<PAGE>
- ---------------------
SEMI-ANNUAL
- ---------------------
REPORT
- ---------------------
Money Market
Mutual Fund
Class S
JUNE 30, 1996
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS iii
MANAGER COMMENTS AND PORTFOLIO OF INVESTMENTS
Money Market Mutual Fund 1
STATEMENT OF ASSETS AND LIABILITIES 7
STATEMENT OF OPERATIONS 8
STATEMENTS OF CHANGES IN NET ASSETS 9
FINANCIAL HIGHLIGHTS 10
NOTES TO THE FINANCIAL STATEMENTS 12
STAGECOACH FUNDS:
-------------------------------------------------------------------------
- ARE NOT FDIC INSURED MONEY MARKET MUTUAL FUNDS
- ARE NOT GUARANTEED BY WELLS SEEK TO MAINTAIN A STABLE [NO FDIC]
FARGO BANK NET ASSET VALUE OF $1.00 PER
- ARE NOT DEPOSITS OR OBLIGATIONS SHARE, HOWEVER, THERE CAN BE
OF THE BANK NO ASSURANCE THAT THE FUNDS
- INVOLVE INVESTMENT RISK, WILL MEET THIS OBJECTIVE.
INCLUDING POSSIBLE LOSS OF YIELDS WILL VARY WITH MARKET
PRINCIPAL CONDITIONS.
---------------------
i
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
INFLATION CONCERNS MAY SPUR FED ACTION
The story of the financial markets for the first six months of 1996 was the
concern that "too much strength" in the economy would increase inflation and
force the Federal Reserve (the "Fed") to raise the federal funds target rate to
slow economic growth. While those concerns pushed long-term interest rates up
about a full percentage point since the end of 1995, sending 30-year Treasury
bonds over the 7.00% mark in June, money market mutual funds, therefore, did not
benefit from increased yields.
In part, money market mutual fund yields remained relatively stable because the
Fed has not in fact raised rates. The federal funds discount rate establishes
the "floor" for interest rates throughout the economy and is one of the most
direct influences on money market yields. When this rate is increased, money
becomes more expensive to borrow, slowing economic activity. The Fed had lowered
interest rates several times over the past year, fueling to some extent the
stock market's strong performance over that time, but reducing returns for money
market funds.
Inflation is a valid concern for investors since inflation can erode the
long-term real return on an investment portfolio. There is not, however, a
consensus on how severe a problem inflation currently is. Certain signs that
usually indicate inflation, such as increased wages, lower unemployment and
stronger than expected economic growth, have not been validated by the
Department of Labor's Consumer Price Index, which continues to show inflation in
the acceptable 2 to 3.00% range. Nonetheless, most analysts now expect the Fed
to increase the federal funds target rate at least once, and possibly twice,
during the remainder of the year.
THE ROLE OF MONEY MARKET MUTUAL FUNDS
It may seem that the interests of money market and long-term mutual funds are
contrary, since an increase in interest rates can have a negative impact on both
the stock and bond markets, while increasing money market yields. It is
important to keep in mind, however, that these investments serve different ends.
Ideally, money market mutual funds are most suitable for short-term investments.
Money market funds are managed to provide current income and to maintain a net
asset value of one dollar per share. This reduces the possibility of loss of
principal and is intended to provide better yields than other short-term
alternatives. (There is, of course, no guarantee that they can achieve these
goals.)
Long-term funds, whether invested in equities or fixed-income securities,
increase the possibility of loss of principal, particularly in the short-term,
and are intended for investors with longer time horizons than money market
investors. Just as most investors have a variety
---------------------
iii
<PAGE>
LETTER TO SHAREHOLDERS
of needs and objectives, a balanced portfolio generally has a mixture of long-
and short-term investments.
A COMMITMENT TO INVESTMENT QUALITY
We believe a conservative, straightforward approach is the most effective long-
term investment strategy, and we offer a variety of Stagecoach Funds to meet a
broad range of investment goals. On the following pages you will find reports
from the investment adviser and portfolio managers of each of the Funds,
offering insight into individual fund performance and strategies, portfolio
holdings and other helpful information.
