereunder.
IX. LIABILITY
A. Damages. Agent shall not be liable to the Company, or any third
-------
party, for punitive, exemplary, indirect, special or consequential damages (even
if Agent has been advised of the possibility of such damages) arising from its
obligations and the services provided under this Agreement, including but not
limited to loss of profits, loss of use of the shareholder accounting system,
cost of capital and expenses of substitute facilities, programs or services.
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.
3
<PAGE>
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.
STAGECOACH TRUST WELLS FARGO BANK, N.A.
By: __________________________ By: _____________________________
Name: Richard H. Blank, Jr. Name: Elizabeth Gottfried
Title: Chief Operating Officer Title: Vice President
By: _____________________________
Name: James Nolan
Title: Vice President
Approved: January 16, 1997
4
<PAGE>
APPENDIX A
----------
Name of Fund
- ------------
LifePath Opportunity Fund
LifePath 2010 Fund
LifePath 2020 Fund
LifePath 2030 Fund
LifePath 2040 Fund
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.
<TABLE>
<CAPTION>
Class Rate
- ----- ----
<S> <C>
Class A 0.14%
Class B 0.14%
Class C 0.14%
Institutional 0.10%
</TABLE>
A-1
<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.
B-1
<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.
B-2
<PAGE>
EXHIBIT 99.B11
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Stagecoach Trust
The Board of Trustees
Master Investment Portfolio:
We consent to the use of our report dated April 3, 1998 for LifePath 2000 Fund
(subsequently changed to LifePath Opportunity Fund), LifePath 2010 Fund,
LifePath 2020 Fund, LifePath 2030 Fund, and LifePath 2040 Fund (five of the
series constituting Stagecoach Trust) incorporated by reference herein.
We also consent to the use of our report dated April 3, 1998 for 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) incorporated by
reference herein.
We also consent to the references to our Firm under the headings "Financial
Highlights" and "How to Read the Financial Highlights" in the prospectus and
"Independent Auditors" in the Statement of Additional Information.
San Francisco, California
November 30, 1998
<PAGE>
EXHIBIT 99.B15(a)
STAGECOACH TRUST
CONSOLIDATED
DISTRIBUTION PLAN
WHEREAS, Stagecoach Trust ("Trust") is an open-end management investment
company and is registered as such under the Investment Trust Act of 1940, as
amended ("Act"); and
WHEREAS, the Trust desires to adopt a Distribution Plan ("Plan") pursuant
to Rule 12b-1 under the Act on behalf of the classes of shares of each Fund
listed on the attached Appendix A as it may be amended from time to time (each,
a "Fund" and, collectively, the "Funds") and the Board of Trustees, including a
majority of the Qualified Trustees (as defined below), has determined that there
is a reasonable likelihood that adoption of the plan will benefit each class of
each Fund and its shareholders;
NOW THEREFORE, each Fund hereby adopts the Plan, or has adopted a
separate Plan and now adopts this Consolidated Plan, which is identical in all
material respects to the separate Plans in accordance with Rule 12b-1 under the
Act on the following terms and conditions:
Section 1. Pursuant to the Plan, the Trust, on behalf of each classes of
each Fund listed in Appendix A, may pay to the distributor engaged by the Trust
on behalf of the class ("Distributor"), as compensation for distribution-related
services provided, or reimbursement for distribution related expenses incurred,
a monthly fee at annual rates as set forth on Appendix A. The actual fee
payable to the Distributor shall, within such limit, be determined from time to
time by mutual agreement between the Trust and the Distributor. The Distributor
may enter into selling agreements with one or more selling agents under which
such agents may receive compensation for distribution-related services from the
Distributor, including, but not limited to, commissions or other payments to
such agents based on the average daily net assets of Fund shares attributable to
them. The Distributor may retain any portion of the total distribution fee
payable hereunder to compensate it for distribution-related services provided by
it or to reimburse it for other distribution-related expenses.
Section 2. The Plan (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 with respect to any class 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.
