<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
INCOME
- ---------------------
FUNDS
- ---------------------
Ginnie Mae Fund
Intermediate Bond Fund
Short-Intermediate
U.S. Government
Income Fund
MARCH 31, 1997
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Ginnie Mae Fund 3
Intermediate Bond Fund 8
Short-Intermediate U.S. Government Income Fund 12
PORTFOLIOS OF INVESTMENTS
Ginnie Mae Fund 16
Intermediate Bond Fund 22
Short-Intermediate U.S. Government Income Fund 26
STAGECOACH FUNDS
Statement of Assets and Liabilities 31
Statements of Operations 32
Statements of Changes in Net Assets 34
Financial Highlights 36
Notes to Financial Statements 42
Independent Auditors' Report 53
LIST OF ABBREVIATIONS 54
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:
Welcome to the 1997 Stagecoach Funds Annual Report.
This Report, dated March 31, 1997, comes to you six months after the previous
Annual Report dated September 30, 1996. As we explained in the Shareholder
Letter at that time, for administrative reasons, the Stagecoach Funds have
shifted their financial year-end to March 31. This change does not otherwise
affect the operation, nor does it affect the investment objectives, of the
Funds.
The recently completed reporting period saw market volatility and the long-
expected increase in the federal funds target rate. After months of debate on
the rate of economic growth and the potential for increased rates of inflation,
the Federal Reserve Board acted in March to raise rates by 0.25%. The Fed's
action capped a six month period which showed only modest total return for the
fixed-income market.
The equity market, as measured by the Standard & Poor's 500 Index, fell 7.20% in
March from its January high. While this environment offered some challenges, we
feel that much of the "bad news" has been greatly exaggerated. For example, the
S&P 500 Index still enjoyed a 1997 year-to-date return through March 31 of
2.69%. The positive return for the six-month period ended March 31, 1997 was
11.24%. The news is similar concerning the further market correction that
occurred after the reporting period. As of early May, the market had recouped
much of its March and April losses.
Of course, equity issues do not rise and fall in unison. Large company stocks
have fared well recently as investor dollars sought their greater security and
reduced volatility. Various sectors such as technology and finance stocks have
fluctuated acutely in recent months. Value stocks have outperformed growth
stocks, in contrast to recent years.
It is all too easy to be confused by such a variety of returns and apparently
conflicting information. That's why it is so important to truly understand the
investment philosophies and long-range goals that govern your Fund. We have
always felt that the more you understand your investment, the less likely you
are to be unduly concerned with short-term developments.
The following pages discuss what factors have affected the returns for the
Stagecoach Funds during the reporting period. These commentaries were written
for you -- our shareholders -- as part of the Stagecoach Funds commitment to
education, information and service as we help you meet your financial goals.
STAGECOACH FUNDS
MAY 1997
---------------------
1
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
2
<PAGE>
GINNIE MAE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Class A shares for the six-month period ended March 31,
1997 was 2.50%. The return for Class B shares for the same period was 2.24%. The
one-year total returns were 4.25% and 3.63%, respectively. These return figures
exclude sales charges.
WHAT ARE SOME OF THE FACTORS THAT AFFECTED THE FUND'S PERFORMANCE?
Early in 1996, the Fund increased its duration, which is a measure of its
sensitivity to interest rates, by adding Treasury Bonds to the portfolio. This
was done to increase total return in anticipation of further reductions in
interest rates by the Federal Reserve Board. Keep in mind that when interest
rates decrease, the resale value of higher-paying, existing bonds increases.
Unfortunately, the Federal Reserve did not reduce target rates -- in fact,
market expectations soon shifted to increased rates, which reduced the resale
value of the securities in the Fund's portfolio. The Fund adapted to the new
economic atmosphere by reducing the amount of Treasury bonds in the portfolio to
reduce the duration of its portfolio. Volatility was reduced and performance
improved during the six months covered by this report.
It is important to note that total return takes into account both the income the
Fund produces in the form of dividends or capital gains, and the increase or
decrease in share value. While a decrease in the value of an underlying security
does reduce the Fund's share value, it does not affect that security's coupon
rate -- the rate at which it pays interest. Despite the volatility in share
prices, the Ginnie Mae Fund has maintained a steady dividend payout for its
shareholders.
THE FUND MUST INVEST AT LEAST 65% OF ITS ASSETS IN GINNIE MAE SECURITIES. THE
BALANCE IS GENERALLY INVESTED IN U.S. TREASURIES. DO THESE TWO TYPES OF
SECURITIES REACT DIFFERENTLY TO INTEREST RATE CHANGES? PLEASE EXPLAIN.
Yes, they react differently. Treasury securities react the "traditional" way in
response to interest rate changes. If rates go down, the resale value of higher-
paying Treasury securities in the Fund's portfolio will increase. If rates go
up, the resale value decreases. Because of the structure of Ginnie Mae
securities, they react quite differently than Treasury securities.
Ginnie Maes are home mortgages bundled together into a single security. As
homeowners pay their mortgages, the interest and principal are passed through to
the Fund as the holder of the security. The Fund, after deducting expenses,
distributes the income generated as dividend income. This "pass-through"
distribution provides the income that Ginnie Mae investors are seeking. On the
other hand, Ginnie Maes have less price appreciation when interest rates fall
than a Treasury security of similar duration.
---------------------
3
<PAGE>
GINNIE MAE FUND
This is because a homeowner may prepay a mortgage at any time. This is what is
meant by "prepayment risk."
As interest rates decrease, a high-paying Treasury Bond is worth more because
investors are willing to pay more for the higher yield. For holders of mortgage-
backed securities, however, interest rate decreases mean homeowners are
increasingly likely to refinance their mortgage. If that happens, the Ginnie Mae
holder will be forced to reinvest the proceeds of the prepayment into lower-
paying securities. When interest rates increase, refinancing is less likely, so
prepayments slow down and the price of the Ginnie Mae security can actually
increase.
The Fund's strategy has been to increase the portion of its portfolio invested
in Ginnie Mae securities when interest rates are stable, and to increase the
portion invested in Treasury securities when rates are expected to decrease.
WHAT IS YOUR CURRENT OUTLOOK REGARDING PREPAYMENT RISK?
After much speculation, in early 1997, the Federal Open Market Committee
("FOMC") of the Federal Reserve Bank increased the federal funds target rate for
the first time in over two years. Many analysts expect the FOMC to increase
target rates again in order to curb inflation before it becomes a problem. As a
result, we believe the risk of homeowner refinancing is reduced for the
immediate future.
CAN YOU ELABORATE ON THE EFFECT OF THE FEDERAL FUNDS TARGET RATE ON THE
SECURITIES MARKET?
The federal funds target rate is considered the most sensitive indicator of
interest rates throughout the economy. The FOMC meets every six weeks to
determine monetary policy. If the economy is growing too quickly, the risk of
inflation is increased and the FOMC will increase the federal funds target rate
to slow the economy. They may reduce rates to spur growth if the economy is
growing too slowly. On March 25th, the FOMC decided that the threat of inflation
justified action and moved the federal funds target rate upward by 25 basis
points to 5.50%.
The anticipation of Fed action also affects rates. For example, an investor
wishing to sell a bond today might be willing to accept less money if he
believes that rates will go up tomorrow thereby reducing the bond's value. If he
believes rates are going down, he will wait for a better price. For most of the
period, contradictory indicators about the course of inflation emerged one right
after another. Investors went from believing the Fed would increase rates,
decrease rates or leave rates alone within short periods of time. That was why
the markets were often quite volatile even without Fed action.
- ---------------------
4
<PAGE>
GINNIE MAE FUND
THE FUND SEEKS TO EARN A LONG-TERM TOTAL RATE OF RETURN AND A HIGH LEVEL OF
INTEREST INCOME. WHAT DO YOU DO TO HELP MAINTAIN INCOME LEVELS?
One of the most important things we do to help maintain income levels is to keep
a close eye on prepayment risk. As we said in a previous answer, prepayments
occur when homeowners refinance at a lower interest rate. The problem this
creates for shareholders is that the proceeds of the prepaid mortgage now have
to be reinvested in what is likely to be a lower-paying instrument. If we expect
prepayments to increase dramatically, we will usually increase the Fund's
investment in Treasury securities to soften the impact of such prepayments.
DID THE PRESIDENTIAL ELECTION AFFECT THE INTEREST RATE ENVIRONMENT?
What often affects the market most is fear of the unknown. President Clinton was
certainly a "known quantity" from his first term and he led in the polls from a
very early stage. Therefore, the market was well prepared for his reelection.
What has a greater impact for the fixed-income markets in particular are issues
concerning the ability of federal and local governments to raise revenue since
they directly impact the credit quality of government issued or backed bonds and
budget deficits. Both issues received a lot of attention during the 1996
electoral campaigns, although revenue issues have tended to be more important to
the municipal bond marketplace. Certainly if a credible compromise is reached on
the federal budget deficit, the financial markets will consider this very good
news.
---------------------
5
<PAGE>
GINNIE MAE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 1/3/91
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge (0.44)% 4.77% 5.32% 6.26%
- ---------------------------------------------------------------------------------------
Without Sales Charge 4.25% 6.39% 6.29% 7.05%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 1/1/95
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) (1.22)% 6.89%
- --------------------------------------------------------------------------------------
Without Sales Charge 3.63% 8.11%
- --------------------------------------------------------------------------------------
(1)Assumes redemption on 3/31/97.
</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 gains distributions at net asset value.
The Stagecoach Ginnie Mae Fund 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 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.
