<PAGE>
STAGECOACH FUNDS(R)
Semi-Annual Report
Strategic Growth Fund
[ART APPEARS HERE]
June 30, 1998
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Strategic Growth Fund
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Table of Contents Strategic Growth Fund
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Letter to Shareholders...............................2
Performance at a Glance..............................4
Investment Advisor Commentary........................5
Portfolio of Investments.............................9
Statement of Assets and Liabilities..................15
Financial Highlights.................................19
Notes to the Financial Statements....................23
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NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
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Strategic Growth Fund
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1
<PAGE>
Letter to Shareholders Strategic Growth Fund
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Letter to Shareholders
Thank you for your investment in the Stagecoach Funds.
We are pleased to present this Semi-Annual Report to you for the period ended
June 30, 1998. The purpose of the Semi-Annual Report is to provide important
information and an in-depth review of your investment. Three major topics are
highlighted, including a performance summary, portfolio review, and strategic
outlook for the Fund.
For the six-month reporting period ending June 30, 1998, there were continued
positive earnings for most domestic long-term investors. Stocks, as measured by
the S&P 500 Index/1/ returned 30.17% as a result of strong corporate earnings
and low inflation. Government bonds also performed well, with returns of 19.63%
as measured by the Lehman Brothers Long Government Bond Index./2/
During the period, the biggest event impacting the financial markets and U.S.
economy was the economic crisis in Asia. The crisis began to unfold in late 1997
as Asian companies and governments could not afford to pay for excessive
borrowing that had accumulated over several years. In addition, Asian currencies
began to lose value, negatively affecting businesses within the region. These
factors combined to create a destabilizing effect on markets throughout Asia.
Lack of confidence in Asian markets prompted Asian investors to make a "flight
to quality" by investing in U.S. Treasury securities, which increased U.S.
Treasury security prices.
The challenges of investing in today's markets make mutual funds one of the
most popular investment vehicles. Investors poured more than $461 billion into
mutual funds for the twelve-month period ended May 31, 1998, according to
Strategic Insight, an industry research firm. We understand that you have a
variety of investment options and appreciate your confidence in selecting us to
manage your money.
2
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Strategic Growth Fund Letter to Shareholders
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Over the years, the Stagecoach Funds have built a reputation for innovation,
leadership and commitment to investors. In addition to our equity funds, we are
proud to lead the industry by offering eight innovative asset allocation funds.
Each Fund offers a comprehensive asset allocation strategy that can provide a
solid foundation for any investment portfolio.
As part of our commitment to investor education, we completely redesigned and
restructured our prospectuses to make investing as simple and as informative as
possible. You will find that our marketing materials and shareholder
correspondence are designed to help you better understand your investment.
We encourage you to review this Semi-Annual Report. We hope that you will
find it useful and informative, and recommend that you continually review your
investment portfolio with a financial consultant to determine an appropriate mix
of investments to meet your ongoing needs. Thank you for your continued
investment with the Stagecoach Funds.
Sincerely,
/s/ Michael J. Hogan /s/ R. Greg Feltus
Michael J. Hogan R. Greg Feltus
Senior Vice President Chairman and President
Wells Fargo Bank, of Stagecoach Funds
Mutual Fund Group
/1/ 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.
/2/ The Lehman Brothers Long Government Bond Index is an unmanaged index
composed of U.S. Treasury bonds with 20-year or longer maturities.
3
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Performance at a Glance Strategic Growth Fund
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Average Annual Total Returns (%)/1/
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Excluding Sales Charge
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Year- 1-Year 5-Year Since
to-Date Inception
Class A 8.87 16.90 17.16 19.34
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Class B 8.55 16.17 16.21 18.23
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Class C 8.55 16.13 16.20 18.22
Including Sales Charge/2/
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Year- 1-Year 5-Year Since
to-Date Inception
Class A 3.13 10.79 15.90 18.17
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Class B 3.55 11.17 16.04 18.14
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Class C 7.55 15.13 16.20 18.22
Performance shown for the retail classes of shares of certain of the Stagecoach
Funds reflects performance of predecessor fund share classes. In cases where a
retail class share of a Stagecoach Fund has higher charges and/or expenses than
its predecessor, the Stagecoach Fund performance has been adjusted to reflect
those higher charges and/or expenses. Complete historical information about any
Stagecoach Fund share class may be found in such Fund's prospectus, statement of
additional information or annual report, all of which are available free of
charge by calling Stagecoach Funds Investor Services at 1-800-222-8222.
There may be some additional risks associated with investments in smaller and/or
newer companies because their shares tend to be less liquid than securities of
larger companies. Further, shares of small and new companies are generally more
sensitive to purchase and sale transactions and changes in the issuer's
financial condition and, therefore, the prices of such stocks may be more
volatile than those of larger company stocks.
/1/ 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.
/2/ For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. The maximum sales charge for Class C
shares is 1.00%. Class B and Class C share performance with sales charge assumes
the sales charge for the corresponding time period.
4
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Strategic Growth Fund Investment Advisor Commentary
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Strategic Growth Fund
The Strategic Growth Fund (the "Fund") seeks to provide investors with an
above-average level of capital appreciation. The Fund primarily invests in
equity securities of companies expected to experience strong growth in revenues
and earnings. In addition, the Fund may invest up to 40% of its assets in
securities acquired in the Initial Public Offering ("IPO") market. While
generally more volatile, these new issues can potentially offer greater growth
opportunities.
Jon Hickman manages the Strategic Growth Fund. Mr. Hickman joined Wells
Fargo Bank in 1986 when the bank merged with Crocker National Bank. In addition
to managing the Fund, he also manages several large individual equity and
balanced portfolios. Mr. Hickman has an MBA in Finance from Brigham Young
University.
Performance Summary
During the six-month reporting period ended June 30, 1998, the Fund's Class
A shares reported a cumulative total return of 8.87%, excluding sales charges.
