<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
TAX-FREE
- ---------------------
FUNDS
- ---------------------
Arizona Tax-Free Fund
California Tax-Free
Bond Fund
California Tax-Free
Income Fund
National Tax-Free Fund
Oregon Tax-Free Fund
SEPTEMBER 30, 1996
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS iii
INVESTMENT ADVISER COMMENTS
Arizona Tax-Free Fund 1
California Tax-Free Bond Fund 5
California Tax-Free Income Fund 9
National Tax-Free Fund 13
Oregon Tax-Free Fund 17
PORTFOLIOS OF INVESTMENTS
Arizona Tax-Free Fund 20
California Tax-Free Bond Fund 23
California Tax-Free Income Fund 38
National Tax-Free Fund 43
Oregon Tax-Free Fund 48
STAGECOACH FUNDS
Statement of Assets and Liabilities 52
Statements of Operations 54
Statements of Changes in Net Assets 56
Financial Highlights 60
Notes to Financial Statements 68
Independent Auditors' Report 81
Proxy Voting Results 82
Federal Income Tax Information 83
LIST OF ABBREVIATIONS 84
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
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ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
The Annual Report is one of the most important documents you, as a shareholder,
will receive during the year, one that can deepen your understanding of your
investment. While the prospectus details the investment policies of a Fund, the
Annual Report shows the results of those policies for the most recent reporting
period. The Annual Report tells shareholders which securities were purchased,
what the overall returns for the Funds have been and provides the portfolio
managers' views on what shaped, and continues to shape, the investment
environment.
The Stagecoach Funds Annual Report has undergone a number of changes, some of
which are the result of the September 6, 1996 merger of Pacifica Funds Trust and
Stagecoach Funds, Inc. Perhaps the most noticeable change is that this Report is
dated September 30, 1996.
Previously, Stagecoach Annual Reports were dated December 31 each year and the
Semi-Annual Reports were dated June 30. We are changing the schedule, however,
so that Annual Reports will now be dated March 31 and Semi-Annual Reports will
be dated September 30. THIS CHANGE HAS BEEN MADE FOR OPERATIONAL AND
ADMINISTRATIVE REASONS. THERE HAS BEEN NO CHANGE TO THE INVESTMENT POLICIES OR
PRACTICES OF THE FUNDS RELATED TO THIS CHANGE IN THE FISCAL YEAR-END.
In order to accomplish this change, we are providing you with this Annual Report
containing audited Financial Statements now and will provide you with another
Annual Report for the six months ended March 31, 1997.
Another noticeable change in the Annual Report is that the Funds are now
separated into categories so that the Equity, Income, Tax-Free, Asset Allocation
and Money Market Mutual Funds are grouped together in their own Reports. This
change was made in part because of the introduction of several new Stagecoach
Funds, some of which were introduced as part of the Pacifica Funds merger. We
believe that by segregating Funds into their investment groups, we have produced
an easier-to-read report with fewer extraneous details not relevant to your
investment.
Special mention should be made of the fact that this is the first Stagecoach
Annual Report that most former Pacifica shareholders will receive. We want to
thank you for your patience through our many changes. We here at Stagecoach
Funds are excited about the opportunity to help you succeed in meeting your
investment goals.
STAGECOACH FUNDS
OCTOBER 1996
---------------------
iii
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iv
<PAGE>
ARIZONA TAX-FREE FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 0.72% for Class A shares. The return for Class B shares for the same
period was negative 0.53%. The one year total returns from October 1, 1995 to
September 30, 1996 were 3.60% and 2.12%, respectively. These return figures are
exclusive of sales charges.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Municipal Bond Index was 1.84%
through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
Throughout most of the year, municipal bond prices for all maturity lengths fell
as investors became concerned that the U.S. economy was growing too quickly and
would cause greater inflation, forcing the Federal Reserve Board to increase
short-term interest rates. Investors generally regained confidence in June,
sending prices higher, then reversed field in August when a variety of strong
economic releases revived concerns about the likelihood of a Fed tightening in
September.
When the Fed did meet in late September, it decided to leave short-term rates
alone. The bond market responded by rallying once again.
Throughout much of the year, municipal bonds have generally outperformed
Treasury bonds. (Typically, the reverse is true.) Municipal to Treasury yield
ratios dropped to their lowest levels in twelve months. Strong retail demand for
individual bonds contributed to the municipal market's stronger performance.
During the quarter, the Fund sold bonds with relatively poor call protection to
cover shareholder redemptions.
The SEC recently brought fraud charges against Maricopa County in relation to
two bond issues. The County was under scrutiny for allegedly failing to disclose
certain information about finances and for allegedly misleading the public on
the use of proceeds on the issues. The bonds are unlimited tax obligations of
the county and all principal and interest payments have been paid on a timely
basis. Therefore, no changes in the County's credit rating are expected.
STRATEGIC COMMENTS:
Issues of new municipal securities continue to be extremely light in Arizona and
bonds are trading at a premium as a result. We plan to remain fully invested,
focusing on high quality issues. The Fund has maintained an intermediate level
of interest rate sensitivity.
---------------------
1
<PAGE>
ARIZONA TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge (1.02)% 2.24% 5.17%
- --------------------------------------------------------------------------------------
Without Sales Charge 3.60 % 3.83% 6.23%
- --------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Contingent Deferred Sales Charge (0.90)% 2.31% 5.06%
- ---------------------------------------------------------------------------------------
Without Contingent Deferred Sales Charge(1) 2.10 % 2.63% 5.06%
- ---------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/96.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
While the Fund principally invests in obligations exempt from federal income
taxes, a portion of the Fund's distributions may be subject to these or state
and local taxes or the alternative minimum tax (AMT).
The Stagecoach Arizona Tax-Free Fund commenced operations on September 6, 1996
as the successor to the Pacifica Arizona Tax-Exempt Fund (10/95 to 9/96) and the
Westcore Arizona Intermediate Tax-Free Fund (3/92 to 9/95). Historical
performance has been calculated using returns produced by these funds for
applicable periods. Class A performance reflects Pacifica Class A and Westcore
Fund performance. Class B performance also reflects such performance but has
been adjusted to reflect Class B share expense levels in effect as of September
6, 1996.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
2
<PAGE>
ARIZONA TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
SC Arizona Tax-Free Class A Shares Lehman Brothers Municipal Bond Index
Inception $9,550 $10,000
Mar-92 $9,522 $10,004
Apr-92 $9,603 $10,093
May-92 $9,717 $10,212
Jun-92 $9,857 $10,384
Jul-92 $9,896 $10,695
Aug-92 $10,001 $10,590
Sep-92 $10,110 $10,659
Oct-92 $9,996 $10,555
Nov-92 $10,193 $10,744
Dec-92 $10,291 $10,853
Jan-93 $10,456 $10,979
Feb-93 $10,769 $11,377
Mar-93 $10,601 $11,256
Apr-93 $10,692 $11,370
May-93 $10,737 $11,433
Jun-93 $10,902 $11,624
Jul-93 $10,869 $11,639
Aug-93 $11,095 $11,882
Sep-93 $11,253 $12,017
Oct-93 $11,274 $12,040
Nov-93 $11,195 $11,934
Dec-93 $11,377 $12,186
---------------------
3
<PAGE>
ARIZONA TAX-FREE FUND
Jan-94 $11,507 $12,325
Feb-94 $11,208 $12,005
Mar-94 $10,954 $11,517
Apr-94 $11,016 $11,615
May-94 $11,089 $11,716
Jun-94 $11,048 $11,644
Jul-94 $11,206 $11,857
Aug-94 $11,260 $11,899
Sep-94 $11,148 $11,724
Oct-94 $10,964 $11,515
Nov-94 $10,800 $11,307
Dec-94 $11,001 $11,556
Jan-95 $11,247 $11,886
Feb-95 $11,514 $12,231
Mar-95 $11,607 $12,372
Apr-95 $11,656 $12,387
May-95 $11,904 $12,782
Jun-95 $11,879 $12,670
Jul-95 $11,997 $12,790
Aug-95 $12,115 $12,952
Sep-95 $12,159 $13,034
Oct-95 $12,272 $13,224
Nov-95 $12,409 $13,443
Dec-95 $12,507 $13,573
Jan-96 $12,602 $13,676
Feb-96 $12,532 $13,583
Mar-96 $12,325 $13,409
- ---------------------
4
<PAGE>
ARIZONA TAX-FREE FUND
Apr-96 $12,333 $13,371
May-96 $12,283 $13,366
Jun-96 $12,399 $13,512
Jul-96 $12,552 $13,633
Aug-96 $12,506 $13,630
Sep-96 $12,597 $13,821
THE RETURN FOR CLASS B SHARES OF THE ARIZONA TAX-FREE FUND WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach Arizona
Tax-Free Fund Class A shares since the inception of the predecessor Pacifica and
Westcore Funds (the "predecessor funds") with the Lehman Brothers 3-Year
Municipal Bond Index. The chart assumes a hypothetical $10,000 initial
investment in the Fund. For Class A shares the chart reflects the operating
expenses and the performance of the predecessor funds and assumes the maximum
initial sales charge of 4.5%. The Lehman Brothers 3-Year Municipal Bond Index is
an unmanaged index of municipal bonds with an approximately three year average
maturity. Please note that the Fund is a professionally managed mutual fund. The
Index presented here is not managed, does not incur expenses and is not
available directly for investment. Had this Index incurred operating expenses,
its performance would have been lower.
---------------------
5
<PAGE>
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- ---------------------
6
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 1.27% for Class A shares. The return for Class B shares for the same
period was 0.73%. The one year total returns from October 1, 1995 to September
30, 1996 were 6.28% and 5.56%, respectively. These return figures are exclusive
of sales charges.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Municipal Bond Index was 1.84%
through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
Throughout most of the year, municipal bond prices for all maturity lengths fell
as investors became concerned that the U.S. economy was growing too quickly and
would cause greater inflation, forcing the Federal Reserve to increase short-
term interest rates. Investors generally regained confidence in June, sending
prices higher, then reversed field in August when a variety of strong economic
releases revived concerns about the likelihood of a Fed tightening in September.
When the Fed did meet in late September, it decided to leave short-term rates
alone. The bond market responded by rallying once again.
Municipals have generally outperformed Treasury bonds throughout most of 1996,
with shorter and intermediate maturities outperforming long-term bonds as well.
During the third quarter, however, longer maturities outperformed shorter
maturities.
The State of California passed a balanced budget for fiscal 1996 - 97 that
provided small tax cuts for business and increased funding for public education.
For the first time in several years, the State had no deficit financing carrying
over from the prior fiscal year. In light of the improvements to the State's
balance sheet and the overall improvement in the State's economy, Standard &
Poor's raised its rating on the State's general obligation bonds from A to A+,
putting its rating in line with Moody's and Fitch.
STRATEGIC COMMENTS:
The Fund plans to reduce interest rate sensitivity and upgrade the credit
quality of its portfolio. Liquidity and high quality will continue to be
emphasized.
---------------------
7
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge 1.52% 2.22% 6.22%
- --------------------------------------------------------------------------------------
Without Sales Charge 6.28% 3.80% 7.25%
- --------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- --------------------------------------------------------------------------------------
With Contingent Deferred Sales Charge(1) 2.57% 9.16%
- --------------------------------------------------------------------------------------
Without Contingent Deferred Sales Charge 5.56% 10.23%
- --------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/96.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
While the Fund principally invests in obligations exempt from federal income
taxes, a portion of the Fund's distributions may be subject to these state and
local taxes or the alternative minimum tax (AMT).
The Class A and Class B shares commenced operations on 1/1/92 and 1/1/95,
respectively.
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.
- ---------------------
8
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
SC California Tax-Free Bond Class A Shares Lehman Brothers Municipal Bond Index
Inception $9,550 $10,000
Jan-92 $9,561 $10,023
Feb-92 $9,605 $10,026
Mar-92 $9,605 $10,030
Apr-92 $9,723 $10,119
May-92 $9,862 $10,239
Jun-92 $10,070 $10,411
Jul-92 $10,447 $10,723
Aug-92 $10,262 $10,618
Sep-92 $10,324 $10,687
Oct-92 $10,027 $10,582
Nov-92 $10,397 $10,772
Dec-92 $10,539 $10,882
Jan-93 $10,670 $11,008
Feb-93 $11,184 $11,406
Mar-93 $11,008 $11,285
Apr-93 $11,148 $11,399
May-93 $11,228 $11,463
Jun-93 $11,452 $11,655
Jul-93 $11,418 $11,670
Aug-93 $11,747 $11,912
Sep-93 $11,911 $12,048
Oct-93 $11,939 $12,071
---------------------
9
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
Nov-93 $11,734 $11,965
Dec-93 $11,996 $12,217
Jan-94 $12,153 $12,357
Feb-94 $11,813 $12,037
Mar-94 $11,216 $11,547
Apr-94 $11,256 $11,645
May-94 $11,395 $11,746
Jun-94 $11,292 $11,675
Jul-94 $11,563 $11,888
Aug-94 $11,582 $11,930
Sep-94 $11,355 $11,754
Oct-94 $11,118 $11,545
Nov-94 $10,867 $11,336
Dec-94 $11,123 $11,586
Jan-95 $11,538 $11,917
Feb-95 $11,882 $12,263
Mar-95 $11,996 $12,404
Apr-95 $11,976 $12,419
May-95 $12,398 $12,815
Jun-95 $12,188 $12,703
Jul-95 $12,273 $12,823
Aug-95 $12,431 $12,986
Sep-95 $12,532 $13,068
Oct-95 $12,749 $13,258
Nov-95 $12,990 $13,478
Dec-95 $13,151 $13,608
Jan-96 $13,230 $13,711
- ---------------------
10
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
Feb-96 $13,125 $13,618
Mar-96 $12,904 $13,444
Apr-96 $12,825 $13,406
May-96 $12,835 $13,401
Jun-96 $12,983 $13,547
Jul-96 $13,123 $13,669
Aug-96 $13,133 $13,666
Sep-96 $13,319 $13,857
THE RETURN FOR CLASS B SHARES OF THE CALIFORNIA TAX-FREE BOND FUND WILL VARY
FROM THE RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach California
Tax-Free Bond Fund Class A shares since its inception with the Lehman Brothers
Municipal Bond Index. The chart assumes a hypothetical $10,000 initial
investment in the Fund and reflects all operating expenses and assumes the
maximum initial sales charge of 4.5%. The Lehman Brothers Municipal Bond Index
is an unmanaged, broad-based index of municipal bonds. Please note that the Fund
is a professionally managed mutual fund. The Index presented here is not
managed, does not incur expenses and is not available directly for investment.
Had this Index incurred operating expenses, its performance would have been
lower.
---------------------
11
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
12
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 2.01% for Class A shares. The one year total return from October 1,
1995 to September 30, 1996 was 3.86%. These return figures are exclusive of
sales charges.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Municipal Bond Index was 1.84%
through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
Throughout most of the year, municipal bond prices for all maturity lengths fell
as investors became concerned that the U.S. economy was growing too quickly and
would cause greater inflation, forcing the Federal Reserve to increase short-
term interest rates. Investors generally regained confidence in June, sending
prices higher, then reversed field in August when a variety of strong economic
releases revived concerns about the likelihood of a Fed tightening in September.
When the Fed did meet in late September, it decided to leave short-term rates
alone. The bond market responded by rallying once again.
Municipals have generally outperformed Treasury bonds throughout most of 1996,
with shorter and intermediate maturities outperforming long-term bonds as well.
During the third quarter, however, longer maturities outperformed shorter
maturities.
The Fund merged with the Pacifica Short-Term California Fund in September. The
addition of the new assets to the portfolio principally accomplished the
shortening of the average maturity and interest rate sensitivity of the Fund's
portfolio that had been planned in response to the continued uncertainty about
Federal Reserve action regarding short-term interest rates. The Fund's current
duration, which is one measure of interest rate sensitivity, is relatively
short. The Fund currently has 51.6% of its assets in AAA-rated securities.
The State of California passed a balanced budget for fiscal 1996 - 97 that
provided for small tax cuts for business and increased funding for public
education. For the first time in several years, the State had no deficit
financing carrying over from the prior fiscal year. In light of the improvements
to the State's balance sheet and the overall improvement in the State's economy,
Standard & Poor's raised its rating on the State's general obligation bonds from
A to A+, putting its rating in line with Moody's and Fitch.
STRATEGIC COMMENTS:
The Fund plans to reduce its interest rate sensitivity and upgrade the credit
quality of its portfolio. Liquidity and high quality will continue to be
emphasized.
---------------------
13
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 3.0% Sales Charge 0.71% 2.63% 3.75%
- --------------------------------------------------------------------------------------
Without Sales Charge 3.86% 3.68% 4.57%
- --------------------------------------------------------------------------------------
</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.
While the Fund principally invests in obligations exempt from federal income
taxes, a portion of the Fund's distributions may be subject to these or state
and local taxes or the alternative minimum tax (AMT).
The Fund commenced operations on November 18, 1992.
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.