- ---------------------
6
<PAGE>
GINNIE MAE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH GINNIE LEHMAN BROS
MAE FUND CLASS A SHARES GINNIE MAE INDEX
<S> <C> <C>
Inception 9550 10000
Feb-91 9712.35 10149
Mar-91 9721.9 10233.24
Apr-91 9769.65 10306.92
May-91 9807.85 10403.8
Jun-91 9903.35 10489.11
Jul-91 9903.35 10509.04
Aug-91 10056.15 10688.75
Sep-91 10247.15 10887.56
Oct-91 10419.05 11079.18
Nov-91 10581.4 11261.98
Dec-91 10648.25 11339.69
Jan-92 10906.1 11603.91
Feb-92 10771.42 11460.02
Mar-92 10840.89 11580.35
Apr-92 10773.45 11514.34
May-92 10830.48 11620.27
Jun-92 11034.48 11824.79
Jul-92 11164.78 11969.05
Aug-92 11355.32 12074.38
Sep-92 11487.3 12236.18
Oct-92 11588.54 12345.08
Nov-92 11468.52 12252.49
Dec-92 11510.13 12308.85
Jan-93 11654.13 12465.17
Feb-93 11850.43 12622.23
Mar-93 11913.5 12749.72
Apr-93 11956.16 12819.84
May-93 11995.95 12865.99
Jun-93 12035.97 12954.77
Jul-93 12213.97 13059.7
Aug-93 12286.44 13114.55
Sep-93 12391.51 13147.34
Oct-93 12421.7 13157.86
Nov-93 12452.08 13180.23
Dec-93 12406.24 13161.77
Jan-94 12491.88 13284.18
Feb-94 12595.7 13389.12
Mar-94 12466.86 13322.18
Apr-94 12136.2 12962.48
May-94 11994.61 12873.04
Jun-94 12021.74 12910.37
Jul-94 11969.42 12891
Aug-94 12214.3 13142.38
Sep-94 12218.91 13183.12
Oct-94 12049.81 12997.24
Nov-94 12007.86 12976.44
Dec-94 11977.37 12940.11
Jan-95 12088.29 13083.74
Feb-95 12318.66 13354.58
Mar-95 12669.94 13707.14
Apr-95 12722.83 13774.3
May-95 12896.98 13978.16
Jun-95 13279.72 14404.5
Jul-95 13412.82 14502.45
Aug-95 13400.62 14532.9
Sep-95 13554.34 14682.59
Oct-95 13682.65 14826.48
Nov-95 13835.9 14948.06
Dec-95 14014.5 15119.96
Jan-96 14207.24 15313.5
Feb-96 14285.9 15420.69
Mar-96 14069.04 15305.04
Apr-96 14018.66 15266.77
May-96 13902.5 15227.08
Jun-96 13817.35 15175.31
Jul-96 13970.02 15374.1
Aug-96 14011.51 15432.53
Sep-96 14033.85 15438.7
Oct-96 14258.99 15696.52
Nov-96 14503.21 16013.59
Dec-96 14711.14 16247.39
Jan-97 14630.17 16161.28
Feb-97 14719.38 16285.72
Mar-97 14759.32 16344.35
Apr-97 14614.94 16182.54
</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 Class A shares 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, while the Fund is a
professionally managed mutual fund. The index presented here does not incur
expenses and is not available directly for investment. Had this index incurred
operating expenses, its performance would have been lower.
---------------------
7
<PAGE>
INTERMEDIATE BOND FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Class A shares for the six-month period ended March 31,
1997 was 1.61%. The return for Class B shares for the same period was 0.66%. The
one-year total returns were 3.73% and 2.25%, respectively. These return figures
exclude sales charges.
HOW DID THE UNCERTAINTY ABOUT INTEREST RATES AFFECT THE FUND'S PERFORMANCE OVER
THE SIX-MONTH PERIOD?
There is always some uncertainty about interest rates. There are numerous
economic indicators which often suggest contradictory conclusions about
inflation, growth, demand, jobs and the many other economic factors which
influence the Federal Reserve's decisions about monetary policy. The
Intermediate Bond Fund concentrates on shorter, less volatile maturities.
Typically, this means that the Fund should avoid some of the steeper price
appreciation and depreciation likely in an uncertain market. For most of the
period, the federal funds target rate did not change. Speculation shifted back
and forth as to when and to what degree the rate would be increased, but there
was a general consensus that an increase was coming. As a result, the Fund
favored shorter maturities in an effort to reduce price depreciation once an
increase was announced.
WITH THE FED INCREASING THE FEDERAL FUNDS TARGET RATE IN EARLY 1997, DO YOU
EXPECT TO EXTEND MATURITIES? WHAT IS THE IMMEDIATE OUTLOOK?
It is too soon to extend maturities. After rates go up, bonds become more
attractive, both for their current income and for their future value. Certainly
extending maturities to "lock in" higher rates for a longer period of time makes
sense under certain conditions. Higher paying bonds would also be attractive
should rates go back down. Generally, if rates drop, the resale value of higher
paying existing bonds increases. This, however, may only be the beginning of a
cycle of Fed rate increases. As of now, we expect another 0.25 to 0.50% increase
in the target rate. We will also be examining the economy for signs that the
Fed's tightening is slowing the economy as intended. Once we see indications
that the cycle is complete, we will reexamine the question of extending
maturities.
EXPLAIN THE CONCEPT OF THE "YIELD CURVE." WHAT HAS IT REVEALED ABOUT
INTERMEDIATE BONDS OVER THE RECENT PERIOD?
The yield curve gives a thumb-nail sketch of interest rates in the bond market.
It lists current yields at various maturity ranges from three-month money market
paper through thirty-year bonds. Typically, as maturity gets longer, yields
increase. Often the degree of difference in the yields is significant. For
example, if we have a steep yield curve, in which
- ---------------------
8
<PAGE>
INTERMEDIATE BOND FUND
longer maturities have significantly higher yields than short or intermediate
maturities, then investors may feel that the higher risks and greater volatility
of longer bonds may be justified by the potential reward. This has not been the
case recently. The yield curve has been relatively flat, meaning that
longer-term bonds, while still earning higher yields than shorter-terms, are
nonetheless not earning enough to justify taking on the extra risk. In this
atmosphere, investing in the shorter- and intermediate-terms may be more
attractive.
WHAT ROLE CAN THE FUND PLAY IN AN INVESTOR'S PORTFOLIO?
This Fund is designed for the investor with a medium range investment horizon
who is willing to tolerate moderate risk. The Fund's typical investor is
concerned with preserving capital to some degree, but will not panic after a
minor share price fluctuation. This investor wants a strong yield, but
understands that the Fund is not designed to pursue aggressive profits. This is
not a Fund where an investor should "park" money the investor may need within a
month or two, but the Fund may be suitable for investors who may need cash in
two to five years. In short, it fits in somewhere between a money market fund
and a long-term investment.
The Fund may also be appropriate for investors who wish to diversify an
equity-heavy portfolio. Studies have shown that by allocating some investments
into bonds, investors can reduce volatility and increase returns.
HOW HAS THE CHANGE TO WELLS FARGO BANK AFFECTED THE DAY-TO-DAY OPERATIONS OF THE
FUND?
Wells Fargo Bank is pursuing the same investment objectives and policies as its
predecessor, First Interstate Capital Management. So in that sense, the Fund has
not changed. Wells Fargo, as investment adviser, prides itself on its thorough,
conservative approach to fixed-income investment management. We are dedicated to
maintaining the high standards we have set for ourselves and hope to continue to
help the Fund's shareholders meet their investment needs.
---------------------
9
<PAGE>
INTERMEDIATE BOND FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge (0.93)% 4.05% 5.27% 7.35%
- ---------------------------------------------------------------------------------------
Without Sales Charge 3.73% 5.66% 6.25% 7.91%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 5.0% Sales Charge(1) (2.57)% 3.79% 5.02% 7.00%
- ---------------------------------------------------------------------------------------
Without Sales Charge 2.25% 4.67% 5.31% 7.00%
- ---------------------------------------------------------------------------------------
(1)Assumes redemption on 3/31/97.
</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.
On September 6, 1996 the Fund was reorganized 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 provided by
these Predecessor Funds. Class A performance for periods prior to September 6,
1996 reflects the Pacifica Intermediate Bond Fund Investor Class and Westcore
Bonds Plus Fund performance. Class B performance for periods prior to September
6, 1996, the date the Class B shares were first offered, also reflects such
performance but has been adjusted to reflect Class B share expense levels in
effect on 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.
