<PAGE>
As filed with the Securities and Exchange Commission on March 13, 1998
Registration No. ______________
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[___] Pre-Effective Amendment No. ____ [___] Post-Effective Amendment No.
(Check appropriate box or boxes)
_________________________________________________
Exact Name of Registrant as Specified in Charter:
STAGECOACH FUNDS, INC.
Area Code and Telephone Number:
(800) 643-9691
Address of Principal Executive Offices:
111 Center Street
Little Rock, Arkansas 72201
_______________________________________
Name and Address of Agent for Service:
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Copies to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W., Suite 5500
Washington, D.C. 20006
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective on April 13, 1998 pursuant
to Rule 488. No filing fee is due because the Registrant has previously filed
an election pursuant to Rule 24f-2 to register an indefinite number of the
Registrant's shares.
<PAGE>
STAGECOACH FUNDS, INC.
CROSS-REFERENCE SHEET
Items Required by Form N-14
---------------------------
PART A
- ------
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
- ---------- ------------ ------------------
<C> <S> <C>
1 Beginning of Registration COVER PAGE OF REGISTRATION STATEMENT; CROSS-REFERENCE
Statement and Outside Front SHEET; FRONT COVER PAGE OF COMBINED PROXY
Cover Page of Prospectus STATEMENT/PROSPECTUS
2 Beginning and Outside Back Cover TABLE OF CONTENTS
Page of Prospectus
3 Synopsis Information and SUMMARY - About the Proposed Consolidation; APPENDIX II
Risk Factors - INVESTMENT OBJECTIVES AND POLICIES; APPENDIX III -
EXPENSE SUMMARIES
4 Information About the Transaction ABOUT THE PROPOSED CONSOLIDATION
5 Information About the Registrant ABOUT THE PROPOSED CONSOLIDATION - Purpose of the
(Acquiring Fund) Consolidation, Organization of the Company,
Capitalization of Each Fund, Comparison of Investment
Objectives and Policies, Investment Adviser and Other
Service Providers, Shareholder Transactions and Services,
Federal Income Tax Consequences
6 Information About the Company ABOUT THE PROPOSED CONSOLIDATION - Purpose of the
(Fund) Being Acquired Consolidation, Organization of the Company,
Capitalization of Each Fund, Comparison of Investment
Objectives and Policies, Investment Adviser and Other
Service Providers, Shareholder Transactions and Services,
Federal Income Tax Consequences
7 Voting Information SUMMARY - Voting Information; INFORMATION RELATING TO
VOTING MATTERS
8 Interest of Certain Persons and NOT APPLICABLE
Experts
9 Additional Information Required NOT APPLICABLE
for Reoffering by Persons Deemed
to be Underwriters
</TABLE>
<PAGE>
PART B
- ------
<TABLE>
<CAPTION>
Statement of Additional
Item No. Item Caption Information Caption
- -------- ------------ -----------------------
<C> <S> <C>
10 Cover Page COVER PAGE
11 Table of Contents TABLE OF CONTENTS
12 Additional Information About the INCORPORATION OF DOCUMENTS BY REFERENCE IN
Registrant (Acquiring Fund) STATEMENT OF ADDITIONAL INFORMATION; GENERAL
INFORMATION
13 Additional Information About the INCORPORATION OF DOCUMENTS BY REFERENCE IN
Company (Fund) Being Acquired STATEMENT OF ADDITIONAL INFORMATION; GENERAL
INFORMATION
14 Financial Statements INCORPORATION OF DOCUMENTS BY REFERENCE IN
STATEMENT OF ADDITIONAL INFORMATION; INTRODUCTORY
NOTE TO PRO FORMA FINANCIAL INFORMATION; PRO
FORMA FINANCIAL STATEMENTS
PART C
- -----------
Item No.
- -----------
15-17 Information required to be included in Part C is set forth under the appropriate Item, so
numbered, in Part C of this Registration Statement.
</TABLE>
2
<PAGE>
THE FOLLOWING ITEMS ARE HEREBY INCORPORATED BY REFERENCE:
STAGECOACH FUNDS, INC. (THE "COMPANY")
A) From Post-Effective Amendment No. 37 of the Company, filed December 15, 1997
(SEC File No. 33-42927; 811-6419):
Prospectus for the Retail shares of the Stagecoach Intermediate Bond and
Short-Intermediate U.S. Government Income Funds, dated December 15, 1997.
Statement of Additional Information for the Retail shares of the Stagecoach
Intermediate Bond and Short-Intermediate U.S. Government Income Funds,
dated December 15, 1997.
B) From Post-Effective Amendment No. 41 of the Company, filed January 30, 1998
(SEC File No. 33-42927; 811-6419):
Prospectus for the Institutional shares of the Stagecoach Intermediate Bond
and Short-Intermediate U.S. Government Income Funds, dated February 1,
1998.
Statement of Additional Information for the Institutional shares of the
Stagecoach Intermediate Bond and Short-Intermediate U.S. Government Income
Funds, dated February 1, 1998.
C) From Post-Effective Amendment No. 42 of the Company, filed March 6, 1998
(SEC File No. 33-42927; 811-6419):
Prospectus for the Class B shares of the Stagecoach Short-Intermediate U.S.
Government Income Fund, dated on or about May 1, 1998, or an earlier date
pending approval of request for acceleration.
Statement of Additional Information for the Class B shares of the
Stagecoach Short-Intermediate U.S. Government Income Fund, dated on or
about May 1, 1998, or an earlier date pending approval of request for
acceleration.
D) The audited financial statements and related independent auditors' reports
for the Retail and Institutional shares of the Intermediate Bond Fund and Short-
Intermediate U.S. Government Income Fund, contained in the Annual Reports for
the fiscal year ended March 31, 1997, as filed with the SEC on June 4, 1997.
E) The unaudited financial statements for the Retail and Institutional shares
of the Intermediate Bond Fund and Short-Intermediate U.S. Government Income
Fund, contained in the Semi-Annual Reports for the six-month period ended
September 30, 1997, as filed with the SEC on December 5, 1997.
3
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
("PROXY/PROSPECTUS")
DATED APRIL 13, 1998
STAGECOACH FUNDS, INC.
C/O STAGECOACH SHAREHOLDER SERVICES
WELLS FARGO BANK, N.A.
P.O. BOX 7066
SAN FRANCISCO, CA 94120-7066
1-800-222-8222
This Proxy/Prospectus is furnished in connection with the solicitation of
proxies by the Board of Directors of Stagecoach Funds, Inc. (the "Company") in
connection with a Special Meeting of Shareholders of the Company's
Intermediate Bond Fund (the "Bond Fund") to be held at 2:00 p.m. Central Time
on May 29, 1998 at the offices of Stephens Inc., 111 Center Street, Little
Rock, Arkansas 72201. This Special Meeting and any adjournment(s) are referred
to as the "Meeting." The Meeting has been called to consider the following
proposal, and to conduct such other business as may come before the Meeting.
PROPOSAL: To approve a proposed Agreement and Plan of Consolidation dated
March , 1998 (the "Consolidation Agreement") between the Bond Fund and the
Company's Short-Intermediate U.S. Government Income Fund (the "Government
Fund" and, together with the Bond Fund, the "Funds"), another of the
Company's funds advised by Wells Fargo Bank, N.A. ("Wells Fargo Bank"). The
Consolidation Agreement provides for the transfer of the assets and
liabilities of the Bond Fund to the investment portfolio of the Government
Fund in exchange for shares of equal value of designated classes of the
Government Fund (the "Consolidation").
As a result of the Consolidation, shareholders of the Bond Fund will
become shareholders of the Government Fund.
This Proxy/Prospectus is the Bond Fund's Proxy Statement for the Special
Meeting of Shareholders and was mailed to shareholders on or about April ,
1998. The Proxy/Prospectus sets forth concisely the information that a Bond
Fund shareholder should know before voting and should be retained for future
reference. Additional information about the Consolidation is set forth in the
Statement of Additional Information dated April 24, 1998. Each of these
documents is on file with the Securities and Exchange Commission, and is
available without charge by calling 1-800-222-8222 or writing the Company at
the address above. The information contained in the Statement of Additional
Information is incorporated by reference into this Proxy/Prospectus.
This Proxy/Prospectus and the Statement of Additional Information are
sometimes referred to together as the "Voting Materials."
THE SECURITIES OF THE FUNDS OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, WELLS FARGO BANK OR OTHER BANK, AND ARE NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE DISTRIBUTOR OF EACH FUND IS
STEPHENS INC.
1
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY/PROSPECTUS AND IN THE
MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, ITS ADVISOR OR DISTRIBUTOR.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY................................................................. 4
I.About the Proposed Consolidation.................................... 4
A.The Consolidation Agreement....................................... 4
B.Purpose of the Consolidation...................................... 4
C.Overview of the Funds............................................. 4
D.Risk Factors...................................................... 5
E.Federal Income Tax Consequences................................... 5
F.Board Consideration............................................... 5
II.Voting Information................................................. 6
I.ABOUT THE PROPOSED CONSOLIDATION...................................... 7
Description of the Consolidation Agreement.......................... 7
Purpose of the Consolidation........................................ 7
Organization of the Company......................................... 8
Capitalization of Each Fund......................................... 8
Comparison of Investment Objectives and Policies.................... 8
Sales Charges....................................................... 9
Comparison of Total Expense Ratios.................................. 9
Investment Adviser and Other Service Providers...................... 10
Shareholder Transactions and Services............................... 11
Federal Income Tax Consequences..................................... 11
Board Consideration................................................. 11
Other Information................................................... 12
II.INFORMATION RELATING TO VOTING MATTERS............................... 13
General Information................................................. 13
Shareholder Approvals............................................... 13
Other Business...................................................... 14
III.OTHER INFORMATION................................................... 15
How to Obtain Additional Information About the Funds................ 15
Financial Statements................................................ 15
Performance Information............................................. 15
Shareholder Inquiries............................................... 15
APPENDICES I-- AGREEMENT AND PLAN OF CONSOLIDATION
II-- INVESTMENT OBJECTIVES AND SIGNIFICANT INVESTMENT POLICIES
III-- EXPENSE SUMMARIES
IV-- SHAREHOLDER TRANSACTIONS AND SERVICES
V-- LIST OF SHAREHOLDERS WITH 5%
OR GREATER OWNERSHIP
VI-- SEPTEMBER 31, 1997 PERFORMANCE INFORMATION
VII-- MARCH 31, 1997 PERFORMANCE INFORMATION
</TABLE>
3
<PAGE>
SUMMARY
The following is a summary of certain information relating to the proposal
to be considered at the Meeting. More complete information about the proposal
is contained throughout the Voting Materials.
I. ABOUT THE PROPOSED CONSOLIDATION
A. THE CONSOLIDATION AGREEMENT. At a meeting held on January 29, 1998, the
Company's Board of Directors approved a Consolidation Agreement that, if
approved by shareholders, will result in shareholders of the Bond Fund
becoming shareholders of a designated class of the Government Fund. The
Consolidation Agreement provides for (i) the transfer of all of the assets and
stated liabilities of the Bond Fund to the portfolio of the Government Fund in
exchange for shares of designated classes of the Government Fund; and (ii) the
distribution of these Government Fund shares to shareholders of the Bond Fund
in liquidation of the Bond Fund. Upon completion of the Consolidation, each
Bond Fund shareholder will hold shares of the Government Fund that are equal
in value to the shares of the Bond Fund held by the shareholder immediately
before the Consolidation.
Shareholders of the Bond Fund will receive shares of a corresponding class
of the Government Fund as shown below.
CONSOLIDATION MAP
<TABLE>
<CAPTION>
BOND FUND SHAREHOLDERS WILL RECEIVE THE FOLLOWING
OWNING THE FOLLOWING CLASSES OF GOVERNMENT
CLASSES: FUND SHARES:
------------------------- --------------------------
<S> <C>
Class A shares Class A shares
Class B shares Class B shares
Institutional Class shares Institutional Class shares
</TABLE>
The Consolidation Agreement must be approved by a vote of a majority the
shareholders of the Bond Fund. The Meeting of the Bond Fund's shareholders to
vote on the Consolidation Agreement and other matters is scheduled for May 29,
1998. The Consolidation, if approved, is expected to occur on or about June
12, 1998.
B. PURPOSE OF THE CONSOLIDATION. The proposed Consolidation combines two
Funds with similar investment objectives into a single Fund. The Consolidation
is intended to benefit shareholders by (i) improving efficiency in the
operation of the Funds, including potentially achieving economies of scale and
greater portfolio diversification; (ii) facilitating investment management,
administration and marketing of the combined Fund; and (iii) eliminating
duplicative shareholder costs and market overlap.
C. OVERVIEW OF THE FUNDS. Set forth below is a brief description of certain
key features of the Funds.
Investment Objectives and Policies. The investment objective of the Bond
Fund is similar to the investment objective of the Government Fund. Each Fund
seeks to provide investors with current income while preserving capital. The
Funds' investment policies are also similar. For example, both Funds invest in
a range of U.S. government obligations and corporate bonds. However, the
Government Fund has committed to investing a substantial portion (at least
65%) of its portfolio in U.S. government obligations. The Bond Fund has not
committed to this level of investment in U.S. government obligations, and
tends to invest a higher portion of its assets in corporate bonds than the
Government Fund. Also, the Government Fund is managed to have a shorter
average maturity than the Bond Fund. For additional information about the
similarities and differences between the investment objectives and significant
investment policies of the Funds, see the section herein entitled "Comparison
of Investment Objectives and Policies" and Appendix II.
Operating Expenses and Service Providers. The ongoing level of operating
expenses of each Class of shares of the Government Fund is expected to be less
than the current expense ratio of the corresponding Class
4
<PAGE>
of shares of the Bond Fund. The current and pro forma total operating expense
ratios for each Fund and Class are shown on page 12. A more detailed breakdown
of the expense ratios for each Fund and Class is included in Appendix III.
The Funds have identical investment advisers, administrators, distributors,
transfer agents and independent auditors, as discussed under "Investment
Adviser and Other Service Providers."
Purchase, Redemption and Other Procedures. The purchase, redemption,
dividend, exchange and other policies and procedures of the Funds are
substantially similar. The Class A shares of the Government Fund have a lower
front-end sales charge (3.00%) than the Class A shares of the Bond Fund
(4.50%). If you hold shares of the Bond Fund that are represented by a share
certificate, the certificate must be surrendered to the Company for
cancellation before the Government Fund shares issued to you in the
Consolidation may be exchanged, redeemed, transferred or issued in
certificated form. Information concerning these policies and procedures is
discussed further under "Shareholder Transactions and Services" and in
Appendix IV.
D. RISK FACTORS. Because of the similarities of the investment objectives
and policies of the Funds, management believes that an investment in the
Government Fund will generally involve risks that are similar to those of the
Bond Fund. For example, the debt instruments in which the Funds invest are
subject to interest-rate risk. Interest-rate risk is the risk that increases
in market interest rates may reduce the value of the debt instruments in which
the Funds invest. The value of the debt instruments generally changes
inversely to market interest rates, so that if interest rates go up the value
of the debt instruments held by the Fund goes down. Debt instruments with
longer maturities are generally more sensitive to interest rate changes than
those with shorter maturities. Some of the debt instruments in which the Funds
invest are subject to credit risk. Credit risk is the risk that issuers of the
debt instruments in which the Funds invest may default on the payment of
principal and/or interest.
Generally speaking, the Government Fund is managed more conservatively than
the Bond Fund. For example, the Government Fund tends to invest a higher
portion of its assets in U.S. Government obligations than the Bond Fund. U.S.
Government obligations are debt obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. U.S. Government obligations may
not offer as high a rate of return as similar obligations or corporate bonds
that are not backed by the U.S. Government. In addition, the Government Fund
maintains a weighted average portfolio maturity of between two and five years
(as compared to three and ten years for the Bond Fund) and therefore tends to
be subject to less interest rate risk than the Bond Fund. For these reasons,
the Government Fund can be expected to have less volatility than the Bond
Fund, although, in certain interest rate environments, its total return also
may be less.
E. FEDERAL INCOME TAX CONSEQUENCES. The Consolidation will not result in a
gain or loss for Federal income tax purposes to the Funds or their respective
shareholders. See "Federal Income Tax Consequences" for additional
information.
F. BOARD CONSIDERATION. In reviewing the proposed Consolidation, the
Company's Board of Directors considered the potential impact of the
Consolidation on the Funds' respective shareholders. The Board considered,
among other things, (i) the terms and conditions of the Consolidation
Agreement, including those provisions intended to avoid the dilution of
shareholder interests; (ii) the potential marketing and shareholder benefits
obtained by having a combined Fund; (iii) the similarity of the investment
objectives and significant investment policies of the Funds; (iv) the
historical investment performance of the Funds; (v) the historical and
projected operating expenses of the Funds; and (vi) the prospects for long-
term viability of the Funds. See "Information Relating to the Proposed
Consolidation--Board Consideration."
Based upon its evaluation of these factors, and in light of their fiduciary
duties under federal and state law, the Company's Boards of Directors,
including all of the non-interested members of the Board, have determined that
the proposed Consolidation is in the best interests of the shareholders of
each Fund, and that the interests of the shareholders of the respective Funds
will not be diluted as a result of the Consolidation.