The Fund underperformed its benchmark, the S&P 500 Index, which returned 17.71%
over the same period.
Strategic Growth Fund's performance was subject to the uncertainty created
from the Asian market crisis. As a result, we took special precaution in
reviewing the Fund's portfolio to limit exposure to Asia. For example, we
decreased our positions in semiconductor and personal computer related stocks
because we believed that these companies would be negatively impacted by lower
demand from Asian countries.
Portfolio Data
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Number of Issues 133
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Beta 1.29
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Median Market Capitalization ($B) $1.0
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Weighted Average P/E 46.4
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Weighted Average Price to Book 6.9
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5
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Investment Advisor Commentary Strategic Growth Fund
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The Fund did, however, benefit from a market correction in small and
mid-cap issues in May. During this time, we were able to select quality issues
at attractive prices. What's more, IPOs in the Fund's portfolio, such as J.D.
Edwards also helped lift performance. We liked this company because it had
strong future growth projections as well as a strong management team. While
generally more volatile, new issues can potentially offer greater growth
opportunities.
During the six-month reporting period, the Strategic Growth Fund's Class A
net asset value increased from $19.96 on December 31, 1997 to $21.73 on June
30, 1998. The Fund did not distribute dividend income or capital gains.
Portfolio Review
The Fund is managed with a mid-cap growth emphasis, and potential holdings
are primarily companies with attractive long-term earnings growth prospects. The
Fund may also invest in IPOs, turn around or acquisition candidates, or
attractive smaller-sized companies. These companies often see accelerated growth
rates and can help contribute to the Fund's growth objective. We focus on new
technology and companies that benefit from changing industries with new
technologies. Opportunities are continually researched in high growth sectors
including technology, biotechnology and consumer growth companies.
The Fund's assets were invested 93% in stocks and 7% in cash and cash
equivalents at the end of the reporting period. As of June 30, 1998, the
portfolio was comprised of 133 stocks spanning many industries.
One area where we saw long-term opportunity was the assisted living sector.
We bought stocks in this sector because we anticipate a large demand for people
to be properly cared for as the U.S. population continues to age.
Hollywood Entertainment is an example of a video chain on a renewed growth
track. We are impressed by the company's management and believe
Portfolio Allocation
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[PIE CHART APPEARS HERE]
93% Stocks
7% Cash
6
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Strategic Growth Fund Investment Advisor Commentary
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they have a solid vision for achieving long-term success. Specifically, they are
making revolutionary efforts to help meet the needs of their customers. They
have approached the Hollywood studios and have entered into a new marketing
arrangement to get more videos at lower costs up front, with profit sharing
taking place after the videos are rented. This new business model is increasing
the company's same-store sales growth.
Top 10 Equity Holdings
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Name % of Portfolio
Envoy Corp. 1.9%
CompuWare Corp. 1.6%
HBO & Co. 1.6%
Advanced Fibre Communications 1.6%
Keane Inc. 1.5%
CSG Systems Intl. Inc. 1.5%
Administaff Inc. 1.5%
SLM Holding Corp. 1.5%
Atlantic Coast Airlines Inc. 1.4%
Applied Graphics Technology 1.4%
Strategic Outlook
We feel that the nation's economy, while currently healthy, may weaken in
the next few months due to events in Asia. Although the problems in Asia could
last several years, we believe that the economy will continue to remain strong.
Key indicators of this strength will be a strong U.S. dollar and stable to low
inflation levels. We feel that the Federal Reserve Board will not drastically
modify rates in the near future.
Based on this economic outlook, we will focus on mid-cap stocks that are
domestically oriented with high future growth projections. Our management team
will continue to search for companies that are characterized by dominant market
share, technological leadership and a strong management team. We will continue
to watch the events in Asia closely and monitor the region's impact on U.S.
corporate profitability. This will help us remain
7
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Investment Advisor Commentary Strategic Growth Fund
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sensitive to the performance of the Fund's holdings.
As a result, we feel that the Fund is positioned very
well for the upcoming months and we expect to
produce solid performance.
8
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Strategic Growth Fund Portfolio of Investments (Unaudited)
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<TABLE>
<CAPTION>
Shares Security Name Cost Value
<S> <C> <C> <C>
COMMON STOCKS - 97.55%
ADVERTISING - 1.35%
90,000 HA-LO Industries Incorporated + $2,107,447 $2,801,250
BIOTECHNOLOGY - 0.59%
