<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
INSTITUTIONAL CLASS
MARCH 31, 1997
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Arizona Tax-Free Fund 2
California Tax-Free Bond Fund 6
California Tax-Free Income Fund 10
National Tax-Free Fund 14
Oregon Tax-Free Fund 18
PORTFOLIOS OF INVESTMENTS
Arizona Tax-Free Fund 22
California Tax-Free Bond Fund 25
California Tax-Free Income Fund 40
National Tax-Free Fund 45
Oregon Tax-Free Fund 50
STAGECOACH FUNDS
Statement of Assets and Liabilities 54
Statements of Operations 56
Statements of Changes in Net Assets 58
Financial Highlights 62
Notes to Financial Statements 72
Independent Auditors' Report 85
LIST OF ABBREVIATIONS 87
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
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i
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
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ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
Welcome to the 1997 Stagecoach Funds Annual Report.
This Report, dated March 31, 1997, comes to you six months after the previous
Annual Report dated September 30, 1996. As we explained in the Shareholder
Letter at that time, for administrative reasons, the Stagecoach Funds have
shifted their financial year-end to March 31. This change does not otherwise
affect the operation, nor does it affect the investment objectives, of the
Funds.
The recently completed reporting period saw market volatility and the long-
expected increase in the federal funds target rate. After months of debate on
the rate of economic growth and the potential for increased rates of inflation,
the Federal Reserve Board acted in March to raise rates by 0.25%. The Fed's
action capped a six month period which showed only modest total return for the
fixed-income market.
The equity market, as measured by the Standard & Poor's 500 Index, fell 7.20% in
March from its January high. While this environment offered some challenges, we
feel that much of the "bad news" has been greatly exaggerated. For example, the
S&P 500 Index still enjoyed a 1997 year-to-date return through March 31 of
2.69%. The positive return for the six-month period ended March 31, 1997 was
11.24%. The news is similar concerning the further market correction that
occurred after the reporting period. As of early May, the market had recouped
much of its March and April losses.
Of course, equity issues do not rise and fall in unison. Large company stocks
have fared well recently as investor dollars sought their greater security and
reduced volatility. Various sectors such as technology and finance stocks have
fluctuated acutely in recent months. Value stocks have outperformed growth
stocks, in contrast to recent years.
It is all too easy to be confused by such a variety of returns and apparently
conflicting information. That's why it is so important to truly understand the
investment philosophies and long-range goals that govern your Fund. We have
always felt that the more you understand your investment, the less likely you
are to be unduly concerned with short-term developments.
The following pages discuss what factors have affected the returns for the
Stagecoach Funds during the reporting period. These commentaries were written
for you -- our shareholders -- as part of the Stagecoach Funds commitment to
education, information and service as we help you meet your financial goals.
STAGECOACH FUNDS
MAY 1997
---------------------
1
<PAGE>
ARIZONA TAX-FREE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 1997?
The total return for Institutional Class shares since September 30, 1996 was
2.38%. The one-year total return for the same share class was 4.75%.
WHAT WERE SOME OF THE FACTORS INFLUENCING THE FUND'S PERFORMANCE?
Returns throughout the fixed-income market were lower in 1996 and early 1997
than in 1995 for a variety of reasons. Chief among them was uncertainty about
the rate of inflation during the recent period. Higher inflation erodes profits
and often sparks credit tightening by the Federal Reserve. When interest rates
increase, the resale value of existing bonds decreases, causing a lower total
return for bonds and bond funds. The effect is more pronounced on bonds with
longer maturities, which are more sensitive to interest rate fluctuations. The
Fund has a flexible investment policy, allowing it to buy bonds of varying
maturities as the portfolio manager sees fit. During the most recently completed
reporting period, the portfolio manager concentrated investments in the
intermediate maturity range throughout the period and was able to avoid some of
the losses experienced by longer-maturity funds, yet still maintain income
levels.
HOW DID INTEREST RATES AFFECT THE FUND?
Since bond values drop when interest rates rise, investors tend to search for
economic indicators which suggest if, when and how the Fed will act. If
investors are convinced that rates are going higher, they will often move out of
fixed-income and municipal funds before any rate increase. Like many municipal
funds during the period, the Fund had to liquidate some assets to meet
redemption requests. When many investors are selling and few are buying, the
price the sellers can get inevitably drops. But the Fund was able to generate
long-range benefits from the interest rate environment. The Fund took the
opportunity to sell some more volatile bonds with unfavorable call structures
and other bonds that were for various reasons unattractive. We believe this
"housekeeping" will help us build a stronger portfolio in the coming months.
WITH THE FEDERAL RESERVE RAISING THE FEDERAL FUNDS TARGET RATE IN EARLY 1997,
WHAT IS YOUR INTEREST RATE OUTLOOK?
We believe that additional increases are in store as the Fed attempts to slow
the economy and head off inflation. As of the date of this report, we think that
the increase will likely amount to 0.25 to 0.50%. We do not expect to see the
kind of tightening we saw in 1994 which had such a negative effect on the bond
market.
DO YOU ANTICIPATE CHANGES IN THE AVERAGE MATURITY OF THE FUND'S PORTFOLIO?
The Fund's average maturity on March 31, 1997 was 11.3 years. With the small
increases in interest rates we expect over the next few months, we really see no
compelling reason to either extend or shorten the maturity of the Fund's
portfolio for now. If we expected
- ---------------------
2
<PAGE>
ARIZONA TAX-FREE FUND
the Fed to lower the target rate, then we might extend maturity to capture
additional total return. If we thought that rates were going to jump higher than
we currently anticipate, we might reduce maturity to protect value. For the
moment, we are still comfortable with the intermediate maturity as offering the
best combination of income and price protection.
WHAT IS THE STATE'S ECONOMIC OUTLOOK? IS THERE ANY CONTINUED FALLOUT FROM THE
SEC'S INVESTIGATION OF MARICOPA COUNTY?
The economic outlook for the state of Arizona remains favorable. Businesses
continue to relocate to the state, adding to the state's growth rate. Maricopa
County was investigated by the Securities and Exchange Commission for misuse of
public funds. Investors, however, only temporarily shunned the county. In part
this was because Arizona bond supplies shrank early in 1997 and the need to
reinvest January coupons prevailed. Therefore, market participants generally
shrugged off the bad publicity. There was no downgrading in the county's debt as
a result of the investigation, which was a plus. Maricopa County is the most
populous county in the state and Phoenix, the state capital, is located there.
ON THE POLITICAL FRONT, DID THE NOVEMBER ELECTIONS RAISE ANY CONCERNS?
On the national level, tax-reform in general and the flat-tax in particular were
quietly taken off the agenda. The difference between expected returns from
municipal and Treasury bonds narrowed as a result, although municipal securities
still outperformed Treasury bonds for the most recent six-month period. As for
Arizona, discussion continued about lowering the state's income tax. Such a move
may lower demand for Arizona municipal securities and the after-tax premium they
have enjoyed over taxable securities may disappear.
HOW DOES WELLS FARGO'S BIAS TOWARDS CREDIT QUALITY BENEFIT INVESTORS?
Wells Fargo Bank's fixed-income team believes in examining the fundamentals when
it comes to an issuer's ability to pay interest and repay principal on a bond.
Even in cases where a bond is insured, we reexamine the issue and make our own
credit quality determination of the issuer's creditworthiness. There have been
instances when we have chosen to take a short-term loss by selling issues rather
than risk long-term problems by holding on to an investment we are not truly
comfortable with. This approach helps the Fund maintain a portfolio high in
credit quality and safety. In the current market, even though higher quality
issues may offer lower yields, credit quality spreads have been narrow. This
means that investors generally are not rewarded with higher yields sufficient to
justify accepting lower credit quality. If the economy slows, we expect this
spread to widen with lower quality issues underperforming higher quality ones on
a total return basis.
---------------------
3
<PAGE>
ARIZONA TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 3/2/92
1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Average Annual Total Returns 4.75% 5.68% 6.31% 6.14%
- -------------------------------------------------------------------------------------------
</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).
On September 6, 1996, the Fund was reorganized 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. Institutional Class performance reflects the
Pacifica Arizona Tax-Exempt and the Westcore Arizona Intermediate Tax-Free Fund
Institutional performance for the periods prior to 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.
- ---------------------
4
<PAGE>
ARIZONA TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS MUNICIPAL BOND STAGECOACH ARIZONA TAX-FREE FUND INSTITUTIONAL CLASS
INDEX SHARES
<S> <C> <C>
Inception $10,000 $10,000
Mar-92 $10,004 $9,971
Apr-92 $10,093 $10,056
May-92 $10,212 $10,175
Jun-92 $10,384 $10,322
Jul-92 $10,695 $10,362
Aug-92 $10,590 $10,472
Sep-92 $10,659 $10,586
Oct-92 $10,555 $10,467
Nov-92 $10,744 $10,673
Dec-92 $10,853 $10,776
Jan-93 $10,979 $10,949
Feb-93 $11,377 $11,276
Mar-93 $11,256 $11,100
Apr-93 $11,370 $11,196
May-93 $11,433 $11,243
Jun-93 $11,624 $11,416
Jul-93 $11,639 $11,381
Aug-93 $11,882 $11,618
Sep-93 $12,017 $11,783
Oct-93 $12,040 $11,806
Nov-93 $11,934 $11,722
Dec-93 $12,186 $11,913
Jan-94 $12,325 $12,049
Feb-94 $12,005 $11,736
Mar-94 $11,517 $11,470
Apr-94 $11,615 $11,535
May-94 $11,716 $11,612
Jun-94 $11,644 $11,568
Jul-94 $11,857 $11,734
Aug-94 $11,899 $11,790
Sep-94 $11,724 $11,673
Oct-94 $11,515 $11,480
Nov-94 $11,307 $11,309
Dec-94 $11,556 $11,519
Jan-95 $11,886 $11,777
Feb-95 $12,231 $12,057
Mar-95 $12,372 $12,154
Apr-95 $12,387 $12,205
May-95 $12,782 $12,465
Jun-95 $12,670 $12,439
Jul-95 $12,790 $12,563
Aug-95 $12,952 $12,686
Sep-95 $13,034 $12,732
Oct-95 $13,224 $12,854
Nov-95 $13,443 $13,000
Dec-95 $13,573 $13,106
Jan-96 $13,676 $13,208
Feb-96 $13,583 $13,137
Mar-96 $13,409 $12,923
Apr-96 $13,371 $12,921
May-96 $13,366 $12,885
Jun-96 $13,512 $13,006
Jul-96 $13,633 $13,170
Aug-96 $13,630 $13,112
Sep-96 $13,821 $13,223
Oct-96 $13,977 $13,379
Nov-96 $14,233 $13,637
Dec-96 $14,174 $13,586
Jan-97 $14,200 $13,631
Feb-97 $14,331 $13,719
Mar-97 $14,140 $13,538
</TABLE>
The accompanying chart compares the performance of the Stagecoach Arizona
Tax-Free Fund Institutional Class shares since the inception of the Predecessor
Funds with the Lehman Brothers Municipal Bond Index. The chart assumes a
hypothetical $10,000 initial investment in the Institutional Class shares and
reflects all operating expenses. The Lehman Brothers Municipal Bond Index is an
unmanaged, broad-based index of municipal bonds. The Fund is a professionally
managed mutual fund. The index presented here does not incur expenses and is not
available directly for investment. Had this index incurred operating expenses,
its performance would have been lower.
---------------------
5
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 1997?
The total return for Institutional Class shares since September 30, 1996 was
2.10%. The one-year total return for the same share class was 5.39%.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
Probably the number one factor affecting the Fund's performance was market
movement in interest rates. Interest rates moved higher during the period and
resulted in lower bond prices. On a more positive note, issuer refunding of
existing bond issues caused some issues to improve in credit quality and
increase in value.
HOW DID INTEREST RATES AFFECT THE FUND?
There is always some uncertainty about interest rates. There are numerous
economic indicators which often suggest contradictory conclusions about
inflation, growth, demand, jobs and many other factors which influence the
Federal Reserve's decisions about the federal funds target rate. For most of the
period, rates did not change, although speculation shifted back and forth about
the timing and severity of any increase. The Fund reacted to this uncertainty by
maintaining a neutral stance in an attempt to limit price depreciation once an
increase was announced.
WITH THE FED RAISING THE TARGET RATE IN EARLY 1997, WHAT IS YOUR INTEREST RATE
OUTLOOK?
We do not expect a prolonged rise in interest rates or that the Fed will tighten
aggressively as in 1994. We believe that overall inflation should remain under
3.5%, but late business cycle cost pressures will dominate the bond market's
focus.
THE FUND HAS A BROAD MATURITY RANGE. WHAT WAS THE WEIGHTED AVERAGE MATURITY
DURING THE PERIOD? WHY?
Weighted average maturity is a measure of the average length of time before
securities in a portfolio mature on a dollar for dollar basis. The Fund's
weighted average maturity has recently been a little over 15 years. Adjusted for
call features, which is the issuer's ability to repay, or "call" a bond before
its maturity, the number drops to below 11 years. These figures are close to the
figures for the Lehman Brothers Municipal Bond Index which is our benchmark.
Over time, we expect the Fund's average maturity, not adjusted for calls, to
decline slightly as we move even closer to our benchmark. This reflects our
expectations about interest rates rising somewhat over the next few months.
- ---------------------
6
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
HOW DOES WELLS FARGO'S BIAS TOWARDS CREDIT QUALITY BENEFIT INVESTORS?
We tend to purchase issues that we believe are above average in credit quality
and to avoid new commitments to market sectors which are under stress. This
approach helps the Fund maintain a portfolio high in credit quality, which we
believe benefits investors.
THE STATE'S ECONOMY APPEARS TO BE STRONG, YET POLITICAL EVENTS SEEM TO THREATEN
LOCAL GOVERNMENTS' ABILITIES TO RAISE REVENUE. WHAT CONCERNS DOES THE MUNICIPAL
MARKETPLACE HAVE?
The recent passage of California Proposition 218 has in fact reduced the
flexibility of local governments to raise revenue. To date, this proposition has
had only a minor impact on local credits. However, the situation is a developing
one and we will be monitoring the effects of Proposition 218 on local credits on
an ongoing basis. The deregulation of the electricity marketplace is also a
concern of the municipal bond market. Several California utility issuers were
downgraded in 1996 and remain on the watch list for further action.
THE FUND CAN INVEST IN BONDS WITH INTERMEDIATE TO LONG MATURITIES. WHAT
ADVANTAGES DOES THIS BROAD RANGE AFFORD INVESTORS?
The flexibility allows the Fund's manager to choose maturities with the best
relative value at a particular point in time. When interest rates are expected
to drop, the Fund can extend maturity and boost total return. During periods
when tightening is expected, the Fund can shorten the average maturity of its
portfolio in order to reduce its sensitivity to changes in interest rates while
seeking adequate income.
---------------------
7
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 1/2/92
1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Average Annual Total Returns 5.39% 6.63% 7.20% 6.96%
- ---------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value. The
Institutional Class shares commenced operations on September 6, 1996.
Performance figures for the Institutional Class shares for periods prior to
September 6, 1996 reflect the performance and expenses of the Class A shares.