5
<PAGE>
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT BOND FUND
SHAREHOLDERS VOTE FOR THE CONSOLIDATION AGREEMENT.
II. VOTING INFORMATION.
This Proxy/Prospectus is being furnished in connection with the solicitation
of proxies by the Company's Board of Directors for the Meeting. Only Bond Fund
shareholders of record at the close of business on April 10, 1998, will be
entitled to vote at the Meeting. Each whole or fractional share is entitled to
a whole or fractional vote. Shares represented by a properly executed proxy
will be voted in accordance with the instructions thereon or, if no
specification is made, the persons named as proxies will vote in favor of each
proposal set forth in the Notice of Meeting. Proxies may be revoked at any
time before they are exercised by attending the meeting and voting in person
or by submitting to the Company (i) a written notice of revocation or (ii) a
subsequently executed proxy. For additional information, including a
description of the shareholder votes required for approval of the proposal to
be considered at the Meeting, see "Information Relating to Voting Matters."
6
<PAGE>
I. ABOUT THE PROPOSED CONSOLIDATION
Important information about the Consolidation and the Consolidation Agreement
is summarized below. This summary is qualified by reference to the Appendixes
at the end of this document.
DESCRIPTION OF THE CONSOLIDATION AGREEMENT. The Consolidation Agreement
provides that at the closing of the Consolidation (the "Closing") the assets
and stated liabilities of the Bond Fund will be transferred to the portfolio of
the Government Fund in exchange for full and fractional shares of designated
classes of the Government Fund as shown below. Class A and Institutional Class
shares of the Bond Fund will be reorganized with and into existing Class A and
Institutional Class shares, respectively, of the Government Fund. The Class B
shares of the Bond Fund will reorganized into newly created Class B shares of
the Government Fund.
CONSOLIDATION MAP
<TABLE>
<CAPTION>
BOND FUND SHAREHOLDERS WILL RECEIVE THE FOLLOWING CLASSES
OWNING THE FOLLOWING CLASSES OF GOVERNMENT FUND SHARES
---------------------------- ----------------------------------
<S> <C>
Class A shares Class A shares
Class B shares Class B shares
Institutional Class shares Institutional Class shares
</TABLE>
The shares issued by the Government Fund in the Consolidation will have an
aggregate value equal to the aggregate value of the shares of the Bond Fund
that are outstanding immediately before the Closing.
Immediately after the transfer of its assets and liabilities in exchange for
Government Fund shares, the Bond Fund will distribute the shares of the
Government Fund received in the Consolidation to its shareholders in
liquidation of the Bond Fund and in exchange for the outstanding shares of the
Bond Fund. Each Bond Fund shareholder at the Closing will receive shares of the
corresponding class of the Government Fund (as specified in the foregoing
table) of equal value, and will receive any unpaid dividends or distributions
that were declared before the Closing on Bond Fund shares. The Government Fund
will establish an account for each former shareholder of the Bond Fund
reflecting the appropriate number of Government Fund shares distributed to the
shareholder. These accounts will be identical in all material respects to the
accounts currently maintained by the Bond Fund for each shareholder. Share
certificates will not be issued unless requested by the shareholder.
Upon completion of the Consolidation, all outstanding shares of the Bond Fund
will be canceled, and the Bond Fund will wind up its affairs and be dissolved
under Maryland law. The stock transfer books of the Bond Fund will be
permanently closed as of the close of business on the business day immediately
preceding the Closing. Exchange or redemption requests received thereafter will
be deemed to be exchange or redemption requests for shares of the Government
Fund distributed to the former shareholders of the Bond Fund. If any shares of
the Bond Fund are represented by an unsurrendered share certificate, the
certificate must be surrendered to the Company before the Government Fund
shares issued to a shareholder in the Consolidation may be redeemed, exchanged,
transferred or issued in certificated form.
Each Fund will bear a pro rata portion of any Consolidation expenses incurred
by the Funds, including the costs associated with the Meeting and the Voting
Materials. These costs are estimated to be $75,000.
PURPOSE OF THE CONSOLIDATION. The Consolidation will combine two Funds with
similar investment objectives and policies into a single Fund. Management
believes this will help the combined Fund achieve economies of scale and
eventually lower its transaction costs and ongoing expenses. The Consolidation
should also help eliminate duplicative shareholder costs and market overlap and
facilitate the administration and marketing of the combined Fund. Although some
of these benefits will accrue to the investment adviser, administrator and
distributor of the Fund, some will be passed through to shareholders. The
benefits passed through to shareholders are expected to include reductions in
operating expense levels and greater portfolio diversification.
7
<PAGE>
ORGANIZATION OF THE COMPANY. The Company is registered as an open-end
management investment company under the 1940 Act and currently offers over 30
separate funds.
The Company is organized as a Maryland Corporation and is subject to the
provisions of its Articles of Incorporation and By-Laws. Shares of the Funds
each have a par value of $.001 per share. Shares of the Funds are entitled to
one vote for each full share held and fractional votes for fractional shares
held, and will vote in the aggregate and not by portfolio or class except as
otherwise required by law or when class voting is permitted by the Company's
Board of Directors. Shares of the Funds have no preemptive rights and have
only such conversion and exchange rights as the Company's Board of Directors
may grant in its discretion. When issued for payment as described in their
respective prospectuses, each Fund's shares are fully paid and non-assessable.
Each share of a class of a Fund represents an equal proportionate interest
in the Fund with other shares of the same class. Each share is entitled to
cash dividends and distributions earned on such shares as may be declared in
the discretion of the Board of Directors. Shares of each class bear a pro rata
portion of all operating expenses paid by the Fund, except that certain
expenses relating to class-specific services (such as distribution and
shareholder servicing fees) may be allocated to a particular class.
CAPITALIZATION OF EACH FUND. The following table shows the total net assets,
number of shares outstanding and net asset value per share of each Fund. This
information is generally referred to as the "capitalization" of each Fund. The
term "pro forma capitalization" simply means the capitalization of the
Government Fund after it has combined with the Bond Fund, i.e., as if the
Consolidation had already occurred.
The following table sets forth as of February 28, 1998, the capitalization
of each Fund and the pro forma capitalization of the Government Fund adjusted
to give effect to the Consolidation. The ongoing investment performance and
daily share purchase and redemption activity of each Fund affects
capitalization. Therefore, the capitalization of each Fund on the Closing Date
is likely to vary from the capitalization shown in the following table.
TABLE I
PRO FORMA CAPITALIZATION TABLE AS OF FEBRUARY 28, 1998
<TABLE>
<CAPTION>
NET ASSET
SHARES VALUE
FUND/CLASS TOTAL NET ASSETS OUTSTANDING PER SHARE
---------- ---------------- ----------- ---------
<S> <C> <C> <C>
Intermediate Bond Fund Class A $ 7,679,154 518,416 $14.81
Short-Intermediate U.S. Government
Income Fund Class A $29,604,337 2,970,659 $ 9.97
PRO FORMA:
SHORT-INTERMEDIATE U.S. GOVERNMENT $37,283,491 3,740,743 $ 9.97
INCOME FUND CLASS A
Intermediate Bond Fund Class B $ 6,738,100 655,202 $10.28
Short-Intermediate U.S. Government 0 0 $ 0
Income Fund Class B
PRO FORMA:
SHORT-INTERMEDIATE U.S. GOVERNMENT $ 6,738,100 675,574 $ 9.97
INCOME FUND CLASS B
Intermediate Bond Fund Institutional $41,558,538 2,802,183 $14.83
Class
Short-Intermediate U.S. Government $53,806,095 5,504,079 $ 9.78
Income Fund Institutional Class
PRO FORMA:
SHORT-INTERMEDIATE U.S. GOVERNMENT
INCOME FUND INSTITUTIONAL CLASS $95,364,633 9,753,197 $ 9.78
</TABLE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES. The investment objectives
and policies of the Funds, except as described below, are substantially
similar. The chart below highlights the investment objective of each Fund and
some of each Fund's key investment policies. Additional information about each
Fund's investment objective and policies is contained in Appendix II hereto
and in its prospectus and statement of additional information. To obtain a
prospectus or statement of additional information call 1-800-222-8222 or see
"How to Obtain Additional Information About The Funds" below.
8
<PAGE>
<TABLE>
<CAPTION>
FUND BOND FUND GOVERNMENT FUND
---- --------- ---------------
<S> <C> <C>
Investment Objective: The Bond Fund seeks to The Government Fund seeks to
provide investors with a provide investors with current
high level of current income income while preserving capital,
consistent with the by investing primarily in a
preservation of capital and portfolio consisting of short- to
the maintenance of intermediate term securities
liquidity. issued or guaranteed by the U.S.
Government, its agencies and
instrumentalities.
Investment Policies: Invests in corporate debt Invests primarily in U.S.
securities, U.S. Government Government obligations and
obligations, and other debt invests in investment grade
securities. corporate debt securities.
Maintains a dollar-weighted Maintains a dollar-weighted
average portfolio maturity average portfolio maturity of
of between 3 and 10 years. between 2 and 5 years.
</TABLE>
Generally speaking, the Government Fund is managed more conservatively than
the Bond Fund. For example, the Government Fund tends to invest a higher
portion of its assets in U.S. Government obligations than the Bond Fund. U.S.
Government obligations are debt obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. U.S. Government obligations may
not offer as high a rate of return as similar obligations or corporate bonds
that are not backed by the U.S. Government. In addition, the Government Fund
maintains a weighted average portfolio maturity of between two and five years
(as compared to three and ten years for the Bond Fund) and therefore tends to
be subject to less interest rate risk than the Bond Fund. For these reasons,
the Government Fund can be expected to have less volatility than the Bond
Fund, although, in certain interest rate environments, its total return also
may be less.
SALES CHARGES. The Class A shares of each Fund are subject to front-end
sales charges at the time of purchase. The maximum front-end sales charge for
Class A shares is 4.50% for the Bond Fund and 3.00% for the Government Fund.
Therefore, upon completion of the Consolidation, shareholders would pay a
lower sales charge (3.00%) on new purchases of Class A shares of the
Government Fund than shareholders currently pay on new purchases of Class A
shares of the Bond Fund.
The Class B shares of the Bond Fund are subject to a contingent deferred
sales charge of 5.00% for redemptions made within the first year of purchase,
and declining amounts each year thereafter. Class B shares automatically
convert to Class A shares six years after purchase. The newly created Class B
shares of the Government Fund will be identical in all respects to the
existing Class B shares of the Bond Fund.
Institutional Class shares of the Funds do not have front-end or contingent-
deferred sales charges.
Sales charges are described in detail, along with a description of exchange
privileges and other information in Appendix III.
COMPARISON OF TOTAL EXPENSE RATIOS. As with all mutual funds, each class of
the Funds incurs various costs and expenses in connection with its daily
activities. The total of these costs and expenses is the "total expense ratio"
and is expressed as a percentage of the average daily net assets of each
class.
The total expense ratio of each class of the Government Fund after giving
effect to the Consolidation (sometimes called the "pro forma total expense
ratio") will be less than the current total expense ratio of the Bond Fund.
The total expense ratio for each class of the Government Fund is, and
immediately after the Consolidation will be, lower than that of the Bond Fund
immediately prior to the Consolidation.
The following table shows the current total expense ratio for each Class of
each Fund, after fee waivers and reimbursements, and the pro forma total
expense ratio of the Government Fund, based upon the fee arrangements,
9
<PAGE>
after waivers and reimbursements, that will be in place upon consummation of
the Consolidation. All fee rates are annualized and are expressed as a
percentage of average daily net assets. Detailed expense information for each
Fund is included in Appendix III.
TOTAL EXPENSE RATIOS
<TABLE>
<CAPTION>
GOVERNMENT FUND COMBINED FUND PRO
BOND FUND CURRENT CURRENT FORMA
----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Class A 0.98% Class A 0.96% Class A 0.96%
Class B 1.71% Class B N/A Class B 1.66%
Inst. Class 0.93% Inst. Class 0.91% Inst. Class 0.91%
</TABLE>
INVESTMENT ADVISER AND OTHER SERVICE PROVIDERS. The Funds have the same
service providers. Upon completion of the Consolidation, these service
providers will continue to serve the Funds in the capacities indicated below.
SERVICE PROVIDERS FOR THE FUNDS
<TABLE>
<S> <C>
Investment Adviser Wells Fargo Bank
Distributor Stephens Inc.
Administrator Wells Fargo Bank
Co-Administrator Stephens Inc.
Custodian Wells Fargo Bank
Fund Accountant Wells Fargo Bank
Transfer Agent Wells Fargo Bank
Independent Auditors KPMG Peat Marwick LLP
</TABLE>
INVESTMENT ADVISER AND ADVISORY FEES. As investment adviser to the Funds,
Wells Fargo Bank, subject to the supervision of the Company's Boards of
Directors, provides investment guidance and policy direction in connection
with the daily portfolio management of each Fund.
Wells Fargo Bank is currently entitled to receive an advisory fee of 0.50%
of the average daily net assets of each Fund. The advisory fee rates for the
Funds, as well as the fee rates for certain other services described below,
are listed in the detailed summary of expense information in Appendix III.
Wells Fargo Bank, a national bank, is one of the largest banks in the United
States. Wells Fargo Bank was founded in 1852 and is the oldest bank in the
western United States. As of December 31, 1997, various divisions and
affiliates of Wells Fargo Bank provided investment advisory services for
approximately $62 billion of assets of individuals, trusts, estates and
institutions. Wells Fargo Bank also serves as investment adviser or sub-
adviser to separately managed funds of several other open-end management
investment companies. Wells Fargo Bank is a wholly-owned subsidiary of Wells
Fargo & Company, a publicly-held bank holding company.
DISTRIBUTION, ADMINISTRATION AND SHAREHOLDER SERVICING ARRANGEMENTS. Each
Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act
for its Class A shares and its Class B shares. The Distribution Plans, and the
related Distribution Agreements, permit each Fund to pay Stephens for
distribution-related services or expenses, such as the printing and
preparation of prospectuses and other materials and the compensation of
selling agents.
The maximum distribution fee payable by the Class A shares of each Fund is
0.05% of the Fund's average daily net assets attributable to Class A shares.
The maximum amount payable by the Class B shares of each Fund is 0.75% of the
Fund's average daily net assets attributable to Class B shares.
10
<PAGE>
The Funds receive administration services from Wells Fargo Bank, as
Administrator, and Stephens, as Co-administrator. The administration services
provided to the Funds include, among other things, general supervision of each
Fund's operation, coordination of other services, compilation of information
for reports to the SEC and the state securities commissions, preparation of
proxy statements and shareholder reports, and general supervision of data
compilation in connection with preparing periodic reports to Directors and
officers. For these administration services, Wells Fargo Bank and Stephens are
entitled to receive monthly fees at the annual rates of 0.03% and 0.04%,
respectively, of each Fund's average daily net assets.
Each class of the Funds have entered into shareholder servicing agreements
with Wells Fargo Bank and may enter into similar agreements with other
institutions ("Shareholder Servicing Agents"). Under such agreements,
Shareholder Servicing Agents (including Wells Fargo Bank) agree, as agents for
their customers, to provide shareholder administrative and liaison services
with respect to Fund shares, which include, without limitation, 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 these
services, a Shareholder Servicing Agent is entitled to receive a fee at an
annual percentage of the average daily net assets attributable to a class of
shares owned of record or beneficially by investors with whom the Shareholder
Servicing Agent maintains a servicing relationship.
The Shareholder Servicing Plans for the Class A shares of the Bond Fund and
the Government Fund provide for a fee at the annual rate of up to 0.25% and
0.30%, respectively, of the average daily net assets attributable to Class A
shares. The Shareholder Servicing Plans for the Class B shares of each Fund
provide for a fee at the annual rate of up to 0.25% of the average daily net
assets attributable to Class B shares. The Shareholder Servicing Plans for the
Institutional Class shares of each Fund provide for a fee at the annual rate
of up to 0.25% of the average daily net assets attributable to Institutional
Class shares. For additional information, see Appendix III.
SHAREHOLDER TRANSACTIONS AND SERVICES. The respective purchase, redemption,
exchange, dividend and other policies and procedures of the Funds are
substantially identical. More detailed information about these policies and
procedures is set forth in Appendix IV. However, there are certain
differences. For example, the front-end sales charges applicable to new
purchases of Class A shares of the Government Fund are lower than the front-
end sales charges applicable to new purchases of Class A shares of the Bond
Fund.
FEDERAL INCOME TAX CONSEQUENCES. The Government Fund intends to qualify as
of the closing of the Consolidation, as a separate "regulated investment
company" under the Internal Revenue Code of 1986, as amended. The
Consolidation is expected to be a tax-free reorganization and is not expected
to have tax consequences for either the Funds or their shareholders.
The Funds have not sought, and will not seek, a private tax ruling from the
Internal Revenue Service ("IRS") regarding the tax consequences of the
Consolidation. The IRS is not precluded from determining that the
Consolidation has tax consequences for the Funds or their shareholders.
Shareholders may wish to consult their own tax advisers concerning the
potential tax consequences to them, including state and local income tax
consequences, of the Consolidation.