40,000 Neurex Corporation + $1,155,000 $1,215,000
CAPITAL GOODS - 10.27%
85,000 Advanced Fibre Communications Incorporated+ $2,847,500 $3,405,312
20,000 BE Aerospace Incorporated 461,250 582,500
100,000 Cellnet Data Systems Incorporated + 1,245,572 968,750
70,000 Concentric Network Corporation + 1,730,714 2,121,875
40,000 Condor Tech Solutions + 560,000 590,000
75,000 First Virtual Corporation + 740,625 909,375
25,000 Learning Company Incorporated + 684,313 740,625
30,000 Micrel Incorporated + 900,000 975,000
40,000 MIPS Technologies Incorporated 560,000 537,500
50,000 Pacific Gateway Exchange 2,098,438 2,003,125
70,000 Platinum Technology Incorporation + 1,823,127 1,999,375
35,000 Sanmina Corporation + 1,304,376 1,518,125
100,200 Smed International Incorporated + 1,871,580 1,803,600
30,000 Sterling Commerce Incorporated 1,234,988 1,455,000
105,000 Tristar Aerospace Incorporated 1,676,200 1,627,500
-------------------------------
$19,738,683 $21,237,662
COMMERCIAL SERVICES - 1.91%
35,000 AccuStaff Incorporated + $1,060,850 $1,093,750
75,000 Boron Lepore & Associates Incorporated + 2,116,625 2,850,000
-------------------------------
$3,177,475 $3,943,750
COMPUTER SOFTWARE - 5.73%
10,000 America Online Incorporated + $354,363 $1,060,000
100,000 Aris Corporation + 2,489,167 2,800,000
20,000 Lycos Incorporated + 1,078,500 1,507,500
20,000 Microsoft Corporation + 1,257,138 2,167,500
75,000 Quadramed Corporation 1,967,875 2,048,437
55,000 Veritas Software Corporation + 1,973,125 2,275,625
-------------------------------
$9,120,168 $11,859,062
COMPUTER SYSTEMS - 2.31%
30,000 Cisco Systems Incorporated + $1,765,000 $2,761,875
106,157 Power Integrations Incorporated 972,240 968,683
25,000 Solectron Corporation + 1,025,983 1,051,563
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$3,763,223 $4,782,121
</TABLE>
9
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Portfolio of Investments (Unaudited) Strategic Growth Fund
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<TABLE>
<CAPTION>
Shares Security Name Cost Value
<S> <C> <C> <C>
CONSUMER - BASIC - 3.95%
130,000 Capital Senior Living Corporation $1,706,240 $1,600,625
1,125 Clinichem Development Incorporated 6,750 6,469
30,000 Kendle International Incorporated + 736,500 907,500
36,500 Laser Vision Centers Incorporated + 506,438 442,562
95,000 Omega Protein Corporation + 1,597,335 1,520,000
30,000 Sunrise Assisted Living Incorporated 994,211 1,031,250
50,000 Total Renal Care Holdings Incorporated + 1,796,255 1,725,000
55,000 Weider Nutrition International Incorporated 868,300 935,000
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$8,212,029 $8,168,406
CONSUMER-DISCRETIONARY - 8.46%
49,000 99 Cents Only Stores + $1,861,547 $2,033,500
45,000 CKE Restaurants Incorporated 1,768,060 1,856,250
145,000 Cultural Access Worldwide Incorporated + 1,717,813 1,413,750
60,000 Headway Corporate Resources Incorporated + 724,150 712,500
150,000 Hollywood Entertainment Corporation + 1,758,178 2,034,375
10,000 Information Management Resources Incorporated + 260,750 338,125
10,900 North American Scientific Incorporation + 303,100 224,813
50,000 Profit Recovery Group International Incorporated+ 1,266,563 1,396,875
35,000 Restoration Hardware Incorporated + 746,250 879,375
20,000 Ross Stores Incorporated 822,500 860,000
40,000 Saville Systems PLC Sponsored ADR + 2,055,938 2,005,000
30,000 Tommy Hilfiger Corporation + 1,969,300 1,875,000
75,000 Verio Incorporated 1,805,625 1,865,625
-------------------------------
$17,059,774 $17,495,188
ENERGY & RELATED - 3.82%
20,000 Diamond Offshore Drilling Incorporated $1,056,972 $800,000
30,000 Friede Goldman International Incorporated + 851,875 866,250
50,000 Noble Drilling Corporation + 1,426,738 1,203,125
100,000 R & B Falcon Corporation + 3,648,660 2,262,500
50,000 Santa Fe International Corporation 1,969,683 1,512,500
25,000 Veritas Digicon Incorporated + 1,363,757 1,248,437
-------------------------------
$10,317,685 $7,892,812
ENTERTAINMENT & LEISURE - 0.73%
60,000 Family Golf Centers Incorporated + $1,168,563 $1,518,750
FINANCE & RELATED - 6.83%
62,500 Coinstar Incorporated + $576,972 $578,125
20,000 Conseco Incorporated 1,009,589 935,000
85,000 Envoy Corporation 2,573,926 4,026,875
30,000 Guidant Corporation 2,042,687 2,139,375
90,000 Laser Mortgage Management Incorporated 1,539,150 978,750
65,000 SLM Holding Corporation 2,900,150 3,185,000
85,000 Sunstone Hotel Investors Incorporated 1,363,803 1,131,563
60,000 Unicapital Corporation + 982,708 1,147,500
-------------------------------
$12,988,985 $14,122,188
</TABLE>
10
<PAGE>
Strategic Growth Fund Portfolio of Investments (Unaudited)
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<TABLE>
<CAPTION>
Shares Security Name Cost Value
<S> <C> <C> <C>
FOOD & RELATED - 1.10%
75,000 NuCo2 Incorporated + $1,112,349 $773,438
25,000 Suiza Foods Corporation + 1,344,859 1,492,187
-------------------------------
$2,457,208 $2,265,625
GENERAL BUSINESS & RELATED - 20.66%
70,000 Administaff Incorporated $2,865,645 $3,228,750
65,000 Applied Graphics Technologies + 3,105,312 2,973,750
10,000 At Home Corporation 455,469 473,125
27,500 Cambridge Tech Partners Incorporated + 1,378,750 1,502,187
40,000 Chancelor Media Corporation + 1,673,638 1,986,250
70,000 CSG Systems International Incorporated + 2,811,950 3,281,250
80,000 Cunningham Graphics International Incorporated 1,394,063 1,380,000
110,000 Daou Systems Incorporated + 2,466,897 2,516,250
50,000 Gartner Group Incorporated Class A + 1,671,875 1,750,000
80,000 Genesys Telecommunication Labs Incorporated 2,460,000 2,645,000
100,000 HBO & Company 1,614,555 3,525,000
