<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
OVERLAND
- ---------------------
EXPRESS
- ---------------------
SWEEP
- ---------------------
FUND
- ---------------------
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A 3
PORTFOLIO OF INVESTMENTS 5
OVERLAND EXPRESS SWEEP FUND
Statement of Assets and Liabilities 9
Statements of Operations 10
Statements of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 14
Independent Auditors' Report 18
LIST OF ABBREVIATIONS 19
PROXY VOTING RESULTS 20
STAGECOACH FUNDS:
--------------------------------------------------------------------------
- - ARE NOT FDIC INSURED
- - ARE NOT GUARANTEED BY WELLS FARGO BANK [NO FDIC]
- - ARE NOT DEPOSITS OR OBLIGATIONS OF WELLS FARGO
BANK
- - INVOLVE INVESTMENT RISK, INCLUDING POSSIBLE LOSS
OF PRINCIPAL
- ---------------------
i
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
Thank you for your investment with the Stagecoach Funds.
The Annual and Semi-Annual Reports provide us with an opportunity to speak
directly to you. This year, we are pleased to announce strong returns in the
investment markets and a continued commitment to improving the Stagecoach Funds
to better serve you.
A review of three key indexes shows that returns for the period from April 1,
1997 through March 31, 1998 have been strong. Equities, as measured by the S&P
500 Index, returned 47.96%. Bonds, as measured by the Lehman Brothers Long
Government Bond Index, returned 20.71%. Money market funds, as measured by the
IBC/Donoghue Money Market Average, returned 4.89%.
Among the key drivers of these returns were strong corporate earnings, high
investor confidence and a positive inflation picture. The Federal Open Market
Committee of the Federal Reserve Board raised the federal funds target rate by
0.25% before the beginning of the reporting period. This was interpreted by
investors as a sign that the Fed was going to remain vigilant against inflation,
and long-term interest rates declined as a result, boosting the bond market. The
U.S. economy had been growing at a steady pace and inflationary pressures have
remained in check.
There is no guarantee that this positive environment will continue unabated,
although we remain optimistic about the long-term investment picture. We believe
that an understanding of the historical returns for the various asset classes,
as well as a realistic appraisal of the risks involved in investing, can help
you earn the financial growth you need to meet your goals. We are confident that
a carefully considered long-term plan can help you through short-term
uncertainty.
Our goal is to present a Family of Funds able to meet the increasingly
sophisticated needs of our investors. We are committed to reviewing the
investment options we offer shareholders. Stagecoach Funds has introduced the
Corporate Bond Fund and the Strategic Income Fund. We have also proposed the
consolidation of two Funds with similar investment objectives, the Intermediate
Bond and the Short-Intermediate U.S. Government Income Funds. These changes
follow the consolidation of the Overland Express and Stagecoach Fund families
and the introduction of our new "Plain English" prospectus and represent part of
our ongoing effort to meet your needs.
---------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
The following pages provide commentary from the Portfolio Managers designed to
give you a clearer understanding of the returns earned over the period, the
investment policies pursued and what you can expect from your Funds. Please
discuss any questions you may have with your financial consultant.
We look forward to learning how we can better serve you in the future.
STAGECOACH FUNDS
MAY 1998
THE "S&P 500 INDEX" IS A TRADEMARK OF STANDARD AND POOR'S CORPORATION. THE S&P
500 INDEX IS AN UNMANAGED INDEX OF 500 WIDELY HELD COMMON STOCKS REPRESENTING,
AMONG OTHERS, INDUSTRIAL, FINANCIAL, UTILITY AND TRANSPORTATION COMPANIES LISTED
OR TRADED ON NATIONAL EXCHANGES OR OVER-THE-COUNTER MARKETS. THE LEHMAN BROTHERS
LONG GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX COMPOSED OF U.S. TREASURY BONDS
WITH 20-YEAR OR LONGER MATURITIES. THE IBC/DONOGHUE MONEY MARKET AVERAGE IS AN
AVERAGE OF 700 TAXABLE MONEY MARKET FUNDS.
- ---------------------
2
<PAGE>
OVERLAND EXPRESS SWEEP FUND
- --------------------
INVESTMENT ADVISER Q&A
OVERLAND EXPRESS SWEEP FUND
WHAT WAS THE SEVEN-DAY YIELD AS OF MARCH 31, 1998?
The seven-day yield for the Fund was 4.46% as of March 31, 1998.