- ---------------------
10
<PAGE>
INTERMEDIATE BOND FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH INTERMEDIATE LEHMAN BROTHERS
BOND FUND CLASS A SHARES AGGREGATE BOND INDEX
<S> <C> <C>
Inception 9550 10000
Jun-88 9684.72 10000
Jul-88 9633.28 9948
Aug-88 9645.08 9973.8648
Sep-88 9852.52 10199.27414
Oct-88 9994.23 10391.0205
Nov-88 9880.94 10265.28915
Dec-88 9871.09 10276.58097
Jan-89 9987.11 10424.56373
Feb-89 9905.91 10349.50688
Mar-89 9951.56 10394.00976
Apr-89 10149.25 10611.24456
May-89 10415.95 10890.32029
Jun-89 10693.19 11221.38603
Jul-89 10903.65 11460.40155
Aug-89 10751.24 11290.78761
Sep-89 10796.34 11348.37062
Oct-89 11052.45 11627.54054
Nov-89 11150.06 11738.00218
Dec-89 11161.56 11769.69478
Jan-90 11056.97 11629.63541
Feb-90 11097.43 11666.85025
Mar-90 11092.36 11675.01704
Apr-90 10977.91 11567.60689
May-90 11275.2 11910.00805
Jun-90 11446.56 12100.56818
Jul-90 11609.81 12267.55602
Aug-90 11502.1 12103.17077
Sep-90 11573.02 12203.62709
Oct-90 11709.54 12358.61315
Nov-90 11952.59 12624.32333
Dec-90 12124.12 12821.26278
Jan-91 12269.75 12980.24644
Feb-91 12374.14 13090.57853
Mar-91 12435.56 13180.90352
Apr-91 12568.44 13323.25728
May-91 12669.25 13400.53217
Jun-91 12667.04 13393.83191
Jul-91 12807.64 13580.00617
Aug-91 13072.54 13873.3343
Sep-91 13338 14154.96299
Oct-91 13500.77 14312.08308
Nov-91 13644.76 14443.75424
Dec-91 14063.72 14872.73374
Jan-92 13838.99 14670.46456
Feb-92 13870.73 14765.82258
Mar-92 13822.63 14683.13398
Apr-92 13930.39 14788.85254
May-92 14184.84 15068.36186
Jun-92 14389.19 15276.30525
Jul-92 14704.82 15587.94188
Aug-92 14834.09 15745.38009
Sep-92 15027.16 15932.75011
Oct-92 14862.59 15720.84454
Nov-92 14796.99 15723.9887
Dec-92 14996.86 15974.00013
Jan-93 15246.88 16280.70093
Feb-93 15484.45 16565.61319
Mar-93 15559.27 16635.18877
Apr-93 15667.89 16751.63509
May-93 15662.99 16773.41222
Jun-93 15911.49 17077.01098
Jul-93 15967.46 17174.34994
Aug-93 16187.89 17474.90106
Sep-93 16237.25 17522.0833
Oct-93 16283.78 17586.91501
Nov-93 16161.29 17437.42623
Dec-93 16242.11 17531.58833
Jan-94 16445.63 17768.26477
Feb-94 16183.2 17459.09696
Mar-94 15864.93 17027.85727
Apr-94 15739.94 16891.63441
May-94 15717.52 16889.94525
Jun-94 15701.68 16852.78737
Jul-94 15931.28 17188.15784
Aug-94 15966.77 17208.78363
Sep-94 15775.99 16955.81451
Oct-94 15766.2 16940.55427
Nov-94 15709.2 16903.28505
Dec-94 15794.9 17019.91772
Jan-95 16079.17 17356.91209
Feb-95 16443.96 17770.0066
Mar-95 16534.69 17878.40364
Apr-95 16741.59 18128.70129
May-95 17310.34 18830.28203
Jun-95 17423.16 18967.74309
Jul-95 17379.18 18926.01406
Aug-95 17530.38 19155.01883
Sep-95 17658.54 19340.82251
Oct-95 17840.18 19592.2532
Nov-95 18033.59 19886.137
Dec-95 18220.34 20164.54292
Jan-96 18357.08 20297.6289
Feb-96 18124.77 19944.45016
Mar-96 18041.41 19804.83901
Apr-96 17977.03 19693.93191
May-96 17937.88 19654.54404
Jun-96 18121.91 19917.91493
Jul-96 18156.58 19971.6933
Aug-96 18176.4 19937.74143
Sep-96 18418.71 20284.65813
Oct-96 18737.27 20734.97754
Nov-96 18988.33 21089.54565
Dec-96 18790.53 20893.41288
Jan-97 18835.22 20958.18246
Feb-97 18864.79 21010.57791
Mar-97 18715.14 20777.3605
</TABLE>
The accompanying chart compares the performance of the Stagecoach Intermediate
Bond Fund since the inception of the predecessor Pacifica and Westcore Funds
with the Lehman Brothers Aggregate Bond Index. The chart assumes a hypothetical
$10,000 initial investment in Class A shares and reflects all operating expenses
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,
while the Fund is a professionally managed mutual fund. The index presented here
does not incur expenses and is not available directly for investment. Had this
index incurred operating expenses, its performance would have been lower.
---------------------
11
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Class A shares for the six-month period ended March 31,
1997 was 2.57%. The one-year total return for the same share class was 4.56%.
These return figures exclude sales charges.
HOW DID THE UNCERTAINTY ABOUT INTEREST RATES AFFECT THE FUND'S PERFORMANCE OVER
THE SIX-MONTH PERIOD?
There is always some uncertainty about interest rates. There are numerous
economic indicators which often suggest contradictory conclusions about
inflation, growth, demand, jobs and the many other factors which influence the
Federal Reserve's decisions about monetary policy. The Fund concentrates on
shorter, less volatile maturities. Typically this means that the Fund should
avoid some of the steeper price appreciation and depreciation likely in an
uncertain market.
For most of the period, the federal funds target rate did not change.
Speculation shifted back and forth as to when and to what degree the rate would
be increased, but there was a general consensus that an increase was coming. As
a result, the Fund favored shorter maturities in an effort to reduce price
depreciation once an increase was announced.
WITH THE FED INCREASING THE FEDERAL FUNDS TARGET RATE IN EARLY 1997, DO YOU
EXPECT TO EXTEND MATURITIES? WHAT IS THE IMMEDIATE OUTLOOK?
It is too soon to extend maturities. When rates go up, bonds become more
attractive, both for their current income and for their future value. Certainly
extending maturities to "lock in" higher rates for a longer period of time makes
sense under certain conditions. Higher paying bonds would also be attractive
should rates go back down. Generally, if rates drop, the resale value of higher
paying existing bonds increases. This, however, may only be the beginning of a
cycle of Fed rate increases. As of now, we expect another 0.25 to 0.50% increase
in the target rate. We will also be examining the economy for signs that the
Fed's tightening is slowing the economy as intended. Once we are comfortable
that the cycle is complete, we will reexamine the question of extending
maturities.
THE FUND'S PORTFOLIO INCLUDES GOVERNMENT AGENCIES, U.S. TREASURIES AND CORPORATE
DEBT OBLIGATIONS. HOW DO YOU DETERMINE THE ALLOCATION AMONG PERMISSIBLE
INVESTMENTS? WHAT ROLES DO THE VARIOUS TYPES OF SECURITIES PLAY IN THE
PORTFOLIO?
Allocations are recommended by the Wells Fargo Fixed Income Policy Committee.
The Committee examines the expected returns and risks from the available
investments within the context
- ---------------------
12
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
of the Fund's shorter-term, low-risk profile. U.S. Treasury securities, for
example, have extremely high credit quality, but they tend to have lower returns
than similar instruments of other issuers. Government agency securities, which
might include mortgage-backed instruments, for example, typically have higher
yields than Treasury securities and are generally considered to be of high
quality. Select corporate bonds and notes can boost yields, although they are
more risky than government-backed instruments. Consistent with the investment
objectives, policies and restrictions of the Fund the Committee searches for the
proper balance between high quality, low volatility and solid returns. When
yields are high, there may be less reason to invest in corporate bonds. When
they are low, corporate bonds and collateralized repurchase agreements offer an
opportunity for higher returns which are still within the Fund's risk tolerance.
DID THE NOVEMBER ELECTIONS ALTER THE OUTLOOK FOR THE FUNDS?
What often affects the market most is fear of the unknown. The markets were
familiar with President Clinton from his first term and he led in the polls from
a very early stage. Therefore, the market was well prepared for his reelection.
What has a greater impact for the fixed-income markets in particular are issues
concerning the ability of federal and local governments to raise revenue since
they directly impact the credit quality of government issued or backed bonds and
budget deficits. Both issues received a lot of attention during the 1996
electoral campaigns, although revenue issues have tended to be more important to
the municipal bond market-place. Certainly if a credible compromise is reached
on the federal budget deficit, the financial markets will consider this very
good news.
WILL THE NEW INFLATION-INDEXED TREASURY SECURITIES PLAY A ROLE IN THE PORTFOLIO?
We do not foresee a role for these instruments right now. Inflation-indexed
Treasury securities do offer an intriguing hedge against inflation for
investors, but they do not currently appear to offer sufficient opportunity to
maximize total return. Inflation-indexed Treasury securities will likely have
very narrow fluctuations in price. Of course, these instruments are very new and
they may behave in unexpected ways. We will monitor how the secondary market for
inflation-indexed Treasury securities develops and make any reassessments in our
policies we deem necessary.
---------------------
13
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 10/27/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 3.0% Sales Charge 1.46% 4.05% 3.51%
- --------------------------------------------------------------------------------------
Without Sales Charge 4.56% 5.09% 4.44%
- --------------------------------------------------------------------------------------
</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 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.
- ---------------------
14
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH SHORT-INTERMEDIATE LEHMAN BROS U.S.
U.S. GOV'T INCOME FUND CLASS A
SHARES TREASURY NOTE INDEX
<S> <C> <C>
Oct-93 9700 10000
Nov-93 9714.77 9950
Dec-93 9745.45 9990.795
Jan-94 9806.62 10089.7039
Feb-94 9748.07 9948.44802
Mar-94 9695.01 9804.19552
Apr-94 9660.92 9741.44867
May-94 9688.92 9748.26768
Jun-94 9697.47 9750.21734
Jul-94 9756.37 9876.97016
Aug-94 9753.12 9905.61338
Sep-94 9632.29 9824.38735
Oct-94 9626.13 9827.33466
Nov-94 9569.64 9782.12892
Dec-94 9607.51 9813.43173
Jan-95 9758.96 9972.5369
Feb-95 9936.78 10163.0622
Mar-95 9988.36 10219.1217
Apr-95 10073.64 10336.9788
May-95 10300.33 10628.585
Jun-95 10360.97 10698.9887
Jul-95 10363.82 10703.6749
Aug-95 10433.55 10789.7966
Sep-95 10494.58 10861.5704
Oct-95 10596.68 10982.7421
Nov-95 10709.96 11116.9072
Dec-95 10825.11 11228.4098
Jan-96 10919.01 11324.9741
Feb-96 10824.83 11203.7969
Mar-96 10762.1 11148.8983
Apr-96 10720.1 11116.5665
May-96 10695.44 11111.0082
Jun-96 10796.19 11221.0072
Jul-96 10824.54 11254.6702
Aug-96 10823.18 11269.3013
Sep-96 10970.6 11413.5483
Oct-96 11108.46 11599.5892
Nov-96 11265.41 11738.7843
Dec-96 11216.1 11675.3948
Jan-97 11287.63 11718.5938
Feb-97 11327.46 11736.1717
Mar-97 11252.72 11666.9283
</TABLE>
The accompanying chart compares the performance of the Stagecoach
Short-Intermediate U.S. Government Income Fund since its inception with the
Lehman Brothers U.S. Treasury Note 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 3.0%. The Lehman Brothers U.S.
Treasury Note Index is an unmanaged index of U.S. Treasury 2 - 10 year notes,
while the Fund is a professionally managed mutual fund. The index presented does
not incur expenses and is not available directly for investment. Had this index
incurred operating expenses, its performance would have been lower.
