<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
MONEY
- ---------------------
MARKET
- ---------------------
TRUST
- ---------------------
MARCH 31, 1997
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A 3
PORTFOLIO OF INVESTMENTS 4
STAGECOACH MONEY MARKET TRUST
Statement of Assets and Liabilities 7
Statements of Operations 8
Statements of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 12
Independent Auditors' Report 17
LIST OF ABBREVIATIONS 18
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>
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2
<PAGE>
MONEY MARKET TRUST
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE SEVEN-DAY CURRENT YIELD AS OF MARCH 31, 1997?
The seven-day current yields for the Fund for the period ended March 31, 1997
and for the period ended September 30, 1996, are as follows:
<TABLE>
<CAPTION>
MARCH 31, SEPT. 30,
1997 1996
<S> <C> <C>
- ---------------------------------------------------
Money Market Trust 5.31% 5.30%
</TABLE>
THE FEDERAL FUNDS TARGET RATE, SET BY THE FEDERAL RESERVE, IS THE GREATEST
INFLUENCE ON MONEY MARKET YIELDS. THE RATE REMAINED UNCHANGED THROUGHOUT MOST OF
THE YEAR AND YET MONEY MARKET YIELDS FLUCTUATED. WHY?
There are a number of reasons. If the economy is expected to grow rapidly, rates
usually move higher in anticipation of a Fed rate hike. Cash flows into money
market mutual funds are another important factor. The dynamics of supply and
demand as managers invest shareholders' cash can drive yields higher or drag
them lower, particularly for variable rate securities. It is important to keep
an eye on the general trend in yields rather than draw conclusions based on a
single-day "snap shot" of current yields. The Wall Street Journal's Market Diary
section, for example, publishes a useful graph tracking interest rates for
investors interested in following this sort of information.
WHAT DOES "WEIGHTED AVERAGE MATURITY" TELL US ABOUT THE FUND? HOW HAS IT CHANGED
DURING THE PERIOD?
Weighted average maturity is a measure of the average length of time before
securities in a portfolio mature on a dollar for dollar basis. It is one of the
measures of a Fund's sensitivity to interest rate changes. Funds with longer
maturities generally are more sensitive to interest rate fluctuations.
Typically, for a money market mutual fund, managers will increase maturity to
lock in higher rates or shorten maturity if they anticipate higher rates being
available soon. Market forces may also make one range relatively more attractive
than another. For the most part, the weighted average maturity for this Fund has
been fairly steady and in the short-to-intermediate range.
SINCE THE FEDERAL RESERVE RAISED THE FEDERAL FUNDS TARGET RATE IN MARCH, DO YOU
EXPECT FURTHER ACTION?
The Federal Reserve has rarely effected only a single increase when changing
monetary policy, so additional increases are likely. However, the federal funds
target rate is relatively high compared to the Consumer Price Index (the prime
measure of inflation), so we believe that substantial increases are unlikely.