WHAT WERE SOME OF THE IMPORTANT FACTORS SHAPING RETURNS?
One key factor was the positive economy -- low inflation, plentiful jobs, and
good wage growth. Prior to the beginning of the period, the Federal Reserve
Board saw signs of inflationary pressure building and raised the federal funds
target rate to relieve this pressure. Taxable money market rates are very
sensitive to Fed policy. Securities which mature in one year or less tend to
react to and anticipate Fed policy. Longer-term securities, on the other hand,
tend to be influenced by inflation expectations. The only really negative news
was the Asian currency crisis, and any long-term effects it may have remain to
be seen.
HOW DID ASIA AFFECT THE MONEY MARKET?
Foreign central banks, mainly in Asia, initially sold their short-term Treasury
holdings in order to create the liquidity they desperately needed. That had an
initial negative impact on our market in terms of rates rising because of excess
supply. Foreign bank selling has settled down, but we are still seeing the
effect in terms of reduced demand for exports by those countries. It is possible
that this could have a slight cooling effect on domestic economic growth and may
keep rates low. In combination, these factors could have a big effect on our
market.
We have foreign exposure in U.S. dollar denominated instruments, but no foreign
currency exposure. We have an approved list of foreign issuers that is
constantly monitored by the credit group within Wells Capital Management. We
monitor all the names on the list, including banks, commercial issuers, finance
companies and insurers. Outside ratings are taken into consideration, but we
also assign our own ratings internally. We conduct our own independent research
and arrive at our own assessment. Our credit group also puts maturity
restrictions on certain foreign issuers if they believe it is warranted.
THE YIELD CURVE, WHICH ILLUSTRATES THE YIELDS FOR VARYING MATURITY LENGTHS, HAS
BEEN RELATIVELY FLAT. DOES THAT OFFER SOME CHALLENGES?
Yes, it does. We buy securities with maturities as long as a year. But during
the period, three, six, nine and twelve month securities traded at a very narrow
spread. We were not getting rewarded for extending maturity towards the long
end; at least not as much as we might have with a steeper curve. To get extra
yield, we have used repurchase agreements. They are very liquid and offer good
yield on an overnight investment.
---------------------
3
<PAGE>
OVERLAND EXPRESS SWEEP FUND
WHAT DO YOU EXPECT THE FEDERAL RESERVE'S NEXT ACTION TO BE?
We believe that the Fed is going to leave rates unchanged for awhile. We made a
strategy shift in early January and extended maturities slightly longer than our
benchmarks. The benchmark averages were 50 to 55 days; we extended ours to 60 to
70 days because we felt there was a sentiment change in the market. The market
sentiment shifted so that most people no longer expected the Fed to raise rates
and we wanted to lock in some yields.
WHAT TYPES OF INSTRUMENTS DO YOU BUY FOR THE FUND?
Commercial paper is the core investment, ranging from 40 to 50 percent of the
portfolio. It has a liquid market and ample supply is always available. Another
security we bought, particularly in the fourth quarter of 1997, was
floating-rate bonds based on three-month Treasury bills. These reset each week
based on the Treasury bill auction. We tend to have about 10% to 20% of the
portfolio in these or similar securities.
IS THE CURRENT ENVIRONMENT OF LOW INFLATION, GOOD ECONOMIC GROWTH AND A
FLATTENING YIELD CURVE ATYPICAL?
This is a highly unusual period, one which we likely have not seen since the
early sixties. The one wild card is Asia. It's widely thought that we have not
seen the full effects of the current Asian crisis, but the implications are that
it will not have a lasting negative effect on this environment. If Asia
continues to be weak or even if the problems accelerate, it is likely that our
economy is strong enough to continue to perform well.
IS THERE ANYTHING YOU WOULD LIKE SHAREHOLDERS TO UNDERSTAND ABOUT THE FUND?
This environment is a challenge. Often managers are tempted to increase yield by
taking on a little more risk. We resist the temptation because our first
commitment is to quality and risk reduction. We monitor the portfolios each day
and run scenarios to see if changes in rates and cash flow might cause the
portfolio to become overextended. It is an active and ongoing process.