---------------------
15
<PAGE>
GINNIE MAE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 91.38%
FEDERAL FARM CREDIT - 2.43%
$ 4,000,000 Federal Farm Credit Bank 6.38 % $ 3,952,500
02/25/02
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.81%
$ 2,943,906 Federal Home Loan Mortgage Corp 7.50 % $ 2,954,004
12/01/11
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 11.46%
$ 5,000,000 Federal National Mortgage Assoc 5.94 % $ 4,606,250
12/12/05
3,573,775 Federal National Mortgage Assoc 7.50 3,587,927
01/01/11
9,900,168 Federal National Mortgage Assoc 9.00 10,461,607
03/01/21
--------------
$ 18,655,784
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 75.68%
$ 178,413 Government National Mortgage Assoc 9.00 % $ 188,499
09/20/16
502,233 Government National Mortgage Assoc 9.00 525,918
12/20/21
1,136,324 Government National Mortgage Assoc 7.50 1,120,302
03/15/23
255,659 Government National Mortgage Assoc 9.50 274,192
05/20/16
1,349,251 Government National Mortgage Assoc 6.50 1,258,770
05/15/24
335,058 Government National Mortgage Assoc 6.50 319,769
02/20/08
4,578,061 Government National Mortgage Assoc 6.75 4,285,706
09/15/28
</TABLE>
- ------------------------
16
<PAGE>
GINNIE MAE FUND
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
$ 1,594,000 Government National Mortgage Assoc 6.88 % $ 1,502,712
01/15/29
3,969,053 Government National Mortgage Assoc 6.90 3,745,675
01/15/31
4,977,033 Government National Mortgage Assoc 7.00 4,730,321
04/20/26
1,951,638 Government National Mortgage Assoc 7.00 1,862,838
05/15/26
4,994,863 Government National Mortgage Assoc 7.00 4,747,268
02/20/27
9,756,684 Government National Mortgage Assoc 7.00 9,258,347
01/15/29
1,292,851 Government National Mortgage Assoc 7.00 1,227,510
02/15/29
3,292,474 Government National Mortgage Assoc 7.13 3,147,408
01/15/29
4,637,533 Government National Mortgage Assoc 7.50 4,543,298
10/15/25
1,373,689 Government National Mortgage Assoc 7.50 1,338,907
06/15/25
1,020,263 Government National Mortgage Assoc 8.00 1,032,496
05/15/22
6,712,893 Government National Mortgage Assoc 8.00 6,764,045
08/15/24
6,629,306 Government National Mortgage Assoc 8.00 6,629,306
02/20/27
4,119,539 Government National Mortgage Assoc 8.43 4,228,130
08/01/27
2,035,630 Government National Mortgage Assoc 8.50 2,106,470
07/15/22
474,014 Government National Mortgage Assoc 8.50 483,845
06/20/25
4,583,449 Government National Mortgage Assoc 8.50 4,708,577
07/15/25
4,265,158 Government National Mortgage Assoc 8.50 4,381,597
10/15/25
</TABLE>
---------------------
17
<PAGE>
GINNIE MAE FUND
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
$ 1,014,248 Government National Mortgage Assoc 8.50 % $ 1,035,284
11/20/25
2,644,476 Government National Mortgage Assoc 8.50 2,697,233
03/15/27
2,190,225 Government National Mortgage Assoc 8.50 2,233,920
04/15/27
4,033,066 Government National Mortgage Assoc 8.75 4,119,212
01/15/28
636,497 Government National Mortgage Assoc 9.00 661,753
09/20/16
318,670 Government National Mortgage Assoc 9.00 331,315
07/20/17
190,038 Government National Mortgage Assoc 9.00 197,579
04/20/19
150,507 Government National Mortgage Assoc 9.00 156,479
04/20/21
4,894,673 Government National Mortgage Assoc 9.00 5,186,640
06/15/21
658,201 Government National Mortgage Assoc 9.00 689,242
07/20/22
44,054 Government National Mortgage Assoc 9.50 47,220
05/20/17
271,054 Government National Mortgage Assoc 9.50 290,196
08/20/19
1,085,621 Government National Mortgage Assoc 9.50 1,162,288
10/20/19
147,773 Government National Mortgage Assoc 9.50 158,024
03/20/21
32,255 Government National Mortgage Assoc 10.00 35,445
01/15/19
2,934 Government National Mortgage Assoc 12.00 3,072
01/20/99
7,686 Government National Mortgage Assoc 12.00 8,049
04/20/99
911,807 Government National Mortgage Assoc II 8.00 911,807
11/20/25
</TABLE>
- ------------------------
18
<PAGE>
GINNIE MAE FUND
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
$ 111,347 Government National Mortgage Assoc II 8.00 % $ 111,986
02/20/23
488,625 Government National Mortgage Assoc II 8.00 491,430
03/20/23
2,320,690 Government National Mortgage Assoc II 8.00 2,323,127
06/20/26
1,109,628 Government National Mortgage Assoc II 8.00 1,110,793
07/20/26
1,983,035 Government National Mortgage Assoc II 8.00 1,983,035
09/20/26
4,985,882 Government National Mortgage Assoc II 8.00 4,991,117
01/20/27
172,279 Government National Mortgage Assoc II 8.50 175,852
07/20/25
508,806 Government National Mortgage Assoc II 8.50 519,359
05/20/26
1,779,681 Government National Mortgage Assoc II 8.50 1,816,592
06/20/26
7,850,090 Government National Mortgage Assoc II 8.50 8,012,901
07/20/26
3,744 Government National Mortgage Assoc II 10.00 4,068
12/20/13
154,977 Government National Mortgage Assoc II 10.00 168,406
07/20/14
39,154 Government National Mortgage Assoc II 10.00 42,567
02/20/16
39,734 Government National Mortgage Assoc II 10.00 43,124
07/20/20
301,135 Government National Mortgage Assoc II 10.00 326,825
08/20/20
390,944 Government National Mortgage Assoc II 10.00 424,295
09/20/20
320,208 Government National Mortgage Assoc II 10.00 347,525
12/20/20
314,096 Government National Mortgage Assoc II 10.00 340,892
01/20/21
</TABLE>
---------------------
19
<PAGE>
GINNIE MAE FUND
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
$ 1,847,625 Government National Mortgage Assoc II 10.00 % $ 2,005,246
03/20/21
1,305,179 Government National Mortgage Assoc II 10.00 1,416,524
05/20/21
82,922 Government National Mortgage Assoc II 10.00 89,996
06/20/22
1,146,139 Government National Mortgage Assoc II 11.00 1,288,249
08/20/19
404,119 Government National Mortgage Assoc II 11.00 453,830
06/20/20
332,900 Government National Mortgage Assoc II 11.00 374,176
08/20/20
--------------
$ 123,198,579
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 148,760,867
(Cost $151,894,253)
U.S. TREASURY SECURITIES - 8.26%
U.S. TREASURY BILLS - 5.84%
$10,000,000 U.S. Treasury Bills 5.60 (F) $ 9,516,900
02/05/98
U.S. TREASURY NOTES - 2.42%
$ 4,000,000 U.S. Treasury Notes 5.88 % $ 3,933,758
11/15/99
--------------
TOTAL U.S. TREASURY SECURITIES $ 13,450,658
(Cost $13,528,090)
</TABLE>
- ------------------------
20
<PAGE>
GINNIE MAE FUND
<TABLE>
<CAPTION>
INTEREST
PRINCIPAL SECURITY NAME RATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 0.52%
REPURCHASE AGREEMENTS - 0.52%
$ 839,000 Goldman Sachs Pooled Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.50 % $ 839,000
04/01/97
(Cost $839,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $166,261,343)* (Notes 1 and 3) 100.16% $ 163,050,525
Other Assets and Liabilities, Net (0.16) (257,880)
------ --------------
TOTAL NET ASSETS 100.00% $ 162,792,645
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(F) YIELD TO MATURITY.
