<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
INCOME
- ---------------------
FUNDS
- ---------------------
Ginnie Mae Fund
Intermediate Bond Fund
Short-Intermediate
U.S. Government
Income Fund
SEPTEMBER 30, 1996
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS iii
INVESTMENT ADVISER COMMENTS
Ginnie Mae Fund 1
Intermediate Bond Fund 7
Short-Intermediate U.S. Government Income Fund 10
PORTFOLIOS OF INVESTMENTS
Ginnie Mae Fund 14
Intermediate Bond Fund 17
Short-Intermediate U.S. Government Income Fund 21
STAGECOACH FUNDS
Statement of Assets and Liabilities 26
Statements of Operations 27
Statements of Changes in Net Assets 29
Financial Highlights 32
Notes to Financial Statements 37
Independent Auditors' Report 49
LIST OF ABBREVIATIONS 51
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>
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- ---------------------
ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
The Annual Report is one of the most important documents you, as a shareholder,
will receive during the year, one that can deepen your understanding of your
investment. While the prospectus details the investment policies of a Fund, the
Annual Report shows the results of those policies for the most recent reporting
period. The Annual Report tells shareholders which securities were purchased,
what the overall returns for the Funds have been and provides the portfolio
managers' views on what shaped, and continues to shape, the investment
environment.
The Stagecoach Funds Annual Report has undergone a number of changes, some of
which are the result of the September 6, 1996 merger of Pacifica Funds Trust and
Stagecoach Funds, Inc. Perhaps the most noticeable change is that this Report is
dated September 30, 1996.
Previously, Stagecoach Annual Reports were dated December 31 each year and the
Semi-Annual Reports were dated June 30. We are changing the schedule, however,
so that Annual Reports will now be dated March 31 and Semi-Annual Reports will
be dated September 30. THIS CHANGE HAS BEEN MADE FOR OPERATIONAL AND
ADMINISTRATIVE REASONS. THERE HAS BEEN NO CHANGE TO THE INVESTMENT POLICIES OR
PRACTICES OF THE FUNDS RELATED TO THIS CHANGE IN THE FISCAL YEAR-END.
In order to accomplish this change, we are providing you with this Annual Report
containing audited Financial Statements now and will provide you with another
Annual Report for the six months ended March 31, 1997.
Another noticeable change in the Annual Report is that the Funds are now
separated into categories so that the Equity, Income, Tax-Free, Asset Allocation
and Money Market Mutual Funds are grouped together in their own Reports. This
change was made in part because of the introduction of several new Stagecoach
Funds, some of which were introduced as part of the Pacifica Funds merger. We
believe that by segregating Funds into their investment groups, we have produced
an easier-to-read report with fewer extraneous details not relevant to your
investment.
Special mention should be made of the fact that this is the first Stagecoach
Annual Report that most former Pacifica shareholders will receive. We want to
thank you for your patience through our many changes. We here at Stagecoach
Funds are excited about the opportunity to help you succeed in meeting your
investment goals.
STAGECOACH FUNDS
OCTOBER 1996
---------------------
iii
<PAGE>
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- ---------------------
iv
<PAGE>
GINNIE MAE FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 0.36% for Class A shares. The return for Class B shares for the same
period was negative 0.12%. The one year total returns from October 1, 1995 to
September 30, 1996 were 4.21% and 3.48%, respectively. These return figures are
exclusive of sales charges.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Ginnie Mae Index was 2.50%
through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
The story of 1996 through September 30 has been the strength of the U.S.
economy, the level of consumer spending and the potential for accelerated
inflation that may result. As we stated in the previous Semi-Annual Report,
stronger-than-expected economic growth early in the year effectively put a stop
to a series of federal fund target rate reductions made by the Federal Reserve
Board. Keep in mind that as rates decrease, the resale value of higher-paying,
existing bonds generally increases. If rates and yields climb, fixed-income
portfolios may lose value.
At the beginning of the third quarter, our expectation was that continued
economic strength, employment gains and increased consumer spending would exert
inflationary pressure and force yields higher.
A drop in retail sales, however, combined with lower-than-expected inflation
figures pushed yields back down. On September 24, the Federal Reserve Board made
no change to federal fund rates, which was received as good news by financial
markets braced for a rate increase. The bond market rallied, giving September
the best one month return for bonds so far this year.
A special concern for mortgage-backed securities such as Ginnie Maes is
prepayment risk. While the value of these securities changes with the interest
rate environment, the coupon-rate, or the amount of interest being paid, does
not. If interest rates decrease, however, homeowners may choose to refinance and
replace higher-paying coupon rates with lower-paying ones, thus reducing the
income passed on to investors. Interest rates are generally higher now than at
the beginning of the year, a fact that has reduced prepayments of the underlying
mortgages and allowed the Fund to keep its portfolio of seasoned higher coupon
securities.
---------------------
1
<PAGE>
GINNIE MAE FUND
STRATEGIC COMMENT:
In this environment, the Fund has managed to preserve capital and maintain a
steady level of dividend income. Total return is lower than a year ago because
the interest rate environment we have described did not provide opportunities to
increase the resale value of the underlying securities.
We expect the economy to continue to grow at a moderate but steady pace and for
bond yields to remain within their current ranges. We anticipate decreasing the
Fund's sensitivity to interest rate changes.
- ---------------------
2
<PAGE>
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---------------------
3
<PAGE>
GINNIE MAE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge (0.44)% 3.11% 5.51% 6.37%
- ---------------------------------------------------------------------------------------
Without Sales Charge 4.21% 4.71% 6.48% 7.22%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- --------------------------------------------------------------------------------------
With Contingent Deferred Sales Charge(1) 0.57% 8.08%
- --------------------------------------------------------------------------------------
Without Contingent Deferred Sales Charge 3.48% 9.15%
- --------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/96.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Ginnie Mae Fund Class A shares commenced operations on January 1, 1992 as
successor to the Ginnie Mae Fund of the Wells Fargo Investment Trust for
Retirement Programs. The predecessor Fund's date of inception was January 3,
1991. The performance figures shown for the Class A shares include the
performance of the predecessor Fund, which had the same investment objectives
and strategies. The Class B shares commenced operations on January 1, 1995.
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>
GINNIE MAE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SC GINNIE MAE CLASS A
SHARES LEHMAN BROTHERS GINNIE MAE INDEX
<S> <C> <C>
Inception $9,550 $10,000
Jan-91 $9,712 $10,149
Feb-91 $9,722 $10,233
Mar-91 $9,770 $10,307
Apr-91 $9,808 $10,404
May-91 $9,903 $10,489
Jun-91 $9,903 $10,509
Jul-91 $10,056 $10,689
Aug-91 $10,247 $10,888
Sep-91 $10,419 $11,079
Oct-91 $10,581 $11,262
Nov-91 $10,648 $11,340
Dec-91 $10,906 $11,604
Jan-92 $10,771 $11,460
Feb-92 $10,841 $11,580
Mar-92 $10,773 $11,514
Apr-92 $10,830 $11,620
May-92 $11,034 $11,825
Jun-92 $11,165 $11,969
Jul-92 $11,355 $12,074
Aug-92 $11,487 $12,236
Sep-92 $11,589 $12,345
Oct-92 $11,469 $12,252
Nov-92 $11,510 $12,309
Dec-92 $11,654 $12,465
Jan-93 $11,850 $12,622
Feb-93 $11,914 $12,750
Mar-93 $11,956 $12,820
Apr-93 $11,996 $12,866
May-93 $12,036 $12,955
Jun-93 $12,214 $13,060
Jul-93 $12,286 $13,115
Aug-93 $12,392 $13,147
Sep-93 $12,422 $13,158
Oct-93 $12,452 $13,180
Nov-93 $12,406 $13,162
Dec-93 $12,492 $13,284
Jan-94 $12,596 $13,389
Feb-94 $12,467 $13,322
Mar-94 $12,136 $12,962
Apr-94 $11,995 $12,873
May-94 $12,022 $12,910
Jun-94 $11,969 $12,891
Jul-94 $12,214 $13,142
Aug-94 $12,219 $13,183
Sep-94 $12,050 $12,997
Oct-94 $12,008 $12,976
Nov-94 $11,977 $12,940
Dec-94 $12,088 $13,084
Jan-95 $12,319 $13,355
Feb-95 $12,670 $13,707
Mar-95 $12,723 $13,774
Apr-95 $12,897 $13,978
May-95 $13,280 $14,404
Jun-95 $13,413 $14,502
Jul-95 $13,401 $14,533
Aug-95 $13,554 $14,683
Sep-95 $13,683 $14,826
Oct-95 $13,836 $14,948
Nov-95 $14,015 $15,120
Dec-95 $14,207 $15,313
Jan-96 $14,286 $15,421
Feb-96 $14,069 $15,305
Mar-96 $14,019 $15,267
Apr-96 $13,903 $15,227
May-96 $13,817 $15,175
Jun-96 $13,970 $15,374
Jul-96 $14,012 $15,433
Aug-96 $14,034 $15,439
Sep-96 $14,259 $15,697
</TABLE>
THE RETURN FOR CLASS B SHARES OF THE GINNIE MAE FUND WILL VARY FROM THE RESULTS
SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach Ginnie Mae
Fund Class A shares since the inception of the predecessor Fund with the Lehman
Brothers Ginnie Mae Index. The chart assumes a hypothetical $10,000 initial
investment in the Fund and reflects all operating expenses and assumes the
maximum initial sales charge of 4.5%. The Lehman Brothers Ginnie Mae Index is an
unmanaged, broad-based index of Ginnie Mae securities. Please note that the Fund
is a professionally managed mutual fund. The Index presented here is not
managed, 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>
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- ---------------------
6
<PAGE>
INTERMEDIATE BOND FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 0.94% for Class A shares. The return for Class B shares for the same
period was 0.15%. The one year total returns from October 1, 1995 to September
30, 1996 were 4.15% and 3.24%, respectively. These return figures are exclusive
of sales charge.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Intermediate Treasury Index was
negative 0.03% through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
The year began with the expectation that the series of reductions in the federal
funds target rate by the Federal Reserve Board would continue and maintain
1995's bond rally. When rates are reduced, the resale value of higher-paying
existing bonds increases, creating an opportunity for the Fund to increase total
return. Those expectations were disappointed, however, when a series of
government reports, including a strong jobs report, ignited concerns that the
Fed would actually raise rates instead. The bond markets fell steeply in
January, with longer term bonds faring much worse than intermediate term issues.