We appreciate your participation in the Stagecoach Funds. We will continue
working diligently to help you realize your financial goals.
STAGECOACH FAMILY OF FUNDS, AUGUST 1996
- ---------------------
iv
<PAGE>
MONEY MARKET MUTUAL FUND -- CLASS S
WHAT WAS THE SEVEN-DAY YIELD AS OF JUNE 30, 1996?
The seven-day yield as of the end of June was 4.00% This is below the 1995
year-end seven-day yield of 4.30%.
WHY IS THE SEVEN-DAY YIELD LOWER THAN AT THE END OF 1995?
Money market yields are most influenced by the federal funds target rate which
is set by the Fed. In late January, the Fed lowered the target rate from 5.50%
to 5.25% in response to a stagnant economy and low inflation. This was the last
in a series rate cuts which had the affect of dragging down money market rates
over the last year. During the second quarter a different story emerged as the
U.S. economy heated up, led by strengths in employment, the housing sector and
auto sales. This increased speculation that the Fed would reverse its recent
direction and raise rates during 1996. That has not yet occurred.
Investors interested in tracking yields in the money market sector would find
the 3-month London Interbank Offered Rate (LIBOR) a helpful indication of
interest rates along with the federal funds target rate. At the end of 1995, the
federal funds target rate was at 5.50% and 3-month LIBOR was at 5.62%. As of
June 30, 1996 the federal funds target rate was at 5.25% and 3-month LIBOR was
at 5.53%.
WHAT DO YOU EXPECT TO HAPPEN TO RATES FOR THE REST OF 1996?
We expect the Fed to tighten monetary policy in the third quarter by raising the
federal funds target rate in response to continued strength in the economy and
fears of inflation. If this occurs, money market rates would increase, and the
short end of the yield curve would be expected to remain steep.
WHAT WILL YOUR STRATEGY BE IN RESPONSE?
With this current outlook on interest rates, the Fund has shortened its average
maturity from 70 days in the first quarter to approximately 50 days at the end
of the first half of the year. If rates increase, we may extend maturity again
to lock in the higher yields.
HOW DIRECT IS THE LINK BETWEEN CHANGES IN THE FEDERAL FUNDS TARGET RATE AND THE
YIELDS ON MONEY MARKET INSTRUMENTS?
The federal funds target rate is the single biggest determinant of money market
rates. This impact occurs in two ways: first, changes in the federal funds
target rate have a direct effect on money market yields. Second, money market
yields increase as expectations for a higher federal funds rate increase.
---------------------
1
<PAGE>
MONEY MARKET MUTUAL FUND -- CLASS S
DURING PERIODS OF GENERALLY LOWER RATES, DOES THE FUND GO "SHOPPING" FOR THE
BEST DEALS? HOW DOES IT SELECT INVESTMENTS?
Regardless of the level of interest rates, the Fund is always looking for the
best deals without compromising credit quality, whether they may be found in
commercial or government paper. The Fund monitors the relative values of both
sectors continually and seizes opportunities as they present themselves. Over a
period of time, the "best deals" can be in either sector.