120,000 Industrial Distribution Group Incorporated 2,208,137 1,860,000
60,000 International Integration Incorporated + 910,313 1,035,000
75,000 ITT Educational Services Incorporated + 1,978,863 2,418,750
40,000 J D Edwards & Company + 1,414,375 1,717,500
60,000 Metamor Worldwide Incorporated + 2,038,064 2,111,250
40,000 Micromuse Incorporated + 744,218 1,632,500
60,000 Parexel International Corporation + 1,715,020 2,182,500
110,000 Philip Services Corporation + 1,022,919 453,750
71,500 Primus Telecommunications Group Incorporated 1,249,375 1,354,031
30,000 SCC Communications Corporation 367,500 367,500
30,000 Staffmark Incorporated 1,076,874 1,098,750
100,000 Teletech Holdings Incorporated + 1,291,250 1,225,000
-------------------------------
$37,915,062 $42,718,093
HEALTHCARE - 0.99%
22,800 Covance Incorporated + $537,011 $532,950
185,000 Somnus Medical Technologies 2,125,782 1,514,687
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$2,662,793 $2,047,637
LARGE CAPITALIZATION STOCKS - 2.08%
40,000 Ceridian Corporation $2,221,913 $2,350,000
20,000 Circuit City Stores Incorporated 944,232 937,500
80,000 Novell Incorporated + 1,038,909 1,020,000
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$4,205,054 $4,307,500
MANUFACTURING PROCESSING - 7.35%
96,200 Cryolife Incorporated + $1,572,498 $1,515,150
60,000 Keane Incorporated 2,871,225 3,360,000
60,000 Mettler-Toledo International Incorporated + 1,200,000 1,203,750
45,000 Ocular Sciences Incorporated + 1,283,125 1,462,500
150,000 Pharmerica Incorporated + 2,142,188 1,809,375
100,000 PSS World Medical Incorporated 1,513,123 1,462,500
</TABLE>
11
<PAGE>
Portfolio of Investments (Unaudited) Strategic Growth Fund
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<TABLE>
<CAPTION>
Shares Security Name Cost Value
<S> <C> <C> <C>
MANUFACTURING PROCESSING (continued)
50,000 Safeskin Corporation + $ 2,025,624 $ 2,056,250
60,000 Sonus Pharmaceuticals Incorporated 774,688 738,750
50,000 Technology Solutions Incorporated + 1,638,126 1,584,375
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$15,020,597 $15,192,650
MEDIUM CAPITALIZATION STOCKS - 6.40%
40,000 Altera Corporation + $1,615,620 $1,182,500
40,000 Centocor Incorporated + 1,693,438 1,450,000
70,000 Compuware Corporation + 3,345,000 3,578,750
40,000 Consolidated Stores Corporation + 1,554,669 1,450,000
25,000 MGIC Investment Corporation 1,659,000 1,426,563
45,000 Office Depot Incorporated + 1,469,014 1,420,312
25,000 Parametric Technology Corporation + 799,688 678,125
60,000 Xilinx Incorporated + 2,298,438 2,040,000
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$14,434,867 $13,226,250
PHARMACEUTICALS - 2.18%
100,000 Anesta Corporation $1,586,407 $1,443,750
45,000 Biochem Pharma Incorporated + 1,083,000 1,192,500
30,000 MedImmune Incorporated + 1,541,591 1,871,250
-------------------------------
$4,210,998 $4,507,500
RETAIL & RELATED - 2.39%
35,000 Barnes & Noble Incorporated + $1,151,244 $1,310,312
120,000 Oakley Incorporated + 1,651,310 1,560,000
55,000 Rite Aid Corporation 1,785,451 2,065,938
-------------------------------
$4,588,005 $4,936,250
SHELTER & RELATED - 2.91%
110,000 Brookdale Living Communities Incorporated + $1,958,313 $2,818,750
70,000 Lennar Corporation 2,033,230 2,065,000
25,000 Martin Mareitta Materials Incorporated 1,114,008 1,125,000
-------------------------------
$5,105,551 $6,008,750
TELECOMMUNICATIONS - 0.24%
10,000 Ascend Communication Incorporated + $328,125 $495,625
TRANSPORTATION - 3.24%
100,000 Atlantic Coast Airlines Incorporated + $2,671,751 $3,000,000
120,000 Midway Airlines Corporation 2,072,563 2,295,000
50,000 Skywest Incorporated 1,030,675 1,400,000
-------------------------------
$5,774,989 $6,695,000
UTILITIES - 2.06%
50,000 International Telecommunication
Data Systems Incorporated + $1,200,000 $1,450,000
22,500 KN Energy Incorporated 1,170,000 1,219,219
30,000 Zions Bancorporation 1,473,750 1,593,750
-------------------------------
$3,843,750 $4,262,969
===============================
TOTAL COMMON STOCKS $189,356,031 $201,700,038
</TABLE>
12
<PAGE>
Strategic Growth Fund Portfolio of Investments
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<TABLE>
<CAPTION>
Principal Security Name Interest Maturity
Rate Date Value
<S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 7.80%
REPURCHASE AGREEMENTS - 7.80%
$3,198,000 Goldman Sachs Pooled Repurchase Agreement
- 102% Collateralized by U.S. Government Securities 5.75% 07/01/98 $3,198,000
4,295,000 HSBC Securities Inc Repurchase Agreement
- 102% Collateralized by U.S. Government Securities 5.75 07/01/98 4,295,000
8,632,000 JP Morgan Securities Inc Repurchase Agreement
- 102% Collateralized by U.S. Government Securities 5.65 07/01/98 8,632,000
TOTAL SHORT-TERM INSTRUMENTS $16,125,000
(Cost $16,125,000)
TOTAL INVESTMENTS IN SECURITIES
------------------------------------------------------------------------------------------------
(Cost $205,481,016)* (Notes 1 and 3) 105.35% $217,825,038
Other Assets and Liabilities, Net (5.35) (11,067,444)
----------------- -----------------
TOTAL NET ASSETS 100.00% $206,757,594
================= =================
- ------------------------------------------------------------------------------------------------------------
</TABLE>
+Non-income earning securities.
*Cost for federal income tax purposes is the same as for financial statement
purposes and net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 22,089,962
Gross Unrealized Depreciation (9,745,940)
--------------
Net Unrealized Appreciation $ 12,344,022
==============
The accompanying notes are an integral part of these financial statements.