---------------------
3
<PAGE>
MONEY MARKET TRUST
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSITS - 9.91%
$25,000,000 Huntington National Bank 5.33 % 04/14/97 $ 25,000,000
25,000,000 Northern Trust Co 5.50 11/21/97 25,000,000
30,000,000 Old Kent Bank & Trust Co 5.48 08/21/97 30,000,000
--------------
TOTAL CERTIFICATES OF DEPOSITS $ 80,000,000
COMMERCIAL PAPER - 55.67%
$35,000,000 Asset Securitization Cooperative Corp++ 5.32 %(F) 04/22/97 $ 34,891,383
30,000,000 Bankers Trust 5.48 (F) 12/05/97 28,867,467
25,000,000 Campbell Soup Co 5.50 (F) 12/05/97 24,052,778
25,000,000 CIT Group Holdings Inc 5.26 (F) 04/15/97 24,948,861
35,000,000 Corporate Asset Funding Co Inc++ 5.60 (F) 05/06/97 34,809,444
30,000,000 Corporate Receivables Corp++ 5.36 (F) 04/18/97 29,924,067
25,865,000 Du Pont Corp 5.29 (F) 05/05/97 25,735,776
30,256,000 Fleet Funding Inc++ 5.26 (F) 04/14/97 30,198,530
20,000,000 General Electric Capital Services Inc 5.43 (F) 09/04/97 19,529,400
20,000,000 Goldman Sachs & Co 5.30 (F) 04/07/97 19,982,333
35,000,000 Merrill Lynch & Co 6.75 (F) 04/01/97 35,000,000
30,000,000 Metlife Funding Inc 5.27 (F) 04/10/97 29,960,475
20,000,000 National Rural Utilities Cooperative Finance
Inc 5.33 (F) 05/13/97 19,875,633
12,566,000 Receivables Capital Corp++ 5.36 (F) 04/15/97 12,539,807
22,000,000 Riverwoods Funding Corp 5.34 (F) 04/16/97 21,951,050
15,000,000 Sheffield Receivables Corp++ 5.35 (F) 04/21/97 14,955,417
30,000,000 Walt Disney Co 5.35 (F) 07/07/97 29,567,542
12,500,000 Weyerhaeuser Co 5.26 (F) 04/21/97 12,463,472
--------------
TOTAL COMMERCIAL PAPER $ 449,253,435
</TABLE>
- ------------------------
4
<PAGE>
MONEY MARKET TRUST
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE NOTES - 8.73%
$20,000,000 Beta Finance Inc 5.80 % 01/15/98 $ 20,000,000
30,000,000 FCC National Bank 5.62 02/20/98 29,985,495
7,200,000 Ford Motor Credit Corp 6.80 08/15/97 7,224,412
13,217,000 Society National Bank 6.50 04/25/97 13,224,666
--------------
TOTAL CORPORATE NOTES $ 70,434,573
FEDERAL AGENCIES - 5.53%
$20,000,000 Federal Farm Credit Bank 5.40 %(F) 08/14/97 $ 19,595,000
25,000,000 Federal Home Loan Bank 5.57 07/24/97 25,000,000
--------------
TOTAL FEDERAL AGENCIES $ 44,595,000
VARIABLE AND FLOATING RATE BONDS - 12.38%
$20,000,000 First Bank of North Dakota 5.38 % 12/17/97 $ 19,985,912
40,000,000 U.S. National Bank of Oregon 5.35 04/16/97 39,972,460
40,000,000 Wachovia Corp 5.50 04/25/97 39,960,076
--------------
TOTAL VARIABLE AND FLOATING RATE BONDS $ 99,918,448
REPURCHASE AGREEMENTS - 8.06%
$38,047,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50 % 04/01/97 $ 38,047,000
10,000,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.37 04/01/97 10,000,000
10,000,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.30 04/01/97 10,000,000
7,000,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.20 04/01/97 7,000,000
--------------
TOTAL REPURCHASE AGREEMENTS $ 65,047,000
</TABLE>
---------------------
5
<PAGE>
MONEY MARKET TRUST
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $809,248,456)* (Note 1) 100.28% $ 809,248,456
Other Assets and Liabilities, Net (0.28) (2,245,232)
------ --------------
TOTAL NET ASSETS 100.00% $ 807,003,224
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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.
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
The accompanying notes are an integral part of these financial statements.