After months of concern that too much strength in the economy was accelerating
inflation and would spark interest rate increases by the Fed, the bond market
rallied in September. The rally came after government reports showed inflation
to be lower than expected and the Fed announced no rate increase after their
September meeting. The 30-year bond ended the quarter yielding 6.92%.
In response to this environment, select investment grade corporate bonds and
mortgage-backed securities were added to increase yield.
STRATEGIC COMMENT:
Economic data over the next few months will be scrutinized for continued
confirmation of a slower economy and for portents of likely Fed actions during
the policy meetings of November and December.
We think the odds favor a tightening move by the Federal Reserve Board later in
the year. We believe that the slower than expected growth figures seen in the
third quarter are more a pause than a halt in an accelerated growth rate. The
risk of rising wage pressures increasing inflation is still with us. The
portfolio has been positioned with a comparatively short current average
maturity of 4.54 years in order to reduce sensitivity to interest rate changes.
---------------------
7
<PAGE>
INTERMEDIATE BOND FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge (0.57)% 2.64% 5.66% 7.58%
- ---------------------------------------------------------------------------------------
Without Sales Charge 4.15% 4.24% 6.64% 8.18%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Contingent Deferred Sales
Charge(1) 0.24% 3.07% 5.78% 7.31%
- ---------------------------------------------------------------------------------------
Without Contingent Deferred Sales
Charge 3.24% 3.38% 5.78% 7.31%
- ---------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/96.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Stagecoach Intermediate Bond Fund commenced operations on September 6, 1996
as the successor to the Pacifica Intermediate Bond Fund (10/95 to 9/96) and the
Westcore Bonds Plus Fund (6/88 to 9/95). Historical performance has been
calculated using returns produced by these predecessor funds for the applicable
periods. Class A performance reflects Pacifica Intermediate Bond Fund Class A
and Westcore Bonds Plus Fund performance. Class B performance also reflects such
performance but has been adjusted to reflect Class B share expense levels in
effect as of September 6, 1996.
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 these reductions, the Fund's returns would have been lower.
- ---------------------
8
<PAGE>
INTERMEDIATE BOND FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SC INT'D BOND CLASS A LEHMAN BROTHERS AGGREGATE BOND
SHARES INDEX
<S> <C> <C>
Inception $9,550 $10,000
Jun-88 $9,685 $10,000
Jul-88 $9,633 $9,948
Aug-88 $9,645 $9,974
Sep-88 $9,853 $10,199
Oct-88 $9,994 $10,391
Nov-88 $9,881 $10,265
Dec-88 $9,871 $10,277
Jan-89 $9,987 $10,425
Feb-89 $9,905 $10,350
Mar-89 $9,951 $10,394
Apr-89 $10,149 $10,611
May-89 $10,415 $10,890
Jun-89 $10,693 $11,221
Jul-89 $10,903 $11,460
Aug-89 $10,751 $11,291
Sep-89 $10,796 $11,348
Oct-89 $11,052 $11,628
Nov-89 $11,150 $11,738
Dec-89 $11,161 $11,770
Jan-90 $11,056 $11,630
Feb-90 $11,097 $11,667
Mar-90 $11,092 $11,675
Apr-90 $10,977 $11,568
May-90 $11,275 $11,910
Jun-90 $11,446 $12,101
Jul-90 $11,609 $12,268
Aug-90 $11,502 $12,103
Sep-90 $11,572 $12,204
Oct-90 $11,709 $12,359
Nov-90 $11,952 $12,624
Dec-90 $12,124 $12,821
Jan-91 $12,269 $12,980
Feb-91 $12,374 $13,091
Mar-91 $12,435 $13,181
Apr-91 $12,568 $13,323
May-91 $12,669 $13,401
Jun-91 $12,666 $13,394
Jul-91 $12,807 $13,580
Aug-91 $13,072 $13,873
Sep-91 $13,337 $14,155
Oct-91 $13,500 $14,312
Nov-91 $13,644 $14,444
Dec-91 $14,063 $14,873
Jan-92 $13,838 $14,670
Feb-92 $13,870 $14,766
Mar-92 $13,822 $14,683
Apr-92 $13,930 $14,789
May-92 $14,184 $15,068
Jun-92 $14,388 $15,276
Jul-92 $14,704 $15,588
Aug-92 $14,833 $15,745
Sep-92 $15,026 $15,933
Oct-92 $14,862 $15,721
Nov-92 $14,796 $15,724
Dec-92 $14,996 $15,974
Jan-93 $15,246 $16,281
Feb-93 $15,484 $16,566
Mar-93 $15,558 $16,635
Apr-93 $15,667 $16,752
May-93 $15,662 $16,773
Jun-93 $15,910 $17,077
Jul-93 $15,966 $17,174
Aug-93 $16,187 $17,475
Sep-93 $16,236 $17,522
Oct-93 $16,283 $17,587
Nov-93 $16,160 $17,437
Dec-93 $16,241 $17,532
Jan-94 $16,445 $17,768
Feb-94 $16,182 $17,459
Mar-94 $15,864 $17,028
Apr-94 $15,739 $16,892
May-94 $15,716 $16,890
Jun-94 $15,701 $16,853
Jul-94 $15,930 $17,188
Aug-94 $15,966 $17,209
Sep-94 $15,775 $16,956
Oct-94 $15,765 $16,941
Nov-94 $15,708 $16,903
Dec-94 $15,794 $17,020
Jan-95 $16,078 $17,357
Feb-95 $16,443 $17,770
Mar-95 $16,534 $17,878
Apr-95 $16,740 $18,129
May-95 $17,309 $18,830
Jun-95 $17,422 $18,968
Jul-95 $17,378 $18,926
Aug-95 $17,529 $19,155
Sep-95 $17,657 $19,341
Oct-95 $17,839 $19,592
Nov-95 $18,032 $19,886
Dec-95 $18,219 $20,165
Jan-96 $18,356 $20,298
Feb-96 $18,124 $19,944
Mar-96 $18,040 $19,805
Apr-96 $17,976 $19,694
May-96 $17,937 $19,655
Jun-96 $18,121 $19,918
Jul-96 $18,155 $19,972
Aug-96 $18,175 $19,938
Sep-96 $18,390 $20,285
</TABLE>
THE RETURN FOR CLASS B SHARES OF THE INTERMEDIATE BOND 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 shares since the inception of the predecessor Pacifica and
Westcore Funds (the "predecessor funds") with the Lehman Brothers Aggregate Bond
Index. The charts assumes a hypothetical $10,000 initial investment in the Fund.
For Class A shares, the chart reflects the operating expenses and the
performance of the predecessor funds and assumes the maximum initial sales
charge of 4.5%. The Lehman Brothers Aggregate Bond Index is an unmanaged index
of U.S. Treasury 2 - 10 year notes. Please note that the Fund is a
professionally managed mutual fund. The Index presented here is not managed,
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>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 1.34% for Class A shares. The one year total return from October 1,
1995 to September 30, 1996 was 4.54%. These return figures are exclusive of
sales charge.
BENCHMARKS:
The year-to-date return for the Lehman Brothers U.S. Treasury Note Index was
negative 0.03% through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
When interest rates are reduced, the resale value of higher-paying, existing
bonds generally increases, creating an opportunity for the Fund to increase
total return. The year began with the expectation that the series of reductions
in the federal fund target rate by the Federal Reserve Board would continue and
maintain 1995's bond rally. Those expectations were disappointed, however, when
a series of government reports showing higher-than-expected economic growth
ignited concerns that the Fed would actually raise rates instead. The bond
markets fell steeply in January, with longer term bonds faring much worse than
intermediate term issues.
The picture improved somewhat in the third quarter. Growth of the U.S. economy
slowed to roughly 2.0% annually, down from the robust pace of 4.7% annually
registered in the second quarter. Much of the slowdown resulted from a pause in
consumer spending which typically accounts for roughly two-thirds of the Gross
Domestic Product. Inflation also remained subdued, running at a 2.90% pace for
the year. On September 24, a widely anticipated Federal Reserve Board meeting
resulted in no change in policy, leaving the federal fund target rate at 5.25%.
This combination of slower growth, lower than expected inflation and a lack of
an increase in the federal funds target rate helped spark a September rally. As
a result, interest rates declined and intermediate Treasury securities, as
measured by the Lehman Brothers 5 to 7-year Treasury Index, posted their best
single month for the year in September, with a 1.85% return, as well as their
best quarter, with a 1.81% return.
Throughout the third quarter, interest rates have remained in a broad trading
range, with two-year notes yielding between 5.88% and 6.40% and 30-year bonds
between 6.70% and 7.20%. As of quarter-end, two-year notes and thirty-year bonds
were yielding 6.10% and 6.92%, respectively.
- ---------------------
10
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
STRATEGIC COMMENT:
We expect the current slowdown in economic growth to be offset by renewed
strength in the fourth quarter. We expect the Fed to raise the federal funds
target rate by 25 to 50 basis points over the next 3 to 6 months. The Fund plans
to reduce the interest rate sensitivity and average maturity of its portfolio to
limit the impact of these potential rate increases. In addition, the Fund will
keep a core holding of approximately 15% in mortgage securities to attempt to
maintain income levels for shareholders.
---------------------
11
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- -------------------------------------------------------------------------------------
With Maximum 3.0% Sales Charge 1.44% 3.22%
- -------------------------------------------------------------------------------------
Without Sales Charge 4.54% 4.31%
- -------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Short-Intermediate U.S. Government Income Fund commenced operations on
October 27, 1993.