13
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Strategic Growth Fund
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14
<PAGE>
<TABLE>
<CAPTION>
Strategic Growth Fund Statement of Assets and Liabilities (unaudited) - June 30, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S>
Investments: <C>
In securities, at market value (See cost below) $ 217,825,038
Cash 1,945
Receivables:
Dividends and interest 44,679
Fund shares sold 49,367
Investment securities sold 5,928,903
Organizational expenses, net of amortization 0
Prepaid expenses 7,143
Total Assets 223,857,075
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------------
Payables:
Investment securities purchased 16,437,350
Distribution to shareholders 0
Fund shares redeemed 345,464
Due to sponsor and distributor (Note 2) 95,855
Due to adviser (Note 2) 155,873
Other 64,939
Total Liabilities 17,099,481
TOTAL NET ASSETS $ 206,757,594
Net assets consist of:
Paid-in capital $ 191,518,994
Undistributed net investment income (loss) (1,100,411)
Undistributed net realized gain(loss) 3,994,989
on investments
Net unrealized appreciation (depreciation) 12,344,022
of investments
TOTAL NET ASSETS $ 206,757,594
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets - Class A $ 151,060,220
Shares outstanding - Class A 6,951,073
Net asset value per share - Class A $ 21.73
Maximum offering price per share - Class A $ 22.93(1)
Net assets - Class B $ 27,528,415
Shares outstanding - Class B 1,042,479
Net asset value and offering price per share - Class B $ 26.41
Net assets - Class C $ 28,168,959
Shares outstanding - Class C 1,067,114
Net asset value and offering price per share - Class C $ 26.40
Investment At Cost (Note 3) $ 205,481,016
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Maximum offering price is computed as 100/94.75 of net asset value.
On investments of $50,000 or more the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities (unaudited) - June 30, 1998 Strategic Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME $ 202,371
Dividends 190,683
Interest 393,054
Total Investment Income
EXPENSES (NOTE 2) 515,253
Advisory fees 70,244
Administration fees 32,582
Custody fees 257,626
Shareholder servicing fees 51,106
Portfolio accounting fees 144,271
Transfer agency fees 293,074
Distribution fees 3,777
Organization cost 17,594
Legal and audit fees 34,421
Registration fees 2,217
Directors' fees 57,929
Shareholder reports 17,834
Other 1,497,928
Total Expenses
Less: (4,463)
Waived fees and reimbursed expenses 1,493,465
Net Expenses (1,100,411)
Net Investment Income
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 10,017,661
Net realized gain (loss) on sale of investments
Net change in unrealized appreciation 10,343,403
(depreciation) of investments 20,361,064
Net Gain (loss) on Investments
NET INCREASE (DECREASE) IN NET ASSETS $ 19,260,653
RESULTING FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
Strategic Growth Fund Statement of Changes in Net Assets (unaudited) - June 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
For the Six For the For the
Months Ended Year Ended Year Ended
June 30, 1998 Dec. 31, 1997(1) Dec. 31, 1996
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ (1,100,411) $ (1,976,702) $ (1,450,885)
Net realized gain (loss) on sale of investments 10,017,661 27,263,706 12,997,935
Net change in unrealized appreciation 10,343,403 (4,721,950) (4,523,410)
Net increase in net assets resulting from operations 19,260,653 20,565,054 7,023,640
Distributions to shareholders:
From net investment income
Class A 0 0 0
Class B 0 0(2) N/A
Class C 0 0 0
From net realized gain on sales of investments
Class A 0 (32,094,549) (941,378)
Class B 0 0(2) N/A
Class C 0 (12,310,107) (415,927)
Capital share transactions:
Proceeds from shares sold - Class A 85,743,875 227,568,030 154,071,907
Reinvestment of dividends - Class A 0 24,933,472 728,971
Cost of shares redeemed - Class A (96,848,064) (219,015,611) (86,486,498)
Net increase (decrease) in net assets
resulting from capital share transactions - Class A (11,104,189) 33,485,891 68,314,380
Proceeds from shares sold - Class B 5,361,937 23,193,050(2) N/A
Reinvestment of dividends - Class B 0(2) N/A
Cost of shares redeemed - Class B (3,468,161) (422,099)(2) N/A
Net increase (decrease) in net assets
resulting from capital share transactions - Class B 1,893,776 22,770,951(2) N/A
Proceeds from shares sold - Class C 24,512,080 221,398,643 110,701,166
Reinvestment of dividends - Class C 0 6,423,494 176,740
Cost of shares redeemed - Class C (41,096,452) (233,237,347) (83,911,395)
Net increase(decrease) in net assets
resulting from capital share transactions - Class C (16,584,372) (5,415,210) 26,966,511
Increase(decrease) in Net Assets (6,534,132) 27,002,030 100,947,226
Net Assets:
Beginning net assets 213,291,726 186,289,696 85,342,470
Ending net assets $ 206,757,594 $ 213,291,726 $ 186,289,696
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Proceeds from shares sold includes $37,967,719 for Class A shares, and
$22,688,669 for Class B shares as a result of the consolidation of the Overland
Express Strategic Growth Fund. See note 1.
(2) This class of shares commenced operations on December 15, 1997.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets (unaudited) - June 30, 1998 Strategic Growth Fund
- --------------------------------------------------------------------------------------------
<S> <C>
</TABLE>
The page intentionally left blank
18
<PAGE>
<TABLE>
<CAPTION>
Strategic Growth Fund Financial Highlights (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each period is as follows:
Class A(1)
Six Months Year Ended Year Ended
June 30, Dec. 31, Dec. 31,
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $19.96 $26.42 $24.12
Income from investment operations:
Net investment income (loss) (0.09) (0.07) (0.04)
Net realized and unrealized gain
(loss) on investments 1.86 2.48 2.54
Total from investment operations 1.77 2.41 2.50
Less Distributions:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain 0.00 (8.87) (0.20)
Tax return of capital 0.00 0.00 0.00
Total from Distributions 0.00 (8.87) (0.20)
NET ASSET VALUE, END OF PERIOD $21.73 $19.96 $26.42
Total Return* 8.87% 7.73% 10.32%
Ratios/supplemental data:
Net assets, end of period (000) $151,060 $148,122 $131,226
Ratios to average net assets (annualized):
Ratio of expenses to average net assets 1.27% 1.18%(6) 1.24%(6)
Ratio of net investment income
to average net assets (0.88%) (0.96%)(6) (0.82%)(6)
Portfolio turnover 239% 256%(6) 10%(5)
Average commission rate paid(2) $0.0568 $0.0622(6) $0.0760(5)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 1.27% 1.18%(6) 1.27%(6)
Ratio of net investment income to
average net assets prior to waived fees
and reimbursed expenses (0.088%) (0.96%)(6) (0.85%)(6)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total returns do not include any sales charges.