* 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 $ 161,726
Gross Unrealized Depreciation (3,372,544)
------------
NET UNREALIZED DEPRECIATION $ (3,210,818)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
21
<PAGE>
INTERMEDIATE BOND FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 51.16%
BANK & FINANCE - 29.31%
$ 500,000 First Chicago NBD Bancorp 8.10 % 03/01/02 $ 518,125
1,000,000 Ford Capital BV 9.13 05/01/98 1,029,100
1,000,000 Ford Motor Credit Co 7.50 06/15/04 1,008,750
1,000,000 General Motors Acceptance Corp 6.88 07/15/01 987,500
500,000 General Motors Acceptance Corp 7.75 04/15/97 500,460
500,000 ITT Hartford Group Inc 8.20 10/15/98 512,070
1,000,000 Midland Bank Plc 7.63 06/15/06 1,002,500
1,000,000 NationsBank Corp 6.88 02/15/05 967,500
1,750,000 Norwest Corp 7.13 04/01/00 1,760,938
2,000,000 Sears Roebuck Acceptance Corp 5.82 12/07/98 1,979,700
1,000,000 Smith Barney Holdings 6.50 10/15/02 966,250
1,000,000 Standard Credit Card Master Credit 8.35 01/07/00 1,022,790
1,000,000 Travelers Inc 6.75 04/15/01 988,980
--------------
$ 13,244,663
FOREIGN CORPORATE BONDS - 6.45%
$ 1,500,000 Ontario, Province of 7.38 % 01/27/03 $ 1,515,000
1,500,000 Quebec, Province of 6.50 01/17/06 1,400,625
--------------
$ 2,915,625
INDUSTRIALS - 9.96%
$ 1,150,000 Disney (Walt) Co 6.75 % 03/30/06 $ 1,104,000
400,000 International Business Machines Corp 7.50 06/15/13 397,500
1,000,000 Pepsico Inc 7.63 11/01/98 1,014,820
2,000,000 Philip Morris Co 7.25 09/15/01 1,985,000
--------------
$ 4,501,320
</TABLE>
- ------------------------
22
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES (CONTINUED)
UTILITIES - 5.44%
$ 500,000 National Rural Utilities Cooperative Corp 9.50 % 05/15/97 $ 501,907
2,000,000 US West Capital Funding Inc 7.30 01/15/07 1,954,998
--------------
$ 2,456,905
TOTAL CORPORATE BONDS & NOTES $ 23,118,513
(Cost $23,594,801)
U.S. GOVERNMENT AGENCY SECURITIES - 13.72%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.24%
$ 100,278 FHLMC #274688 9.00 % 07/01/16 $ 105,527
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.47%
$ 332,305 FNMA #050965 6.50 % 01/01/24 $ 311,433
373,277 FNMA #264440 6.00 12/01/08 354,804
--------------
$ 666,237
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 12.01%
$ 38,777 GNMA #122382 11.50 % 04/15/15 $ 44,003
178,413 GNMA #158583 9.00 09/20/16 188,499
12,449 GNMA #163047 9.00 09/15/16 13,247
163,199 GNMA #1740 9.00 10/20/21 171,608
136,021 GNMA #1740 9.00 12/20/21 142,436
122,551 GNMA #188769 9.00 02/15/17 130,474
36,709 GNMA #197650 9.00 08/15/21 38,898
20,516 GNMA #201783 9.00 02/15/17 21,843
132,531 GNMA #258377 10.00 08/15/18 145,701
135,403 GNMA #262027 10.00 08/15/18 148,858
7,630 GNMA #264106 9.00 11/15/18 8,114
96,922 GNMA #302683 9.00 03/15/21 102,703
266,418 GNMA #305078 9.00 04/15/21 282,310
1,278,364 GNMA #336930 7.50 03/15/23 1,260,339
492,867 GNMA #339486 7.50 04/15/23 485,917
210,602 GNMA #389023 8.50 11/15/22 217,931
1,460,321 GNMA #417389 7.00 05/15/26 1,393,876
</TABLE>
---------------------
23
<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)
$ 260,074 GNMA #57247 9.50 % 05/20/16 $ 278,926
342,973 GNMA #8552 6.87 11/20/24 350,155
--------------
$ 5,425,838
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 6,197,602
(Cost $6,278,148)
U.S. TREASURY SECURITIES - 30.19%
U.S. TREASURY NOTES - 30.19%
$ 800,000 U.S. Treasury Notes 6.13 % 05/31/97 $ 800,496
1,400,000 U.S. Treasury Notes 6.25 02/15/03 1,361,934
3,250,000 U.S. Treasury Notes 6.75 06/30/99 3,266,770
2,250,000 U.S. Treasury Notes 6.75 04/30/00 2,257,020
2,000,000 U.S. Treasury Notes 7.88 11/15/04 2,112,180
3,750,000 U.S. Treasury Notes 8.25 07/15/98 3,841,388
--------------
TOTAL U.S. TREASURY SECURITIES $ 13,639,788
(Cost $13,901,529)
SHORT-TERM INSTRUMENTS - 4.30%
REPURCHASE AGREEMENTS - 4.30%
$ 1,943,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50 % 04/01/97 $ 1,943,000
(Cost $1,943,000)
</TABLE>
- ------------------------
24
<PAGE>
INTERMEDIATE BOND FUND
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $45,717,478)* (Notes 1 and 3) 99.37% $ 44,898,903
Other Assets and Liabilities, Net 0.63 285,984
------ --------------
TOTAL NET ASSETS 100.00% $ 45,184,887
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 102,077
Gross Unrealized Depreciation (920,652)
------------
NET UNREALIZED DEPRECIATION $ (818,575)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
25
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 29.92%
BANK & FINANCE - 7.21%
$ 5,000,000 First Bank Corp 6.40 % 02/15/03 $ 4,871,875
2,000,000 Household Finance Co 6.88 03/01/07 1,915,000
--------------
$ 6,786,875
INTERNATIONAL AGENCIES - 2.65%
$ 2,500,000 European Investment Bank 7.13 % 09/18/06 $ 2,496,875
MISCELLANEOUS BONDS - 14.60%
$ 5,000,000 Anheuser-Busch Co 6.75 % 08/01/03 $ 4,881,250
4,000,000 Honeywell Inc 6.75 03/15/02 3,930,000
5,000,000 McKesson Corp++ 6.88 03/01/02 4,925,000
--------------
$ 13,736,250
UTILITIES - 5.46%
$ 5,000,000 Pacific Gas & Electric Co 7.88 % 03/01/02 $ 5,131,250
--------------
TOTAL CORPORATE BONDS & NOTES $ 28,151,250
(Cost $28,701,450)
U.S. GOVERNMENT AGENCY SECURITIES - 36.56%
FEDERAL AGENCY - OTHER - 3.71%
$ 1,500,000 Federal Home Loan Mortgage Corp 7.13 % 07/21/99 $ 1,518,600
2,000,000 Tennessee Valley Authority 6.50 08/20/01 1,967,500
--------------
$ 3,486,100
FEDERAL HOME LOAN BANKS - 4.19%
$ 1,030,000 FHLB 8.45 % 07/26/99 $ 1,071,324
2,760,000 FHLB 8.60 06/25/99 2,875,285
--------------
$ 3,946,609
</TABLE>
- ------------------------
26
<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 - 2.21%
$ 157,671 FHLMC # 546103 10.50 % 08/01/19 $ 170,245
37,443 FHLMC #189194 8.75 08/01/08 38,835
100,674 FHLMC #22-0009 8.25 08/01/01 102,309
257,066 FHLMC #291786 8.50 01/01/09 264,711
1,218,235 FHLMC #536534 9.00 07/01/17 1,277,623
221,907 FHLMC #544269 8.00 11/01/08 223,294
--------------
$ 2,077,017
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 18.67%
$ 2,000,000 FNMA MTN 6.69 % 08/07/01 $ 1,980,940
2,455,000 FNMA MTN 7.30 04/17/00 2,462,291
1,999,989 FNMA MTN 7.36 09/29/99 2,006,869
5,000,000 FNMA Global 8.50 02/01/05 5,192,750
321,790 FNMA #2783 8.75 03/01/07 333,053
3,562,529 FNMA #50761 6.00 07/01/08 3,349,882
45,377 FNMA #68853 6.50 11/01/98 42,144
26,347 FNMA #75336 9.50 02/01/09 28,245
180,325 FNMA #83785 8.00 08/01/18 183,895
2,000,000 FNMA Global 6.85 05/26/00 1,988,120
--------------
$ 17,568,189
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 7.68%
$ 1,761,911 GNMA #402844 9.00 % 12/15/24 $ 1,845,038
1,573,973 GNMA #403934 9.00 08/15/24 1,653,758
1,559,670 GNMA #418261 6.50 04/15/26 1,443,178
440,152 GNMA #423225 6.50 04/15/26 407,885
1,961,479 GNMA #423779 7.00 05/15/26 1,870,761
--------------
$ 7,220,620
REAL ESTATE MORTGAGE INVESTMENT CONDUITS - 0.10%
$ 87,203 FNMA 1993-G19 7.00 % 04/25/23 $ 91,018
--------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 34,389,553
(Cost $35,062,190)
</TABLE>
---------------------
27
<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. TREASURY SECURITIES - 22.28%
U.S. TREASURY BONDS - 4.37%
$ 1,000,000 U.S. Treasury Bonds 6.25 % 05/31/00 $ 988,750
1,250,000 U.S. Treasury Bonds 6.25 08/15/23 1,107,613
2,000,000 U.S. Treasury Bonds 7.25 05/15/16 2,009,060
--------------
$ 4,105,423
U.S. TREASURY NOTES - 17.91%
$ 2,000,000 U.S. Treasury Notes 5.75 % 08/15/03 $ 1,887,820
3,250,000 U.S. Treasury Notes 6.13 03/31/98 3,251,527
1,000,000 U.S. Treasury Notes 6.13 09/30/00 982,810
1,000,000 U.S. Treasury Notes 6.38 07/15/99 997,500
2,500,000 U.S. Treasury Notes 7.13 09/30/99 2,533,200
3,700,000 U.S. Treasury Notes 8.00 08/15/99 3,816,439
3,300,000 U.S. Treasury Notes 8.25 07/15/98 3,380,421
--------------
$ 16,849,717
TOTAL U.S. TREASURY SECURITIES $ 20,955,140
(Cost $21,400,239)
SHORT-TERM INSTRUMENTS - 10.43%
SHORT-TERM FEDERAL AGENCIES - 6.38%
$ 6,000,000 Student Loan Marketing Association 5.84 % 01/25/10 $ 6,005,625
REPURCHASE AGREEMENTS - 4.05%
$ 1,211,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50 % 04/01/97 $ 1,211,000
2,600,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.30 04/01/97 2,600,000
--------------
$ 3,811,000
TOTAL SHORT-TERM INSTRUMENTS $ 9,816,625
(Cost $9,811,000)
</TABLE>
- ------------------------
28
<PAGE>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $94,931,500)* (Notes 1 and 3) 99.19% $ 93,312,568
Other Assets and Liabilities, Net 0.81 757,941
------ --------------
TOTAL NET ASSETS 100.00% $ 94,070,509
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
++ 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 AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 172,727
Gross Unrealized Depreciation (1,791,659)
------------
NET UNREALIZED DEPRECIATION $ (1,618,932)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
29
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ------------------------
30
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<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) $163,050,525 $44,898,903 $ 93,312,568
Cash 12,850 1,205 263,703
Receivables:
Interest 1,162,112 591,215 1,245,060
Fund shares sold 36,000 2,000 144,647
Investment securities sold 0 986 31,214
Organization expenses net of
amortization 8,115 0 15,240
Prepaid expenses 15,839 12,809 0
TOTAL ASSETS 164,285,441 45,507,118 95,012,432
LIABILITIES
Payables:
Distribution to shareholders 848,709 234,735 550,193
Fund shares redeemed 6,000 0 2,682
Due to sponsor and distributor (Note
2) 220,143 6,782 21,074
Due to adviser (Note 2) 345,185 54,082 119,729
Other 72,759 26,632 248,245
TOTAL LIABILITIES 1,492,796 322,231 941,923
TOTAL NET ASSETS $162,792,645 $45,184,887 $ 94,070,509
NET ASSETS CONSIST OF:
Paid-in capital $183,230,538 $47,945,477 $109,627,636
Undistributed net investment income 123,599 0 0
Undistributed net realized gain (loss)
on investments (17,350,674) (1,942,015) (13,938,195)
Net unrealized appreciation
(depreciation) of investments (3,210,818) (818,575) (1,618,932)
TOTAL NET ASSETS $162,792,645 $45,184,887 $ 94,070,509
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $132,458,677 $ 2,124,629 $ 33,920,220
Shares outstanding - Class A 12,573,870 148,797 3,520,001
Net asset value - Class A $ 10.53 $ 14.28 $ 9.64
Maximum offering price per share - Class
A $ 11.03(1) 14.95(1) 9.94(2)
Net Assets - Class B $ 22,471,254 $ 674,586 N/A
Shares outstanding - Class B 2,167,690 68,050 N/A
Net asset value and offering price per
share - Class B $ 10.37 $ 9.91 N/A
Net Assets - Institutional Class $ 7,862,714 $42,385,672 $ 60,150,289
Shares outstanding - Institutional Class 516,882 2,965,069 6,363,243
Net asset value and offering price per
share - Institutional Class $ 15.21 $ 14.30 $ 9.45
INVESTMENT AT COST (NOTE 3) $166,261,343 $45,717,478 $ 94,931,500
- ------------------------------------------------------------------------------------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