- ---------------------
4
<PAGE>
OVERLAND EXPRESS SWEEP FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSITS - 18.38%
$54,000,000 Barclays Bank Plc 5.90 % 10/22/98 $ 53,983,546
35,000,000 Bayerische Landersbank 5.78 07/27/98 34,989,184
100,000,000 Branch Bank Plc 6.06 04/01/98 100,000,000
40,000,000 Dresdner Bank 5.95 10/20/98 40,004,207
75,000,000 PNC Bank 5.88 04/01/98 75,000,000
55,000,000 Societe Generale 5.65 01/11/99 54,983,538
60,000,000 Societe Generale 5.97 09/15/98 59,986,884
28,000,000 Swiss Bank Corp 5.64 03/12/99 27,983,511
30,000,000 Swiss Bank Corp 5.69 01/07/99 29,997,624
--------------
TOTAL CERTIFICATES OF DEPOSITS $ 476,928,494
COMMERCIAL PAPER - 41.50%
$70,000,000 Asset Securitization Cooperative Corp++ 5.49 %(F) 06/17/98 $ 69,178,025
25,000,000 Asset Securitization Cooperative Corp++ 5.55 (F) 04/14/98 24,949,896
40,000,000 Bank of America 5.50 (F) 07/06/98 39,413,333
25,000,000 Bankers Trust 5.63 (F) 05/13/98 24,835,792
60,000,000 Cargill Financial Services Corp 5.60 (F) 05/11/98 59,627,111
50,000,000 Corporate Asset Funding Co++ 5.52 (F) 05/12/98 49,685,667
30,000,000 Corporate Receivables Corp++ 5.54 (F) 05/14/98 29,801,483
38,225,000 Falcon Asset Securitization Corp++ 5.54 (F) 05/11/98 37,989,704
25,000,000 Fleet Funding Corp++ 5.55 (F) 04/09/98 24,969,167
50,000,000 General Electric Capital Corp 5.53 (F) 04/08/98 49,946,236
50,000,000 General Motors Acceptance Corp 5.54 (F) 04/14/98 49,899,972
40,000,000 Goldman & Sachs Co 5.54 (F) 04/06/98 39,969,222
50,000,000 Greenwich Asset Funding Inc++ 5.54 (F) 05/05/98 49,738,389
40,000,000 Merrill Lynch & Co 5.55 (F) 04/16/98 39,907,500
40,000,000 Merrill Lynch & Co 5.55 (F) 04/23/98 39,864,333
50,000,000 Monte Rosa Capital Corp++ 5.48 (F) 04/23/98 49,832,556
20,000,000 New Center Asset Trust 5.38 (F) 08/17/98 19,587,533
50,000,000 New Center Asset Trust 5.43 (F) 04/22/98 49,841,625
80,000,000 Prudential Funding Corp 5.55 (F) 04/07/98 79,926,000
35,418,000 Receivables Capital Corp 5.55 (F) 04/14/98 35,347,016
75,500,000 Sigma Finance Inc 5.39 (F) 08/24/98 73,860,916
</TABLE>
---------------------
5
<PAGE>
OVERLAND EXPRESS SWEEP FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
$43,000,000 Sigma Finance Inc 5.44 %(F) 07/06/98 $ 42,376,213
77,000,000 Unifunding Corp 5.43 (F) 04/20/98 76,779,331
20,000,000 Union Bank of CA 5.52 (F) 09/11/98 19,500,134
--------------
TOTAL COMMERCIAL PAPER $1,076,827,154
CORPORATE BONDS - 10.03%
$42,000,000 Australia & New Zealand Bank Group 5.52 % 07/28/98 $ 41,992,469
25,000,000 CIT Group Holdings 5.57 01/27/99 24,983,507
33,420,000 CIT Group Holdings 6.13 09/01/98 33,447,190
50,000,000 Comerica Bank 5.63 09/17/98 49,989,791
30,000,000 First National Bank of Chicago 5.63 03/16/99 29,984,876
40,000,000 Huntington National Bank 5.64 08/28/98 39,994,173
40,000,000 Morgan Guaranty Bank 5.71 01/08/99 39,988,256
--------------
TOTAL CORPORATE BONDS $ 260,380,262
SHORT-TERM FEDERAL AGENCIES - 0.31%
$ 8,000,000 Federal Farm Credit Bank 5.75 % 09/11/98 $ 7,996,988
VARIABLE AND FLOATING RATE BONDS - 14.37%
$30,000,000 American Express Co 5.66 % 05/08/98 $ 30,000,000
60,000,000 Bank of America N.A. 5.65 04/16/98 59,998,807
53,000,000 Bode Group Holdings 5.60 05/22/98 52,994,995
50,000,000 Comerica Bank 5.77 12/14/98 49,993,382
80,000,000 FCC National Bank 5.60 06/11/98 79,987,980
50,000,000 Huntington National Bank 5.73 12/17/98 50,000,000
50,000,000 Strategic Money Fund 5.69 03/05/99 50,000,000
--------------
TOTAL VARIABLE AND FLOATING RATE BONDS $ 372,975,164
</TABLE>
- ------------------------
6
<PAGE>
OVERLAND EXPRESS SWEEP FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS - 15.41%
$214,866,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90 % 04/01/98 $ 214,866,000
85,000,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.85 04/01/98 85,000,000
73,097,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 04/01/98 73,097,000
26,961,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.90 04/01/98 26,961,000
--------------
TOTAL REPURCHASE AGREEMENTS $ 399,924,000
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $2,595,032,062)* (Note 1) 100.00% $2,595,032,062
Other Assets and Liabilities, Net 0.00% (122,217)
------ --------------
TOTAL NET ASSETS 100.00% $2,594,909,845
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(F) YIELD TO MATURITY.