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 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
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS STAGECOACH CALIFORNIA TAX-FREE
BOND FUND INSTITUTIONAL CLASS
MUNICIPAL BOND INDEX SHARES
<S> <C> <C>
Inception $10,000 $10,000
Jan-92 $10,023 $10,011
Feb-92 $10,026 $10,057
Mar-92 $10,030 $10,058
Apr-92 $10,119 $10,181
May-92 $10,239 $10,326
Jun-92 $10,411 $10,544
Jul-92 $10,723 $10,940
Aug-92 $10,618 $10,746
Sep-92 $10,687 $10,810
Oct-92 $10,582 $10,499
Nov-92 $10,772 $10,887
Dec-92 $10,882 $11,035
Jan-93 $11,008 $11,173
Feb-93 $11,406 $11,711
Mar-93 $11,285 $11,526
Apr-93 $11,399 $11,673
May-93 $11,463 $11,757
Jun-93 $11,655 $11,991
Jul-93 $11,670 $11,956
Aug-93 $11,912 $12,301
Sep-93 $12,048 $12,472
Oct-93 $12,071 $12,502
Nov-93 $11,965 $12,287
Dec-93 $12,217 $12,561
Jan-94 $12,357 $12,726
Feb-94 $12,037 $12,369
Mar-94 $11,547 $11,745
Apr-94 $11,645 $11,786
May-94 $11,746 $11,932
Jun-94 $11,675 $11,824
Jul-94 $11,888 $12,108
Aug-94 $11,930 $12,128
Sep-94 $11,754 $11,890
Oct-94 $11,545 $11,642
Nov-94 $11,336 $11,379
Dec-94 $11,586 $11,647
Jan-95 $11,917 $12,082
Feb-95 $12,263 $12,442
Mar-95 $12,404 $12,562
Apr-95 $12,419 $12,540
May-95 $12,815 $12,982
Jun-95 $12,703 $12,762
Jul-95 $12,823 $12,851
Aug-95 $12,986 $13,017
Sep-95 $13,068 $13,123
Oct-95 $13,258 $13,350
Nov-95 $13,478 $13,602
Dec-95 $13,608 $13,771
Jan-96 $13,711 $13,853
Feb-96 $13,618 $13,744
Mar-96 $13,444 $13,512
Apr-96 $13,406 $13,429
May-96 $13,401 $13,440
Jun-96 $13,547 $13,594
Jul-96 $13,669 $13,742
Aug-96 $13,666 $13,752
Sep-96 $13,857 $13,947
Oct-96 $14,014 $14,109
Nov-96 $14,270 $14,379
Dec-96 $14,210 $14,309
Jan-97 $14,237 $14,323
Feb-97 $14,368 $14,459
Mar-97 $14,177 $14,240
</TABLE>
The accompanying chart compares the performance of the Stagecoach California
Tax-Free Bond Fund Institutional Class shares since the Fund's inception with
the Lehman Brothers Municipal Bond Index. The chart assumes a hypothetical
$10,000 initial investment in Institutional Class shares and for periods prior
to September 6, 1996 reflects the performance and expenses of the Class A
shares. For periods after September 6, 1996, the chart reflects all operating
expenses of the Institutional Class shares. The Lehman Brothers Municipal Bond
Index is an unmanaged, broad-based index of municipal bonds. The Fund is a
professionally managed mutual fund. The index presented here does not incur
expenses and is not available directly for investment. Had this index incurred
operating expenses, its performance would have been lower.
---------------------
9
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 1997?
The total return for Institutional Class shares since September 30, 1996 was
2.00%. The one-year total return was 4.00%.
WHAT WERE SOME OF THE CHARACTERISTICS OF THE FUND'S PORTFOLIO THAT AFFECTED
PERFORMANCE?
Duration, which measures a Fund's sensitivity to interest rate changes, and
sector were key. The Fund maintained a fairly short duration due to uncertainty
about a pending hike in the federal funds target rate. Interest rates finally
rose as expected in the first quarter of 1997, which caused longer duration
securities to underperform shorter duration securities. For example, the Lehman
Brothers 1-year Municipal Bond Index returned .85% for the quarter whereas the
Lehman Brothers 5-Year Municipal Bond Index was down 0.02%. As for sector,
California bonds underperformed national bonds due to heavy issuance of new
California paper which caused a supply glut.
HOW DID INTEREST RATES AFFECT THE FUND?
The Fund took a neutral stance throughout the period by maintaining its average
maturity at around 4 years and shortening duration. This was done in expectation
of the target rate increase which eventually occurred in March. We felt that
this somewhat defensive approach was necessary to limit the price depreciation a
rate hike might have caused.
NOW THAT THE FED HAS RAISED THE TARGET RATE, WHAT IS YOUR INTEREST RATE OUTLOOK?
As of the date of this report, our expectation is for one and possibly two more
tightenings, ranging from 0.25 to 0.50%.
WHAT WAS THE WEIGHTED AVERAGE MATURITY OF THE FUND'S PORTFOLIO DURING THE
PERIOD? WHY?
Weighted average maturity is a measure of the average length of time before
securities in a portfolio mature on a dollar for dollar basis. Weighted average
maturity has been maintained at 4 years. We did not change average maturity
significantly during the period because we don't see the market moving
significantly one way or the other but continuing to trade in a relatively
narrow range.
HOW DOES WELLS FARGO'S BIAS TOWARDS CREDIT QUALITY BENEFIT INVESTORS?
Bias towards credit quality means that we only buy investment-grade paper and if
we buy paper at the lower end of the investment-grade range we expect to be
rewarded with a higher yield. Recently, credit spreads have been very tight
(meaning investors are not being rewarded for buying lower-rated paper) so the
Fund has focused on highly-rated paper. We tend to purchase issues that we
believe are above-average in credit quality and avoid new commitments to market
sectors which are under stress.
- ---------------------
10
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
This approach helps the Fund maintain a portfolio high in credit quality, which
we believe benefits investors.
THE STATE'S ECONOMY APPEARS TO BE STRONG, YET POLITICAL EVENTS SEEM TO THREATEN
LOCAL GOVERNMENTS' ABILITIES TO RAISE REVENUE. WHAT CONCERNS DOES THE MUNICIPAL
MARKETPLACE HAVE?
Local governments' abilities to raise revenue without voter approval have been
increasingly restricted since the passage of Proposition 13 in the 1970's.
Recently Proposition 218 was passed which also placed restrictions on certain
types of bond issuances. Overall, the state's credit quality and the credit
quality of many local municipalities is very high, and adjustments have been
made without too much pain. The legislative risk in the municipal bond market is
ongoing and our job is to analyze the risks and make portfolio adjustments
accordingly to minimize impact.
THIS FUND CONCENTRATES ON THE SHORTER AND INTERMEDIATE RANGE OF THE CALIFORNIA
MUNICIPAL MARKET. WHAT ADVANTAGES DOES THIS CONCENTRATION AFFORD INVESTORS?
The intended advantage is to provide investors with greater income than
typically is provided by a money market fund with less price risk and volatility
than a longer-term bond fund.
---------------------
11
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/18/92
1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Average Annual Total Returns 4.00% 4.60% 4.51%
- ---------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value. The
Institutional Class shares commenced operations on September 6, 1996.
Performance figures for the Institutional Class shares for periods prior to
September 6, 1996 reflect the performance and expenses of the Class A shares.
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'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.
- ---------------------
12
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROS 3 YEAR STAGECOACH CALIFORNIA TAX-FREE
INCOME FUND INSTITUTIONAL CLASS
MUNICIPAL BOND INDEX SHARES
<S> <C> <C>
Inception $10,000 $10,000
Nov-92 $10,070 $10,008
Dec-92 $10,130 $10,084
Jan-93 $10,206 $10,176
Feb-93 $10,367 $10,389
Mar-93 $10,336 $10,303
Apr-93 $10,395 $10,358
May-93 $10,424 $10,373
Jun-93 $10,490 $10,467
Jul-93 $10,496 $10,441
Aug-93 $10,593 $10,587
Sep-93 $10,640 $10,671
Oct-93 $10,662 $10,693
Nov-93 $10,648 $10,663
Dec-93 $10,760 $10,801
Jan-94 $10,847 $10,877
Feb-94 $10,746 $10,722
Mar-94 $10,616 $10,601
Apr-94 $10,679 $10,636
May-94 $10,729 $10,674
Jun-94 $10,732 $10,657
Jul-94 $10,821 $10,758
Aug-94 $10,860 $10,774
Sep-94 $10,833 $10,736
Oct-94 $10,807 $10,698
Nov-94 $10,788 $10,626
Dec-94 $10,834 $10,681
Jan-95 $10,924 $10,802
Feb-95 $11,039 $10,953
Mar-95 $11,138 $11,045
Apr-95 $11,176 $11,066
May-95 $11,347 $11,223
Jun-95 $11,374 $11,226
Jul-95 $11,494 $11,324
Aug-95 $11,584 $11,404
Sep-95 $11,617 $11,451
Oct-95 $11,673 $11,518
Nov-95 $11,747 $11,599
Dec-95 $11,796 $11,658
Jan-96 $11,888 $11,752
Feb-96 $11,890 $11,741
Mar-96 $11,861 $11,665
Apr-96 $11,876 $11,668
May-96 $11,886 $11,665
Jun-96 $11,957 $11,723
Jul-96 $12,023 $11,806
Aug-96 $12,042 $11,815
Sep-96 $12,115 $11,893
Oct-96 $12,200 $11,975
Nov-96 $12,314 $12,121
Dec-96 $12,321 $12,111
Jan-97 $12,375 $12,154
Feb-97 $12,435 $12,213
Mar-97 $12,371 $12,131
</TABLE>
The accompanying chart compares the performance of the Stagecoach California
Tax-Free Income Fund Institutional Class shares since the Fund's inception with
the Lehman Brothers 3-Year Municipal Bond Index. The chart assumes a
hypothetical $10,000 initial investment in Institutional Class shares and for
periods prior to September 6, 1996 reflects the performance and expenses of the
Class A shares. For periods after September 6, 1996, the chart reflects all
operating expenses of the Institutional Class shares. The Lehman Brothers 3-Year
Municipal Bond Index is an unmanaged index of municipal bonds with an
approximately three year average maturity. The Fund is a professionally managed
mutual fund. The index presented here does not incur expenses and is not
available directly for investment. Had this index incurred operating expenses,
its performance would have been lower.
---------------------
13
<PAGE>
NATIONAL TAX-FREE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 1997?
The total return for Institutional Class shares since September 30, 1996 was
1.95%. The one-year total return for the same share class was 4.08%.
WHAT WERE SOME OF THE FACTORS INFLUENCING THE FUND'S PERFORMANCE?
Returns throughout the fixed-income market were lower in 1996 and early 1997
than in 1995 for a variety of reasons. Chief among them was uncertainty about
the rate of inflation. Higher inflation erodes profits and often sparks credit
tightening by the Federal Reserve. When interest rates increase, the resale
value of existing bonds decreases, causing a lower total return for bond funds.
The effect is more pronounced on bonds with longer maturities, however. This
Fund has a flexible investment policy, allowing it to buy bonds of varying
maturities as the portfolio manager sees fit. The portfolio concentrated in the
intermediate maturity range throughout the period and was able to avoid some of
the losses experienced by longer-maturity funds, yet still maintain income
levels.
HOW DID INTEREST RATES AFFECT THE FUND?
Since bond values drop when interest rates rise, investors tend to search for
economic indicators which suggest if, when and how the Fed will act. If
investors are convinced that rates are going higher, they will often move out of
fixed-income and municipal funds before any increase. Like many municipal funds
during the period, the Fund had to liquidate some assets to meet redemption
requests. When many investors are selling and few are buying, the price the
sellers can get inevitably drops. This reduced share values for the Fund.
WITH THE FEDERAL RESERVE RAISING THE FEDERAL FUNDS TARGET RATE IN EARLY 1997,
WHAT IS YOUR INTEREST RATE OUTLOOK?
We believe that additional increases are in store as the Fed attempts to slow
the economy and head off inflation. As of the date of this report, we think that
the increase will likely amount to 0.25 to 0.50%. We do not expect to see the
kind of tightening we saw in 1994 which had such a negative effect on the bond
market.
DO YOU ANTICIPATE CHANGES IN THE AVERAGE MATURITY OF THE FUND'S PORTFOLIO?
With the small increases in interest rates we expect, we really see no
compelling reason to either extend or shorten the maturity of the Fund's
portfolio for now. If we expected the Fed to lower the target rate, then we
might extend maturity to capture additional total return. If we thought that
rates were going to jump higher than we currently anticipate, we might reduce
maturity to protect value. For the moment, we are
- ---------------------
14
<PAGE>
NATIONAL TAX-FREE FUND
still comfortable with the intermediate maturity as offering the best
combination of income and price protection.
WHAT ARE SOME OF THE ISSUES OF CONCERN IN THE NATIONAL MUNICIPAL SECURITIES
MARKETS?
Credit downgrades are always a concern, of course. One of the big issues facing
the municipal bond market is in the electric utility sector. Deregulation has
subjected utilities to increased competition and for some this means budget
pressures and downgrades. For example, several California utility issuers were
downgraded in 1995 and remain on the watch list for further action. Another area
we are monitoring is county and state issuers with large legal immigrant
populations. Welfare reform means shifting some financial burden from the
Federal government to municipalities. Managing this challenge may lead to
budgetary pressures in some states and counties. Finally, if the Federal capital
gains tax rate is lowered, market discount bonds, still taxed at the ordinary
income tax rate, would likely underperform other bonds. There may also be a
period of increased trading due to investor tax swapping.
ON THE POLITICAL FRONT, DID THE NOVEMBER ELECTIONS RAISE ANY CONCERNS?
On the national level, tax-reform in general and the flat-tax in particular were
quietly taken off the agenda. The difference between yields from municipal and
Treasury bonds narrowed as a result, although municipal securities still
outperformed Treasury bonds for the most recent twelve-month period.
HOW DOES WELLS FARGO'S BIAS TOWARDS CREDIT QUALITY BENEFIT INVESTORS?
Wells Fargo Bank's fixed-income team believes in examining the fundamentals when
it comes to an issuer's ability to pay interest and repay principal on a bond.
Even in cases where a bond is insured, we reexamine the issue and make our own
credit quality determination of the issuer's creditworthiness. There have been
instances when we have chosen to take a short-term loss by selling issues rather
than risk long-term problems by holding on to an investment we are not truly
comfortable with. This approach helps the Fund maintain a portfolio high in
credit quality and safety. In the current market, even though higher quality
issues may offer lower yields, credit quality spreads have been narrow. This
means that investors generally are not rewarded with higher yields sufficient to
justify accepting lower credit quality. If the economy slows, we expect this
spread to widen, with lower quality issues underperforming higher quality ones
on a total return basis.
---------------------
15
<PAGE>
NATIONAL TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/15/93
1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Average Annual Total Returns 4.08% 5.57% 4.90%
- -------------------------------------------------------------------------------------------
</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).
On September 6, 1996, the Fund was reorganized 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. Performance figures for
the Institutional Class reflect the performance of the Pacifica National Tax-
Exempt Fund and the Westcore Quality Tax-Exempt Income Fund Institutional Class
shares for periods prior to 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.
