<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
INCOME
- ---------------------
FUNDS
- ---------------------
Intermediate Bond Fund
Short-Intermediate
U.S. Government
Income Fund
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Intermediate Bond Fund 3
Short-Intermediate U.S. Government Income Fund 6
PORTFOLIOS OF INVESTMENTS
Intermediate Bond Fund 10
Short-Intermediate U.S. Government Income Fund 13
STAGECOACH FUNDS
Statement of Assets and Liabilities 16
Statement of Operations 17
Statements of Changes in Net Assets 18
Financial Highlights 20
Notes to Financial Statements 25
Independent Auditors' Report 35
LIST OF ABBREVIATIONS 37
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>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
ii
<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>
INTERMEDIATE BOND FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 10.13% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
returns for other share classes.
THE FUND HAS DONE WELL DURING THE PERIOD. WHAT DROVE THE PERFORMANCE?
The most significant factor driving total returns has been that long-term yields
have declined. Declining yields generally increase bond prices. In March 1997,
the Federal Reserve did raise the federal funds target rate by 25 basis points
(or 0.25%), but this was eventually accepted as a sign that inflation, which is
the primary influence on long-term rates, was going to remain in check. As a
result, after a brief increase, long-term yields began drifting downward. Yields
in the five-year range were as high as 6.70% early in the period, closed 1997 at
5.66% and remained in a narrow range for the remainder of the period. Another
positive factor during the second half of the period was spread changes. Spreads
measure the difference in yields between corporate bonds and Treasury bonds. If
corporate spreads narrow, this means that corporate yields are declining and
corporate bond prices are increasing. As of October 1997, corporate spreads had
actually widened following the Asian crisis but narrowed for the remainder of
the period.
---------------------
3
<PAGE>
INTERMEDIATE BOND FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
With Maximum 4.50% Sales Charge 5.19% 5.99% 4.82% 7.63%
- --------------------------------------------------------------------------------------------
Without Sales Charge 10.13% 7.62% 5.78% 8.14%
- --------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 4.36% 5.75% 4.56% 7.24%
- --------------------------------------------------------------------------------------------
Without Sales Charge 9.36% 6.64% 4.87% 7.24%
- --------------------------------------------------------------------------------------------
(1)Assumes redemption on 3/31/98.
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
This Share Class has No Sales Charge 10.20% 7.66% 5.81% 8.15%
- --------------------------------------------------------------------------------------------
</TABLE>
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions at net asset value. Investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Figures quoted
represent past performance, which is no guarantee of future results.
The Stagecoach Intermediate Bond Fund is the successor fund to the Pacifica
Intermediate Bond Fund (10/95 to 9/96) and the Westcore Intermediate Bond Fund
(6/88 to 9/95). Historical performance has been calculated using returns
produced by these predecessor funds for the applicable periods. Class A share
performance reflects Pacifica Fund Class A and Westcore Fund performance. Class
B and Institutional Class share performance reflects such performance but has
been adjusted to reflect Class B and Institutional Class share expense levels as
of the inception date of 9/6/96.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
4
<PAGE>
INTERMEDIATE BOND FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH INTERMEDIATE LEHMAN BROTHERS STAGECOACH INTERMEDIATE
BOND FUND AGGREGATE BOND FUND
INSTITUTIONAL CLASS
CLASS A SHARES BOND INDEX SHARES
<S> <C> <C> <C>
Inception $9,550 $10,000 $10,000
6/30/88 $9,685 $10,000 $10,141
7/29/88 $9,633 $9,948 $10,087
8/31/88 $9,645 $9,974 $10,100
9/30/88 $9,853 $10,199 $10,317
10/31/88 $9,994 $10,391 $10,465
11/30/88 $9,881 $10,265 $10,347
12/30/88 $9,871 $10,277 $10,336
1/31/89 $9,987 $10,425 $10,458
2/28/89 $9,906 $10,350 $10,373
3/31/89 $9,952 $10,394 $10,420
4/28/89 $10,149 $10,611 $10,627
5/31/89 $10,416 $10,890 $10,907
6/30/89 $10,693 $11,221 $11,197
7/31/89 $10,904 $11,460 $11,417
8/31/89 $10,751 $11,291 $11,258
9/29/89 $10,796 $11,348 $11,305
10/31/89 $11,052 $11,628 $11,573
11/30/89 $11,150 $11,738 $11,675
12/31/89 $11,162 $11,770 $11,688
1/31/90 $11,057 $11,630 $11,578
2/28/90 $11,097 $11,667 $11,620
3/31/90 $11,092 $11,675 $11,615
4/30/90 $10,978 $11,568 $11,495
5/31/90 $11,275 $11,910 $11,807
6/30/90 $11,447 $12,101 $11,986
7/31/90 $11,610 $12,268 $12,157
8/31/90 $11,502 $12,103 $12,044
9/30/90 $11,573 $12,204 $12,118
10/31/90 $11,710 $12,359 $12,261
11/30/90 $11,953 $12,624 $12,516
12/31/90 $12,124 $12,821 $12,695
1/31/91 $12,270 $12,980 $12,848
2/28/91 $12,374 $13,091 $12,957
3/31/91 $12,436 $13,181 $13,022
4/30/91 $12,568 $13,323 $13,161
5/31/91 $12,669 $13,401 $13,266
6/30/91 $12,667 $13,394 $13,264
7/31/91 $12,808 $13,580 $13,411
8/31/91 $13,073 $13,873 $13,689
9/30/91 $13,338 $14,155 $13,966
10/31/91 $13,501 $14,312 $14,137
11/30/91 $13,645 $14,444 $14,288
12/31/91 $14,064 $14,873 $14,726
1/31/92 $13,839 $14,670 $14,491
2/29/92 $13,871 $14,766 $14,524
3/31/92 $13,823 $14,683 $14,474
4/30/92 $13,930 $14,789 $14,587
5/31/92 $14,185 $15,068 $14,853
6/30/92 $14,389 $15,276 $15,067
7/31/92 $14,705 $15,588 $15,398
8/31/92 $14,834 $15,745 $15,533
9/30/92 $15,027 $15,933 $15,735
10/31/92 $14,863 $15,721 $15,563
11/30/92 $14,797 $15,724 $15,494
12/31/92 $14,997 $15,974 $15,704
1/31/93 $15,247 $16,281 $15,965
2/28/93 $15,484 $16,566 $16,214
3/31/93 $15,559 $16,635 $16,292
4/30/93 $15,668 $16,752 $16,406
5/31/93 $15,663 $16,773 $16,401
6/30/93 $15,911 $17,077 $16,661
7/31/93 $15,967 $17,174 $16,720
8/31/93 $16,188 $17,475 $16,951
9/30/93 $16,237 $17,522 $17,002
10/31/93 $16,284 $17,587 $17,051
11/30/93 $16,161 $17,437 $16,923
12/31/93 $16,242 $17,532 $17,007
1/31/94 $16,446 $17,768 $17,221
2/28/94 $16,183 $17,459 $16,946
3/31/94 $15,865 $17,028 $16,612
4/30/94 $15,740 $16,892 $16,482
5/31/94 $15,718 $16,890 $16,458
6/30/94 $15,702 $16,853 $16,442
7/31/94 $15,931 $17,188 $16,682
8/31/94 $15,967 $17,209 $16,719
9/30/94 $15,776 $16,956 $16,519
10/31/94 $15,766 $16,941 $16,509
11/30/94 $15,709 $16,903 $16,449
12/31/94 $15,795 $17,020 $16,539
1/31/95 $16,079 $17,357 $16,837
2/28/95 $16,444 $17,770 $17,219
3/31/95 $16,535 $17,878 $17,314
4/28/95 $16,742 $18,129 $17,530
5/31/95 $17,310 $18,830 $18,126
6/30/95 $17,423 $18,968 $18,244
7/31/95 $17,379 $18,926 $18,198