++ REPRESENTS COMMERCIAL PAPER SOLD WITHIN TERMS OF PRIVATE PLACEMENT
MEMORANDUM, EXEMPT FROM REGISTRATION UNDER SECTION 4(2) OF THE
SECURITIES ACT OF 1933, THAT MAY BE RESOLD TO QUALIFIED INSTITUTIONAL
BUYERS. THIS SECURITY WAS DEEMED LIQUID BY THE INVESTMENT ADVISER IN
ACCORDANCE WITH PROCEDURES APPROVED BY THE FUND'S BOARD OF DIRECTORS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
The accompanying notes are an integral part of these financial statements.
---------------------
7
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ------------------------
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1998
<TABLE>
<CAPTION>
OVERLAND
EXPRESS
SWEEP FUND
<S> <C>
- -----------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value and
cost
(includes repurchase agreements of
$399,924,000) $2,595,032,062
Cash 1,594
Receivables:
Interest 11,510,222
Prepaid expenses 1,450
TOTAL ASSETS 2,606,545,328
LIABILITIES
Payables:
Distribution to shareholders 8,964,099
Due to sponsor and distributor (Note
2) 681,840
Due to adviser (Note 2) 1,880,931
Other 108,613
TOTAL LIABILITIES 11,635,483
TOTAL NET ASSETS $2,594,909,845
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets $2,594,909,845
Shares outstanding 2,595,478,027
Net asset value and offering price per
share $ 1.00
- -----------------------------------------------------------
</TABLE>
AT MARCH 31, 1998, NET ASSETS WERE COMPRISED PREDOMINATELY OF
PAID-IN-CAPITAL.
The accompanying notes are an integral part of these financial statements.
---------------------
9
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
OVERLAND EXPRESS SWEEP FUND
----------------------------
FOR THE
THREE
MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, DEC. 31,
1998 1997 (1)
<S> <C> <C>
- -------------------------------------------------------------------------
INVESTMENT INCOME
Interest $35,532,093 $119,573,333
TOTAL INVESTMENT INCOME 35,532,093 119,573,333
EXPENSES (NOTE 2)
Advisory fees 2,783,980 5,540,534
Administration fees 409,092 1,211,007
Custody fees 104,821 359,885
Shareholder servicing fees 1,855,987 6,951,112
Portfolio accounting fees 138,896 485,037
Transfer agency fees 618,662 510,100
Distribution fees 1,855,987 11,332,851
Legal and audit fees 28,109 158,370
Other 28,572 102,597
TOTAL EXPENSES 7,824,106 26,651,493
Less:
Waived fees and reimbursed expenses (104,602) (362,061)
Net Expenses 7,719,504 26,289,432
NET INVESTMENT INCOME 27,812,589 93,283,901
Net realized gain (loss) on sale of
investments 6,512 (8,595)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $27,819,101 $ 93,275,306
- -------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM CASH INVESTMENT TRUST PRIOR TO DECEMBER 15,
1997. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
10
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
OVERLAND EXPRESS SWEEP FUND
-------------------------------------------------------
FOR THE FOR THE
FOR THE THREE YEAR ENDED YEAR ENDED
MONTHS ENDED DEC. 31, DEC. 31,
MARCH 31, 1998 1997 (1) 1996 (1)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 27,812,589 $ 93,283,901 $ 55,913,517
Realized gain (loss) on sale of
investments 6,512 (8,595) 136,401
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 27,819,101 93,275,306 56,049,918
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (27,812,589) (93,283,901) (55,913,517)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,536,002,681 5,854,849,943 4,856,143,166
Reinvestment of dividends 1,188 5,474 4,923
Cost of shares redeemed (1,897,190,623) (4,901,482,140) (4,062,742,186)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (361,186,754) 953,373,277 793,405,903
INCREASE (DECREASE) IN NET ASSETS (361,180,242) 953,364,682 793,542,304
NET ASSETS:
Beginning net assets 2,956,090,087 2,002,725,405 1,209,183,101