BOARD CONSIDERATION. The Company's Board of Directors unanimously voted to
approve the Consolidation Agreement at a meeting held on January 29, 1998. In
reviewing the proposed Consolidation, the Board considered the potential
impact of the Consolidation on each Fund's shareholders. The Board considered,
among other things, (i) the terms and conditions of the Consolidation
Agreement, including those intended to avoid the dilution of shareholder
interests; (ii) the potential marketing and shareholder benefits obtained by
having a combined fund; (iii) the similarity of the investment objectives and
significant policies and restrictions of the Funds; (iv) the historical
investment performance of the Funds; (v) the historical and projected
investment advisory fee rates and operating expenses of the Funds; (vi) the
identity of the organizations that provide investment advisory and certain
other services to the Funds, and the terms on which these services are
provided; and (vii) the prospects for long-term viability of the Funds.
11
<PAGE>
Based upon its evaluation of these factors, and in light of their fiduciary
duties under federal and state law, the Company's Boards of Directors,
including all of the non-interested members of the Board, have determined that
the proposed Consolidation is in the best interests of the shareholders of
each Fund and that the interests of the shareholders of the respective Funds
will not be diluted as a result of the Consolidation. THE COMPANY'S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE CONSOLIDATION
AGREEMENT.
OTHER INFORMATION. The Consolidation may be abandoned at any time before the
Closing upon the mutual consent of both Funds. At any time before or (to the
extent permitted by law) after approval of the agreement by the shareholders
of the Bond Fund (i) the parties may, by written agreement authorized by the
Company's Boards of Directors and with or without the approval of their
shareholders, amend any of the provisions of the Consolidation Agreement and
(ii) either party may waive any default by the other party or the failure to
satisfy any of the conditions to its obligations (the waiver to be in writing
and authorized by the Company's Board of Directors with or without the
approval of such party's shareholders).
12
<PAGE>
II. INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. The Proxy/Prospectus is being furnished in connection
with the solicitation of proxies for the Meeting by the Company's Board of
Directors. It is expected that the solicitation of proxies will be primarily
by mail. Officers and agents of the Company also may solicit proxies by
telephone, telegraph or personal interview. In this connection, the Company
has retained D. F. King to assist in the solicitation of proxies with the
Consolidation. The cost of the solicitation will be paid by the Funds and is
estimated to be $ . Any shareholder giving a proxy may revoke it at any
time before it is exercised (i) by submitting to Stagecoach a written notice
of revocation, (ii) by submitting to Stagecoach a subsequently executed proxy
or by attending the Meeting and voting in person.
Only shareholders of record at the close of business on April 10, 1998, will
be entitled to vote at the Meeting. On that date, the following number of Bond
Fund shares were outstanding and entitled to be voted.
<TABLE>
<CAPTION>
BOND FUND SHARES ENTITLED TO BE VOTED
--------- ---------------------------
<S> <C>
Class A shares --
Class B shares --
Institutional Class shares --
</TABLE>
Each whole and fractional share is entitled to a whole or fractional vote.
If the accompanying proxy is executed and returned in time for the Meeting,
the shares covered thereby will be voted in accordance with the proxy on all
matters that may properly come before the Meeting.
Significant Shareholders. Appendix V shows the name, address and share
ownership of each person known to the Company to have beneficial or record
ownership of 5% or more of the outstanding shares of a class of each Fund as
of March 31, 1998. Any person who owns directly or indirectly more than 25% of
the outstanding voting securities of a Fund or class thereof is presumed by
the 1940 Act to "control" such Fund or class and may be able to significantly
influence the outcome of any shareholder vote. As of March 31, 1998, the
officers and Directors of the Company as a group owned less than 1% of the
outstanding shares of each Fund.
SHAREHOLDER APPROVALS. The Consolidation Agreement is being submitted for
approval at the Meeting by the shareholders of the Bond Fund. The vote of the
shareholders of the Government Fund is not being solicited, since their
approval or consent is not necessary to approve the Consolidation.
The Consolidation Agreement must be approved by a majority of the
outstanding shares of the Bond Fund. The term "majority of the outstanding
shares" of the Bond Fund means more than 50% of the outstanding shares of the
Fund, in accordance with Maryland Law and the Company's Articles of
Incorporation and By-Laws.
Quorum. In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve
a proposal are not received, the persons named as proxies may propose one or
more adjournment(s) of the Meeting to permit further solicitation of proxies.
Any such adjournment(s) will require the affirmative vote of a majority of
those shares affected by the adjournment(s) that are represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR the
proposals in favor of such adjournment(s), and will vote those proxies
required to be voted AGAINST the proposals against any adjournment(s).
A quorum is constituted with respect to the Bond Fund or a share class
thereof by the presence in person or by proxy of the holders of more than 33%
of the outstanding shares of the Fund or class entitled to vote at the
Meeting. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions will be treated as shares that are
present at the Meeting but which have not been voted. Abstentions, therefore,
will have the effect of a "no" vote for purposes of obtaining the requisite
approvals. Broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares on a particular
matter with respect to which
13
<PAGE>
the brokers or nominees do not have discretionary power) will not be treated
as shares that are present at the Meeting and, accordingly, could make it more
difficult to obtain the requisite approvals.
Annual Meetings. The Company does not presently intend to hold an annual
meeting of shareholders for the election of Directors or other business,
unless and until such time as less than a majority of the Directors holding
office have been elected by the shareholders, at which time the Directors then
in office will call a shareholders' meeting for the election of Directors.
Under certain circumstances, however, shareholders have the right to call a
meeting of shareholders to consider the removal of one or more Directors and
such meetings will be called when requested by the holders of record of 10% or
more of the outstanding shares of common stock of the Company. To the extent
required by law, the Company will assist in shareholder communications in such
matters.
OTHER BUSINESS. The Company's Board of Directors knows of no other business
to be brought before the Meeting. However, if any other matters come before
the Meeting, it is the intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
14
<PAGE>
III. OTHER INFORMATION
HOW TO OBTAIN ADDITIONAL INFORMATION ABOUT THE FUNDS. Additional information
about each Fund is included in its most recent prospectus and statement of
additional information. You may obtain a prospectus or statement of additional
information without charge by calling 1-800-222-8222 or by writing the Company
at Stagecoach Funds, Inc., c/o Stagecoach Shareholder Services, Wells Fargo
Bank, N.A., P.O. Box 7066, San Francisco, CA 94120-7066.
This Proxy/Prospectus is accompanied by the current prospectus for the
Government Fund.
Reports and other information filed by the Company can be inspected and
copied at the Public Reference Facilities maintained by the Securities and
Exchange Commission ("SEC") at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, these materials can be inspected and copied at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed
rates.
The information contained in each Fund's prospectus is incorporated by
reference into this Proxy/Prospectus.
FINANCIAL STATEMENTS. The unaudited financial statements and financial
highlights and the independent auditors' report thereon for the Funds for the
six-month period ended September 30, 1997, and the audited financial
statements, financial highlights and the independent auditors report thereon
for the six-month period ended March 31, 1997, are incorporated by reference
into the Statement of Additional Information related to this Proxy/Prospectus.
The Financial Highlights included therein are incorporated by reference into
this Proxy/Prospectus.
PERFORMANCE INFORMATION. Certain performance information for the Government
Fund, and a discussion of some of the factors affecting the Fund, are
contained in Appendix VI and VII. Comparable information for the Bond Fund is
contained in the Bond Fund's Annual and Semi-Annual reports which were sent to
shareholders in June and November of this year. If you need additional copies
of these documents please call 1-800-222-8222.
SHAREHOLDER INQUIRIES. For additional information call 1-800-222-8222 or
write to Stagecoach Funds, Inc. at the address on the cover page of this
Proxy/Prospectus.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
15
<PAGE>
APPENDIX I
PLAN OF
CONSOLIDATION
FOR THE
INTERMEDIATE BOND FUND
AND THE
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
OF
STAGECOACH FUNDS, INC.
<PAGE>
This PLAN OF CONSOLIDATION (the "Plan") is made as of this day of
March, 1998 by Stagecoach Funds, Inc. ("Stagecoach"), a Maryland corporation,
for itself and on behalf of the Intermediate Bond Fund (the "Bond Fund"), a
portfolio of Stagecoach, and on behalf of the Short-Intermediate
U.S. Government Income Fund (the "Government Fund" and sometimes together with
the Bond Fund, the "Funds"), also a portfolio of Stagecoach.
WHEREAS, Stagecoach is an open-end management investment company registered
with the Securities and Exchange Commission (the "SEC") under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, Stagecoach desires that the assets and stated liabilities of the
Bond Fund be conveyed to and be acquired and assumed by, the Government Fund,
as stated herein, in exchange for shares of specified classes of the
Government Fund which shall thereafter promptly be distributed to the
shareholders of the corresponding classes of the Bond Fund in connection with
its liquidation as described in this Plan (the "Consolidation").
NOW, THEREFORE, in accordance with the terms and conditions described
herein, the Funds shall be consolidated as follows:
1. Conveyance of Assets of Bond Fund.
(a) At the Effective Time of the Consolidation, as defined in Section 8, all
assets of every kind, and all interests, rights, privileges and powers of the
Bond Fund, subject to all liabilities of such Fund, whether accrued, absolute,
contingent or otherwise existing as of the Effective Time of the
Consolidation, shall be transferred and conveyed by the Bond Fund to the
Government Fund (as set forth below) and shall be accepted and assumed by the
Government Fund as more particularly set forth in this Plan, such that at and
after the Effective Time of the Consolidation: (i) all assets of the Bond Fund
shall become and be the assets of the Government Fund; and (ii) all
liabilities of the Bond Fund shall attach to the Government Fund as aforesaid
and may thenceforth be enforced against the Government Fund to the same extent
as if incurred by it.
(b) At least fifteen (15) business days prior to the Effective Time of the
Consolidation, the Bond Fund will provide the Government Fund with a schedule
of its securities and other assets and its known liabilities, and the
Government Fund will provide the Bond Fund with a copy of the current
investment objective and policies applicable to the Government Fund. The Bond
Fund reserves the right to sell any of the securities or other assets shown on
the list of the Bond Fund's assets prior to the Effective Time of the
Consolidation but will not, without the prior approval of the Government Fund,
acquire any additional securities other than securities which the Government
Fund is permitted to purchase in accordance with its stated investment
objective and policies. At least ten (10) business days prior to the Effective
Time of the Consolidation, the Government Fund will advise the Bond Fund of
any investments of the Bond Fund shown on such schedule which the Government
Fund would not be permitted to hold, pursuant to its stated investment
objective and policies or otherwise. In the event that the Bond Fund holds any
investments that the Government Fund would not be permitted to hold under its
stated investment objective or policies, the Bond Fund, if requested by the
Government Fund, will dispose of such securities prior to the Effective Time
of the Consolidation to the extent practicable. In addition, if it is
determined that the portfolios of the Bond Fund and the Government Fund, when
aggregated, would contain investments exceeding certain percentage limitations
to which the Government Fund is or will be subject with respect to such
investments, the Bond Fund, if requested by the Government Fund, will dispose
of and/or reinvest a sufficient amount of such investments as may be necessary
to avoid violating such limitations as of the Effective Time of the
Consolidation.
(c) The Bond Fund will endeavor to discharge all of its known liabilities
and obligations prior to the Closing Date.
(d) Without limiting the generality of the foregoing, it is understood that
the Bond Fund assets shall include all property and assets of any nature
whatsoever, including, without limitation, all cash, cash equivalents,
A-1
<PAGE>
securities, claims (whether absolute or contingent, known or unknown, accrued
or unaccrued) and receivables (including dividend and interest receivables)
owned by the Bond Fund, and any deferred or prepaid expenses shown as an asset
on the Bond Fund's books, at the Effective Time of the Consolidation, and all
goodwill, all other intangible property and all books and records belonging to
the Bond Fund.
(e) In particular, the Bond Fund assets shall be transferred and conveyed to
the Government Fund, as set forth below:
(1) In exchange for the transfer of the Bond Fund assets, the Government
Fund shall simultaneously issue to the Bond Fund at the Effective Time of
the Consolidation full and fractional shares of Common Stock in the
Government Fund of each of the Class A, Class B, and Institutional Class
shares having an aggregate net asset value equal to the net value of the
Bond Fund assets so conveyed, all determined and adjusted as provided in
this Section 1. In particular, the Government Fund shall deliver to the
Bond Fund the number of shares of each of its share classes described
above, including fractional shares, determined by dividing the value of the
Bond Fund assets of the Bond Fund that are so conveyed and are attributable
to each of the Government Fund's respective share classes, computed in the
manner and as of the time and date set forth in this Section, by the net
asset value of one Government Fund share of the particular share class that
is to be delivered with respect thereto, computed in the manner and as of
the time and date set forth in this Section.
(2) The net asset value of shares to be delivered by the Government Fund,
and the net value of the Bond Fund assets to be conveyed by the Bond Fund,
shall, in each case, be determined as of the Valuation Time specified in
Section 3. The net asset value of shares of the Government Funds shall be
computed in the manner set forth in the Government Fund's then current
prospectuses under the Securities Act of 1933, as amended (the "1933 Act").
In determining the value of the securities transferred by the Bond Fund to
the Government Fund, each security shall be priced in accordance with the
pricing policies and procedures of the Government Fund as described in its
then current prospectus.
2. Liquidation of Bond Fund. At the Effective Time of the Consolidation, the
Bond Fund shall make a liquidating distribution to its shareholders as
follows. Shareholders of record of the Bond Fund shall be credited with full
and fractional shares of the class of common stock that is issued by the
Government Fund in connection with the Consolidation with respect to the
shares that are held of record by the shareholder. In addition, each
shareholder of record of the Bond Fund shall have the right to receive any
unpaid dividends or other distributions which were declared before the
Effective Time of the Consolidation with respect to the shares of the Bond
Fund that are held by the shareholder at the Effective Time of the
Consolidation. Stagecoach shall record on its books the ownership of the
respective Government Fund shares by the shareholders of record of the Bond
Fund (the "Transferor Record Holders"). All of the issued and outstanding
shares of the Bond Fund at the Effective Time of the Consolidation shall be
redeemed and canceled on the books of Stagecoach at such time. After the
Effective Time of the Consolidation, Stagecoach shall wind up the affairs of
the Bond Fund and shall file any final regulatory reports, including but not
limited to any Form N-SAR and Rule 24f-2 filings with respect to the Bond
Fund, and also shall take all other steps as are necessary and proper to
effect the termination or declassification of the Bond Fund in accordance with
the laws of the State of Maryland and other applicable requirements.
3. Valuation Time. The Valuation Time for the Bond Fund and the Government
Fund shall be a mutually agreed upon time on June 12, 1998, or such earlier or
later date as may be determined by Stagecoach's duly authorized officers.
4. Certain Representations, Warranties and Plans of Stagecoach. Stagecoach,
on behalf of the Funds, represents and warrants to the following, such
representations, warranties and agreements being made on behalf of each Fund
on a several (and not joint, or joint and several) basis:
(a) Stagecoach is a Maryland corporation duly created pursuant to its
Articles of Incorporation for the purpose of acting as a management
investment company under the 1940 Act, and is validly existing under
A-2
<PAGE>
the laws of the State of Maryland. Stagecoach is registered as an open-end
management investment company under the 1940 Act and its registration with
the SEC as an investment company is in full force and effect.
(b) Stagecoach has the power to own all of its properties and assets and
to consummate the transactions contemplated herein, and has all necessary
federal, state and local authorizations to carry on its business as now
being conducted and to consummate the transactions contemplated by this
Plan.
(c) This Plan has been duly authorized by the Board of Directors of
Stagecoach, and executed and delivered by the duly authorized officers of
Stagecoach, and represents a valid and binding contract, enforceable in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles. The execution and delivery of this Plan does
not, and the consummation of the transactions contemplated by this Plan
will not, violate Stagecoach's Articles of Incorporation or By-Laws or any
agreement or arrangement to which it is a party or by which it is bound.
(d) Stagecoach intends to qualify as a regulated investment company under
Part I of Subchapter M of the Code, and with respect to the Funds as
operating prior to the Effective Time of the Consolidation, has elected to
qualify and has qualified as a regulated investment company under Part I of
Subchapter M of Subtitle A, Chapter 1, of the Code, as of and since its
first taxable year; has been a regulated investment company under such Part
of the Code at all times since the end of its first taxable year when it so
qualified; and qualifies and shall continue to qualify as a regulated
investment company for its current taxable year.
(e) It has valued, and will continue to value, its portfolio securities
and other assets in accordance with applicable legal requirements.
(f) The N-14 Registration Statement and the Consolidation Proxy
Materials, from their effective and clearance dates with the SEC, through
the time of the shareholders meeting referred to in Section 6 and at the
Effective Time of the Consolidation, insofar as they relate to Stagecoach
(i) shall comply in all material respects with the provisions of the 1933
Act, 1934 Act and the 1940 Act, the rules and regulations thereunder, and
state securities laws, and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading.
(g) The shares of the Government Fund to be issued and delivered to the
Bond Fund for the account of the shareholders of the Bond Fund, pursuant to
the terms hereof, shall have been duly authorized as of the Effective Time
of the Consolidation and, when so issued and delivered, shall be duly and
validly issued, fully paid and non-assessable, and no shareholder of the
Government Fund shall have any preemptive right of subscription or purchase
in respect thereto.