(1) Periods prior to December 31, 1997 have been restated to give effect to the
conversion ratios applied in the consolidation of Overland Express Funds, Inc.
and Stagecoach Funds, Inc. See Note 1.
(2) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on which
commissions are charged. This amount may vary from period to period and fund to
fund depending on the mix of trades executed in various markets where trading
practices and commission rate structures may differ.
19
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights (Unaudited) Class B Strategic Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Period Ended Six Months Ended Period Ended
Dec. 31, Dec. 31, Dec. 31, June 30, Dec 31,
1995 1994 1993(3) 1998 1997(4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$19.06 $18.93 $14.34 24.33 $23.68
(0.06) (0.16) (0.04) (0.19) (0.02)
8.12 0.96 5.27 2.27 0.67
8.06 0.80 5.23 2.08 0.65
0.00 0.00 (0.04) 0.00 0.0
(3.00) (0.47) (0.59) 0.00 0.00
0.00 (0.20) (0.01) 0.00 0.00
(3.00) (0.67) (0.64) 0.00 0.00
$24.12 $19.06 $18.93 $26.41 $24.33
42.51% 4.23% 36.56% 8.55% 2.74%
$59,016 $26,744 $25,413 $27,528 $23,562
1.28% 1.20% 0.66% 1.91% 1.89%
(0.76%) (0.81%) (0.01%) (1.53%) (1.63%)
171% 149% 182% 239% 256%
N/A N/A N/A $0.0568 $0.0622
- -----------------------------------------------------------------------------------------------------------------------------------
1.38% 1.55% 1.64% 1.91% 1.89%
(0.86%) (1.16%) (0.99%) (1.53%) (1.63%)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(3) The Class A shares commenced operations on January 20,1993.
(4) The Class B shares commenced operations on December 15, 1997.
(5) The portfolio turnover for and average commission rate paid by the Capital
Appreciation Master Portfolio from its inception on February 20, 1996 to
December 31, 1996, were 137% and $0.0781, respectively. The information shown
reflects the stand-alone period only.
(6) This ratio includes activity of the Master Portfolio prior to December 15,
1997 .
The accompanying notes are an integral part of these financial statements
20
<PAGE>
<TABLE>
<CAPTION>
Strategic Growth Fund Financial Highlights (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each period is as follows:
Class C/1//3/
Six Months
Ended Year Ended
June 30, Dec. 31,
1998 1997
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $24.32 $32.42
Income from investment operations:
Net investment income (loss) (0.19) (0.45)
Net realized and unrealized gain
(loss) on investments 2.27 3.17
Total from investment operations 2.08 2.72
Less Distributions:
Dividends from net investment income 0.00 0.00
Distributions from net realized gain 0.00 (10.82)
Tax return of capital 0.00 0.00
Total from Distributions 0.00 (10.82)
NET ASSET VALUE, END OF PERIOD $26.40 $24.32
Total Return 8.55% 6.98%
Ratios/supplemental data:
Net assets, end of period (000) $28,169 $41,608
Ratios to average net assets (annualized):
Ratio of expenses to average net assets 1.92% 1.93%/4/
Ratio of net investment income to average
net assets (1.55%) (1.70%)/4/
Portfolio turnover 239% 256%/4/
Average commission rate paid/2/ $0.0568 $0.0622/4/
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 1.93% 1.94%/4/
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses (1.56%) (1.71%)/4/
* Total returns do not include any sales charges.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Total returns do not include any sales charges.
/1/ Periods prior to December 31, 1997 have been restated to give effect to the
conversion ratios applied in the consolidation of Overland Express Funds, Inc.
and Stagecoach Funds, Inc. See Note 1.
/2/ For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on which
commissions are charged. This amount may vary from period to period and fund to
fund depending on the mix of trades executed in various markets where trading
practices and commission rate structures may differ.
21
<PAGE>
Financial Highlights (Unaudited) Strategic Growth Fund
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Period Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993
$29.84 $23.74 $23.75 $21.53
(0.11) (0.23) (0.34) (0.62)
2.93 10.03 1.16 3.60
2.82 9.80 0.82 2.98
0.00 0.00 0.00 0.00
(0.24) (3.70) (0.57) (0.76)
0.00 0.00 (0.26) 0.00
(0.24) (3.70) (0.83) (0.76)
$32.42 $29.84 $23.74 $23.75
9.46% 41.54% 3.46% 13.84%
$55,063 $26,326 $15,335 $11,932
2.00%/4/ 2.02% 1.95% 0.61%
(1.58%)/4/ (1.49%) (1.56%) (1.00%)
10%/5/ 171% 149% 182%
$0.0760/5/ N/A N/A N/A
2.02%/4/ 2.09% 2.23% 2.14%
(1.60%)/4/ (1.56%) (1.84%) (2.53%)
- --------------------------------------------------------------------------------
/3/ This class of shares commenced operations as Class D shares on July 1, 1993.
These shares were renamed as Class C shares in conjunction with the
consolidation of Overland Express Funds, Inc. and Stagecoach Funds, Inc. See
Note 1.
/4/ This ratio includes activity of the Master Portfolio prior to December 15,
1997.