ENDING NET ASSETS $ 2,594,909,845 $ 2,956,090,087 $ 2,002,725,405
Shares issued and redeemed at constant $1.00 NAV
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM CASH INVESTMENT TRUST PRIOR TO DECEMBER 15,
1997. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
---------------------
11
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OVERLAND EXPRESS
SWEEP FUND
----------------------
THREE
MONTHS
ENDED MAR. YEAR ENDED
31, DEC. 31,
1998 (2) 1997
<S> <C> <C>
- ----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.04
LESS DISTRIBUTIONS:
Dividends from net investment income (0.01 ) (0.04)
---------- ----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
---------- ----------
---------- ----------
TOTAL RETURN 1.11% 4.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $2,594,910 $2,956,090
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to average net
assets (1) 1.25% 1.24%
Ratio of net investment income to
average net assets (1) 4.49% 4.40%
- ----------------------------------------------------------------
Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (1) 1.26% 1.26%
Ratio of net investment income to
average net assets prior to waived
fees and reimbursed expenses (1) 4.48% 4.38%
- ----------------------------------------------------------------
</TABLE>
(1) RATIOS INCLUDE ACTIVITY OF THE CASH INVESTMENT TRUST MASTER PORTFOLIO
PRIOR TO DECEMBER 15, 1997.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO MARCH 31.
The accompanying notes are an integral part of these financial statements.
- ---------------------
12
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OVERLAND EXPRESS
SWEEP FUND (CONT.)
----------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.04 0.05 0.03 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.04) (0.05) (0.03) (0.02)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN 4.29% 4.80% 3.11% 1.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $2,002,725 $1,209,183 $812,559 $528,072
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets (1) 1.24% 1.25% 1.25% 1.25%
Ratio of net investment
income to average net
assets (1) 4.20% 4.70% 2.92% 1.67%
- ----------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses (1) 1.26% 1.28% 1.33% 1.31%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses (1) 4.18% 4.67% 2.84% 1.61%
- ----------------------------------------------------------------------------
</TABLE>
(1) RATIOS INCLUDE ACTIVITY OF THE CASH INVESTMENT TRUST MASTER PORTFOLIO
PRIOR TO DECEMBER 15, 1997.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO MARCH 31.
The accompanying notes are an integral part of these financial statements.
---------------------
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and currently offers thirty-three separate series. These financial
statements represent the Overland Express Sweep Fund (the "Fund"), a diversified
series of the Company.
At a meeting held on July 23, 1997, the Boards of Directors of Overland Express
Funds, Inc. ("Overland") and the Company approved a consolidation agreement
providing for the transfer of the assets and liabilities of each Overland fund
to a corresponding fund of the Company in exchange for shares of designated
classes of the corresponding Stagecoach fund (the "Consolidation"). The
Consolidation was subsequently approved by Overland shareholders. As a result of
this Consolidation, effective at the close of business on December 12, 1997, the
Company's Overland Express Sweep Fund was established to acquire all of the
assets and assume all of the liabilities of the Overland Sweep Fund (the
"Predecessor Fund") of Overland Express Funds, Inc. The acquisition was
accomplished in a tax-free exchange for shares of the Fund. All performance and
financial data for the Fund prior to December 15, 1997 refer to the Predecessor
Fund.