- ------------------------
6
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<TABLE>
<CAPTION>
MONEY
MARKET
TRUST
<S> <C>
- ---------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $809,248,456
Cash 1,286
Receivables:
Interest 2,089,763
Prepaid expenses 35,803
TOTAL ASSETS 811,375,308
LIABILITIES
Payables:
Distribution to shareholders 3,638,555
Due to sponsor and distributor (Note
2) 193,014
Due to adviser (Note 2) 366,699
Other 173,816
TOTAL LIABILITIES 4,372,084
TOTAL NET ASSETS $807,003,224
NET ASSETS CONSIST OF:
Paid-in capital $806,985,676
Undistributed net realized gain on
investments 17,548
TOTAL NET ASSETS $807,003,224
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net Assets $807,003,224
Shares outstanding 807,062,410
Net asset value and offering price per
share $ 1.00
INVESTMENT AT COST $809,248,456
- ---------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
7
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
MONEY MARKET TRUST
---------------------------
FOR THE SIX
MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, SEPT. 30,
1997 1996
<S> <C> <C>
- ------------------------------------------------------------------------
INVESTMENT INCOME
Interest $23,284,319 $40,456,338
TOTAL INVESTMENT INCOME 23,284,319 40,456,338
EXPENSES (NOTE 2)
Advisory fees 1,044,401 2,173,501
Administration fees 217,710 1,042,738
Custody fees 69,765 9,743
Shareholder servicing fees 835,521 117,368
Portfolio accounting fees 115,687 35,142
Transfer agency fees 213,842 72,875
Legal and audit fees 16,560 77,259
Registration fees 51,531 239,468
Directors' fees 2,210 5,725
Shareholder reports 9,357 25,754
Other 17,087 133,556
TOTAL EXPENSES 2,593,671 3,933,129
Less:
Waived fees and reimbursed expenses (1,744,072) (2,583,968)
Net Expenses 849,599 1,349,161
NET INVESTMENT INCOME 22,434,720 39,107,177
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on sale of
investments 17,548 0
NET GAIN ON INVESTMENTS 17,548 0
NET INCREASE IN NET ASSETS RESULTING
FROM
OPERATIONS $22,452,268 $39,107,177
- ------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET TRUST
----------------------------------------------------------------------
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 (1) MAY 31, 1995
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 22,434,720 $ 39,107,177 $ 5,414,501 $ 13,979,887
Net realized gain on sale of
investments 17,548 0 0 0
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 22,452,268 39,107,177 5,414,501 13,979,887
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (22,434,720) (39,107,177) (5,414,501) (13,979,887)
In excess of net investment income 0 0 (76,734) 0
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 723,588,657 1,743,840,124 206,738,848 481,846,431
Reinvestment of dividends 41 21,187 1,253 1,954
Cost of shares redeemed (1,060,369,845) (886,957,978) (210,282,383) (492,259,778)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (336,781,147) 856,903,333 (3,542,282) (10,411,393)
INCREASE (DECREASE) IN NET ASSETS (336,763,599) 856,903,333 (3,619,016) (10,411,393)
NET ASSETS:
BEGINNING NET ASSETS 1,143,766,823 286,863,490 290,482,506 300,893,899
ENDING NET ASSETS $ 807,003,224 $1,143,766,823 $ 286,863,490 $ 290,482,506
SHARES ISSUED AND REDEEMED:
Shares sold 723,588,657 1,743,840,124 206,738,848 481,846,431
Shares issued in reinvestment of
dividends 41 21,187 1,253 1,954
Shares redeemed (1,060,369,845) (886,957,978) (210,282,383) (492,259,778)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING (336,781,147) 856,903,333 (3,542,282) (10,411,393)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
9
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET TRUST
(1)
--------------------
SIX
MONTHS YEAR
ENDED ENDED
MARCH 31, SEPT. 30,
1997 1996
<S> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.05
Net realized and unrealized gain (loss) on investments 0.00 0.00
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.03 0.05
LESS DISTRIBUTIONS:
Dividends from net investment income (0.03) (0.05)
Distributions from net realized gain 0.00 0.00
--------- ---------
TOTAL FROM DISTRIBUTIONS (0.03) (0.05)
--------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
--------- ---------
--------- ---------
TOTAL RETURN (NOT ANNUALIZED) 2.66% 5.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $807,003 $1,143,767
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.20% 0.18%
Ratio of net investment income to average net assets 5.28% 5.33%
- ----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 0.61% 0.55%
Ratio of net investment income to average net assets prior to
waived fees and reimbursed expenses 4.87% 4.96%
- ----------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE MONEY MARKET 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
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
- ---------------------
10
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET TRUST (1) (CONT.)