- ---------------------
14
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
Lehman Brothers Municipal Bond - 3 Year Index SC California Tax-Free Income
Class A Shares
Inception $10,000 $9,700
Nov-92 $10,070 $9,708
Dec-92 $10,130 $9,782
Jan-93 $10,206 $9,871
Feb-93 $10,367 $10,077
Mar-93 $10,336 $9,994
Apr-93 $10,395 $10,047
May-93 $10,424 $10,062
Jun-93 $10,490 $10,153
Jul-93 $10,496 $10,128
Aug-93 $10,593 $10,270
Sep-93 $10,640 $10,351
Oct-93 $10,662 $10,373
Nov-93 $10,648 $10,343
Dec-93 $10,760 $10,477
Jan-94 $10,847 $10,551
Feb-94 $10,746 $10,400
Mar-94 $10,616 $10,283
Apr-94 $10,679 $10,317
May-94 $10,729 $10,353
Jun-94 $10,732 $10,337
Jul-94 $10,821 $10,435
---------------------
15
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
Aug-94 $10,860 $10,451
Sep-94 $10,833 $10,414
Oct-94 $10,807 $10,377
Nov-94 $10,788 $10,308
Dec-94 $10,834 $10,361
Jan-95 $10,924 $10,478
Feb-95 $11,039 $10,624
Mar-95 $11,138 $10,714
Apr-95 $11,176 $10,734
May-95 $11,347 $10,886
Jun-95 $11,374 $10,889
Jul-95 $11,494 $10,984
Aug-95 $11,584 $11,062
Sep-95 $11,617 $11,107
Oct-95 $11,673 $11,173
Nov-95 $11,747 $11,251
Dec-95 $11,796 $11,308
Jan-96 $11,888 $11,399
Feb-96 $11,890 $11,389
Mar-96 $11,861 $11,315
Apr-96 $11,876 $11,318
May-96 $11,886 $11,315
Jun-96 $11,957 $11,371
Jul-96 $12,023 $11,452
Aug-96 $12,042 $11,460
- ---------------------
16
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
Sep-96 $12,115 $11,535
The accompanying chart compares the performance of the Stagecoach California
Tax-Free Income Fund Class A shares since its inception with the Lehman Brothers
Municipal Bond 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 3-Year Municipal Bond
Index is an unmanaged index of municipal bonds with an approximately three year
average maturity. Please note that the Fund is a professionally managed mutual
fund. The Index presented here is not managed, does not incur expenses and is
not available directly for investment. Had this Index incurred operating
expenses, its performance would have been lower.
---------------------
17
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
18
<PAGE>
NATIONAL TAX-FREE FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 0.80% for Class A shares. The return for Class B shares for the same
period was 0.14%. The one year total returns from October 1, 1995 to September
30, 1996 were 4.03% and 3.13% respectively. These return figures are exclusive
of sales charges.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Municipal Bond Index was 1.84%
through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
Throughout most of the year, municipal bond prices fell all along the yield
curve as investors became concerned that the U.S. economy was growing too
quickly and would cause greater inflation and force the Federal Reserve to
increase short-term interest rates. Investors regained confidence in June,
sending prices higher, then reversed field in August when a variety of strong
economic releases revived concerns about the likelihood of a Fed tightening in
September.
When the Fed did meet in late September, it decided to leave short-term rates
alone and the bond market responded by rallying once again.
Throughout most of the year, municipal bonds have generally outperformed
Treasuries. Municipal to Treasury yield ratios dropped to their lowest levels in
twelve months. Strong retail demand for individual bonds contributed to the
municipal market's stronger performance. During the quarter, the Fund sold bonds
with relatively poor call protection to cover shareholder redemptions.
The rating agencies will be reviewing the credit impact on local governments of
hurricane-damaged areas. Puerto Rico and several southeast and mid-Atlantic
states have suffered losses and some counties were declared federal disaster
areas. While some will receive federal aid through the Federal Emergency
Management Agency, rebuilding will no doubt still cause enormous cash demands on
local governments. No adverse rating changes are anticipated at this time on
issuers affected by the storms. Those municipalities with good financial
performance and healthy economies prior to the damage are expected to be able to
successfully meet cash demands and other challenges encountered while
rebuilding.
STRATEGIC COMMENT:
The Fund will continue to emphasize credit quality and call protection in its
new purchases and reduce its holdings of higher coupon bonds which may be called
by their issuers.
---------------------
19
<PAGE>
NATIONAL TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge (0.64)% 2.15% 3.69%
- --------------------------------------------------------------------------------------
Without Sales Charge 4.03 % 3.73% 5.00%
- --------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Contingent Deferred Sales Charge(1) 0.13% 2.61% 3.95%
- --------------------------------------------------------------------------------------
Without Contingent Deferred Sales Charge 3.13% 2.93% 4.19%
- --------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/96.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
While the Fund principally invests in obligations exempt from federal income
taxes, a portion of the Fund's distributions may be subject to these or state
and local taxes or the alternative minimum tax (AMT).
The Stagecoach National Tax-Free Fund commenced operations on September 6, 1996
as the successor to the Pacifica National Tax-Exempt Fund (10/95 to 9/96) and
the Westcore Quality Tax-Exempt Income Fund (1/93 to 9/95). Historical
performance has been calculated using returns produced by these funds for
applicable periods. Class A performance reflects Pacifica Class A and Westcore
Fund performance. Class B performance also reflects such performance but has
been adjusted to reflect Class B share expense levels in effect as of September
6, 1996.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
20
<PAGE>
NATIONAL TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
SC National Tax-Free Class A Shares Lehman Brothers Municipal Bond Index
Inception $9,550 $10,000
Feb-93 $9,807 $10,362
Mar-93 $9,646 $10,252
Apr-93 $9,734 $10,356
May-93 $9,753 $10,414
Jun-93 $9,922 $10,588
Jul-93 $9,887 $10,601
Aug-93 $10,089 $10,822
Sep-93 $10,235 $10,945
Oct-93 $10,224 $10,966
Nov-93 $10,168 $10,870
Dec-93 $10,342 $11,099
Jan-94 $10,464 $11,225
Feb-94 $10,195 $10,935
Mar-94 $9,909 $10,490
Apr-94 $9,967 $10,579
May-94 $10,050 $10,671
Jun-94 $10,017 $10,606
Jul-94 $10,151 $10,800
Aug-94 $10,182 $10,838
Sep-94 $10,039 $10,678
Oct-94 $9,884 $10,488
Nov-94 $9,711 $10,298
---------------------
21
<PAGE>
NATIONAL TAX-FREE FUND
Dec-94 $9,894 $10,525
Jan-95 $10,107 $10,826
Feb-95 $10,362 $11,141
Mar-95 $10,463 $11,269
Apr-95 $10,487 $11,282
May-95 $10,751 $11,642
Jun-95 $10,726 $11,540
Jul-95 $10,835 $11,649
Aug-95 $10,940 $11,797
Sep-95 $10,980 $11,872
Oct-95 $11,107 $12,045
Nov-95 $11,243 $12,244
Dec-95 $11,331 $12,362
Jan-96 $11,434 $12,456
Feb-96 $11,367 $12,371
Mar-96 $11,201 $12,213
Apr-96 $11,179 $12,179
May-96 $11,152 $12,174
Jun-96 $11,219 $12,307
Jul-96 $11,361 $12,417
Aug-96 $11,324 $12,415
Sep-96 $11,422 $12,589
THE RETURN FOR CLASS B SHARES OF THE NATIONAL TAX-FREE FUND WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach National
Tax-Free Fund shares since the inception of the predecessor Pacifica and
Westcore Funds (the "predecessor funds") with the Lehman Brothers Municipal Bond
Index. The chart assumes a hypothetical $10,000 initial investment in the Fund.
The chart reflects the Class A shares operating expenses and the performance of
the predecessor funds and assumes the maximum initial sales charge of 4.5%. The
Lehman Brothers Municipal Bond Index
- ---------------------
22
<PAGE>
NATIONAL TAX-FREE FUND
is an unmanaged index of municipal bonds with an approximately three year
average maturity. Please note that the Fund is a professionally managed mutual
fund. The Index presented here is not managed, does not incur expenses and is
not available directly for investment. Had this Index incurred operating
expenses, its performance would have been lower.
---------------------
23
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
24
<PAGE>
OREGON TAX-FREE FUND
- -------------------------
INVESTMENT ADVISER COMMENTS
RETURNS:
The Fund posted a return for the fiscal period from January 1, 1996 to September
30, 1996 of 1.01% for Class A shares. The return for Class B shares for the same
period was 0.42%. The one year total returns from October 1, 1995 to September
30, 1996 were 5.03% and 4.30%, respectively. These return figures are exclusive
of sales charges.
BENCHMARKS:
The year-to-date return for the Lehman Brothers Municipal Bond Index was 1.84%
through September 30, 1996.
ECONOMIC FACTORS INFLUENCING PERFORMANCE:
Throughout most of the year, municipal bond prices fell all along the yield
curve as investors became concerned that the U.S. economy was growing too
quickly and would cause greater inflation and force the Federal Reserve to
increase short-term interest rates. Investors generally regained confidence in
June, sending prices higher, then reversed field in August when a variety of
strong economic releases revived concerns about the likelihood of a Fed
tightening in September.
When the Fed did meet in late September, it decided to leave short-term rates
alone and the bond market responded by rallying once again.
Throughout most of the year, municipal bonds have generally outperformed
Treasuries. Municipal to Treasury yield ratios dropped to their lowest levels in
twelve months. Strong retail demand for individual bonds contributed to the
municipal market's stronger performance. During the quarter, the Fund sold bonds
with relatively poor call protection to cover shareholder redemptions.
A large volume of new bonds have been issued in Oregon. The excess of new
municipal supply caused Oregon bonds to trade at levels considered attractive
relative to comparable national tax exempt securities.
STRATEGIC COMMENT:
Municipal issuers are generally anxious to come to market before the November
election because Oregon's new tax initiatives could limit their taxing
authority. Bond counselors generally are of the opinion that bonds issued prior
to the elections would be protected by the contracts clause in the existing
bonds. If the new tax measures pass, the long-term credit quality of local
governments could be adversely affected by the municipalities restricted
financial flexibility. We will be closely monitoring the progress.
The Fund will continue to emphasize credit quality and call protection in its
new purchases and reduce its holdings of higher coupon bonds that may be
recalled by their issuers.
---------------------
25
<PAGE>
OREGON TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 4.5% Sales Charge 0.31% 1.99% 5.37% 6.48%
- ---------------------------------------------------------------------------------------
Without Sales Charge 5.03% 3.56% 6.34% 7.08%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
With Contingent Deferred Sales
Charge(1) 1.30% 2.53% 5.61% 6.33%
- ----------------------------------------------------------------------------------------
Without Contingent Deferred Sales
Charge 4.30% 2.84% 5.61% 6.33%
- ----------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/96.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
While the Fund principally invests in obligations exempt from federal income
taxes, a portion of the Fund's distributions may be subject to these or state
and local taxes or the alternative minimum tax (AMT).
The Stagecoach Oregon Tax-Free Fund commenced operations on September 6, 1996 as
the successor to the Pacifica Oregon Tax-Exempt Fund (10/95 to 9/96) and the
Westcore Oregon Tax-Free Fund (6/88 to 9/95). Historical performance has been
calculated using returns produced by these funds for applicable periods. Class A
performance reflects Pacifica Class A and Westcore Fund performance. Class B
performance also reflects such performance but has been adjusted to reflect
Class B share expense levels in effect as of September 6, 1996.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
26
<PAGE>
OREGON TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
SC Oregon Tax-Free Class A Shares Lehman Brothers Municipal Bond Index
Inception $9,550 $10,000
Jun-88 $9,595 $10,146
Jul-88 $9,579 $10,212
Aug-88 $9,731 $10,221
Sep-88 $9,890 $10,406
Oct-88 $9,838 $10,589
Nov-88 $9,932 $10,492
Dec-88 $10,015 $10,599
Jan-89 $10,108 $10,818
Feb-89 $10,027 $10,695
Mar-89 $10,022 $10,669
Apr-89 $10,207 $10,922
May-89 $10,365 $11,149
Jun-89 $10,531 $11,301
Jul-89 $10,624 $11,455
Aug-89 $10,588 $11,342
Sep-89 $10,519 $11,308
Oct-89 $10,660 $11,446
Nov-89 $10,829 $11,647
Dec-89 $10,841 $11,742
Jan-90 $10,755 $11,687
Feb-90 $10,877 $11,791
Mar-90 $10,836 $11,795
---------------------
27
<PAGE>
OREGON TAX-FREE FUND
Apr-90 $10,748 $11,710
May-90 $10,967 $11,965
Jun-90 $11,073 $12,070
Jul-90 $11,245 $12,248
Aug-90 $11,046 $12,070
Sep-90 $11,094 $12,077
Oct-90 $11,233 $12,296
Nov-90 $11,419 $12,543
Dec-90 $11,494 $12,598
Jan-91 $11,627 $12,767
Feb-91 $11,750 $12,878
Mar-91 $11,792 $12,883
Apr-91 $11,903 $13,055
May-91 $12,017 $13,171
Jun-91 $11,988 $13,158
Jul-91 $12,170 $13,318
Aug-91 $12,292 $13,494
Sep-91 $12,416 $13,669
Oct-91 $12,506 $13,792
Nov-91 $12,472 $13,831
Dec-91 $12,709 $14,128
Jan-92 $12,723 $14,161
Feb-92 $12,765 $14,165
Mar-92 $12,776 $14,171
Apr-92 $12,885 $14,297
May-92 $13,032 $14,466
Jun-92 $13,229 $14,709
- ---------------------
28
<PAGE>
OREGON TAX-FREE FUND
Jul-92 $13,657 $15,150
Aug-92 $13,477 $15,001
Sep-92 $13,503 $15,099
Oct-92 $13,298 $14,951
Nov-92 $13,588 $15,219
Dec-92 $13,729 $15,374
Jan-93 $13,842 $15,552
Feb-93 $14,280 $16,115
Mar-93 $14,115 $15,944
Apr-93 $14,270 $16,105
May-93 $14,382 $16,195
Jun-93 $14,634 $16,466
Jul-93 $14,655 $16,487
Aug-93 $14,999 $16,830
Sep-93 $15,200 $17,022
Oct-93 $15,196 $17,054
Nov-93 $15,152 $16,904
Dec-93 $15,429 $17,261
Jan-94 $15,601 $17,458
Feb-94 $15,242 $17,006
Mar-94 $14,610 $16,314
Apr-94 $14,539 $16,452
May-94 $14,716 $16,595
Jun-94 $14,564 $16,494
Jul-94 $14,834 $16,796
Aug-94 $14,886 $16,855
Sep-94 $14,620 $16,607
---------------------
29
<PAGE>
OREGON TAX-FREE FUND
Oct-94 $14,271 $16,311
Nov-94 $13,982 $16,016
Dec-94 $14,428 $16,369
Jan-95 $14,902 $16,836
Feb-95 $15,320 $17,326
Mar-95 $15,424 $17,525
Apr-95 $15,431 $17,546
May-95 $15,882 $18,106
Jun-95 $15,722 $17,947
Jul-95 $15,821 $18,117
Aug-95 $15,962 $18,347
Sep-95 $16,075 $18,463
Oct-95 $16,297 $18,732
Nov-95 $16,568 $19,043
Dec-95 $16,714 $19,226
Jan-96 $16,762 $19,372
Feb-96 $16,676 $19,240
Mar-96 $16,454 $18,994
Apr-96 $16,388 $18,940
May-96 $16,405 $18,933
Jun-96 $16,561 $19,139
Jul-96 $16,717 $19,312
Aug-96 $16,711 $19,308
Sep-96 $16,883 $19,578
THE RETURN FOR CLASS B SHARES OF THE OREGON TAX-FREE FUND WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
- ---------------------
30
<PAGE>
OREGON TAX-FREE FUND
The accompanying chart compares the performance of the Stagecoach Oregon
Tax-Free Fund since the inception of the predecessor Pacifica and Westcore Funds
(the "predecessor funds") with the Lehman Brothers Municipal Bond Index. The
chart assumes a hypothetical $10,000 initial investment in the Fund. The chart
reflects the Class A shares operating expenses and the performace of the
predecessor funds and assumes the maximum initial sales charge of 4.5%. The
Lehman Brothers Municipal Bond Index is an unmanaged index of municipal bonds
with an approximately three year average maturity. Please note that the Fund is
a professionally managed mutual fund. The Index presented here is not managed,
does not incur expenses and is not available directly for investment. Had this
Index incurred operating expenses, its performance would have been lower.