- ---------------------
16
<PAGE>
NATIONAL TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROS STAGECOACH NATIONAL TAX-FREE
FUND INSTITUTIONAL CLASS
MUNICIPAL BOND INDEX SHARES
<S> <C> <C>
Inception $10,000 $10,000
Feb-93 $10,362 $10,269
Mar-93 $10,252 $10,101
Apr-93 $10,356 $10,193
May-93 $10,414 $10,212
Jun-93 $10,588 $10,389
Jul-93 $10,601 $10,353
Aug-93 $10,822 $10,564
Sep-93 $10,945 $10,717
Oct-93 $10,966 $10,705
Nov-93 $10,870 $10,647
Dec-93 $11,099 $10,829
Jan-94 $11,225 $10,957
Feb-94 $10,935 $10,675
Mar-94 $10,490 $10,376
Apr-94 $10,579 $10,436
May-94 $10,671 $10,524
Jun-94 $10,606 $10,489
Jul-94 $10,800 $10,629
Aug-94 $10,838 $10,662
Sep-94 $10,678 $10,512
Oct-94 $10,488 $10,350
Nov-94 $10,298 $10,168
Dec-94 $10,525 $10,360
Jan-95 $10,826 $10,583
Feb-95 $11,141 $10,850
Mar-95 $11,269 $10,956
Apr-95 $11,282 $10,981
May-95 $11,642 $11,257
Jun-95 $11,540 $11,231
Jul-95 $11,649 $11,346
Aug-95 $11,797 $11,456
Sep-95 $11,872 $11,498
Oct-95 $12,045 $11,623
Nov-95 $12,244 $11,773
Dec-95 $12,362 $11,865
Jan-96 $12,456 $11,965
Feb-96 $12,371 $11,895
Mar-96 $12,213 $11,729
Apr-96 $12,179 $11,706
May-96 $12,174 $11,670
Jun-96 $12,307 $11,755
Jul-96 $12,417 $11,904
Aug-96 $12,415 $11,866
Sep-96 $12,589 $11,974
Oct-96 $12,731 $12,107
Nov-96 $12,964 $12,332
Dec-96 $12,909 $12,255
Jan-97 $12,934 $12,292
Feb-97 $13,053 $12,409
Mar-97 $12,879 $12,208
</TABLE>
The accompanying chart compares the performance of the Stagecoach National
Tax-Free Fund Institutional Class shares since the inception of the Predecessor
Funds with the Lehman Brothers Municipal Bond Index. The chart assumes a
hypothetical $10,000 initial investment in the Institutional Class shares and
reflects all operating expenses. The Lehman Brothers Municipal Bond Index is an
unmanaged, broad-based index of municipal bonds. The Fund is a professionally
managed mutual fund. The index presented here does not incur expenses and is not
available directly for investment. Had this index incurred operating expenses,
its performance would have been lower.
---------------------
17
<PAGE>
OREGON TAX-FREE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 1997?
The total return for Institutional Class shares since September 30, 1996 was
1.69%. The one-year total return for the same share class was 4.53%.
WHAT WERE SOME OF THE FACTORS INFLUENCING THE FUND'S PERFORMANCE?
Returns throughout the fixed-income market were lower in 1996 and early 1997
than in 1995 for a variety of reasons. Chief among them was uncertainty about
the rate of inflation during the recent period. Higher inflation erodes profits
and often sparks credit tightening by the Federal Reserve. When interest rates
increase, the resale value of existing bonds decreases, causing a lower total
return for bonds and bond funds. The effect is more pronounced on bonds with
longer maturities, which are more sensitive to interest rate fluctuations. The
Fund has a flexible investment policy, allowing it to buy bonds of varying
maturities as the portfolio manager sees fit. During the most recently completed
reporting period, the portfolio manager concentrated investments in the
intermediate maturity range and was able to avoid some of the losses experienced
by longer-maturity funds, yet still maintain income levels.
HOW DID INTEREST RATES AFFECT THE FUND?
Since bond values drop when interest rates rise, investors tend to search for
economic indicators which suggest if, when and how the Fed will act. If
investors are convinced that rates are going higher, they will often move out of
fixed-income and municipal funds before any rate increase. Like many municipal
funds during the period, the Fund had to liquidate some assets to meet
redemption requests. When many investors are selling and few are buying, the
price the sellers can get inevitably drops. Share value did decline as a result.
But the Fund was able to generate long-range benefits from the interest rate
environment. The Fund took the opportunity to sell some more volatile bonds with
poor call structures and other bonds that were for various reasons unattractive.
We believe this "housekeeping" will help us build a stronger portfolio in the
coming months.
WITH THE FEDERAL RESERVE RAISING THE FEDERAL FUNDS TARGET RATE IN EARLY 1997,
WHAT IS YOUR INTEREST RATE OUTLOOK?
We believe that additional increases are in store as the Fed attempts to slow
the economy and head off inflation. As of the date of this report, we think that
the increase will likely amount to 0.25 to 0.50%. We do not expect to see the
kind of tightening we saw in 1994 which had such a negative effect on the bond
market.
DO YOU ANTICIPATE CHANGES IN THE AVERAGE MATURITY OF THE FUND?
With the small increases in interest rates we expect over the next few months,
we
- ---------------------
18
<PAGE>
OREGON TAX-FREE FUND
really see no compelling reason to either extend or shorten the maturity of the
Fund's portfolio for now. If we expected the Fed to lower the target rate, then
we might extend maturity to capture additional total return. If we thought that
rates were going to jump higher than we currently anticipate, we might reduce
maturity to protect value. For the moment, we are still comfortable with the
intermediate maturity as offering the best combination of income and price
protection.
WHAT IS THE STATE'S ECONOMIC OUTLOOK?
Oregon should continue to have slow but steady growth. The primary challenge
facing the state is how to implement Ballot Measure 47 which limits property
taxation. The legislature is now debating the 1997 - 1998 budget. If
municipalities are hindered in their efforts to raise revenue, there could be
downgrades in credit quality. We will be monitoring the outcome of the debate.
Overall, we believe the outlook for the state is stable, with moderate demand
for Oregon bonds.
ON THE POLITICAL FRONT, DID THE NOVEMBER ELECTIONS RAISE ANY CONCERNS?
On the national level, tax-reform in general and the flat-tax in particular were
quietly taken off the agenda. The difference between expected returns from
municipal and Treasury bonds narrowed as a result. Municipal securities
outperformed Treasury bonds for the most recent six-month period.
HOW DOES WELLS FARGO'S BIAS TOWARDS CREDIT QUALITY BENEFIT INVESTORS?
Wells Fargo Bank's fixed-income team believes in examining the fundamentals when
it comes to an issuer's ability to pay interest and repay principal on a bond.
Even in cases where a bond is insured, we reexamine the issue and make our own
credit quality determination of the issuer's creditworthiness. There have been
instances when we have chosen to take a short-term loss by selling issues rather
than risk long-term problems by holding on to an investment we are not truly
comfortable with. This approach helps the Fund maintain a portfolio high in
credit quality and safety. In the current market, even though higher quality
issues may offer lower yields, credit quality spreads have been narrow. This
means that investors generally are not rewarded with higher yields sufficient to
justify accepting lower credit quality. If the economy slows, we expect this
spread to widen with lower quality issues underperforming higher quality ones on
a total return basis.
---------------------
19
<PAGE>
OREGON TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Average Annual Total Returns 4.53% 5.60% 6.13% 6.89%
- ----------------------------------------------------------------------------------------------
</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).
On September 6, 1996, the Fund was reorganized as the successor to the Pacifica
Oregon Tax-Exempt Fund (10/95 to 9/96) and the Westcore Oregon Tax-Exempt Fund
(3/92 to 9/95). Historical performance has been calculated using returns
produced by these funds. Performance figures for the Institutional Class reflect
the performance of the Pacifica Oregon Tax-Exempt Fund and the Westcore Oregon
Tax-Exempt Fund Class A shares for periods prior to 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>
OREGON TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROS STAGECOACH OREGON TAX-FREE
FUND INSTITUTIONAL CLASS
MUNICIPAL BOND INDEX SHARES
<S> <C> <C>
Inception $10,000 $10,000
Jun-88 $10,146 $10,047
Jul-88 $10,212 $10,030
Aug-88 $10,221 $10,189
Sep-88 $10,406 $10,356
Oct-88 $10,589 $10,301
Nov-88 $10,492 $10,400
Dec-88 $10,599 $10,487
Jan-89 $10,818 $10,584
Feb-89 $10,695 $10,499
Mar-89 $10,669 $10,494
Apr-89 $10,922 $10,688
May-89 $11,149 $10,854
Jun-89 $11,301 $11,027
Jul-89 $11,455 $11,125
Aug-89 $11,342 $11,087
Sep-89 $11,308 $11,015
Oct-89 $11,446 $11,162
Nov-89 $11,647 $11,340
Dec-89 $11,742 $11,353
Jan-90 $11,687 $11,263
Feb-90 $11,791 $11,390
Mar-90 $11,795 $11,347
Apr-90 $11,710 $11,255
May-90 $11,965 $11,484
Jun-90 $12,070 $11,595
Jul-90 $12,248 $11,776
Aug-90 $12,070 $11,567
Sep-90 $12,077 $11,617
Oct-90 $12,296 $11,763
Nov-90 $12,543 $11,957
Dec-90 $12,598 $12,036
Jan-91 $12,767 $12,175
Feb-91 $12,878 $12,304
Mar-91 $12,883 $12,349
Apr-91 $13,055 $12,464
May-91 $13,171 $12,584
Jun-91 $13,158 $12,554
Jul-91 $13,318 $12,745
Aug-91 $13,494 $12,872
Sep-91 $13,669 $13,001
Oct-91 $13,792 $13,096
Nov-91 $13,831 $13,061
Dec-91 $14,128 $13,308
Jan-92 $14,161 $13,323
Feb-92 $14,165 $13,367
Mar-92 $14,171 $13,378
Apr-92 $14,297 $13,493
May-92 $14,466 $13,647
Jun-92 $14,709 $13,853
Jul-92 $15,150 $14,302
Aug-92 $15,001 $14,114
Sep-92 $15,099 $14,141
Oct-92 $14,951 $13,926
Nov-92 $15,219 $14,229
Dec-92 $15,374 $14,377
Jan-93 $15,552 $14,495
Feb-93 $16,115 $14,954
Mar-93 $15,944 $14,781
Apr-93 $16,105 $14,943
May-93 $16,195 $15,060
Jun-93 $16,466 $15,324
Jul-93 $16,487 $15,346
Aug-93 $16,830 $15,707
Sep-93 $17,022 $15,918
Oct-93 $17,054 $15,914
Nov-93 $16,904 $15,867
Dec-93 $17,261 $16,157
Jan-94 $17,458 $16,338
Feb-94 $17,006 $15,961
Mar-94 $16,314 $15,299
Apr-94 $16,452 $15,225
May-94 $16,595 $15,411
Jun-94 $16,494 $15,251
Jul-94 $16,796 $15,534
Aug-94 $16,855 $15,588
Sep-94 $16,607 $15,310
Oct-94 $16,311 $14,944
Nov-94 $16,016 $14,642
Dec-94 $16,369 $15,109
Jan-95 $16,836 $15,605
Feb-95 $17,326 $16,043
Mar-95 $17,525 $16,152
Apr-95 $17,546 $16,159
May-95 $18,106 $16,632
Jun-95 $17,947 $16,464
Jul-95 $18,117 $16,567
Aug-95 $18,347 $16,715
Sep-95 $18,463 $16,834
Oct-95 $18,732 $17,066
Nov-95 $19,043 $17,348
Dec-95 $19,226 $17,503
Jan-96 $19,372 $17,554
Feb-96 $19,240 $17,466
Mar-96 $18,994 $17,235
Apr-96 $18,940 $17,167
May-96 $18,933 $17,186
Jun-96 $19,139 $17,340
Jul-96 $19,312 $17,518
Aug-96 $19,308 $17,503
Sep-96 $19,578 $17,716
Oct-96 $19,799 $17,880
Nov-96 $20,162 $18,217
Dec-96 $20,077 $18,108
Jan-97 $20,115 $18,150
Feb-97 $20,300 $18,299
Mar-97 $20,030 $18,016
</TABLE>
The accompanying chart compares the performance of the Stagecoach Oregon
Tax-Free Fund Institutional Class shares since the inception of the Predecessor
Funds with the Lehman Brothers Municipal Bond Index. The chart assumes a
hypothetical $10,000 initial investment in the Institutional Class shares and
reflects all operating expenses. The Lehman Brothers Municipal Bond Index is an
unmanaged, broad-based index of municipal bonds. The Fund is a professionally
managed mutual fund. The index presented here does not incur expenses and is not
available directly for investment. Had this index incurred operating expenses,
its performance would have been lower.