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 such class
of such 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 a class of a Fund pursuant to the Plan without the
approval by a vote of a majority of the outstanding voting securities of such
class of such 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 Director 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. To the extent any payments made by the Fund pursuant to a
Servicing Agreement are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Class C Shares within the context of
Rule 12b-1 under the Act, such payments shall be deemed to have been approved
pursuant to this Plan. Notwithstanding anything herein to the contrary, the
Fund shall not be obligated to make any payments under this Plan that exceed the
maximum amounts payable under Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Section 9. The Trust shall preserve copies of the Plan, each related
agreement and each report made pursuant to Section 4 hereof, for a period of not
less than six years from the date of the Plan, such agreement or such report, as
the case may be, the first two years in an easily accessible place.
Section 10. As used in the Plan, (a) the terms "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
2
<PAGE>
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.
3
<PAGE>
APPENDIX A
----------
<TABLE>
<CAPTION>
FUND AND SHARE CLASS MAXIMUM PERMITTED FEE
- -------------------- ---------------------
<S> <C>
LifePath Opportunity Fund
Class A 0.25%
Class B 0.75%
Class C 0.75%
LifePath 2010 Fund
Class A 0.25%
Class B 0.75%
Class C 0.75%
LifePath 2020 Fund
Class A 0.25%
Class B 0.75%
Class C 0.75%
LifePath 2030 Fund
Class A 0.25%
Class B 0.75%
Class C 0.75%
LifePath 2040 Fund
Class A 0.25%
Class B 0.75%
Class C 0.75%
</TABLE>
A-1
<PAGE>
EXHIBIT 99.B18
STAGECOACH TRUST
RULE 18f-3 MULTI-CLASS PLAN
---------------------------
I. INTRODUCTION.
------------
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses among each class of shares in the separate investment
portfolios of Stagecoach Trust (the "Trust"). In addition, this Rule 18f-3
Multi-Class Plan (the "Plan") sets forth the maximum initial sales loads,
contingent deferred sales charges ("CDSCs"), Rule 12b-1 distribution fees,
shareholder servicing fees, conversion features, exchange privileges and other
shareholder services applicable to a particular class of shares of the Funds.
The Trust is an open-end series investment company registered under the
1940 Act, the shares of which are registered on Form N-1A under the Securities
Act of 1933. Upon the effective date of Rule 18f-3, the Trust hereby elected to
offer multiple classes of shares of the Funds pursuant to the provisions of Rule
18f-3 and the Plan. The Plan does not make any material changes to the class
arrangements and expense allocations previously approved by the Board of
Trustees of the Trust pursuant to the exemptive order issued under Section 6(c)
of the 1940 Act to Stagecoach Funds, Inc., et. al, Wells Fargo Bank, N.A. (the
investment adviser of the Trust) (the "Bank"), and Stephens Inc. (the principal
underwriter of the Trust) ("Stephens"), on May 18, 1993 (1940 Act Release No.
19479).
The Trust (Registration Nos. 33-64352 and 811-7780) currently offers the
following five separate investment portfolios: the LifePath Opportunity Fund,
LifePath 2010 Fund, LifePath 2020 Fund, LifePath 2030 Fund, and LifePath 2040
Fund (collectively, the "Funds"). Each Fund invests all of its assets in a
separate series (each, a "Master Portfolio") of Master Investment Portfolio, an
open-end management investment company, rather than directly in a portfolio of
securities. Each Master Portfolio has the same investment objective as the Fund
which invests its assets in the corresponding Master Portfolio.
The Funds listed below are authorized to issue the following classes
of shares representing interests in such Funds:
(i) Class A shares (formerly, Retail Class shares): LifePath Opportunity
Fund, LifePath 2010 Fund, LifePath 2020 Fund, LifePath 2030 Fund and
LifePath 2040 Fund;
(ii) Class B shares: LifePath Opportunity Fund, LifePath 2010 Fund,
LifePath 2020 Fund, LifePath 2030 Fund and LifePath 2040 Fund;
(iii) Class C shares: LifePath Opportunity Fund, LifePath 2010 Fund,
LifePath 2020 Fund, LifePath 2030 Fund and LifePath 2040 Funds; and
<PAGE>
(iv) Institutional Class shares: LifePath Opportunity Fund, LifePath 2010
Fund, LifePath 2020 Fund, LifePath 2030 Fund and LifePath 2040 Fund.