8/31/95 $17,530 $19,155 $18,356
9/29/95 $17,659 $19,341 $18,491
10/31/95 $17,840 $19,592 $18,682
11/30/95 $18,034 $19,886 $18,899
12/29/95 $18,220 $20,165 $19,095
1/31/96 $18,357 $20,298 $19,227
2/29/96 $18,125 $19,944 $18,997
3/31/96 $18,041 $19,805 $18,898
4/30/96 $17,977 $19,694 $18,831
5/31/96 $17,938 $19,655 $18,804
6/30/96 $18,122 $19,918 $18,984
7/31/96 $18,157 $19,972 $19,025
8/31/96 $18,176 $19,938 $19,040
9/30/96 $18,419 $20,285 $19,291
10/31/96 $18,737 $20,735 $19,612
11/30/96 $18,988 $21,090 $19,888
12/31/96 $18,791 $20,893 $19,642
1/31/97 $18,835 $20,958 $19,730
2/28/97 $18,865 $21,011 $19,762
3/31/97 $18,715 $20,777 $19,607
4/30/97 $18,934 $21,089 $19,823
5/31/97 $19,080 $21,289 $19,990
6/30/97 $19,254 $21,543 $20,159
7/31/97 $19,702 $22,124 $20,643
8/31/97 $19,555 $21,936 $20,476
9/30/97 $19,802 $22,259 $20,750
10/31/97 $20,063 $22,582 $21,024
11/30/97 $20,147 $22,685 $21,112
12/31/97 $20,323 $22,915 $21,300
1/31/98 $20,597 $23,208 $21,590
2/28/98 $20,553 $23,189 $21,546
3/31/98 $20,611 $23,268 $21,607
</TABLE>
THE RETURNS FOR CLASS B SHARES OF THE FUND WILL VARY FROM THE RESULTS SHOWN DUE
TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach Intermediate
Bond Fund Class A and Institutional Class shares since inception with the Lehman
Brothers Aggregate Bond Index. The chart assumes a hypothetical $10,000 initial
investment in Class A and Institutional Class shares and reflects all operating
expenses and, for Class A shares, assumes the maximum initial sales charge of
4.5%. The Lehman Brothers Aggregate Bond Index is an unmanaged index of composed
of bonds, mortgage-backed securities and asset-backed securities. 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.
---------------------
5
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 8.69% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
return for the other share class.
THE FUND HAS DONE WELL DURING THE PERIOD. WHAT DROVE THE PERFORMANCE?
The most significant factor driving total returns has been that long-term yields
have declined. Declining yields generally increase bond prices. In March 1997,
the Federal Reserve raised the federal funds target rate by 25 basis points (or
0.25%), but this was eventually accepted as a sign that inflation, which is the
primary influence on long-term rates, was going to remain in check. As a result,
after a brief increase, long-term yields began drifting downward. Yields in the
five-year range were as high as 6.70% early in the fiscal year, closed 1997 at
5.66% and remained in a narrow range for the remainder of the fiscal year.
Another positive factor during the second half of the fiscal year was spread
changes. Spreads measure the difference in yields between corporate bonds and
Treasury bonds. If corporate spreads narrow, this means corporate yields are
declining and corporate bond prices are increasing. As of October 1997,
corporate spreads had actually widened following the Asian crisis but narrowed
for the remainder of the fiscal period.
HOW HAS THE ALLOCATION OF THE FUND'S ASSETS CHANGED?
We have kept the Fund very close to the maximum allowance of 35% corporate
securities because investors are still rewarded for owning corporate debt. For
instance, a five year A-rated corporate bond still gets forty to fifty basis
points more yield than a Treasury bond of similar maturity. We reduced our
mortgage exposure in February 1998. We decided to do this when yields rallied
because we thought that prepayments would pick up. Prepayments occur when
homeowners refinance their mortgages to take advantage of lower rates. We did
not want to reinvest prepaid mortgages at lower rates, so we reduced that
exposure and kept mortgages with a lower coupon and less of a prepayment risk.
We have also bought government agency issues, which have a little better yield
than Treasury securities. Treasury securities are backed by the full faith and
credit of the U.S. government and are considered so safe that they can be sold
at a slightly lower yield, while agencies are not backed by the government, so
they tend to have slightly higher coupon rates.
- ---------------------
6
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
WHAT IS YOUR CURRENT OUTLOOK FOR THE FUND?
We're bullish on the next few months for the Fund. We think the economy could
slow down even further with the fallout from Asia. That could keep inflation low
and bring yields down even further. We anticipate that the Fed will remain
inactive for the next quarter and that the next move after that could be to ease
rates. That's why we increased our sensitivity to interest rate changes at the
end of the reporting period.
THE FEDERAL GOVERNMENT HAS HAD A BUDGET SURPLUS AND HAS REDUCED THE AMOUNT OF
DEBT IT ISSUES. HAS THE REDUCTION IN TREASURY AUCTIONS AFFECTED THE FUND?
The federal government has reduced Treasury auctions over the last year from
about $10 billion dollars worth of securities per auction to only $6 billion. We
do not believe that the auctions can get much smaller, but the Treasury can also
reduce the frequency. In general, this should be a positive for the Fund. With
fewer treasuries outstanding, the yields will be lower and the prices will be
higher. But we don't think the federal budget surplus will continue at this
rate.
HOW WOULD YOU CHARACTERIZE THIS FUND FOR A SHAREHOLDER?
The Fund is rather conservative compared to other bond funds. There is a lower
exposure to corporate securities and a higher exposure to government securities.
The duration, which is a measure of a portfolio's sensitivity to interest rates
expressed in years, is typically about 3 to 3 1/2 years. That means that if
rates went up 1%, the portfolio would lose up to 3% of its value. That is more
volatile than a money market, but less than a long-term bond fund. The typical
investment horizon is less than three years.
---------------------
7
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 3.0% Sales Charge 5.41% 5.89% 4.66%
- --------------------------------------------------------------------------------------
Without Sales Charge 8.69% 6.98% 5.39%
- --------------------------------------------------------------------------------------
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
This Share Class has No Sales Charge 8.85% 7.01% 5.41%
- --------------------------------------------------------------------------------------
</TABLE>
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gain distributions, at net asset value. Investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Figures quoted
represent past performance, which is no guarantee of future results.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
8
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH SHORT- STAGECOACH SHORT-
INTERMEDIATE U.S. LEHMAN BROTHERS INTERMEDIATE U.S.