- ---------------------
2
<PAGE>
MONEY MARKET MUTUAL FUND (UNAUDITED)
- -----------------------------------------
PORTFOLIO OF INVESTMENTS - 6/30/96
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER - 63.26%
$50,000,000 Abbey National North America 5.30 % 08/09/96 $ 49,712,917
30,000,000 ABN Amro North American Finance Corp Inc 5.27 09/03/96 29,718,933
40,000,000 ANZ Delaware Inc 5.29 07/16/96 39,911,833
50,000,000 ANZ Delaware Inc 5.29 08/13/96 49,684,069
50,000,000 Asset Securitization Cooperative Corp++ 5.30 07/23/96 49,838,056
50,000,000 Asset Securitization Cooperative Corp++ 5.40 09/25/96 49,355,000
25,000,000 Associates Corp of North America 5.38 09/05/96 24,753,417
50,000,000 Associates Corp of North America 5.39 09/11/96 49,461,000
50,000,000 Bank of New York Co Inc 5.27 08/20/96 49,634,028
50,000,000 Bank of New York Co Inc 5.40 09/24/96 49,362,500
50,000,000 Bank of Nova Scotia 5.29 08/01/96 49,772,236
50,000,000 Bank of Nova Scotia 5.38 09/18/96 49,409,694
50,000,000 Beta Finance Corp 5.33 07/16/96 49,888,958
50,000,000 Canadian Imperial Holdings Inc 5.27 07/02/96 49,992,681
100,000,000 Canadian Imperial Holdings Inc 5.28 07/30/96 99,574,667
30,000,000 Ciesco LP++ 5.27 08/08/96 29,833,117
50,000,000 Ciesco LP++ 5.39 09/10/96 49,468,486
50,000,000 Commerzbank US Finance Inc 5.42 09/24/96 49,360,139
100,000,000 Corporate Receivables Corp++ 5.32 07/11/96 99,852,222
50,000,000 Daimler-Benz North America Corp 5.28 07/31/96 49,780,000
50,000,000 Daimler-Benz North America Corp 5.28 08/14/96 49,677,333
25,000,000 Daimler-Benz North America Corp 5.28 08/20/96 24,816,667
50,000,000 Den Danske Co Inc 5.05 07/31/96 49,789,583
50,000,000 Ford Motor Credit 5.29 08/01/96 49,772,236
150,000,000 General Electric Capital Corp 5.32 07/10/96 149,800,500
50,000,000 Glaxo Wellcome Plc++ 5.28 07/26/96 49,816,667
22,841,000 Greenwich Funding Corp++ 5.28 08/19/96 22,676,849
29,912,000 Greenwich Funding Corp++ 5.28 08/23/96 29,679,484
50,687,000 Greenwich Funding Corp++ 5.42 09/19/96 50,076,503
50,000,000 Greenwich Funding Corp++ 5.42 09/23/96 49,367,667
50,000,000 Household Finance Corp 5.37 09/26/96 49,351,125
</TABLE>
---------------------
3
<PAGE>
MONEY MARKET MUTUAL FUND (UNAUDITED)
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
$50,000,000 Household Finance Corp 5.45 % 05/28/97 $ 50,000,000
100,000,000 Morgan (J P) & Co 5.27 07/03/96 99,970,722
50,000,000 National Australia Funding Inc 5.25 07/09/96 49,941,667
50,000,000 National Australia Funding Inc 5.30 08/06/96 49,735,000
100,000,000 National Rural Utilities Cooperative Finance
Corp 5.27 08/02/96 99,531,111
23,000,000 National Rural Utilities Cooperative Finance
Corp 5.28 07/18/96 22,942,653
40,000,000 National Rural Utilities Cooperative Finance
Corp 5.30 08/15/96 39,735,000
50,000,000 New Center Asset Funding Corp 5.21 07/25/96 49,826,333
50,000,000 New Center Asset Funding Corp 5.29 07/16/96 49,889,792
50,000,000 New Center Asset Funding Corp 5.28 08/21/96 49,626,000
30,000,000 Sony Capital Corp++ 5.32 08/02/96 29,858,133
50,000,000 Transamerica Finance Corp 5.40 09/19/96 49,400,000
25,500,000 U.S. Borax & Chemical Corp++ 5.28 08/22/96 25,305,520
50,000,000 Walt Disney Co Inc++ 5.20 07/18/96 49,877,222
40,100,000 WCP Funding Corp 5.30 07/18/96 39,999,639
50,000,000 WCP Funding Corp++ 5.40 09/12/96 49,452,500
50,000,000 WCP Funding Corp++ 5.41 09/17/96 49,413,917
--------------
TOTAL COMMERCIAL PAPER $2,447,693,776
SHORT TERM FEDERAL AGENCIES - 5.16%
$50,000,000 Federal Home Loan Bank 4.95 % 07/18/96 $ 49,883,125
50,000,000 Federal Home Loan Mortgage Corp 5.27 07/24/96 49,831,653
50,000,000 Federal Home Loan Mortgage Corp 5.27 07/15/96 49,897,333
50,000,000 Federal National Mortgage Assoc 5.28 07/26/96 49,816,667
--------------
TOTAL SHORT TERM FEDERAL AGENCIES $ 199,428,778
</TABLE>
- ------------------------
4
<PAGE>