The differences between these classes are discussed below.
II. ALLOCATION OF EXPENSES.
----------------------
Pursuant to Rule 18f-3 under the 1940 Act, the Trust will allocate to
each class of shares of a Fund (i) any fees and expenses incurred by the Fund in
connection with the distribution of such class of shares under a distribution
plan adopted for such class of shares pursuant to Rule 12b-1, and (ii) any fees
and expenses incurred by the Fund under a shareholder servicing plan in
connection with the provision of shareholder administrative or liaison services
to the holders of such class of shares. In addition, pursuant to Rule 18f-3,
the Trust may allocate the following fees and expenses to a particular class of
shares of each Fund:
(i) transfer agency fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, notices,
prospectuses, reports, and proxies to current shareholders of
that class or to regulatory agencies with respect to such class
of shares;
(iii) blue sky registration or qualification fees incurred by such
class of shares;
(iv) Securities and Exchange Commission registration fees
incurred by such class of shares;
(v) the expense of administrative personnel and services as required
to support the shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to such class
of shares; and
(vii) fees of the Trust's Trustees incurred as result of issues
relating to such class of shares.
The initial determination of the class expenses that will be allocated by
the Trust to a particular class of shares and any subsequent changes thereto
will be reviewed by the Board of Trustees of the Trust and approved by a vote of
the Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust.
Income, realized and unrealized capital gains and losses, and any
expenses of a Fund not allocable to a particular class of the Fund pursuant to
this Plan shall be allocated to each class of the Fund based upon the relative
net asset value of that class in relation to the aggregate net
2
<PAGE>
asset value of the Fund. In certain cases, Stephens, the Bank, or another
service provider for a Fund may waive or reimburse all or a portion of the
expenses of a specific class of shares of a Fund. The Board of Trustees will
monitor any such waivers or reimbursements to ensure that they do not provide a
means for cross-subsidization between classes.
III. CLASS ARRANGEMENTS.
------------------
The following summarizes the maximum initial sales loads, CDSCs, Rule
12b-1 distribution fees, shareholder servicing fees, conversion features,
exchange privileges and other shareholder services applicable to each class of
shares of the Funds. Additional details and restrictions regarding such fees
and services are set forth in the Funds' current Prospectus and Statement of
Additional Information.
A. Class A shares (formerly, Retail Class shares)
----------------------------------------------
1. Maximum Initial Sales Load: 4.50%
--------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.25% of average daily net
------------------------------------------
assets attributable to Class A shares.
4. Maximum Annual Shareholder Servicing Fees: 0.20% of average daily net assets
-----------------------------------------
attributable to Class A shares.
5. Conversion Features: None
-------------------
6. Exchange Privileges: Class A shares may be exchanged for Class A shares of
-------------------
any other Fund, shares of a fund offered by the Trust pursuant to another
prospectus, or shares of certain other funds advised or sub-advised by the
Bank to the extent such shares are offered for sale in the investor's state
of residence. The exchange privilege may be expanded to permit exchanges
between a Fund and other funds that may, in the future, be advised or sub-
advised by the Bank
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
B. Class B Shares -- Multi-Class Funds
-----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: Class B shares that are redeemed within
--------------------------------
six years from the receipt of a purchase order affecting such shares are
subject to a CDSC equal to 5.00% in the first year, 4.00% in the second year,
3.00% in the third and fourth years, 2.00% in the
3
<PAGE>
fifth year and 1.00% in the sixth year, of the dollar amount equal to the
lesser of the net asset value ("NAV") at the time of purchase of the Class B
shares being redeemed or the NAV of such shares at the time of redemption. No
CDSC is imposed on Class B shares purchased through reinvestment of dividends
or capital gain distributions.