-----------------------------------------------------
FOUR
MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
SEPT. 30, MAY 31, MAY 31, MAY 31, MAY 31,
1995 (2) 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.02 0.05 0.03 0.03 0.05
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.02 0.05 0.03 0.03 0.05
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02) (0.05) (0.03) (0.03) (0.05)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.03) (0.03) (0.05)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 5.70%** 5.05% 3.21% 2.94% 4.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s) $286,863 $290,483 $300,894 $74,375 $87,039
RATIOS TO AVERAGE NET
ASSETS (ANNUALIZED):
Ratio of expenses to
average net assets 0.19% 0.17% 0.18% 0.46% 0.48%
Ratio of net investment
income to average net
assets 5.70% 5.06% 3.21% 2.94% 4.56%
- -----------------------------------------------------------------------------------
Ratio of expenses to
average net assets
prior to waived fees
and reimbursed
expenses 1.11% 1.07% 1.02% 1.08% 1.04%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.78% 4.16% 2.37% 2.32% 4.00%
- -----------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE MONEY MARKET 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
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
---------------------
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and currently offers 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 Money Market Trust (the "Fund").
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 Money Market Trust was established
to acquire all of the assets and assume all of the liabilities of the Pacifica
Money Market Trust (formerly the Prime Money Market Fund of Westcore Trust), the
"Predecessor Fund." This acquisition was accomplished in a tax-free exchange for
shares of the Stagecoach Money Market Trust. All performance and financial data
in this annual report for periods prior to September 6, 1996 refers to the
Predecessor Fund.
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.
- ---------------------
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
INVESTMENT POLICY AND SECURITY VALUATION
The Fund invests in securities with remaining maturities not exceeding 397 days
(thirteen months), including obligations of the U.S. government, bankers
acceptances, commercial paper and certain floating- and variable-rate
instruments. Certain of these floating- and variable-rate instruments may carry
a demand feature that would permit the holder to tender them back to the issuer
at par value prior to maturity.
The Fund uses the amortized cost method to value its portfolio securities and
seeks to maintain a constant net asset value of $1.00 per share; however, there
can be no assurance that the Fund will meet this goal. The amortized cost method
involves valuing a security at its cost plus accretion of discount or minus
amortization of premium over the period until maturity, which approximates
market value.
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 and
premiums are accreted or amortized as required by the Internal Revenue Code.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
securities ("repurchase agreements") are treated as collateralized financing
transactions and are recorded at their contracted resale amounts. These
repurchase agreements, if any, are detailed in the Fund's Portfolio of
Investments. The Fund may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank, N.A. ("WFB"). The
repurchase agreement 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 Fund at March 31, 1997, were
collateralized by U.S. government obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Fund are declared
daily and distributed monthly. Any distributions to shareholders from net
realized capital gains are declared and distributed annually.
FEDERAL INCOME TAXES
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
---------------------
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
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, if any, are shown as excess distributions of net investment
income and net realized gain on the sale of investments in the accompanying
Statements of Changes in Net Assets.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into an advisory contract on behalf of the Fund.
Pursuant to the contract, WFB has agreed to furnish to the Fund investment
guidance and policy direction in connection with daily portfolio management.
Under such contract, WFB is entitled to be paid monthly advisory fees at the
annual percentage rate of 0.25% of the Fund's average daily net assets.