GOVERNMENT INCOME U.S. TREASURY GOVERNMENT INCOME
FUND INSTITUTIONAL
FUND CLASS A SHARES NOTE INDEX SHARES
<S> <C> <C> <C>
10/31/93 $9,700 $10,000 $10,000
11/30/93 $9,715 $9,950 $10,015
12/31/93 $9,745 $9,991 $10,047
1/31/94 $9,807 $10,090 $10,110
2/28/94 $9,748 $9,948 $10,050
3/31/94 $9,695 $9,804 $9,995
4/30/94 $9,661 $9,741 $9,960
5/31/94 $9,689 $9,748 $9,989
6/30/94 $9,697 $9,750 $9,997
7/31/94 $9,756 $9,877 $10,058
8/31/94 $9,753 $9,906 $10,055
9/30/94 $9,632 $9,824 $9,930
10/31/94 $9,626 $9,827 $9,924
11/30/94 $9,570 $9,782 $9,866
12/31/94 $9,608 $9,813 $9,905
1/31/95 $9,759 $9,973 $10,061
2/28/95 $9,937 $10,163 $10,244
3/31/95 $9,988 $10,219 $10,297
4/28/95 $10,074 $10,337 $10,385
5/31/95 $10,300 $10,629 $10,619
6/30/95 $10,361 $10,699 $10,681
7/31/95 $10,364 $10,704 $10,684
8/31/95 $10,434 $10,790 $10,756
9/29/95 $10,495 $10,862 $10,819
10/31/95 $10,597 $10,983 $10,924
11/30/95 $10,710 $11,117 $11,041
12/29/95 $10,825 $11,228 $11,160
1/31/96 $10,919 $11,325 $11,257
2/29/96 $10,825 $11,204 $11,160
3/31/96 $10,762 $11,149 $11,095
4/30/96 $10,720 $11,117 $11,052
5/31/96 $10,695 $11,111 $11,026
6/30/96 $10,796 $11,221 $11,130
7/31/96 $10,825 $11,255 $11,159
8/31/96 $10,823 $11,269 $11,158
9/30/96 $10,971 $11,414 $11,301
10/31/96 $11,108 $11,600 $11,445
11/30/96 $11,265 $11,739 $11,609
12/31/96 $11,216 $11,675 $11,557
1/31/97 $11,288 $11,719 $11,631
2/28/97 $11,327 $11,736 $11,672
3/31/97 $11,253 $11,667 $11,593
4/30/97 $11,382 $11,798 $11,740
5/31/97 $11,456 $11,890 $11,818
6/30/97 $11,549 $11,991 $11,915
7/31/97 $11,764 $12,215 $12,128
8/31/97 $11,707 $12,166 $12,068
9/30/97 $11,825 $12,299 $12,192
10/31/97 $11,950 $12,443 $12,322
11/30/97 $11,970 $12,471 $12,344
12/31/97 $12,065 $12,573 $12,444
1/31/98 $12,229 $12,742 $12,619
2/28/98 $12,204 $12,725 $12,591
3/31/98 $12,230 $12,764 $12,619
</TABLE>
The accompanying chart compares the performance of the Stagecoach
Short-Intermediate U.S. Government Income Fund Class A and Institutional Class
shares since inception with the Lehman Brothers U.S. Treasury Note Index. The
chart assumes a hypothetical $10,000 initial investment in Class A and
Institutional Class shares and reflects all operating expenses and, for Class A
shares, 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.
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.
---------------------
9
<PAGE>
INTERMEDIATE BOND FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
FOREIGN GOVERNMENTS - 5.38%
FOREIGN GOVERNMENTS - 5.38%
$ 1,300,000 Ontario, Province of 7.63 % 06/22/04 $ 1,397,500
1,500,000 Quebec, Province of 8.80 04/15/03 1,661,175
--------------
TOTAL FOREIGN GOVERNMENTS $ 3,058,675
(Cost $2,995,552)
CORPORATE BONDS & NOTES - 49.21%
BANK & FINANCE - 15.96%
$ 500,000 First Chicago NBD Bancorp 8.10 % 03/01/02 $ 530,000
2,000,000 Ford Motor Credit 8.00 06/15/02 2,127,500
1,000,000 General Motors Acceptance Corp 6.88 07/15/01 1,018,750
500,000 ITT Hartford Group Inc 8.20 10/15/98 506,150
1,000,000 Midland Bank Plc 7.63 06/15/06 1,073,750
1,750,000 Norwest Corp 7.13 04/01/00 1,787,188
1,000,000 NYNEX Credit Co 6.25 06/13/02 1,003,910
1,000,000 Standard Credit Card Master Credit 8.35 01/07/00 1,014,830
--------------
$ 9,062,078
INDUSTRIALS - 12.30%
$ 2,000,000 Continental Cablevision 8.30 % 05/15/06 $ 2,192,500
1,000,000 Fort James Corp 6.88 09/15/07 1,015,000
1,000,000 General Motors Corp 9.45 11/01/11 1,251,250
1,000,000 Lockheed Martin Co 6.85 05/15/01 1,020,000
1,500,000 Mobil Oil Corp 6.25 08/31/01 1,511,250
--------------
$ 6,990,000
MISCELLANEOUS BONDS - 20.95%
$ 1,675,000 American Home Products 7.70 % 02/15/00 $ 1,725,250
1,600,000 California Infrastructure 6.14 03/25/02 1,605,552
2,000,000 California Infrastructure 6.22 03/25/04 2,009,060
1,300,000 CIT Group Holdings 5.88 11/09/98 1,299,402
</TABLE>
- ------------------------
10
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES (CONTINUED)
$ 1,150,000 Disney (Walt) Co 6.75 % 03/30/06 $ 1,188,813
1,000,000 Philip Morris Co Inc 7.00 07/15/05 1,022,500
1,000,000 RJR Nabisco Inc 8.25 07/01/04 1,043,750
2,000,000 Sears Roebuck 6.36 12/04/01 2,010,620
--------------
$ 11,904,947
TOTAL CORPORATE BONDS & NOTES $ 27,957,025
(Cost $27,625,026)
U.S. GOVERNMENT AGENCY SECURITIES - 23.90%
FEDERAL HOME LOAN BANKS - 5.21%
$ 3,000,000 Federal Home Loan Bank 5.53 % 01/15/03 $ 2,958,810
FEDERAL HOME LOAN MORTGAGE CORPORATION - 7.06%
$ 4,000,000 FHLMC 6.49 % 07/16/02 $ 4,011,240
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 6.81%
$ 3,828,997 FNMA #313644 7.00 % 08/01/27 $ 3,867,555
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.82%
$ 1,336,926 GNMA #417389 7.00 % 05/15/26 $ 1,351,592
1,151,578 GNMA #336930 7.50 03/15/23 1,183,626
191,460 GNMA #157247 9.50 05/20/16 206,333
--------------
$ 2,741,551
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 13,579,156
(Cost $13,488,531)
U.S. TREASURY SECURITIES - 17.74%
U.S. TREASURY NOTES - 11.91%
$ 2,250,000 U.S. Treasury Notes 6.75 % 04/30/00 $ 2,299,567
4,000,000 U.S. Treasury Notes 7.88 11/15/04 4,468,760
--------------
$ 6,768,327
</TABLE>
---------------------
11
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES (CONTINUED)
U.S. TREASURY BONDS - 5.83%
$ 2,500,000 U.S. Treasury Bonds 10.38 % 11/15/12 $ 3,314,850
--------------
TOTAL U.S. TREASURY SECURITIES $ 10,083,177
(Cost $9,936,775)
SHORT-TERM INSTRUMENTS - 2.90%
REPURCHASE AGREEMENTS - 2.90%
$ 1,005,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90 % 04/01/98 $ 1,005,000
645,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.85 04/01/98 645,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 1,650,000
(Cost $1,650,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $55,695,884)* (Notes 1 and 3) 99.13% $ 56,328,033
Other Assets and Liabilities, Net 0.87 497,041
------ --------------
TOTAL NET ASSETS 100.00% $ 56,825,074
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 766,306
Gross Unrealized Depreciation (134,157)
------------
NET UNREALIZED APPRECIATION $ 632,149
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
12