MONEY MARKET MUTUAL FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSITS - 1.29%
$50,000,000 Banque Nationale de Paris (Yankee) 5.41 % 07/17/96 $ 50,000,000
VARIABLE AND FLOATING RATE BONDS - 17.18%
$50,000,000 Abbey National North America 5.35 % 05/21/97 $ 49,954,795
30,000,000 Chemical Banking Corp 5.69 08/19/96 30,008,405
50,000,000 Comerica Inc 5.39 10/30/96 49,970,920
100,000,000 Comerica Inc 5.52 11/08/96 99,941,840
135,000,000 FCC National Bank 5.27 10/31/96 134,934,903
25,000,000 Household Finance Corp 5.68 09/16/96 25,004,772
100,000,000 International Business Machines Credit Corp 5.38 11/06/96 99,913,570
50,000,000 PNC Bank Corp 5.51 09/03/96 49,979,850
125,000,000 PNC Funding Corp 5.40 05/15/97 124,907,600
--------------
TOTAL VARIABLE AND FLOATING RATE BONDS $ 664,616,655
U.S. TREASURY BILLS - 9.13%
$ 5,000,000 U.S. Treasury Bills 5.32 %(F) 11/14/96 $ 4,911,978
260,000,000 U.S. Treasury Bills 5.46 (F) 02/06/97 252,399,000
100,000,000 U.S. Treasury Bills 5.53 (F) 04/03/97 96,022,917
--------------
TOTAL U.S. TREASURY BILLS $ 353,333,895
REPURCHASE AGREEMENTS - 4.41%
$170,767,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.30 07/03/96 $ 170,767,000
</TABLE>
---------------------
5
<PAGE>
MONEY MARKET MUTUAL FUND (UNAUDITED)
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES $%
(Cost $3,885,840,104)* (Note 1) 3,885,840,104
100.43
Other Assets and Liabilities, Net (0.43) (16,673,649)
------ -------------
TOTAL NET ASSETS 100.00% $3,869,166,455
------ -------------
------ -------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(F) YIELD TO MATURITY.
++ THESE SECURITIES ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933.
RULE 144A UNDER THAT ACT PERMITS THESE SECURITIES TO BE RESOLD IN
TRANSACTIONS EXEMPT FROM REGISTRATION TO QUALIFIED INSTITUTIONAL
BUYERS. THESE SECURITIES WERE DEEMED LIQUID BY THE INVESTMENT ADVISER
IN ACCORDANCE WITH PROCEDURES APPROVED BY THE FUND'S BOARD OF
DIRECTORS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
The accompanying notes are an integral part of these financial statements.
- ------------------------
6
<PAGE>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED) - JUNE 30, 1996
<TABLE>
<CAPTION>
MONEY
MARKET
MUTUAL FUND
<S> <C>
- -----------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $3,885,840,104
Cash 51,239
Receivables:
Interest 5,144,173
Organization expenses, net of
amortization 34,797
Prepaid expenses 166,636
TOTAL ASSETS 3,891,236,949
LIABILITIES
Payables:
Investment securities purchased 0
Distribution to shareholders 14,406,715
Due to sponsor and distributor (Note
2) 1,142,244
Due to adviser (Note 2) 6,251,937
Other 269,598
TOTAL LIABILITIES 22,070,494
TOTAL NET ASSETS
$3,869,166,455
NET ASSETS CONSIST OF:
Paid-in capital - Class A $3,244,085,190
Paid-in capital - Class S 625,675,394
Undistributed net realized gain (loss)
on investments (594,129)
TOTAL NET ASSETS $3,869,166,455
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE
Net assets - Class A $3,243,575,292
Shares outstanding - Class A 3,244,085,190
Net asset value per share - Class A $ 1.00
Net assets - Class S $ 625,591,163
Shares outstanding - Class S 625,675,394
Net asset value per share - Class S $ 1.00
INVESTMENTS AT COST (NOTE 3) $3,885,840,104
- -----------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
---------------------
7
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) - FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
MONEY
MARKET
MUTUAL FUND
<S> <C>
- -----------------------------------------------------------
INVESTMENT INCOME
Interest $ 100,300,880
TOTAL INVESTMENT INCOME 100,300,880
EXPENSES (NOTE 2):
Advisory fees 7,415,037
Administration fees 559,179
Custody 313,308
Shareholder servicing fees 5,406,545
Portfolio accounting fees 401,469
Transfer agency fees 1,280,180
Distribution fees 2,626,794
Amortization of organization expenses 8,098
Legal and audit fees 256,134