(h) All of the issued and outstanding shares of the Government Fund have
been validly issued and are fully paid and non-assessable, and were offered
for sale and sold in conformity with the registration requirements of all
applicable federal and state securities laws.
(i) Stagecoach shall operate its business in the ordinary course between
the date hereof and the Effective Time of the Consolidation. It is
understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions and any
other dividends and distributions deemed advisable.
(j) At the Effective Time of the Consolidation, the Government Fund will
have good and marketable title to its assets and full right, power and
authority to assign, deliver and otherwise transfer such assets.
5. Shareholder Action. As soon as practicable after the effective date of
the N-14 Registration Statement and SEC clearance of the proxy solicitation
materials referred to in Section 6, but in any event prior to the Effective
Time of the Consolidation and as a condition thereto, the Board of Directors
of Stagecoach shall call
A-3
<PAGE>
and Stagecoach shall hold, meeting(s) of the shareholders of the Bond Fund for
the purpose of considering and voting upon:
(a) approval of this Plan and the transactions contemplated hereby; and
(b) such other matters as may be determined by the Board of Directors of
Stagecoach.
6. Regulatory Filings. Stagecoach shall file a post-effective amendment (the
"N-1A Post-Effective Amendment") to its registration statement on Form N-1A
(File Nos. 33-42927; 811-6419) with the SEC, and the appropriate state
securities commissions, as promptly as practicable so that the Class B shares
of the Government Fund required to complete the Consolidation are registered
under the 1933 Act, 1940 Act and applicable state securities laws. In
addition, Stagecoach shall file an N-14 Registration Statement, which shall
include the Consolidation Proxy Materials, with the SEC, and with the
appropriate state securities commissions, relating to the matters described in
Section 5 as promptly as practicable.
7. Effective Time of the Consolidation. Delivery of the Bond Fund assets and
the shares of the Government Fund to be issued pursuant to Section 1 and the
liquidation of the Bond Fund pursuant to Section 2 shall occur on the day
following the Valuation Time, whether or not such day is a business day, or on
such other date, and at such place and time and date, as may be agreed to by
each of the parties. The date and time at which such actions are taken are
referred to herein as the "Effective Time of the Consolidation." To the extent
any Bond Fund assets are, for any reason, not transferred at the Effective
Time of the Consolidation, Stagecoach shall cause such Bond Fund assets to be
transferred in accordance with this Plan at the earliest practicable date
thereafter.
8. Stagecoach Conditions. The obligations of Stagecoach hereunder shall be
subject to the following conditions precedent:
(a) Stagecoach shall provide a certificate executed in its name by its
President or Vice President and its Treasurer or Assistant Treasurer, dated
as of the Effective Time of the Consolidation, to the effect that its
representations and warranties made in this Plan are true and correct at
and as of the Effective Time of the Consolidation, except as they may be
affected by the transactions contemplated by this Plan.
(b) Stagecoach shall have received an opinion of Morrison & Foerster,
LLP, counsel to Stagecoach, in form reasonably satisfactory to Stagecoach
and dated the Effective Time of the Consolidation, substantially to the
effect that (i) Stagecoach is a Maryland corporation duly established and
validly existing under the laws of the State of Maryland; (ii) this Plan
has been duly authorized, executed and delivered by Stagecoach; (iii) the
execution and delivery of this Plan did not, and the consummation of the
transactions contemplated by this Plan will not, violate the Amended
Articles of Incorporation or By-Laws of Stagecoach or any material contract
known to such counsel to which Stagecoach is a party or by which it is
bound. Such opinion may rely on the opinion of other counsel to the extent
set forth in such opinion, provided such other counsel is reasonably
acceptable to Stagecoach; for federal income tax purposes (vi) the transfer
by the Bond Fund of all of its assets to the Government Fund in exchange
for shares of the Government Fund, and the distribution of such shares to
the shareholders of the Bond Fund, as provided in this Plan, will
constitute a reorganization within the meaning of Section 368(a)(1)(C), (D)
or (F) of the Code; (vii) in accordance with Sections 361(a), 361(c)(1) and
357(a) of the Code, no gain or loss will be recognized by the Bond Fund as
a result of such transactions; (viii) in accordance with Section 1032(a) of
the Code, no gain or loss will be recognized by the Government Fund as a
result of such transactions; (ix) in accordance with Section 354(a)(1) of
the Code, no gain or loss will be recognized by the shareholders of the
Bond Fund on the distribution to them by the Bond Fund of shares of the
Government Fund in exchange for their shares of the Bond Fund; (x) in
accordance with Section 358(a)(1) of the Code, the basis of the Government
Fund shares received by each shareholder of a Bond Fund will be the same as
the basis of the shareholder's Bond Fund shares immediately prior to the
transactions; (xi) in accordance with Section 362(b) of the Code, the basis
of the Bond Fund assets received by the Government Fund will be the same as
the basis of such Bond Fund assets in the hands of the corresponding Bond
Fund immediately prior
A-4
<PAGE>
the transactions; (xii) in accordance with Section 1223(1) of the Code, a
shareholder's holding period for Government Fund shares will be determined
by including the period for which the shareholder held the shares of the
Bond Fund exchanged therefor, provided that the shareholder held such
shares of the Bond Fund as a capital asset; (xiii) in accordance with
Section 1223(2) of the Code, the holding period of the Stagecoach Fund with
respect to the Bond Fund assets will include the period for which such Bond
Fund assets were held by the Bond Fund; and (iv) in accordance with Section
381(a) of the Code, the Government Fund will succeed to the tax attributes
of the Bond Fund described in Section 381(c) of the Code.
(c) The Bond Fund assets to be transferred to the Government Fund under
this Plan shall include no assets which the Government Fund may not
properly acquire pursuant to its investment limitations or objectives or
may not otherwise lawfully acquire.
(d) The N-1A Post-Effective Amendment and the N-14 Registration Statement
shall have become effective under the 1933 Act and no stop order suspending
such effectiveness shall have been instituted or, to the knowledge of
Stagecoach, contemplated by the SEC and the parties shall have received all
permits and other authorizations necessary under state securities laws to
consummate the transactions contemplated by this Plan.
(e) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to restrain
or prohibit or obtain damages or other relief in connection with this Plan
or the transactions contemplated herein.
(f) Prior to the Valuation Time, the Bond Fund shall have declared a
dividend or dividends, with a record date and ex-dividend date prior to the
Valuation Time, which, together with all previous dividends, shall have the
effect of distributing to its shareholders all of its net investment
company taxable income, if any, for the taxable periods or years ending
March 31, 1998 and for the taxable periods from said date to and including
the Effective Time of the Consolidation (computed without regard to any
deduction for dividends paid), and all of its net capital gain, if any,
realized in taxable periods or years ending March 31, 1998, and in the
taxable periods from said date to and including the Effective Time of the
Consolidation.
(g) Stagecoach shall have performed and complied in all material respects
with each of its agreements and covenants required by this Plan to be
performed or complied with by it prior to or at the Valuation Time and the
Effective Time of the Consolidation.
(h) Stagecoach shall have received a letter from KPMG Peat Marwick LLP
addressed to Stagecoach in form reasonably satisfactory to them, and dated
the Effective Time of the Consolidation, to the effect that on the basis of
limited procedures agreed to by Stagecoach and described in such letter
(but not an examination in accordance with generally accepted auditing
standards): (i) the data used in the pro forma adjustment and calculation
of the current and pro forma expense ratios of the Funds appearing in the
N-14 Registration Statement and Consolidation Proxy Materials agree with
underlying accounting records of the Stagecoach Fund or to written
estimates provided by officers of Stagecoach having responsibility for
financial and reporting matters and were found to be mathematically
correct, and (ii) the calculation of the net value of the Bond Fund assets
and the net asset value of the Government Fund shares, in each case as of
the Valuation Time, was determined in accordance with the pricing policies
and procedures of Stagecoach as described in its then current prospectuses.
10. Further Assurances. Subject to the terms and conditions herein provided,
Stagecoach shall use its best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all
things necessary, proper or advisable under the provisions of this Plan and
under applicable law to consummate and make effective the transactions
contemplated by this Plan, including without limitation, delivering and/or
causing to be delivered each of the items required under this Plan as a
condition to such obligations hereunder.
11. Survival of Representations and Warranties. The representations and
warranties of Stagecoach set forth in this Plan shall survive the delivery of
the Bond Fund assets to the Government Fund and the issuance of the shares of
the Government Fund at the Effective Time of the Consolidation.
A-5
<PAGE>
12. Termination of Plan. This Plan may be terminated by Stagecoach at, or at
any time prior to, the Effective Time of the Consolidation, by a majority vote
of its Board of Directors.
13. Governing Law. This Plan and the transactions contemplated hereby shall
be governed, construed and enforced in accordance with the laws of the State
of Maryland.
14. Brokerage Fees and Expenses.
(a) Stagecoach, for itself and on behalf of the Funds, represents and
warrants that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
(b) Except as may be otherwise provided herein, the Bond Fund and the
Government Fund shall be liable for its expenses incurred in connection with
entering into and carrying out the provisions of this Agreement, whether or
not the transactions contemplated hereby are consummated. The expenses payable
by the Bond Fund hereunder shall include (i) fees and expenses of its counsel
and independent auditors incurred in connection with the Reorganization; (ii)
expenses associated with printing and mailing the Prospectus/Proxy Statement
and soliciting proxies in connection with the meeting of shareholders of the
Bond Fund; (iii) all fees and expenses related to the liquidation of the Bond
Fund; (iv) fees and expenses of the Bond Fund's custodian and transfer
agent(s) incurred in connection with the Reorganization; and (v) any special
pricing fees associated with the valuation of the Bond Fund's portfolio on the
Applicable Valuation Date. The expenses payable by the Government Fund
hereunder shall include (i) fees and expenses of its counsel and independent
auditors incurred in connection with the Reorganization; (ii) expenses
associated with preparing this Agreement and preparing and filing the
Registration Statement under the 1933 Act covering the Government Fund Shares
to be issued in the Reorganization; (iii) registration or qualification fees
and expenses of preparing and filing such forms, if any, as are necessary
under applicable state securities laws to qualify the Government Fund Shares
to be issued in connection with the Reorganization; (iv) any fees and expenses
of the Government Fund's custodian and transfer agent(s) incurred in
connection with the Consolidation; and (v) any special pricing fees associated
with the valuation of the Government Fund's portfolio on the applicable
Valuation Date.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the date
first written above.
STAGECOACH FUNDS, INC.,
on behalf of the Intermediate Bond
Fund
ATTEST:
<TABLE>
<S> <C>
___________________________________________ By: _______________________________________
Michael W. Nolte Richard H. Blank, Jr.
Assistant Secretary Chief Operating Officer,
Secretary and Treasurer
</TABLE>
STAGECOACH FUNDS, INC.,
on behalf of the Short-Intermediate
U.S. Government Income Fund
ATTEST:
<TABLE>
<S> <C>
___________________________________________ By: _______________________________________
Michael W. Nolte Richard H. Blank, Jr.
Assistant Secretary Chief Operating Officer,
Secretary and Treasurer
</TABLE>
A-6
<PAGE>
APPENDIX II
INVESTMENT OBJECTIVES AND POLICIES
This Appendix sets forth each Fund's investment objective and significant
investment policies. The information here summarizes only some of the
investment policies and limitations of each Fund. Under certain circumstances,
the investment policies and limitations of the Funds may be changed by the
Company's Board of Directors. Additional information about the investment
policies and limitations of each Fund is included in its most recent
prospectus and statement of additional information, copies of which may be
obtained by calling 1-800-222-8222.
<TABLE>
<CAPTION>
FUND BOND FUND GOVERNMENT FUND
---- --------- ---------------
<S> <C> <C>
Investment Objective: The Bond Fund seeks to provide The Government Fund seeks to
investors with a high level of provide investors with current
current income consistent with income while preserving
the preservation of capital and capital, by investing primarily
the maintenance of liquidity. in a portfolio consisting of
short- to intermediate-term
securities issued or guaranteed
by the U.S. Government, its
agencies and instrumentalities.
Investment Policies: Invests in corporate debt
securities, U.S. Government Invests primarily (at least 65%
obligations, and other debt of its total assets) in U.S.
securities. Government obligations.
Maintains a dollar-weighted Maintains a dollar-weighted
average portfolio maturity of average portfolio maturity of
between 3 and 10 years. between 2 and 5 years.
Additional Investment Invests at least 65% of total Invests at least 65% of total
Policies: assets in a combination of assets in U.S. government
corporate bonds and U.S. obligations.
government obligations. May
invest less than 65% of its
total assets in U.S. government
obligations.
Invests no more than 20% of Invests no more than 25% of
total assets in the dollar- total assets in the dollar-
denominated debt of foreign denominated debt of U.S.
issuers, including foreign branches of foreign banks or
banks. foreign branches of U.S. Banks.
May not invest in debt
securities of non-bank foreign
issues.
</TABLE>
Generally speaking, the Bond Fund assumes slightly more risk and volatility
than the Government Fund. In certain interest rate environments, the Bond Fund
has a higher expectation of total return, with greater expectation of risk,
than the Government Fund.
The Bond Fund maintains a longer weighted average portfolio maturity than
the Government Fund. This increases the sensitivity of the Bond Fund's
portfolio to interest-rate fluctuations. The Bond Fund may enter into futures
contracts and related options, while the Government Fund may not. The Bond
Fund sometimes invests in unrated securities while the Government Fund invests
almost exclusively in investment grade securities. The stripped Treasury
securities in which the Government Fund invests have greater interest-rate
sensitivity than traditional government securities with identical credit
ratings.
Both Funds may borrow from banks up to 10% of their respective average daily
net assets. The Bond Fund also may enter into reverse repurchase agreements.
<PAGE>
APPENDIX III
EXPENSE SUMMARIES OF THE FUNDS
The following tables compare (a) the current fees and expenses for the Bond
Fund and (b) the estimated fees and expenses for the Government Fund on a pro
forma basis after giving effect to the Consolidation. The purpose of the
tables is to help shareholders understand the various costs and expenses that
investors in the Funds will pay directly or indirectly. The tables do not
reflect any charges that may be imposed by institutions directly on their
customer accounts in connection with investments in the Funds.
CLASS A SHARES
<TABLE>
<CAPTION>
GOVERNMENT
BOND FUND
FUND PRO FORMA
---- ----------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge on Purchases (as a percentage of
offering price)............................................ 4.50% 3.00%
Maximum Sales Charge on Reinvested Dividends................ None None
Maximum Sales Charge on Redemptions......................... None None
Maximum Fees................................................ None None
Exchange Fees............................................... None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements)/1/........ 0.23% 0.26%
Rule 12b-1 Fees............................................. 0.05% 0.05%
Other Expenses (after waivers or reimbursements)/2/......... 0.70% 0.65%
---- ----
Total Fund Operating Expenses
(after waivers or reimbursements)/3/........................ 0.98% 0.96%
==== ====
</TABLE>
- --------
/1/ Management Fees (before waivers or reimbursements) would be 0.50% for each
Fund.
/2/ Other Expenses (before waivers or reimbursements) would be 0.85% and 0.65%,
respectively.
/3/ Total Fund Operating Expenses (before waivers or reimbursements) would be
1.40% and 1.15%, respectively.
EXAMPLE:
You would pay the following expenses on a $1,000 investment in Class A
shares, assuming (1) 5% gross annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
GOVERNMENT
BOND FUND
FUND PRO FORMA
---- ----------
<S> <C> <C>
1 year........................................................ $ 55 $ 40
3 years....................................................... 75 60
5 years....................................................... 97 81
10 years...................................................... 160 144
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
<PAGE>
CLASS B SHARES
<TABLE>
<CAPTION>
GOVERNMENT
BOND FUND
FUND PRO FORMA
---- ----------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge on Purchases (as a percentage of
offering price)............................................. None None
Maximum Sales Charge on Reinvested Dividends................. None None
Maximum Sales Charge on Redemptions..........................
Redemption during year 1.................................... 5.00% 5.00%
Redemption during year 2.................................... 4.00% 4.00%
Redemption during year 3.................................... 3.00% 3.00%
Redemption during year 4.................................... 3.00% 3.00%
Redemption during year 5.................................... 2.00% 2.00%
Redemption during year 6.................................... 1.00% 1.00%
Redemption after year 6/1/.................................. 0.00% 0.00%
Exchange Fees................................................ None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements)/2/......... 0.23% 0.26%
Rule 12b-1 Fees.............................................. 0.75% 0.75%
Other Expenses (after waivers or reimbursements)/3/.......... 0.73% 0.65%
---- ----
TOTAL FUND OPERATING EXPENSES
(after waivers or reimbursements)/4/......................... 1.71% 1.66%
==== ====
</TABLE>
- --------
1 Class B shares automatically convert to Class A shares six years after
purchase.
2 Management Fees (before waivers or reimbursements) would be 0.50% for each
Fund.
3 Other Expenses (before waivers or reimbursements) would be 1.89% for each
Fund.
4 Total Fund Operating Expenses (before waivers or reimbursements) would be
3.14% for each Fund.