/5/ The portfolio turnover for and average commission rate paid by the Capital
Appreciation Master Portfolio from its inception on February 20, 1996 to
December 31, 1996, were 137% and $0.0781, respectively. The information shown
reflects the stand-alone period only. The accompanying notes are an integral
part of these financial statements
22
<PAGE>
Strategic Growth Fund Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
Notes to the Financial Statements (Unaudited)
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 Strategic Growth 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. (at times, 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 Stagecoach Aggressive Growth Fund acquired
all of the assets and assumed all of the liabilities of the Overland Strategic
Growth Fund. To ensure that each Overland shareholder would hold shares of the
corresponding Stagecoach Fund equal in value to the total value of the shares of
the Overland fund held by the shareholder immediately before the Consolidation,
the conversion ratios applied to the Overland Strategic Growth Fund shares were
0.69721936 and 0.69679054 for Class A and Class D shares, respectively. Class D
shares were renamed as Class C shares in conjunction with the Consolidation.
Subsequent to the application of the above mentioned conversion ratios,
shareholders of the Fund received one share of the Stagecoach Fund for every
share held of the Overland fund. Shares issued by the Stagecoach Aggressive
Growth Fund were 6,399,356 (valued at $130,801,032). At the date of the
Consolidation, the components of net assets for the Overland & Stagecoach funds
were as follows:
Overland Strategic Stagecoach Aggressive
December 12, 1997 Growth Fund Growth Fund
- --------------------------------------------------------------------------------
Paid-in Capital $142,434,794 $60,656,387
Undistributed Net Realized Gain (Loss) 0 (6,239,908)
Unrealized Appreciation (Depreciation) (11,633,762) 8,008,769
----------- ----------
Total Net Assets $130,801,032 $62,425,248
Subsequent to the Consolidation, the Stagecoach Aggressive Growth Fund was
renamed Stagecoach Strategic Growth Fund. The combined net assets immediately
after the Consolidation were $193,226,280. Additionally, the Fund retained
Overland accounting and performance history. Historical data found within this
semi-annual report has been restated to give effect to the conversion ratios
listed above.
23
<PAGE>
Notes to Financial Statements (Unaudited) Strategic Growth Fund
- --------------------------------------------------------------------------------
The acquisition was accomplished in a tax-free exchange for shares of the
Fund. At the time of the Consolidation, the Strategic Growth Fund structure was
a feeder Fund in a master-feeder structure. The Fund was restructured to invest
directly in a portfolio of securities, rather than to invest in portfolio
securities through a master Fund. The corresponding Capital Appreciation Master
Portfolio (the Master Portfolio) distributed all of its assets and 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. The
following amounts of income and expense were allocated from the Master Portfolio
to the feeder Fund for the period from January 1, 1997 to December 12, 1997:
Interest $193,285
Dividends 157,182
Expenses (952,217)
Waived Fees 0
---------------------------------------
Net Investment Income $(601,750)
The Fund offers Class A, Class B and Class C shares. The separate classes of
shares differ principally in the applicable sales charges (if any), 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 declared separately for each
class. Realized gains are allocated to each class pro rata based on the 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 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. 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. These estimates should not be
considered an indication of actual or expected figures; actual results may
differ.
24
<PAGE>
Strategic Growth Fund Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
Investment Policy and 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 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
Security transactions are recorded on a trade date basis. Dividend income is
recognized on the ex-dividend date and 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 as
required by the Internal Revenue Code of 1986, as amended (the Code).
TBA Purchase Commitments
The Fund may enter into TBA (to be announced) purchase commitments to
purchase securities for a fixed price at a future date beyond customary
settlement time. The Fund holds, and maintains until the settlement date, cash
or high-quality debt obligations in an amount sufficient to meet the purchase
price. TBA purchase commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date. Unsettled TBA purchase commitments are valued at
the current market value of the underlying securities, generally according to
the procedures described under Security Valuation above.
Although the Fund generally enters into TBA purchase commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to settlement if the Fund's adviser deems it appropriate to do
so.
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
25
<PAGE>
Notes to Financial Statements (Unaudited) Strategic Growth Fund
- --------------------------------------------------------------------------------
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 Fund are collateralized by instruments such as
U.S. Treasury or federal agency obligations.
Distributions to Shareholders
Dividends to shareholders from net investment income of the Fund, if any, are
declared and distributed annually. Any distributions to shareholders from net
realized capital gains are declared and distributed annually.
Federal Income Taxes
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 substantially all, federal income taxes. Accordingly, no provision for
federal income taxes was required at June 30, 1998.
The Fund had the following net capital loss carryforwards at June 30, 1998:
Year Expires Capital Loss Carryforwards
-------------------------------------------------
2004 $3,168,815
2005 2,470,830
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 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
the 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 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 reclassification.
Organization Expenses
The Fund has been charged for expenses incurred in connection with the
organization and initial registration of the Fund and/or classes of shares.
Certain of
26
<PAGE>
Strategic Growth Fund Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
these expenses are being amortized by the Fund on a straight-line basis over 60
months from the date the Fund and/or class commenced operations.
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 be paid a monthly
advisory fee at the annual rate of 0.50% of the Fund's average daily net assets.
Prior to December 15, 1997, the Fund did not directly retain an investment
adviser because the Fund invested all of its assets in a separate Master
Portfolio which, in turn, retained WFB as investment adviser. Advisory fees were
charged to the Master Portfolio at the same rates as listed above.
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 an annual fee for custody services at the annual rate
of 0.0167% of the average daily net assets of the Fund. 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.
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 0.14% of the average daily net assets of the Class A, Class B and Class
C shares of the Fund. Prior to February 1, 1997, under the agency contract with
the Fund, WFB was paid a per account fee plus other related costs with a minimum
monthly fee of $3,000 unless net assets of the Fund were less than $20 million.
For as long as the net assets remained under $20 million, the Fund would not be
charged any transfer agency fees by WFB.