Registration fees 115,863
Directors' fees 2,486
Shareholder reports 124,337
Other 54,056
TOTAL EXPENSES 18,563,486
Less:
Waived and reimbursed fees (Note 2) (2,544,521)
Net Expenses 16,018,965
NET INVESTMENT INCOME 84,281,915
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 673,179
NET GAIN ON INVESTMENTS 673,179
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 84,955,094
- -----------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ------------------------
8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET MUTUAL FUND
---------------------------------
(UNAUDITED)
FOR THE FOR THE
SIX MONTHS YEAR ENDED
ENDED DEC. 31,
JUNE 30, 1996 1995(1)
<S> <C> <C>
- -----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 84,281,915 $ 163,787,562
Net realized gain (loss) on sale of
investments 673,179 (1,181,926)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 84,955,094 162,605,636
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (71,967,159) (150,704,682)
CLASS S (12,314,756) (13,082,880)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 1,175,124,787 2,284,498,553
Reinvestment of dividends - Class A 72,497,732 146,963,258
Cost of shares redeemed - Class A (897,225,951) (1,881,800,747)
NET INCREASE IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - CLASS A 350,396,568 549,661,064
Proceeds from shares sold - Class S 668,176,820 1,211,993,101
Reinvestment of dividends - Class S 12,737,246 10,735,965
Cost of shares redeemed - Class S (674,336,894) (603,630,843)
NET INCREASE IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - CLASS S 6,577,172 619,098,223
INCREASE (DECREASE) IN NET ASSETS 357,646,919 1,167,577,361
NET ASSETS:
Beginning net assets 3,511,519,536 2,343,942,175
ENDING NET ASSETS $3,869,166,455 $3,511,519,536
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 1,175,124,789 2,284,460,229
Shares issued in reinvestment of dividends
- Class A 72,497,732 146,963,258
Shares redeemed - Class A (897,225,951) (1,881,762,423)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- -CLASS A 350,396,570 549,661,064
Shares sold - Class S 668,178,820 1,211,984,821
Shares issued in reinvestment of dividends
- Class S 12,737,245 10,735,964
Shares redeemed - Class S (674,336,894) (603,622,562)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- -CLASS S 6,579,171 619,098,223
- -----------------------------------------------------------------------------------
</TABLE>
(1) THE CLASS S SHARES COMMENCED OPERATIONS ON MAY 25, 1995.
The accompanying notes are an integral part of the financial statements.
---------------------
9
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET MUTUAL FUND
----------------------------------
CLASS A
----------------------------------
(UNAUDITED)
SIX MONTHS YEAR YEAR
ENDED ENDED ENDED
JUNE 30, DEC. 31, DEC. 31,
1996 1995 1994
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.05 0.04
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.05 0.04
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.05) (0.04)
Distributions from net realized gain 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.04)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 2.34% 5.34% 3.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $3,243,575 $2,892,621 $2,343,942
Number of shares outstanding, end of period (000) 3,244,085 2,893,689 2,344,028
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.75% 0.75% 0.69%
Ratio of net investment income to average net
assets(2) 4.64% 5.13% 4.12%
- --------------------------------------------------------------------------------------------
(1) Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 0.84% 0.83% 0.89%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.55% 5.05% 3.92%
- --------------------------------------------------------------------------------------------
</TABLE>
(3) THE FUND COMMENCED OPERATIONS ON JULY 1, 1992.