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 33.19%
BANK & FINANCE - 6.24%
$ 5,000,000 First Bank Corp 6.40 % 02/15/03 $ 5,099,650
INTERNATIONAL AGENCIES - 3.29%
$ 2,500,000 European Investment Bank 7.13 % 09/18/06 $ 2,690,625
MISCELLANEOUS BONDS - 17.18%
$ 4,000,000 Anheuser-Busch Co 6.75 % 08/01/03 $ 4,130,000
2,000,000 Cable & Wireless Communication Corp 6.38 03/06/03 2,001,140
4,000,000 Honeywell Inc 6.75 03/15/02 4,075,000
3,800,000 Norwest Financial Inc 6.38 09/15/02 3,821,394
--------------
$ 14,027,534
UTILITIES - 6.48%
$ 5,000,000 Pacific Gas & Electric Co 7.88 % 09/18/02 $ 5,293,750
--------------
TOTAL CORPORATE BONDS & NOTES $ 27,111,559
(Cost $26,426,926)
U.S. GOVERNMENT AGENCY SECURITIES - 50.02%
FEDERAL AGENCY - OTHER - 2.50%
$ 2,000,000 Tennessee Valley Authority 6.50 % 08/20/01 $ 2,042,180
FEDERAL HOME LOAN BANKS - 10.83%
$ 5,000,000 FHLB 5.53 % 01/15/03 $ 4,931,350
1,030,000 FHLB 8.45 07/26/99 1,064,433
2,760,000 FHLB 8.60 06/25/99 2,851,936
--------------
$ 8,847,719
</TABLE>
---------------------
13
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 14.57%
$ 5,000,000 FHLMC 7.01 % 07/11/07 $ 5,139,850
5,000,000 FHLMC 6.79 08/26/05 5,232,050
1,500,000 FHLMC 7.13 07/21/99 1,525,005
--------------
$ 11,896,905
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 17.85%
$ 3,071,842 FNMA #50761 6.00 % 07/01/08 $ 3,023,829
2,000,000 FNMA Global 6.85 05/26/00 2,001,880
5,000,000 FNMA MTN 6.18 06/23/00 5,036,550
2,000,000 FNMA MTN 6.69 08/07/01 2,051,440
2,455,000 FNMA MTN 7.30 04/17/00 2,460,745
--------------
$ 14,574,444
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.16%
$ 1,538,953 GNMA #418261 6.50 % 04/15/26 $ 1,522,594
1,854,285 GNMA #423779 7.00 05/15/26 1,872,234
--------------
$ 3,394,828
REAL ESTATE MORTGAGE INVESTMENT CONDUITS - 0.11%
$ 87,203 FNMA 1993-G19 7.25 % 04/01/98 $ 92,162
--------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 40,848,238
(Cost $40,571,084)
U.S. TREASURY SECURITIES - 14.20%
U.S. TREASURY NOTES - 14.20%
$ 1,000,000 U.S. Treasury Notes 5.75 % 08/15/03 1,003,590
5,000,000 U.S. Treasury Notes 5.88 11/15/05 5,040,600
5,000,000 U.S. Treasury Notes 5.88 09/30/02 5,039,050
500,000 U.S. Treasury Notes 7.13 09/30/99 510,860
--------------
TOTAL U.S. TREASURY SECURITIES $ 11,594,100
(Cost $11,313,186)
</TABLE>
- ------------------------
14
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 2.09%
REPURCHASE AGREEMENTS - 2.09%
$ 1,406,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90 % 04/01/98 $ 1,406,000
300,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 04/01/98 300,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 1,706,000
(Cost $1,706,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $80,017,196)* (Notes 1 and 3) 99.50% $ 81,259,897
Other Assets and Liabilities, Net 0.50% 407,893
------ --------------
TOTAL NET ASSETS 100.00% $ 81,667,790
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 1,371,744
Gross Unrealized Depreciation (129,043)
------------
NET UNREALIZED APPRECIATION $ 1,242,701
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1998
<TABLE>
<CAPTION>
SHORT-
INTERMEDIATE
INTERMEDIATE U.S. GOVERNMENT
BOND FUND INCOME FUND
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see cost below) $ 56,328,033 $ 81,259,897
Cash 1,013 1,116
Receivables:
Interest 815,076 906,826
Fund shares sold 16,687 0
Organization expenses net of amortization 32,740 8,039
Prepaid expenses 6,305 180
TOTAL ASSETS 57,199,854 82,176,058
LIABILITIES
Payables:
Distribution to shareholders 258,045 341,058
Fund shares redeemed 5,100 0
Due to sponsor and distributor (Note 2) 51,972 6,366
Due to adviser (Note 2) 33,257 54,149
Other 26,406 106,695
TOTAL LIABILITIES 374,780 508,268
TOTAL NET ASSETS $ 56,825,074 $ 81,667,790
NET ASSETS CONSIST OF:
Paid-in capital $ 57,928,106 $ 94,952,807
Undistributed net realized loss on investments (1,735,181) (14,527,718)
Net unrealized appreciation of investments 632,149 1,242,701
TOTAL NET ASSETS $ 56,825,074 $ 81,667,790
COMPUTATION OF NET ASSET VALUE
AND OFFERING PRICE PER SHARE
Net assets - Class A $ 8,310,821 $ 29,694,494
Shares outstanding - Class A 562,273 2,984,564
Net asset value per share - Class A $ 14.78 $ 9.95
Maximum offering price per share - Class A $ 15.48(1) $ 10.26(2)
Net Assets - Class B $ 7,259,299 N/A
Shares outstanding - Class B 707,403 N/A
Net asset value and offering price per share - Class B $ 10.26 N/A
Net Assets - Institutional Class $ 41,254,954 $ 51,973,296
Shares outstanding - Institutional Class 2,787,713 5,325,228
Net asset value and offering price per share - Institutional
Class $ 14.80 $ 9.76
INVESTMENT AT COST (NOTE 3) $ 55,695,884 $ 80,017,196
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
- ------------------------
16
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
INTERMEDIATE U.S. GOVERNMENT
BOND FUND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 3,508,176 $ 5,266,959
TOTAL INVESTMENT INCOME 3,508,176 5,266,959
EXPENSES (NOTE 2)
Advisory fees 247,862 441,584
Administration fees 30,602 54,262
Custody fees 8,279 18,880
Shareholder servicing fees 123,932 236,501
Portfolio accounting fees 57,444 76,442
Transfer agency fees 36,034 78,169
Distribution fees 26,407 15,741
Organization costs 14,837 21,204
Legal and audit fees 29,029 18,550
Registration fees 28,852 14,779
Directors' fees 4,840 4,457
Shareholder reports 19,035 26,384
Other 18,196 7,480
TOTAL EXPENSES 645,349 1,014,433
Less:
Waived fees and reimbursed expenses (227,493) (378,499)
Net Expenses 417,856 635,934
NET INVESTMENT INCOME 3,090,320 4,631,025
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on sale of investments 166,199 8,966
Net change in unrealized appreciation of investments 1,450,724 2,861,633
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,616,923 2,870,599
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,707,243 $ 7,501,624
- --------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
17
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
---------------------------------------