EXAMPLE:
You would pay the following expenses on a $1,000 investment in Class B
shares, assuming a 5% gross annual return and, at the end of each time period
indicated:
<TABLE>
<CAPTION>
REDEMPTION NO REDEMPTION
--------------- ---------------
GOVERNMENT GOVERNMENT
BOND FUND BOND FUND
FUND PRO FORMA FUND PRO FORMA
---- ---------- ---- ----------
<S> <C> <C> <C> <C>
1 year....................................... $ 67 $ 67 $ 17 $ 17
3 years...................................... 84 82 54 52
5 years...................................... 113 110 93 90
10 years..................................... 164 160 164 160
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
2
<PAGE>
INSTITUTIONAL CLASS SHARES
<TABLE>
<CAPTION>
GOVERNMENT
BOND FUND
FUND PRO FORMA
---- ----------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge on Purchases
(as a percentage of offering price)....................... None None
Maximum Sales Charge on Reinvested Dividends............... None None
Maximum Sales Charge on Redemptions........................ None None
Exchange Fees.............................................. None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements)/1/....... 0.23% 0.26%
Rule 12b-1 Fees............................................ 0.00% 0.00%
Other Expenses (after waivers or reimbursements)........... 0.70%/2/ 0.65%
---- ----
TOTAL FUND OPERATING EXPENSES
(after waivers or reimbursements)/3/....................... 0.93% 0.91%
==== ====
</TABLE>
- --------
1 Management Fees (before waivers or reimbursements) would be 0.50% for each
Fund.
2 Other Expenses (before waivers or reimbursements) would be 0.73% for the
Bond Fund.
3 Total Fund Operating Expenses (before waivers or reimbursements) would be
1.23% and 1.15% for the Bond Fund and the Government Fund, respectively.
EXAMPLE:
You would pay the following expenses on a $1,000 investment in Institutional
Class shares, assuming (1) 5% gross annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
GOVERNMENT
BOND FUND
FUND PRO FORMA
---- ----------
<S> <C> <C>
1 year....................................................... $ 9 $ 9
3 years...................................................... 30 29
5 years...................................................... 51 50
10 years..................................................... 114 112
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
3
<PAGE>
APPENDIX IV
SHAREHOLDER TRANSACTIONS AND FUND SERVICES
This Appendix reviews and compares important information about the purchase
and redemption policies (such as front-end sales charges, minimum balances and
contingent-deferred sales charges) applicable to each Fund. This Appendix also
reviews and compares important information about dividend and distribution
options and exchange privileges available to each Fund.
This Appendix is qualified in its entirety by the more detailed information
included in the prospectuses for the Funds which are incorporated by reference
into this Proxy/Prospectus.
I. CLASS A SHARES
A. SALES CHARGES AND EXEMPTIONS. Front-end sales charges for Class A shares
of the Funds are as follows:
.Intermediate Bond Fund--4.50%.
.The Short-Intermediate U.S. Government Income Fund--3.00%.
The Funds offer reductions in front-end sales charges based upon the dollar
amount of shares purchased. Currently, reductions generally are available to
Fund shareholders who purchase or commit to purchase $50,000 or more in Class
A shares.
B. PURCHASE AND REDEMPTION PROCEDURES. Shares of the Funds may be purchased
and redeemed through substantially similar methods. The minimum initial and
subsequent purchase amounts for the Funds are the same, as are the general
procedures for automatic purchase and redemption programs.
C. DIVIDEND AND DISTRIBUTION OPTIONS. Both Funds allow shareholders to
receive dividends and capital gain distributions by check or to reinvest
dividends and capital gain distributions in shares of the same Fund or in an
approved bank account. The Company also allows investors to reinvest dividend
and capital gain distributions in shares of another Fund in the Stagecoach
Family of Funds.
D. SHARE EXCHANGES. The share exchange privileges available to Class A
shareholders of the Funds are identical.
II. CLASS B SHARES
The sales charges, purchase and redemption procedures, dividend and
distribution options and exchange privileges applicable to the new Class B
shares of the Short-Intermediate U.S. Government Income Fund are identical in
every respect to the existing Class B shares of the Intermediate Bond Fund.
III. INSTITUTIONAL CLASS SHARES
A. SALES CHARGES AND EXEMPTION. There are no front-end or contingent-
deferred sales charges on Institutional Class shares of either Fund.
B. PURCHASE AND REDEMPTION PROCEDURES. Institutional Class shares of the
Funds may be purchased and redeemed through the methods and the minimum
initial and subsequent purchase amounts are identical.
C. DIVIDEND AND DISTRIBUTION OPTIONS. The dividend and distribution options
applicable to the Institutional Class shares are identical for the Funds.
D. SHARE EXCHANGES. The share exchange privileges available to Institutional
Class shareholders of each Fund are identical.
<PAGE>
IV. DIVIDENDS AND DISTRIBUTIONS
Both Funds distribute their net capital gains to shareholders at least
annually and pay dividends from net investment income, if any, monthly.
<PAGE>
APPENDIX V
5% OWNERSHIP AS OF MARCH 31, 1998 (PRE-CONSOLIDATION
[Will be completed prior to effectiveness]
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND TYPE OF PERCENTAGE OF
FUND ADDRESS OWNERSHIP OF CLASS PORTFOLIO
---- -------- --------- ---------- ----------
<S> <C> <C> <C> <C>
INTERMEDIATE BOND FUND Virg & Co. Institutional Class Record Holder 44.12% 33.26%
Attn: MF Dept A88-4
P.O. Box 9800
Calabasas, CA 91372
Hep & Co. Institutional Class Record Holder 53.54% 40.36%
Attn: MF Dept A88-4
P.O. Box 9800
MAC 0139-027
Calabasas, CA 91302
Virg & Co. Class A Record Holder 48.37% 5.78%
c/o Wells Fargo Bank
P.O. Box 9800 MAC
9139-027
Calabasas, CA 91372
SHORT-INTERMEDIATE U.S. Wells Fargo Bank Class A Beneficially Owned 28.4% 9.85%
GOVERNMENT INCOME FUND FBO Retirement Plans
Ominibus
P.O. Box 63015
San Francisco, CA
94163
Calabasas, CA 91372
</TABLE>
1
<PAGE>
APPENDIX VI
This Appendix reproduces the discussion of Fund performance from the
Government Fund's September 30, 1997, Semi-Annual Report. The discussion
(which has been slightly modified) reviews some of the factors that affected
the Fund's performance during the six-month period ended September 30, 1997,
and shows the performance of the Fund for various periods. The discussion has
not been updated to reflect events occurring after September 30, 1997.
HOW DID THE GOVERNMENT FUND'S ALLOCATION OF INVESTMENTS SHIFT BETWEEN
GOVERNMENT AND CORPORATE BONDS DURING THE PERIOD?
The Government Fund decreased its allocations to Treasury securities and
cash, with allocations to corporate and mortgage-backed securities remaining
stable. The federal agency allocation was increased from 23% to 34%.
DID SPECULATION ABOUT FURTHER INTEREST RATE INCREASES PLAY A ROLE IN THE
ALLOCATION CHANGES?
Not directly. The difference in yields between government and corporate
bonds remains narrow by historical standards and is expected to remain fairly
stable. This has allowed the Government Fund to upgrade credit quality without
sacrificing too much yield.
WHAT IS THE CURRENT OUTLOOK FOR INTEREST RATES?
We expect the unusual combination of strong economic growth and low
inflation to continue in the fourth quarter. The market appears sensitive to
any suggestion of too much growth and/or higher inflation. We do not believe
the Federal Reserve will increase the federal funds target rate in November,
but we do expect further tightening. Until then, interest rates are expected
to remain in the 6.00% to 6.75% range. Recently, the average maturity of the
Government Fund's investments has been extended compared to its length at the
beginning of the period.
PERFORMANCE AT A GLANCE
PERFORMANCE AS OF 9/30/97
<TABLE>
<CAPTION>
CLASS A SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
---------------------------- ------ ------ --------------
<S> <C> <C> <C>
With Maximum 3.0% Sales Charge.................. 4.57% 5.98% 4.37%
Without Sales Charge............................ 7.79% 7.08% 5.19%
<CAPTION>
INSTITUTIONAL CLASS SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
---------------------------- ------ ------ --------------
<S> <C> <C> <C>
7.89% 7.08% 5.19%
</TABLE>
Past performance is not predictive of future results. The investment return
and net asset value of shares of the Government Fund will fluctuate with
market conditions so that shares of the Government Fund, when redeemed, may
have a greater or lesser net asset value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Government Fund's manager has voluntarily waived portions of its fees or
has reimbursed expenses to the Government Fund, which has reduced operating
expenses for shareholders. Without these reductions, the Government Fund's
returns would have been lower.
The Class A shares of the Government Fund commenced operations on October
27, 1993. Performance figures for the Institutional Class shares reflect the
performance and expenses of the Class A shares for periods prior to September
6, 1996. The Institutional Class shares commenced operations on September 6,
1996.
<PAGE>
APPENDIX VII
This appendix reproduces the discussion of Fund performance from the
Government Fund's March 31, 1997, Annual Report. The discussion (which has
been slightly modified) reviews some of the factors that affected the Fund's
performance during the six-month period ended March 31, 1997, and shows the
performance of the Fund for various periods. The discussion has not been
updated to reflect events occurring after March 31, 1997.
WHAT WERE THE GOVERNMENT FUND'S TOTAL RETURNS?
The total return for Class A shares for the six-month period ended March 31,
1997, was 2.57%. The one-year total return for the Class A shares was 4.56%.
These return figures exclude sales charges. The total return for Institutional
Class shares for the six-month period ended March 31, 1997 was 2.58%. The one-
year total return for the Institutional Class shares was 4.49%.
HOW DID THE UNCERTAINTY ABOUT INTEREST RATES AFFECT THE GOVERNMENT FUND'S
PERFORMANCE OVER THE SIX-MONTH PERIOD?
There is always some uncertainty about interest rates. There are numerous
economic indicators which often suggest contradictory conclusions about
inflation, growth, demand, jobs and the many other factors which influence the
Federal Reserve's decisions about monetary policy. The Government Fund
concentrates on shorter, less volatile maturities. Typically, this means that
the Government Fund should avoid some of the steeper price appreciation and
depreciation likely in an uncertain market.
For most of the period, the federal funds target rate did not change.
Speculation shifted back and forth as to when and to what degree the rate
would be increased, but there was a general consensus that an increase was
coming. As a result, the Government Fund favored shorter maturities in an
effort to reduce price depreciation once an increase was announced.
WITH THE FED INCREASING THE FEDERAL FUNDS TARGET RATE IN EARLY 1997, DO YOU
EXPECT TO EXTEND MATURITIES? WHAT IS THE IMMEDIATE OUTLOOK?
We believe it is too soon to extend maturities. When interest rates go up,
bonds generally become more attractive, both for their current income and for
their future value. Extending maturities to "lock in" higher rates for a
longer period of time makes sense under certain conditions. Higher paying
bonds would also be attractive should rates go back down. Generally, if rates
drop, the resale value of higher paying existing bonds increases. This,
however, may only be the beginning of a cycle of Fed rate increases. As of
now, we expect another 0.25 to 0.50% increase in the target rate. We will also
be examining the economy for signs that the Fed's tightening is slowing the
economy as intended. Once we are comfortable that the cycle is complete, we
will reexamine the question of extending maturities.
THE GOVERNMENT FUND'S PORTFOLIO INCLUDES GOVERNMENT AGENCIES, U.S. TREASURIES
AND CORPORATE DEBT OBLIGATIONS. HOW DO YOU DETERMINE THE ALLOCATION AMONG
PERMISSIBLE INVESTMENTS? WHAT ROLES DO THE VARIOUS TYPES OF SECURITIES PLAY IN
THE PORTFOLIO?
Allocations are recommended by the Wells Fargo Fixed Income Policy
Committee. The Committee examines the expected returns and risks from the
available investments within the context of the Government Fund's shorter-
term, low-risk profile, U.S. Treasury securities, for example, have extremely
high credit quality, but they tend to have lower returns than similar
instruments of other issuers. Government agency securities, which might
include mortgage-backed instruments, for example, typically have higher yields
than Treasury securities and are generally considered to be of high quality.
Select corporate bonds and notes can boost yields, although they are more
risky than government-backed instruments. Consistent with the investment
objectives, policies and restrictions of the Government Fund, the Committee
searches for the proper balance between high
1
<PAGE>
quality, low volatility and solid returns. When yields are high, there may be
less reason to invest in corporate bonds. When they are low, corporate bonds
and collateralized repurchase agreements offer an opportunity for higher
returns which are still within the Government Fund's risk tolerance.
DID THE NOVEMBER ELECTIONS ALTER THE OUTLOOK FOR THE GOVERNMENT FUND?
What often affects the market most is fear of the unknown. The markets were
familiar with President Clinton from his first term and he led in the polls
from a very early stage. Therefore, the market was well prepared for his
reelection.
Issues concerning the ability of federal and local governments to raise
revenue tend to have a significant impact on the fixed-income markets, since
they directly impact budget deficits and the credit quality of government
issued or backed bonds. Both issues received a lot of attention during the
1996 electoral campaigns, although revenue issues have tended to be more
important to the municipal bond market-place. Certainly if a credible
compromise is reached on the federal budget deficit, the financial markets
will consider this very good news.
WILL THE NEW INFLATION-INDEXED TREASURY SECURITIES PLAY A ROLE IN THE
PORTFOLIO?
We do not foresee a role for these instruments right now. Inflation-indexed
Treasury securities do offer an intriguing hedge against inflation for
investors, but they do not currently appear to offer sufficient opportunity to
maximize total return. Inflation-indexed Treasury securities will likely have
very narrow fluctuations in price. Of course, these instruments are very new
and they may behave in unexpected ways. We will monitor how the secondary
market for inflation-indexed Treasury securities develops and make any
reassessments in our policies we deem necessary.
PERFORMANCE AT A GLANCE
PERFORMANCE AS OF 3/31/97
<TABLE>
<CAPTION>
CLASS A SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
---------------------------- ------ ------ --------------
<S> <C> <C> <C>
With Maximum 3.0% Sales Charge.................. 1.46% 4.05% 3.51%
Without Sales Charge............................ 4.56% 5.09% 4.44%
<CAPTION>
INSTITUTIONAL CLASS SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
---------------------------- ------ ------ --------------
<S> <C> <C> <C>
4.49% 5.07% 4.42%
</TABLE>
Past performance is not predictive of future results. The investment return
and net asset value of shares of the Government Fund will fluctuate with
market conditions so that shares of the Government Fund, when redeemed, may
have a greater or lesser net asset value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Government Fund's manager has voluntarily waived portions of its fees or
has reimbursed expenses to the Government Fund, which has reduced operating
expenses for shareholders. Without these reductions, the Government Fund's
returns would have been lower.
2
<PAGE>
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH SHOWING THE PERFORMANCE OF A $10,000 INVESTMENT IN THE CLASS A
SHARES OF THE FUND SINCE INCEPTION WITH THE LEHMAN BROTHERS U.S. TREASURY NOTE
INDEX]
The above chart compares the performance of the Government Fund since the
inception with the Lehman Brothers U.S. Treasury Note Index. The chart assumes
a hypothetical $10,000 initial investment in the Fund and reflects all
operating expenses and assumes the maximum initial sales charge of 3.0%. The
Lehman Brothers U.S. Treasury Note Index is an unmanaged index of U.S.
Treasury 2-10 year notes, while the Government Fund is a professionally
managed mutual fund. The index presented does not incur expenses and is not
available directly for investment. Had this index incurred operating expenses,
its performance would have been lower.
GROWTH OF A $10,000 INVESTMENT
[LINE GRAPH SHOWING THE PERFORMANCE OF A $10,000 INVESTMENT IN THE
INSTITUTIONAL CLASS SHARES OF THE FUND WITH THE LEHMAN BROTHERS U.S. TREASURY
NOTE INDEX]
The above chart compares the performance of the Government Fund
Institutional Class shares since its inception with the Lehman Brothers U.S.
Treasury Note Index. The chart assumes a hypothetical $10,000 initial
investment in the Institutional Class shares and, for periods prior to
September 6, 1996, reflects the performance of the Class A Shares. For periods
after September 6, 1996, the chart reflects the operating expenses of the
Institutional Class shares. The Lehman Brothers U.S. Treasury Note Index is an
unmanaged index of U.S. Treasury 2-10 year notes. Please note that the Fund is
a professionally managed mutual fund. The index presented here does not incur
expenses and is not available directly for investment. Had this index incurred
operating expenses, its performance would have been lower.
3
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated April 13, 1998
STAGECOACH FUNDS, INC.
c/o Stagecoach Shareholder Services
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, CA 94120-7066
1-800-222-8222
May 29, 1998 Special Meeting of
Shareholders of THE INTERMEDIATE BOND FUND
This Statement of Additional Information sets forth certain additional
information about Stagecoach Funds, Inc. (the "Company") and the Company's
Intermediate Bond Fund (the "Bond Fund") and the Short-Intermediate U.S.