---------------------
31
<PAGE>
ARIZONA TAX-FREE FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
ARIZONA MUNICIPAL BONDS - 95.34%
$ 500,000 Arizona State Wastewater Management Authority
Financial Assistance AMBAC Insured 5.60 % 07/01/12 $ 497,255
130,000 Bullhead City AZ Special Assessment Parkway
Improvement District 6.10 01/01/02 136,739
170,000 Bullhead City AZ Special Assessment Parkway
Improvement District 6.10 01/01/03 179,389
500,000 Chandler AZ Street & Highway User Revenue 6.00 07/01/11 519,215
200,000 Coconino & Yavapai County AZ Sedona USD 6.10 07/01/00 208,934
650,000 Coconino & Yavapai County AZ Sedona USD 5.40 07/01/02 663,442
700,000 Glendale AZ High School USD 5.10 07/01/05 702,611
110,000 Glendale AZ Improvement District 6.00 01/01/01 115,030
175,000 Glendale AZ Improvement District 6.00 01/01/02 183,932
235,000 Glendale AZ Water & Sewer Revenue 9.00 07/01/03 291,264
500,000 Maricopa County AZ Community College District
Building Revenue MBIA Insured 5.05 07/15/04 501,570
500,000 Maricopa County AZ USD Fountain Hills 5.13 07/01/10 485,010
495,000 Maricopa County AZ USD Glendale FGIC Insured 5.00 07/01/10 471,903
1,500,000 Maricopa County AZ USD Mesa GO FGIC Insured 5.55 07/01/04 1,531,515
150,000 Maricopa County AZ USD Osborn 6.10 07/01/04 160,098
1,000,000 Maricopa County AZ USD Paradise Valley MBIA
Insured 5.40 07/01/12 984,890
1,500,000 Maricopa County AZ USD Peoria 5.50 07/01/10 1,487,535
500,000 Maricopa County AZ USD Phoenix Series A 5.50 07/01/10 502,740
500,000 Maricopa County AZ USD Phoenix Series A 5.40 07/01/09 500,725
330,000 Maricopa County AZ USD Temple FGIC Insured 5.00 07/01/03 332,723
415,000 Maricopa County AZ USD Tolleson AMBAC Insured 5.80 07/01/07 431,127
150,000 Maricopa County AZ USD Tolleson FGIC Insured 5.45 07/01/04 153,248
</TABLE>
- ------------------------
20
<PAGE>
ARIZONA TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
ARIZONA MUNICIPAL BONDS (CONTINUED)
$ 500,000 Mohave County AZ IDA Baptist Hospital MBIA
Insured 5.70 % 09/01/15 $ 496,485
500,000 Navajo County AZ USD Blueridge GO FSA Insured 5.80 07/01/07 519,080
100,000 Peoria AZ Improvement District 7.30 01/01/99 104,750
500,000 Phoenix AZ Civic Improvement Water System
Revenue 5.60 07/01/17 496,895
215,000 Phoenix AZ Special Assessment Central Avenue
Improvement District 7.00 01/01/99 224,251
750,000 Phoenix AZ Street & Highway User Revenue 6.40 07/01/04 809,805
335,000 Pima County AZ Community College District 5.50 07/01/12 332,387
250,000 Pima County AZ USD Amphitheater Series E 6.50 07/01/05 274,535
75,000 Pima County AZ USD Amphitheater Series E 6.00 07/01/04 78,663
300,000 Pima County AZ USD Tucson FGIC Insured 5.90 07/01/05 317,769
800,000 Pima County AZ USD Tucson Series D FGIC Insured 6.10 07/01/12 829,896
500,000 Salt River AZ Agricultural Improvement Series A 5.75 01/01/13 503,895
500,000 Salt River AZ Agricultural Improvement Series A 5.30 01/01/03 514,590
250,000 Salt River AZ Agricultural Improvement Series A 5.63 01/01/06 261,495
500,000 Salt River AZ Agricultural Improvement Series B 5.25 01/01/13 480,305
2,000,000 Salt River AZ Agricultural Improvement Series C 5.00 01/01/16 1,832,780
250,000 Tucson AZ GO FGIC Insured 5.80 07/01/05 265,198
500,000 Tucson AZ Street & Highway User Revenue MBIA
Insured 5.10 07/01/03 505,305
500,000 Tucson AZ Street & Highway User Revenue MBIA
Insured 5.50 07/01/12 491,060
500,000 University AZ Foundation COP MBIA Insured 4.90 08/01/08 473,084
</TABLE>
---------------------
21
<PAGE>
ARIZONA TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
ARIZONA MUNICIPAL BONDS (CONTINUED)
$ 500,000 Yuma County AZ Municipal Property Corp Revenue
AMBAC Insured 5.13 % 07/01/08 $ 486,640
500,000 Yuma County AZ USD FGIC Insured 5.70 07/01/06 520,265
--------------
TOTAL ARIZONA MUNICIPAL BONDS $ 21,860,028
(Cost $21,703,897)
SHORT-TERM ARIZONA MUNICIPAL BOND+ - 1.31%
$ 300,000 Phoenix AZ GO V/R 3.45 % 06/01/20 $ 300,000
(Cost $300,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $22,003,897)* (Notes 1 and 3) 96.65% $ 22,160,028
Other Assets and Liabilities 3.35 767,707
------ --------------
TOTAL NET ASSETS 100.00% $ 22,927,735
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ THIS VARIABLE RATE SECURITY IS SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES ARE THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 355,013
Gross Unrealized Depreciation (198,882)
------------
NET UNREALIZED APPRECIATION $ 156,131
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
22
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - 94.08%
$ 3,000,000 ABAG Finance Authority for Nonprofit Corp CA
Stanford University Hospital 5.50 % 11/01/13 $ 2,854,980
1,000,000 Alameda CA USD AMBAC Insured 5.95 07/01/09 1,035,640
1,000,000 Alameda CA USD AMBAC Insured 6.05 07/01/11 1,032,310
2,000,000 Alameda County CA Public Facilities Corp COP 6.25 06/01/06 2,091,340
3,620,000 Antioch CA Public FA Water Revenue Water
Treatment Plant Project MBIA Insured 5.63 07/01/14 3,618,480
1,330,000 Arcadia CA USD Capital Appreciation Series A
MBIA Insured 6.77 * 09/01/06 785,698
1,430,000 Arcadia CA USD Capital Appreciation Series A
MBIA Insured 7.37 * 09/01/07 792,678
2,545,000 Bonita CA USD COP MBIA Insured 5.63 05/01/10 2,572,690
1,300,000 Burbank Glendale Pasadena CA Airport Authority
Revenue AMBAC Insured 6.40 06/01/10 1,360,294
1,500,000 California State DWR Central Valley Project
Revenue 5.00 12/01/12 1,407,675
400,000 California State DWR Central Valley Project
Revenue Series F 6.00 12/01/11 403,096
5,000,000 California State DWR Central Valley Project
Revenue Series J 6.00 12/01/07 5,359,500
1,830,000 California State DWR Central Valley Project
Revenue Series L 5.75 12/01/13 1,829,780
1,000,000 California State DWR Central Valley Project
Revenue Series L 5.75 12/01/14 999,880
3,235,000 California State DWR Central Valley Project
Revenue Series O 4.75 12/01/17 2,826,840
680,000 California State EDFA Revenue Mills College 6.70 09/01/05 739,996
50,000 California State EDFA Revenue Pomona College 6.13 02/15/08 52,516
1,000,000 California State EDFA Revenue Pomona College GO 5.60 12/01/14 965,000
3,200,000 California State EDFA Revenue Pomona College GO 6.00 02/15/17 3,239,200
</TABLE>
---------------------
23
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 4,435,000 California State EDFA Revenue St Mary's College 4.75 % 10/01/20 $ 3,650,271
750,000 California State EDFA Revenue University of San
Diego Project 6.50 10/01/08 799,103
1,000,000 California State EDFA Revenue University of San
Francisco MBIA Insured 5.60 10/01/10 1,017,220
1,000,000 California State GO 4.75 09/01/12 901,850
1,000,000 California State GO 4.75 09/01/11 905,680
1,000,000 California State GO 6.70 02/01/04 1,105,810
3,000,000 California State GO AMBAC Insured 5.75 03/01/15 3,005,370
1,910,000 California State GO Eagles II Series 6 7.54 * 04/01/10 887,577
3,000,000 California State GO MBIA Insured 6.00 10/01/10 3,174,450
50,000 California State HFA Home Mortgage Revenue
Series B FHA Collateralized 6.90 08/01/16 50,529
200,000 California State HFA Home Mortgage Revenue
Series B MBIA Insured 6.90 08/01/16 202,088
300,000 California State HFA Home Mortgage Revenue
Series G AMT Multiple Credit Enhancements 6.95 08/01/11 316,710
500,000 California State HFA Home Multi Unit Rental
Mortgage Revenue Series B-II 6.70 08/01/15 520,300
500,000 California State HFA Home Multi-Unit Rental
Mortgage Revenue Series C-II AMT 6.85 08/01/15 520,180
1,250,000 California State HFA Multi-Unit Rental Housing
Revenue Series A AMT 5.50 08/01/15 1,147,725
1,500,000 California State HFFA Revenue Kaiser Permanente
Series A 6.25 03/01/21 1,557,885
2,000,000 California State HFFA Revenue Scripps Memorial
Hospital MBIA Insured 6.40 10/01/12 2,098,160
2,000,000 California State HFFA Revenue Scripps Research
Institute 6.63 07/01/14 2,123,940
600,000 California State HFFA Revenue Small Insured
Health Facilities Series A 6.70 03/01/11 628,788
1,000,000 California State HFFA Revenue Special Episcopal
Homes Mortgage 7.30 07/01/00 1,020,850
5,000,000 California State HFFA San Diego Hospital
Association MBIA Insured 6.20 08/01/12 5,146,150
</TABLE>
- ------------------------
24
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,795,000 California State HFFA Scripps Memorial Hospital
Series A MBIA Insured 6.25 % 10/01/13 $ 1,858,453
2,500,000 California State PCFA Pacific Gas & Electric Co
AMT 6.35 06/01/09 2,596,725
1,445,000 California State PCFA Pacific Gas & Electric Co
AMT 6.63 06/01/09 1,534,330
2,000,000 California State Public Works Board Lease
Revenue Community Colleges 6.63 09/01/07 2,140,680
3,000,000 California State Public Works Board Lease
Revenue Department of Corrections AMBAC
Insured 5.25 01/01/21 2,804,790
3,000,000 California State Public Works Board Lease
Revenue Department of Corrections AMBAC
Insured 6.40 11/01/10 3,236,580
2,000,000 California State Public Works Board Lease
Revenue Department of Corrections Series A
AMBAC Insured 5.50 01/01/15 1,972,380
1,000,000 California State Public Works Board Lease
Revenue University Of California Project
Series A AMBAC Insured 6.00 12/01/12 1,017,360
1,755,000 California State Public Works Board Lease
Revenue University Of California Project
Series A AMBAC Insured 6.30 12/01/09 1,872,497
5,000,000 California State Universities & Colleges
Revenue HSG System FGIC Insured 5.80 11/01/17 5,030,050
1,500,000 California Statewide CDA Lease Revenue Oakland
Convention Centers Project AMBAC Insured 5.50 10/01/14 1,462,980
6,800,000 California Statewide CDA Lease Revenue Oakland
Convention Centers Project AMBAC Insured 6.00 10/01/10 7,026,780
1,000,000 California Statewide CDA Motion Picture and
Television Development AMBAC Insured 5.20 01/01/11 958,800
1,750,000 California Statewide CDA Motion Picture and
Television Development AMBAC Insured 5.25 01/01/12 1,675,013
</TABLE>
---------------------
25
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 500,000 California Statewide CDA Revenue COP Health
Facilities Barton Memorial Hospital LOC -
Banque Nationale de Paris 6.40 % 12/01/05 $ 508,100
1,810,000 California Statewide CDA Revenue COP Hospital
Cedars Sinai Medical Center 6.50 08/01/12 1,917,930
1,500,000 California Statewide CDA Revenue COP Sutter
Health Obligated Group AMBAC Insured 6.00 08/15/09 1,539,600
1,935,000 California Statewide CDA Water Revenue Series A 6.00 07/01/10 1,985,504
2,000,000 Capistrano CA Unified PFA Special Tax Revenue
AMBAC Insured 5.25 09/01/09 1,950,000
200,000 Capitol Area Development Authority Sacramento
CA Lease Revenue Series A MBIA Insured 6.50 04/01/12 212,402
1,000,000 Cerritos CA PFA Redevelopment Los Cerritos
Redevelopment Project Revenue 6.05 11/01/20 988,680
1,800,000 Chino Basin CA Regional Financial Authority
Revenue Municipal Water District Sewer
Systems Project AMBAC insured 6.00 08/01/16 1,843,218
400,000 Chula Vista CA COP Town Centre II Package
Project RDA 6.00 09/01/07 408,608
735,000 Chula Vista CA COP Town Centre II Package
Project RDA 6.00 09/01/08 745,680
820,000 Chula Vista CA COP Town Centre II Package
Project Redevelopment Agency 6.00 09/01/10 826,232
2,000,000 Coachella CA Water Revenue COP FSA Insured 6.10 03/01/22 2,050,040
985,000 Coachella Valley CA Water District Improvement
District #07 Storm Water District Flood
Control Project 6.45 10/01/05 1,056,738
1,000,000 Coachella Valley CA Water District Improvement
District #71 Storm Water District Flood
Control 6.60 10/01/06 1,073,500
2,500,000 Concord CA RDFA Tax Allocation 5.75 07/01/10 2,373,575
3,240,000 Contra Costa CA Water District Revenue FGIC
Insured 6.00 10/01/13 3,316,432
</TABLE>
- ------------------------
26
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 2,505,000 Contra Costa CA Water Treatment Revenue FGIC
Insured 5.70 % 10/01/12 $ 2,508,206
1,500,000 Contra Costa County CA COP Public Facilities
Merrithew Memorial Hospital Replacement 6.60 11/01/12 1,563,825
2,000,000 Contra Costa County CA Transportation Authority
Sales Tax Revenue Series A Escrowed to
Maturity 6.50 03/01/09 2,204,020
1,000,000 Contra Costa County CA Water Treatment Revenue
Series A FGIC Insured 5.60 10/01/10 1,004,500
1,045,000 Corona CA PFA Public Improvement Revenue 5.95 07/01/07 1,035,407
1,075,000 Cotati CA Facilities Financing Authority Tax
Allocation Series A 5.60 09/01/12 1,004,803
1,250,000 Cucamonga County CA Water District COP
Refinancing Facilities FGIC Insured 6.30 09/01/12 1,304,475
15,000 Culver City CA RDFA AMBAC Insured 6.75 11/01/15 15,993
2,500,000 Cupertino CA Series A AMBAC Insured 5.75 07/01/16 2,510,575
1,450,000 Cupertino CA Series B 6.25 07/01/10 1,476,492
1,855,000 Duarte CA COP City of Hope National Medical
Center 6.13 04/01/13 1,830,440
1,000,000 East Bay CA MUD Wastewater Treatment Revenue
FGIC Insured 5.00 06/01/16 920,980
3,000,000 East Bay CA MUD Wastewater Treatment Revenue
MBIA Insured 5.00 06/01/14 2,792,580
1,500,000 East Bay CA MUD Wastewater Treatment System
Revenue AMBAC Insured 6.00 06/01/09 1,557,660
1,000,000 East Bay CA MUD Water System Revenue FGIC
Insured 6.00 06/01/12 1,019,550
1,195,000 East Bay CA Regional Park District Series B 5.75 09/01/14 1,181,401
5,000,000 Elsinore Valley CA Municipal Water District COP
Series A FGIC Insured 5.75 07/01/19 5,021,150
1,000,000 Elsinore Valley CA Municipal Water District COP
Series A FGIC Insured 6.00 07/01/12 1,044,410
3,000,000 Emeryville CA PFA Housing Increment Revenue
Series A 6.35 05/01/10 3,085,230
</TABLE>
---------------------
27
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 2,000,000 Escondido CA PFA Lease Revenue Escondido Civic
Center Project Series B AMBAC Insured 6.13 % 09/01/11 $ 2,143,800
1,080,000 Escondido CA USD Series A FGIC Insured 5.13 09/01/15 1,018,019
1,110,000 Folsom CA PFA Revenue AMBAC Insured 6.00 10/01/12 1,132,600
1,000,000 Foothill CA De Anza Community College Connie
Lee Insured 5.25 09/01/21 925,450
1,270,000 Fremont CA USD Alameda County Series E FGIC
Insured 5.90 09/01/15 1,303,299
2,000,000 Fresno CA Conference Center 5.00 04/01/13 1,867,320
2,000,000 Fresno CA Joint Powers Financing Authority
Street Light Acquisition Project Series A 5.50 08/01/12 1,886,280
2,000,000 Fresno CA USD FSA Insured 5.88 08/01/20 2,014,380
3,000,000 Fresno CA Water System Revenue FGIC Insured 6.00 06/01/16 3,071,070
1,500,000 Glendale CA RDFA Tax Allocation Revenue AMBAC
Insured 5.50 12/01/09 1,496,610
1,000,000 Glendale CA RDFA Tax Allocation Revenue AMBAC
Insured 5.50 12/01/11 987,530
575,000 Huntington Beach CA PFA Revenue Bond 6.55 08/01/01 571,866
1,000,000 Indian Wells CA RDFA Tax Allocation Whitewater
Project MBIA Insured 6.00 12/01/14 1,023,910
1,310,000 Indian Wells CA Redevelopment Agency Tax
Allocation MBIA Insured 5.38 12/01/15 1,264,923