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 these reductions, the Fund's returns would have been lower.
- ---------------------
12
<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>
SC SHORT-INTERMEDIATE U.S. GOV'T INCOME CLASS A LEHMAN BROTHERS U.S. TREASURY NOTE
SHARES INDEX
<S> <C> <C>
Oct-93 $9,700 $10,000
Nov-93 $9,715 $9,950
Dec-93 $9,745 $9,991
Jan-94 $9,807 $10,090
Feb-94 $9,748 $9,948
Mar-94 $9,695 $9,804
Apr-94 $9,661 $9,741
May-94 $9,689 $9,748
Jun-94 $9,697 $9,750
Jul-94 $9,756 $9,877
Aug-94 $9,753 $9,906
Sep-94 $9,632 $9,824
Oct-94 $9,626 $9,827
Nov-94 $9,570 $9,782
Dec-94 $9,608 $9,813
Jan-95 $9,759 $9,973
Feb-95 $9,937 $10,163
Mar-95 $9,988 $10,219
Apr-95 $10,074 $10,337
May-95 $10,300 $10,629
Jun-95 $10,361 $10,699
Jul-95 $10,364 $10,704
Aug-95 $10,434 $10,790
Sep-95 $10,495 $10,862
Oct-95 $10,597 $10,983
Nov-95 $10,710 $11,117
Dec-95 $10,825 $11,228
Jan-96 $10,919 $11,325
Feb-96 $10,825 $11,204
Mar-96 $10,762 $11,149
Apr-96 $10,720 $11,117
May-96 $10,695 $11,111
Jun-96 $10,796 $11,221
Jul-96 $10,825 $11,255
Aug-96 $10,823 $11,269
Sep-96 $10,971 $11,414
</TABLE>
The accompanying chart compares the performance of the Stagecoach
Short-Intermediate U.S. Government Income Fund Class A shares since its
inception with the Lehman Brothers U.S. Treasury Note Index. The charts assumes
a hypothetical $10,000 initial investment in the Fund and reflects all operating
expenses and assumes the maximum initial sales charge of 3.0%. The Lehman
Brothers U.S. Treasury Note Index is an unmanaged index of U.S. Treasury 2 - 10
year notes. Please note that the Fund is a professionally managed mutual fund.
The Index presented here is not managed, does not incur expenses and is not
available directly for investment. Had this Index incurred operating expenses,
its performance would have been lower.
---------------------
13
<PAGE>
GINNIE MAE FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 86.60%
$ 5,000,000 Federal National Mortgage Assoc 5.94 % 4,676,800
12/12/05
1,753,501 Government National Mortgage Assoc 6.50 1,658,359
02/20/08 to 05/15/24
5,169,634 Government National Mortgage Assoc 6.75 4,907,165
03/15/22 to 09/15/28
1,600,298 Government National Mortgage Assoc 6.88 1,530,141
01/15/29
3,982,632 Government National Mortgage Assoc 6.90 3,811,339
01/15/31
13,455,491 Government National Mortgage Assoc 7.00 12,953,972
05/15/26 to 02/15/29
3,304,916 Government National Mortgage Assoc 7.13 3,202,827
01/15/29
11,610,943 Government National Mortgage Assoc 7.50 11,476,057
03/15/23 to 10/15/25
12,904,633 Government National Mortgage Assoc 8.00 13,079,517
05/15/22 to 08/15/24
4,132,943 Government National Mortgage Assoc 8.43 4,254,823
08/01/27
21,204,900 Government National Mortgage Assoc 8.50 21,853,851
10/15/16 to 04/15/27
4,044,954 Government National Mortgage Assoc 8.75 4,144,015
01/15/28
23,913,023 Government National Mortgage Assoc 9.00 25,278,949
03/15/05 to 02/15/25
2,289,909 Government National Mortgage Assoc 9.50 2,464,066
10/15/09 to 10/15/21
5,693,568 Government National Mortgage Assoc 10.00 6,229,949
11/15/09 to 03/15/21
2,748,167 Government National Mortgage Assoc 10.50 3,041,974
09/15/15 to 08/15/20
</TABLE>
- ------------------------
14
<PAGE>
GINNIE MAE FUND
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
15,367 Government National Mortgage Assoc 12.00 % $ 16,063
01/20/99 to 04/20/99
5,456 Government National Mortgage Assoc 12.50 5,792
12/15/99
5,186,257 Government National Mortgage Assoc II 8.00 5,219,991
02/20/23 to 07/20/26
12,608,083 Government National Mortgage Assoc II 8.50 12,910,253
06/20/25 to 07/20/26
1,796,660 Government National Mortgage Assoc II 9.50 1,923,285
05/20/17 to 03/20/21
5,270,499 Government National Mortgage Assoc II 10.00 5,694,573
12/20/13 to 06/20/22
2,041,287 Government National Mortgage Assoc II 11.00 2,298,290
08/20/19 to 08/20/20
--------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 152,632,051
(Cost $154,421,199)
U.S. TREASURY SECURITIES - 10.84%
$15,000,000 U.S. Treasury Notes 6.50 % $ 15,014,100
08/31/01
4,000,000 U.S. Treasury Notes 7.00 4,083,120
07/15/06
--------------
TOTAL U.S. TREASURY SECURITIES $ 19,097,220
(Cost $19,138,742)
SHORT-TERM INSTRUMENTS - 2.54%
$ 4,475,000 Goldman Sachs & Co Tri-Party Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.20 $ 4,475,000
10/01/96
(Cost $4,475,000)
</TABLE>
---------------------
15
<PAGE>
GINNIE MAE FUND
<TABLE>
TOTAL INVESTMENTS IN SECURITIES
<C> <S> <C> <C>
(Cost $178,034,941)* (Notes 1 and 3) 99.98% $ 176,204,271
Other Assets and Liabilities 0.02 29,701
------ --------------
TOTAL NET ASSETS 100.00% $ 176,233,972
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 598,815
Gross Unrealized Depreciation (2,429,485)
------------
NET UNREALIZED DEPRECIATION $ (1,830,670)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
16
<PAGE>
INTERMEDIATE BOND FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 31.08%
BANK & FINANCE - 16.09%
$ 500,000 First Chicago NBD Bancorp 8.10 % 03/01/02 525,625
1,000,000 Ford Capital BV 9.13 05/01/98 1,041,250
1,000,000 General Motors Acceptance Corp 6.88 07/15/01 996,250
500,000 General Motors Acceptance Corp 7.75 04/15/97 504,895
500,000 ITT Hartford Group Inc 8.20 10/15/98 515,625
1,000,000 Midland Bank Plc 7.63 06/15/06 1,015,000
1,000,000 NationsBank Corp 6.88 02/15/05 971,250
1,000,000 Smith Barney Holdings 6.50 10/15/02 972,500
1,000,000 Travelers/Aetna Property & Casualty 6.75 04/15/01 993,750
--------------
$ 7,536,145
FOREIGN GOVERNMENT - 6.37%
$ 1,500,000 Ontario, Province of 7.75 % 06/04/02 1,566,960
1,500,000 Quebec, Province of (Yankee) 6.50 01/17/06 1,415,625
--------------
$ 2,982,585
INDUSTRIAL - 7.53%
$ 1,150,000 Disney (Walt) Co 6.75 % 03/30/06 1,116,938
400,000 International Business Machines Corp 7.50 06/15/13 400,000
2,000,000 Phillip Morris Co Inc 7.25 09/15/01 2,007,500
--------------
$ 3,524,438
UTILITIES - 1.09%
$ 500,000 National Rural Utilities Cooperative Corp 9.50 % 05/15/97 510,000
--------------
TOTAL CORPORATE BONDS & NOTES $ 14,553,168
(Cost $14,557,030)
</TABLE>
---------------------
17
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE AND OTHER OBLIGATIONS - 9.80%
$ 1,294,425 Banc One Auto Grantor Trust 6.55 % 02/15/03 1,299,849
1,000,000 Standard Credit Card Master Trust 8.35 01/07/00 1,036,020
100,991 GNMA #302683 9.00 03/15/21 106,672
267,966 GNMA #305078 9.00 04/15/21 282,954
1,366,329 GNMA #336930 7.50 03/15/23 1,357,352
513,514 GNMA #339486 7.50 04/15/23 510,142
--------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS $ 4,592,989
(Cost $4,672,253)
U.S. GOVERNMENT AGENCY SECURITIES - 9.12%
FEDERAL HOME LOAN MORTGAGE CORP - 0.24%
$ 107,597 FHLMC #274688 9.00 % 07/01/16 113,145
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.50%
$ 343,637 FNMA #50965 6.50 % 01/01/24 324,091
394,380 FNMA #26440 6.00 12/01/08 376,014
--------------
$ 700,105
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 7.38%
$ 39,083 GNMA #122382 11.50 % 04/15/15 44,213
12,557 GNMA #163047 9.00 09/15/16 13,307
140,883 GNMA #188769 9.00 02/15/17 149,291
44,471 GNMA #197650 9.00 08/15/21 46,932
22,288 GNMA #201783 9.00 02/15/17 23,618
138,820 GNMA #258377 10.00 08/15/18 152,268
142,815 GNMA #262027 10.00 08/15/18 156,650
10,181 GNMA #264106 9.00 11/15/18 10,789
219,027 GNMA #389023 8.50 11/15/22 226,076
1,473,762 GNMA #417389 7.00 05/15/26 1,418,953
275,078 GNMA II #157247 9.50 05/20/16 294,763
180,008 GNMA II #158583 9.00 09/20/16 189,402
180,274 GNMA II #1704 9.00 10/20/21 188,894
</TABLE>
- ------------------------
18
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
152,674 GNMA II #1740 9.00 12/20/21 159,926
372,672 GNMA II #8552 7.00 11/20/24 379,194
--------------
$ 3,454,276
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 4,267,526
(Cost $4,247,728)
U.S. TREASURY SECURITIES - 46.79%
U.S. TREASURY NOTES - 46.79%
$ 4,000,000 U.S. Treasury Notes 6.13 % 05/31/97 4,012,400
3,900,000 U.S. Treasury Notes 6.25 02/15/03 3,835,026
2,250,000 U.S. Treasury Notes 6.75 04/30/00 2,275,358
5,250,000 U.S. Treasury Notes 6.75 06/30/99 5,313,314
6,250,000 U.S. Treasury Notes 8.25 07/15/98 6,474,563
--------------
TOTAL U.S. TREASURY SECURITIES $21,938,986 $ 21,910,661
(Cost $21,938,985)
SHORT-TERM INSTRUMENTS - 2.10%
REPURCHASE AGREEMENTS - 2.10%
$ 984,000 Goldman Sachs & Co. Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.20 10/01/96 984,000
(Cost $984,000)
</TABLE>
---------------------
19
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
TOTAL INVESTMENTS IN SECURITIES
<C> <S> <C> <C>
(Cost $46,399,997)*(Notes 1 and 3) 98.89% $ 46,308,344
Other Assets and Liabilities 1.11 520,226
------ --------------
TOTAL NET ASSETS 100.00% $ 46,828,570
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES ARE THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 192,924
Gross Unrealized Depreciation (284,577)