(4) THE CLASS S SHARES COMMENCED OPERATIONS ON MAY 25, 1995.
- ---------------------
10
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET MUTUAL FUND (CONT.)
----------------------------------------------
CLASS S
CLASS A (CONT.) ----------------------
---------------------- (UNAUDITED)
YEAR PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, JUNE 30, DEC. 31,
1993 1992(3) 1996 1995(4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.03 0.02 0.02 0.03
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.03 0.02 0.02 0.03
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.02) (0.02) (0.03)
Distributions from net
realized gain 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.03) (0.02) (0.02) (0.03)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 2.70% 1.50% 1.99% 2.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $317,474 $236,269 $625,591 $618,899
Number of shares
outstanding, end of
period (000) 317,474 236,270 625,675 619,098
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.58% 0.20% 1.43% 1.43%
Ratio of net investment
income to average net
assets(2) 2.67% 2.98% 3.97% 4.40%
- ----------------------------------------------------------------------------------------------------------------
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 1.00% 0.94% 1.44% 1.53%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 2.25% 2.24% 3.98% 4.30%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(3) THE FUND COMMENCED OPERATIONS ON JULY 1, 1992.
(4) THE CLASS S SHARES COMMENCED OPERATIONS ON MAY 25, 1995.
---------------------
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- -----------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Money Market Mutual Fund (the "Fund") is a series of Stagecoach Funds, Inc.
(the "Company"), which is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end investment company. The Company
commenced operations on January 1, 1992, and consists of ten separate
diversified funds: the Aggressive Growth, Asset Allocation, Corporate Stock,
Diversified Income, Ginnie Mae, Growth and Income, Money Market Mutual, National
Tax-Free Money Market Mutual, Short-Intermediate U.S. Government Income and U.S.
Government Allocation Funds; and three non-diversified funds: the California
Tax-Free Bond, California Tax-Free Income and California Tax-Free Money Market
Mutual Funds. The Company formerly offered the Variable Rate Government Fund,
which was combined into the Short-Intermediate U.S. Government Fund in August of
1995. These financial statements represent the Class S shares of the Money
Market Mutual Fund.
The following significant accounting policies are consistently followed by the
Fund in the preparation of their 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
The Fund invests in securities with remaining maturities not exceeding 397 days
(thirteen months), including obligations of the U.S. government, bankers
acceptances, commercial paper and certain floating- and variable-rate
instruments. Certain of these floating-and variable-rate instruments may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity.
The Fund uses the amortized cost method to value its portfolio securities and
seeks to maintain a constant net asset value of $1.00 per share; however, there
can be no assurance that the Fund will meet this goal. The amortized cost method
involves valuing a security at its cost plus accretion of discount or minus
premium amortized over the period until maturity, which approximates market
value.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased
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12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
or sold (trade date). Interest income is accrued daily. Realized gains or losses
are reported on the basis of identified cost of securities delivered. Bond
discounts and premiums are accreted or amortized as required by the Internal
Revenue Code.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell
("repurchase agreements") are treated as collateralized financing transactions
and are recorded at their contracted resale amounts. These repurchase
agreements, if any, are detailed in the Fund's Portfolio of Investments. The
Fund's adviser pools the Funds' cash and invests in repurchase agreements
entered into by the Funds. The repurchase agreement must be fully collateralized
based on values that are marked to market daily. The collateral is 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 held in the Fund at June 30, 1996, were collateralized by U.S.
government obligations. The repurchase agreements were entered into on June 28,
1996.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Fund are declared
daily and distributed monthly. Any distributions to shareholders from net
realized capital gains are declared and distributed annually.
FEDERAL INCOME TAXES
It is the Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute substantially all of the Fund's net investment income and any net
realized capital gains to its shareholders. Therefore, no federal or state
income tax provision is required. As of December 31, 1995 the Money Market
Mutual Fund has a net capital loss carryforward of $85,382 that will expire in
the year 2002 and $1,181,926 which will expire in the year 2003. The Board
intends to offset net capital gains with each capital loss carryforward until
each carryforward has been fully utilized or expires. No capital gain
distribution shall be made until the capital loss carryforward has been fully
utilized or has expired.