At the time of the Consolidation, the Fund, structured as a "feeder" Fund in a
"master-feeder" structure, was restructured to invest directly in a portfolio of
securities, rather than to invest in portfolio securities through a "master"
portfolio (the Cash Investment Trust Master Portfolio, "CIT"). CIT distributed
all of its assets, net of its assumed liabilities, in-kind to its
interestholders and wound up its affairs (the "Dissolution"). The Dissolution
occurred at the close of business on December 12, 1997. For the period from
January 1, 1997 to December 12, 1997, CIT allocated $112,389,468 of interest
income and $5,866,521 of net expenses to the Predecessor Fund.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles ("GAAP") for investment
companies.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
- ---------------------
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SECURITY VALUATION
The Fund invests only in securities with remaining maturities not exceeding 397
days (thirteen months). Certain floating-and variable-rate instruments in the
portfolio may have maturities in excess of 397 days, but carry a demand feature
that permits the holder to tender the instruments back to the issuer at par
value prior to maturity.
The Fund uses the amortized cost method to value its portfolio securities. The
amortized cost method involves valuing a security at its cost, plus accretion of
discount or minus amortization of premium over the period until maturity, which
approximates market value. The Fund seeks to maintain a constant net asset value
of $1.00 per share, although there is no assurance that it will be able to do
so.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Interest income is
accrued daily. Realized gains or losses are reported on the basis of identified
cost of securities delivered. Bond discounts are accreted and premiums are
amortized under provisions of the Internal Revenue Code of 1986, as amended (the
"Code").
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
securities ("repurchase agreements") are treated as collateralized financing
transactions and are recorded at their contracted resale amounts. These
repurchase agreements, if any, are detailed in the Fund's Portfolio of
Investments. The Fund may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank, N.A. ("WFB"). The
repurchase agreements must be fully collateralized based on values that are
marked to market daily. The collateral may be held by an agent bank under a
tri-party agreement. It is the custodian's responsibility to value collateral
daily and to take action to obtain additional collateral as necessary to
maintain market value equal to or greater than the resale price. The repurchase
agreements held in the Fund are collateralized by instruments such as U.S.
Treasury or federal agency obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income, if any, are declared daily
and distributed monthly. Any distributions to shareholders from net realized
capital gains are declared and distributed annually.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes. It is
the policy of the Fund to continue to qualify as a regulated investment company
by complying with the provisions applicable to regulated investment companies,
as defined in the Code, and to make distributions of substantially all of its
investment company taxable income and any net realized capital gains (after
reduction for capital loss carryforwards) sufficient to relieve it from all, or
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15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
substantially all, federal income taxes. Accordingly, no provision for federal
income taxes was required at March 31, 1998. The Fund has capital loss
carryforwards of $548,956 and $8,595 which will expire in the years 2003 and
2005, respectively. The Company's Board of Directors intends to offset net
capital gains with the capital loss carryforwards, and no capital gain
distribution shall be made until the carryforwards have been fully utilized or
expire.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into an advisory contract on behalf of the Fund with
WFB. Pursuant to the contract, WFB has agreed to provide the Fund with daily
portfolio management. Under the contract, WFB is entitled to receive a monthly
advisory fee at an annual rate of 0.45% of the average daily net assets of the
Fund. Prior to December 15, 1997, the Fund did not directly retain an investment
adviser because it invested all of its assets in CIT which, in turn, retained
WFB as investment adviser. Advisory fees were charged to CIT at an annual rate
of 0.25% of its average daily net assets.
The Company has entered into a contract on behalf of the Fund with WFB, whereby
WFB is responsible for providing custody and portfolio accounting services for
the Fund. Pursuant to the contract, WFB is entitled to certain transaction
charges plus a monthly fee for custody services at the annual rate of 0.0167% of
the Fund's average daily net assets. For portfolio accounting services, WFB is
entitled to a monthly base fee of $2,000 plus an annual fee of 0.07% of the
first $50 million of the Fund's average daily net assets, 0.045% of the next $50
million, and 0.02% of the Fund's average daily net assets in excess of $100
million. Prior to December 15, 1997, WFB was entitled to compensation for its
custodial and portfolio accounting services to CIT at the same rates as listed
above.
The Company has entered into a contract on behalf of the Fund with WFB, whereby
WFB provides transfer agency services for the Fund. Under the transfer agency
contract, WFB is entitled to receive transfer agency fees at an annual rate of
0.10% of the average daily net assets of the Fund. For the period from February
1, 1997 to December 15, 1997, WFB was entitled to receive transfer agency fees
at an annual rate of 0.02% of the average daily net assets of the Fund. Prior to
February 1, 1997, WFB was paid a per account fee plus other related costs with a
minimum monthly fee of $3,000.