For the period from October 1, 1995 to March 31, 1996, the Fund was advised by
First Interstate Capital Management ("FICM"). Pursuant to the advisory contract,
the Fund paid an advisory fee at an annual rate of 0.30% of the first $500
million of the Fund's average daily net assets, 0.25% of the next $500 million,
and 0.20% of the Fund's average daily net assets in excess of $1 billion. 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 a contract on behalf of the Fund with WFB, whereby
WFB is responsible for providing custody and portfolio accounting services for
the Fund. For providing custody services, WFB is entitled to be compensated at
an annual rate of 0.0167% of the average daily net assets of the Fund. For
portfolio accounting services, WFB is entitled to a monthly base fee of $2,000
plus 0.07% of the first $50 million of the Fund's average daily net assets,
0.045% of the next $50 million, and 0.02% of the 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 Fund. Pursuant to the contract, the Fund paid a custodian fee
based on net assets and certain
transac-
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14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
tion 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 Fund with WFB, whereby
WFB has agreed to provide transfer agency services for the Fund. Under the
transfer agency agreement, WFB is entitled to be paid a fee at an annual rate of
0.02% of the average daily net assets of the Fund. Prior to February 1, 1997,
under the contract with the Fund, WFB was entitled to be paid transfer agency
fees at an annual rate of 0.07% of average daily net assets.
For the period from October 1, 1995 to September 5, 1996, the Fund retained
Furman Selz LLC ("Furman Selz") to provide personnel and facilities to perform
shareholders servicing, transfer agency related services and portfolio
accounting.
The Company has entered into a contract on behalf of the Fund with WFB, whereby
WFB has agreed to provide shareholder services for the Fund. WFB is entitled to
be compensated for these services based on an annual rate not to exceed 0.20% of
the average daily net assets of the Fund.
Subject to the overall supervision of the Company's Board of Directors, WFB as
administrator and Stephens Inc. ("Stephens") as co-administrator provide the
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 the Fund's average
daily net assets. Prior to February 1, 1997, Stephens provided substantially the
same services as sole administrator to the Fund. Under the previous agreement,
Stephens was entitled to receive a monthly fee at the annual rate of 0.05% of
the average daily net assets of the Fund.
For the period from October 1, 1995 to September 5, 1996, Furman Selz provided
administrative services for the operation of the 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.
FEES WAIVED AND REIMBURSED EXPENSES
The amount shown as waived fees and reimbursed expenses on the Statements of
Operations for the six months ended March 31, 1997 was waived by WFB. The
following fees and expenses were waived or reimbursed for the year ended
September 30, 1996:
<TABLE>
<CAPTION>
FEES WAIVED AND
FEES WAIVED EXPENSES
BY FURMAN REIMBURSED FEES WAIVED
FUND SELZ BY FIB BY WFB
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Money Market Trust $ 326,885 $ 923,288 $ 1,333,795
</TABLE>
---------------------
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Fee waivers and expense reimbursements continue at the discretion of WFB. WFB
and Stephens have agreed to waive or reimburse all or a portion of their
respective fees charged to, or expenses paid by, the Fund to ensure that the
total fund operating expenses do not exceed, on an annual basis, 0.20% of the
Fund's average daily net assets through August 31, 1997.
Certain officers and directors of the Company are also officers of Stephens. At
March 31, 1997, Stephens owned 25 share of the Money Market Trust.
3. CAPITAL SHARE TRANSACTIONS
As of March 31, 1997, there were 91 billion shares of $.001 par value capital
stock authorized by the Company. At March 31, 1997, the Fund was authorized to
issue 5 billion shares of $.001 par value capital stock. Capital share
transactions for the Fund are disclosed in detail in the Statements of Changes
in Net Assets.
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16
<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 Money Market Trust (one of the funds
comprising Stagecoach Funds, Inc.) as of March 31, 1997, and the related
statements of operations and changes in net assets, and financial highlights 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. 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 the
Money Market Trust of Stagecoach Funds, Inc. as of March 31, 1997, the results
of its operations, the changes in its net assets and its 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
---------------------
17
<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>
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18
<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 085 (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