---------------------
21
<PAGE>
ARIZONA TAX-FREE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
ARIZONA MUNICIPAL BONDS - 98.05%
$ 500,000 Arizona State Wastewater Management Authority
Financial Assistance AMBAC Insured 5.60 % 07/01/12 $ 498,815
1,165,000 Bullhead City AZ Sewer Facility Excise Tax
Revenue 5.25 07/01/10 1,143,156
130,000 Bullhead City AZ Special Assessment Parkway
Improvement District 6.10 01/01/02 136,663
170,000 Bullhead City AZ Special Assessment Parkway
Improvement District 6.10 01/01/03 179,563
500,000 Chandler AZ Street & Highway User Revenue 6.00 07/01/11 518,275
110,000 Glendale AZ Improvement District 6.00 01/01/01 114,236
175,000 Glendale AZ Improvement District 6.00 01/01/02 182,532
235,000 Glendale AZ Water & Sewer Revenue 9.00 07/01/03 286,547
800,000 Maricopa County AZ School District GO 7.75 07/01/06 945,000
495,000 Maricopa County AZ USD Glendale FGIC Insured 5.00 07/01/10 470,869
1,500,000 Maricopa County AZ USD Mesa GO FGIC Insured 5.55 07/01/04 1,531,410
150,000 Maricopa County AZ USD Osborn 6.10 07/01/04 159,188
1,500,000 Maricopa County AZ USD Peoria 5.50 07/01/10 1,494,270
500,000 Maricopa County AZ USD Phoenix Series A 5.40 07/01/09 501,045
415,000 Maricopa County AZ USD Tolleson AMBAC Insured 5.80 07/01/07 429,554
500,000 Maricopa County Unified School District Series
A 5.50 07/01/10 501,035
500,000 Mesa AZ GO 6.50 07/01/09 550,000
1,045,000 Mohave County AZ Elementary School District 6.90 07/01/07 1,175,625
500,000 Mohave County AZ IDA Baptist Hospital MBIA
Insured 5.70 09/01/15 493,175
500,000 Navajo County AZ USD Blueridge GO FSA Insured 5.80 07/01/07 519,755
100,000 Peoria AZ Improvement District 7.30 01/01/99 103,853
</TABLE>
- ------------------------
22
<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)
$ 1,000,000 Phoenix AZ Civic Improvement Corp MBIA Insured 4.85 % 07/01/07 $ 970,000
900,000 Phoenix AZ GO 3.85 06/01/20 900,000
250,000 Phoenix AZ GO 6.50 07/01/06 273,438
1,000,000 Phoenix AZ GO Series A 6.25 07/01/16 1,067,500
750,000 Phoenix AZ Street & Highway User Revenue 6.40 07/01/04 811,013
215,000 Phoenix AZ Special Assessment Central Avenue
Improvement District 7.00 01/01/99 222,054
250,000 Pima County AZ 5.00 07/01/08 243,750
335,000 Pima County AZ Community College District 5.50 07/01/12 330,387
75,000 Pima County AZ USD Amphitheater Series E 6.00 07/01/04 78,263
250,000 Pima County AZ USD Amphitheater Series E 6.50 07/01/05 272,843
800,000 Pima County AZ USD Tucson Series D FGIC Insured 6.10 07/01/12 827,000
1,000,000 Salt River AZ Agricultural Improvement Series C 5.00 01/01/16 912,220
200,000 Scottsdale AZ GO 5.50 07/01/09 203,250
500,000 Scottsdale AZ GO 7.50 07/01/04 585,625
250,000 Tucson AZ Street & Highway User Revenue MBIA
Insured 5.50 07/01/12 246,675
--------------
TOTAL ARIZONA MUNICIPAL BONDS $ 19,878,584
(Cost $19,820,047)
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 3.76%
MONEY MARKET FUNDS - 3.76%
762,919 Goldman Sachs & Co Financial Square Tax-Free Fund $ 762,919
(Cost $762,919)
</TABLE>
---------------------
23
<PAGE>
ARIZONA TAX-FREE FUND
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $20,582,966)* (Note 1 and 3) 101.81% $ 20,641,503
Other Assets and Liabilities, Net (1.81) (367,233)
------ --------------
TOTAL NET ASSETS 100.00% $ 20,274,270
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* 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 $ 255,937
Gross Unrealized Depreciation (197,400)
------------
NET UNREALIZED APPRECIATION $ 58,537
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
24
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - 96.27%
$ 3,000,000 ABAG Finance Authority for Nonprofit Corp CA
Stanford University Hospital 5.50 % 11/01/13 $ 2,866,500
1,000,000 Alameda CA USD AMBAC Insured 5.95 07/01/09 1,037,330
1,000,000 Alameda CA USD AMBAC Insured 6.05 07/01/11 1,028,140
2,000,000 Alameda County CA Public Facilities Corp COP 6.25 06/01/06 2,083,900
3,620,000 Antioch CA Public FA Water Revenue Water
Treatment Plant Project MBIA Insured 5.63 07/01/14 3,566,026
1,430,000 Arcadia CA USD Capital Appreciation Series A
MBIA Insured 7.19 (F) 09/01/07 815,186
1,330,000 Arcadia CA USD Capital Appreciation Series A
MBIA Insured 7.32 (F) 09/01/06 807,536
2,545,000 Bonita CA USD COP MBIA Insured 5.63 05/01/10 2,564,164
1,300,000 Burbank Glendale Pasadena Airport Authority CA
Airport Revenue AMBAC Insured 6.40 06/01/10 1,356,134
1,000,000 California State DWR Central Valley Project
Revenue 4.75 09/01/12 914,330
1,500,000 California State DWR Central Valley Project
Revenue 5.00 12/01/12 1,379,535
400,000 California State DWR Central Valley Project
Revenue Series F 6.00 12/01/11 402,048
5,000,000 California State DWR Central Valley Project
Revenue Series J 6.00 12/01/07 5,325,950
1,830,000 California State DWR Central Valley Project
Revenue Series L 5.75 12/01/13 1,823,302
1,000,000 California State DWR Central Valley Project
Revenue Series L 5.75 12/01/14 990,830
3,235,000 California State DWR Central Valley Project
Series O 4.75 12/01/17 2,765,052
680,000 California State EDFA Revenue Mills College 6.70 09/01/05 738,487
50,000 California State EDFA Revenue Pomona College 6.13 02/15/08 52,691
</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)
$ 1,000,000 California State EDFA Revenue Pomona College GO 5.60 % 12/01/14 $ 962,500
3,200,000 California State EDFA Revenue Pomona College GO 6.00 02/15/17 3,207,776
2,235,000 California State EDFA Revenue St Mary's College 4.75 10/01/20 1,805,210
750,000 California State EDFA Revenue University of San
Diego Project 6.50 10/01/08 800,678
1,000,000 California State EDFA Revenue University of San
Francisco MBIA Insured 5.60 10/01/10 1,017,730
1,000,000 California State GO 4.75 09/01/11 922,540
3,000,000 California State GO AMBAC Insured 5.75 03/01/15 2,963,040
1,910,000 California State GO Eagles II Series 6 5.88 (F) 04/01/10 915,425
3,000,000 California State GO MBIA Insured 6.00 10/01/10 3,173,070
40,000 California State HFA Home Mortgage Revenue
Series B FHA Collateralized 6.90 08/01/16 40,428
180,000 California State HFA Home Mortgage Revenue
Series B MBIA Insured 6.90 08/01/16 181,903
300,000 California State HFA Home Mortgage Revenue
Series G AMT Multiple Credit Enhancements 6.95 08/01/11 315,813
500,000 California State HFA Home Multi Unit Rental
Mortgage Revenue Series B-II 6.70 08/01/15 519,500
500,000 California State HFA Home Multi-Unit Rental
Mortgage Revenue Series C-II AMT 6.85 08/01/15 519,385
1,250,000 California State HFA Multi-Unit Rental Housing
Revenue Series A AMT 5.50 08/01/15 1,159,463
1,500,000 California State HFFA Revenue Kaiser Permanente
Series A 6.25 03/01/21 1,551,510
2,000,000 California State HFFA Revenue Scripps Memorial
Hospital MBIA Insured 6.40 10/01/12 2,094,320
2,000,000 California State HFFA Revenue Scripps Research
Institute 6.63 07/01/14 2,114,480
1,000,000 California State HFFA Revenue Special Episcopal
Homes Mortgage 7.30 07/01/00 1,016,050
5,000,000 California State HFFA San Diego Hospital
Association MBIA Insured 6.20 08/01/12 5,162,650
</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)
$ 1,795,000 California State HFFA Scripps Memorial Hospital
Series A MBIA Insured 6.25 % 10/01/13 $ 1,845,709
2,500,000 California State PCFA Pacific Gas & Electric Co
AMT 6.35 06/01/09 2,588,525
1,445,000 California State PCFA Pacific Gas & Electric Co
AMT 6.63 06/01/09 1,527,640
2,000,000 California State Public Works Board Lease
Revenue Community Colleges 6.63 09/01/07 2,133,780
1,000,000 California State Public Works Board Lease
Revenue Department of Corrections AMBAC
Insured 5.25 01/01/21 916,180
3,000,000 California State Public Works Board Lease
Revenue Department of Corrections AMBAC
Insured 6.40 11/01/10 3,218,130
2,000,000 California State Public Works Board Lease
Revenue Department of Corrections Series A
AMBAC Insured 5.50 01/01/15 1,931,360
1,000,000 California State Public Works Board Lease
Revenue University Of California Project
Series A AMBAC Insured 6.00 12/01/12 1,013,970
1,755,000 California State Public Works Board Lease
Revenue University Of California Project
Series A AMBAC Insured 6.30 12/01/09 1,867,653
5,000,000 California State Universities & Colleges
Revenue HSG System FGIC Insured 5.80 11/01/17 4,993,450
1,500,000 California Statewide CDA Lease Revenue Oakland
Convention Centers Project AMBAC Insured 5.50 10/01/14 1,452,270
6,800,000 California Statewide CDA Lease Revenue Oakland
Convention Centers Project AMBAC Insured 6.00 10/01/10 7,019,028
1,000,000 California Statewide CDA Motion Picture and
Television Development AMBAC Insured 5.20 01/01/11 960,660
1,750,000 California Statewide CDA Motion Picture and
Television Development AMBAC Insured 5.25 01/01/12 1,678,233
</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)
$ 500,000 California Statewide CDA Revenue COP Health
Facilities Barton Memorial Hospital LOC -
Banque Nationale de Paris 6.40 % 12/01/05 $ 521,380
1,810,000 California Statewide CDA Revenue COP Hospital
Cedars Sinai Medical Center 6.50 08/01/12 1,921,387
1,500,000 California Statewide CDA Revenue COP Sutter
Health Obligated Group AMBAC Insured 6.00 08/15/09 1,542,930
1,935,000 California Statewide CDA Water Revenue Series A 6.00 07/01/10 1,986,239
2,000,000 Capistrano CA Unified PFA Special Tax Revenue
AMBAC Insured 5.25 09/01/09 1,962,500
200,000 Capitol Area Development Authority Sacramento
CA Lease Revenue Series A MBIA Insured 6.50 04/01/12 213,240
1,800,000 Chino Basin CA Regional Financial Authority
Revenue Municipal Water District Sewer
Systems Project AMBAC insured 6.00 08/01/16 1,823,220
400,000 Chula Vista CA COP Town Centre II Package
Project RDA 6.00 09/01/07 407,672
735,000 Chula Vista CA COP Town Centre II Package
Project RDA 6.00 09/01/08 744,195
820,000 Chula Vista CA COP Town Centre II Package
Project Redevelopment Agency 6.00 09/01/10 827,544
2,000,000 Coachella CA Water Revenue COP FSA Insured 6.10 03/01/22 2,036,820
2,500,000 Concord CA RDFA Tax Allocation 5.75 07/01/10 2,372,150
3,240,000 Contra Costa CA Water District Revenue FGIC
Insured 6.00 10/01/13 3,294,529
2,505,000 Contra Costa CA Water Treatment Revenue FGIC
Insured 5.70 10/01/12 2,501,844
1,500,000 Contra Costa County CA COP Public Facilities
Merrithew Memorial Hospital Replacement 6.60 11/01/12 1,655,250
2,000,000 Contra Costa County CA Transportation Authority
Sales Tax Revenue Series A Escrowed to
Maturity 6.50 03/01/09 2,179,600
</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)
$ 1,000,000 Contra Costa County CA Water Treatment Revenue
Series A FGIC Insured 5.60 % 10/01/10 $ 1,004,820
1,045,000 Corona CA PFA Public Improvement Revenue 5.95 07/01/07 1,034,111
1,075,000 Cotati CA Facilities Financing Authority Tax
Allocation Series A 5.60 09/01/12 999,062
1,250,000 Cucamonga County CA Water District COP
Refinancing Facilities FGIC Insured 6.30 09/01/12 1,301,775
15,000 Culver City CA RDFA AMBAC Insured 6.75 11/01/15 15,853
2,500,000 Cupertino CA Series A AMBAC Insured 5.75 07/01/16 2,496,600
1,450,000 Cupertino CA Series B 6.25 07/01/10 1,477,579
1,355,000 Duarte CA COP City of Hope National Medical
Center 6.13 04/01/13 1,340,027
1,000,000 East Bay CA MUD Wastewater Treatment Revenue
FGIC Insured 5.00 06/01/16 906,850
3,000,000 East Bay CA MUD Wastewater Treatment Revenue
MBIA Insured 5.00 06/01/14 2,752,620
1,500,000 East Bay CA MUD Wastewater Treatment System
Revenue AMBAC Insured 6.00 06/01/09 1,559,880
1,000,000 East Bay CA MUD Water System Revenue FGIC
Insured 6.00 06/01/12 1,016,090
1,195,000 East Bay CA Regional Park District Series B 5.75 09/01/14 1,192,646
5,000,000 Elsinore Valley CA Municipal Water District COP
Series A FGIC Insured 5.75 07/01/19 4,900,950
1,000,000 Elsinore Valley CA Municipal Water District COP
Series A FGIC Insured 6.00 07/01/12 1,047,690
3,000,000 Emeryville CA PFA Housing Increment Revenue
Series A 6.35 05/01/10 3,084,210
1,850,000 Escondido CA Certificates Participation
Wastewater Project 5.50 09/01/16 1,773,688
2,000,000 Escondido CA PFA Lease Revenue Escondido Civic
Center Project Series B AMBAC Insured 6.13 09/01/11 2,125,840
1,080,000 Escondido CA USD Series A FGIC Insured 5.13 09/01/15 1,002,532
1,110,000 Folsom CA PFA Revenue AMBAC Insured 6.00 10/01/12 1,128,681
1,000,000 Foothill CA De Anza Community College Connie
Lee Insured 5.25 09/01/21 907,970
</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)
$ 1,270,000 Fremont CA USD Alameda County Series E FGIC
Insured 5.90 % 09/01/15 $ 1,283,094
3,940,000 Fremont CA USD Alameda County Series F MBIA
Insured 5.88 08/01/16 3,944,925
2,000,000 Fresno CA Conference Center 5.00 04/01/13 1,861,780
2,000,000 Fresno CA Joint Powers Financing Authority
Street Light Acquisition Project Series A 5.50 08/01/12 1,875,120
2,000,000 Fresno CA USD FSA Insured 5.88 08/01/20 1,991,000
3,000,000 Fresno CA Water System Revenue FGIC Insured 6.00 06/01/16 3,038,130
1,500,000 Glendale CA RDFA Tax Allocation Revenue AMBAC
Insured 5.50 12/01/09 1,503,120
1,000,000 Glendale CA RDFA Tax Allocation Revenue AMBAC
Insured 5.50 12/01/11 988,750
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 1,015,220
200,000 Industry CA Urban Development Agency 6.85 11/01/04 213,750
1,270,000 Industry CA Urban Development Agency Tax
Allocation MBIA Insured 5.80 05/01/09 1,301,966
1,000,000 Industry CA Urban Development Agency Tax
Allocation MBIA Insured 6.00 05/01/15 1,026,200
1,350,000 Jackson CA COP Water System Acquisition Project 6.80 09/01/23 1,374,813
270,000 Jamul-Dulzura CA USD 6.40 08/01/16 285,795
2,000,000 Kern CA High School District MBIA Insured 5.60 08/01/12 2,085,180
1,185,000 La Verne CA COP Capital Improvements Projects 5.70 06/01/15 1,118,130
3,000,000 Long Beach CA Finance Authority Revenue 6.00 11/01/08 3,189,450
2,000,000 Long Beach CA Water Revenue 6.00 05/01/14 2,014,380
1,000,000 Long Beach CA Water Revenue 6.13 05/01/19 1,008,880
1,000,000 Los Angeles CA Community College District COP
Series A CGIC Insured 5.90 08/15/07 1,046,270
4,695,000 Los Angeles CA DW&P Electric Plant Revenue 5.70 09/01/11 4,656,971
200,000 Los Angeles CA DW&P Electric Plant Revenue 6.38 02/01/20 207,210