Transfer agency fees paid on behalf of the Fund for the six months ended
June 30, 1998 were $103,343, $17,902, and $23,026 for the Class A, Class B, and
Class C shares of the Fund, respectively.
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 0.25% of the average daily net assets of each class of the Fund.
Shareholder servicing fees paid on behalf of the Fund for the six months
ended June 30, 1998 were $184,540, $31,968, and $41,118 for Class A, Class B,
and Class C shares of the Fund, respectively.
The Company has entered into an administration agreement 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
27
<PAGE>
Notes to Financial Statements (Unaudited) Strategic Growth Fund
- --------------------------------------------------------------------------------
Stephens were entitled to receive monthly fees at the annual rate of .04% and
.02%, respectively, of each 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 agreements, the Fund had agreed to pay Stephens a
monthly fee at the annual rate of 0.15% of the Fund's average daily net assets
up to $200 million and 0.10% of the average daily net assets in excess of $200
million.
The Company has adopted separate Distribution Plans for the Class A, Class
B and Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act
(each, a Plan). The Plan for Class A shares of the Fund provides that the Fund
may pay to Stephens up to 0.10% of its average daily net assets attributable to
the Class A shares as compensation for distribution-related services or as
reimbursement for distribution-related expenses. Prior to December 15, 1997, the
Plan provided that the Fund pay to Stephens up to 0.25% of its average daily net
assets attributable to the Class A shares as compensation for distribution-
related services.
The Plans for the Class B and Class C shares of the Fund provide 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 the Class B and Class C shares of the Fund.
The 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.
Distribution fees paid on behalf of the Fund for the six months ended June
30, 1998 were $73,816, $95,903, and $123,355 for Class A, Class B, and Class C
shares of the Fund, respectively.
Registration fees paid on behalf of the Fund for the six months ended June
30, 1998 were $21,527, $4,959, and $7,935 for Class A, Class B and Class C
shares of the Fund, respectively.
The amount shown as waived fees and reimbursed expenses on the Statement of
Operations for the six months ended June 30, 1998, were waived by WFB. Waived
fees and reimbursed expenses continue at the discretion of WFB and Stephens.
Certain officers and one of the directors of the Company are also officers
of Stephens. As of June 30, 1998, Stephens owned seven shares of the Fund.
Stephens has retained $5,647,291 as sales charges from the proceeds of
Class A shares sold, $1,473,156 as proceeds from Class B shares redeemed by the
Company and $29,526 as proceeds from Class C shares redeemed by the Company for
the six months ended June 30, 1998. Wells Fargo Securities Inc., a subsidiary of
WFB, received $4,712,432 as sales charges from the proceeds of Class A shares
sold, $854,265 as proceeds from Class B shares redeemed by the Company and $0 as
proceeds from Class C shares redeemed by the Company for the six months ended
June 30, 1998.
28
<PAGE>
Strategic Growth Fund Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 the Fund
for the six months ended June 30, 1998, were $459,026,073 and $476,167,638,
respectively.
4. Capital Share Transactions
As of June 30, 1998, there were over 108 billion shares of $0.001 par value
capital stock authorized by the Company. As of June 30, 1998, the Fund was
authorized to issue 100 million shares of $0.001 par value capital stock for
each class of shares.
Capital share transactions for the Fund were as follow:
(Unaudited) For the For the
For the Six Year Ended Year Ended
Months Ended December 31, December 31,
June 30, 1998 1997/1/ 1996*
- --------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 4,160,800 9,450,816 5,734,498
Shares issued in reinvestment
of dividends - Class A 0 1,180,296 26,926
Shares redeemed - Class A (4,631,513) (8,176,548) (3,240,135)
Net increase(decrease) in shares
outstanding - Class A (470,713) 2,454,564 2,521,289
Shares sold - Class B 209,445 986,522 N/A
Shares issued in reinvestment
of dividends - Class B 0 0 N/A
Shares redeemed - Class B (135,470) (18,018) N/A
Net increase(decrease) in shares
outstanding - Class B 73,975 968,504 N/A
Shares sold - Class C 1,023,021 7,044,117 3,347,233
Shares issued in reinvestment
of dividends - Class C 0 249,166 5,316
Shares redeemed - Class C (1,666,716) (7,280,888) (2,536,604)
Net increase(decrease) in
shares outstanding - Class C (643,695) 12,395 815,945
- --------------------------------------------------------------------------------
* Figures have been restated to give effect to the conversion ratios applied
in the Consolidation. See Note 1.
/1/ Shares sold includes 2,038,293 for Class A shares and 964,884 for Class B
shares as a result of the consolidation of the Overland Express Strategic Growth
Fund.
29
<PAGE>
Notes to Financial Statements (Unaudited) Strategic Growth Fund
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5. Subsequent Events
The Fund changed its fiscal year-end to September 30 to coincide with the
year-end of other funds offered by the Company.
On August 1, 1998, Wells Capital Management Incorporated (WCM), a
wholly-owned subsidiary of WFB, began acting as investment sub-advisor to the
Fund. WCM is entitled to receive from WFB, as compensation for its sub-advisory
services, a monthly fee at the annual rate of 0.25% of the Fund's average daily
net assets up to $200 million, 0.20% for the next $200 million and 0.15% of the
Fund's average daily net assets in excess of $400 million. WCM's minimum annual
fee is $120,000 for the Fund. This minimum annual fee does not increase the
advisory fees paid by the Fund to WFB.
30
<PAGE>
Strategic Growth Fund
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31
<PAGE>
Strategic Growth Fund
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32
<PAGE>
Wells Fargo provides investment advisory services, shareholders services, and
certain other services for Stagecoach Funds. The Funds are 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 proceeded 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.
(C) Stagecoach Funds
STAGECOACH FUNDS(R) -----------------
P.O. Box 7066 Bulk Rate
San Francisco, Ca 94120-7066 U.S. Postage Paid
Permit # 30835
Los Angeles, CA
Dated Material -----------------
Please Expedite