---------------------
31
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GINNIE MAE FUND
---------------------------
FOR THE
FOR THE SIX NINE
MONTHS MONTHS
ENDED ENDED
MARCH 31, SEPT. 30,
1997 1996
<S> <C> <C>
- ------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 6,725,529 $10,456,487
TOTAL INVESTMENT INCOME 6,725,529 10,456,487
EXPENSES (NOTE 2)
Advisory fees 430,170 679,123
Administration fees 32,158 40,747
Custody fees 37,272 57,198
Shareholder servicing fees 256,022 408,550
Portfolio accounting fees 47,830 73,246
Transfer agency fees 117,869 180,825
Distribution fees 112,777 159,519
Amortization of organization expenses 1,345 2,027
Legal and audit fees 22,769 44,323
Registration fees 31,091 35,771
Directors' fees 2,490 3,751
Shareholder reports 19,918 15,747
Other 16,958 25,958
TOTAL EXPENSES 1,128,669 1,726,785
Less:
Waived fees and reimbursed expenses (355,083) (504,824)
Net Expenses 773,586 1,221,961
NET INVESTMENT INCOME 5,951,943 9,234,526
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments (52,174) (4,952,031)
Net change in unrealized appreciation
(depreciation) of investments (1,380,148) (3,717,687)
NET GAIN (LOSS) ON INVESTMENTS (1,432,322) (8,669,718)
NET INCREASE IN NET ASSETS RESULTING
FROM
OPERATIONS $ 4,519,621 $ 564,808
- ------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
32
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND SHORT-INTERMEDIATE U.S. GOVERNMENT
--------------------------- INCOME FUND
FOR THE ----------------------------------
SIX FOR THE SIX
MONTHS FOR THE MONTHS
ENDED YEAR ENDED ENDED FOR THE NINE
MARCH 31, SEPT. 30, MARCH 31, MONTHS ENDED
1997 1996 1997 SEPT. 30, 1996
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $1,602,294 $ 3,485,020 $ 3,917,078 $ 2,694,664
TOTAL INVESTMENT INCOME 1,602,294 3,485,020 3,917,078 2,694,664
EXPENSES (NOTE 2)
Advisory fees 113,284 267,478 255,764 213,467
Administration fees 12,053 77,363 19,910 12,808
Custody fees 3,784 11,899 12,028 12,371
Shareholder servicing fees 56,640 7,201 136,888 125,862
Portfolio accounting fees 27,867 36,524 40,852 45,550
Transfer agency fees 15,468 17,338 22,401 17,967
Distribution fees 1,346 0 9,008 19,128
Amortization of organization expenses 0 1,823 3,585 5,390
Legal and audit fees 16,799 17,769 12,465 19,080
Registration fees 7,803 13,220 6,781 748
Directors' fees 2,299 5,932 498 748
Shareholder reports 10,400 23,698 14,938 22,460
Other 12,528 8,794 3,791 6,802
TOTAL EXPENSES 280,271 489,039 538,909 502,381
Less:
Waived fees and reimbursed expenses (108,985) (95,265) (196,516) (183,291)
Net Expenses 171,286 393,774 342,393 319,090
NET INVESTMENT INCOME 1,431,008 3,091,246 3,574,685 2,375,574
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 60,556 188,764 510,730 (1,001,781)
Net change in unrealized appreciation
(depreciation) of investments (726,922) (997,909) (1,294,254) 438,931
NET GAIN (LOSS) ON INVESTMENTS (666,366) (809,145) (783,524) (562,850)
NET INCREASE IN NET ASSETS RESULTING
FROM
OPERATIONS $ 764,642 $ 2,282,101 $ 2,791,161 $ 1,812,724
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
33
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GINNIE MAE FUND
----------------------------------------------
FOR THE SIX FOR THE NINE FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 5,951,943 $ 9,234,526 $ 11,884,440
Net realized gain (loss) on sale of
investments (52,174) (4,952,031) 1,935,107
Net change in unrealized appreciation
(depreciation) of investments (1,380,148) (3,717,687) 13,236,756
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 4,519,621 564,808 27,056,303
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (3,998,499) (8,324,322) (11,629,261)
CLASS B (588,420) (874,966) (255,179)
INSTITUTIONAL CLASS (266,242) (35,238) 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 (864,500) 0 0
CLASS B (96,738) 0 0
INSTITUTIONAL CLASS (13,945) 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 3,722,018 43,434,133 24,703,217
Reinvestment of dividends - Class A 2,944,260 5,182,118 6,911,844
Cost of shares redeemed - Class A (20,900,019) (59,192,126) (51,605,131)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (14,233,741) (10,575,875) (19,990,070)
Proceeds from shares sold - Class B 3,554,370 12,897,534 12,424,092
Reinvestment of dividends - Class B 274,104 312,213 69,456
Cost of shares redeemed - Class B (2,284,636) (3,423,143) (579,027)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 1,543,838 9,786,604 11,914,521
Proceeds from shares sold -
Institutional Class 1,265,845 7,655,410 0
Reinvestment of dividends -
Institutional Class 84,375 336 0
Cost of shares redeemed -
Institutional Class (792,921) (347,432) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 557,299 7,308,314 0
INCREASE (DECREASE) IN NET ASSETS (13,441,327) (2,150,675) 7,096,314
NET ASSETS:
Beginning net assets 176,233,972 178,384,647 171,288,333
ENDING NET ASSETS $162,792,645 $176,233,972 $178,384,647
- -------------------------------------------------------------------------------------------
</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.
(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. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
34
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------------------------------------------
FOR THE FOUR
FOR THE SIX FOR THE MONTHS ENDED FOR THE
MONTHS ENDED YEAR ENDED SEPT. 30, YEAR ENDED
MARCH 31, 1997 SEPT. 30, 1996 1995 MAY 31, 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 1,431,008 $ 3,091,246 $ 1,127,598 $ 3,508,106
Net realized gain (loss) on sale of
investments 60,556 188,764 364,287 (1,412,557)
Net change in unrealized appreciation
(depreciation) of investments (726,922) (997,909) (382,517) 3,149,425
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 764,642 2,282,101 1,109,368 5,244,974
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (67,863) (397,829) (1,127,598) (3,508,106)
CLASS B (6,096) 0 0 0
INSTITUTIONAL CLASS (1,357,049) (2,693,417) 0 0
In excess of net investment income
CLASS A 0 0 (27,612) (250,840)
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
Tax return of capital
CLASS A 0 (2,213) 0 0
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 (40,503) 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 183,352 525,048 6,805,043 14,208,619
Reinvestment of dividends - Class A 53,409 261,911 795,638 2,638,770
Cost of shares redeemed - Class A (561,269) (54,206,729) (8,013,618) (20,445,306)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (324,508) (53,419,770) (412,937) (3,597,917)
Proceeds from shares sold - Class B 682,502 25 0 0
Reinvestment of dividends - Class B 1,378 0 0 0
Cost of shares redeemed - Class B (11) 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 683,869 25 0 0
Proceeds from shares sold -
Institutional Class 5,756,328 63,136,515 0 0
Reinvestment of dividends -
Institutional Class 783,565 1,730,693 0 0
Cost of shares redeemed -
Institutional Class (7,876,571) (19,395,503) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (1,336,678) 45,471,705 0 0
INCREASE (DECREASE) IN NET ASSETS (1,643,683) (8,799,901) (458,779) (2,111,889)
NET ASSETS:
Beginning net assets 46,828,570 55,628,471 56,087,250 58,199,139
ENDING NET ASSETS $ 45,184,887 $ 46,828,570 $ 55,628,471 $ 56,087,250
- ----------------------------------------------------------------------------------------------------
<CAPTION>
SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME FUND
----------------------------------------------------
FOR THE
FOR THE SIX FOR THE NINE YEAR ENDED
MONTHS ENDED MONTHS ENDED DEC. 31,
MARCH 31, 1997 SEPT. 30, 1996 (2) 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 3,574,685 $ 2,375,574 $ 1,175,223
Net realized gain (loss) on sale of
investments 510,730 (1,001,781) (1,740,504)
Net change in unrealized appreciation
(depreciation) of investments (1,294,254) 438,931 1,047,532
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 2,791,161 1,812,724 482,251
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,249,906) (2,125,952) (1,175,223)
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS (2,324,779) (249,622) 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 SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 3,370,813 50,198,742 38,655,106
Reinvestment of dividends - Class A 943,357 1,800,529 931,554
Cost of shares redeemed - Class A (7,567,949) (53,286,609) (10,567,251)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (3,253,779) (1,287,338) 29,019,409
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 4,565,190 75,368,746 0
Reinvestment of dividends -
Institutional Class 667,123 934 0
Cost of shares redeemed -
Institutional Class (18,226,996) (2,345,155) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (12,994,683) 73,024,525 0
INCREASE (DECREASE) IN NET ASSETS (17,031,986) 71,174,337 28,326,437
NET ASSETS:
Beginning net assets 111,102,495 39,928,158 11,601,721
ENDING NET ASSETS $ 94,070,509 $ 111,102,495 $ 39,928,158
- ----------------------------------------------------------------------------------------------------
</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.
(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. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
---------------------
35
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GINNIE MAE FUND
------------------------------------------
CLASS A
------------------------------------------
SIX NINE
MONTHS MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31, DEC. 31,
1997 1996 (1) 1995 1994
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.63 $11.15 $10.18 $11.31
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.38 0.55 0.76 0.77
Net realized and unrealized gain (loss) on
investments (0.11) (0.52) 0.97 (1.13)
--------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.27 0.03 1.73 (0.36)
LESS DISTRIBUTIONS:
Dividends from net investment income (0.31) (0.55) (0.76) (0.77)
Distributions from net realized gain 0.00 0.00 0.00 0.00
Tax return of capital (0.06) 0.00 0.00 0.00
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.37) (0.55) (0.76) (0.77)
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.53 $10.63 $11.15 $10.18
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 2.50% 0.36% 17.53% (3.23)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $132,459 $147,712 $166,157 $171,288
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.82% 0.83% 0.82% 0.73%
Ratio of net investment income to average
net assets 6.99% 6.85% 7.09% 7.20%
Portfolio turnover 72% 183% 118% 69%
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses 1.22% 1.19% 1.15% 1.07%
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses 6.59% 6.49% 6.76% 6.86%
- ------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
36
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GINNIE MAE FUND (CONT.)