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the Fund's administrator and distributor, has
charged the Fund for expenses incurred in connection with the organization and
initial registration, including the Class S shares of the Fund. Such expenses
are being amortized by the Fund on a straightline basis over 60 months from the
date the Fund or share classes commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Fund
with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contracts, WFB has agreed
to furnish to the Fund investment
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13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
guidance and policy direction in connection with daily portfolio management.
Under the contracts with the Money Market Mutual Fund, WFB is entitled to be
paid monthly advisory fees at the annual rate of 0.40% of the average daily net
assets of the Fund.
The Company has entered into contracts on behalf of the Fund with WFB, whereby
WFB is responsible for providing custody and fund accounting services for the
Fund. For providing custody services, WFB is entitled to be compensated at an
annual rate of 0.0167% of the average daily net assets of the Fund. For
portfolio accounting services, WFB is entitled to a monthly a base fee of $2,000
plus 0.07% of the first $50 million, 0.045% of the next $50 million, and 0.02%
of the net assets over $100 million.
The Company has entered into a contract on behalf of the Fund with WFB, whereby
WFB has agreed to provide transfer agency services for the Fund. Under the
transfer agency agreement, WFB is entitled to be paid a per account fee plus
other related costs with a minimum monthly fee of $3,000 per Fund unless net
assets of the Fund are under $20 million. For as long as the net assets remain
under $20 million, the Fund will not be charged any transfer agency fees by WFB.
The Company has entered into a contract on behalf of the Fund with WFB, whereby
WFB has agreed to provide shareholder services for the Fund. WFB is entitled to
be compensated for these services based on an annual rate not to exceed 0.30% of
the Fund's average daily net assets.
FEES WAIVED
Payment of the following fees was waived by WFB for the six months ended June
30, 1996.
<TABLE>
<CAPTION>
WAIVED FEES
FUND BY WFB
<S> <C>
- -----------------------------------------------
Money Market Mutual Fund $ 2,544,521
</TABLE>
Fee waivers continue at the discretion of WFB.
The Company has entered into administration and distribution agreements on
behalf of the Fund with Stephens. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services to the Fund. For
providing supervisory and administrative services, the Fund has agreed to pay
Stephens a monthly fee at the annual rate of 0.03% of the Fund's average daily
net assets.
The Company has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan"), whereby the 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%, for the Fund's average daily net assets. The
Company has also adopted a Plan whereby the Company may pay Stephens, as
compensation for distribution-related services, a monthly fee at an annual rate
of 0.75% for Class S shares of the Fund's average daily net assets. The Fund may
participate in joint distribution
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14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
activities with any of the other funds, in which event, expenses reimbursed out
of the assets of the Fund may be attributable, in part, to the distribution-
related activities of another fund. Generally, the expenses attributable to
joint distribution activities are allocated among all of the funds in proportion
to their relative net asset sizes.
For the six months ended June 30, 1996 the Money Market Mutual Fund paid
Stephens $305,808 in distribution fees for Class A and $2,320,986 in
distribution fees for Class S.
Certain officers and directors of the Company are also officers of Stephens. At
June 30, 1996, Stephens owned 11,162 shares of the Money Market Mutual Fund.
3. CAPITAL SHARES TRANSACTIONS
As of June 30, 1996, there were 10 billion shares of $.001 par value capital
stock authorized by the Company. At June 30, 1996, the Fund was authorized to
issue 3 billion shares of $.001 par value capital stock. Transactions in capital
shares for the six months ended June 30, 1996 are disclosed in detail in the
Statements of Changes in Net Assets.
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<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-222-8222. Read the
prospectus carefully before you invest or send money.
<TABLE>
<S> <C>
STAGECOACH FUNDS-REGISTERED TRADEMARK- BULK RATE
P.O. Box 7066 U.S. POSTAGE
San Francisco, CA 94120-7066 PAID
PERMIT NO 1933
DATED MATERIAL FULLERTON CA
PLEASE EXPEDITE
</TABLE>
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-C- 1995 Stagecoach Funds