200,000 Industry CA Urban Development Agency 6.85 11/01/04 215,000
1,270,000 Industry CA Urban Development Agency Tax
Allocation MBIA Insured 5.80 05/01/09 1,297,089
1,000,000 Industry CA Urban Development Agency Tax
Allocation MBIA Insured 6.00 05/01/15 1,026,660
1,350,000 Jackson CA COP Water System Acquisition Project 6.80 09/01/23 1,374,975
270,000 Jamul-Dulzura CA USD 6.40 08/01/16 288,004
2,000,000 Kern CA High School District MBIA Insured 5.60 08/01/12 2,104,020
1,185,000 La Verne CA COP Capital Improvements Projects 5.70 06/01/15 1,125,951
500,000 Lemon Grove CA CDA Lemon Grove Redevelopment
Project 6.65 08/01/06 521,285
</TABLE>
- ------------------------
28
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 3,000,000 Long Beach CA Finance Authority Revenue 6.00 % 11/01/08 $ 3,178,890
2,000,000 Long Beach CA Water Revenue 6.00 05/01/14 2,041,200
1,000,000 Long Beach CA Water Revenue 6.13 05/01/19 1,021,580
1,000,000 Los Angeles CA Community College District COP
Series A CGIC Insured 5.90 08/15/07 1,045,370
4,695,000 Los Angeles CA DW&P Electric Plant Revenue 5.70 09/01/11 4,692,089
200,000 Los Angeles CA DW&P Electric Plant Revenue 6.38 02/01/20 209,860
2,000,000 Los Angeles CA DW&P Electric Plant Revenue
Second Issue 5.75 08/15/11 2,004,860
2,000,000 Los Angeles CA DW&P Electrical Plant Revenue
FGIC Insured 4.75 08/15/09 1,858,580
3,000,000 Los Angeles CA DW&P Waterworks Revenue 5.70 04/15/09 3,030,480
2,145,000 Los Angeles CA Harbor Department of Revenue 6.40 08/01/15 2,260,766
340,000 Los Angeles CA Municipal Improvement Corp Lease
Revenue Central Library Project Series A 6.30 06/01/16 342,822
4,000,000 Los Angeles CA Wastewater System Revenue AMBAC
Insured 6.25 06/01/12 4,164,880
1,300,000 Los Angeles CA Wastewater System Revenue Series
A MBIA Insured 5.70 06/01/13 1,296,867
1,000,000 Los Angeles CA Wastewater System Revenue Series
C MBIA Insured 5.50 06/01/13 981,550
7,000,000 Los Angeles CA Wastewater System Revenue Series
D FGIC Insured 5.20 11/01/21 6,474,160
1,975,000 Los Angeles County CA Metropolitan
Transportation Authority Sales Tax Revenue
Series A 5.50 07/01/13 1,891,023
2,250,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue 6.25 07/01/16 2,251,215
2,000,000 Los Angeles USD COP Dr Francisco Bravo Medical
Hospital 6.60 06/01/05 2,150,280
1,370,000 Madera CA RDFA Tax Allocation Revenue CGIC
Insured 5.75 09/01/11 1,381,508
</TABLE>
---------------------
29
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,000,000 Menlo Park CA CDA Tax Allocation Revenue MBIA
Insured 5.38 % 06/01/16 $ 960,000
2,485,000 Merced County CA COP Construction & Equipment
Project Lease Revenue FSA Insured 6.00 10/01/12 2,527,618
8,000,000 Metropolitan Water District Southern CA Water
Works Revenue 5.75 07/01/13 8,005,520
2,000,000 Metropolitan Water District Southern CA Water
Works Revenue MBIA Insured 5.75 07/01/15 2,019,660
705,000 Mid Peninsula CA Regional Open Space District
Promissory Notes 6.30 07/01/11 740,398
750,000 Mid Peninsula CA Regional Open Space District
Promissory Notes 6.35 07/01/12 786,075
1,000,000 Modesto CA Irrigation District Financing
Authority Domestic Water Project Revenue
Series A AMBAC Insured 6.00 09/01/09 1,036,250
975,000 Montclair CA RDFA Lease Revenue Series A 5.80 11/01/10 979,319
100,000 Montclair CA RDFA Lease Revenue Series A 6.63 11/01/11 104,306
1,000,000 Mountain View CA Shoreline Regional Park
Community Tax Allocation MBIA Insured 5.50 08/01/13 981,250
1,000,000 National City CA CDA Tax Allocation Downtown
Redevelopment Project Series A AMBAC Insured 6.25 08/01/12 1,038,750
1,230,000 National City CA CDA Tax Allocation Downtown
Redevelopment Project Series B AMT AMBAC
Insured 6.63 08/01/12 1,306,555
720,000 Natomas CA USD Series A MBIA Insured 5.75 09/01/12 726,048
750,000 Nevada County CA Solid Waste Revenue 6.50 10/01/06 799,545
1,000,000 Northern California Power Agency Multiple
Capital Facilities Revenue Series A MBIA
Insured 6.50 08/01/12 1,069,760
7,000,000 Northern California Transmission Revenue
Transmission Project A MBIA Insured 5.50 05/01/14 6,867,140
4,280,000 Northridge CA Water District Revenue AMBAC
Insured 5.25 02/01/14 4,127,932
1,465,000 Oakland CA FGIC Insured 6.00 06/15/12 1,493,758
</TABLE>
- ------------------------
30
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 2,000,000 Oceanside CA Water Reuse Finance Project A
AMBAC Insured 6.40 % 10/01/12 $ 2,117,960
2,000,000 Ontario CA RDFA Revenue MBIA Insured 5.50 08/01/18 1,923,560
6,000,000 Orange County CA Local Transportation Authority
Sales Tax Revenue First Series Measure M 6.00 02/15/08 6,315,720
800,000 Orange County CA Local Transportation Authority
Sales Tax Revenue First Series Measure M 6.00 02/15/09 831,560
1,000,000 Orange County CA RDFA Tax Allocation Northwest
Redevelopment Project B 5.70 10/01/17 920,670
360,000 Orange County CA Sanitation District COP FGIC
Insured 6.40 08/01/07 383,213
1,240,000 Parlier CA RDFA Tax Allocation Series A 6.95 08/01/23 1,264,812
1,500,000 Pinole CA RDFA Tax Allocation 5.60 08/01/17 1,401,825
3,285,000 Pittsburg CA Redevelopment Agency Tax
Allocation V/R Series A AMBAC Insured 5.00 08/01/13 3,047,297
3,380,000 Port of Oakland CA Special Facilities Revenue
Mitsui OSK Lines Ltd Series A AMT LOC -
Industrial Bank of Japan Ltd 6.80 01/01/19 3,492,250
1,000,000 Poway CA PFA Water Services Captial Improvement
Program AMBAC Insured 5.50 11/01/15 980,170
1,050,000 Redding CA Joint Powers Financing Authority
Solid Waste Revenue Series A 5.00 01/01/23 861,714
1,325,000 Redding CA Joint Powers Financing Authority
Wastewater Revenue Series A FGIC Insured 6.00 12/01/11 1,365,439
1,310,000 Rialto CA RDFA Tax Allocation Series A 5.80 09/01/08 1,307,157
4,000,000 Riverside County CA Asset Leasing Corp Revenue
Riverside County Hospital Project A 6.38 06/01/09 4,165,000
1,045,000 Riverside County CA PFA Special Tax Revenue
Series A MBIA Insured 5.25 09/01/10 1,017,475
1,000,000 Sacramento CA Airport Commission International
Airport Revenue AMBAC Insured 6.00 07/01/16 1,027,520
</TABLE>
---------------------
31
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,500,000 Sacramento CA Area Flood Control Authority
Special Assessment FGIC Insured 5.38 % 10/01/15 $ 1,448,745
5,000 Sacramento CA Financing Authority Revenue
Prerefunded 6.70 11/01/11 5,246
2,300,000 Sacramento CA Light Rail Transportation Project 6.00 07/01/12 2,313,317
2,500,000 Sacramento CA MUD Electric Revenue MBIA Insured 6.25 08/15/10 2,687,000
500,000 Sacramento CA MUD Electric Revenue Series C
FGIC Insured 5.75 11/15/08 512,035
6,695,000 Sacramento CA MUD Electric Revenue Series C
MBIA Insured 5.75 11/15/09 6,812,096
50,000 Sacramento CA MUD Electric Revenue Series Z
FGIC Insured 6.45 07/01/10 52,967
1,000,000 Sacramento CA RDFA Tax Allocation Merged
Downtown Project A MBIA Insured 6.50 11/01/13 1,063,650
2,000,000 Sacramento County CA Airport System Revenue
Series A AMT FGIC Insured 6.00 07/01/12 2,026,920
380,000 San Bernardino County CA West Valley Detention
Center MBIA Insured 6.50 11/01/12 406,209
200,000 San Bernardino County CA Transportation
Authority Sales Tax Revenue FGIC Insured 6.00 03/01/10 207,482
4,000,000 San Buenaventura CA COP AMBAC Insured 6.00 01/01/12 4,085,000
1,500,000 San Diego CA Community College District COP
Financing Projects 5.38 12/01/14 1,378,020
1,695,000 San Diego CA PFA Sewer Revenue FGIC Insured 5.00 05/15/15 1,574,265
5,000,000 San Diego CA PFA Sewer Revenue FGIC Insured 5.00 05/15/20 4,554,300
3,000,000 San Diego CA Public Safety Commission Project
GO 5.50 04/01/08 3,044,790
1,000,000 San Diego CA Public Safety Commission Project
GO 6.50 07/15/07 1,118,600
</TABLE>
- ------------------------
32
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 4,000,000 San Diego County CA Regional Transportation
Community Sales Tax Revenue Series A Escrowed
to Maturity 6.00 % 04/01/08 $ 4,198,520
1,235,000 San Elijo Joint Powers Authority San Diego
County CA Water Pollution Control Facility
FGIC Insured 5.38 03/01/13 1,189,688
1,000,000 San Francisco CA Airport Commission
International Airport Revenue AMBAC Insured 6.20 05/01/07 1,063,240
2,085,000 San Francisco CA Airport Commission
International Airport Revenue AMBAC Insured 6.30 05/01/11 2,183,183
200,000 San Francisco CA City & County Public Utilities
Commission Water Revenue Series A 6.50 11/01/09 217,270
700,000 San Francisco CA City & County RDFA Tax
Allocation Capital Appreciation Project MBIA
Insured 8.39 * 08/01/08 367,157
4,500,000 San Francisco CA City & County Sewer Revenue 6.00 10/01/11 4,620,735
500,000 San Francisco CA RDA Tax Allocation MBIA
Insured 5.00 08/01/15 461,415
1,000,000 San Francisco County CA RDFA 6.50 07/01/08 1,090,070
2,000,000 San Joaquin Hills CA Transportation Corridor
Agency Toll Road Revenue Capital Appreciation 6.06 * 01/01/10 1,552,500
500,000 San Jose CA RDFA Tax Allocation Park Center
Project 7.00 10/01/04 520,835
3,000,000 San Jose RDFA Merged Area Project MBIA Insured 5.25 08/01/16 2,850,540
1,200,000 San Mateo CA Joint Powers Financing Authority
Redevelopment Downtown & Shoreline Project A
AMBAC Insured 5.50 08/01/07 1,212,696
1,130,000 San Mateo CA Sewer Revenue FSA Insured 5.50 08/01/14 1,114,587
2,250,000 Santa Clara CA Financing Authority Lease
Revenue Facility Replacement Project A AMBAC
Insured 6.88 11/15/14 2,490,413
</TABLE>
---------------------
33
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 4,010,000 Santa Clara CA RDFA Tax Allocation Bayshore
North Project AMBAC Insured 5.75 % 07/01/14 $ 4,051,985
2,500,000 Santa Clara County CA COP Multiple Facilities
Project AMBAC Insured 6.00 05/15/12 2,548,675
1,000,000 Santa Maria CA RDFA Town Center West Side
Parking Facilities FSA Insured 5.25 06/01/11 963,010
2,450,000 Santa Rosa CA Wastewater Treatment Plant FGIC
Insured 4.75 09/01/16 2,169,157
1,750,000 Shasta CA Joint Powers Financing Authority
Lease Revenue County Courthouse Improvement
Project Series 6.70 06/01/23 1,793,908
1,000,000 Sonoma Valley CA USD FSA Insured 6.00 07/15/21 1,017,720
4,720,000 South County CA Regional Wastewater Authority
Revenue Capital Improvement FGIC Insured 5.75 08/01/10 4,784,900
1,000,000 Southern CA Public Power Project Revenue 6.75 07/01/11 1,103,460
1,000,000 Southern California State Public Power
Authority 5.50 07/01/12 972,980
3,000,000 Southern California State Rapid Transit
District Special Benefit Assessment District
A1 AMBAC Insured 6.00 09/01/08 3,128,370
2,000,000 Stanislaus County CA Capital Improvement
Program Series A MBIA Insured 5.25 05/01/14 1,906,840
1,600,000 Stanislaus County CA COP Capital Improvement
Project AMBAC Insured 5.25 05/01/18 1,497,856
2,000,000 Stanislaus County CA COP Series B AMBAC Insured 6.13 06/01/12 2,067,020
1,000,000 Three Valleys CA Municipal Water District COP
FGIC Insured 5.00 11/01/14 929,960
2,000,000 Three Valleys CA Municipal Water District
Revenue COP FGIC Insured 5.25 11/01/10 1,946,920
1,000,000 Torrance CA COP AMBAC Insured 5.50 04/01/11 992,820
1,000,000 Torrance CA COP AMBAC Insured 5.75 04/01/16 1,006,720
2,000,000 Tulare County CA COP Public Facilities
Corporation Series A MBIA Insured 6.10 11/15/07 2,118,780
1,250,000 Twentynine Palms CA Water District CA COP 7.00 08/01/17 1,290,788
</TABLE>
- ------------------------
34
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,000,000 Union City CA Community RDFA Tax Allocation
Revenue Community Redevelopment Project AMBAC
Insured 5.65 % 10/01/14 $ 997,620
1,645,000 University of California Revenue Housing System
Series A AMBAC Insured 5.50 11/01/11 1,632,860
6,900,000 University of California Revenue Multiple
Purpose Project C AMBAC Insured 5.25 09/01/11 6,676,095
1,000,000 University of California Revenue Multiple
Purpose Projects AMBAC Insured 4.75 09/01/15 878,020
1,000,000 University of California Revenue Residential
Housing Projects AMBAC Insured 6.10 09/01/10 1,019,480
2,000,000 University of California Revenue Residential
Housing Projects AMBAC Insured 6.30 09/01/13 2,042,740
1,450,000 University of California Revenue Seismic Safety
Project MBIA Insured 5.50 11/01/10 1,446,375
2,500,000 University of California State Housing System
Series A MBIA Insured 5.00 11/01/14 2,298,225
2,175,000 Vallejo CA Revenue Water Improvement Project
FSA Insured 5.70 05/01/16 2,180,438
2,000,000 Ventura CA COP Public Facilities 5.75 12/01/06 2,063,440
2,000,000 Ventura CA COP Public Facilities Corporation IV 5.75 12/01/07 2,025,740
2,500,000 Walnut Creek CA John Muir Medical Center MBIA
Insured 5.00 02/15/16 2,263,100
2,000,000 West & Century Basin Finance Authority CA
Revenue West Basin Project AMBAC Insured 5.00 08/01/13 1,855,000
1,170,000 West Sacramento CA Financing Authority Revenue
Water System Improvement Project FGIC Insured 5.50 08/01/15 1,140,305
1,200,000 Westminster CA RDFA AMT 6.50 08/01/10 1,205,508
</TABLE>
---------------------
35
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,000,000 Whittier CA Educational Facilities Revenue
Whittier College Connie Lee Insured 5.40 % 12/01/18 $ 959,960
1,040,000 Yolo County CA Library Special Tax Community
Facilities 6.25 12/01/22 1,041,207
--------------
TOTAL CALIFORNIA MUNICIPAL BONDS $ 421,186,303
(Cost $412,451,862)
SHORT-TERM INSTRUMENTS - 4.83%
SHORT-TERM CALIFORNIA MUNICIPAL BONDS+ - 4.15%
$ 300,000 California State HFFA St Joseph Health Center
Series A V/R 3.60 % 07/01/13 $ 300,000
900,000 California State PCFA Southern California
Edison V/R 3.45 02/28/08 900,000
1,800,000 California State PCFA Southern California
Edison V/R Series A 3.45 02/28/08 1,800,000
3,000,000 California State PCFA Southern California
Edison V/R Series D 3.45 02/28/08 3,000,000
1,075,000 California State PCFA Stanislaus Project V/R
AMT LOC - Swiss Bank 3.70 12/01/17 1,075,000
800,000 California State PCFA V/R Shell Oil Co Project
Series B 3.00 10/01/11 800,000
7,000,000 California State RAN 3.80 06/30/97 7,000,000
1,700,000 Irvine Ranch CA Water District V/R 3.45 06/01/15 1,700,000
1,000,000 Irvine Ranch CA Water District V/R LOC -
Sumitomo Bank Ltd 3.30 10/01/10 1,000,000
1,000,000 Los Angeles County CA IDA Walter & Howard V/R
AMT LOC - Dai-Ichi Kangyo Bank Ltd 4.20 12/01/06 1,000,000
--------------
$ 18,575,000
</TABLE>
- ------------------------
36
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS (CONTINUED)
MONEY MARKET FUNDS - 0.68%
2,984,056 Arbor Fund CA Tax-Exempt Portfolio
$ 2,984,056
74,724 Nuveen Institutional CA Tax-Exempt Fund
74,724
--------------
$ 3,058,780
TOTAL SHORT-TERM INSTRUMENTS $ 21,633,780
(Cost $21,633,780)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $434,085,642)** (Notes 1 and 3) 98.91% $ 442,820,083
Other Assets and Liabilities, Net 1.09 4,876,931
------ --------------
TOTAL NET ASSETS 100.00% $ 447,697,014
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* YIELD TO MATURITY.