</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 Los Angeles CA DW&P Electric Plant Revenue
Second Issue 5.75 % 08/15/11 $ 1,983,820
2,000,000 Los Angeles CA DW&P Electrical Plant Revenue
FGIC Insured 4.75 08/15/09 1,872,600
3,000,000 Los Angeles CA DW&P Waterworks Revenue 5.70 04/15/09 3,038,580
2,145,000 Los Angeles CA Harbor Department of Revenue 6.40 08/01/15 2,345,214
340,000 Los Angeles CA Municipal Improvement Corp Lease
Revenue Central Library Project Series A 6.30 06/01/16 345,209
2,800,000 Los Angeles CA USD Certificates Participation
Multiple Properties Project Series A FSA
Insured 5.40 10/01/09 2,782,500
2,200,000 Los Angeles CA USD Certificates Participation
Multiple Properties Project Series A FSA
Insured 5.50 10/01/10 2,175,250
4,000,000 Los Angeles CA Wastewater System Revenue AMBAC
Insured 6.25 06/01/12 4,158,240
1,300,000 Los Angeles CA Wastewater System Revenue Series
A MBIA Insured 5.70 06/01/13 1,284,738
1,000,000 Los Angeles CA Wastewater System Revenue Series
C MBIA Insured 5.50 06/01/13 972,580
4,500,000 Los Angeles CA Wastewater System Revenue Series
D FGIC Insured 5.20 11/01/21 4,034,430
1,975,000 Los Angeles County CA Metropolitan
Transportation Authority Sales Tax Revenue
Series A 5.50 07/01/13 1,874,670
2,250,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue 6.25 07/01/16 2,250,720
2,000,000 Los Angeles USD COP Dr Francisco Bravo Medical
Hospital 6.60 06/01/05 2,137,660
1,370,000 Madera CA RDFA Tax Allocation Revenue CGIC
Insured 5.75 09/01/11 1,381,837
1,000,000 Menlo Park CA CDA Tax Allocation Revenue MBIA
Insured 5.38 06/01/16 950,000
</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)
$ 2,485,000 Merced County CA COP Construction & Equipment
Project Lease Revenue FSA Insured 6.00 % 10/01/12 $ 2,519,268
8,000,000 Metropolitan Water District Southern CA Water
Works Revenue 5.75 07/01/13 7,846,640
2,000,000 Metropolitan Water District Southern CA Water
Works Revenue MBIA Insured 5.75 07/01/15 1,986,120
1,000,000 Modesto CA Irrigation District Financing
Authority Domestic Water Project Revenue
Series A AMBAC Insured 6.00 09/01/09 1,038,030
975,000 Montclair CA RDFA Lease Revenue Series A 5.80 11/01/10 977,360
100,000 Montclair CA RDFA Lease Revenue Series A 6.63 11/01/11 104,046
1,000,000 Mountain View CA Shoreline Regional Park
Community Tax Allocation MBIA Insured 5.50 08/01/13 977,500
1,000,000 National City CA CDA Tax Allocation Downtown
Redevelopment Project Series A AMBAC Insured 6.25 08/01/12 1,037,280
1,230,000 National City CA CDA Tax Allocation Downtown
Redevelopment Project Series B AMT AMBAC
Insured 6.63 08/01/12 1,306,973
720,000 Natomas CA USD Series A MBIA Insured 5.75 09/01/12 726,221
750,000 Nevada County CA Solid Waste Revenue 6.50 10/01/06 796,035
1,000,000 North City West CA School Facility Authority
Special Tax Refunded Series B FSA Insured 5.75 09/01/15 987,500
1,000,000 Northern California Power Agency Multiple
Capital Facilities Revenue Series A MBIA
Insured 6.50 08/01/12 1,066,450
7,000,000 Northern California Transmission Revenue
Transmission Project A MBIA Insured 5.50 05/01/14 6,802,110
4,280,000 Northridge CA Water District Revenue AMBAC
Insured 5.25 02/01/14 4,067,626
1,465,000 Oakland CA FGIC Insured 6.00 06/15/12 1,493,011
2,000,000 Oceanside CA Water Reuse Finance Project A
AMBAC Insured 6.40 10/01/12 2,113,120
6,000,000 Orange County CA LOC TRANS Authority Sales Tax
Revenue MBIA Insured 6.00 02/15/08 6,335,580
</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)
$ 800,000 Orange County CA Local Transportation Authority
Sales Tax Revenue First Series Measure M 6.00 % 02/15/09 $ 841,304
360,000 Orange County CA Sanitation District COP FGIC
Insured 6.40 08/01/07 381,830
1,000,000 Palm Springs CA Certificate of Participation
Refunded Multiple Capital Facilities Project
AMBAC Insured 5.75 04/01/17 987,500
1,240,000 Parlier CA RDFA Tax Allocation Series A 6.95 08/01/23 1,260,386
1,500,000 Pinole CA RDFA Tax Allocation 5.60 08/01/17 1,388,250
3,285,000 Pittsburgh CA Redevelopment Agency Tax
Allocation V/R Series A AMBAC Insured 5.00 08/01/13 3,021,937
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 3,480,082
1,325,000 Redding CA Joint Powers Financing Authority
Wastewater Revenue Series A FGIC Insured 6.00 12/01/11 1,364,180
1,310,000 Rialto CA RDFA Tax Allocation Series A 5.80 09/01/08 1,305,035
4,000,000 Riverside County CA Asset Leasing Corp Revenue
Riverside County Hospital Project A 6.38 06/01/09 4,145,000
1,045,000 Riverside County CA PFA Special Tax Revenue
Series A MBIA Insured 5.25 09/01/10 1,019,084
1,000,000 Rocklin CA USD Community Facility District
Special Tax MBIA Insured 5.75 09/01/18 975,000
1,000,000 Sacramento CA Airport Commission International
Airport Revenue AMBAC Insured 6.00 07/01/16 1,010,870
1,500,000 Sacramento CA Area Flood Control Authority
Special Assessment FGIC Insured 5.38 10/01/15 1,426,380
5,000 Sacramento CA Financing Authority Revenue
Prerefunded 6.70 11/01/11 5,226
2,300,000 Sacramento CA Light Rail Transportation Project 6.00 07/01/12 2,320,677
</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)
$ 2,500,000 Sacramento CA MUD Electric Revenue MBIA Insured 6.25 % 08/15/10 $ 2,697,125
500,000 Sacramento CA MUD Electric Revenue Series C
FGIC Insured 5.75 11/15/08 513,290
5,100,000 Sacramento CA MUD Electric Revenue Series C
MBIA Insured 5.75 11/15/09 5,203,530
50,000 Sacramento CA MUD Electric Revenue Series Z
FGIC Insured 6.45 07/01/10 52,795
1,000,000 Sacramento CA RDFA Tax Allocation Merged
Downtown Project A MBIA Insured 6.50 11/01/13 1,056,850
2,000,000 Sacramento County CA Airport System Revenue
Series A AMT FGIC Insured 6.00 07/01/12 2,020,660
380,000 San Bernardino County CA West Valley Detention
Center MBIA Insured 6.50 11/01/12 406,000
200,000 San Bernardino County CA Transportation
Authority Sales Tax Revenue FGIC Insured 6.00 03/01/10 207,166
4,000,000 San Buenaventura CA COP AMBAC Insured 6.00 01/01/12 4,070,000
1,500,000 San Diego CA Community College District COP
Financing Projects 5.38 12/01/14 1,369,290
1,695,000 San Diego CA PFA Sewer Revenue FGIC Insured 5.00 05/15/15 1,550,840
2,000,000 San Diego CA PFA Sewer Revenue FGIC Insured 5.00 05/15/20 1,783,400
3,000,000 San Diego CA Public Safety Commission Project
GO 5.50 04/01/08 3,058,260
1,000,000 San Diego CA Public Safety Commission Project
GO 6.50 07/15/07 1,122,000
4,000,000 San Diego County CA Regional Transportation
Community Sales Tax Revenue Series A Escrowed
to Maturity 6.00 04/01/08 4,208,960
1,235,000 San Elijo Joint Powers Authority San Diego
County CA Water Pollution Control Facility
FGIC Insured 5.38 03/01/13 1,185,514
</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 San Francisco CA Airport Commission
International Airport Revenue AMBAC Insured 6.20 % 05/01/07 $ 1,062,850
200,000 San Francisco CA City & County Public Utilities
Commission Water Revenue Series A 6.50 11/01/09 216,408
700,000 San Francisco CA City & County RDFA Tax
Allocation Capital Appreciation Project MBIA
Insured 7.51 (F) 08/01/08 379,806
4,500,000 San Francisco CA City & County Sewer Revenue 6.00 10/01/11 4,630,995
500,000 San Francisco CA RDA Tax Allocation MBIA
Insured 5.00 08/01/15 454,550
2,000,000 San Joaquin Hills CA Transportation Corridor
Agency Toll Road Revenue Capital Appreciation 4.82 (F) 01/01/10 1,637,500
3,000,000 San Jose RDFA Merged Area Project MBIA Insured 5.25 08/01/16 2,805,720
1,200,000 San Mateo CA Joint Powers Financing Authority
Redevelopment Downtown & Shoreline Project A
AMBAC Insured 5.50 08/01/07 1,214,964
1,130,000 San Mateo CA Sewer Revenue FSA Insured 5.50 08/01/14 1,103,807
2,250,000 Santa Clara CA Financing Authority Lease
Revenue Facility Replacement Project A AMBAC
Insured 6.88 11/15/14 2,467,170
4,010,000 Santa Clara CA RDFA Tax Allocation Bayshore
North Project AMBAC Insured 5.75 07/01/14 4,021,348
2,500,000 Santa Clara County CA COP Multiple Facilities
Project AMBAC Insured 6.00 05/15/12 2,540,050
1,000,000 Santa Maria CA RDFA Town Center West Side
Parking Facilities FSA Insured 5.25 06/01/11 964,760
2,450,000 Santa Rosa CA Wastewater Treatment Plant FGIC
Insured 4.75 09/01/16 2,123,734
1,750,000 Shasta CA Joint Powers Financing Authority
Lease Revenue County Courthouse Improvement
Project Series 6.70 06/01/23 1,787,450
1,000,000 Sonoma Valley CA USD FSA Insured 6.00 07/15/21 1,006,270
</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)
$ 4,720,000 South County CA Regional Wastewater Authority
Revenue Capital Improvement FGIC Insured 5.75 % 08/01/10 $ 4,784,050
1,000,000 Southern CA Public Power Project Revenue 6.75 07/01/11 1,099,080
1,000,000 Southern California State Public Power
Authority 5.50 07/01/12 972,500
3,000,000 Southern California State Rapid Transit
District Special Benefit Assessment District
A1 AMBAC Insured 6.00 09/01/08 3,132,750
2,000,000 Stanislaus County CA Capital Improvement
Program Series A MBIA Insured 5.25 05/01/14 1,889,540
1,600,000 Stanislaus County CA COP Capital Improvement
Project AMBAC Insured 5.25 05/01/18 1,486,144
2,000,000 Stanislaus County CA COP Series B AMBAC Insured 6.13 06/01/12 2,064,500
1,000,000 Three Valleys CA Municipal Water District COP
FGIC Insured 5.00 11/01/14 921,620
2,000,000 Three Valleys CA Municipal Water District
Revenue COP FGIC Insured 5.25 11/01/10 1,950,000
1,000,000 Torrance CA COP AMBAC Insured 5.50 04/01/11 993,920
1,000,000 Torrance CA COP AMBAC Insured 5.75 04/01/16 993,030
1,000,000 Truckee-Donner Public Utility District
Certificate of Participation Water System
Improvement Project 5.50 11/15/16 958,750
2,000,000 Tulare County CA COP Public Facilities
Corporation Series A MBIA Insured 6.10 11/15/07 2,119,060
1,250,000 Twentynine Palms CA Water District CA COP 7.00 08/01/17 1,290,125
1,000,000 Union City CA Community RDFA Tax Allocation
Revenue Community Redevelopment Project AMBAC
Insured 5.65 10/01/14 987,800
1,645,000 University of California Revenue Housing System
Series A AMBAC Insured 5.50 11/01/11 1,618,565
6,900,000 University of California Revenue Multiple
Purpose Project C AMBAC Insured 5.25 09/01/11 6,621,309
1,000,000 University of California Revenue Multiple
Purpose Projects AMBAC Insured 4.75 09/01/15 865,000
</TABLE>
- ------------------------
36
<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 University of California Revenue Residential
Housing Projects AMBAC Insured 6.10 % 09/01/10 $ 1,022,530
2,000,000 University of California Revenue Residential
Housing Projects AMBAC Insured 6.30 09/01/13 2,026,120
1,450,000 University of California Revenue Seismic Safety
Project MBIA Insured 5.50 11/01/10 1,433,688
2,500,000 University of California State Housing System
Series A MBIA Insured 5.00 11/01/14 2,278,150
2,175,000 Vallejo CA Revenue Water Improvement Project
FSA Insured 5.70 05/01/16 2,134,219
2,000,000 Ventura CA COP Public Facilities 5.75 12/01/06 2,057,800
2,000,000 Ventura CA COP Public Facilities Corporation IV 5.75 12/01/07 2,021,780
2,500,000 Walnut Creek CA John Muir Medical Center MBIA
Insured 5.00 02/15/16 2,242,650
1,245,000 West & Central Basin CA Financing Authority
Series A AMBAC Insured 5.00 08/01/16 1,121,795
2,000,000 West & Century Basin Finance Authority CA
Revenue West Basin Project AMBAC Insured 5.00 08/01/13 1,840,000
1,170,000 West Sacramento CA Financing Authority Revenue
Water System Improvement Project FGIC Insured 5.50 08/01/15 1,122,755
1,200,000 Westminster CA RDFA AMT 6.50 08/01/10 1,206,024
1,000,000 Whittier CA Educational Facilities Revenue
Whittier College Connie Lee Insured 5.40 12/01/18 935,640
1,040,000 Yolo County CA Library Special Tax Community
Facilities 6.25 12/01/22 1,038,579
--------------
TOTAL CALIFORNIA MUNICIPAL BONDS $ 407,623,368
(Cost $401,499,761)
</TABLE>
---------------------
37
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 2.88%
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES+ - 2.20%
$ 1,000,000 California State HFFA St Joseph's Health
Systems Series B V/R 3.60 % 07/01/09 $ 1,000,000
1,000,000 California State PCFA Shell Oil Company Project
V/R Series C 3.65 11/01/00 1,000,000
1,800,000 California State PCFA Southern California
Edison V/R Series A 3.55 02/28/08 1,800,000
1,075,000 California State PCFA Stanislaus Project V/R
AMT LOC - Swiss Bank 3.85 12/01/17 1,075,000
800,000 California State PCFA V/R Shell Oil Co Project
Series B 3.65 10/01/11 800,000
1,700,000 Irvine Ranch CA Water District V/R 3.55 06/01/15 1,700,000
1,000,000 Irvine Ranch CA Water District V/R LOC -
Sumitomo Bank Ltd 3.70 10/01/10 1,000,000
950,000 Los Angeles County CA IDA Walter & Howard V/R
AMT LOC - Dai-Ichi Kangyo Bank Ltd 4.20 12/01/06 950,000
--------------
$ 9,325,000
</TABLE>
- ------------------------
38
<PAGE>
CALIFORNIA TAX-FREE BOND FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
SHARES SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MONEY MARKET FUNDS - 0.68%
2,863,530 Arbor Fund CA Tax-Exempt Portfolio $ 2,863,530
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 12,188,530
(Cost $12,188,530)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $413,688,291)* (Note 1 and 3) 99.15% $ 419,811,898
Other Assets and Liabilities, Net 0.85 3,597,146
------ --------------
TOTAL NET ASSETS 100.00% $ 423,409,044
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
(F) YIELD TO 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 $ 10,514,485
Gross Unrealized Depreciation (4,390,878)
------------
NET UNREALIZED APPRECIATION $ 6,123,607
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
39
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - 91.53%
$ 2,425,000 California State DWR Central Valley Project
Revenue 8.50 % 12/01/98 $ 2,581,534
3,625,000 California State DWR Central Valley Project
Revenue Series H Prerefunded 6.90 12/01/25 3,922,286
2,000,000 California State DWR Central Valley Project
Revenue Series L 8.00 12/01/01 2,268,000
500,000 California State EDFA Revenue Pooled College &
University Financing 5.10 06/01/98 501,975
500,000 California State HFFA Revenue Episcopal Homes
Mortgage Insurance 7.20 07/01/99 507,845
260,000 California State HFFA Revenue Mortgage