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 3,090,320 $ 1,431,008 $ 3,091,246
Net realized gain (loss) on sale of
investments 166,199 60,556 188,764
Net change in unrealized appreciation
(depreciation) of investments 1,450,724 (726,922) (997,909)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 4,707,243 764,642 2,282,101
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (288,740) (67,863) (397,829)
CLASS B (172,241) (6,096) 0
INSTITUTIONAL CLASS (2,629,339) (1,357,049) (2,693,417)
Tax return of capital
CLASS A 0 0 (2,213)
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 (40,503)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 8,091,206 183,352 525,048
Reinvestment of dividends - Class A 150,815 53,409 261,911
Cost of shares redeemed - Class A (2,165,792) (561,269) (54,206,729)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS A 6,076,229 (324,508) (53,419,770)
Proceeds from shares sold - Class B 6,740,944 682,502 25
Reinvestment of dividends - Class B 112,374 1,378 0
Cost of shares redeemed - Class B (323,834) (11) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS B 6,529,484 683,869 25
Proceeds from shares sold - Institutional
Class 10,225,078 5,756,328 63,136,515
Reinvestment of dividends - Institutional
Class 1,532,360 783,565 1,730,693
Cost of shares redeemed - Institutional
Class (14,339,887) (7,876,571) (19,395,503)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS (2,582,449) (1,336,678) 45,471,705
INCREASE (DECREASE) IN NET ASSETS 11,640,187 (1,643,683) (8,799,901)
NET ASSETS:
Beginning net assets 45,184,887 46,828,570 55,628,471
ENDING NET ASSETS $ 56,825,074 $ 45,184,887 $46,828,570
- --------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $19,442,019 FOR CLASS A AND
$74,056,852 FOR THE INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA
SHORT-TERM GOVERNMENT BOND FUND AND PACIFICA GOVERNMENT INCOME FUND
MERGERS. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
18
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME
FUND
-----------------------------------------
FOR THE FOR THE SIX FOR THE NINE
YEAR ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996 (1)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 4,631,025 $ 3,574,685 $ 2,375,574
Net realized gain (loss) on sale of
investments 8,966 510,730 (1,001,781)
Net change in unrealized appreciation
(depreciation) of investments 2,861,633 (1,294,254) 438,931
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 7,501,624 2,791,161 1,812,724
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,633,537) (1,249,906) (2,125,952)
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS (2,997,488) (2,324,779) (249,622)
Tax return of capital
CLASS A 0 0 0
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 5,448,204 3,370,813 50,198,742
Reinvestment of dividends - Class A 1,300,551 943,357 1,800,529
Cost of shares redeemed - Class A (11,996,563) (7,567,949) (53,286,609)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS A (5,247,808) (3,253,779) (1,287,338)
Proceeds from shares sold - Class B N/A N/A N/A
Reinvestment of dividends - Class B N/A N/A N/A
Cost of shares redeemed - Class B N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS B N/A N/A N/A
Proceeds from shares sold - Institutional
Class 5,679,146 4,565,190 75,368,746
Reinvestment of dividends - Institutional
Class 880,516 667,123 934
Cost of shares redeemed - Institutional
Class (16,585,172) (18,226,996) (2,345,155)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS (10,025,510) (12,994,683) 73,024,525
INCREASE (DECREASE) IN NET ASSETS (12,402,719) (17,031,986) 71,174,337
NET ASSETS:
Beginning net assets 94,070,509 111,102,495 39,928,158
ENDING NET ASSETS $ 81,667,790 $ 94,070,509 $ 111,102,495
- ----------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $19,442,019 FOR CLASS A AND
$74,056,852 FOR THE INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA
SHORT-TERM GOVERNMENT BOND FUND AND PACIFICA GOVERNMENT INCOME FUND
MERGERS. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
---------------------
19
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (1)
----------------------------------
CLASS A
----------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (2) 1996 (3)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.28 $14.50 $14.76
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.91 0.46 0.87
Net realized and unrealized gain (loss) on investments 0.50 (0.22) (0.25)
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.41 0.24 0.62
LESS DISTRIBUTIONS:
Dividends from net investment income (0.91) (0.46) (0.87)
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 (0.01)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.91) (0.46) (0.88)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $14.78 $14.28 $14.50
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 10.13% 1.61% 4.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $8,311 $2,125 $2,481
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.88% 0.80% 0.85%
Ratio of net investment income to average net assets 6.16% 6.29% 5.82%
Portfolio turnover 81% 28% 96%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.54% 1.40% 1.11%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 5.50% 5.69% 5.56%
- --------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE BONDS PLUS FUND OF WESTCORE TRUST AND WAS
ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM ITS COMMENCEMENT
OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF PACIFICA FUNDS
TRUST ON OCTOBER 1, 1995, WHEN FIRST INTERSTATE CAPITAL MANAGEMENT,
INC. ("FICM") ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES. IN
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC. THE FUND OPERATED AS A SERIES OF PACIFICA
FUNDS TRUST UNTIL IT WAS REORGANIZED AS A SERIES OF STAGECOACH FUNDS,
INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE SEPTEMBER 6, 1996
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
- ---------------------
20
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (1) (CONT.)