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
** COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 12,311,187
Gross Unrealized Depreciation (3,576,746)
------------
NET UNREALIZED APPRECIATION $ 8,734,441
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
37
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - 92.98%
$ 250,000 Burbank CA Wastewater Treatment Revenue FGIC
Insured 4.40 % 06/01/00 $ 248,650
2,425,000 California State DWR Central Valley Project
Revenue 8.50 12/01/98 2,627,585
3,625,000 California State DWR Central Valley Project
Revenue Series H Prerefunded 6.90 12/01/25 3,974,414
1,500,000 California State DWR Central Valley Project
Revenue Series H Prerefunded 8.50 12/01/02 1,798,935
2,000,000 California State DWR Central Valley Project
Revenue Series L 8.00 12/01/01 2,305,560
500,000 California State EDFA Revenue Pooled College &
University Financing 5.10 06/01/98 502,015
500,000 California State HFFA Revenue Episcopal Homes
Mortgage Insurance 7.20 07/01/99 510,305
315,000 California State HFFA Revenue Mortgage
Insurance 7.40 12/01/00 340,326
2,135,000 California State Maritime Infrastructure
Authority Port of San Diego Revenue AMT AMBAC
Insured 5.00 11/01/02 2,142,238
1,785,000 California State Public Power Agency San Juan
Project Revenue Series F AMBAC Insured 5.65 07/01/03 1,862,880
500,000 California State Public Works Board Lease
Revenue Department of Corrections State
Prison 7.00 09/01/98 515,140
750,000 California State Public Works Board Lease
Revenue Department of Corrections State
Prison 7.20 11/01/98 766,613
1,500,000 California Statewide CDA Revenue COP Saint
Joseph Health System 4.30 07/01/98 1,503,660
3,500,000 California-Oregon State Electrical Transmission
Project Series A MBIA Insured 7.00 05/01/24 3,842,965
250,000 Carlsbad CA USD COP Phase III 6.70 11/01/99 263,428
</TABLE>
- ------------------------
38
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 5,000,000 Contra Costa County CA Transportation Authority
Sales Tax Revenue Series AFGIC Insured 6.00 % 03/01/04 $ 5,344,650
500,000 Desert Sands CA USD COP Capital Projects FSA
Insured 4.35 03/01/00 495,920
2,000,000 Desert Sands CA USD COP Series C 4.30 03/01/98 1,990,000
4,000,000 East Bay CA MUD Water System Revenue MBIA
Insured 7.50 06/01/18 4,482,960
500,000 Emeryville CA PFA Housing Increment Revenue
Series A 5.40 05/01/98 507,140
600,000 Encinitas CA USD COP Measure B Capital Projects 4.38 09/01/98 598,728
820,000 Foster City CA PFA 4.70 09/01/98 818,926
685,000 Foster City CA PFA 5.40 09/01/01 695,316
1,700,000 Glendale CA RDFA Tax Allocation Revenue AMBAC
Insured 5.00 12/01/01 1,724,004
255,000 Industry CA GO FGIC Insured 8.00 07/01/99 278,391
500,000 Industry CA GO MBIA Insured 8.00 07/01/99 545,190
500,000 Los Angeles CA Community RDFA Central Business
District Project Series G 6.20 07/01/97 505,560
500,000 Los Angeles CA COP 7.30 10/01/96 500,037
1,000,000 Los Angeles CA Department of Airports Revenue
FGIC Insured 6.50 05/15/04 1,098,750
500,000 Los Angeles CA DW&P Electric Plant Revenue 8.00 02/01/99 537,300
750,000 Los Angeles CA DW&P Water Works Revenue 7.10 08/01/02 789,503
2,500,000 Los Angeles CA DWP Electrical Plant Revenue 6.63 10/01/31 2,742,650
2,000,000 Los Angeles CA DWP Electrical Plant Revenue 6.75 04/01/32 2,205,000
1,500,000 Los Angeles CA GO FGIC Insured 5.00 09/01/03 1,514,640
725,000 Los Angeles CA Judgement Obligation Bonds
Series A 4.70 08/01/98 732,033
1,500,000 Los Angeles CA TRAN Series A 4.50 06/30/97 1,507,635
500,000 Los Angeles CA Transportation Commission Sales
Tax Revenue FGIC Insured 6.75 07/01/18 555,630
</TABLE>
---------------------
39
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,300,000 Los Angeles CA Waste Water System Revenue
Series A MBIA Insured 8.50 % 06/01/03 $ 1,560,663
1,000,000 Los Angeles CA Waste Water System Revenue
Series D Prerefunded 6.70 12/01/21 1,103,190
300,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue Series A 6.10 07/01/99 311,688
500,000 Metropolitan Water District of Southern CA
Waterworks Revenue 6.00 07/01/21 531,680
2,935,000 Modesto CA Irrigation District Financing
Authority Series A MBIA Insured 4.95 10/01/02 2,960,094
500,000 Morgan Hill CA RDFA Tax Allocation Ojo De Agua
Community Development Project 5.60 03/01/00 505,370
1,075,000 Mount Diablo CA USD Community Facilities
District Special Tax AMBAC Insured 8.00 08/01/03 1,265,813
500,000 Oakland CA Revenue FGIC Insured 7.00 08/01/98 523,355
4,320,000 Orange County CA MUD Allen-McCollough Pipeline
MBIA Insured 5.50 07/01/05 4,431,845
945,000 Pleasanton CA Joint Powers Financing Authority
Revenue 5.63 09/02/97 953,184
2,500,000 Rancho CA Water District Financing Authority
Revenue 4.70 08/15/21 2,471,875
1,000,000 Riverside County CA Transportation Sales Tax
Revenue Series A 6.40 06/01/99 1,046,250
300,000 Sacramento CA Light Rail Transportation Project 6.30 07/01/00 313,764
500,000 Sacramento CA MUD Electric Revenue MBIA Insured 7.50 08/15/99 535,730
500,000 San Diego CA Transportation Authority COP Bus
Acquisition Project 6.60 12/01/01 528,945
2,000,000 San Diego County CA Regional Transportation
Commission Sales Tax Revenue Series A FGIC
Insured 6.25 04/01/02 2,145,060
600,000 San Francisco CA City & County Airport Revenue
Second Series Issue One MBIA Insured 6.35 05/01/98 618,912
</TABLE>
- ------------------------
40
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,000,000 San Francisco CA City & County RDFA Lease
Revenue George R Moscone Center AMBAC Insured 6.20 % 10/01/00 $ 1,063,750
750,000 San Francisco CA Redevelopment Agency Lease
Revenue George Moscone Center Project 7.40 07/01/98 784,095
200,000 San Jose CA Airport Revenue MBIA Insured 5.00 03/01/99 202,434
2,750,000 San Jose CA RDFA MBIA Insured 4.20 08/01/98 2,746,975
500,000 Santa Monica CA Wastewater Enterprise Revenue
Hyperion Project 12.00 01/01/01 639,150
1,100,000 Southern California State Public Power
Authority 6.75 07/01/00 1,170,125
572,282 University of California COP San Diego Medical
Center 5.92 03/15/00 583,391
1,245,000 University of California Los Angeles Central
Chiller - Cogeneration Facilties 10.75 11/01/98 1,397,874
1,000,000 University of California Multiple Projects
Revenue Series A MBIA Insured 6.00 09/01/02 1,061,930
1,000,000 West Basin CA Municipal Water District COP
Prerefunded 7.00 08/01/11 1,107,500
--------------
TOTAL CALIFORNIA MUNICIPAL BONDS $ 85,939,319
(Cost $85,845,226)
SHORT-TERM INSTRUMENTS - 7.07%
SHORT-TERM CALIFORNIA MUNICIPAL BONDS+ - 3.98%
$ 500,000 California State PCFA Southern California
Edison V/R Series D 3.45 % 02/28/08 $ 500,000
3,220,000 Los Angeles CA Department of General Services
Lease Revenue V/R Series A 4.50 05/01/00 3,178,076
--------------
$ 3,678,076
</TABLE>
---------------------
41
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS (CONTINUED)
MONEY MARKET FUNDS - 3.09%
2,857,000 Arbor Fund CA Tax-Exempt Portfolio
$ 2,857,000
TOTAL SHORT-TERM INSTRUMENTS $ 6,535,076
(Cost $6,561,010)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $92,406,236)* (Notes 1 and 3) 100.05% $ 92,474,395
Other Assets and Liabilities, Net (0.05) (49,566 )
------ --------------
TOTAL NET ASSETS 100.00% $ 92,424,829
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 596,237
Gross Unrealized Depreciation (528,078)
------------
NET UNREALIZED APPRECIATION $ 68,159
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
42
<PAGE>
NATIONAL TAX-FREE FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - 93.13%
ALASKA - 1.75%
$ 200,000 Anchorage AK USD FGIC Insured 6.00 % 10/01/14 $ 209,192
ARIZONA - 4.15%
$ 500,000 Maricopa County AZ USD 5.50 % 07/01/10 $ 495,845
CALIFORNIA - 3.65%
$ 345,000 California State Department of Water Reserves
Revenue 5.00 % 12/01/12 $ 323,765
20,000 California State GO 6.00 02/01/01 21,020
100,000 East Bay CA MUD Special District 5.00 04/01/15 91,722
--------------
$ 436,507
COLORADO - 7.69%
$ 135,000 Douglas County CO USD MBIA Insured 5.95 % 12/15/06 $ 143,708
270,000 El Paso County CO USD 6.15 12/15/08 290,987
500,000 Garfield CO Pitkin Eagle County USD 5.13 12/15/10 484,710
--------------
$ 919,405
HAWAII - 4.87%
$ 175,000 Hawaii State Series CC GO 5.13 % 02/01/07 $ 172,960
250,000 Hawaii State Series CL GO 6.00 03/01/09 263,030
150,000 Hawaii State Series CC GO 5.13 02/01/08 146,898
--------------
$ 582,888
ILLINOIS - 3.21%
$ 375,000 Illinois State HFFA Revenue FSA Insured 6.25 % 04/15/22 $ 383,325
KENTUCKY - 1.29%
$ 150,000 Kentucky State Housing Corporation Revenue FHA
Insured 6.50 % 07/01/17 $ 154,547
</TABLE>
---------------------
43
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN - 2.04%
$ 250,000 Detroit MI City School District 5.13 % 05/01/07 $ 243,485
MISSOURI - 0.82%
$ 100,000 Missouri State Regional Convention & Sports
Center 5.00 % 08/15/05 $ 97,573
NORTH DAKOTA - 0.86%
$ 100,000 North Dakota State Building Authority Lease
Revenue 5.35 % 06/01/02 $ 102,267
NEW MEXICO - 1.96%
$ 250,000 University of New Mexico Revenue MBIA Insured 5.38 % 06/01/26 $ 234,708
NEVADA - 10.42%
$ 100,000 Carson City NV USD AMBAC Insured 5.00 % 04/01/06 $ 98,634
500,000 Clark County NV Las Vegas Convention & Visitors
Authority FSA Insured 6.00 07/01/26 505,410
150,000 Clark County NV Series A AMBAC Insured 6.00 06/01/03 161,501
500,000 Reno NV Hospital Revenue 5.63 05/15/23 480,340
--------------
$ 1,245,885
NEW YORK - 2.09%
$ 250,000 New York NY Municipal Assistance Corp Series E 5.20 % 07/01/08 $ 249,760
OREGON - 6.92%
$ 500,000 Southwestern Oregon Community College AMBAC
Insured 5.85 % 10/01/21 $ 498,095
330,000 Washington County OR Unified Sewer Agency FGIC
Insured 5.50 10/01/13 329,225
--------------
$ 827,320
</TABLE>
- ------------------------
44
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
PUERTO RICO - 2.31%
$ 250,000 Commonwealth of Puerto Rico Electrical Power
Authority Revenue Series W MBIA Insured 6.50 % 07/01/06 $ 276,370
TEXAS - 7.82%
$ 400,000 Austin TX Utility Systems Revenue 5.90 % 10/01/99 $ 416,092
125,000 Port Arthur TX MBIA Insured 8.50 02/15/03 149,790
115,000 San Antonio TX GO 5.13 08/01/01 117,492
250,000 Texas State Financial Public Finance Authority
Series B 5.30 10/01/07 252,275
--------------
$ 935,649
UTAH - 8.43%
$ 250,000 Salt Lake City UT RDA Neighborhood Tax Revenue 6.50 % 10/01/01 $ 266,678
250,000 Utah State Building Ownership Authority Lease
Series A 6.00 05/15/09 254,990
225,000 Washington County UT USD St Georges FGIC
Insured 6.00 03/01/03 239,429
250,000 Washington County UT USD St Georges FGIC
Insured 5.00 09/01/06 246,863
--------------
$ 1,007,960
VIRGINIA - 2.05%
$ 250,000 Richmond VA GO Public Improvement Series A 5.40 % 01/15/10 $ 245,168
VERMONT - 4.55%
$ 500,000 Burlington VT Electricity Revenue Series A MBIA
Insured 6.38 % 07/01/10 $ 543,655
</TABLE>
---------------------
45
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
WASHINGTON - 14.54%
$ 375,000 Clark County WA GO Series A 5.90 % 12/01/15 $ 381,780
250,000 Grant County WA Public Utilities Electric
Revenue MBIA Insured 5.38 01/01/09 245,595
100,000 Island County WA USD South Whidbey 6.75 12/01/07 113,104
250,000 King County WA USD 5.80 12/01/10 252,575
250,000 Lynnwood WA Improvement District Anticipatory
Notes 5.15 04/01/97 251,478
150,000 Snohomish County WA Road Improvement 4.95 12/31/96 150,428
100,000 South Columbian Basin WA Improvement District
Revenue 6.00 12/01/02 105,167
250,000 Washington State Public Power Supply Systems
Nuclear 5.25 07/01/08 239,300
--------------
$ 1,739,427
WISCONSIN - 0.85%
$ 100,000 Wisconsin State Tax Income 5.10 % 11/01/01 $ 101,715
WYOMING - 0.86%
$ 100,000 Wyoming State Farm Board Capital Facilities
Revenue 5.60 % 10/01/03 $ 103,428
--------------
TOTAL MUNICIPAL BONDS $ 11,136,079
(Cost $11,079,192)
SHORT-TERM INSTRUMENTS+ - 5.85%
ARIZONA - 0.84%
$ 100,000 Phoenix AZ GO V/R 3.45 % 06/01/20 $ 100,000
DELAWARE - 1.67%
$ 200,000 Wilmington DE Hospital Revenue V/R 4.05 % 07/01/11 $ 200,000
</TABLE>
- ------------------------
46
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS+ (CONTINUED)
TEXAS - 3.34%
$ 400,000 Grapevine TX Tax IDA MBIA Insured V/R 3.40 % 12/01/24 $ 400,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 700,000
(Cost $700,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $11,779,192)*(Notes 1 and 3) 98.98% $ 11,836,079
Other Assets and Liabilities 1.02 122,342
------ --------------
TOTAL NET ASSETS 100.00% $ 11,958,421
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 127,105
Gross Unrealized Depreciation (70,218)
------------
NET UNREALIZED APPRECIATION $ 56,887
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
47
<PAGE>
OREGON TAX-FREE FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
OREGON MUNICIPAL BONDS - 91.72%
$ 815,000 Bend OR Library County Service District AMBAC
Insured 5.50 % 06/01/13 $ 819,580
885,000 Bend OR Library County Service District AMBAC
Insured 5.50 06/01/14 889,310
320,000 Benton County OR Hospital Facilities Good
Samaritan Hospital Corvallis 6.25 10/01/09 326,051
1,100,000 Chemeketa OR Community College District FGIC
Insured 6.00 06/01/06 1,192,928
250,000 Chemeketa OR Community College MBIA Insured 6.50 07/01/07 278,275
1,000,000 Clackamas & Washington Counties OR GO Series A 5.88 10/01/09 1,038,700
495,000 Clackamas County HFFA Jennings Lodge Project
GNMA FHA credit support 7.50 10/20/31 535,154
300,000 Clackamas County HFFA Sisters of Providence
Series A 6.38 10/01/05 322,977
370,000 Clackamas County OR School District #1 GO 6.50 07/01/07 397,883
565,000 Clackamas County OR School District #12 GO 4.75 06/01/06 550,717
75,000 Deschutes County Hospital Facilities Authortiy
Revenue St. Charles Medical Center 7.50 01/01/08 77,917
500,000 Emerald Peoples OR MUD Revenue FGIC Insured 7.00 11/01/00 541,380
1,000,000 Emerald Peoples OR MUD Revenue FGIC Insured 7.35 11/01/13 1,203,120
250,000 Eugene OR Electric Utilities Revenue 6.40 08/01/07 261,025
620,000 Hood River County OR USD GO AMBAC Insured 5.65 06/01/08 636,635
500,000 Josephine County OR USD FGIC 5.75 06/01/07 521,830
750,000 Lane County OR USD Lane County Community
College GO 5.20 06/01/05 768,060
2,000,000 Lane County, OR USD Eugene Series A 5.38 07/01/13 1,965,520
100,000 Marion & Polk Counties OR USD Salem GO 5.90 10/01/07 106,473
750,000 Marion & Polk Counties OR USD Salem GO 5.00 10/01/12 713,940
</TABLE>
- ------------------------
48
<PAGE>
OREGON TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
OREGON MUNICIPAL BONDS (CONTINUED)
$ 250,000 Multinomah-Clackamas County OR Riverdale School
District 5.65 % 06/01/12 $ 251,018
500,000 Multinomah-Clackamas County OR Riverdale School
District 5.70 06/01/13 503,885
250,000 Multinomah-Clackamas County OR Riverdale USD 5.63 06/01/11 251,485
1,000,000 Multnomah County OR School District GO 5.63 06/01/12 1,005,940
250,000 Oregon State Board Bank Revenue Economic
Development 5.50 01/01/13 242,295
500,000 Oregon State Board of Higher Education GO
Series A 5.90 08/01/18 513,730
750,000 Oregon State Board of Higher Education GO
Series C 5.95 08/01/26 764,025
250,000 Oregon State Department General Services MBIA
Insured 7.05 01/15/06 270,358
1,500,000 Oregon State Department General Services Real
Estate Property Financing Project Series A
COP AMBAC Insured 6.25 09/01/15 1,571,985
175,000 Oregon State GO 9.00 10/01/05 224,625
480,000 Oregon State GO 7.25 07/01/07 562,867
255,000 Oregon State GO 7.30 01/01/08 299,255
2,000,000 Oregon State GO Higher Education Building 6.30 08/01/13 2,116,400
1,000,000 Oregon State GO Series B 6.38 08/01/24 1,055,710
1,000,000 Oregon State Health Housing Educational and
Cultural Facilities Authority Lewis & Clark
College MBIA Insured 6.13 10/01/24 1,039,290
575,000 Oregon State Housing Educational & Cultural
Facilities Authority Revenue Reed College
Project 6.75 07/01/21 636,370
1,000,000 Oregon State Metropolitan Services District
Waste Disposal Revenue Metro Central Transfer 5.13 07/01/11 952,370
15,000 Oregon State SFMR Program Series A 7.38 07/01/10 15,386
190,000 Oregon State SFMR Program FHA/VA Insured 7.05 07/01/09 199,145
1,390,000 Portland OR Sewer Systems Revenue FGIC Insured 6.00 10/01/12 1,438,177
500,000 Portland OR Water System Revenue 5.50 08/01/15 498,170
1,500,000 Portland OR MUD Sewer System Revenue 5.25 03/01/10 1,483,815
</TABLE>
---------------------
49
<PAGE>
OREGON TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
OREGON MUNICIPAL BONDS (CONTINUED)
$ 150,000 Portland OR MUD Sewer System Revenue Series A 6.05 % 06/01/09 $ 158,297
250,000 Portland OR Port/Airport Revenue Portland
International Airport MBIA Insured 6.75 07/01/09 269,805
1,000,000 Portland OR Series A FGIC Insured 6.25 06/01/15 1,055,480
1,000,000 Portland OR Series B 4.63 04/01/13 900,390
510,000 Southwestern Oregon Community College Revenue
AMBAC Insured 5.85 10/01/21 508,057
40,000 Tri-County Metropolitan OR Transportation
District Revenue 5.70 08/01/13 40,148
500,000 Tualatin Hills OR Park & Recreation GO 5.75 03/01/15 504,700
725,000 Washington County School District J Sherwood
FSA Insured 6.10 06/01/12 759,909
250,000 Washington & Clackamas County OR School
District J Tigard 5.50 06/01/06 253,285
2,000,000 Washington County OR Criminal Justice
Facilities GO 6.00 12/01/13 2,070,500
2,000,000 Washington County OR Unified Sewer Agency
Revenue FGIC Insured 5.50 10/01/13 1,995,300
1,040,000 Western Lane OR HFFA Revenue Sisters of St.