Insurance 7.40 12/01/00 276,528
2,135,000 California State Maritime Infrastructure
Authority Port of San Diego Revenue AMT AMBAC
Insured 5.00 11/01/02 2,142,537
1,785,000 California State Public Power Agency San Juan
Project Revenue Series F AMBAC Insured 5.65 07/01/03 1,858,756
1,000,000 California State Public Revenue CA State
University Projects 6.70 10/01/17 1,110,000
500,000 California State Public Works Board Lease
Revenue Department of Corrections State
Prison 7.00 09/01/98 510,290
750,000 California State Public Works Board Lease
Revenue Department of Corrections State
Prison 7.20 11/01/98 766,658
1,500,000 California Statewide CDA Revenue COP Saint
Joseph Health System 4.30 07/01/98 1,501,890
3,500,000 California-Oregon State Electrical Transmission
Project Series A MBIA Insured 7.00 05/01/24 3,791,305
250,000 Carlsbad CA USD COP Phase III 6.70 11/01/99 260,330
</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)
$ 4,000,000 Contra Costa County CA Transportation Authority
Sales Tax Revenue Series A FGIC Insured 6.00 % 03/01/04 $ 4,262,160
2,000,000 Desert Sands CA USD COP Series C 4.30 03/01/98 1,992,520
4,000,000 East Bay CA MUD Water System Revenue MBIA
Insured 7.50 06/01/18 4,415,320
500,000 Emeryville CA PFA Housing Increment Revenue
Series A 5.40 05/01/98 504,820
600,000 Encinitas CA USD COP Measure B Capital Projects 4.38 09/01/98 598,878
820,000 Foster City CA PFA 4.70 09/01/98 818,967
685,000 Foster City CA PFA 5.40 09/01/01 692,405
2,000,000 Industry CA Urban Development Agency FSA
Insured 4.70 05/01/04 1,962,500
500,000 Los Angeles CA Community RDFA Central Business
District Project Series G 6.20 07/01/97 501,880
1,000,000 Los Angeles CA Department of Airports Revenue
FGIC Insured 6.50 05/15/04 1,097,500
750,000 Los Angeles CA DW&P Water Works Revenue 7.10 08/01/02 778,718
725,000 Los Angeles CA Judgement Obligation Bonds
Series A 4.70 08/01/98 732,018
2,205,000 Los Angeles CA USD Certificates Participation
Properties FSA Insured 4.75 10/01/02 2,202,244
1,300,000 Los Angeles CA Waste Water System Revenue
Series A MBIA Insured 8.50 06/01/03 1,544,530
1,000,000 Los Angeles CA Waste Water System Revenue
Series D Prerefunded 6.70 12/01/21 1,089,340
300,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue Series A 6.10 07/01/99 308,628
500,000 Morgan Hill CA RDFA Tax Allocation Ojo De Agua
Community Development Project 5.60 03/01/00 503,700
1,075,000 Mount Diablo CA USD Community Facilities
District Special Tax AMBAC Insured 8.00 08/01/03 1,253,719
3,320,000 Orange County CA MUD Allen-McCollough Pipeline
MBIA Insured 5.50 07/01/05 3,404,029
</TABLE>
---------------------
41
<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)
$ 2,500,000 Rancho CA Water District Financing Authority
Revenue 4.70 % 08/15/21 $ 2,468,750
1,000,000 Riverside County CA Transportation Sales Tax
Revenue Series A 6.40 06/01/99 1,035,000
300,000 Sacramento CA Light Rail Transportation Project 6.30 07/01/00 311,517
500,000 Sacramento CA MUD Electric Revenue MBIA Insured 7.50 08/15/99 527,525
500,000 San Diego CA Transportation Authority COP Bus
Acquisition Project 6.60 12/01/01 524,140
2,000,000 San Diego County CA Regional Transportation
Commission Sales Tax Revenue Series A FGIC
Insured 6.25 04/01/02 2,134,060
1,090,000 San Francisco CA City & County International
Airport Revenue MBIA Insured 8.00 05/01/05 1,276,663
1,150,000 San Francisco CA City & County International
Revenue AMT MBIA Insured 8.00 05/01/05 1,346,938
1,000,000 San Francisco CA City & County RDFA Lease
Revenue George R Moscone Center AMBAC Insured 6.20 10/01/00 1,052,500
750,000 San Francisco CA Redevelopment Agency Lease
Revenue George Moscone Center Project 7.40 07/01/98 774,390
500,000 Santa Monica CA Wastewater Enterprise Revenue
Hyperion Project 12.00 01/01/01 623,905
2,000,000 Southern California Rapid Transit District
Certificates Participation MBIA Insured 7.50 07/01/05 2,217,500
1,100,000 Southern California State Public Power
Authority 6.75 07/01/00 1,157,750
</TABLE>
- ------------------------
42
<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)
$ 1,200,000 University of California Certificate of
Participation Series A MBIA Insured 5.00 % 06/01/99 $ 1,213,500
1,000,000 University of California Multiple Projects
Revenue Series A MBIA Insured 6.00 09/01/02 1,057,728
--------------
TOTAL CALIFORNIA MUNICIPAL BONDS $ 68,385,676
(Cost $68,388,641)
SHORT-TERM INSTRUMENTS - 7.26%
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES+ - 5.46%
$ 900,000 Irvine Ranch CA Water District V/R LOC -
Commerzbank AG 3.70 % 01/01/21 $ 900,000
3,220,000 Los Angeles CA Department of General Services
Lease Revenue Series A V/R 4.50 05/01/00 3,178,977
--------------
$ 4,078,977
</TABLE>
---------------------
43
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
SHARES SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MONEY MARKET FUNDS - 1.80%
1,343,000 Arbor Fund CA Tax-Exempt Portfolio $ 1,343,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 5,421,977
(Cost $5,449,053)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $73,837,694)* (Note 1 and 3) 98.79% $ 73,807,653
Other Assets and Liabilities, Net 1.21 900,262
------ --------------
TOTAL NET ASSETS 100.00% $ 74,707,915
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 440,015
Gross Unrealized Depreciation (470,056)
------------
NET UNREALIZED DEPRECIATION $ (30,041)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
44
<PAGE>
NATIONAL TAX-FREE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - 97.80%
ALASKA - 1.72%
$ 200,000 Anchorage AK USD FGIC Insured 6.00 % 10/01/14 $ 206,086
CALIFORNIA - 0.92%
$ 20,000 California State GO 6.00 % 02/01/01 $ 20,914
100,000 East Bay CA MUD Special District 5.00 04/01/15 89,750
--------------
$ 110,664
COLORADO - 3.62%
$ 135,000 Douglas County CO USD MBIA Insured 5.95 % 12/15/06 $ 143,217
270,000 El Paso County CO USD 6.15 12/15/08 291,263
--------------
$ 434,480
HAWAII - 4.87%
$ 175,000 Hawaii State Series CC GO 5.13 % 02/01/07 $ 173,682
150,000 Hawaii State Series CC GO 5.13 02/01/08 147,593
250,000 Hawaii State Series CL GO 6.00 03/01/09 262,813
--------------
$ 584,088
ILLINOIS - 6.27%
$ 500,000 Chicago IL Board of Education Series A 6.13 % 01/01/07 $ 531,250
200,000 Chicago IL O'Hare International Airport Revenue
Series A 6.75 01/01/06 221,250
--------------
$ 752,500
KENTUCKY - 1.21%
$ 140,000 Kentucky State Housing Corporation Revenue FHA
Insured 6.50 % 07/01/17 $ 144,900
MICHIGAN - 2.05%
$ 250,000 Detroit MI City School District 5.13 % 05/01/07 $ 245,408
</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)
MISSOURI - 0.81%
$ 100,000 Missouri State Regional Convention & Sports
Center 5.00 % 08/15/05 $ 97,605
NEVADA - 9.45%
$ 500,000 Clark County NV Las Vegas Convention & Visitors
Authority FSA Insured 6.00 % 07/01/26 $ 499,830
150,000 Clark County NV Series A - AMBAC Insured 6.00 06/01/03 159,911
500,000 Reno NV Hospital Revenue 5.63 05/15/23 474,760
--------------
$ 1,134,501
NEW MEXICO - 14.44%
$ 1,000,000 Albuquerque NM General Purpose Revenue Series A 5.00 % 07/01/03 $ 1,006,250
500,000 Bernalillo County NM Gross Receipt Tax Revenue
Series B 5.00 04/01/14 470,625
250,000 Santa Fe County NM Gross Receipts Tax Revenue
Series A 6.00 02/01/27 255,625
--------------
$ 1,732,500
NEW YORK - 6.39%
$ 250,000 Erie County NY Public Improvement 6.13 % 01/15/10 $ 265,000
250,000 New York NY FGIC Series E 6.00 08/01/12 253,750
250,000 New York NY Municipal Assistance Corp Series E 5.20 07/01/08 247,500
--------------
$ 766,250
NORTH DAKOTA - 0.85%
$ 100,000 North Dakota State Building Authority Lease
Revenue 5.35 % 06/01/02 $ 101,898
PUERTO RICO - 2.31%
$ 250,000 Commonwealth of Puerto Rico Electrical Power
Authority Series W MBIA Insured 6.50 % 07/01/06 $ 277,623
</TABLE>
- ------------------------
46
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
TEXAS - 18.83%
$ 400,000 Austin TX Utility Systems Revenue 5.90 % 10/01/99 $ 412,784
500,000 Decatur TX Independent School District 6.13 08/01/25 511,875
250,000 El Paso TX GO 7.00 08/15/06 280,938
500,000 Houston TX Independent School District 6.15 08/15/14 535,625
125,000 Port Authur TX MBIA Insured 8.50 02/15/03 147,870
115,000 San Antonio TX GO 5.13 08/01/01 116,869
250,000 Texas State Financial Public Finance Authority
Series B 5.30 10/01/07 252,813
--------------
$ 2,258,774
UTAH - 8.37%
$ 250,000 Salt Lake City UT RDA Neighborhood Tax Revenue 6.50 % 10/01/01 $ 264,508
250,000 Utah State Building Ownership Authority Lease
Series A 6.00 05/15/09 255,333
250,000 Washington County UT USD St Georges FGIC
Insured 5.00 09/01/06 246,778
225,000 Washington County UT USD St Georges FGIC
Insured 6.00 03/01/03 237,704
--------------
$ 1,004,323
VERMONT - 4.57%
$ 500,000 Burlington VT Electricity Revenue Series A MBIA
Insured 6.38 % 07/01/10 $ 548,010
</TABLE>
---------------------
47
<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 - 10.28%
$ 500,000 Clark County WA Sewer Revenue 6.00 % 12/01/06 $ 525,000
100,000 Island County WA USD South Whidbey 6.75 12/01/07 113,000
250,000 Lynnwood WA Improvement District Anticipatory
Notes 5.15 04/01/97 250,009
100,000 South Columbian Basin WA Improvement District
Revenue 6.00 12/01/02 104,694
250,000 Washington State Public Power Supply Systems
Nuclear 5.25 07/01/08 241,223
--------------
$ 1,233,926
WISCONSIN - 0.84%
$ 100,000 Wisconsin State Tax Income 5.10 % 11/01/01 $ 101,369
--------------
TOTAL MUNICIPAL BONDS $ 11,734,905
(Cost $11,765,216)
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 3.26%
MONEY MARKET FUNDS - 3.26%
391,000 Goldman Sachs & Co Financial Square Tax-Free Fund $ 391,000
(Cost $391,000)
</TABLE>
- ------------------------
48
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $12,156,216)* (Note 1 and 3) 101.06% $ 12,125,905
Other Assets and Liabilities, Net (1.06) (127,343)
------ --------------
TOTAL NET ASSETS 100.00% $ 11,998,562
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 70,470
Gross Unrealized Depreciation (100,781)
------------
NET UNREALIZED DEPRECIATION $ (30,311)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
49
<PAGE>
OREGON TAX-FREE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
OREGON MUNICIPAL BONDS - 81.77%
$ 320,000 Benton County OR Hospital Facilities Good
Samaritan Hospital Corvallis 6.25 % 10/01/09 $ 324,934
300,000 Chemeketa OR Community College District AMBAC
Insured 5.40 06/01/07 306,375
1,100,000 Chemeketa OR Community College District FGIC
Insured 6.00 06/01/06 1,175,548
1,000,000 Chemeketa OR Community College District Series
B 5.60 06/01/14 991,960
250,000 Chemeketa OR Community College MBIA Insured 6.50 07/01/07 277,648
500,000 Clackamas & Washington Counties OR GO Series A 5.88 10/01/09 518,710
495,000 Clackamas County HFFA Jennings Lodge Project
GNMA FHA credit support 7.50 10/20/31 530,798
300,000 Clackamas County HFFA Sisters of Providence
Series A 6.38 10/01/05 321,003
565,000 Clackamas County OR School District #12 GO 4.75 06/01/06 546,807
500,000 Clackamas OR Community College District Series
B 5.40 06/01/10 496,875
1,000,000 Deschutes County OR 5.30 06/01/14 966,250
500,000 Emerald Peoples OR MUD Revenue FGIC Insured 7.00 11/01/00 536,250
1,000,000 Emerald Peoples OR MUD Revenue FGIC Insured 7.35 11/01/13 1,192,130
1,750,000 Emerald Peoples OR Utility District 7.35 11/01/07 2,025,625
630,000 Emerald Peoples OR Utility District Revenue 7.20 11/01/06 712,688
250,000 Eugene OR Electric Utilities Revenue 6.40 08/01/07 261,550
845,000 Eugene OR Public Safety Facilities Revenue 6.00 06/01/06 894,644
1,000,000 Hillsboro OR Hospital Healthcare Facility 5.75 10/01/12 961,250
620,000 Hood River County OR USD GO AMBAC Insured 5.65 06/01/08 637,143
500,000 Josephine County OR USD FGIC 5.75 06/01/07 522,615
</TABLE>
- ------------------------
50
<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)
$ 750,000 Lane County OR USD Lane County Community
College GO 5.20 % 06/01/05 $ 758,018
1,000,000 Linn & Benton OR School District GO 5.35 06/01/08 1,016,250
100,000 Marion & Polk Counties OR USD Salem GO 5.90 10/01/07 105,355
1,000,000 Multnomah County OR School District GO 5.50 06/01/15 973,750
1,000,000 Multnomah County OR School District GO 5.63 06/01/12 1,003,450
250,000 Multnomah-Clackamas County OR Riverdale USD 5.63 06/01/11 250,863
250,000 Oregon State Board Bank Revenue Economic
Development 5.50 01/01/13 239,928
750,000 Oregon State Board of Higher Education GO
Series C 5.95 08/01/26 757,920
250,000 Oregon State Department General Services AMBAC
Insured 7.50 09/01/15 277,188
480,000 Oregon State GO 7.25 07/01/07 561,979
255,000 Oregon State GO 7.30 01/01/08 298,911
175,000 Oregon State GO 9.00 10/01/05 221,692
2,000,000 Oregon State GO Higher Education Building 6.30 08/01/13 2,114,840
5,000 Oregon State Housing Agency Revenue Family
Mortgage Project Series A 7.38 07/10/10 5,119
575,000 Oregon State Housing Educational & Cultural
Facilities Authority Revenue Reed College
Project 6.75 07/01/21 628,567
140,000 Oregon State SFMR Program FHA/VA Insured 7.05 07/01/09 146,378
275,000 Port Morrow OR Pollution Control Project
General Electric Co 6.38 04/01/08 294,250
485,000 Portland OR Arena Gas Tax Revenue Series A 5.35 06/01/07 488,638
150,000 Portland OR MUD Sewer System Revenue Series A 6.05 06/01/09 158,438
1,000,000 Portland OR Series B 4.63 04/01/13 901,250
750,000 Portland OR Sewer System Revenue Series A 5.75 06/01/06 777,188
40,000 Tri-County Metropolitan OR Transportation
District Revenue 5.70 08/01/13 39,946
500,000 Tualatin Hills OR Park & Recreation GO 5.75 03/01/15 501,875
</TABLE>
---------------------
51
<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)
$ 400,000 Umatilla County OR GO 5.20 % 10/01/08 $ 394,500
250,000 Washington & Clackamas County OR School
District J Tigard 5.50 06/01/06 253,490
1,265,000 Washington County OR School District Series B 5.25 12/01/01 1,290,300
2,000,000 Washington County OR Unified Sewer Agency
Revenue FGIC Insured 5.50 10/01/13 1,982,500
725,000 Washington County School District J Sherwood
FSA Insured 6.10 06/01/12 758,560
550,000 Western Lane OR HFFA Revenue Sisters of St.