------------
NET UNREALIZED DEPRECIATION $ (91,653)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
20
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 28.50%
BANK & FINANCE - 14.94%
$ 3,500,000 Caterpillar Financial Services Corp 6.77 % 12/29/00 $ 3,496,675
2,500,000 General Motors Acceptance Corp 6.65 05/24/00 2,481,250
2,000,000 General Motors Acceptance Corp 7.75 04/15/97 2,019,580
1,000,000 Midland Bank Plc 7.63 06/15/06 1,014,780
5,000,000 NationsBank Corp 6.63 12/15/00 5,017,150
1,500,000 Norwest Corp 6.88 08/08/06 1,466,250
1,100,000 Smith Barney Holdings 6.00 03/15/97 1,101,749
--------------
$ 16,597,434
INDUSTRIALS - 1.84%
$ 2,000,000 Coors (Adolph) Co 8.95 % 06/16/97 $ 2,039,660
INTERNATIONAL AGENCIES - 7.06%
$ 2,500,000 European Investment Bank 7.13 % 09/18/06 $ 2,534,375
5,000,000 Export Development Corp 8.63 03/24/00 5,311,500
--------------
$ 7,845,875
UTILITIES - 4.66%
$ 5,000,000 Pacific Gas & Electric Co 7.88 % 09/18/02 $ 5,181,250
--------------
TOTAL CORPORATE BONDS & NOTES $ 31,664,219
(Cost $31,632,143)
U.S. GOVERNMENT AGENCY SECURITIES - 32.11%
FEDERAL AGENCY - OTHER - 1.79%
$ 2,000,000 Tennessee Valley Authority 6.50 % 08/20/01 $ 1,988,440
FEDERAL HOME LOAN BANKS - 3.60%
$ 1,030,000 FHLB 8.45 % 07/26/99 $ 1,083,416
2,765,000 FHLB 8.60 06/25/99 2,914,559
--------------
$ 3,997,975
</TABLE>
---------------------
21
<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 - 3.54%
$ 1,500,000 FHLMC MTN 7.13 % 07/21/99 $ 1,528,020
136,412 FHLMC #22-0009 8.25 08/01/01 137,989
279,541 FHLMC #291786 8.50 01/01/09 287,139
180,573 FHLMC #546103 10.50 08/01/19 197,728
45,782 FHLMC #189194 8.75 08/01/08 47,413
1,409,731 FHLMC #536534 9.00 07/01/17 1,471,844
259,085 FHLMC #544269 8.00 11/01/08 261,676
--------------
$ 3,931,809
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 16.17%
$ 2,455,000 FNMA MTN 7.30 % 04/17/00 $ 2,479,943
2,000,000 FNMA MTN 7.36 09/29/99 2,019,060
3,795,538 FNMA #50761 6.00 07/01/08 3,599,802
82,328 FNMA #68853 6.50 11/01/98 77,336
27,122 FNMA #75336 9.50 02/01/09 28,978
193,096 FNMA #83785 8.00 08/01/18 194,786
346,291 FNMA #2783 8.75 03/01/07 358,411
2,000,000 FNMA MTN 6.69 08/07/01 2,002,960
5,000,000 FNMA Global 8.50 02/01/05 5,203,700
2,000,000 FNMA Global 6.85 05/26/00 1,999,680
--------------
$ 17,964,656
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.93%
$ 1,775,098 GNMA #403934 9.00 % 08/15/24 $ 1,861,066
1,569,120 GNMA #418261 6.50 04/15/26 1,466,625
1,972,896 GNMA #423779 7.00 05/15/26 1,898,912
1,959,588 GNMA #402844 8.50 12/15/24 2,054,490
450,434 GNMA #423225 6.50 04/15/26 421,011
--------------
$ 7,702,104
</TABLE>
- ------------------------
22
<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)
REAL ESTATE MORTGAGE INVESTMENT CONDUITS - 0.08%
$ 87,203 FNMA 1993-G19 6.69 % 04/25/23 $ 91,208
--------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 35,676,192
(Cost $36,243,578)
U.S. TREASURY SECURITIES - 36.66%
U.S. TREASURY BONDS - 7.05%
$ 4,000,000 U.S. Treasury Bonds 6.25 % 05/31/00 $ 3,982,480
2,000,000 U.S. Treasury Bonds 6.25 08/15/23 1,806,860
2,000,000 U.S. Treasury Bonds 7.25 05/15/16 2,043,440
--------------
$ 7,832,780
U.S. TREASURY NOTES - 29.61%
$ 1,000,000 U.S. Treasury Notes 5.50 % 07/31/97 $ 998,120
1,000,000 U.S. Treasury Notes 5.75 10/31/97 999,060
1,500,000 U.S. Treasury Notes 6.13 05/31/97 1,504,650
3,250,000 U.S. Treasury Notes 6.13 03/31/98 3,256,078
2,000,000 U.S. Treasury Notes 6.25 12/15/03 1,968,120
1,000,000 U.S. Treasury Notes 6.38 07/15/99 1,003,440
2,000,000 U.S. Treasury Notes 6.50 05/15/97 2,010,660
2,000,000 U.S. Treasury Notes 6.50 04/30/97 2,010,320
1,800,000 U.S. Treasury Notes 6.75 02/28/97 1,809,558
2,500,000 U.S. Treasury Notes 7.13 09/30/99 2,556,250
1,000,000 U.S. Treasury Notes 7.13 10/15/98 1,019,060
1,000,000 U.S. Treasury Notes 7.38 11/15/97 1,015,780
2,850,000 U.S. Treasury Notes 7.88 01/15/98 2,917,231
3,700,000 U.S. Treasury Notes 8.00 08/15/99 3,862,430
3,300,000 U.S. Treasury Notes 8.25 07/15/98 3,419,097
2,500,000 U.S. Treasury Notes 8.50 05/15/97 2,543,350
--------------
$ 32,893,204
TOTAL U.S. TREASURY SECURITIES $ 40,725,984
(Cost $40,515,352)
</TABLE>
---------------------
23
<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 - 1.95%
REPURCHASE AGREEMENTS -
$ 2,170,000 Goldman Sachs & Co Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.20 10/01/96 2,170,000
(Cost $2,170,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $110,561,073)*(Notes 1 and 3) 99.22% $ 110,236,395
Other Assets and Liabilities, Net 0.78 866,100
------ --------------
TOTAL NET ASSETS 100.00% $ 111,102,495
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 773,504
Gross Unrealized Depreciation (1,098,182)
------------
NET UNREALIZED DEPRECIATION $ (324,678)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
24
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
25
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SHORT-
INTERMEDIATE
GINNIE U.S.
MAE INTERMEDIATE GOVERNMENT
FUND BOND FUND INCOME FUND
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities at market value (see
cost below) $176,204,271 $ 46,308,344 $110,236,395
Cash 111,557 16,740 7,953
Receivables:
Dividends and Interest 1,231,540 727,759 1,755,933
Fund shares sold 112,603 0 0
Organization expenses net of
amortization 9,572 0 18,826
Prepaid expenses 14,791 3,501 28
TOTAL ASSETS 177,684,334 47,056,344 112,019,135
LIABILITIES
Payables:
Distribution to shareholders 1,041,394 161,689 518,845
Fund shares redeemed 60,836 5,660 41,056
Due to sponsor and distributor 168,243 5,809 24,667
Due to advisor (Note 2) 100,491 45,637 55,820
Other 79,398 8,979 276,252
TOTAL LIABILITIES 1,450,362 227,774 916,640
TOTAL NET ASSETS
$176,233,972 $ 46,828,570 $111,102,495
NET ASSETS CONSIST OF:
Paid-in capital - Class A $170,303,569 $ 3,494,250 $ 50,686,231
Paid-in capital - Class B 21,701,125 25 N/A
Paid-in capital - Institutional Class 7,621,691 45,471,705 75,461,853
Undistributed (overdistributed) net
investment income 0 (73,203) (271,985)
Undistributed net realized gain (loss)
on investments (21,561,743) (1,972,554) (14,448,926)
Net unrealized appreciation
(depreciation) of investments (1,830,670) (91,653) (324,678)
TOTAL NET ASSETS $176,233,972 $ 46,828,570 $111,102,495
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $147,712,104 $ 2,481,027 $ 37,465,480
Shares outstanding - Class A 13,901,021 171,073 3,852,422
Net asset value and offering price per
share - Class A $ 10.63 $ 14.50 $ 9.73
Maximum offering price per share - Class
A $ 11.13(1) $ 15.19(1) $ 10.03(2)
Net Assets - Class B $ 21,140,822 $ 25 N/A
Shares outstanding - Class B 2,021,777 3 N/A
Net asset value and offering price per
share - Class B $ 10.46 $ 10.07 N/A
Net Assets - Institutional Class $ 7,381,046 $ 44,347,518 $ 73,637,015
Shares outstanding - Institutional Class 481,042 3,054,233 7,718,797
Net asset value and offering price per
share - Institutional Class $ 15.34 $ 14.52 $ 9.54
INVESTMENT AT COST (NOTE 3) $178,034,941 $ 46,399,997 $110,561,073
- -------------------------------------------------------------------------------------------
</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 $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
- ------------------------
26
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GINNIE MAE FUND
--------------------------- INTERMEDIATE
BOND FUND
FOR THE ----------
NINE
MONTHS FOR THE FOR THE
ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, SEPT. 30,
1996 1995 1996
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $10,456,487 $13,291,508 $3,485,020
TOTAL INVESTMENT INCOME 10,456,487 13,291,508 3,485,020
EXPENSES (NOTE 2)
Advisory 679,123 840,112 267,478
Administration fees 40,747 50,407 77,363
Custody fees 57,198 74,444 11,899
Shareholder servicing fees 408,550 504,067 7,201
Portfolio accounting fees 73,246 95,105 36,524
Transfer agency fees 180,825 156,422 17,338
Distribution fees 159,519 111,269 0
Amortization of organization expenses 2,027 1,902 1,823
Legal and audit fees 44,323 36,553 17,769
Registration fees 35,771 46,185 13,220
Directors' fees 3,751 5,000 5,932
Shareholder reports 15,747 45,205 23,698
Other 25,958 15,375 8,794
TOTAL EXPENSES 1,726,785 1,982,046 489,039
Less:
Waived fees (Note 2) (504,824) (574,978) (95,265)
Net Expenses 1,221,961 1,407,068 393,774
NET INVESTMENT INCOME 9,234,526 11,884,440 3,091,246
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments (4,952,031) 1,935,107 188,764
Net change in unrealized appreciation
(depreciation) of investments (3,717,687) 13,236,756 (997,909)
NET GAIN (LOSS) ON INVESTMENTS (8,669,718) 15,171,863 (809,145)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 564,808 $27,056,303 $2,282,101
- ---------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
27
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S.