Joseph Peace Services MBIA Insured 7.13 08/01/17 1,135,792
--------------
TOTAL OREGON MUNICIPAL BONDS $ 38,695,439
(Cost $37,972,028)
</TABLE>
- ------------------------
50
<PAGE>
OREGON TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
PUERTO RICO MUNICIPAL BONDS - 5.34%
$ 40,000 Commonwealth of Puerto Rico Aqueduct & Sewer
Revenue 10.25 % 07/01/09 $ 55,201
1,000,000 Commonwealth of Puerto Rico Electric Power
Authority Revenue MBIA Insured 6.50 07/01/06 1,105,480
350,000 Commonwealth of Puerto Rico MFHR LOC -
Government Development Bank of Puerto Rico 7.50 04/01/22 366,391
425,000 Commonwealth of Puerto Rico PCR Facilities
Financing Authority UpJohn Co Project 7.50 12/01/23 462,519
250,000 Commonwealth of Puerto Rico SFMR GNMA Insured 7.50 10/15/12 261,648
--------------
TOTAL PUERTO RICO MUNICIPAL BONDS $ 2,251,239
(Cost $2,184,264)
SHORT-TERM INSTRUMENTS+ - 0.95%
$ 100,000 Portland OR PCR Harbor Authority V/R 3.65 % 12/01/09 $ 100,000
300,000 Umatilla City OR V/R 3.60 12/01/24 300,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 400,000
(Cost $400,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $40,556,292)* (Notes 1 and 3) 98.01% $ 41,346,678
Other Assets and Liabilities 1.99 841,061
------ --------------
TOTAL NET ASSETS 100.00% $ 42,187,739
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 1,032,350
Gross Unrealized Depreciation (241,964)
------------
NET UNREALIZED APPRECIATION $ 790,386
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
51
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA
TAX-FREE TAX-FREE
FUND BOND FUND
<S> <C> <C>
- ---------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities at market value (see
cost value below) $22,160,028 $ 442,820,083
Cash 29,937 20,113
Receivables:
Interest 317,895 7,162,507
Fund shares sold 143 231,368
Investment securities sold 510,181 0
Due from WFB 7,662 0
Organization expenses, net of
amortization 6,256 1,266
Prepaid expenses 2,832 1,877
TOTAL ASSETS 23,034,934 450,237,214
LIABILITIES
Cash overdraft due to custodian 0 0
Payables:
Investment securities purchased 0 0
Distribution to shareholders 65,958 1,570,258
Capital shares redeemed 0 0
Due to sponsor and distributor 2,789 362,729
Due to WFB (Note 2) 0 181,659
Other 38,452 425,554
TOTAL LIABILITIES 107,199 2,540,200
TOTAL NET ASSETS
$22,927,735 $ 447,697,014
NET ASSETS CONSIST OF:
Paid-in capital - Class A $ 6,742,616 $ 294,850,907
Paid-in capital - Class B 20,025 39,744,106
Paid-in capital - Institutional Class 16,046,845 106,965,699
Undistributed (overdistributed) net
investment income (67,269) (40,884)
Undistributed net realized gain (loss)
on investments 29,387 (2,557,255)
Net unrealized appreciation
(depreciation) of investments 156,131 8,734,441
TOTAL NET ASSETS $22,927,735 $ 447,697,014
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $ 7,331,089 $ 300,702,091
Shares outstanding - Class A 701,722 27,901,107
Net asset value and offering price per
share - Class A $ 10.45 $ 10.78
Maximum offering price $ 10.94(1) $ 11.29(1)
Net Assets - Class B $ 20,122 $ 40,098,580
Shares outstanding - Class B 1,999 3,650,437
Net asset value and offering price per
share - Class B $ 10.07 $ 10.98
Net Assets - Institutional Class $15,576,524 $ 106,896,343
Shares outstanding - Institutional Class 1,491,647 9,894,420
Net asset value and offering price per
share - Institutional Class $ 10.44 $ 10.80
INVESTMENT AT COST (NOTE 3) $22,003,897 $ 434,085,642
- ---------------------------------------------------------------------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
- ------------------------
52
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL OREGON
TAX-FREE TAX-FREE TAX-FREE
INCOME FUND FUND FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities at market value (see
cost value below) $ 92,474,395 $11,836,079 $ 41,346,678
Cash 5,508 191,550 0
Receivables:
Interest 1,494,168 187,493 654,823
Fund shares sold 0 96 0
Investment securities sold 0 950,717 935,928
Due from WFB 0 61,938 0
Organization expenses, net of
amortization 9,091 20,423 0
Prepaid expenses 53,635 3,949 5,699
TOTAL ASSETS 94,036,797 13,252,245 42,943,128
LIABILITIES
Cash overdraft due to custodian 0 0 3,186
Payables:
Investment securities purchased 1,263,738 1,240,068 510,746
Distribution to shareholders 230,671 32,779 123,346
Capital shares redeemed 0 0 10,814
Due to sponsor and distributor 37,304 1,613 6,117
Due to WFB (Note 2) 30,460 0 78,446
Other 49,795 19,364 22,734
TOTAL LIABILITIES 1,611,968 1,293,824 755,389
TOTAL NET ASSETS
$ 92,424,829 $11,958,421 $ 42,187,739
NET ASSETS CONSIST OF:
Paid-in capital - Class A $ 82,454,366 $ 4,735,739 $ 32,844,525
Paid-in capital - Class B N/A 25 25
Paid-in capital - Institutional Class 10,137,736 7,238,416 8,611,113
Undistributed (overdistributed) net
investment income 0 (9,889) (26,485)
Undistributed net realized gain (loss)
on investments (235,432) (62,757) (31,825)
Net unrealized appreciation
(depreciation) of investments 68,159 56,887 790,386
TOTAL NET ASSETS $ 92,424,829 $11,958,421 $ 42,187,739
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $ 82,358,838 $ 4,826,793 $ 33,676,010
Shares outstanding - Class A 8,025,037 316,745 2,050,850
Net asset value and offering price per
share - Class A $ 10.26 $ 15.24 $ 16.42
Maximum offering price $ 10.58(2) $ 15.96(1) $ 17.19(1)
Net Assets - Class B N/A $ 25 $ 25
Shares outstanding - Class B N/A 3 3
Net asset value and offering price per
share - Class B N/A $ 10.06 $ 10.07
Net Assets - Institutional Class $ 10,065,991 $ 7,131,603 $ 8,511,704
Shares outstanding - Institutional Class 996,809 467,897 518,497
Net asset value and offering price per
share - Institutional Class $ 10.10 $ 15.24 $ 16.42
INVESTMENT AT COST (NOTE 3) $ 92,406,236 $11,779,192 $ 40,556,292
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
---------------------
53
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
ARIZONA
TAX- FREE
FUND CALIFORNIA TAX-FREE BOND FUND
----------- -------------------------------
FOR THE FOR THE
YEAR ENDED FOR THE NINE YEAR ENDED
SEPT. 30, MONTHS ENDED DEC. 31,
1996 SEPT. 30, 1996 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 1,263,459 $ 14,068,280 $ 18,157,370
TOTAL INVESTMENT INCOME 1,263,459 14,068,280 18,157,370
EXPENSES (NOTE 2)
Advisory 120,757 1,202,280 1,542,893
Administration fees 34,843 73,687 93,013
Custody fees 5,038 43,440 55,013
Shareholder servicing fees 2,748 752,569 930,128
Portfolio accounting fees 38,026 84,857 123,508
Transfer agency fees 18,340 145,236 183,849
Distribution fees 20,787 288,335 231,192
Amortization of organization expenses 6,985 4,476 5,872
Legal and audit fees 7,499 58,125 56,475
Registration fees 20,950 34,890 43,357
Directors' fees 6,569 3,743 5,000
Shareholder reports 25,455 51,039 59,999
Other 8,025 70,070 77,451
TOTAL EXPENSES 316,022 2,812,747 3,407,750
Less:
Waived and reimbursed fees (Note 2) (172,659) (921,858) (1,232,856)
Net Expenses 143,363 1,890,889 2,174,894
NET INVESTMENT INCOME 1,120,096 12,177,391 15,982,476
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 336,608 2,803,854 591,815
Net change in unrealized appreciation
(depreciation) of investments (564,971) (9,703,374) 35,434,462
NET GAIN (LOSS) ON INVESTMENTS (228,363) (6,899,520) 36,026,277
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 891,733 $ 5,277,871 $ 52,008,753
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
54
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CALIFORNIA TAX- FREE NATIONAL
INCOME FUND TAX-FREE OREGON
------------------------- FUND TAX- FREE
-------- FUND
FOR THE ----------
NINE FOR THE
MONTHS FOR THE YEAR FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
SEPT. 30, DEC. 31, SEPT. SEPT. 30,
1996 1995 30, 1996 1996
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $2,749,129 $2,414,748 $689,500 $2,585,534
TOTAL INVESTMENT INCOME 2,749,129 2,414,748 689,500 2,585,534
EXPENSES (NOTE 2)
Advisory 300,312 267,645 67,463 230,626
Administration fees 18,371 16,793 19,518 66,644
Custody fees 10,974 10,407 2,801 11,283
Shareholder servicing fees 183,562 166,349 1,802 50,431
Portfolio accounting fees 54,901 61,353 36,465 38,007
Transfer agency fees 31,443 45,280 12,321 38,225
Distribution fees 30,358 27,725 146 1,013
Amortization of organization expenses 6,288 8,399 2,656 1,824
Legal and audit fees 16,983 22,521 4,185 16,936
Registration fees 14,972 19,998 12,877 13,407
Directors' fees 3,743 5,000 5,886 5,926
Shareholder reports 18,717 14,015 23,621 31,650
Other 7,718 9,501 5,385 6,480
TOTAL EXPENSES 698,342 674,986 195,126 512,452
Less:
Waived and reimbursed fees (Note 2) (299,200) (314,402) (142,023) (139,960)
Net Expenses 399,142 360,584 53,103 372,492
NET INVESTMENT INCOME 2,349,987 2,054,164 636,397 2,213,042
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 2,344 (43,204) 12,999 226,397
Net change in unrealized appreciation
(depreciation) of investments (677,786) 2,645,684 (92,672) (105,222)
NET GAIN (LOSS) ON INVESTMENTS (675,442) 2,602,480 (79,673) 121,175
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,674,545 $4,656,644 $556,724 $2,334,217
- --------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
55
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND
-------------------------------------------
FOR THE
FOR THE PERIOD FOR THE
YEAR ENDED ENDED YEAR ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 (1) 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 1,120,096 $ 390,606 $ 1,221,865
Net realized gain (loss) on sale of
investments 336,608 68,297 6,272
Net change in unrealized appreciation
(depreciation) of investments (564,971) 80,894 440,550
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 891,733 539,797 1,668,687
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (370,176) (390,606) (1,221,865)
CLASS B (11) 0 0
INSTITUTIONAL CLASS (749,909) 0 0
In excess of net investment income
CLASS A 0 (61,287) (52,079)
CLASS B 0 0
INSTITUTIONAL CLASS 0 0
From net realized gain (loss) on sales
of investments
CLASS A (109,463) 0 (6,272)
CLASS B 0 0 0
INSTITUTIONAL CLASS (227,136) 0 0
In excess of net realized gain
CLASS A (12,756) 0 (20,328)
CLASS B 0 0 0
INSTITUTIONAL CLASS (24,754) 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 1,232,906 1,568,324 6,231,470
Reinvestment of dividends - Class A 329,709 103,193 282,090
Cost of shares redeemed - Class A (18,720,996) (1,719,071) (7,453,357)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (17,158,381) (47,554) (939,797)
Proceeds from shares sold - Class B 20,025 0 0
Reinvestment of dividends - Class B 0 0 0
Cost of shares redeemed - Class B 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 20,025 0 0
Proceeds from shares sold -
Institutional Class 19,525,762 0 0
Reinvestment of dividends -
Institutional Class 6,149 0 0
Cost of shares redeemed -
Institutional Class (3,485,066) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 16,046,845 0 0
INCREASE (DECREASE) IN NET ASSETS (1,693,983) 40,350 (571,654)
NET ASSETS:
Beginning net assets 24,621,718 24,581,368 25,153,022
ENDING NET ASSETS $22,927,735 $24,621,718 $24,581,368
- ----------------------------------------------------------------------------------------
</TABLE>
(1) FOR THE PERIOD JUNE 1, 1995 THROUGH SEPT. 30, 1995.
(2) "PROCEEDS FROM SHARES SOLD" INCLUDES $34,678,827 FOR CLASS A AND
$108,895,455 FOR THE INSTITUTIONAL CLASS, AS A RESULT OF THE MERGER OF THE
PACIFICA CALIFORNIA TAX-EXEMPT FUND. SEE NOTE 1.
(3) "PROCEEDS FROM SHARES SOLD" INCLUDES $4,994,478 FOR CLASS A AND $9,693,700
FOR THE INSTITUTIONAL CLASS, AS A RESULT OF THE MERGER OF THE PACIFICA
SHORT-TERM CALIFORNIA TAX-EXEMPT FUND. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
56
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
----------------------------------------------
FOR THE NINE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (2) 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 12,177,391 $ 15,982,476 $ 22,512,196
Net realized gain (loss) on sale of
investments 2,803,854 591,815 (6,042,867)
Net change in unrealized
appreciation (depreciation) of
investments (9,703,374) 35,434,462 (52,684,575)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,277,871 52,008,753 (36,215,246)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (10,685,255) (15,472,726) (22,512,196)
CLASS B (1,125,031) (509,750) 0
INSTITUTIONAL CLASS (367,105) 0 0
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
From net realized gain (loss) on
sales of investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 66,701,505 33,207,626 54,574,028
Reinvestment of dividends - Class A 7,380,505 10,558,616 17,945,317
Cost of shares redeemed - Class A (62,521,660) (88,142,779) (240,793,430)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 11,560,350 (44,376,537) (168,274,085)
Proceeds from shares sold - Class B 17,171,150 26,079,671 0
Reinvestment of dividends - Class B 809,463 313,904 0
Cost of shares redeemed - Class B (4,072,983) (557,099) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 13,907,630 25,836,476 0
Proceeds from shares sold -
Institutional Class 109,432,129 0 0
Reinvestment of dividends -
Institutional Class 416 0 0
Cost of shares redeemed -
Institutional Class (3,636,945) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 105,795,600 0 0
INCREASE (DECREASE) IN NET ASSETS 124,364,060 17,486,216 (227,001,527)
NET ASSETS:
Beginning net assets 323,332,954 305,846,738 532,848,265
ENDING NET ASSETS $447,697,014 $323,332,954 $305,846,738
- -------------------------------------------------------------------------------------------
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
-------------------------------------------
FOR THE
NINE
MONTHS FOR THE FOR THE
ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (3) 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 2,349,987 $ 2,054,164 $ 2,293,335
Net realized gain (loss) on sale of
investments 2,344 (43,204) (128,868)
Net change in unrealized
appreciation (depreciation) of
investments (677,786) 2,645,684 (2,827,879)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,674,545 4,656,644 (663,412)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (2,330,216) (2,054,164) (2,293,335)
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS (19,771) 0 0
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
From net realized gain (loss) on
sales of investments
CLASS A 0 0 0
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 44,078,871 51,648,405 31,971,989
Reinvestment of dividends - Class A 2,046,401 1,618,516 1,875,590
Cost of shares redeemed - Class A (41,016,574) (26,901,737) (34,766,280)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 5,108,698 26,365,184 (918,701)
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 10,078,900 0 0
Reinvestment of dividends -
Institutional Class 0 0 0
Cost of shares redeemed -
Institutional Class (52,763) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 10,026,137 0 0
INCREASE (DECREASE) IN NET ASSETS 14,459,393 28,967,664 (3,875,448)
NET ASSETS:
Beginning net assets 77,965,436 48,997,772 52,873,220
ENDING NET ASSETS $92,424,829 $77,965,436 $48,997,772
- -------------------------------------------------------------------------------------------
</TABLE>
(1) FOR THE PERIOD JUNE 1, 1995 THROUGH SEPT. 30, 1995.
The accompanying notes are an integral part of these financial statements.
---------------------
57
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND
-------------------------------------------
FOR THE
FOR THE PERIOD FOR THE
YEAR ENDED ENDED YEAR ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 (1) 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 636,397 $ 225,575 $ 622,957
Net realized gain (loss) on sale of
investments 12,999 (1,042) (75,743)
Net change in unrealized
appreciation (depreciation) of
investments (92,672) 82,929 376,362
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 556,724 307,462 923,576
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (298,145) (225,575) (622,957)
CLASS B 0 0 0
INSTITUTIONAL CLASS (338,252) 0 0
In excess of net investment income
CLASS A 0 (21,523) (18,062)
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
From net realized gain (loss) on
sales of investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 252,284 624,616 5,682,988
Reinvestment of dividends - Class A 186,973 113,062 287,582
Cost of shares redeemed - Class A (9,944,744) (951,240) (5,394,689)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (9,505,487) (213,562) 575,881
Proceeds from shares sold - Class B 25 0 0
Reinvestment of dividends - Class B 0 0 0
Cost of shares redeemed - Class B 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 25 0 0
Proceeds from shares sold -
Institutional Class 9,318,896 0 0
Reinvestment of dividends -
Institutional Class 104,965 0 0
Cost of shares redeemed -
Institutional Class (2,185,445) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 7,238,416 0 0
INCREASE (DECREASE) IN NET ASSETS (2,346,719) (153,198) 858,438
NET ASSETS:
Beginning net assets 14,305,140 14,458,338 13,599,900
ENDING NET ASSETS $11,958,421 $14,305,140 $14,458,338
- ----------------------------------------------------------------------------------------
</TABLE>
(1) FOR THE PERIOD JUNE 1, 1995 THROUGH SEPT. 30, 1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
58
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND
-------------------------------------------
FOR THE
FOR THE PERIOD FOR THE
YEAR ENDED ENDED YEAR ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 (1) 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 2,213,042 $ 852,996 $ 2,663,326
Net realized gain (loss) on sale of
investments 226,397 13,635 (239,143)
Net change in unrealized
appreciation (depreciation) of
investments (105,222) (278,482) 1,451,939
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,334,217 588,149 3,876,122
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,836,397) (852,996) (2,663,326)
CLASS B 0 0 0
INSTITUTIONAL CLASS (376,645) 0 0
In excess of net investment income
CLASS A 0 (32,292) (160,187)
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
From net realized gain (loss) on
sales of investments
CLASS A 0 0 (128,294)
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 1,339,221 1,376,768 5,706,279
Reinvestment of dividends - Class A 1,177,977 531,664 1,830,242
Cost of shares redeemed - Class A (19,138,811) (3,779,707) (10,061,225)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (16,621,613) (1,871,275) (2,524,704)
Proceeds from shares sold - Class B 25 0 0
Reinvestment of dividends - Class B 0 0 0
Cost of shares redeemed - Class B 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 25 0 0
Proceeds from shares sold -
Institutional Class 10,508,693 0 0
Reinvestment of dividends -
Institutional Class 74,828 0 0
Cost of shares redeemed -
Institutional Class (1,972,408) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 8,611,113 0 0
INCREASE (DECREASE) IN NET ASSETS (7,889,300) (2,168,414) (1,600,389)
NET ASSETS:
Beginning net assets 50,077,039 52,245,453 53,845,842
ENDING NET ASSETS $42,187,739 $50,077,039 $52,245,453
- ----------------------------------------------------------------------------------------
</TABLE>
(1) FOR THE PERIOD JUNE 1, 1995 THROUGH SEPT. 30, 1995.