Joseph Peace Services MBIA Insured 5.63 08/01/07 566,496
--------------
TOTAL OREGON MUNICIPAL BONDS $ 31,968,442
(Cost $31,880,992)
PUERTO RICO MUNICIPAL BONDS - 13.93%
$ 40,000 Commonwealth of Puerto Rico Aqueduct & Sewer
Revenue 10.25 % 07/01/09 $ 54,339
350,000 Commonwealth of Puerto Rico MFHR LOC -
Government Development Bank of Puerto Rico 7.50 04/01/22 366,916
425,000 Commonwealth of Puerto Rico PCR Facilities
Financing Authority Upjohn Co Project 7.50 12/01/23 456,845
250,000 Commonwealth of Puerto Rico SFMR GNMA Insured 7.50 10/15/12 260,785
1,310,000 Puerto Rico Commonwealth Aqueduct & Sewer
Revenue 6.00 07/01/07 1,408,250
1,600,000 Puerto Rico Commonwealth Highway &
Transportation Revenue Series Y 6.25 07/01/08 1,744,000
1,000,000 Puerto Rico Electric Power Authority Revenue
MBIA Insured 7.00 07/01/07 1,156,250
--------------
TOTAL PUERTO RICO MUNICIPAL BONDS $ 5,447,385
(Cost $5,463,786)
</TABLE>
- ------------------------
52
<PAGE>
OREGON TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 2.82%
SHORT-TERM OREGON MUNICIPAL SECURITIES+ - 1.53%
$ 600,000 Portland OR PCR Harbor Authority V/R 3.80 % 12/01/09 $ 600,000
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
MONEY MARKET FUNDS - 1.29%
504,001 Goldman Sachs & Co Financial Square Tax-Free Fund $ 504,001
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 1,104,001
(Cost $1,104,001)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $38,448,779)* (Note 1 and 3) 98.52% $ 38,519,828
Other Assets and Liabilities, Net 1.48 577,722
------ --------------
TOTAL NET ASSETS 100.00% $ 39,097,550
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ THESE VARIABLE RATE SECURITIES HAVE 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 $ 505,933
Gross Unrealized Depreciation (434,884)
------------
NET UNREALIZED APPRECIATION $ 71,049
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
53
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<TABLE>
<CAPTION>
ARIZONA
TAX-FREE
FUND
<S> <C>
- --------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $20,641,503
Cash 1,420
Receivables:
Interest 296,462
Fund shares sold 0
Due from administrator (Note 2) 21,415
Organization expenses, net of
amortization 2,763
Prepaid expenses 4,733
TOTAL ASSETS 20,968,296
LIABILITIES
Payables:
Investment securities purchased 558,210
Distribution to shareholders 76,183
Capital shares redeemed 0
Due to sponsor and distributor (Note
2) 5,302
Due to adviser (Note 2) 0
Other 54,331
TOTAL LIABILITIES 694,026
TOTAL NET ASSETS
$20,274,270
NET ASSETS CONSIST OF:
Paid-in capital $20,136,111
Undistributed net realized gain (loss)
on investments 79,622
Net unrealized appreciation
(depreciation) of investments 58,537
TOTAL NET ASSETS $20,274,270
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $ 5,744,086
Shares outstanding - Class A 549,986
Net asset value per share - Class A $ 10.44
Maximum offering price per share - Class
A $ 10.93(1)
Net assets - Class B $ 181,599
Shares outstanding - Class B 18,026
Net asset value and offering price per
share - Class B $ 10.07
Net assets - Institutional Class $14,348,585
Shares outstanding - Institutional Class 1,374,529
Net asset value and offering price per
share - Institutional Class $ 10.44
INVESTMENT AT COST (NOTE 3) $20,582,966
- --------------------------------------------------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
- ------------------------
54
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA NATIONAL OREGON
TAX-FREE TAX-FREE TAX-FREE TAX-FREE
BOND FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $ 419,811,898 $ 73,807,653 $12,125,905 $ 38,519,828
Cash 1,482 250 1,026 3,142
Receivables:
Interest 6,757,906 1,269,301 178,630 789,040
Fund shares sold 116,349 0 0 0
Due from administrator (Note 2) 0 0 47,415 0
Organization expenses, net of
amortization 0 4,909 12,254 0
Prepaid expenses 786 52,495 0 8,703
TOTAL ASSETS 426,688,421 75,134,608 12,365,230 39,320,713
LIABILITIES
Payables:
Investment securities purchased 0 0 281,825 0
Distribution to shareholders 1,678,746 237,952 46,900 121,323
Capital shares redeemed 0 0 0 29,292
Due to sponsor and distributor (Note
2) 491,279 29,733 517 15,597
Due to adviser (Note 2) 671,972 119,079 0 17,494
Other 437,380 39,929 37,426 39,457
TOTAL LIABILITIES 3,279,377 426,693 366,668 223,163
TOTAL NET ASSETS
$ 423,409,044 $ 74,707,915 $11,998,562 $ 39,097,550
NET ASSETS CONSIST OF:
Paid-in capital $ 419,138,931 $ 74,724,614 $12,032,980 $ 38,604,572
Undistributed net realized gain (loss)
on investments (1,853,494) 13,342 (4,107) 421,929
Net unrealized appreciation
(depreciation) of investments 6,123,607 (30,041) (30,311) 71,049
TOTAL NET ASSETS $ 423,409,044 $ 74,707,915 $11,998,562 $ 39,097,550
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $ 280,787,654 $ 67,646,918 $ 4,525,711 $ 30,634,929
Shares outstanding - Class A 26,183,047 6,586,755 298,316 1,880,867
Net asset value per share - Class A $ 10.72 $ 10.27 $ 15.17 $ 16.29
Maximum offering price per share - Class
A $ 11.23(1) $ 10.59(2) $ 15.88(1) $ 17.06(1)
Net assets - Class B $ 47,170,273 N/A $ 119,333 $ 287,140
Shares outstanding - Class B 4,315,300 N/A 11,925 28,712
Net asset value and offering price per
share - Class B $ 10.93 N/A $ 10.01 $ 10.00
Net assets - Institutional Class $ 95,451,117 $ 7,060,997 $ 7,353,518 $ 8,175,481
Shares outstanding - Institutional Class 8,879,099 698,686 484,863 502,088
Net asset value and offering price per
share - Institutional Class $ 10.75 $ 10.11 $ 15.17 $ 16.28
INVESTMENT AT COST (NOTE 3) $ 413,688,291 $ 73,837,694 $12,156,216 $ 38,448,779
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
---------------------
55
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND
ARIZONA TAX-FREE FUND FUND
------------------------- -------------------------
FOR THE FOR THE FOR THE
SIX SIX NINE
MONTHS FOR THE MONTHS MONTHS
ENDED YEAR ENDED ENDED ENDED
MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 553,763 $1,263,459 $12,579,873 $14,068,280
TOTAL INVESTMENT INCOME 553,763 1,263,459 12,579,873 14,068,280
EXPENSES (NOTE 2)
Advisory fees 52,838 120,757 1,085,385 1,202,280
Administration fees 5,750 34,843 85,535 73,687
Custody fees 1,800 5,038 38,114 43,440
Shareholder servicing fees 26,968 2,748 630,658 752,569
Portfolio accounting fees 19,554 38,026 74,376 84,857
Transfer agency fees 7,988 18,340 152,357 145,236
Distribution fees 1,887 20,787 226,105 288,335
Amortization of organization expenses 3,493 6,985 1,266 4,476
Legal and audit fees 16,795 7,499 32,128 58,125
Registration fees 10,813 20,950 33,563 34,890
Directors' fees 2,253 6,569 2,490 3,743
Shareholder reports 8,398 25,455 28,602 51,039
Other 5,958 8,025 32,195 70,070
TOTAL EXPENSES 164,495 316,022 2,422,774 2,812,747
Less:
Waived fees and reimbursed expenses (114,652) (172,659) (820,005) (921,858)
Net Expenses 49,843 143,363 1,602,769 1,890,889
NET INVESTMENT INCOME 503,920 1,120,096 10,977,104 12,177,391
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on sale of
investments 117,123 336,608 703,761 2,803,854
Net change in unrealized appreciation
(depreciation) of investments (97,594) (564,971) (2,610,834) (9,703,374)
NET GAIN (LOSS) ON INVESTMENTS 19,529 (228,363) (1,907,073) (6,899,520)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 523,449 $ 891,733 $9,070,031 $5,277,871
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
56
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
INCOME FUND NATIONAL TAX-FREE FUND OREGON TAX-FREE FUND
------------------------- ------------------------- -------------------------
FOR THE FOR THE FOR THE FOR THE
SIX NINE SIX SIX
MONTHS MONTHS MONTHS FOR THE MONTHS FOR THE
ENDED ENDED ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, SEPT. 30, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $1,854,315 $2,749,129 $ 312,827 $ 689,500 $1,052,189 $2,585,534
TOTAL INVESTMENT INCOME 1,854,315 2,749,129 312,827 689,500 1,052,189 2,585,534
EXPENSES (NOTE 2)
Advisory fees 211,764 300,312 30,284 67,463 102,775 230,626
Administration fees 16,307 18,371 3,222 19,518 10,907 66,644
Custody fees 7,571 10,974 1,009 2,801 3,433 11,283
Shareholder servicing fees 125,292 183,562 15,139 1,802 51,387 50,431
Portfolio accounting fees 37,447 54,901 16,240 36,465 26,393 38,007
Transfer agency fees 31,934 31,443 4,675 12,321 18,017 38,225
Distribution fees 19,246 30,358 1,292 146 8,553 1,013
Amortization of organization expenses 4,182 6,288 8,170 2,656 0 1,824
Legal and audit fees 10,581 16,983 16,796 4,185 12,800 16,936
Registration fees 10,718 14,972 11,948 12,877 7,987 13,407
Directors' fees 2,490 3,743 2,510 5,886 2,300 5,926
Shareholder reports 12,448 18,717 11,800 23,621 12,400 31,650
Other 4,833 7,718 3,805 5,385 10,497 6,480
TOTAL EXPENSES 494,813 698,342 126,890 195,126 267,449 512,452
Less:
Waived fees and reimbursed expenses (221,267) (299,200) (105,585) (142,023) (152,154) (139,960)
Net Expenses 273,546 399,142 21,305 53,103 115,295 372,492
NET INVESTMENT INCOME 1,580,769 2,349,987 291,522 636,397 936,894 2,213,042
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on sale of
investments 248,774 2,344 28,242 12,999 503,644 226,397
Net change in unrealized appreciation
(depreciation) of investments (98,200) (677,786) (87,198) (92,672) (719,337) (105,222)
NET GAIN (LOSS) ON INVESTMENTS 150,574 (675,442) (58,956) (79,673) (215,693) 121,175
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,731,343 $1,674,545 $ 232,566 $ 556,724 $ 721,201 $2,334,217
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
57
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND
-----------------------------------------------------------
FOR THE
FOR THE SIX FOUR
MONTHS FOR THE MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30, MAY 31,
1997 1996 1995 1995
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 503,920 $ 1,120,096 $ 390,606 $ 1,221,865
Net realized gain (loss) on sale of
investments 117,123 336,608 68,297 6,272
Net change in unrealized appreciation
(depreciation) of investments (97,594) (564,971) 80,894 440,550
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 523,449 891,733 539,797 1,668,687
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (143,470) (370,176) (390,606) (1,221,865)
CLASS B (1,534) (11) 0 0
INSTITUTIONAL CLASS (358,916) (749,909) 0 0
In excess of net investment income
CLASS A 0 0 (61,287) (52,079)
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
From net realized gain on sale of
investments
CLASS A 0 (109,463) 0 (6,272)
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 (227,136) 0 0
In excess of net realized gain
CLASS A 0 (12,756) 0 (20,328)
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 (24,754) 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 88,082 1,232,906 1,568,324 6,231,470
Reinvestment of dividends - Class A 107,419 329,709 103,193 282,090
Cost of shares redeemed - Class A (1,794,342) (18,720,996) (1,719,071) (7,453,357)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (1,598,841) (17,158,381) (47,554) (939,797)
Proceeds from shares sold - Class B 183,000 20,025 0 0
Reinvestment of dividends - Class B 900 0 0 0
Cost of shares redeemed - Class B (20,119) 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 163,781 20,025 0 0
Proceeds from shares sold -
Institutional Class 795,737 19,525,762 0 0
Reinvestment of dividends -
Institutional Class 1,171 6,149 0 0
Cost of shares redeemed -
Institutional Class (2,034,842) (3,485,066) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (1,237,934) 16,046,845 0 0
INCREASE (DECREASE) IN NET ASSETS (2,653,465) (1,693,983) 40,350 (571,654)
NET ASSETS:
Beginning net assets 22,927,735 24,621,718 24,581,368 25,153,022
ENDING NET ASSETS $20,274,270 $22,927,735 $24,621,718 $24,581,368
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $34,768,827 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.
(2) "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.