----------------------------------------------------------------------------------
INSTITUTIONAL CLASS
CLASS B ----------------------------------------------
---------------------------------- FOUR
SIX MONTHS PERIOD SIX MONTHS MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, SEPT. 30,
1998 1997 (2) 1996 (4) 1998 1997 (2) 1996 1995 (5)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $9.91 $10.07 $10.00 $14.30 $14.52 $14.76 $14.77
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.56 0.23 0.00 0.92 0.46 0.85 0.30
Net realized and
unrealized gain (loss)
on investments 0.35 (0.16) 0.07 0.50 (0.22) (0.23) (0.01)
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.91 0.07 0.07 1.42 0.24 0.62 0.29
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.56) (0.23) 0.00 (0.92) (0.46) (0.85) (0.30)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 (0.01) 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.56) (0.23) 0.00 (0.92) (0.46) (0.86) (0.30)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $10.26 $9.91 $10.07 $14.80 $14.30 $14.52 $14.76
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 9.36% 0.66% 0.70% 10.20% 1.64% 4.19% 6.14%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $7,259 $675 $0 $41,255 $42,386 $44,348 $55,628
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.61% 1.50% 0.00% 0.78% 0.75% 0.73% 0.89%
Ratio of net investment
income to average net
assets 5.32% 5.54% 2.43% 6.31% 6.32% 5.82% 5.94%
Portfolio turnover 81% 28% 96% 81% 28% 96% 54%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.28% 3.13% 0.00% 1.20% 1.22% 0.89% 0.94%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.65% 3.91% 2.43% 5.89% 5.85% 5.66% 5.89%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE BONDS PLUS FUND OF WESTCORE TRUST AND WAS
ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM ITS COMMENCEMENT
OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF PACIFICA FUNDS
TRUST ON OCTOBER 1, 1995, WHEN FIRST INTERSTATE CAPITAL MANAGEMENT,
INC. ("FICM") ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES. IN
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC. THE FUND OPERATED AS A SERIES OF PACIFICA
FUNDS TRUST UNTIL IT WAS REORGANIZED AS A SERIES OF STAGECOACH FUNDS,
INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE SEPTEMBER 6, 1996
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
21
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (1) (CONT.)
----------------------------------
INSTITUTIONAL CLASS (CONT.)
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, MAY 31, MAY 31,
1995 1994 1993
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.36 $15.72 $15.69
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.91 0.99 1.17
Net realized and unrealized gain (loss) on investments 0.47 (0.90) 0.40
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.38 0.09 1.57
LESS DISTRIBUTIONS:
Dividends from net investment income (0.97) (0.85) (1.04)
Distributions from net realized gain 0.00 (0.60) (0.50)
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.97) (1.45) (1.54)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $14.77 $14.36 $15.72
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 10.13% 0.35% 10.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $56,087 $58,199 $61,207
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.81% 0.79% 0.76%
Ratio of net investment income to average net assets 6.35% 5.33% 6.01%
Portfolio turnover 76% 163% 146%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.85% 0.83% 0.79%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 6.31% 5.29% 5.98%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND OPERATED AS THE BONDS PLUS FUND OF WESTCORE TRUST AND WAS
ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM ITS COMMENCEMENT
OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF PACIFICA FUNDS
TRUST ON OCTOBER 1, 1995, WHEN FIRST INTERSTATE CAPITAL MANAGEMENT,
INC. ("FICM") ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES. IN
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC. THE FUND OPERATED AS A SERIES OF PACIFICA
FUNDS TRUST UNTIL IT WAS REORGANIZED AS A SERIES OF STAGECOACH FUNDS,
INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE SEPTEMBER 6, 1996
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE FUND COMMENCED OPERATIONS ON OCTOBER 27, 1993.
The accompanying notes are an integral part of these financial statements.
- ---------------------
22
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
----------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------
NINE
SIX MONTHS MONTHS PERIOD
YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30, DEC. 31, DEC. 31, DEC. 31,
1998 1997 (2) 1996 (3) 1995 1994 1993 (4)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $9.64 $9.73 $10.00 $9.39 $9.99 $10.00
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.51 0.34 0.41 0.55 0.46 0.06
Net realized and
unrealized gain (loss)
on investments 0.31 (0.09) (0.27) 0.61 (0.60) (0.01)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.82 0.25 0.14 1.16 (0.14) 0.05
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.51) (0.34) (0.41) (0.55) (0.46) (0.06)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.51) (0.34) (0.41) (0.55) (0.46) (0.06)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $9.95 $9.64 $9.73 $10.00 $9.39 $9.99
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 8.69% 2.57% 1.34% 12.67% (1.42)% 0.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $29,694 $33,920 $37,465 $39,928 $11,602 $8,557
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.78% 0.71% 0.76% 0.71% 0.25% 0.00%
Ratio of net investment
income to average net
assets 5.19% 6.96% 5.60% 5.64% 4.75% 3.49%
Portfolio turnover 48% 52% 389% 472% 288% N/A
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.30% 1.12% 1.21% 1.67% 2.28% 2.45%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.67% 6.55% 5.15% 4.68% 2.72% 1.04%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND OPERATED AS THE BONDS PLUS FUND OF WESTCORE TRUST AND WAS
ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM ITS COMMENCEMENT
OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF PACIFICA FUNDS
TRUST ON OCTOBER 1, 1995, WHEN FIRST INTERSTATE CAPITAL MANAGEMENT,
INC. ("FICM") ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES. IN
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC. THE FUND OPERATED AS A SERIES OF PACIFICA
FUNDS TRUST UNTIL IT WAS REORGANIZED AS A SERIES OF STAGECOACH FUNDS,
INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE SEPTEMBER 6, 1996
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE FUND COMMENCED OPERATIONS ON OCTOBER 27, 1993.
The accompanying notes are an integral part of these financial statements.
---------------------
23
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S. GOVERNMENT
INCOME FUND (CONT.)
----------------------------------
INSTITUTIONAL CLASS
----------------------------------
SIX MONTHS PERIOD
YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (1) 1996 (2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $9.45 $9.54 $9.46
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.51 0.34 0.03
Net realized and unrealized gain (loss) on investments 0.31 (0.09) 0.08
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.82 0.25 0.11
LESS DISTRIBUTIONS:
Dividends from net investment income (0.51) (0.34) (0.03)
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.51) (0.34) (0.03)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $9.76 $9.45 $9.54
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 8.85% 2.58% 1.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $51,973 $60,150 $73,637
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.69% 0.65% 0.59%
Ratio of net investment income to average net assets 5.28% 7.01% 5.14%
Portfolio turnover 48% 52% 389%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.07% 1.02% 0.84%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.90% 6.64% 4.89%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(2) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
24
<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 Intermediate Bond and Short-Intermediate U.S.
Government Income Funds (each, a "Fund", collectively, the "Funds"), each a
diversified series of the Company.
At a special shareholders meeting on July 16, 1996, the Shareholders of Pacifica
Funds Trust ("Pacifica") approved a plan of reorganization providing for the
transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Intermediate Bond Fund was
established to acquire all of the assets and assume all of the liabilities of
the Pacifica Intermediate Bond Fund (previously, the Westcore Bonds Plus Fund),
the "Predecessor Fund". Additionally, the Short-Intermediate U.S. Government
Income Fund acquired all of the assets and assumed all of the liabilities of the
Pacifica Short-Term Government Bond and Government Income Funds. These
acquisitions were accomplished in separate tax-free exchanges for shares of the
respective Stagecoach Fund. All performance and financial data for the
Intermediate Bond Fund for periods prior to September 6, 1996 refers to the
Predecessor Fund.