The accompanying notes are an integral part of these financial statements.
---------------------
59
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND (1)
-------------------------------
CLASS A
-------------------------------
YEAR PERIOD YEAR
ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 (2) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.71 $10.68 $10.48
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.48 0.17 0.51
Net realized and unrealized gain (loss) on investments (0.09) 0.06 0.23
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.39 0.23 0.74
LESS DISTRIBUTIONS:
Dividends from net investment income (0.48) (0.20) (0.53)
Distributions from net realized gain (0.17) 0.00 (0.01)
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.65) (0.20) (0.54)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.45 $10.71 $10.68
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 3.60% 6.55%** 7.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $7,331 $24,622 $24,581
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.78% 0.45% 0.40%
Ratio of net investment income to average net assets 4.45% 4.73% 4.89%
Portfolio turnover 42% 62% 14%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.46% 1.35% 1.13%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 3.77% 3.83% 4.16%
- -----------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE ARIZONA INTERMEDIATE TAX-FREE FUND OF
WESTCORE TRUST AND WAS ADVISED BY FIRST INTERSTATE BANK OF OREGON,
N.A. FROM ITS COMMENCEMENT OF OPERATIONS ON MARCH 2, 1992 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
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(3) THE FUND COMMENCED OPERATIONS ON MARCH 2, 1992.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
- ---------------------
60
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
ARIZONA TAX-FREE FUND (1) (CONT.) BOND FUND
----------------------------------------------------- --------------------
INSTL.
CLASS A (CONT.) CLASS B CLASS CLASS A
------------------------------- --------- --------- --------------------
YEAR YEAR PERIOD PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, SEPT. 30, SEPT. 30, SEPT. 30, DEC. 31,
1994 1993 1992 (3) 1996 (4) 1996 1996 (5) 1995
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.64 $10.09 $10.00 $10.00 $10.71 $11.05 $9.84
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.50 0.49 0.09 0.01 0.49 0.40 0.55
Net realized and
unrealized gain (loss)
on investments (0.15) 0.55 0.08 0.07 (0.10) (0.27) 1.21
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.35 1.04 0.17 0.08 0.39 0.13 1.76
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.50) (0.49) (0.08) (0.01) (0.49) (0.40) (0.55)
Distributions from net
realized gain (0.01) 0.00 0.00 0.00 (0.17) 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.51) (0.49) (0.08) (0.01) (0.66) (0.40) (0.55)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $10.48 $10.64 $10.09 10.07 $10.44 $10.78 $11.05
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 3.28% 10.50% 7.02%** 0.76% 3.74% 1.27% 18.24%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $25,153 $22,430 $4,690 $20 $15,577 $300,702 $296,417
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.31% 0.20% 0.68% 1.16% 0.48% 0.69% 0.68%
Ratio of net investment
income to average net
assets 4.72% 4.98% 4.32% 3.59% 4.63% 4.99% 5.18%
Portfolio turnover 28% 4% 0% 42% 42% 22% 9%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.00% 1.18% 2.08% 1.81% 1.20% 1.07% 1.07%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.03% 4.00% 2.92% 2.94% 3.91% 4.61% 4.79%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE ARIZONA INTERMEDIATE TAX-FREE FUND OF
WESTCORE TRUST AND WAS ADVISED BY FIRST INTERSTATE BANK OF OREGON,
N.A. FROM ITS COMMENCEMENT OF OPERATIONS ON MARCH 2, 1992 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
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(3) THE FUND COMMENCED OPERATIONS ON MARCH 2, 1992.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
---------------------
61
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
(CONT.)
-------------------------------
CLASS A (CONT.)
-------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.20 $10.41 $10.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.56 0.56 0.53
Net realized and unrealized gain (loss) on investments (1.36) 0.84 0.41
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS (0.80) 1.40 0.94
LESS DISTRIBUTIONS:
Dividends from net investment income (0.56) (0.56) (0.53)
Distributions from net realized gain 0.00 (0.05) 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.56) (0.61) (0.53)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $9.84 $11.20 $10.41
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) (7.27)% 13.82% 10.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $305,847 $532,848 $242,409
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.65% 0.64% 0.19%
Ratio of net investment income to average net assets 5.35% 5.05% 5.67%
Portfolio turnover 3% 7% 18%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.06% 1.01% 1.07%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.94% 4.68% 4.79%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
- ---------------------
62
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
(CONT.) CALIFORNIA TAX-FREE INCOME FUND
------------------------------- -------------------------------
INSTL.
CLASS B CLASS CLASS A
-------------------- --------- -------------------------------
PERIOD YEAR PERIOD PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPT. 30, DEC. 31, SEPT. 30, SEPT. 30, DEC. 31, DEC. 31,
1996 (1) 1995 1996 (2) 1996 (1) 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.26 $10.00 $10.69 $10.35 $9.84 $10.36
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.35 0.48 0.04 0.29 0.38 0.40
Net realized and
unrealized gain (loss)
on investments (0.28) 1.26 0.11 (0.09) 0.51 (0.52)
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.07 1.74 0.15 0.20 0.89 (0.12)
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.35) (0.48) (0.04) (0.29) (0.38) (0.40)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.35) (0.48) (0.04) (0.29) (0.38) (0.40)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $10.98 $11.26 $10.80 $10.26 $10.35 $9.84
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 0.73% 17.72% 1.24% 2.01% 9.14% (1.10)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $40,099 $26,916 $106,896 $82,359 $77,965 $48,998
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.35% 1.32% 0.67% 0.65% 0.65% 0.16%
Ratio of net investment
income to average net
assets 4.32% 4.31% 5.20% 3.83% 3.70% 4.03%
Portfolio turnover 22% 9% 22% 48% 31% 33%
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.73% 1.72% 1.20% 1.14% 1.22% 1.21%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 3.94% 3.91% 4.67% 3.34% 3.13% 2.98%
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
---------------------
63
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
(CONT.)
-------------------------------
INSTL.
CLASS A (CONT.) CLASS
-------------------- ---------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
DEC. 31, DEC. 31, SEPT. 30,
1993 1992 (2) 1996 (3)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.05 $10.00 $10.06
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.39 0.02 0.02
Net realized and unrealized gain (loss) on investments 0.31 0.05 0.04
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.70 0.07 0.06
LESS DISTRIBUTIONS:
Dividends from net investment income (0.39) (0.02) (0.02)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.39) (0.02) (0.02)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.36 $10.05 $10.10
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 7.10% 0.84% 0.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $52,873 $7,821 $10,066
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.34% 0.00% 0.55%
Ratio of net investment income to average net assets 3.74% 3.56% 3.06%
Portfolio turnover 11% 0% 48%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.23% 1.55% 0.92%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 2.85% 2.01% 2.69%
- -----------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE QUALITY TAX-EXEMPT INCOME FUND OF WESTCORE
TRUST AND WAS ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM
ITS COMMENCEMENT OF OPERATIONS ON JANUARY 15, 1993 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
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND COMMENCED OPERATIONS ON NOVEMBER 18, 1992.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(4) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(5) THE FUND COMMENCED OPERATIONS ON JANUARY 15, 1993.
(6) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
- ---------------------
64
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND (1)
---------------------------------------------------------------------------
INSTL.
CLASS A CLASS B CLASS
----------------------------------------------------- --------- ---------
YEAR PERIOD YEAR YEAR PERIOD PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MAY 31, MAY 31, MAY 31, SEPT. 30, SEPT. 30,
1996 1995 (4) 1995 1994 1993 (5) 1996 (6) 1996
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $15.34 $15.28 $14.98 $15.17 $15.00 $10.00 $15.34
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.72 0.24 0.68 0.64 0.17 0.00 0.71
Net realized and
unrealized gain (loss)
on investments (0.10) 0.08 0.32 (0.17) 0.15 0.06 (0.10)
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.62 0.32 1.00 0.47 0.32 0.06 0.61
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.72) (0.26) (0.70) (0.64) (0.15) 0.00 (0.71)
Distributions from net
realized gain 0.00 0.00 0.00 (0.02) 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.72) (0.26) (0.70) (0.66) (0.15) 0.00 (0.71)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $15.24 $15.34 $15.28 $14.98 $15.17 $10.06 $15.24
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 4.03% 6.53%** 6.97% 3.07% 5.65%** 0.60% 4.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $4,827 $14,305 $14,458 $13,600 $7,457 $0 $7,132
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.42% 0.35% 0.35% 0.27% 0.25% 0.00% 0.36%
Ratio of net investment
income to average net
assets 4.69% 4.65% 4.59% 4.29% 3.88% 1.83% 4.66%
Portfolio turnover 73% 86% 23% 19% 18% 73% 73%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.42% 1.85% 1.51% 1.58% 1.99% 0.00% 1.45%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 3.69% 3.15% 3.43% 2.99% 2.14% 1.83% 3.57%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE QUALITY TAX-EXEMPT INCOME FUND OF WESTCORE
TRUST AND WAS ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM
ITS COMMENCEMENT OF OPERATIONS ON JANUARY 15, 1993 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
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND COMMENCED OPERATIONS ON NOVEMBER 18, 1992.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(4) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(5) THE FUND COMMENCED OPERATIONS ON JANUARY 15, 1993.
(6) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
---------------------
65
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND (1)
-------------------------------
CLASS A
-------------------------------
YEAR PERIOD YEAR
ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 (2) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $16.38 $16.47 $16.17
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.79 0.28 0.82
Net realized and unrealized gain (loss) on investments 0.04 (0.08) 0.39
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.83 0.20 1.21
LESS DISTRIBUTIONS:
Dividends from net investment income (0.79) (0.29) (0.87)
Distributions from net realized gain 0.00 0.00 (0.04)
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.79) (0.29) (0.91)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $16.42 $16.38 $16.47
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 5.03% 3.67%** 7.92%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $33,676 $50,077 $52,245
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.85% 0.70% 0.70%
Ratio of net investment income to average net assets 4.87% 5.01% 5.19%
Portfolio turnover 27% 57% 15%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.15% 1.01% 0.90%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.57% 4.70% 4.99%
- -----------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE OREGON TAX-EXEMPT 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 REORGANIZATION, EXISTING
INVESTOR SHARES WERE CONVERTED INTO CLASS A SHARES OF THE FUND. IN
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
- ---------------------
66
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND (1) (CONT.)
-----------------------------------------------------
INSTL.
CLASS A (CONT.) CLASS B CLASS
------------------------------- --------- ---------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, SEPT. 30, SEPT. 30,
1994 1993 1992 1996 (3) 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $16.79 $16.07 $15.74 $10.00 $16.38
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.84 0.86 0.91 0.00 0.72
Net realized and
unrealized gain (loss)
on investments (0.43) 0.76 0.38 0.07 0.04
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.41 1.62 1.29 0.07 0.76
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.82) (0.86) (0.92) 0.00 (0.72)
Distributions from net
realized gain (0.21) (0.04) (0.04) 0.00 0.00
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (1.03) (0.90) (0.96) 0.00 (0.72)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $16.17 $16.79 $16.07 $10.07 $16.42
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 2.33% 10.36% 8.45% 0.70% 5.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $53,846 $45,435 $25,002 $0 $8,512
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.62% 0.60% 0.60% 0.00% 0.63%
Ratio of net investment
income to average net
assets 4.90% 5.34% 5.81% 1.83% 4.41%
Portfolio turnover 22% 6% 17% 27% 27%
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.84% 0.91% 0.98% 0.00% 0.93%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.69% 5.03% 5.43% 1.83% 4.11%
- ----------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE OREGON TAX-EXEMPT 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 REORGANIZATION, EXISTING
INVESTOR SHARES WERE CONVERTED INTO CLASS A SHARES OF THE FUND. IN
CONNECTION WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS
FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS WELLS FARGO
INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM MAY 31 TO SEPTEMBER 30.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
---------------------
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940 (the "1940 Act"), as an open-end series investment company.
The Company commenced operations on January 1, 1992, 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 Arizona
Tax-Free, California Tax-Free Bond, California Tax-Free Income, National
Tax-Free, and Oregon Tax-Free Funds (the "Funds").
At a special shareholders meeting on July 16, 1996, the Shareholders of Pacifica
Funds Trust ("Pacifica") approved a plan of reorganization providing for the
transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Arizona Tax-Free, National Tax-Free,
and Oregon Tax-Free Funds were established to acquire all of the assets and
assume all of the liabilities of the Pacifica Arizona Tax-Exempt, National
Tax-Exempt, and Oregon Tax-Exempt Funds (previously, the Arizona Intermediate
Tax-Free, Quality Tax-Exempt Income, and Oregon Tax-Exempt Funds of Westcore
Trust), respectively (collectively, the "Predecessor Funds"). Additionally, the
Stagecoach California Tax-Free Bond and California Tax-Free Income Funds
acquired all of the assets and assumed all of the liabilities of the Pacifica
California Tax-Exempt and California Short-Term Tax-Exempt Funds, respectively.
These acquisitions were accomplished in separate tax-free exchanges for shares
of the respective Fund. Pursuant to the reorganization, the Company changed its
fiscal year-end from December 31 to September 30.
All performance and financial data presented in this annual report for the
Arizona Tax-Free, National Tax-Free, and Oregon Tax-Free Funds for periods prior
to September 6, 1996 refers to the Predecessor Funds.
Each of the funds presented in this book, with the exception of the California
Tax-Free Income Fund, offers Class A, Class B, and Institutional Class shares.
The California Tax-Free Income Fund offers Class A and Institutional Class
shares. The three classes of shares differ principally in the applicable sales
charges, shareholder servicing fees and
- ---------------------
68
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 and service fees.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT POLICY AND SECURITY VALUATION
Investments in securities for which the primary market is a national securities
exchange or the NASDAQ National Market System are valued at the last reported
sales price on the day of valuation. U.S. government obligations are valued at
the reported bid prices. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding debt securities
maturing in 60 days or less, the valuations are based on latest quoted bid
prices. Debt securities maturing in 60 days or less are valued at amortized
cost. Securities for which quotations are not readily available are valued at
fair value as determined by procedures set by the Company's Board of Directors.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the ex-dividend
date, and interest income is accrued daily. Realized gains or losses are
reported on the basis of identified cost of securities delivered. Bond discounts
are accreted and premiums are amortized as required by the Internal Revenue
Code.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income of the Funds are
declared daily and distributed monthly. Any dividends to shareholders from net
realized capital gains are declared and distributed annually.
---------------------
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAXES
The Company's policy with respect to each Fund is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute substantially all of each Fund's net
investment income and any net realized capital gain to its shareholders.
Therefore, no federal or state income tax provision is required. The following
funds had capital loss carryforwards at September 30, 1996:
<TABLE>
<CAPTION>
CAPITAL
YEAR LOSS
FUND EXPIRES CARRYFORWARD
- ----------------------------------------------------------------------------------
<S> <C> <C>
California Tax-Free Bond Fund 2002 $2,795,198
California Tax-Free Income Fund 2002 128,867
2003 87,204
National Tax-Free Fund 2002 32,437
Oregon Tax-Free Fund 2003 1,543
</TABLE>
The capital loss carryforwards shown above include carryforwards from Pacifica
Funds which were merged into the Funds during the year. The Board intends to
offset net capital gains with each capital loss carryforward until each
carryforward has been fully utilized or expires. Thus, no capital gain
distributions shall be made until the capital loss carryforward has been fully
utilized or expires.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by
the Fund. The differences between the income and gains distributed on a book
versus tax basis are shown as excess distributions of net investment income and
net realized gain on the sale of investments in the accompanying Statements of
Changes in Net Assets.
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of the Fund and/or Class. These expenses
are being amortized by the Funds on a straight-line basis over 60 months from
the date each Fund and/or Class commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Funds
with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contracts, WFB furnishes to
the Funds investment guidance and policy direction in connection with daily
portfolio management. Under the contracts with each of the Funds, WFB is
- ---------------------
70
<PAGE>
NOTES TO FINANCIAL STATEMENTS
entitled to be paid a monthly advisory fee at an annual rate of 0.50% of the
average daily net assets of each Fund.