GOVERNMENT INCOME FUND
----------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED
SEPT. 30, DEC. 31,
1996 1995
<S> <C> <C>
- -------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 2,694,664 $ 1,323,136
TOTAL INVESTMENT INCOME 2,694,664 1,323,136
EXPENSES (NOTE 2)
Advisory 213,467 116,628
Administration fees 12,808 6,998
Custody fees 12,371 7,673
Shareholder servicing fees 125,862 70,914
Portfolio accounting fees 45,550 44,207
Transfer agency fees 17,967 16,846
Distribution fees 19,128 8,986
Amortization of organization expenses 5,390 8,244
Legal and audit fees 19,080 26,620
Registration fees 748 29,743
Directors' fees 748 5,935
Shareholder reports 22,460 5,000
Other 6,802 0
TOTAL EXPENSES 502,381 347,794
Less:
Waived fees (Note 2) (183,291) (199,881)
Net Expenses 319,090 147,913
NET INVESTMENT INCOME 2,375,574 1,175,223
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments (1,001,781) (1,740,504)
Net change in unrealized appreciation
(depreciation) of investments 438,931 1,047,532
NET GAIN (LOSS) ON INVESTMENTS (562,850) (692,972)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,812,724 $ 482,251
- -------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
28
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GINNIE MAE FUND
---------------------------------------------
FOR THE NINE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (1) 1995 1994
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 9,234,526 $11,884,440 $ 17,212,338
Net realized gain (loss) on sale of
investments (4,952,031) 1,935,107 (12,854,822)
Net change in unrealized appreciation
(depreciation) of investments (3,717,687) 13,236,756 (14,085,918)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 564,808 27,056,303 (9,728,402)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (8,324,322) (11,629,261) (17,212,338)
CLASS B (874,966) (255,179) 0
INSTITUTIONAL CLASS (35,238) 0 0
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
Tax return of capital
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 43,434,133 24,703,217 36,339,249
Reinvestment of dividends - Class A 5,182,118 6,911,844 10,397,568
Cost of shares redeemed - Class A (59,192,126) (51,605,131) (152,037,792)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (10,575,875) (19,990,070) (105,300,975)
Proceeds from shares sold - Class B 12,897,534 12,424,092 0
Reinvestment of dividends - Class B 312,213 69,456 0
Cost of shares redeemed - Class B (3,423,143) (579,027) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 9,786,604 11,914,521 0
Proceeds from shares sold -
Institutional Class 7,655,410 0 0
Reinvestment of dividends -
Institutional Class 336 0 0
Cost of shares redeemed -
Institutional Class (347,432) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 7,308,314 0 0
INCREASE (DECREASE) IN NET ASSETS (2,150,675) 7,096,314 (132,241,715)
NET ASSETS:
Beginning net assets 178,384,647 171,288,333 303,530,048
ENDING NET ASSETS $176,233,972 $178,384,647 $171,288,333
- ------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $15,024,237 FOR CLASS A AND $6,990,045
FOR THE INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA INTERMEDIATE
GOVERNMENT BOND FUND MERGER. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
---------------------
29
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------------------------------
FOR THE FOR THE FOUR
YEAR ENDED MONTHS ENDED FOR THE
SEPT. 30, SEPT. 30, YEAR ENDED
1996 1995 MAY 31, 1995
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 3,091,246 $ 1,127,598 $ 3,508,106
Net realized gain (loss) on sale of
investments 188,764 364,287 (1,412,557)
Net change in unrealized appreciation
(depreciation) of investments (997,909) (382,517) 3,149,425
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,282,101 1,109,368 5,244,974
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (397,829) (1,127,598) (3,508,106)
CLASS B 0 0 0
INSTITUTIONAL CLASS (2,693,417) 0 0
In excess of net investment income
CLASS A 0 (27,612) (250,840)
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
Tax return of capital
CLASS A (2,213) 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS (40,503) 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 525,048 6,805,043 14,208,619
Reinvestment of dividends - Class A 261,911 795,638 2,638,770
Cost of shares redeemed - Class A (54,206,729) (8,013,618) (20,445,306)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (53,419,770) (412,937) (3,597,917)
Proceeds from shares sold - Class B 25 0 0
Reinvestment of dividends - Class B 0 0 0
Cost of shares redeemed - Class B 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 25 0 0
Proceeds from shares sold -
Institutional Class 63,136,515 0 0
Reinvestment of dividends -
Institutional Class 1,730,693 0 0
Cost of shares redeemed -
Institutional Class (19,395,503) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 45,471,705 0 0
INCREASE (DECREASE) IN NET ASSETS (8,799,901) (458,779) (2,111,889)
NET ASSETS:
Beginning net assets 55,628,471 56,087,250 58,199,139
ENDING NET ASSETS $ 46,828,570 $ 55,628,471 $ 56,087,250
- -------------------------------------------------------------------------------------------
</TABLE>
(2) "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.
The accompanying notes are an integral part of these financial statements.
- ---------------------
30
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S. GOVERNMENT
INCOME FUND
---------------------------------------
FOR THE NINE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (2) 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 2,375,574 $ 1,175,223 $ 557,955
Net realized gain (loss) on sale of
investments (1,001,781) (1,740,504) (477,511)
Net change in unrealized appreciation
(depreciation) of investments 438,931 1,047,532 (260,085)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,812,724 482,251 (179,641)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (2,125,952) (1,175,223) (557,955)
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS (249,622) 0 0
In excess of net investment income
CLASS A 0 0 0
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
Tax return of capital
CLASS A 0 0 0
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 50,198,742 38,655,106 15,266,240
Reinvestment of dividends - Class A 1,800,529 931,554 457,026
Cost of shares redeemed - Class A (53,286,609) (10,567,251) (11,941,036)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (1,287,338) 29,019,409 3,782,230
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 75,368,746 0 0
Reinvestment of dividends -
Institutional Class 934 0 0
Cost of shares redeemed -
Institutional Class (2,345,155) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 73,024,525 0 0
INCREASE (DECREASE) IN NET ASSETS 71,174,337 28,326,437 3,044,634
NET ASSETS:
Beginning net assets 39,928,158 11,601,721 8,557,087
ENDING NET ASSETS $ 111,102,495 $39,928,158 $11,601,721
- ---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
31
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GINNIE MAE FUND
------------------------------------------
CLASS A
------------------------------------------
NINE
MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31, DEC. 31,
1996 (2) 1995 1994 1993
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.15 $10.18 $11.31 $11.34
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.55 0.76 0.77 0.83
Net realized and unrealized gain (loss) on
investments (0.52) 0.97 (1.13) (0.03)
--------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.03 1.73 (0.36) 0.80
LESS DISTRIBUTIONS:
Dividends from net investment income (0.55) (0.76) (0.77) (0.83)
Distributions from net realized gain 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.55) (0.76) (0.77) (0.83)
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.63 $11.15 $10.18 $11.31
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 0.36% 17.53% (3.23)% 7.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $147,712 $166,157 $171,288 $303,530
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.83% 0.82% 0.73% 0.46%
Ratio of net investment income to average
net assets 6.85% 7.09% 7.20% 7.19%
Portfolio turnover 183% 118% 69% 121%
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses 1.19% 1.15% 1.07% 1.02%
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses 6.49% 6.76% 6.86% 6.63%
- ------------------------------------------------------------------------------------------
</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. ON OCTOBER
1, 1995, EXISTING INSTITUTIONAL SHARES WERE CONVERTED INTO INVESTOR
SHARES OF THE PACIFICA FUND. 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 SECOND
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. 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.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(3) THE INSTITUTIONAL CLASS COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) REPRESENTS TAX RETURN OF CAPITAL.
- ---------------------
32
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND
GINNIE MAE FUND (CONT.) FUND (1)
----------------------------------------------------- --------------------
CLASS B INSTL.