---------------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) ------------------------------- --------------------
-------------------- SIX NINE SIX
YEAR YEAR MONTHS MONTHS YEAR MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, MARCH 31, SEPT. 30, DEC. 31, MARCH 31, SEPT. 30,
1993 1992 1997 1996 (1) 1995 (2) 1997 1996 (3)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.34 $11.42 $10.46 $10.97 $10.00 $15.34 $15.19
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.83 0.83 0.34 0.49 0.66 0.54 0.08
Net realized and
unrealized gain (loss)
on investments (0.03) (0.08) (0.10) (0.51) 0.97 (0.14) 0.15
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.80 0.75 0.24 (0.02) 1.63 0.40 0.23
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.83) (0.83) (0.28) (0.49) (0.66) (0.50) (0.08)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 (0.05) 0.00 0.00 (0.03) 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.83) (0.83) (0.33) (0.49) (0.66) (0.53) (0.08)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $11.31 $11.34 $10.37 $10.46 $10.97 $15.21 $15.34
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 7.19% 6.86% 2.24% (0.12)% 16.69% 2.62% 1.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $303,530 $184,692 $22,471 $21,141 $12,227 $7,863 $7,381
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.46% 0.46% 1.47% 1.48% 1.47% 0.77% 0.78%
Ratio of net investment
income to average net
assets 7.19% 7.93% 6.32% 6.16% 6.01% 7.05% 7.48%
Portfolio turnover 121% 73% 72% 183% 118% 72% 183%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.02% 1.26% 1.94% 1.93% 2.12% 1.17% 1.31%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 6.63% 7.13% 5.85% 5.71% 5.36% 6.65% 6.95%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
---------------------
37
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (1)
------------------------------------------
CLASS A CLASS B
-------------------- --------------------
SIX SIX
MONTHS YEAR MONTHS PERIOD
ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1997 1996 (2) 1997 1996 (3)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.50 $14.76 $10.07 $10.00
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.46 0.87 0.23 0.00
Net realized and unrealized gain (loss) on
investments (0.22) (0.25) (0.16) 0.07
--------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.24 0.62 0.07 0.07
LESS DISTRIBUTIONS:
Dividends from net investment income (0.46) (0.87) (0.23) 0.00
Distributions from net realized gain 0.00 0.00 0.00 0.00
Tax return of capital 0.00 (0.01) 0.00 0.00
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.46) (0.88) (0.23) 0.00
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $14.28 $14.50 $9.91 $10.07
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 1.61% 4.15% 0.66% 0.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $2,125 $2,481 $675 $0
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.80% 0.85% 1.50% 0.00%
Ratio of net investment income to average
net assets 6.29% 5.82% 5.54% 2.43%
Portfolio turnover 28% 96% 28% 96%
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses 1.40% 1.11% 3.13% 0.00%
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses 5.69% 5.56% 3.91% 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. THE FUND
OPERATED AS A SERIES OF PACIFICA FUNDS TRUST UNTIL IT WAS REORGANIZED
AS A SERIES OF STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN
CONJUNCTION WITH THE SEPTEMBER 6, 1996 REORGANIZATION, EXISTING
INVESTOR SHARES WERE CONVERTED INTO CLASS A SHARES OF THE FUND. 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 CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
- ---------------------
38
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND (1) (CONT.)
---------------------------------------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------------------------------------
SIX FOUR
MONTHS YEAR MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30, MAY 31, MAY 31, MAY 31, MAY 31,
1997 1996 1995 (4) 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.52 $14.76 $14.77 $14.36 $15.72 $15.69 $15.52
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.46 0.85 0.30 0.91 0.99 1.17 1.14
Net realized and
unrealized gain (loss)
on investments (0.22) (0.23) (0.01) 0.47 (0.90) 0.40 0.65
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.24 0.62 0.29 1.38 0.09 1.57 1.79
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.46) (0.85) (0.30) (0.97) (0.85) (1.04) (1.41)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 (0.60) (0.50) (0.21)
Tax return of capital 0.00 (0.01) 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.46) (0.86) (0.30) (0.97) (1.45) (1.54) (1.62)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $14.30 $14.52 $14.76 $14.77 $14.36 $15.72 $15.69
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 1.64% 4.19% 6.14%** 10.13% 0.35% 10.42% 11.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $42,386 $44,348 $55,628 $56,087 $58,199 $61,207 $54,203
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.75% 0.73% 0.89% 0.81% 0.79% 0.76% 0.68%
Ratio of net investment
income to average net
assets 6.32% 5.82% 5.94% 6.35% 5.33% 6.01% 7.14%
Portfolio turnover 28% 96% 54% 76% 163% 146% 102%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.22% 0.89% 0.94% 0.85% 0.83% 0.79% 0.73%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.85% 5.66% 5.89% 6.31% 5.29% 5.98% 7.09%
- ---------------------------------------------------------------------------------------------------------
</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. THE FUND
OPERATED AS A SERIES OF PACIFICA FUNDS TRUST UNTIL IT WAS REORGANIZED
AS A SERIES OF STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN
CONJUNCTION WITH THE SEPTEMBER 6, 1996 REORGANIZATION, EXISTING
INVESTOR SHARES WERE CONVERTED INTO CLASS A SHARES OF THE FUND. 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 CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
39
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S.
GOVERNMENT
INCOME FUND
-------------------------------
CLASS A
-------------------------------
SIX NINE
MONTHS MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $9.73 $10.00 $9.39
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.34 0.41 0.55
Net realized and unrealized gain (loss) on investments (0.09) (0.27) 0.61
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.25 0.14 1.16
LESS DISTRIBUTIONS:
Dividends from net investment income (0.34) (0.41) (0.55)
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.34) (0.41) (0.55)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $9.64 $9.73 $10.00
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 2.57% 1.34% 12.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $33,920 $37,465 $39,928
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.71% 0.76% 0.71%
Ratio of net investment income to average net assets 6.96% 5.60% 5.64%
Portfolio turnover 52% 389% 472%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.12% 1.21% 1.67%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 6.55% 5.15% 4.68%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE FUND COMMENCED OPERATIONS ON OCTOBER 27, 1993.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
40
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE U.S. GOVERNMENT
INCOME FUND (CONT.)
------------------------------------------
INSTITUTIONAL CLASS
CLASS A (CONT.) --------------------
-------------------- SIX
YEAR PERIOD MONTHS PERIOD
ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, MARCH 31, SEPT. 30,
1994 1993 (2) 1997 1996 (3)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $9.99 $10.00 $9.54 $9.46
--------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.46 0.06 0.34 0.03
Net realized and
unrealized gain (loss)
on investments (0.60) (0.01) (0.09) 0.08
--------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (0.14) 0.05 0.25 0.11
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.46) (0.06) (0.34) (0.03)
Distributions from net
realized gain 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.46) (0.06) (0.34) (0.03)
--------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $9.39 $9.99 $9.45 $9.54
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) (1.42)% 0.40% 2.58% 1.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $11,602 $8,557 $60,150 $73,637
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.25% 0.00% 0.65% 0.59%
Ratio of net investment
income to average net
assets 4.75% 3.49% 7.01% 5.14%
Portfolio turnover 288% N/A 52% 389%
- ------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.28% 2.45% 1.02% 0.84%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 2.72% 1.04% 6.64% 4.89%
- ------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE FUND COMMENCED OPERATIONS ON OCTOBER 27, 1993.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
---------------------
41
<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 management
investment company. The Company commenced operations on January 1, 1992, 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").
The Company changed its fiscal year-end from September 30 to March 31.
At a special shareholders meeting on July 16, 1996, the Shareholders of Pacifica
Funds Trust ("Pacifica") approved a plan of reorganization providing for the
transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach Fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Intermediate Bond Fund was
established to acquire all of the assets and assume all of the liabilities of
the Pacifica Intermediate Bond Fund (previously, the Westcore Bonds Plus Fund),
the "Predecessor Fund." Additionally, the 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.
All performance and financial data presented in this annual report for the
Intermediate Bond Fund for periods prior to September 6, 1996, refers to the
Predecessor Fund.
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
- ---------------------
42
<PAGE>
NOTES TO FINANCIAL STATEMENTS
servicing fees, transfer agency fees and distribution fees. Shareholders of each
class also bear certain expenses that pertain to that particular class. All
shareholders bear the common expenses of the Fund and earn income from the
portfolio pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are determined separately for each
class based on income and expenses allocable to each class. 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, shareholder servicing and transfer agency fees.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles 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 approved by the Company'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 recorded no later than one business day after trade
date. 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 commit-
---------------------
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ments 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
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 Funds may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank, N.A. ("WFB"). The
repurchase agreements must be fully collateralized based on values that are
marked to market daily. The collateral may be held by an agent bank under a
tri-party agreement. It is the custodian's responsibility to value collateral
daily and to take action to obtain additional collateral as necessary to
maintain market value equal to or greater than the resale price. The repurchase
agreements entered into and held in the Funds at March 31, 1997, are
collateralized by U.S. Government obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Funds are declared
daily and distributed monthly. Any distributions to shareholders from net
realized capital gains are declared and distributed annually.