The Intermediate Bond Fund offers Class A, Class B, and Institutional Class
shares. The Short-Intermediate U.S. Government Income Fund offers Class A and
Institutional Class shares. The separate classes of shares differ principally in
the applicable sales charges, distribution fees, shareholder servicing fees and
transfer agency fees. Shareholders of each class also bear certain expenses that
pertain to that particular class. All shareholders bear the common expenses of
the Fund and earn income from the portfolio pro rata based on the average daily
net assets of each class, without distinction between share classes. Dividends
are determined separately for each class based on income and expenses allocable
to each class. Realized gains are allocated to each class pro rata based upon
net assets of each class on the date of distribution. No class has preferential
dividend rights. Differences in per share dividend rates generally result from
the relative weightings of pro rata income and realized gain allocations and
from differences in separate class expenses, including distribution, shareholder
servicing and transfer agency fees.
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.
---------------------
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
SECURITY VALUATION
All securities are valued at the close of each business day. Securities for
which the primary market is a national or foreign recognized securities or
commodities exchange or the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System are valued at the last reported
sales price on the day of valuation. Debt securities are generally traded in the
over-the-counter market and are valued at a price deemed best to reflect fair
value as quoted by dealers who make markets in those securities or by an
independent pricing source. U.S. Government obligations are valued at the last
reported bid price. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding money market
instruments maturing in 60 days or less, the valuations are based on latest
quoted bid prices. Debt securities maturing in 60 days or less are valued at
amortized cost. 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. Securities for which
quotations are not readily available are valued at fair value as determined by
policies set by the Company's Board of Directors.
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 each Fund's Portfolio of
Investments. The Funds 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 by the Funds are collateralized by instruments such as U.S.
Treasury or federal agency obligations.
- ---------------------
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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
Each Fund is treated as a separate entity for federal income tax purposes. It is
the policy of each Fund of the Company 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 substantially all, federal income taxes. Accordingly, no
provision for federal income taxes was required at March 31, 1998. The Funds had
net capital loss carryforwards at December 31, 1997, the end of the most recent
tax year, as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS
FUND YEAR EXPIRES CARRYFORWARDS
<S> <C> <C>
- ------------------------------------------------------------------------------------------
Intermediate Bond Fund 2001 $1,797,147
2002 17,986
Short-Intermediate U.S. Government Income Fund 2002 6,807,249
2003 7,074,103
2004 753,400
</TABLE>
The capital loss carryforwards shown above include carryforwards from the
Pacifica Funds which merged into the Funds in 1996. Certain loss carryforwards
for the Short-Intermediate U.S. Government Income Fund resulted from
transactions entered into by the Variable Rate Government Fund prior to its
merger into the Short-Intermediate U.S. Government Income Fund in 1995. The
utilization of these loss carryforwards from the Variable Rate Government Fund
may be subject to limitations as a result of rules in the Code applicable to
corporate changes of ownership.
The Company's Board of Directors intends to offset net capital gains with each
capital loss carryforward, and no capital gain distribution shall be made until
each such carryforward has been fully utilized or expires.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by a
Fund. The differences between the income or gains distributed on a book versus
tax basis are shown as excess distributions of net investment income and net
realized gain on sales of
---------------------
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
investments in the accompanying Statements of Changes in Net Assets. The amount
of distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from GAAP. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent that these differences are permanent in
nature, such amounts are reclassified within the capital accounts based on their
federal tax-basis treatment; temporary differences do not require
reclassifications.
ORGANIZATION COSTS
Certain costs incurred in connection with the organization of the Funds and
their initial registration with the Securities and Exchange Commission and with
the various states are amortized on a straight-line basis over 60 months from
the date each Fund commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Funds
with WFB. Pursuant to the contracts, WFB has agreed to provide the Funds with
daily portfolio management. Under the contracts WFB is entitled to be paid a
monthly advisory fee at an annual rate of 0.50% of the average daily net assets
of each Fund.
The Company has entered into contracts on behalf of each Fund with WFB, whereby
WFB is responsible for providing custody and portfolio accounting services for
the Funds. Pursuant to the contracts, WFB is entitled to certain transaction
charges plus a monthly fee for custody services at an annual rate of 0.0167% of
the average daily net assets of each Fund. For portfolio accounting services,
WFB is entitled to a monthly base fee from each Fund of $2,000 plus an annual
fee of 0.07% of the first $50 million of each Fund's average daily net assets,
0.045% of the next $50 million, and 0.02% of each Fund's average daily net
assets in excess of $100 million.
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB provides transfer agency services for the Funds. Under the transfer agency
contract, WFB is entitled to receive transfer agency fees at an annual rate of
0.14% of the average daily net assets of the Class A and Class B shares of the
Intermediate Bond Fund, 0.14% of the average daily net assets of the Class A
shares of the Short-Intermediate U.S. Government Income Fund and 0.06% of the
average daily net assets of the Institutional Class shares of the Funds.
- ---------------------
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The transfer agency fees paid on behalf of the Funds for the year ended March
31, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Intermediate Bond Fund $ 6,513 $4,495 $25,026
Short-Intermediate U.S. Government Income Fund 44,076 N/A 34,093
</TABLE>
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services for the Funds. Pursuant to the
contracts, WFB is entitled to receive shareholder servicing fees at an annual
rate of 0.30% of the average daily net assets of the Class A shares of the
Short-Intermediate U.S. Government Income Fund, and 0.25% of the average daily
net assets of each of the classes of the Intermediate Bond Fund and the
Institutional Class shares of the Short-Intermediate U.S. Government Income
Fund.
The shareholder servicing fees paid on behalf of the Funds for the year ended
March 31, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Intermediate Bond Fund $11,631 $8,026 $104,275
Short-Intermediate U.S. Government Income Fund 94,448 N/A 142,053
</TABLE>
The Company has entered into administration agreements on behalf of the Funds
whereby WFB as administrator and Stephens Inc. ("Stephens") as co-administrator
provide each 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 each 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 each Fund's average daily net assets.
The Company has adopted separate Distribution Plans for Class A shares of the
Funds and Class B shares of the Intermediate Bond Fund pursuant to Rule 12b-1
under the 1940 Act (each, a "Plan"). The Plan for Class A shares of the
Short-Intermediate U.S. Government Income Fund provides that the Fund may defray
all or part of the cost of preparing, printing and distributing prospectuses and
other promotional materials by paying for costs incurred on an annual basis of
up to 0.05% of the average daily net assets attributable to its Class A shares.
The Plan for Class A shares of the Intermediate Bond Fund provides that the Fund
may pay to Stephens, as compensation for distribution-related services or as
reimbursement for
distri-
---------------------
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
bution-related expenses, up to 0.05% of the average daily net assets
attributable to its Class A shares.
The Plan for Class B shares of the Intermediate Bond Fund provides that the Fund
may pay to Stephens, as compensation for distribution-related services or as
reimbursement for distribution-related expenses, up to 0.75% of the average
daily net assets attributable to its Class B shares.