CLASS A (CONT.) -------------------- CLASS CLASS A CLASS B
-------------------- NINE --------- --------- ---------
YEAR YEAR MONTHS YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, SEPT. 30, DEC. 31, SEPT. 30, SEPT. 30, SEPT. 30,
1992 1991 1996 (2) 1995 1996 (3) 1996 1996 (4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.42 $10.00 $10.97 $10.00 $15.19 $14.76 $10.00
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.83 0.83 0.49 0.66 0.08 0.87 0.00
Net realized and
unrealized gain (loss)
on investments (0.08) 0.59 (0.51) 0.97 0.15 (0.25) 0.07
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.75 1.42 (0.02) 1.63 0.23 0.62 0.07
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.83) 0.00 (0.49) (0.66) (0.08) (0.87) 0.00
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 (0.01 (5) 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.83) 0.00 (0.49) (0.66) (0.08) (0.88) 0.00
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $11.34 $11.42 $10.46 $10.97 $15.34 $14.50 $10.07
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 6.86% 14.30% (0.12)% 16.69% 1.30% 4.15% 0.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $184,692 $4,870 $21,141 $12,227 $7,381 $2,481 $0
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.46% 1.04% 1.48% 1.47% 0.78% 0.85% 0.00%
Ratio of net investment
income to average net
assets 7.93% 7.66% 6.16% 6.01% 7.48% 5.82% 2.43%
Portfolio turnover 73% 241% 183% 118% 183% 96% 96%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.26% 1.05% 1.93% 2.12% 1.31% 1.11% 0.00%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 7.13% 7.65% 5.71% 5.36% 6.95% 5.56% 2.43%
- ---------------------------------------------------------------------------------------------------------
</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. ON OCTOBER
1, 1995, EXISTING INSTITUTIONAL SHARES WERE CONVERTED INTO INVESTOR
SHARES OF THE PACIFICA FUND. 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 SECOND
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. 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.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(3) THE INSTITUTIONAL CLASS COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) REPRESENTS TAX RETURN OF CAPITAL.
---------------------
33
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (1)
(CONT.)
-------------------------------
INSTITUTIONAL SHARES
-------------------------------
YEAR PERIOD YEAR
ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 (2) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.76 $14.77 $14.36
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.85 0.30 0.91
Net realized and unrealized gain (loss) on investments (0.23) (0.01) 0.47
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.62 0.29 1.38
LESS DISTRIBUTIONS:
Dividends from net investment income (0.85) (0.30) (0.97)
Distributions from net realized gain (0.01 (4) 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.86) (0.30) (0.97)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $14.52 $14.76 $14.77
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 4.19% 6.14%** 10.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $44,348 $55,628 $56,087
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.73% 0.89% 0.81%
Ratio of net investment income to average net assets 5.82% 5.94% 6.35%
Portfolio turnover 96% 54% 76%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.89% 0.94% 0.85%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 5.66% 5.89% 6.31%
- -----------------------------------------------------------------------------------------
</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. ON OCTOBER
1, 1995, EXISTING INSTITUTIONAL SHARES WERE CONVERTED INTO INVESTOR
SHARES OF THE PACIFICA FUND. 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 SECOND
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. 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.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(4) REPRESENTS TAX RETURN OF CAPITAL.
- ---------------------
34
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
U.S.
GOVERNMENT INCOME
INTERMEDIATE BOND FUND (1) FUND
(CONT.) --------------------
------------------------------- CLASS A
INSTITUTIONAL SHARES (CONT.) --------------------
------------------------------- NINE
YEAR YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, SEPT. 30, DEC. 31,
1994 1993 1992 1996 (3) 1995
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $15.72 $15.69 $15.52 $10.00 $9.39
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.99 1.17 1.14 0.41 0.55
Net realized and
unrealized gain (loss)
on investments (0.90) 0.40 0.65 (0.27) 0.61
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.09 1.57 1.79 0.14 1.16
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.85) (1.04) (1.41) (0.41) (0.55)
Distributions from net
realized gain (0.60) (0.50) (0.21) 0.00 0.00
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (1.45) (1.54) (1.62) (0.41) (0.55)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $14.36 $15.72 $15.69 $9.73 $10.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 0.35% 10.42% 11.96% 1.34% 12.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $58,199 $61,207 $54,203 $37,465 $39,928
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.79% 0.76% 0.68% 0.76% 0.71%
Ratio of net investment
income to average net
assets 5.33% 6.01% 7.14% 5.60% 5.64%
Portfolio turnover 163% 146% 102% 389% 472%
- -----------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.83% 0.79% 0.73% 1.21% 1.67%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.30% 5.98% 7.09% 5.15% 4.68%
- -----------------------------------------------------------------------------------
</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. ON OCTOBER
1, 1995, EXISTING INSTITUTIONAL SHARES WERE CONVERTED INTO INVESTOR
SHARES OF THE PACIFICA FUND. 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 SECOND
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. 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.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(4) REPRESENTS TAX RETURN OF CAPITAL.
---------------------
35
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S.
GOVERNMENT INCOME FUND (CONT.)
-------------------------------
INSTL.
CLASS A (CONT.) CLASS
-------------------- ---------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, SEPT. 30,
1994 1993 (1) 1996 (2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $9.99 $10.00 $9.46
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.46 0.06 0.03
Net realized and unrealized gain (loss) on investments (0.60) (0.01) 0.08
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS (0.14) 0.05 0.11
LESS DISTRIBUTIONS:
Dividends from net investment income (0.46) (0.06) (0.03)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.46) (0.06) (0.03)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $9.39 $9.99 $9.54
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) (1.42)% 0.40% 1.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $11,602 $8,557 $73,637
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.25% 0.00% 0.59%
Ratio of net investment income to average net assets 4.75% 3.49% 5.14%
Portfolio turnover 288% N/A 389%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.28% 2.45% 0.84%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 2.72% 1.04% 4.89%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND COMMENCED OPERATIONS ON OCTOBER 27, 1993.
(2) THE INSTITUTIONAL CLASS COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
- ---------------------
36
<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, (the "1940 Act"), as an open-end series investment company.
The Company commenced operations on January 1, 1992, at which time the merger
described in Note 5 was consummated, and currently offers the following nineteen
separate diversified Funds: the Aggressive Growth, Asset Allocation, Balanced,
Corporate Stock, Diversified Income, Equity Value, Ginnie Mae, Growth and
Income, Government Money Market Mutual, Intermediate Bond, Money Market Mutual,
Money Market Trust, National Tax-Free, National Tax-Free Money Market Mutual,
Prime Money Market Mutual, Short-Intermediate U.S. Government Income, Small Cap,
Treasury Money Market Mutual, and U.S. Government Allocation Funds; and five
non-diversified funds: the Arizona Tax-Free, California Tax-Free Bond,
California Tax-Free Income, California Tax-Free Money Market Mutual, and Oregon
Tax-Free Funds. These financial statements represent the Ginnie Mae,
Intermediate Bond, and Short-Intermediate U.S. Government Income Funds (the
"Funds").
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).
Additionally, the Ginnie Mae Fund acquired all of the assets and assumed all of
the liabilities of the Pacifica Intermediate Government Bond Fund while 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. Pursuant to the
reorganization, the Company changed its fiscal year-end from December 31 to
September 30.
Each of the Funds presented in this book, with the exception of the
Short-Intermediate U.S. Government Income 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 three classes of shares
differ principally in the applicable sales charges, shareholder servicing fees
and distribution fees. Shareholders of each class also bear certain expenses
that pertain to that particular class. All shareholders bear the
---------------------
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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. 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 gain allocations and
from differences in separate class expenses, including distribution and service
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 for investment
companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and 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.
INVESTMENT POLICY AND SECURITY VALUATION
Investments in securities for which the primary market is a national securities
exchange or the NASDAQ National Market System are valued at the last reported
sales price on the day of valuation. U.S. government obligations are valued at
the reported bid prices. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding debt securities
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. Securities for which quotations are not readily available are valued at
fair value as determined by procedures set by the Fund's Board of Directors.
Cash equivalents relating to firm commitment purchase agreements are segregated
by the custodian and may not be sold while the current commitment is
outstanding.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). 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.
TBA PURCHASE COMMITMENTS
The Ginnie Mae Fund enters into "TBA" (to be announced) purchase commitments to
purchase securities for a fixed price at a future date beyond customary
settlement time. Although the unit price of a TBA has been established, the
- ---------------------
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS
principal value has not been finalized. However, the amount of the commitment
will not fluctuate more than 2% from the principal amount. 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. The risk is
in addition to the risk of a decline in the value of the Fund's other assets.
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 each Fund's Portfolio of
Investments. The adviser to the Funds pools the Fund's cash and invests in
repurchase agreements entered into by the Funds. 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
adviser's responsibility to value collateral daily and to obtain additional
collateral as necessary to maintain market value equal to or greater than the
resale price. The repurchase agreements entered into and held in the Funds at
September 30, 1996, are collateralized by U.S. Government obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income of the Funds are
declared daily and distributed monthly. Any dividends to shareholders from net
realized capital gains are declared and distributed annually.
---------------------
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAXES
The Company's policy with respect to each Fund is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute substantially all of each Fund's net
investment income and any net realized capital gain to its shareholders.
Therefore, no federal or state income tax provision is required. The following
funds had capital loss carryforwards at September 30, 1996:
<TABLE>
<CAPTION>
YEAR CAPITAL LOSS
FUND EXPIRES CARRYFORWARD
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Ginnie Mae Fund 2001 $ 3,356,546
2002 $ 13,505,822
2003 $ 229,000
2004 $ 4,952,031
Intermediate Bond Fund 2002 $ 1,943,948
2003 $ 17,986
Short-Intermediate U.S. Government Income Fund 2000 $ 127,148
2001 $ 751,718
2002 $ 2,161,797
2003 $ 4,199,467
2004 $ 7,000,000
</TABLE>
The capital loss carryforwards shown above include carryforwards from the
Pacifica Funds which were merged into the Funds during the year. 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 Internal Revenue Code
applicable to corporate changes of ownership.