- ---------------------
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAXES
Each Fund of the Company is treated as a separate entity for federal income tax
purposes. It is the policy of each Fund of the Company to continue to qualify as
a regulated investment company by complying with the provisions applicable to
regulated investment companies, as defined in the Internal Revenue Code, and to
make distributions of substantially all of its investment company taxable income
and any net realized capital gains (after reduction for capital loss
carryforwards) sufficient to relieve it from all, or substantially all, federal
income taxes. Accordingly, no provision for federal income taxes was required at
December 31, 1996. The following funds had net capital loss carryforwards at
December 31, 1996:
<TABLE>
<CAPTION>
YEAR CAPITAL LOSS
FUND EXPIRES CARRYFORWARD
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Ginnie Mae Fund 2001 $ 3,300,546
2002 12,911,885
2003 939,975
2004 4,827,808
Intermediate Bond Fund 2001 1,977,220
2002 17,986
Short-Intermediate U.S. Government Income Fund 2002 2,126,663
2003 4,922,699
2004 7,742,893
</TABLE>
The capital loss carryforwards shown above include carryforwards from the
Pacifica Funds which were merged into the Funds in 1996. Certain loss
carryforwards for the Short-Intermediate U.S. Government Income Fund resulted
from transactions entered into by the Variable Rate Government Fund prior to its
merger into the Short-Intermediate U.S. Government Income Fund in 1995. The
utilization of these loss carryforwards from the Variable Rate Government Fund
may be subject to limitations as a result of rules in the Internal Revenue Code
applicable to corporate changes of ownership.
The Board of Directors 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
---------------------
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
investments in the accompanying Statements of Changes in Net Assets. The amount
of distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassifications.
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of the Funds and/or classes of shares.
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 WFB. Pursuant to the contracts, WFB furnishes to the Funds investment
guidance and policy direction in connection with daily portfolio management.
Under the contracts 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 such Funds' average daily net assets. 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 the next $250 million, and 0.30% of the
average daily net assets 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 each Fund. For portfolio accounting services, WFB is
entitled to a monthly base fee from each Fund of $2,000 plus an annual fee of
0.07% of the first $50 million of average
- ---------------------
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS
daily net assets, 0.045% of the next $50 million, and 0.02% of the average daily
net assets in excess of $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 contract, 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 a contract on behalf of the Funds with WFB, whereby
WFB has agreed to act as transfer agent for the Funds. Under the transfer agency
contract, WFB is entitled to receive transfer agency fees at an annual rate of
0.14% of the average daily net assets of the Class A and B shares of the Ginnie
Mae and Intermediate Bond Funds, 0.14% of the average daily net assets of the
Class A shares of the Short-Intermediate U.S. Government Income
Fund and 0.06% of the average daily net assets of the Institutional Class shares
of the Funds. Prior to February 1, 1997, under the contracts with the Ginnie Mae
and Short-Intermediate U.S. Government Income Funds, WFB was 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 respective Fund were under $20 million. For
as long as the assets remained under $20 million, a Fund would not be charged
any transfer agency fees by WFB. Prior to February 1, 1997, under the contract
with the Intermediate Bond Fund, WFB was 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 portfolio accounting.
The transfer agency fees for Class A, Class B and Institutional Class shares of
the Funds for the six months ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
TRANSFER
TRANSFER TRANSFER AGENCY FEES
AGENCY FEES AGENCY FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Ginnie Mae Fund $98,044 $15,304 $ 4,521
Intermediate Bond Fund 1,005 138 14,325
Short-Intermediate
U.S. Government Income Fund 10,974 N/A 11,427
</TABLE>
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services to the Funds. Pursuant to the
contracts, 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-
---------------------
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Intermediate U.S. Government Income Fund, and 0.25% of the average daily net
assets of each of the classes of the Intermediate Bond Fund and the
Institutional Class shares of the 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 average 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 shareholder servicing fees for Class A, Class B and Institutional Class
shares of the Funds for the six months ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Ginnie Mae Fund $212,721 $33,185 $10,116
Intermediate Bond Fund 2,697 271 53,672
Short-Intermediate
U.S. Government Income Fund 54,045 N/A 82,843
</TABLE>
The shareholder servicing fees for Class A, Class B and Institutional Class
shares of the Funds for the periods ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
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.
Subject to the overall supervision of the Company's Board of Directors, WFB as
administrator and Stephens Inc. ("Stephens") as co-administrator provide each
Fund with supervisory, administrative and distribution services. For these
administrative services, WFB and Stephens are entitled to receive monthly fees
at the annual rates of 0.04% and 0.02%, respectively, of each Fund's average
daily net assets. Prior to February 1, 1997, Stephens provided substantially
- ---------------------
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
the same services as sole administrator to the Funds. Under the previous
agreements, Stephens was entitled to receive a monthly fee at the annual rate of
0.03% of the average daily net assets of the the Ginnie Mae and
Short-Intermediate U.S. Government Income Funds, and 0.05% of the average daily
net assets of the Intermediate Bond Fund.
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, of up 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 Distribution Plan for 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 for costs incurred at an annual rate up to 0.05% of the
Class A shares' average daily net assets. Each Fund may participate in joint
distribution activities with other funds, in which event, expenses reimbursed
out of the assets of one of the Funds may be attributable, in part, to the
distribution-related activities of another Fund. Generally, the expenses
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 daily 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 Plans for the Funds provide that the Funds may pay for
distribution-related services, a monthly fee at an annual rate of up to 0.70% of
the average daily net assets attributable to Class B shares of the Ginnie Mae
Fund and up to 0.75% of the average daily net assets attributable to Class B
shares of the Intermediate Bond Fund.
The Distribution Plan expenses for Class A and Class B shares of the Funds were
as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE NINE MONTHS ENDED
MARCH 31, 1997 SEPTEMBER 30, 1996
------------------------------ ------------------------------
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 $35,286 $77,491 $60,634 $98,885
Intermediate Bond Fund 541 805 0** 0**
</TABLE>
** INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
---------------------
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEES WAIVED AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statements of
Operations for the six months ended March 31, 1997 were waived and/or reimbursed
by WFB. The following fees were waived for the periods ended September 30, 1996:
<TABLE>
<CAPTION>
FEES WAIVED
BY FEES WAIVED FEES WAIVED
FUND FURMAN SELZ BY FIB BY 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.
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens. 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, and 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%, and 0.71% of the average daily net assets of each Fund's Class A shares
and 0.77%, 0.75%, and 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 March 31, 1997, Stephens owned 117 shares of the Ginnie Mae, 6 shares of the
Intermediate Bond and 123 shares of the Short-Intermediate U.S. Government
Income Funds.
Stephens has retained $1,960,806 as sales charges from the proceeds of Class A
shares sold and $335,437 from the proceeds of Class B shares redeemed by the
Company for the six months ended March 31, 1997. Wells Fargo Securities Inc., a
subsidiary of WFB, received $1,938,506 as sales charges from the proceeds of
Class A shares sold and $335,437 from the proceeds of Class B shares redeemed by
the Company for the six months ended March 31, 1997.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for each
Fund for the six months ended March 31, 1997, were as follows:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
AGGREGATE PURCHASES GINNIE MAE INTERMEDIATE U.S. GOVERNMENT
AND SALES FUND BOND FUND INCOME FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Total purchases at cost $134,763,260 $ 54,249,045 $72,007,938
Total sales proceeds 117,065,526 12,229,606 50,546,582
</TABLE>
- ---------------------
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL SHARE TRANSACTIONS
As of March 31, 1997, there were 91 billion shares of $0.001 par value capital
stock authorized by the Company. At March 31, 1997, the Intermediate Bond and
Short-Intermediate U.S. Government Income 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 of $0.001 par
value capital stock for each class of shares. Capital share transactions for the
Funds were as follows:
<TABLE>
<CAPTION>
GINNIE MAE FUND
----------------------------------------
FOR THE SIX FOR THE NINE FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 347,593 4,023,370 2,279,437
Shares issued in reinvestment of dividends --
Class A 274,415 481,543 646,128
Shares redeemed -- Class A (1,949,159) (5,508,045) (4,839,906)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A (1,327,151) (1,003,132) (1,914,341)
Shares sold -- Class B 336,300 1,203,149 1,161,521
Shares issued in reinvestment of dividends --
Class B 25,964 29,609 6,474
Shares redeemed -- Class B (216,351) (325,522) (53,454)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS B 145,913 907,236 1,114,541
Shares sold -- Institutional Class 81,720 503,644 N/A
Shares issued in reinvestment of dividends --
Institutional Class 5,444 22 N/A
Shares redeemed -- Institutional Class (51,324) (22,624) N/A
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS 35,840 481,042 N/A
</TABLE>
(1) "SHARES 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.
---------------------
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
----------------------------------------------------
FOR THE SIX FOR THE FOR THE FOUR FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31, MAY 30,
1997 1996 1995 1995
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 12,388 33,572 459,831 1,000,106
Shares issued in reinvestment of
dividends -- Class A 3,659 17,750 54,095 186,341
Shares redeemed -- Class A (38,323) (3,650,324) (541,307) (1,441,332)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (22,276) (3,599,002) (27,381) (254,885)
Shares sold -- Class B 67,910 3 N/A N/A
Shares issued in reinvestment of
dividends -- Class B 137 0 N/A N/A
Shares redeemed -- Class B 0 0 N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 68,047 3 N/A N/A
Shares sold -- Institutional Class 396,109 4,275,471 N/A N/A
Shares issued in reinvestment of
dividends -- Institutional Class 53,628 117,940 N/A N/A
Shares redeemed -- Institutional
Class (538,901) (1,339,178) N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING INSTITUTIONAL CLASS (89,164) 3,054,233 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
U.S. GOVERNMENT INCOME FUND
----------------------------------------
FOR THE SIX FOR THE NINE FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (2) 1995
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 344,402 5,141,274 3,742,963
Shares issued in reinvestment of dividends --
Class A 96,320 184,087 95,287
Shares redeemed -- Class A (773,143) (5,467,391) (1,079,388)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A (332,421) (142,030) 2,758,862
Shares sold -- Institutional Class 475,795 7,965,695 N/A
Shares issued in reinvestment of dividends --
Institutional Class 69,465 99 N/A
Shares redeemed -- Institutional Class (1,900,814) (246,997) N/A
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS (1,355,554) 7,718,797 N/A
</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.
- ---------------------
52
<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 March 31, 1997, and the related
statements of operations for the six months ended March 31, 1997, and for the
nine months ended September 30, 1996, 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 six months ended March 31, 1997, 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 six months ended
March 31, 1997, 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 six months ended March 31, 1997, and
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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997, by correspondence with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds of Stagecoach Funds, Inc. as of March 31, 1997, the
results of their operations, the changes in their net assets and their financial
highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 9, 1997
---------------------
53
<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>
- ---------------------
54
<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 1-800-260-5969. Read the
prospectus carefully before you invest or send money.
SCF 078 (5/97)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
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-C- 1997 Stagecoach Funds