Each Fund may participate in joint distribution activities with other Funds, in
which event, expenses reimbursed out of the assets of one of the Funds may be
attributable, in part, to the distribution-related activities of another Fund.
Generally, the expenses of joint distribution activities are allocated among the
Funds in proportion to their relative net asset sizes.
The distribution fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
Intermediate Bond Fund $2,326 $24,081
Short-Intermediate U.S. Government Income Fund 15,741 N/A
</TABLE>
The registration fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Intermediate Bond Fund $7,686 $5,882 $15,284
Short-Intermediate U.S. Government Income Fund 1,655 N/A 13,124
</TABLE>
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statement of
Operations for the year ended March 31, 1998 were waived by WFB. Waived fees and
reimbursed expenses continue at the discretion of WFB and Stephens. WFB and
Stephens agreed to waive or reimburse all or a portion of their respective fees
charged to, or expenses paid by, the Funds to ensure that the total Funds'
operating expenses did not exceed, on an annual basis, 0.80% and 0.71% of the
average daily net assets of the Intermediate Bond and Short-Intermediate U.S.
Government Income Funds' Class A shares, respectively, and 0.75% and 0.65% of
the average daily net assets of the Intermediate Bond and Short-Intermediate
U.S. Government Income Funds' Institutional Class shares, respectively, through
August 31, 1997.
Certain officers and one director of the Company are also officers of Stephens.
As of March 31, 1998, Stephens owned 6 shares of the Intermediate Bond and 130
shares of the Short-Intermediate U.S. Government Income Funds.
- ---------------------
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Stephens has retained $5,404,593 as sales charges from the proceeds of Class A
shares sold and $1,120,619 from the proceeds of Class B shares redeemed by the
Company for the year ended March 31, 1998. Wells Fargo Securities Inc., a
subsidiary of WFB, received $4,508,566 as sales charges from the proceeds of
Class A shares sold and $840,060 from the proceeds of Class B shares redeemed by
the Company for the year ended March 31, 1998.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each Fund
for the year ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
AGGREGATE PURCHASES INTERMEDIATE U.S. GOVERNMENT
AND SALES BOND FUND INCOME FUND
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Total purchases at cost $45,023,358 $39,795,071
Total sales proceeds 38,124,095 52,248,016
</TABLE>
4. 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 Intermediate
Bond Fund was authorized to issue 100 million shares of $0.001 par value capital
stock for each class of shares. The Short-Intermediate U.S. Government Income
Fund was authorized to issue 200 million shares of $0.001 par value capital
stock for each class of shares.
---------------------
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Capital share transactions for the Funds were as follows:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
---------------------------------------
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1997 1997 1996
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 550,386 12,388 33,572
Shares issued in reinvestment of dividends --
Class A 10,297 3,659 17,750
Shares redeemed -- Class A (147,207) (38,323) (3,650,324)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A 413,476 (22,276) (3,599,002)
Shares sold -- Class B 659,975 67,910 3
Shares issued in reinvestment of dividends --
Class B 10,973 137 0
Shares redeemed -- Class B (31,595) 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS B 639,353 68,047 3
Shares sold -- Institutional Class 698,116 396,109 4,275,471
Shares issued in reinvestment of dividends --
Institutional Class 104,788 53,628 117,940
Shares redeemed -- Institutional Class (980,260) (538,901) (1,339,178)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS (177,356) (89,164) 3,054,233
</TABLE>
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
U.S. GOVERNMENT INCOME FUND
-----------------------------------------
FOR THE FOR THE SIX FOR THE NINE
YEAR ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996 (1)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 552,800 344,402 5,141,274
Shares issued in reinvestment of dividends --
Class A 132,231 96,320 184,087
Shares redeemed -- Class A (1,220,467) (773,143) (5,467,391)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A (535,436) (332,421) (142,030)
Shares sold -- Institutional Class 587,082 475,795 7,965,695
Shares issued in reinvestment of dividends --
Institutional Class 91,268 69,465 99
Shares redeemed -- Institutional Class (1,716,365) (1,900,814) (246,997)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS (1,038,015) (1,355,554) 7,718,797
</TABLE>
(1) "SHARES SOLD" INCLUDES 2,016,780 FOR CLASS A AND 7,827,393 FOR THE
INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA SHORT-TERM GOVERNMENT BOND
FUND AND PACIFICA GOVERNMENT INCOME FUND MERGER.
- ---------------------
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
5. SUBSEQUENT EVENTS
The Funds have changed their fiscal year-ends to June 30.
At a meeting held on January 29, 1998, the Company's Board of Directors approved
a Plan of Consolidation (the "Plan") that, if approved by shareholders, will
result in shareholders of the Intermediate Bond Fund becoming shareholders of a
designated class of the Short-Intermediate U.S. Government Income Fund. The Plan
provides for the transfer of all of the assets and liabilities of the
Intermediate Bond Fund to the portfolio of the Short-Intermediate U.S.
Government Income Fund in exchange for shares of designated classes of the
Short-Intermediate U.S. Government Income Fund (the "Consolidation"). If the
Plan is approved by shareholders of the Intermediate Bond Fund, each such
shareholder will hold shares of the Short-Intermediate U.S. Government Income
Fund that are equal in value to the shares of the Intermediate Bond Fund held by
the shareholder immediately prior to the Consolidation.
CONSOLIDATION MAP
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND WOULD RECEIVE THE FOLLOWING CLASSES
SHAREHOLDERS OWNING THE OF SHORT-INTERMEDIATE
FOLLOWING CLASS: U.S. GOVERNMENT INCOME FUND SHARES:
- ----------------------------------------------- -----------------------------------------------
<S> <C>
Class A shares Class A shares
Class B shares Class B shares
Institutional Class shares Institutional Class shares
</TABLE>
If the Plan is approved by a vote of a majority of the shareholders of the
Intermediate Bond Fund, the Consolidation would occur on or about June 12, 1998
and the Class B shares of the Short-Intermediate U.S. Government Income Fund
would commence operations at the same time.
---------------------
33
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
34
<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 Intermediate Bond Fund and
Short-Intermediate U.S. Government Income Fund (two of the funds comprising
Stagecoach Funds, Inc.) as of March 31, 1998, and the related statement of
operations for the year then ended, the statements of changes in net assets of
the Intermediate Bond Fund for the year ended March 31, 1998, the six months
ended March 31, 1997, and the year ended September 30, 1996, and the
Short-Intermediate U.S. Government Income Fund for the year ended March 31,
1998, the six months ended March 31, 1997, and the nine months ended September
30, 1996, 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. For the
Intermediate Bond Fund, all years or periods indicated in the accompanying
financial highlights ending prior to October 1, 1995, were audited by other
auditors whose report dated November 3, 1995, expressed an unqualified opinion
on this information.
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 each
of the aforementioned funds of Stagecoach Funds, Inc. as of March 31, 1998, the
results of their operations, the changes in their net assets and their financial
highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 1, 1998
---------------------
35
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
36
<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>
---------------------
37
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
38
<PAGE>
Wells Fargo 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 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 IC R (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