The Company has entered into a contract on behalf of the Fund with WFB, whereby
WFB has agreed to provide shareholder services for the Fund. Pursuant to the
contract, WFB is entitled to receive shareholder servicing fees at an annual
rate of 0.30% of the average daily net assets of the Fund. Prior to December 15,
1997, WFB was entitled to receive shareholder servicing fees at an annual rate
of 0.35% of the average daily net assets of the Fund.
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16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Company has entered into administration agreements on behalf of the Fund
whereby WFB as administrator and Stephens Inc. ("Stephens") as co-administrator
provide the Fund with administration services. For these services, WFB and
Stephens are entitled to receive monthly fees at the annual rates of 0.03% and
0.04%, respectively, of the Fund's average daily net assets. Prior to February
1, 1998, WFB and Stephens were entitled to receive monthly fees at the annual
rates of 0.04% and 0.02%, respectively, of the Fund's average daily net assets.
Prior to May 1, 1997, Stephens provided substantially the same services as sole
administrator to the Fund. Under the previous agreement, Stephens was entitled
to receive a monthly fee at the annual rate of 0.025% of the Fund's average
daily net assets.
The Company has adopted a Distribution Plan on behalf of the Fund pursuant to
Rule 12b-1 under the 1940 Act (the "Plan"). The Plan provides that the Fund may
pay to Stephens, as compensation for distribution-related services or as
reimbursement for distribution-related expenses, a monthly fee at an annual rate
of up to 0.30% of the Fund's average daily net assets. Prior to December 15,
1997, the Plan provided that the Fund pay to Stephens up to 0.55% of its average
daily net assets.
Under the contracts and agreements described above, WFB and Stephens may each
voluntarily waive fees or reimburse expenses to the Fund. Waived fees and
reimbursed expenses continue at the discretion of WFB and Stephens.
Certain officers and one director of the Company are also officers of Stephens.
As of March 31, 1998, Stephens owned 126,256 shares of the Fund.
3. CAPITAL SHARE TRANSACTIONS
As of March 31, 1998, there were over 108 billion shares of $0.001 par value
capital stock authorized by the Company. As of March 31, 1998, the Fund was
authorized to issue 3 billion shares of capital stock with a par value of $0.001
per share. Capital shares are issued and redeemed at a constant $1.00 net asset
value as disclosed in the Statement of Changes in Net Assets.
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17
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
STAGECOACH FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Overland Express Sweep Fund (one of the
funds comprising Stagecoach Funds, Inc.) as of March 31, 1998, and the related
statements of operations for the three months ended March 31, 1998, and the year
ended December 31, 1997, the statements of changes in net assets for the three
months ended March 31, 1998, and each of the years in the two-year period ended
December 31, 1997, and financial highlights for the periods indicated herein.
These financial statements and financial highlights are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Overland Express Sweep Fund of Stagecoach Funds, Inc. as of March 31, 1998, the
results of its operations, the changes in its net assets and its financial
highlights for the periods indicated herein in conformity with generally
accepted accounting principles.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 1, 1998
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18
<PAGE>
LIST OF ABBREVIATIONS
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
<TABLE>
<S> <C> <C>
ABAG -- Association of Bay Area Governments
ADR -- American Depository Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
CONNIE LEE -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance, Inc
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
LIBOR -- London Interbank Offered Rate
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFMR -- Single Family Mortgage Revenue
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
</TABLE>
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19
<PAGE>
STAGECOACH FUNDS
- -----------------------------------------
SHAREHOLDERS' MEETING AND PROXY VOTING RESULTS
The following proposal was passed by the required majority of shareholders of
the indicated Predecessor Fund at Special Shareholders' meetings held on
November 20, (as adjourned to) November 26, 1997, for the purpose of voting on
the proposal.
To approve a proposed Agreement and Plan of Consolidation providing for the
transfer of the assets and stated liabilities of specific Overland portfolios to
corresponding investment portfolios of Stagecoach Funds, Inc., in exchange for
shares of equal value of designated classes of the Stagecoach Funds.
SWEEP FUND
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
- -----------------------------------
1,229,016,781 20,991,827 92,664,208
</TABLE>
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20
<PAGE>
Wells Fargo Bank provides investment advisory services, shareholder services,
and certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo Bank is not
affiliated with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-222-8222. Read the
prospectus carefully before you invest or send money.
SC OEXSW ANR (5/98)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1998 Stagecoach Funds
