Wells Fargo Co. has joined a small group of investment managers that is trying to make mutual fund prospectuses easy to read. The San Francisco banking company, which manages $23 billion of mutual fund assets, said Thursday that it has developed a "plain-English" prospectus for its Stagecoach family of funds.

The new documents are about 20% shorter than their predecessors, and use color and graphics to make them more inviting to investors. "We were looking at the fund group and trying to find ways to show that we are innovative," said Michael J. Hogan, senior vice president and managing director of the bank's mutual fund group. Plain-English prospectuses seemed like a logical step to take.

Last year, the Securities and Exchange Commission proposed that prospectuses be simplified to better explain to investors the risks of mutual funds. The agency is expected to adopt a final rule on the documents next year.

Some fund companies are awaiting definitive guidelines before revamping their prospectuses. But several, including CoreStates Financial Corp. and KeyCorp, have charged ahead. John Hancock Funds, Boston, was the first fund company to unveil a plain-English prospectus, in July 1996.

Wells Fargo executives said they are confident that their new prospectus will comply with any rules adopted by the SEC. Indeed, Mr. Hogan said, the Stagecoach documents could be a model for other fund companies.

To produce the new documents, Wells Fargo tried to eliminate "legalese" in favor of plain English. That meant substituting the word "we" for what had been referred to as Wells Fargo Bank N.A. and the word "you" for the shareholder.

With these types of changes, Wells reduced the word count in its prospectuses by 40%, Mr. Hogan said. The Stagecoach Equity Funds prospectus, a five-inch by eight-inch booklet, runs 66 pages.

Other new features include bar charts that illustrate year-by-year performance and volatility for each Stagecoach fund and a glossary of key terms.

Wells Fargo introduced the prospectuses for retail classes of its 32 funds in December. Next month, it plans to unveil versions for institutional and other share classes. Mr. Hogan said the document has been well received by the bank's sales force.

In a parallel initiative, the SEC is also developing guidelines for vastly simplified prospectuses, or "profile prospectuses." These documents, which could run as short as four pages, have been tested by eight fund companies, including BankAmerica Corp. and Mellon Bank Corp.'s Dreyfus Corp.

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