Government Income Fund (the "Government Fund"). This Statement of Additional
Information is not a prospectus but should be read in conjunction with the
Proxy/Prospectus, also dated April 13, 1998, for the Special Meeting of
Shareholders of the Bond Fund to be held on May 29, 1998. Copies of the
Proxy/Prospectus may be obtained at no charge by calling 1-800-222-8222 or
writing the Company at the address above.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Proxy/Prospectus.
The Proxy/Prospectus and this Statement of Additional Information are sometimes
referred to together as the "Voting Materials."
INCORPORATION OF DOCUMENTS BY REFERENCE
IN THIS STATEMENT OF ADDITIONAL INFORMATION
Further information about the Company's Bond Fund and the Government Fund
(together with the Bond Fund, the "Funds") is contained in other documents
previously filed with the Securities and Exchange Commission (the "SEC"). These
documents are incorporated herein by reference to the statements of additional
information referenced below.
Further information about Class A shares of the Funds is contained in and
incorporated by reference to the statement of additional information for the
Class A shares of the Funds dated December 15, 1997, as supplemented on February
24, 1998. The statement of additional information is contained in Post-
Effective Amendment No. 37, Registration No. 33-42927; 811-6419, as filed with
the SEC on December 15, 1997. The statement of additional information was
1
<PAGE>
supplemented pursuant to Rule 497(e) of the Securities Act of 1933 on
February 24, 1998, and the supplemented statement of additional information is
incorporated herein by reference.
Further information about the Class B shares of the Bond Fund is contained
in and incorporated by reference to the statement of additional information for
the Class B shares of such Fund dated December 15, 1997, as supplemented on
February 24, 1998. The statement of additional information is contained in
Post-Effective Amendment No. 37, Registration No. 33-42927; 811-6419, as filed
with the SEC on December 15, 1997. The statement of additional information was
supplemented pursuant to Rule 497(e) of the Securities Act of 1933 on February
24, 1998, and the supplemented statement of additional information is
incorporated herein by reference.
Further information about Institutional Class shares of the Funds is
contained in and incorporated by reference to the statement of additional
information for the Institutional Class shares of the Funds dated January 30,
1998. The statement of additional information is contained in Post-Effective
Amendment No. 41, Registration No. 33-42927; 811-6419, as filed with the SEC on
January 30, 1998.
The audited financial statements and financial highlights for the Funds
contained in the Annual Report for the fiscal period ended March 31, 1997, are
hereby incorporated by reference to the Funds' Annual Report for such period, as
filed with the SEC on June 4, 1997.
The unaudited financial statements, financial highlights and related
independent auditors' report for the Funds contained in the Semi-Annual Report
for the fiscal period ended September 30, 1997, are hereby incorporated by
reference to the Funds' Semi-Annual Report for such period, as filed with the
SEC on December 5, 1997.
2
<PAGE>
Table of Contents
-----------------
Page
----
General Information.................................................. 4
Exhibit I -- Pro Forma Financial Statements.......................... I-1
3
<PAGE>
GENERAL INFORMATION
About the Proposed Consolidation
--------------------------------
The shareholders of the Company's Bond Fund are being asked to approve an
Agreement and Plan of Consolidation (the "Consolidation Agreement") between the
Bond Fund and the Government Fund. The Consolidation Agreement contemplates
that all of the assets and stated liabilities of the Bond Fund will be
transferred to the investment portfolio of the Government Fund, in exchange for
shares of equal value of designated classes of the Government Fund (the
"Consolidation"). As a result of the Consolidation, shareholders of the Bond
Fund will become shareholders of the Government Fund.
The shares issued by the Government Fund will have an aggregate value equal
to the aggregate value of the shares of the Bond Fund that are outstanding
immediately before the Closing.
After the transfer of its assets and stated liabilities in exchange for
Government Fund shares, the Bond Fund will distribute the shares of the
Government Fund to its shareholders. Each shareholder owning shares of the Bond
Fund at the Closing will receive shares of the designated class of the
Government Fund of equal value, and will receive any unpaid dividends or
distributions that were declared before the Closing on shares of the Bond Fund.
Stagecoach will establish an account for each former shareholder of the
Bond Fund reflecting the appropriate number of Government Fund shares
distributed to the shareholder. These accounts will be substantially identical
to the accounts currently maintained by Stagecoach for each shareholder.
For further information about the Consolidation, see the Proxy/Prospectus.
4
<PAGE>
INTRODUCTORY NOTE TO PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to the
proposed transfer of the assets and stated liabilities of the Bond Fund and
Government Fund, accounted for as if each transfer had occurred as of September
30, 1997, and as if the Funds had operated for the periods then ended. In
addition, the pro forma combining statements have been prepared based upon the
proposed fee and expense structure of the surviving Government Fund. The
statements do not reflect the effect of proposed differing investment objectives
and policies of the Funds.
The pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Funds incorporated by
reference in this statement of additional information. The Funds will be
accounted for as a tax-free reorganization. For more information concerning
this aspect of the Consolidation, see "About the Proposed Consolidation-Federal
Income Tax Consequences," in the Proxy/Prospectus.
5
<PAGE>
Income
<TABLE>
<CAPTION>
Stagecoach Funds - Short-Intermediate U.S. Government Income Fund
Pro Forma Combining Statement of Operations (Unaudited) Stagecoach
For the Year Ended September 30, 1997 Short-Intermediate
Stagecoach U.S. Government
Stagecoach Short-Intermediate Income Fund
Intermediate U.S. Government Pro Forma Pro Forma
Bond Fund Income Fund Adjustments Combined
----------------- ------------------ --------------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 3,265,741 $ 6,608,472 $ 9,874,213
Total Investment Income 3,265,741 6,608,472 9,874,213
Expenses:
Advisory fees 229,986 482,297 712,283
Administration fees 26,057 47,094 (3,085) (b) 70,066
Custody fees 7,682 21,832 29,514
Shareholder servicing fees 114,991 258,267 1,294 (b) 374,552
Portfolio accounting fees 65,542 79,746 (55,416) (b 89,872
Transfer agency fees 31,241 62,564 93,805
Distribution fees 7,532 17,120 24,652
Organization costs 10,294 21,199 (10,294) (b) 21,199
Legal and audit fees 30,638 20,814 (21,447) (b) 30,005
Registration fees 18,203 15,576 (7,281) (b) 26,498
Directors' fees 5,088 1,760 (2,000) (b) 4,849
Shareholder reports 20,463 26,363 (8,185) (b) 38,641
Other 21,563 7,207 28,770
Nonrecurring expenses - 75,000 (d) 75,000
Total Expenses 589,281 1,061,839 (31,414) 1,619,706
Less:
Waived fees and reimbursed expenses (236,506) (415,335) 31,414 (620,427)
NET EXPENSES 352,775 646,504 999,279
NET INVESTMENT INCOME 2,912,966 5,961,968 8,874,934
REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS
Net realized gain(loss) on sale of
investments (71,357) (186,159) (257,516)
Net change in unrealized appreciation
of investments 601,427 964,559 1,565,986
NET GAIN ON INVESTMENTS 530,070 778,400 1,308,470
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,443,036 $ 6,740,368 $ 10,183,404
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to pro forma financial statements.
(a) Reflects new shares issued, net of retired shares of Stagecoach
Intermediate Bond Fund; the Class B shares' net asset value has been
presented to be the same as Class A.
(b) Reflects adjustment in expenses due to elimination of duplicate services
and/or effect of proposed contract rate.
(c) Wells Fargo Bank will absorb the balance of unamortized organizational
costs from Stagecoach Intermediate Bond Fund.
(d) Represents incremental merger related costs for audit, legal and transfer
agency fees.
<PAGE>
<TABLE>
<CAPTION>
Stagecoach Funds - Short-Intermediate U.S. Government Income Fund
Pro Forma Combining Statement of Assets and Liabilities (Unaudited)
September 30, 1997 Stagecoach
Short-Intermediate
Stagecoach U.S. Government
Stagecoach Short-Intermediate Income Fund
Intermediate U.S. Government Pro Forma Pro Forma
Bond Fund Income Fund Adjustments Combined
---------------- ------------------ ----------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
In securities, at market value (see
cost below) $47,109,479 $88,602,587 $135,712,066
Cash 1,616 1,164 2,780
Receivables:
Dividends and interest 699,787 1,168,507 1,868,294
Fund shares sold 82,367 107,760 190,127
Investment securities sold 2,069,570 21,459 2,091,029
Due from co-administrator 0 0 37,283 (c) 37,283
Organization expenses, net of amortization 37,283 11,630 (37,283)(c) 11,630
Prepaid expenses 32,941 4,076 37,017
Total Assets 50,033,043 89,917,183 139,950,226
LIABILITIES
Payables:
Investment securities purchased 2,504,380 0 2,504,380
Distribution to shareholders 237,845 354,454 592,299
Fund shares redeemed 597 0 597
Due to sponsor and distributor 48,350 1,468 49,818
Due to advisor 10,333 26,029 36,362
Other 18,686 102,526 121,212
Total Liabilities 2,820,191 484,477 3,304,668
TOTAL NET ASSETS 47,212,852 $ 89,432,706 $136,645,558
NET ASSETS CONSIST OF:
Paid-in capital 48,777,006 103,427,909 152,204,915
Undistributed net realized gain(loss)
on investments (2,073,928) (14,635,084) (16,709,012)
Net unrealized appreciation
of investments 509,774 639,881 1,149,655
TOTAL NET ASSETS $47,212,852 $ 89,432,706 $136,645,558
COMPUTATION OF NET ASSET VALUE
AND OFFERING PRICE PER SHARE
Net assets - Class A $ 3,773,875 $ 31,742,089 $ 35,515,964
Shares outstanding - Class A 257,775 3,216,064 124,578 (a) 3,598,417
Net asset value per share - Class A $14.64 $9.87 $ 9.87
Maximum offering price per share - Class A $15.33 $10.18 $ 10.18
Net Assets - Class B $ 2,480,497 $ 2,480,497
Shares outstanding - Class B 244,069 7,171 (a) 251,240
Net asset value and offering price per
share - Class B $10.16 $ 9.87
Net Assets - Institutional Class $40,958,480 $ 57,690,617 $ 98,649,097
Shares outstanding - Institutional Class 2,794,524 5,958,791 1,437,679 (a) 10,190,994
Net asset value and offering price per
share - Institutional Class $14.66 $9.68 $ 9.68
INVESTMENT AT COST 46,599,705 $ 87,962,706 $134,562,411
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
Notes to Pro Forma Financial Statements (Unaudited)
1. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolio of Investments,
Statement of Assets and Liabilities and Statement of Operations reflect the
Stagecoach Intermediate Bond and Short Intermediate U.S. Government Income Funds
(the "Funds") for the year ended September 30, 1997. These statements have been
derived from the Funds' annual and semi- annual reports.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Intermediate Bond Fund to the Short-Intermediate U.S.
Government Income Fund. The Short-Intermediate U.S. Government Income Fund is
the surviving legal and accounting entity.
Under generally accepted accounting principles, the historical cost of the
investment securities will be carried forward to the surviving entity and the
results of operations of the Intermediate Bond Fund for pre-combination periods
will not be restated. The pro forma combining statements have been prepared
utilizing historical fee data.
The Pro Forma Combining Portfolio of Investments, Statement of Assets and
Liabilities and Statement of Operations should be read in conjunction with the
historical financial statements of the Funds incorporated by reference in the
Statement of Additional Information.
For the year ended September 30, 1997, the pro forma adjusted administration
fees were calculated using the rates applicable for two time periods: February
1, 1997 to September 30, 1997 and October 1, 1996 to January 31, 1997. For the
period from February 1, 1997 to September 30, 1997, the pro forma adjusted
administration fees were computed based on an annual rate of 0.06% of the
average daily net assets of the Funds. For the period from October 1, 1996 to
January 31, 1997, the pro forma adjusted administration fees were computed based
on an annual rate of 0.03% of the average daily net assets of the Funds.
The pro forma adjusted shareholder servicing fees were computed based on an
annual rate of 0.30% of the average daily net assets attributable to the Class A
shares of the Funds and 0.25% of the average daily net assets attributable to
the Class B and Institutional Class shares of the Funds.
The pro forma adjustments to accounting, legal and audit, and registration fees
reflect the estimated differences resulting from the single surviving entity
having a greater level of net assets and number of shareholders, savings due to
economies of scale, and decreases in certain expenses duplicated between the
Funds.
2. PORTFOLIO VALUATION
Investments in securities in the pro forma financial statements are valued in
accordance with the description of their respective prospectuses.
3. CAPITAL SHARES
The Pro Forma Combining Statement of Assets and Liabilities assumes the issuance
of shares of the Short-Intermediate U.S. Government Income Fund to the
Intermediate Bond Fund as if the
<PAGE>
reorganization had taken place on September 30, 1997, and is based on the net
asset value of the Short-Intermediate U.S. Government Income Fund. The Class B
shares' net asset value per share has been presented to be the same as that of
Class A for purposes of this pro forma.
4. INVESTMENT OBJECTIVE AND POLICIES
These statements do not reflect the effects of the proposed differing investment
objectives and policies of each Fund.
<PAGE>
STAGECOACH FUNDS, INC.
c/o Stagecoach Shareholder Services
Wells Fargo Bank, N.A.
P.O. Box 7066
San Francisco, CA 94120-7066
1-800-222-8222
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant by the Registrant pursuant to the Amended and Restated
Articles of Incorporation or otherwise, the Registrant is aware that in the
opinion of the SEC, such indemnification is against public policy as
expressed in the Act and, therefore, is 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 directors, officers or
controlling persons of the Registrant in connection with the successful
defense of any act, suit or proceeding) is asserted by such directors,
officers or controlling persons in connection with the Shares being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issues.
With respect to the indemnification of the Registrant's directors and
officers, reference is made to Article VIII(h) of the Registrant's Amended
and Restated Articles of Incorporation which are incorporated by reference
as Exhibit 1 hereto.
With respect to the indemnification of Stephens Inc., the Registrant's
principal underwriter for each class of shares of each Fund of the
Registrant, reference is made to Section 10 of the Amended Distribution
Agreement between the Registrant and Stephens Inc., which is incorporated by
reference as Exhibit 7(a) hereto.
With respect to the indemnification of Wells Fargo Bank, N.A., the
Registrant's custodian for each Fund, reference is made to Section 14 of
Article XII of the Custody Agreements between the Registrant and Wells Fargo
Bank, N.A., on behalf of the Funds, which is incorporated by reference as
Exhibits 9(a) - 9(n) hereto.
With respect to the indemnification of Wells Fargo Bank, N.A., the
Registrant's Transfer Agent for each Fund, reference is made to Article VIII
of the Agency Agreement
C-1
<PAGE>
between the Registrant and Wells Fargo Bank, N.A., on behalf of the Funds,
which is incorporated by reference as Exhibit 13(a) hereto.
With respect to the indemnification of Wells Fargo Bank, N.A., the
Registrant's Administrator, reference is made to Section 5 of the
Administration Agreement between the Registrant and Wells Fargo Bank, N.A.,
on behalf of the Funds, which is incorporated by reference as Exhibit
13(b)(i) hereto.
With respect to the indemnification of Stephens Inc., the Registrant's
Co-Administrator, reference is made to Section 5 of the Co-Administration
Agreement between the Registrant , Wells Fargo Bank, N.A. and Stephens Inc.,
on behalf of the Funds, which is incorporated by reference as Exhibit
13(b)(2) hereto.
Item 16: Exhibits
--------
All references to the "Registration Statement" in the following list of
Exhibits refer to the Registrant's Registration Statement on Form N-1A (File
Nos. 811-6419; 33-42927).
Exhibit
Number Description
------ -----------
1(a) - Amended and Restated Articles of Incorporation dated November
22, 1995, incorporated by reference to Post-Effective
Amendment No. 17 to the Registration Statement, filed
November 29, 1995.
1(b) - Not Applicable
2 - By-Laws, incorporated by reference to the Post-Effective
Amendment No. 31 to the Registration Statement, filed May 15,
1997.
3 - Not Applicable.
4 - Consolidation Agreement, filed herewith as Appendix I to the
Combined Proxy Statement/Prospectus.
5 - Not Applicable.
6(a)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
6(a)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Asset Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.
C-2
<PAGE>
6(b)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the U.S. Government Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
6(b)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the U.S. Government Allocation Fund, incorporated
by reference to Post-Effective Amendment No. 21 to the
Registration Statement, filed February 29, 1996.
6(c) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
6(d) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
6(e) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
6(f) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
6(g)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Corporate Stock Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
6(g)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Corporate Stock Fund, incorporated by reference
to Post-Effective Amendment No. 21 to the Registration
Statement, filed February 29, 1996.
6(h) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.
6(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Income Fund, incorporated by
reference to Post-Effective Amendment No. 4 to the
Registration Statement, filed September 10, 1992.
6(j) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
C-3
<PAGE>
6(k) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Arizona Tax-Free Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
6(l) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Balanced Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
6(m) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Equity Value Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
6(n) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Government Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
6(o) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Intermediate Bond Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
6(p) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Money Market Trust Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
6(q) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the National Tax-Free Fund, incorporated by reference to
Post-Effective Amendment No. 30 to the Registration
Statement, filed January 31, 1997.
6(r) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Oregon Tax-Free Fund, incorporated by reference to Post-
Effective Amendment No. 30 to the Registration Statement,
filed January 31, 1997.