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.75% of average daily net
------------------------------------------
assets attributable to Class B shares.
4. Maximum Annual Shareholder Servicing Fee: 0.20% of average daily net assets
----------------------------------------
attributable to Class B shares.
5. Conversion Features: Class B shares of a Multi-Class Fund that have been
-------------------
outstanding for six years after the end of the month in which the shares were
initially purchased automatically convert to Class A shares of such Fund and,
consequently, are no longer subject to the higher Rule 12b-1 fees applicable
to Class B shares. Such conversion is on the basis of the relative NAVs of
the two classes, without the imposition of any sales charge or other charge,
except that the lower Rule 12b-1 fees applicable to Class A shares shall
thereafter be applied to such converted shares.
6. Exchange Privileges: Class B shares may be exchanged for Class B shares of
-------------------
any other Fund, shares of a fund offered by the Trust pursuant to another
prospectus, or shares of certain other funds advised or sub-advised by the
Bank to the extent such shares are offered for sale in the investor's state
of residence. The exchange privilege may be expanded to permit exchanges
between a Fund and other funds that may, in the future, be advised or sub-
advised by the Bank.
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
C. Class C Shares-- Multi-Class Funds
----------------------------------
1. Maximum Initial Sales Charge: None
----------------------------
2. Contingent Deferred Sales Charge: Class C shares that are redeemed within
--------------------------------
one year of the receipt of a purchase order affecting such shares are subject
to a CDSC equal to 1.00% of an amount equal to the lesser of NAV at the time
of purchase of the Class C shares being redeemed or the NAV of such shares at
the time of redemption. No CDSC is imposed on Class C shares purchased
through reinvestment of dividends or capital gain distributions.
3. Maximum Annual Rule 12b-1 Distribution Fee: 0.75% of average daily net
------------------------------------------
assets attributable to Class C shares.
4. Maximum Annual Shareholder Servicing Fee: 0.20% of average daily net assets
----------------------------------------
attributable to Class C shares.
5. Conversion Features: None
-------------------
4
<PAGE>
6. Exchange Privileges: As described in the current prospectus for each Fund.
-------------------
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
D. Institutional Class shares
--------------------------
1. Maximum Initial Sales Load: None
--------------------------
2. Contingent Deferred Sales Charge: None
--------------------------------
3. Maximum Annual Rule 12b-1 Distribution Fee: None
------------------------------------------
4. Maximum Annual Shareholder Servicing Fee: 0.20% of average daily net assets
----------------------------------------
attributable to Institutional Class shares.
5. Conversion Features: None
-------------------
6. Exchange Privileges: Institutional Class shares may be exchanged for
-------------------
Institutional Class shares of any other Fund, shares of a Fund offered by
the Trust pursuant to another prospectus, or shares of certain other
investment companies advised or sub-advised by the Bank, to the extent such
shares are offered for sale in the investor's state of residence. The
exchange privilege may be expanded to permit exchanges between a Fund and
other funds that, in the future, may be advised or sub-advised by the Bank.
7. Other Class-Specific Shareholder Services: None
-----------------------------------------
IV. BOARD REVIEW.
------------
The Boards of Trustees of the Trust shall review the Plan as it deems
necessary. Prior to any material amendment(s) to the Plan with respect to any
Fund's shares, the Trust's Board of Trustees, including a majority of the
Trustees that are not interested persons of the Trust, shall find that the Plan,
as proposed to be amended (including any proposed amendments to the method of
allocating class and/or fund expenses), is in the best interest of each class of
shares of the Fund individually and the Fund as a whole. In considering whether
to approve any proposed amendment(s) to the Plan, the Trustees of the Trust
shall request and evaluate such information as it considers reasonably necessary
to evaluate the proposed amendment(s) to the Plan.
Adopted by the Trust effective April 3, 1995
Amended by the Trust effective October 24, 1996
Amended by the Trust effective April 30, 1998
Amended by the Trust effective November 19, 1998
5