The Board intends to offset net capital gains with each capital loss
carryforward until each carryforward has been fully utilized or expires. Thus,
no capital gain distributions shall be made until the capital loss 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 and gains distributed on a book
versus tax basis are shown as excess distributions of net investment income and
net realized gain on the sale of investments in the accompanying Statements of
Changes in Net Assets.
- ---------------------
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of the Fund and/or Class. These expenses
are being amortized by the Funds on a straight-line basis over 60 months from
the date each Fund and/or Class commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Funds
with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contracts, WFB furnishes to
the Funds investment guidance and policy direction in connection with daily
portfolio management. Under the contract with the Intermediate Bond and
Short-Intermediate U.S. Government Income Funds, WFB is entitled to be paid a
monthly advisory fee at an annual rate of 0.50% of the average daily net assets
of the respective Fund. Under the contract with the Ginnie Mae Fund, WFB is
entitled to be paid by the Fund a monthly advisory fee at an annual rate of
0.50% of such Fund's average daily net assets up to $250 million, 0.40% of
average daily net assets of the next $250 million, and 0.30% in excess of $500
million.
For the period from October 1, 1995 to March 31, 1996, the Intermediate Bond
Fund was advised by First Interstate Capital Management, Inc. ("FICM"). Pursuant
to the advisory contract, the Fund paid an advisory fee at an annual rate of
0.50%. On April 1, 1996, First Interstate Bancorp ("FIB") was merged with and
into Wells Fargo & Company ("Wells Fargo") and FICM and First Interstate Bank of
California ("FICAL") became indirect wholly-owned subsidiaries of Wells Fargo.
In connection with this merger, FICM changed its name to Wells Fargo Investment
Management, Inc. ("WFIM"). For the period from April 1, 1996 to September 5,
1996, such advisory fees were paid to WFIM.
The Company has entered into contracts with WFB on behalf of all of the Funds
whereby WFB is responsible for providing custody and portfolio accounting
services for the Funds. WFB is entitled to certain transaction charges plus an
annual fee for custody services at an annual rate of 0.0167% of the average
daily net assets of the respective Funds. 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 average daily net assets, 0.045% of the next
$50 million, and 0.02% of the average daily net assets over $100 million.
For the period from October 1, 1995 to March 31, 1996, FICAL served as the
custodian for the Intermediate Bond Fund. Pursuant to the contracts, the Fund
paid a custodian fee based on net assets and certain transaction charges. For
the period from April 1, 1996 to September 5, 1996, such custodian fees were
paid to WFB.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to act as transfer agent for the Funds. Under the
---------------------
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
contracts with the Ginnie Mae and Short-Intermediate U.S. Government Income
Funds, WFB is paid a per account fee plus other related costs with a minimum
monthly fee of $3,000 per Fund, unless net assets of the respective Fund are
under $20 million. For as long as the assets remain under $20 million, a Fund
will not be charged any transfer agent fees by WFB. Under the contract with the
Intermediate Bond Fund, WFB is entitled to be paid a fee at the annual rate of
0.07% of the average daily net assets of the Fund.
For the period from October 1, 1995 to September 5, 1996, the Intermediate Bond
Fund retained Furman Selz LLC ("Furman Selz") to provide personnel and
facilities to perform shareholder servicing, transfer agency related services
and fund accounting.
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder servicing to the Funds. Pursuant to the
contract, WFB is entitled to an annual fee for providing shareholder servicing
of 0.30% of the average daily net assets attributable to the Class A and Class B
shares of the Ginnie Mae Fund and 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 Institutional Class shares of the
Ginnie Mae and Short-Intermediate U.S. Government Income Funds.
For the period from October 1, 1995 to September 5, 1996, various banks, trust
companies, broker-dealers or other financial organizations (collectively,
"Service Organizations") also provided administrative services for the
Intermediate Bond Fund, such as maintaining shareholder accounts and records.
The Fund paid fees to Service Organizations in amounts up to an annual rate of
0.25% of the daily net assets of the Fund's shares owned by shareholders with
whom the Service Organization had a servicing relationship. During that period,
FIB was the only service organization to receive payments.
The servicing expenses for Class A, Class B and Institutional Class shares of
the Funds for the period ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Ginnie Mae Fund* $363,734 $42,380 $ 2,436
Intermediate Bond Fund** 379 0 6,822
Short-Intermediate U.S. Government
Income Fund* 114,771 N/A 11,091
</TABLE>
* INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
- ---------------------
42
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Company has entered into administration and distribution agreements on
behalf of the Funds with Stephens. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services to the Funds. For
receiving supervisory and administrative services, the Ginnie Mae and
Short-Intermediate U.S. Government Income Funds pay Stephens a monthly fee at
the annual rate of 0.03% of such Fund's average daily net assets and the
Intermediate Bond Fund pays 0.05% of such Fund's average daily net assets.
For the period from October 1, 1995 to September 5, 1996, Furman Selz provided
administrative services for the operation of the Intermediate Bond Fund. As
compensation for such services, the Fund paid Furman Selz an annual fee payable
monthly equal to 0.15% of the average daily net assets of the Fund.
The Company has adopted separate Distribution Plans, pursuant to Rule 12b-1, for
Class A and Class B shares of the Funds. The separate Distribution Plan for each
of the Class A shares of the Funds provides that each Fund may defray all or
part of the cost of preparing, printing and distributing prospectuses and other
promotional materials by paying on an annual basis up to 0.05% of the Class A
shares' average daily net assets for costs incurred. Each of these Funds 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 attributable to joint distribution activities will be allocated among
the Funds in proportion to their relative net asset sizes.
For the period from October 1, 1995 to September 5, 1996, the Intermediate Bond
Fund had adopted a non-compensatory Distribution Plan and Agreement (the "Plan")
for the Class A shares. The Plan provided for payments by the Fund for actual
expenses incurred, not to exceed 0.50% of the average net assets of the Class A
shares of the Fund. Pacifica Funds Distributor Inc., an affiliate of Furman
Selz, acted as Distributor during such period.
The Class B Distribution Plan for the Ginnie Mae Fund provides that the Fund may
pay, as compensation for distribution-related services, a monthly fee at an
annual rate of up to 0.70% of the Fund's average daily net assets attributable
to Class B shares. The Intermediate Bond Fund may pay up to 0.75% of the average
daily net assets attributable to Class B shares as compensation for
distribution-related services provided on behalf of its Class B shares.
---------------------
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distribution Plan expenses for Class A and Class B shares of the Funds were
as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31,1995
------------------------------ ------------------------------
DISTRIBUTION DISTRIBUTION DISTRIBUTION DISTRIBUTION
FEES FEES FEES FEES
FUND CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Ginnie Mae Fund $ 60,634 $ 98,885 $ 81,915 $ 29,354
</TABLE>
FEES WAIVED AND REIMBURSED EXPENSES
The following amounts of fees were waived for the period ended September 30,
1996:
<TABLE>
<CAPTION>
FEES WAIVED FEES WAIVED FEES WAIVED
BY BY BY
FUND FURMAN SELZ FIB WFB
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Ginnie Mae Fund* N/A N/A $ 504,824
Intermediate Bond Fund** 21,881 39,513 33,871
Short-Intermediate U.S. Government Income Fund* N/A N/A 183,291
</TABLE>
* INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
All amounts shown as waived fees on the Statements of Operations for the year
ended December 31, 1995 were waived by WFB. Waived Fees continue at the
discretion of WFB. WFB and Stephens have agreed to waive or reimburse all or a
portion of their respective fees charged to, or expenses paid by, the Ginnie
Mae, Intermediate Bond, or Short-Intermediate U.S. Government Income Funds to
ensure that the total fund operating expenses do not exceed, on an annual basis,
0.82%, 0.80%, or 0.71% of the average daily net assets of each Fund's Class A
shares and 0.77%, 0.75%, or 0.65% of the average daily net assets of each Fund's
Institutional Class shares, respectively, through August 31, 1997.
Certain officers and directors of the Company are also officers of Stephens. As
of September 30, 1996, Stephens owned one share of the Ginnie Mae, three shares
of the Intermediate Bond and 108 shares of the Short-Intermediate U.S.
Government Income Funds.