For the period from October 1, 1995 to March 31, 1996, the Arizona Tax-Free,
National Tax-Free, and Oregon Tax-Free Funds were advised by First Interstate
Capital Management, Inc. (FICM). Pursuant to the advisory contracts, the Funds
paid an advisory fee at an annual rate of 0.50%. On April 1, 1996, First
Interstate Bancorp (FIB) was merged with and into Wells Fargo & Company ("Wells
Fargo") and FICM and First Interstate Bank of California (FICAL) became indirect
wholly-owned subsidiaries of Wells Fargo. In connection with this merger, FICM
changed its name to Wells Fargo Investment Management, Inc ("WFIM"). For the
period from April 1, 1996 to September 5, 1996, such advisory fees were paid to
WFIM.
The Company has entered into contracts with WFB on behalf of all of the Funds
whereby WFB is responsible for providing custody and portfolio accounting
services for the Funds. WFB is entitled to certain transaction charges plus an
annual fee for custody services at an annual rate of 0.0167% of the average
daily net assets of the respective Funds. For portfolio accounting services, WFB
is entitled to a monthly base fee from each Fund of $2,000 plus an annual fee of
0.07% of the first $50 million of average daily net assets, 0.045% of the next
$50 million, and 0.02% of the average daily net assets over $100 million.
For the period from October 1, 1995 to March 31, 1996, FICAL served as the
custodian for the Arizona Tax-Free, National Tax-Free, and Oregon Tax-Free
Funds. Pursuant to the contracts, the Funds paid a custodian fee based on net
assets and certain transaction charges. For the period from April 1, 1996 to
September 5, 1996, such custodian fees were paid to WFB.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to act as transfer agent for the Funds. Under the transfer agency
contracts with the California Tax-Free Income and California Tax Free Bond
Funds, WFB is paid a per account fee plus other related costs with a minimum
monthly fee of $3,000 per Fund, unless net assets of the respective Fund are
under $20 million. For as long as the assets remain under $20 million a Fund
will not be charged any transfer agent fees by WFB. Under the contract with the
Arizona Tax-Free, National Tax-Free, and Oregon Tax-Free Funds, WFB is entitled
to be paid an annual fee at the rate of 0.07% of the average daily net assets of
the Funds.
For the period from October 1, 1995 to September 5, 1996, the Arizona Tax-Free,
National Tax-Free, and Oregon Tax-Free Funds retained Furman Selz LLC ("Furman
Selz") to provide personnel and facilities to perform shareholders servicing,
transfer agency related services and fund accounting.
The Company has entered into contracts on behalf of the Funds with WFB,
---------------------
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS
whereby WFB has agreed to provide shareholder servicing 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
shares of the California Tax-Free Income Fund and the Class A and Class B shares
of the California Tax-Free Bond Fund, 0.25% of the average daily net assets
attributable to the Institutional Class shares of the California Tax-Free Income
and California Tax-Free Bond Funds, and 0.25% of the average daily net assets of
each class of the Arizona Tax-Free, National Tax-Free, and Oregon Tax-Free
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 Arizona
Tax-Free, National Tax-Free, and Oregon Tax-Free Funds, such as maintaining
shareholder accounts and records. The Funds 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 servicing expenses for the Funds for the period ended September 30, 1996
were as follows:
<TABLE>
<CAPTION>
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund* $ 429 $ 0 $ 2,319
California Tax-Free Bond Fund** 638,962 77,763 35,844
California Tax-Free Income Fund** 182,151 0 1,411
National Tax-Free Fund* 730 0 1,072
Oregon Tax-Free Fund* 49,136 0 1,295
</TABLE>
* INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
The Company has entered into administration and distribution agreements on
behalf of the Funds with Stephens. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services to the Funds. For
providing supervisory and administrative services, Stephens is entitled to
receive a monthly fee at the annual rate of 0.03% of such Fund's average daily
net assets for the California Tax-Free Income and California Tax-Free Bond
Funds, and 0.05% of such Fund's average daily net assets for the Arizona
Tax-Free, National Tax-Free, and Oregon Tax-Free Funds.
For the period from October 1, 1995 to November 15, 1995, ALPS Mutual Fund
Services, Inc. ("ALPS") served as the administrator for the Oregon Tax-Free
Fund. ALPS was entitled to and received
- ---------------------
72
<PAGE>
NOTES TO FINANCIAL STATEMENTS
administrative fees at an annual rate of 0.05% of the average daily net assets
of the Fund. For the period from November 16, 1995 to September 5, 1996 for the
Oregon Tax-Free Fund, and for the period from October 1, 1995 to September 5,
1996 for the Arizona Tax-Free and National Tax-Free Funds, Furman Selz provided
administrative services for the operation of each Fund. As compensation for such
services, each Fund paid Furman Selz an annual fee payable monthly equal to
0.15% of the average daily net assets of each Fund.
The Company has adopted separate Distribution Plans pursuant to Rule 12b-1 under
the 1940 Act for Class A and Class B shares of the Funds.
The Distribution Plan for each of the Class A shares of the funds provides that
each Fund may defray all or part of the cost of preparing, printing and
distributing prospectuses and other promotional materials by paying on an annual
basis up to 0.05% of such Fund's Class A shares' average daily net assets for
costs incurred. Each of these Funds may participate in joint distribution
activities with other funds, in which event, expenses reimbursed out of the
assets of one of the Funds may be attributable, in part, to the
distribution-related activities of another Fund. Generally, the expenses
attributable to joint distribution activities will be allocated among the Funds
in proportion to their relative net asset sizes.
For the period from October 1, 1995 to September 5, 1996, the Arizona Tax-Free,
National Tax-Free, and Oregon Tax-Free Funds had adopted a non-compensatory
Distribution Plan and Agreement (the "Plan") for the Class A shares. The Plan
provided for payments by each Fund for actual expenses incurred, not to exceed
0.50% of the average net assets of the Class A shares of the Fund. Pacifica
Funds Distributor Inc., an affiliate of Furman Selz, acted as Distributor during
such period.
---------------------
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The separate Class B Distribution Plan for the Funds provides that the Funds
(other than the California Tax-Free Bond Fund) may pay, as compensation for
distribution-related services, a monthly fee at an annual rate of up to 0.75% of
each Fund's average daily net assets attributable to Class B shares. The
California Tax-Free Bond Fund may pay up to 0.70% of the average daily net
assets attributable to Class B shares as compensation for distribution-related
services provided on behalf of its Class B shares. The Distribution Plan
expenses for Class A and Class B shares of the Funds for the period ended
September 30, 1996 were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION
FEES FEES
FUND CLASS A CLASS B
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund * $ 20,787 $ 0
California Tax-Free Bond Fund ** 106,757 181,578
National Tax-Free Fund * 146 0
Oregon Tax-Free Fund * 1,013 0
</TABLE>
* INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
For the year ended December 31, 1995, the California Tax-Free Bond Fund paid
distribution fees of $149,164 and $82,028 for the Class A and B shares,
respectively.
FEES WAIVED AND REIMBURSED EXPENSES
The following amounts of fees were waived for the period ended September 30,
1996:
<TABLE>
<CAPTION>
FEES WAIVED FEES WAIVED FEES WAIVED
BY BY BY
FUND FURMAN SELZ FICM WFB
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund* $ 10,207 $ 61,642 $ 100,810
California Tax-Free Bond Fund** N/A N/A 921,858
California Tax-Free Income Fund** N/A N/A 299,200
National Tax-Free Fund* 5,380 35,773 100,870
Oregon Tax-Free Fund* 17,017 57,377 65,566
</TABLE>
* INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
All amounts shown as Waived and Reimbursed Fees on the Statements of Operations
for the year ended December 31, 1995 were waived by WFB.
- ---------------------
74
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens, respectively. WFB and Stephens have agreed to waive or reimburse all
or a portion of the respective fees charged to, or expenses paid by, each Fund
to ensure that the total operating expenses do not exceed, on an annual basis,
0.60%, 0.68%, 0.65%, 0.35% and 0.60% of the average daily net assets of Class A
shares and 0.40%, 0.63%, 0.60%, 0.35% and 0.40% of the Institutional Class
shares of the Arizona Tax-Free, California Tax-Free Bond, California Tax-Free
Income, National Tax-Free, and Oregon Tax-Free Funds, respectively, through
August 31, 1997.
Certain officers and directors of the Company are also officers of Stephens. As
of September 30, 1996, Stephens owned 6,755 shares of the California Tax-Free
Bond, 11,483 shares of the California Tax-Free Income and three shares each of
the Arizona Tax-Free, National Tax-Free and Oregon Tax-Free Funds.
Stephens has retained $2,252,478 as sales charges from the proceeds of Class A
shares sold and $306,643 from the proceeds of Class B shares redeemed by the
Company for the period ended September 30, 1996. Wells Fargo Securities Inc., a
subsidiary of WFB, received $1,780,263 as sales charges from the proceeds of
Class A shares sold and $306,643 from the proceeds of Class B shares redeemed by
the Company for the period ended September 30, 1996.
---------------------
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for each
Fund were as follows:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEAR ENDED ENDED SEPTEMBER 30,
SEPTEMBER 30, 1996 1996
------------------------------------- --------------------------
ARIZONA NATIONAL OREGON CALIFORNIA CALIFORNIA
AGGREGATE PURCHASES TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
AND SALES OF: BOND FUND BOND FUND BOND FUND BOND FUND INCOME FUND
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS:
Purchases at cost $ 0 $ 0 $ 0 $ 0 $ 0
Sales proceeds 0 0 0 0 0
OTHER SECURITIES:
Purchases at cost 9,705,406 9,333,452 12,140,676 179,909,490 44,970,231
Sales proceeds 11,135,163 11,996,410 19,391,285 71,217,554 36,138,817
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
--------------------------
CALIFORNIA CALIFORNIA
AGGREGATE PURCHASES TAX-FREE TAX-FREE
AND SALES OF: BOND FUND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $ 0 $ 0
Sales proceeds 0 0
OTHER SECURITIES:
Purchases at cost 27,057,332 39,393,662
Sales proceeds 40,202,450 15,296,421
</TABLE>
- ---------------------
76
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL SHARES TRANSACTIONS
As of September 30, 1996, there were 49 billion shares of $0.001 par value
capital stock authorized by the Company. At September 30, 1996, each Fund was
authorized to issue 100 million shares of $0.001 par value capital stock for
each class of shares. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND
<S> <C> <C> <C>
-------------------------------------
<CAPTION>
FOR THE
FOR THE PERIOD FOR THE
YEAR ENDED ENDED YEAR ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 1995
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 115,400 146,719 597,182
Shares issued in reinvestment of dividends -- Class A 31,157 9,677 27,333
Shares redeemed -- Class A (1,743,227) (160,074) (722,419)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS
A (1,596,670) (3,678) (97,904)
Shares sold -- Class B 1,999 0 0
Shares issued in reinvestment of dividends -- Class B 0 0 0
Shares redeemed -- Class B 0 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS
B 1,999 0 0
Shares sold -- Institutional Class 1,818,383 0 0
Shares issued in reinvestment of dividends --
Institutional Class 584 0 0
Shares redeemed -- Institutional Class (327,320) 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS 1,491,647 0 0
</TABLE>
---------------------
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
----------------------------------
FOR THE
NINE FOR THE
MONTHS YEAR FOR THE
ENDED ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (1) 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 6,024,391 3,122,899 5,123,672
Shares issued in reinvestment of
dividends -- Class A 685,330 1,007,045 1,700,768
Shares redeemed -- Class A (5,635,998) (8,380,512) (23,326,239)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 1,073,723 (4,250,568) (16,501,799)
Shares sold -- Class B 1,559,230 2,411,791 0
Shares issued in reinvestment of
dividends -- Class B 73,909 28,834 0
Shares redeemed -- Class B (372,322) (51,005) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 1,260,817 2,389,620 0
Shares sold -- Institutional Class 10,233,225 0 0
Shares issued in reinvestment of
dividends -- Institutional Class 39 0 0
Shares redeemed -- Institutional
Class (338,844) 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 9,894,420 0 0
</TABLE>
(1) "SHARES SOLD" INCLUDES 3,249,037 FOR CLASS A AND 10,183,266 FOR THE
INSTITUTIONAL CLASS, AS A RESULT OF THE MERGER OF THE PACIFICA CALIFORNIA
TAX-EXEMPT FUND.
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
------------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30,
1996 (2) 1995 1994
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 4,281,601 5,048,517 3,151,634
Shares issued in reinvestment of dividends
-- Class A 199,260 159,491 186,105
Shares redeemed -- Class A (3,992,269) (2,650,715) (3,463,657)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 488,592 2,557,293 (125,918)
Shares sold -- Institutional Class 1,002,052 0 0
Shares issued in reinvestment of dividends
-- Institutional Class 0 0 0
Shares redeemed -- Institutional Class (5,243) 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 996,809 0 0
</TABLE>
(2) "SHARES SOLD" INCLUDES 488,921 FOR CLASS A AND 963,872 FOR THE
INSTITUTIONAL CLASS, AS A RESULT OF THE MERGER OF THE PACIFICA SHORT-TERM
CALIFORNIA TAX-EXEMPT FUND.
- ---------------------
78
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND
---------------------------------
FOR THE FOR THE
FOR THE PERIOD YEAR
YEAR ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 16,315 40,810 385,307
Shares issued in reinvestment of dividends --
Class A 12,154 7,417 19,534
Shares redeemed -- Class A (644,452) (61,901) (366,565)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (615,983) (13,674) 38,276
Shares sold -- Class B 3 0 0
Shares issued in reinvestment of dividends --
Class B 0 0 0
Shares redeemed -- Class B 0 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 3 0 0
Shares sold -- Institutional Class 603,337 0 0
Shares issued in reinvestment of dividends --
Institutional Class 6,841 0 0
Shares redeemed -- Institutional Class (142,281) 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 467,897 0 0
</TABLE>
---------------------
79
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND
-------------------------------
FOR THE FOR THE FOR THE
YEAR PERIOD YEAR
ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MAY 31,
1996 1995 1995
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 80,771 84,114 360,914
Shares issued in reinvestment of
dividends -- Class A 71,455 32,705 116,237
Shares redeemed -- Class A (1,158,830) (231,037) (636,342)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,006,604) (114,218) (159,191)
Shares sold -- Class B 3 0 0
Shares issued in reinvestment of
dividends -- Class B 0 0 0
Shares redeemed -- Class B 0 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 3 0 0
Shares sold -- Institutional Class 633,826 0 0
Shares issued in reinvestment of
dividends -- Institutional Class 4,545 0 0
Shares redeemed -- Institutional Class (119,874) 0 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 518,497 0 0
</TABLE>
- ---------------------
80
<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 Arizona Tax-Free Fund, California Tax-Free
Bond Fund, California Tax-Free Income Fund, National Tax-Free Fund, and Oregon
Tax-Free Fund (five of the funds comprising Stagecoach Funds, Inc.) as of
September 30, 1996, and the related statements of operations of the Arizona
Tax-Free Fund, the National Tax-Free Fund and the Oregon Tax-Free Fund for the
year ended September 30, 1996, and the California Tax-Free Bond Fund and
California Tax-Free Income Fund for the nine months ended September 30, 1996,
and the year ended December 31, 1995, the statements of changes in net assets of
the Arizona Tax-Free Fund, National Tax-Free Fund and Oregon Tax-Free Fund for
the year ended September 30, 1996, and the California Tax-Free Bond Fund and
California Tax-Free Income Fund for the nine months ended September 30, 1996,
and each of the years in the two year period ended December 31, 1995, and
financial highlights for the periods indicated herein. 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 Arizona
Tax-Free Fund, National Tax-Free Fund, and Oregon Tax-Free 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 verification of securities owned as of
September 30, 1996, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds of Stagecoach Funds, Inc. as of September 30, 1996,
the results of their operations, the changes in their net assets and their
financial highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
NOVEMBER 15, 1996
---------------------
81
<PAGE>
- -----------------
PROXY VOTING RESULTS
PROPOSAL 1
To ratify and approve an interim investment advisory agreement on behalf of the
Pacifica Portfolio, between Pacifica and Wells Fargo Investment Management, Inc.
(formerly known as First Interstate Capital Management, Inc. ("FICM"), the terms
of which were substantially identical to the previous advisory agreement between
Pacifica and FICM (the fee rates were unchanged), and the receipt of investment
advisory fees by WFIM for the period from April 1, 1996 forward.
PACIFICA ARIZONA TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,860,220 3,016 7,446
</TABLE>
PACIFICA NATIONAL TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
565,830 718 12,561
</TABLE>
PACIFICA OREGON TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,641,849 6,759 44,401
</TABLE>
PACIFICA CALIFORNIA TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
9,671,719 209,049 132,212
</TABLE>
PACIFICA CALIFORNIA SHORT-TERM TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,077,721 786 3,455
</TABLE>
PROPOSAL 2
To approve the Agreement and Plan of Reorganization attached to the combined
proxy statement/prospectus for the meeting providing for the transfer of the
assets and liabilities of specific Pacifica Funds to corresponding Funds of
Stagecoach Funds, Inc., in exchange for shares of the designated classes of
Stagecoach Funds.
PACIFICA ARIZONA TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,854,923 6,542 9,217
</TABLE>
PACIFICA NATIONAL TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
565,252 718 13,140
</TABLE>
PACIFICA OREGON TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,643,066 6,089 43,854
</TABLE>
PACIFICA CALIFORNIA TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
9,664,838 210,116 138,026
</TABLE>
PACIFICA CALIFORNIA SHORT-TERM TAX-EXEMPT FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
1,076,505 2,002 3,455
</TABLE>
- ---------------------
82
<PAGE>
- ----------------
FEDERAL INCOME TAX INFORMATION
(UNAUDITED)
For the year ended September 30, 1996, 100% of the dividends paid by each of
Arizona Tax-Free, National Tax-Free and Oregon Tax-Free Funds should be treated
as tax-exempt dividends. The Arizona Tax-Free Fund distributed long-term capital
gains of $374,110 for the year ended September 30, 1996. This information is
presented in order to comply with regulatory requirements as these Funds have a
tax year end of September 30. Additional information will be reported to you at
the close of calendar 1996.
---------------------
83
<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>
- ---------------------
84
<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-222-8222. Read the
prospectus carefully before you invest or send money.
SC 0555 (11/96)
<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- 1996 Stagecoach Funds