6(s) - Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the Prime Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
6(t) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Treasury Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 30 to the
Registration Statement, filed January 31, 1997.
6(u) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the California Tax-Free Money Market Trust,
incorporated by reference to Post-Effective Amendment No. 28
to the Registration Statement, filed December 3, 1996.
6(v) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the National Tax-Free Money Market Trust,
incorporated by reference to Post-
C-4
<PAGE>
Effective Amendment No. 32 to the Registration Statement,
filed May 30, 1997.
6(v)(i) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the Index Allocation, Short-Term Government-
Corporate Income, Short-Term Municipal Income, Overland
Express Sweep and Variable Rate Government Funds, filed
September 25, 1997.
6(v)(ii) - Form of Sub-Advisory Contract with Barclays Global Fund
Advisors on behalf of the Index Allocation Fund, filed
September 25, 1997.
6(w) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the International Equity Fund, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.
7(a) - Amended Distribution Agreement with Stephens Inc. on behalf
of the Funds, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
7(b) - Selling Agreement with Wells Fargo Bank, N.A. on behalf of
the Funds, incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement, filed April
17, 1992.
8 - Not Applicable
9(a) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
9(b) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
9(c) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
9(d) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
9(e) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 2 to the Registration
Statement, filed April 17, 1992.
C-5
<PAGE>
9(f) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
9(g) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
9(h) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Money Market Fund, incorporated by reference to Post-
Effective Amendment No. 3 to the Registration Statement,
filed May 1, 1992.
9(i) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the California Tax-Free Income Fund, incorporated by
reference to Post-Effective Amendment No. 17 to the
Registration Statement, filed November 29, 1995.
9(j) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement, filed November 29, 1995.
9(k) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Short-Intermediate U.S. Government Income Fund,
incorporated by reference to Post-Effective Amendment No. 8
to the Registration Statement, filed February 10, 1994.
9(l) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the National Tax-Free Money Market Mutual Fund, incorporated
by reference to Post-Effective Amendment No. 24 to the
Registration Statement, filed April 29, 1996.
9(m) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Aggressive Growth Fund, incorporated by reference to
Post-Effective Amendment No. 20 to the Registration
Statement, filed February 28, 1996.
9(n) - Custody Agreement with Wells Fargo Bank on behalf of the
Arizona Tax-Free, Balanced, Equity Value, Government Money
Market Mutual, Index Allocation, Intermediate Bond, Money
Market Trust, National Tax-Free, Oregon Tax-Free, Overland
Express Sweep, Prime Money Market Mutual, Short-Term
Government-Corporate Income, Short-Term Municipal Income,
Treasury Money Market Mutual and Variable Rate Government
Funds, filed September 25, 1997.
10(a)(i) - Distribution Plan on behalf of the California Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement,
filed April 17, 1992.
C-6
<PAGE>
10(a)(ii) - Distribution Plan on behalf of the Corporate Stock Fund,
incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement, filed April 17, 1992.
10(a)(iii) - Distribution Plan on behalf of the Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 3
to the Registration Statement, filed May 1, 1992.
10(a)(iv) - Distribution Plan on behalf of the California Tax-Free Income
Fund, incorporated by reference to Post-Effective Amendment
No. 4 to the Registration Statement, filed September 10,
1992.
10(a)(v) - Distribution Plan on behalf of the Short-Intermediate U.S.
Government Income Fund, incorporated by reference to Post-
Effective Amendment No. 8 to the Registration Statement,
filed February 10, 1994.
10(a)(vi) - Amended Distribution Plan on behalf of the Class A Shares of
the Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(a)(vii) - Amended Distribution Plan on behalf of the Class A Shares of
the California Tax-Free Bond Fund, incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(a)(viii) - Amended Distribution Plan on behalf of the Class A Shares of
the Diversified Income Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(a)(ix) - Amended Distribution Plan on behalf of the Class A Shares of
the Ginnie Mae Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(a)(x) - Amended Distribution Plan on behalf of the Class A Shares of
the Growth and Income Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(a)(xi) - Amended Distribution Plan on behalf of the Class A Shares of
the U.S. Government Allocation Fund, incorporated by
reference to Post-Effective Amendment No. 15 to the
Registration Statement, filed May 1, 1995.
10(a)(xii) - Distribution Plan on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 17 to the Registration Statement,
filed November 29, 1995.
10(a)(xiii) - Distribution Plan on behalf of the Class A Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
C-7
<PAGE>
10(a)(xiv) - Distribution Plan on behalf of the California Tax-Free Money
Market Trust, incorporated by reference to Post-Effective
Amendment No. 28 to the Registration Statement, filed
December 3, 1996.
10(a)(xv) - Distribution Plan on behalf of the Class A Shares of the
Arizona Tax-Free, Balanced, Equity Value, Government Money
Market Mutual, Intermediate Bond, International Equity,
National Tax-Free, Oregon Tax-Free, Prime Money Market
Mutual, Small Cap and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 32,
filed May 30, 1997.
10(a)(xvi) - Distribution Plan on behalf of the Class A shares of the
Index Allocation and Variable Rate Government Funds and
shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds, filed September 25, 1997.
10(a)(xvii) - Distribution Plan on behalf of the Class B Shares of the
Asset Allocation Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(a)(xviii) - Distribution Plan on behalf of the Class B Shares of the
California Tax-Free Bond Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(a)(xix) - Distribution Plan on behalf of the Class B Shares of the
Diversified Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(a)(xx) - Distribution Plan on behalf of the Class B Shares of the
Ginnie Mae Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(a)(xxi) - Distribution Plan on behalf of the Class B Shares of the
Growth and Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(a)(xxii) - Distribution Plan on behalf of the Class B Shares of the U.S.
Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(a)(xxiii) - Distribution Plan on behalf of the Class B Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
C-8
<PAGE>
10(a)(xxiv) - Distribution Plan on behalf of the Class B Shares of the
Arizona Tax-Free, Balanced, Equity Value, Index Allocation,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free and Small Cap Funds, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.
10(a)(xxv) - Distribution Plan on behalf of the Class C Shares of the
Aggressive Growth, California Tax-Free Bond, Index
Allocation, Ginnie Mae, National Tax-Free Bond, Small Cap and
Variable Rate Government Funds, incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement, filed August 5, 1997.
10(a)(xxvi) - Distribution Plan on behalf of the Overland Sweep Fund, filed
September 25, 1997.
10(a)(xxvii) - Distribution Plan on behalf of the Class E Shares of the
Treasury Money Market Mutual Fund, incorporated by reference
to Post-Effective Amendment No. 29, filed January 23, 1997.
10(b)(i) - Servicing Plan on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Post-
Effective Amendment No. 17 to the Registration Statement,
filed November 29, 1995.
10(b)(ii) - Servicing Plan on behalf of the Class B Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(b)(iii) - Servicing Plan on behalf of the Class B Shares of the
California Tax-Free Bond Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(b)(iv) - Servicing Plan on behalf of the Class B Shares of the
Diversified Income Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(b)(v) - Servicing Plan on behalf of the Class B Shares of the Ginnie
Mae Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(b)(vi) - Servicing Plan on behalf of the Class B Shares of the Growth
and Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(b)(vii) - Servicing Plan on behalf of the Class B Shares of the U.S.
Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
C-9
<PAGE>
10(b)(viii) - Servicing Plan on behalf of the Class A Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
10(b)(ix) - Servicing Plan on behalf of the Class B Shares of the
Aggressive Growth Fund, incorporated by reference to Post-
Effective Amendment No. 19 to the Registration Statement,
filed December 18, 1995.
10(b)(x) - Servicing Plan on behalf of the Class B shares of the Index
Allocation Fund, filed September 25, 1997.
10(b)(xi) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class A Shares of the Arizona Tax-Free,
Balanced, Equity Value, Government Money Market Mutual,
Intermediate Bond, International Equity, National Tax-Free,
Oregon Tax-Free, Prime Money Market Mutual, Small Cap and
Treasury Money Market Mutual Funds, incorporated by reference
to Post-Effective Amendment No. 32 to the Registration
Statement, incorporated by reference to Post-Effective
Amendment No. 32 to the Registration Statement, filed May 30,
1997.
10(b)(xii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class B Shares of the Arizona Tax-Free,
Balanced, Equity Value, Intermediate Bond, International
Equity, National Tax-Free, Oregon Tax-Free and Small Cap
Funds, incorporated by reference to Post-Effective Amendment
No. 32 to the Registration Statement, filed May 30, 1997.
10(b)(xiii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Institutional Class Shares of the Aggressive
Growth, Arizona Tax-Free, Balanced, California Tax-Free Bond,
California Tax-Free Income, Equity Value, Ginnie Mae, Growth
and Income, Intermediate Bond, International Equity, Money
Market Mutual, National Tax-Free, Oregon Tax-Free, Prime
Money Market Mutual, Short-Intermediate Government, Small Cap
and Treasury Money Market Mutual Funds, incorporated by
reference to Post-Effective Amendment No. 32 to the
Registration Statement, filed May 30, 1997.
10(b)(xiv) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Service Class Shares of the Prime Money Market
Mutual and Treasury Money Market Mutual Funds, incorporated
by reference to Post-Effective Amendment No. 25 to the
Registration Statement, filed June 17, 1996.
10(b)(xv) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Money Market Trust and California Tax-Free
Money Market Trust, incorporated by reference to Post-
Effective Amendment No. 28 to the Registration Statement,
filed December 3, 1996.
10(b)(xvi) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class E Shares of the Treasury Money Market
Mutual Fund,
C-10
<PAGE>
incorporated by reference to Post-Effective Amendment No. 19
to the Registration Statement, filed January 23, 1997.
10(b)(xvii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Administrative Class shares of the Prime Money
Market Mutual and Treasury Money Market Mutual Funds,
incorporated by reference to Post-Effective Amendment No. 33
to the Registration Statement, filed August 5, 1997.
10(b)(xviii) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Class C shares of the Aggressive Growth,
California Tax-Free Bond, Index Allocation, Ginnie Mae,
National Tax-Free Bond, Small Cap and Variable Rate
Government Funds, incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement, filed August
5, 1997.
10(b)(xix) - Servicing Plan and Form of Shareholder Servicing Agreement on
behalf of the Institutional Class shares of the National Tax-
Free Money Market Mutual Fund, incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement, filed August 5, 1997.
10(b)(xx) - Shareholder Administrative Servicing Plan and Form of
Administrative Servicing Agreement on behalf of Class A
shares of Index Allocation and Variable Rate Government Funds
and shares of the Short-Term Government-Corporate Income and
Short-Term Municipal Income Funds, filed September 25, 1997.
10(c)(i) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the California Tax-Free Money Market Mutual
Fund, incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement, filed April 17, 1992.
10(c)(ii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Corporate Stock Fund, incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement, filed April 17, 1992.
10(c)(iii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Money Market Mutual Fund, incorporated by
reference to Post-Effective Amendment No. 3 to the
Registration Statement, filed May 1, 1992.
10(c)(iv) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the California Tax-Free Income Fund,
incorporated by reference to Post-Effective Amendment No. 17
to the Registration Statement, filed November 29, 1995.
10(c)(v) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Short-Intermediate U.S. Government Income
Fund, incorporated by
C-11
<PAGE>
reference to Post-Effective Amendment No. 8 to the
Registration Statement, filed February 10, 1994.
10(c)(vi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the National Tax-Free Money Market Mutual Fund,
incorporated by reference to Post-Effective Amendment No. 24
to the Registration Statement, filed April 29, 1996.
10(c)(vii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Asset Allocation Fund,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
10(c)(viii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the California Tax-Free
Bond Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(c)(ix) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Diversified Income
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
10(c)(x) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Ginnie Mae Fund,
incorporated by reference to Post-Effective Amendment No. 15
to the Registration Statement, filed May 1, 1995.
10(c)(xi) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Growth and Income
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
10(c)(xii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the U.S. Government
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(c)(xiii) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class B Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment
No. 20 to the Registration Statement, filed February 28,
1996.
10(c)(xiv) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Asset
Allocation Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
C-12
<PAGE>
10(c)(xv) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the California
Tax-Free Bond Fund, incorporated by reference to Post-
Effective Amendment No. 15 to the Registration Statement,
filed May 1, 1995.
10(c)(xvi) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Diversified
Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(c)(xvii) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Ginnie Mae
Fund, incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement, filed May 1, 1995.
10(c)(xviii) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the Growth and
Income Fund, incorporated by reference to Post-Effective
Amendment No. 15 to the Registration Statement, filed May 1,
1995.
10(c)(xix) - Amended Shareholder Servicing Agreement with Wells Fargo
Bank, N.A. on behalf of the Class A Shares of the U.S.
Government Allocation Fund, incorporated by reference to
Post-Effective Amendment No. 15 to the Registration
Statement, filed May 1, 1995.
10(c)(xx) - Shareholder Servicing Agreement with Wells Fargo Bank, N.A.
on behalf of the Class A Shares of the Aggressive Growth
Fund, incorporated by reference to Post-Effective Amendment
No. 20 to the Registration Statement, filed February 28,
1996.
10(d) - Amended Rule 18f-3 Multi-Class Plan, incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement, filed August 5, 1997.
11 - Opinion and Consent of Morrison & Foerster llp, filed
herewith.
12 - See Item 17(3) of this Part C.
13(a) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of the
Funds, incorporated by reference to Post-Effective Amendment
No. 32 to the Registration Statement, filed May 30, 1997.
13(b)(i) - Administration Agreement with Wells Fargo Bank, N.A. on
behalf of the Funds, incorporated by reference to Post-
Effective Amendment No. 33 to the Registration Statement,
filed August 5, 1997.
13(b)(ii) - Co-Administration Agreement with Wells Fargo Bank, N.A. and
Stephens Inc. on behalf of the Funds, incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement, filed August 5, 1997.
C-13
<PAGE>
14 - Not Applicable
15 - Not Applicable
16 - Powers of Attorney for R. Greg Feltus, Jack S. Euphrat,
Thomas S. Goho, Joseph N. Hankin, W. Rodney Hughes, Robert M.
Joses and J. Tucker Morse, incorporated by reference to Post-
Effective Amendment No. 32 to the Registration Statement,
filed May 30, 1997; Power of Attorney for Peter G. Gordon,
incorporated by reference to Post-Effective Amendment No. 41
to the Registration Statement, filed January 30, 1998.
17(a) - Declaration pursuant to Rule 24f-2, filed herewith.
17(b)(i) - Form of Proxy Ballot, filed herewith.
17(b)(ii) - Form of Letter to Shareholders, filed herewith.
17(b)(iii) - Form of Notice of Special Meeting, filed herewith.
17(c)(i) - Prospectus and Statement of Additional Information for the
Retail shares of the Intermediate Bond, Short-Intermediate
U.S. Government Income, Short-Term Government-Corporate
Income, U.S. Government Income, Variable Rate Government
Funds, incorporated by reference to Post-Effective Amendment
No. 37 to the Registration Statement, filed December 15,
1997.
17(c)(ii) - Prospectus and Statement of Additional Information for the
Institutional shares of the Intermediate Bond, Short-
Intermediate U.S. Government Income and U.S. Government
Income Funds, incorporated by reference to Post-Effective
Amendment No. 41 to the Registration Statement, filed January
30, 1998.
17(c)(iii) - Prospectus and Statement of Additional Information for the
Class B shares of the Short-Intermediate U.S. Government
Income Fund, incorporated by reference to Post-Effective
Amendment No. 42 to the Registration Statement, filed March
6, 1998.
17(c)(iv) - Annual Reports for the fiscal year ended March 31, 1997 for
the Intermediate Bond and Short-Intermediate U.S. Government
Income Funds, as filed on June 4, 1997.
17(c)(v) - Semi-Annual Reports for the six-month period ended September
30, 1997 for the Intermediate Bond and Short-Intermediate
U.S. Government Income Funds, as filed on December 5, 1997.
27 - Financial Data Schedules for the fiscal period ended March
31, 1997, incorporated by reference to the Form N-SAR, filed
May 29, 1997.
C-14
<PAGE>
Item 17. Undertakings.
------------
1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as
amended, the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
3) The undersigned Registrant agrees to file, by post-effective amendment,
an opinion of counsel or a copy of an IRS ruling supporting the tax consequences
of the Reorganization within a reasonable time after receipt of such opinion or
ruling.
C-15
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form N-14 to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Little Rock,
State of Arkansas on the 12th day of March, 1998.
STAGECOACH FUNDS, INC.
By /s/ Richard H. Blank, Jr.
----------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*
------------------------- Director, Chairman and President
(R. Greg Feltus) (Principal Executive Officer)
/s/ Richard H. Blank, Jr.
------------------------- Secretary and Treasurer 3/12/98
(Richard H. Blank, Jr.) (Principal Financial Officer)
* Director
-------------------------
(Jack S. Euphrat)
* Director
-------------------------
(Thomas S. Goho)
* Director
-------------------------
(Peter G. Gordon)
* Director
-------------------------
(Joseph N. Hankin)
* Director
-------------------------
(W. Rodney Hughes)
* Director
-------------------------
(J. Tucker Morse)
*By: /s/ Richard H. Blank, Jr.