- ---------------------
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Stephens has retained $2,252,478 as sales charges from the proceeds of Class A
shares sold and $306,643 from the proceeds of Class B shares redeemed by the
Company for the period ended September 30, 1996. Wells Fargo Securities Inc., a
subsidiary of Wells Fargo & Co., received $1,780,263 as sales charges from the
proceeds of Class A shares sold and $306,643 from the proceeds of Class B shares
redeemed by the Company for the period ended September 30, 1996.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for each
Fund were as follows:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE YEAR ENDED
ENDED SEPTEMBER 30, 1996 DECEMBER 31, 1995
--------------------------- ---------------------------
SHORT-INTERMEDIATE SHORT-INTERMEDIATE
AGGREGATE PURCHASES GINNIE MAE U.S. GOVERNMENT GINNIE MAE U.S. GOVERNMENT
AND SALES OF: FUND INCOME FUND FUND INCOME FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS:
Purchases at cost $163,216,571 $176,123,138 $155,156,563 $82,621,249
Sales proceeds 178,999,393 172,778,451 135,966,523 59,925,207
OTHER SECURITIES:
Purchases at cost 183,922,538 74,187,324 46,377,956 23,199,819
Sales proceeds 164,484,606 24,704,762 57,025,032 16,571,316
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30, 1996
---------------------
AGGREGATE PURCHASES INTERMEDIATE BOND
AND SALES OF: FUND
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $26,867,645
Sales proceeds 32,959,441
OTHER SECURITIES:
Purchases at cost 22,057,925
Sales proceeds 19,877,719
</TABLE>
---------------------
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL SHARES TRANSACTIONS
As of September 30, 1996, there were 49 billion shares of $0.001 par value
capital stock authorized by the Company. At September 30, 1996, the
Short-Intermediate U.S. Government Income Fund and Intermediate Bond Funds were
each authorized to issue 100 million shares of $0.001 par value capital stock
for each class of shares, and the Ginnie Mae Fund was authorized to issue 300
million shares. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
GINNIE MAE FUND
----------------------------------
FOR THE
NINE FOR THE
MONTHS YEAR FOR THE
ENDED ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (1) 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 4,023,370 2,279,437 3,335,882
Shares issued in reinvestment of
dividends -- Class A 481,543 646,128 970,355
Shares redeemed -- Class A (5,508,045) (4,839,906) (14,322,410)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,003,132) (1,914,341) (10,016,173)
Shares sold -- Class B 1,203,149 1,161,521 0
Shares issued in reinvestment of
dividends -- Class B 29,609 6,474 0
Shares redeemed -- Class B (325,522) (53,454) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 907,236 1,114,541 0
Shares sold -- Institutional Class 503,644 0 0
Shares issued in reinvestment of
dividends -- Institutional Class 22 0 0
Shares redeemed -- Institutional
Class (22,624) 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 481,042 0 0
</TABLE>
(1) "SHARE SOLD" INCLUDES 1,427,922 FOR CLASS A AND 460,157 FOR THE
INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA INTERMEDIATE GOVERNMENT
BOND FUND MERGER
- ---------------------
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
-----------------------------------
FOR THE
FOR THE PERIOD FOR THE
YEAR ENDED ENDED YEAR ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 1995
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 33,572 459,831 1,000,106
Shares issued in reinvestment of dividends --
Class A 17,750 54,095 186,341
Shares redeemed -- Class A (3,650,324) (541,307) (1,441,332)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
-- CLASS A (3,599,002) (27,381) (254,885)
Shares sold -- Class B 3 0 0
Shares issued in reinvestment of dividends --
Class B 0 0 0
Shares redeemed -- Class B 0 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
-- CLASS B 3 0 0
Shares sold -- Institutional Class 4,275,471 0 0
Shares issued in reinvestment of dividends --
Institutional Class 117,940 0 0
Shares redeemed -- Institutional Class (1,339,178) 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
-- INSTITUTIONAL CLASS 3,054,233 0 0
</TABLE>
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
U.S. GOVERNMENT INCOME FUND
---------------------------------
FOR THE
NINE FOR THE FOR THE
MONTHS YEAR YEAR
ENDED ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (2) 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 5,141,274 3,742,963 1,559,723
Shares issued in reinvestment of
dividends -- Class A 184,087 95,287 47,074
Shares redeemed -- Class A (5,467,391) (1,079,388) (1,227,993)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (142,030) 2,758,862 378,804
Shares sold -- Institutional Class 7,965,695 0 0
Shares issued in reinvestment of
dividends -- Institutional Class 99 0 0
Shares redeemed -- Institutional Class (246,997) 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 7,718,797 0 0
</TABLE>
(2) "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.
---------------------
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
5. REORGANIZATION OF WELLS FARGO INVESTMENT TRUST FOR RETIREMENT PROGRAMS
At special meetings held on December 31, 1991, unitholders owning a majority of
the outstanding units of each of the Wells Fargo Investment Trust for Retirement
Programs Funds (the "Trust") as of the close of business on November 8, 1991,
approved an Agreement and Plan of Reorganization (the "Agreement") among the
Trust, for itself and on behalf of each of the six funds comprising the Trust
(each a "Predecessor Fund"); the Company; and Wells Fargo in its capacity as the
Trustee of the Trust, and in its individual capacity.
The Agreement provided, among other things, for the transfer of the assets of
each Predecessor Fund to a corresponding series of the Company (each a
"Stagecoach Fund"). The Agreement provided that in consideration thereof, each
Stagecoach Fund would assume certain identified liabilities of the corresponding
Predecessor Fund and would deliver to the corresponding Predecessor Fund the
number of full and fractional shares of common stock of the Stagecoach Fund
having an aggregate net asset value equivalent to the aggregate net asset value
of the assets transferred to the Stagecoach Fund by the corresponding
Predecessor Fund (collectively, the "Reorganization").
On January 1, 1992, the Reorganizations closed, and each Predecessor Fund made a
pro rata liquidating distribution to its unitholders of the shares of the
corresponding Stagecoach Fund it had received.
All of the expenses connected with the Reorganizations were paid by Wells Fargo
or Stephens.
All information contained in this Annual Report which reflects financial data on
the Ginnie Mae Fund for periods prior to 1992 refers to the corresponding
Predecessor Fund.
- ---------------------
48
<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 Ginnie Mae Fund, Intermediate Bond Fund,
and Short-Intermediate U.S. Government Income Fund (three of the funds
comprising Stagecoach Funds, Inc.) as of September 30, 1996, and the related
statements of operations for the nine months ended September 30, 1996, and the
year ended December 31, 1995, for the Ginnie Mae Fund and the Short-Intermediate
U.S. Government Income Fund and for the year ended September 30, 1996, for the
Intermediate Bond Fund, the statements of changes in net assets for the nine
months ended September 30, 1996, and each of the years in the two year period
ended December 31, 1995, for the Ginnie Mae Fund and the Short-Intermediate U.S.
Government Income Fund and the year ended September 30, 1996, for the
Intermediate Bond Fund, and financial highlights for the Ginnie Mae Fund and the
Short-Intermediate U.S. Government Income Fund for the periods indicated herein
and for the Intermediate Bond Fund for the year ended September 30, 1996. 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 statements and 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. For the Ginnie Mae Fund, all periods
indicated in the accompanying financial highlights ending prior to January 1,
1992 were audited by other auditors whose report dated February 19, 1992,
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 verification of securities owned as of
September 30, 1996, by examination 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 September 30, 1996,
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.
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
NOVEMBER 15, 1996
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49
<PAGE>
- -----------------
PROXY VOTING RESULTS
PROPOSAL 1.
To ratify and approve an interim investment advisory agreement on behalf of the
Pacifica Portfolio, between Pacifica and Wells Fargo Investment Management, Inc.
(formerly known as First Interstate Capital Management, Inc. ("FICM"), the terms
of which are substantially identical to the previous advisory agreement between
Pacifica and FICM (the fee rates are unchanged), and the receipt of investment
advisory fees by WFIM for the period from April 1, 1996 forward.
PACIFICA INTERMEDIATE BOND FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
3,522,549 666 5,445
</TABLE>
PACIFICA INTERMEDIATE
GOVERNMENT BOND FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
785.861 3,400 22,382
</TABLE>
PACIFICA GOVERNMENT INCOME FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
4,674,342 8,155 21,479
</TABLE>
PACIFICA SHORT-TERM
GOVERNMENT BOND FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,526,401 154 17,884
</TABLE>
PROPOSAL 2.
To approve the Agreement and Plan of Reorganization attached to the combined
proxy statement/prospectus for the meeting providing for the transfer of the
assets and liabilities of specific Pacifica Funds to corresponding Funds of
Stagecoach Funds, Inc., in exchange for shares of the designated classes of the
Stagecoach Funds.
PACIFICA INTERMEDIATE BOND FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
3,522,530 684 5,445
</TABLE>
PACIFICA INTERMEDIATE
GOVERNMENT BOND FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
783,266 1,601 26,776
</TABLE>
PACIFICA GOVERNMENT INCOME FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
4,654,657 28,126 21,193
</TABLE>
PACIFICA SHORT-TERM GOVERNMENT
BOND FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,526,401 351 17,884
</TABLE>
- ---------------------
50
<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>
---------------------
51
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
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52
<PAGE>
GINNIE MAE FUND
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
SUPPLEMENT DATED NOVEMBER 25, 1996
TO PROSPECTUS DATED SEPTEMBER 6, 1996
The following three paragraphs replace the third and fifth paragraphs under the
prospectus section "Management":
Ms. Tamyra Thomas assumed responsibility as a co-portfolio manager for the
day-to-day management of the portfolio of the Ginnie Mae Fund and the
Intermediate Bond Fund as of July 16, 1996 and September 6, 1996, respectively.
Ms. Thomas is a Senior Vice-President and the Chief Fixed Income Investment
Officer of the Investment Management Group of Wells Fargo Bank. Ms. Thomas has
managed bond portfolios for over a decade. She currently manages in excess of $1
billion of long-term taxable bond portfolios for various foundations, defined
benefit plans and other clients. Prior to joining Wells Fargo Bank in 1988, she
held a number of senior investment positions for the Valley Bank & Trust Company
of Utah, including Vice President and Manager of the Investment Department and
Chairman of the Trust Investment Committee. She holds a B.S. from the University
of Utah and was past president of the Utah Bond Club. Ms. Thomas is a chartered
financial analyst.
Mr. Jeff Weaver assumed responsibility as a co-portfolio manager for the
day-to-day management of the portfolio of the Short-Intermediate U.S. Government
Income Fund as of July 16, 1996. Mr. Weaver joined Wells Fargo Bank in February
of 1994, after three years as a short-term fixed income trader and portfolio
manager in the investment management group of Bankers Trust Company in New York.
He holds a B.A. in economics from the University of Colorado and is a chartered
financial analyst candidate.
Ms. Madeline Gish also assumed responsibility as a co-portfolio manager for the
day-to-day management of the portfolio of the Short-Intermediate U.S. Government
Income Fund as of July 16, 1996. Ms. Gish joined Wells Fargo Bank in 1989 as the
portfolio coordinator for the Mutual Funds Division and played an integral part
in the rapid growth of the Overland Express Funds. Since joining the
fixed-income group in 1992, Ms. Gish has assisted in the research and trading
for the adjustable-rate mortgage fund and is currently managing taxable
liquidity portfolios. She holds a bachelor of science degree in business
administration from the University of Kansas and is a chartered financial
analyst candidate.
NOT PART OF THE ANNUAL REPORT
<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. THE BOOKLET
ALSO CONTAINS A PROSPECTUS SUPPLEMENT INSIDE THE BACK COVER. 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 0553 (11/96)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1996 Stagecoach Funds
<PAGE>