-------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
March 12, 1998
</TABLE>
<PAGE>
STAGECOACH FUNDS, INC.
N-14 EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
99.11 Opinion and Consent of Morrison & Foerster LLP
99.17(a) Declaration Pursuant to Rule 24f-2
99.17(b)(i) Form of Proxy Ballot
99.17(b)(ii) Form of Letter of Shareholders
99.17(b)(iii) Notice of Special Meeting
</TABLE>
<PAGE>
EXHIBIT 99.11
[MORRISON & FOERSTER LLP LETTERHEAD]
March 13, 1998
Stagecoach Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Shares of Common Stock of
Stagecoach Funds, Inc.
------------------------
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of Stagecoach Funds, Inc. (the "Company") relating to the
registration of an indefinite number of shares of common stock, par value $.001
per share (the "Shares"), of the Short-Intermediate U.S. Government Income Fund
of the Company (the "Fund").
We had been requested by the Company to furnish this opinion as
Exhibit 11 to the Registration Statement.
We have examined documents relating to the organization of the Company
and the authorization and issuance of the Shares. We have also made such
inquiries of the Company and examined such questions of law as we have deemed
necessary for the purpose of rendering the opinion set forth herein. We have
assumed the genuineness of all signatures and the authenticity of all items
submitted to us as originals and the conformity with originals of all items
submitted to us as copies.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the Shares by the Company, upon completion of such
corporate action as is deemed necessary or appropriate, will be duly and validly
authorized by such corporate action and assuming delivery by in accordance with
the description set forth in the Combined Proxy Statement/Prospectus included in
the Registration Statement, the Shares will be legally issued, fully paid and
nonassessable.
<PAGE>
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Morrison & Foerster LLP
----------------------------
MORRISON & FOERSTER LLP
<PAGE>
EXHIBIT 99.17(a)
U.S. SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 24F-2
Annual Notice of Securities Sold
Pursuant to Rule 24f-2
1. Name and address of issuer:
STAGECOACH FUNDS, INC.
111 CENTER STREET
LITTLE ROCK, AR 72201
2. Name of each series or class of funds for which this notice is filed:
AGGRESSIVE GROWTH FUND CLASS A
AGGRESSIVE GROWTH FUND CLASS B
ARIZONA TAX-FREE FUND CLASS A
ARIZONA TAX-FREE FUND CLASS B
ARIZONA TAX-FREE FUND INSTITUTIONAL CLASS
ASSET ALLOCATION FUND CLASS A
ASSET ALLOCATION FUND CLASS B
BALANCED FUND CLASS A
BALANCED FUND CLASS B
BALANCED FUND INSTITUTIONAL CLASS
CALIFORNIA TAX-FREE BOND FUND CLASS A
CALIFORNIA TAX-FREE BOND FUND CLASS B
CALIFORNIA TAX-FREE BOND FUND INSTITUTIONAL CLASS
CALIFORNIA TAX-FREE INCOME FUND CLASS A
CALIFORNIA TAX-FREE INCOME FUND INSTITUTIONAL CLASS
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
CORPORATE STOCK FUND
DIVERSIFIED INCOME FUND CLASS A
DIVERSIFIED INCOME FUND CLASS B
EQUITY VALUE FUND CLASS A
EQUITY VALUE FUND CLASS B
EQUITY VALUE FUND INSTITUTIONAL CLASS
GINNIE MAE FUND CLASS A
GINNIE MAE FUND CLASS B
GINNIE MAE FUND INSTITUTIONAL CLASS
GOVERNMENT MONEY MARKET MUTUAL FUND CLASS A
GROWTH AND INCOME FUND CLASS A
GROWTH AND INCOME FUND CLASS B
GROWTH AND INCOME FUND INSTITUTIONAL CLASS
INTERMEDIATE BOND FUND CLASS A
INTERMEDIATE BOND FUND CLASS B
INTERMEDIATE BOND FUND INSTITUTIONAL CLASS
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MONEY MARKET MUTUAL FUND CLASS A
MONEY MARKET MUTUAL FUND CLASS S
MONEY MARKET MUTUAL FUND INSTITUTIONAL CLASS
MONEY MARKET TRUST
NATIONAL TAX-FREE FUND CLASS A
NATIONAL TAX-FREE FUND CLASS B
NATIONAL TAX-FREE FUND INSTITUTIONAL CLASS
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
OREGON TAX-FREE FUND CLASS A
OREGON TAX-FREE FUND CLASS B
OREGON TAX-FREE INSTITUTIONAL CLASS
PRIME MONEY MARKET MUTUAL FUND CLASS A
PRIME MONEY MARKET MUTUAL FUND INSTITUTIONAL CLASS
PRIME MONEY MARKET MUTUAL FUND SERVICE CLASS
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND CLASS A
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND INSTITUTIONAL CLASS
SMALL CAP FUND CLASS A
SMALL CAP FUND CLASS B
SMALL CAP FUND INSTITUTIONAL CLASS
TREASURY MONEY MARKET MUTUAL FUND CLASS A
TREASURY MONEY MARKET MUTUAL FUND CLASS E
TREASURY MONEY MARKET MUTUAL FUND INSTITUTIONAL CLASS
TREASURY MONEY MARKET MUTUAL FUND SERVICE CLASS
U.S. GOVERNMENT ALLOCATION FUND CLASS A
U.S. GOVERNMENT ALLOCATION FUND CLASS B
3. Investment Company Act File Number: 811-6419
Securities Act File Number: 33-42927
4. Last day of fiscal year for which this notice is filed: 3/31/97
5. Check box if this notice is being filed more than 180days after the close
of issuer's fiscal year for purposes of reporting securities sold after the
close of the fiscal year but before termination of the issuer's 24f-2
declaration [_]
6. Date of termination of issuer's declaration under rule 24f-2(a)(1), if
applicable:
7. Number and amount of securities of the same class or series which had been
registered under the Securities Act of 1933 other than pursuant to rule
24f-2 in a prior fiscal year, but which remained unsold at the beginning of
the fiscal year:
8. Number and amount of securities registered during the fiscal year other
than pursuant to rule 24f-2:
2
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9. Number and aggregate sale price of securities sold during the fiscal year:
NUMBER OF SHARES SOLD: 11,480,584,481
SALES PRICE OF SECURITIES SOLD: $11,807,230,373
10. Number and aggregate sale price of securities sold during the fiscal year
in reliance upon registration pursuant to rule 24f-2:
NUMBER OF SHARES SOLD: 11,480,584,481
SALES PRICE OF SECURITIES SOLD: $11,807,230,373
11. Number and aggregate sale price of securities issued during the fiscal year
in connection with dividend reinvestment plans, if applicable:
NUMBER OF SHARES REINVESTED: 137,086,500
SALES PRICE OF SECURITIES REINVESTED: $280,089,555
12. Calculation of registration fee:
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<S> <C>
(i) Aggregate sale price of securities sold during the fiscal
year in reliance on rule 24f-2 (from Item 10) $ 11,807,230,373
(ii) Aggregate price of shares issued in connection with
dividends reinvestment plans (from item11, if applicable): + 280,089,555
(iii) Aggregate price of shares redeemed or repurchased
during the fiscal year (if applicable): - 11,430,057,172
(iv) Aggregate price of shares redeemed or repurchased and
previously applied as a reduction to filing fees pursuant
to rule 24e-2 (if applicable): +
(v) Net aggregate price of securities sold and issued during
the fiscal year in reliance on rule 24f-2 (line(i), plus
line(ii), less line(iii), plus line(iv) $ 657,262,756
(vi) Multiplier prescribed by Section6(b) of the Securities
Act of 1933 or other applicable law or regulation
x 1/33 of 1%
(vii) Fee due line(i) or line(v) multiplied by line(vi): $ 199,170.53
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13. Check box if fees are being remitted to the Commission's
lockbox depository as described in section3a of the
Commission's Rules of Informal and Other Procedures
(17 CRF 202.3a) [X]
Date of mailing or wire transfer of filing fees
to the Commission's lockbox depository: 5/27/97
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SIGNATURES
This report has been signed below by the following persons on behalf of the
issuer and in the capacities and on the dates indicated:
By (Signature and Title) /s/ ANN M. BONSTEEL
---------------
Assistant Secretary
Date: 5/28/97
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[LETTERHEAD OF MORRISON & FOERSTER LLP]
May 28, 1997
Stagecoach Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Stagecoach Funds, Inc.; Rule 24f-2 Notice
SEC File Nos. 33-42927; 811-6419
Ladies/Gentlemen:
Stagecoach Funds, Inc. (the "Company") has requested our opinion in
connection with the issuance of 11,617,670,981 shares, in the aggregate, of the
Company's funds (the "Funds"). We understand that a copy of this opinion will
be provided to the Securities and Exchange Commission pursuant to Rule 24f-
2(b)(1) under the Investment Company Act of 1940, as amended.
We have examined documents relating to the organization of the Company and
the authorization for registration and issuance of shares of each of the Funds
and, for Funds with more than one class of shares, each class of shares. The
opinion given below only relates to the laws of the State of Maryland, the state
of incorporation of the Company, and is subject to the condition that the
Company is in compliance with the provisions of any applicable laws, regulations
and permits of any state or foreign country in which any shares of each Fund or
class thereof are sold.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the above-referenced shares of each Fund has been duly and
validly authorized by all appropriate corporate action, and assuming delivery by
sale or in accord with the Company's dividend reinvestment plan in accordance
with the description set forth in the Funds' current prospectuses under the
Securities Act of 1933, the shares were legally issued and are fully paid and
nonassessable.
We consent to the submission of a copy of this opinion to the Securities
and Exchange Commission in connection with the filing of the Company's Rule 24f-
2 Notice
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[LETTERHEAD OF MORRISON & FOERSTER]
May 28,1997
Page Two
for the fiscal period ended March 31, 1997, as contemplated in Rule 24f-2(b)(1)
under the Investment Company Act of 1940, as amended.
Very truly yours,
/s/ Morrison & Foerster LLP
MORRISON & FOERSTER LLP
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EXHIBIT 99.17(b)(i)
STAGECOACH INTERMEDIATE BOND FUND
SPECIAL MEETING OF SHAREHOLDERS
MAY 29, 1998
The undersigned hereby appoints R. Greg Feltus, Richard H. Blank, Jr.,
and Michael W. Nolte, and each of them, attorneys and proxies of the
undersigned, each with power of substitution and resubstitution, to attend, vote
and act for the undersigned at the special meeting of shareholders of the
Intermediate Bond Fund (the "Bond Fund") of Stagecoach Funds, Inc. (the
"Company") to be held at the principal executive offices of the Company, 111
Center Street, Little Rock, Arkansas 72201, at 2:00 p.m. (Central time) on May
29, 1998 and at any adjournment(s) thereof, casting votes according to the
number of shares of the Bond Fund which the undersigned may be entitled to vote
with respect to the proposal listed below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present, hereby revoking any prior proxy to vote at such meeting,
and hereby ratifying and confirming all that said attorneys and proxies, or any
of them, may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE BOND FUND AND THE PROXY STATEMENT, DATED MAY 29, 1998.
This proxy is solicited by and these proposals are proposed by the Board
of Directors of Stagecoach, which unanimously recommends that you vote in favor
of both proposals. For your convenience, you may vote by calling D.F. King &
Co., Inc. toll-free at 1-800-659-6590 from 5:00 a.m. to 6:00 p.m. (Pacific
time). You may also vote by faxing the proxy ballot to ___________ at 1-___-
___-____ or by mailing it in the enclosed postage paid envelope. Please make
sure you mark, sign and date your proxy card. A confirmation of your telephone
or telefacsimile vote will be mailed to you.
The proxy will be voted as specified below with respect to the actions to
be taken on the following proposal. In the absence of any specification, this
proxy will be voted in favor of the proposal.
Please sign below exactly as your name(s) appear(s) hereon. Corporate
proxies should be signed in full corporate name by an authorized officer. Each
joint owner should sign personally. Fiduciaries should give full titles as
such.
1
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1. Approval of an Agreement and Plan of Consolidation for the Bond Fund and
the transactions contemplated thereby, which include (a) the transfer of
all of the assets of the Bond Fund to the Short-Intermediate U.S.
Government Income Fund (the "Government Fund") of the Company, and the
assumption by the Government Fund of stated liabilities of the Bond Fund,
in exchange for shares of the Government Fund; and (b) the distribution to
shareholders of the Bond Fund of the shares of the Government Fund so
received.
[_] FOR [_] AGAINST [_] ABSTAIN
____________________________ ___________________________ __________
SIGNATURE SIGNATURE (JOINT OWNER) DATE
Please sign name or names exactly as printed above to authorize the voting of
your shares as indicated above. Where shares are registered with joint owners,
all joint owners should sign. Persons signing as executors, administrators,
trustees, etc. should so indicate. Corporate proxies should be signed by an
authorized officer.
2
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EXHIBIT 99.17(b)(ii)
[Stagecoach logo]
Dear Shareholder:
Thank you for your continued investment in the Stagecoach Intermediate Bond
Fund. You are cordially invited to attend a Special Meeting of Intermediate Bond
Fund shareholders on May 29, 1998.
You have received this booklet so that you may consider the proposed
consolidation of your Fund into the Stagecoach Short-Intermediate U.S.
Government Income Fund. You may attend the special shareholder meeting called to
consider this consolidation in person or you may use the enclosed Proxy Ballot
to cast your vote.
THE BOARD OF DIRECTORS OF STAGECOACH UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN
FAVOR OF THE PROPOSAL. This booklet describes the proposed consolidation and the
Board of Directors' reasons for recommending approval. The booklet is organized
into this cover letter, a notice/invitation to the shareholder meeting, the
Proxy Statement/Prospectus and several appendixes. Please take the time to
review all the information before casting your vote.
You should weigh several considerations in particular:
. THE POTENTIAL BENEFITS
An immediate benefit of the consolidation to current shareholders of the
Intermediate Bond Fund will be reduced fund operating expenses. In addition,
the Board believes that over time, the consolidation also should benefit
shareholders by:
. Facilitating investment management, administration and marketing, since two
separate Funds will be combined into a single entity;
. Improving efficiency, including potentially achieving economies of scale and
greater portfolio diversification; and
. Eliminating duplicative shareholder costs and market overlap.
. THE SIMILARITIES BETWEEN THE FUNDS
. Objectives and Policies--The investment objectives and policies of the Funds
are similar, although there are some important differences that you should
consider. (The similarities and differences are described in the Proxy
Statement/Prospectus on pages ____.)
. Access Arrangements--The distribution, shareholder servicing and transaction
arrangements are identical for both Funds.
. Share Values--The total dollar value of shares you would receive in the
Short-Intermediate Government Income Fund will be equal to the total dollar
value of your shares in the Intermediate Bond Fund.
Whether or not you attend the Special Meeting of shareholders, you may vote by
proxy in any of three ways:
. BY MAIL--Mark, date, sign and return the enclosed Proxy Ballot in the
postage-paid envelope;
. BY PHONE--Call D.F. King & Co., Inc. toll-free at 1-800-659-6590 from 6:00
a.m. to 7:00 p.m. (Pacific Time); or
. BY FAX--Mark, date, sign and fax the enclosed Proxy Ballot to D.F. King &
Co., Inc. at 1-212-269-2796.
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A confirmation of phone and fax votes will be mailed to you. You have one vote
for every share of the Intermediate Bond Fund you own. Every vote is important
to us and we ask that you read this material carefully.
If you have any questions, you may call Stagecoach shareholder services at 1-
800-222-8222.
Very truly yours,
Stagecoach Funds, Inc.
R. Greg Feltus
President
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EXHIBIT 99.17(b)(iii)
STAGECOACH FUNDS, INC.
C/O STAGECOACH SHAREHOLDER SERVICES
P.O. BOX 7066
SAN FRANCISCO, CA 94120-7066
NOTICE OF SPECIAL SHAREHOLDERS MEETING
TO BE HELD ON MAY 29, 1998
TO INTERMEDIATE BOND FUND SHAREHOLDERS:
NOTICE IS GIVEN THAT a Special Meeting of the Shareholders of the
INTERMEDIATE BOND FUND (the "Bond Fund") of STAGECOACH FUNDS, INC. (the
"Company") will be held at the offices of Stephens Inc. ("Stephens") 111
Center Street, Little Rock, Arkansas 72201 on May 29, 1998, at 2:00 p.m.
(Central Time) to consider:
ITEM 1. A proposal to approve an Agreement and Plan of Consolidation (the
"Consolidation Agreement") providing for the transfer of the assets and
liabilities of the Bond Fund to the Company's Short-Intermediate U.S.
Government Income Fund (the "Government Fund") in exchange for shares of
designated classes of the Government Fund.
ITEM 2. Such other business as may properly come before the Special Meeting
or any adjournment(s) thereof.
The proposal is described in the attached Combined Proxy Statement/
Prospectus. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE IN FAVOR OF THE PROPOSAL.
Shareholders of record as of the close of business on April 10, 1998, are
entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY THE
COMPANY'S BOARD OF DIRECTORS. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING TO THE COMPANY A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
EXECUTED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
April , 1998
_____________________________________
Richard H. Blank, Jr.
Chief Operating Officer,
Secretary and Treasurer