- ---------------------
58
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
----------------------------------------------
FOR THE SIX FOR THE NINE FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 10,977,104 $ 12,177,391 $ 15,982,476
Net realized gain (loss) on sale of
investments 703,761 2,803,854 591,815
Net change in unrealized appreciation
(depreciation) of investments (2,610,834) (9,703,374) 35,434,462
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 9,070,031 5,277,871 52,008,753
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (7,407,796) (10,685,255) (15,472,726)
CLASS B (966,271) (1,125,031) (509,750)
INSTITUTIONAL CLASS (2,603,035) (367,105) 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 on sale 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 SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 11,498,244 66,701,505 33,207,626
Reinvestment of dividends - Class A 4,945,521 7,380,505 10,558,616
Cost of shares redeemed - Class A (35,126,395) (62,521,660) (88,142,779)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (18,682,630) 11,560,350 (44,376,537)
Proceeds from shares sold - Class B 9,758,966 17,171,150 26,079,671
Reinvestment of dividends - Class B 704,669 809,463 313,904
Cost of shares redeemed - Class B (3,088,552) (4,072,983) (557,099)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 7,375,083 13,907,630 25,836,476
Proceeds from shares sold -
Institutional Class 2,525,829 109,432,129 0
Reinvestment of dividends -
Institutional Class 188,029 416 0
Cost of shares redeemed -
Institutional Class (13,787,210) (3,636,945) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (11,073,352) 105,795,600 0
INCREASE (DECREASE) IN NET ASSETS (24,287,970) 124,364,060 17,486,216
NET ASSETS:
Beginning net assets 447,697,014 323,332,954 305,846,738
ENDING NET ASSETS $423,409,044 $447,697,014 $323,332,954
- -------------------------------------------------------------------------------------------
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
MONTHS FOR THE NINE FOR THE
ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (2) 1995
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 1,580,769 $ 2,349,987 $ 2,054,164
Net realized gain (loss) on sale of
investments 248,774 2,344 (43,204)
Net change in unrealized appreciation
(depreciation) of investments (98,200) (677,786) 2,645,684
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 1,731,343 1,674,545 4,656,644
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,432,926) (2,330,216) (2,054,164)
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS (147,843) (19,771) 0
In excess of net investment income
CLASS A 0 0 0
CLASS B N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
From net realized gain on sale 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 SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 11,076,589 44,078,871 51,648,405
Reinvestment of dividends - Class A 1,252,455 2,046,401 1,618,516
Cost of shares redeemed - Class A (27,177,264) (41,016,574) (26,901,737)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (14,848,220) 5,108,698 26,365,184
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 467,025 10,078,900 0
Reinvestment of dividends -
Institutional Class 26,714 0 0
Cost of shares redeemed -
Institutional Class (3,513,007) (52,763) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (3,019,268) 10,026,137 0
INCREASE (DECREASE) IN NET ASSETS (17,716,914) 14,459,393 28,967,664
NET ASSETS:
Beginning net assets 92,424,829 77,965,436 48,997,772
ENDING NET ASSETS $74,707,915 $ 92,424,829 $ 77,965,436
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
59
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND
-----------------------------------------------------------
FOR THE
FOR THE SIX FOUR
MONTHS FOR THE MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30, MAY 31,
1997 1996 1995 1995
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 291,522 $ 636,397 $ 225,575 $ 622,957
Net realized gain (loss) on sale of
investments 28,242 12,999 (1,042) (75,743)
Net change in unrealized appreciation
(depreciation) of investments (87,198) (92,672) 82,929 376,362
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 232,566 556,724 307,462 923,576
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (112,378) (298,145) (225,575) (622,957)
CLASS B (654) 0 0 0
INSTITUTIONAL CLASS (178,490) (338,252) 0 0
In excess of net investment income
CLASS A 0 0 (21,523) (18,062)
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
From net realized gain on sale of
investments
CLASS A 0 0 0 0
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
In excess of net realized gain
CLASS A 0 0 0 0
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 163,757 252,284 624,616 5,682,988
Reinvestment of dividends - Class A 83,037 186,973 113,062 287,582
Cost of shares redeemed - Class A (558,651) (9,944,744) (951,240) (5,394,689)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (311,857) (9,505,487) (213,562) 575,881
Proceeds from shares sold - Class B 151,670 25 0 0
Reinvestment of dividends - Class B 163 0 0 0
Cost of shares redeemed - Class B (29,618) 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 122,215 25 0 0
Proceeds from shares sold -
Institutional Class 1,266,444 9,318,896 0 0
Reinvestment of dividends -
Institutional Class 60,571 104,965 0 0
Cost of shares redeemed -
Institutional Class (1,038,276) (2,185,445) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 288,739 7,238,416 0 0
INCREASE (DECREASE) IN NET ASSETS 40,141 (2,346,719) (153,198) 858,438
NET ASSETS:
Beginning net assets 11,958,421 14,305,140 14,458,338 13,599,900
ENDING NET ASSETS $11,998,562 $11,958,421 $14,305,140 $14,458,338
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
60
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND
-------------------------------------------------------------
FOR THE
FOR THE SIX FOUR
MONTHS FOR THE MONTHS
ENDED YEAR ENDED ENDED FOR THE
MARCH 31, SEPT. 30, SEPT. 30, YEAR ENDED
1997 1996 1995 MAY 31, 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 936,894 $ 2,213,042 $ 852,996 $ 2,663,326
Net realized gain (loss) on sale of
investments 503,644 226,397 13,635 (239,143)
Net change in unrealized appreciation
(depreciation) of investments (719,337) (105,222) (278,482) 1,451,939
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 721,201 2,334,217 588,149 3,876,122
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (738,895) (1,836,397) (852,996) (2,663,326)
CLASS B (1,673) 0 0 0
INSTITUTIONAL CLASS (196,326) (376,645) 0 0
In excess of net investment income
CLASS A 0 0 (32,292) (160,187)
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
From net realized gain on sale of
investments
CLASS A (64,075) 0 0 (128,294)
CLASS B (68) 0 0 0
INSTITUTIONAL CLASS (16,029) 0 0 0
In excess of net realized gain
CLASS A 0 0 0 0
CLASS B 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 705,873 1,339,221 1,376,768 5,706,279
Reinvestment of dividends - Class A 603,836 1,177,977 531,664 1,830,242
Cost of shares redeemed - Class A (4,118,599) (19,138,811) (3,779,707) (10,061,225)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (2,808,890) (16,621,613) (1,871,275) (2,524,704)
Proceeds from shares sold - Class B 290,001 25 0 0
Reinvestment of dividends - Class B 1,006 0 0 0
Cost of shares redeemed - Class B 0 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 291,007 25 0 0
Proceeds from shares sold -
Institutional Class 737,208 10,508,693 0 0
Reinvestment of dividends -
Institutional Class 46,958 74,828 0 0
Cost of shares redeemed -
Institutional Class (1,060,607) (1,972,408) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (276,441) 8,611,113 0 0
INCREASE (DECREASE) IN NET ASSETS (3,090,189) (7,889,300) (2,168,414) (1,600,389)
NET ASSETS:
Beginning net assets 42,187,739 50,077,039 52,245,453 53,845,842
ENDING NET ASSETS $39,097,550 $ 42,187,739 $50,077,039 $ 52,245,453
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
61
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND (1)
-------------------------------
CLASS A
-------------------------------
SIX FOUR
MONTHS YEAR MONTHS
ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995 (2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.45 $10.71 $10.68
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.24 0.48 0.17
Net realized and unrealized gain (loss) on investments (0.01) (0.09) 0.06
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.23 0.39 0.23
LESS DISTRIBUTIONS:
Dividends from net investment income (0.24) (0.48) (0.20)
Distributions from net realized gain 0.00 (0.17) 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.24) (0.65) (0.20)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.44 $10.45 $10.71
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 2.18% 3.60% 6.55%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $5,744 $7,331 $24,622
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.60% 0.78% 0.45%
Ratio of net investment income to average net assets 4.54% 4.45% 4.73%
Portfolio turnover 77% 42% 62%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.58% 1.46% 1.35%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 3.56% 3.77% 3.83%
- -----------------------------------------------------------------------------------------
</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
SEPTEMBER 6, 1996 REORGANIZATION, EXISTING INVESTOR SHARES WERE
CONVERTED INTO CLASS A SHARES OF THE FUND. IN CONNECTION WITH THE
MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL 1,
1996, FICM WAS RENAMED AS WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END 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 INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
62
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND (1) (CONT.)
--------------------------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) -------------------- --------------------
------------------------------------------ SIX SIX
YEAR YEAR YEAR PERIOD MONTHS PERIOD MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, MAY 31, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1995 1994 1993 1992 (3) 1997 1996 (4) 1997 1996 (5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.48 $10.64 $10.09 $10.00 $10.07 $10.00 $10.44 $10.71
--------- --------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.51 0.50 0.49 0.09 0.11 0.01 0.25 0.49
Net realized and
unrealized gain (loss)
on investments 0.23 (0.15) 0.55 0.08 0.00 0.07 0.00 (0.10)
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.74 0.35 1.04 0.17 0.11 0.08 0.25 0.39
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.53) (0.50) (0.49) (0.08) (0.11) (0.01) (0.25) (0.49)
Distributions from net
realized gain (0.01) (0.01) 0.00 0.00 0.00 0.00 0.00 (0.17)
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.54) (0.51) (0.49) (0.08) (0.11) (0.01) (0.25) (0.66)
--------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $10.68 $10.48 $10.64 $10.09 $10.07 $10.07 $10.44 $10.44
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 7.35% 3.28% 10.50% 7.02%** 1.09% 0.76% 2.38% 3.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $24,581 $25,153 $22,430 $4,690 $182 $20 $14,349 $15,577
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.40% 0.31% 0.20% 0.68% 1.30% 1.16% 0.40% 0.48%
Ratio of net investment
income to average net
assets 4.89% 4.72% 4.98% 4.32% 3.83% 3.59% 4.73% 4.63%
Portfolio turnover 14% 28% 4% 0% 77% 42% 77% 42%
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.13% 1.00% 1.18% 2.08% 2.96% 1.81% 1.50% 1.20%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.16% 4.03% 4.00% 2.92% 2.17% 2.94% 3.63% 3.91%
- --------------------------------------------------------------------------------------------------------------------
</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
SEPTEMBER 6, 1996 REORGANIZATION, EXISTING INVESTOR SHARES WERE
CONVERTED INTO CLASS A SHARES OF THE FUND. IN CONNECTION WITH THE
MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL 1,
1996, FICM WAS RENAMED AS WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END 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 INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
---------------------
63
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
-------------------------------
CLASS A
-------------------------------
SIX NINE
MONTHS MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.78 $11.05 $9.84
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.27 0.40 0.55
Net realized and unrealized gain (loss) on investments (0.06) (0.27) 1.21
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.21 0.13 1.76
LESS DISTRIBUTIONS:
Dividends from net investment income (0.27) (0.40) (0.55)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.27) (0.40) (0.55)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.72 $10.78 $11.05
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 1.98% 1.27% 18.24%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $280,788 $300,702 $296,417
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.68% 0.69% 0.68%
Ratio of net investment income to average net assets 5.07% 4.99% 5.18%
Portfolio turnover 4% 22% 9%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.07% 1.07% 1.07%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.68% 4.61% 4.79%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
64
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND (CONT.)
--------------------------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) ------------------------------- --------------------
------------------------------- SIX NINE SIX
YEAR YEAR YEAR MONTHS MONTHS YEAR MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, MARCH 31, SEPT. 30, DEC. 31, MARCH 31, SEPT. 30,
1994 1993 1992 1997 1996 1995 (2) 1997 1996 (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.20 $10.41 $10.00 $10.98 $11.26 $10.00 $10.80 $10.69
--------- --------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.56 0.56 0.53 0.24 0.35 0.48 0.28 0.04
Net realized and
unrealized gain (loss)
on investments (1.36) 0.84 0.41 (0.05) (0.28) 1.26 (0.05) 0.11
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (0.80) 1.40 0.94 0.19 0.07 1.74 0.23 0.15
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.56) (0.56) (0.53) (0.24) (0.35) (0.48) (0.28) (0.04)
Distributions from net
realized gain 0.00 (0.05) 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.56) (0.61) (0.53) (0.24) (0.35) (0.48) (0.28) (0.04)
--------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $9.84 $11.20 $10.41 $10.93 $10.98 $11.26 $10.75 $10.80
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) (7.27)% 13.82% 10.35% 1.76% 0.73% 17.72% 2.10% 1.24%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $305,847 $532,848 $242,409 $47,170 $40,099 $26,916 $95,451 $106,896
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.65% 0.64% 0.19% 1.32% 1.35% 1.32% 0.63% 0.67%
Ratio of net investment
income to average net
assets 5.35% 5.05% 5.67% 4.41% 4.32% 4.31% 5.12% 5.20%
Portfolio turnover 3% 7% 18% 4% 22% 9% 4% 22%
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.06% 1.01% 1.07% 1.72% 1.73% 1.72% 0.95% 1.20%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.94% 4.68% 4.79% 4.01% 3.94% 3.91% 4.80% 4.67%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
---------------------
65
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
-------------------------------
CLASS A
-------------------------------
SIX NINE
MONTHS MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.26 $10.35 $9.84
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.19 0.29 0.38
Net realized and unrealized gain (loss) on investments 0.01 (0.09) 0.51
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.20 0.20 0.89
LESS DISTRIBUTIONS:
Dividends from net investment income (0.19) (0.29) (0.38)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.19) (0.29) (0.38)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.27 $10.26 $10.35
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 1.97% 2.01% 9.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $67,647 $82,359 $77,965
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.65% 0.65% 0.65%
Ratio of net investment income to average net assets 3.73% 3.83% 3.70%
Portfolio turnover 14% 48% 31%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.18% 1.14% 1.22%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 3.20% 3.34% 3.13%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE FUND COMMENCED OPERATIONS ON NOVEMBER 18, 1992.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
66
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND (CONT.)
-----------------------------------------------------
INSTITUTIONAL CLASS
CLASS A (CONT.) --------------------
------------------------------- SIX
YEAR YEAR PERIOD MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, MARCH 31, SEPT. 30,
1994 1993 1992 (2) 1997 1996 (3)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.36 $10.05 $10.00 $10.10 $10.06
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.40 0.39 0.02 0.19 0.02
Net realized and
unrealized gain (loss)
on investments (0.52) 0.31 0.05 0.01 0.04
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (0.12) 0.70 0.07 0.20 0.06
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.40) (0.39) (0.02) (0.19) (0.02)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.40) (0.39) (0.02) (0.19) (0.02)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $9.84 $10.36 $10.05 $10.11 $10.10
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) (1.10)% 7.10% 0.84% 2.00% 0.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $48,998 $52,873 $7,821 $7,061 $10,066
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.16% 0.34% 0.00% 0.60% 0.55%
Ratio of net investment
income to average net
assets 4.03% 3.74% 3.56% 3.73% 3.06%
Portfolio turnover 33% 11% 0% 14% 48%
- -----------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.21% 1.23% 1.55% 1.05% 0.92%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 2.98% 2.85% 2.01% 3.28% 2.69%
- -----------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE FUND COMMENCED OPERATIONS ON NOVEMBER 18, 1992.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
---------------------
67
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND (1)
-------------------------------
CLASS A
-------------------------------
SIX FOUR
MONTHS YEAR MONTHS
ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995 (2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $15.24 $15.34 $15.28
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.37 0.72 0.24
Net realized and unrealized gain (loss) on investments (0.07) (0.10) 0.08
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.30 0.62 0.32
LESS DISTRIBUTIONS:
Dividends from net investment income (0.37) (0.72) (0.26)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.37) (0.72) (0.26)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $15.17 $15.24 $15.34
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 1.95% 4.03% 6.53%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $4,526 $4,827 $14,305
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.35% 0.42% 0.35%
Ratio of net investment income to average net assets 4.81% 4.69% 4.65%
Portfolio turnover 86% 73% 86%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.11% 1.42% 1.85%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 3.05% 3.69% 3.15%
- -----------------------------------------------------------------------------------------
</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
SEPTEMBER 6, 1996 REORGANIZATION, EXISTING INVESTOR SHARES WERE
CONVERTED INTO CLASS A SHARES OF THE FUND. IN CONNECTION WITH THE
MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL 1,
1996, FICM WAS RENAMED AS WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(3) THE FUND COMMENCED OPERATIONS ON JANUARY 15, 1993.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
68
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND (1) (CONT.)
---------------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) -------------------- --------------------
------------------------------- SIX SIX
YEAR YEAR PERIOD MONTHS PERIOD MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1995 1994 1993 (3) 1997 1996 (4) 1997 1996 (5)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.98 $15.17 $15.00 $10.06 $10.00 $15.24 $15.34
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.68 0.64 0.17 0.06 0.00 0.37 0.71
Net realized and
unrealized gain (loss)
on investments 0.32 (0.17) 0.15 (0.05) 0.06 (0.07) (0.10)
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 1.00 0.47 0.32 0.01 0.06 0.30 0.61
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.70) (0.64) (0.15) (0.06) 0.00 (0.37) (0.71)
Distributions from net
realized gain 0.00 (0.02) 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.70) (0.66) (0.15) (0.06) 0.00 (0.37) (0.71)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $15.28 $14.98 $15.17 $10.01 $10.06 $15.17 $15.24
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 6.97% 3.07% 5.65%** 0.10% 0.60% 1.95% 4.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $14,458 $13,600 $7,457 $119 $0 $7,354 $7,132
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.35% 0.27% 0.25% 1.10% 0.00% 0.35% 0.36%
Ratio of net investment
income to average net
assets 4.59% 4.29% 3.88% 3.80% 1.83% 4.82% 4.66%
Portfolio turnover 23% 19% 18% 86% 73% 86% 73%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.51% 1.58% 1.99% 13.74% 0.00% 2.03% 1.45%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 3.43% 2.99% 2.14% (8.84)% 1.83% 3.14% 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
SEPTEMBER 6, 1996 REORGANIZATION, EXISTING INVESTOR SHARES WERE
CONVERTED INTO CLASS A SHARES OF THE FUND. IN CONNECTION WITH THE
MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL 1,
1996, FICM WAS RENAMED AS WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(3) THE FUND COMMENCED OPERATIONS ON JANUARY 15, 1993.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
---------------------
69
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND (1)
-------------------------------
CLASS A
-------------------------------
SIX FOUR
MONTHS YEAR MONTHS
ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995 (2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $16.42 $16.38 $16.47
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.37 0.79 0.28
Net realized and unrealized gain (loss) on investments (0.10) 0.04 (0.08)
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.27 0.83 0.20
LESS DISTRIBUTIONS:
Dividends from net investment income (0.37) (0.79) (0.29)
Distributions from net realized gain (0.03) 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.40) (0.79) (0.29)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $16.29 $16.42 $16.38
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 1.65% 5.03% 3.67%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $30,635 $33,676 $50,077
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.60% 0.85% 0.70%
Ratio of net investment income to average net assets 4.52% 4.87% 5.01%
Portfolio turnover 90% 27% 57%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.31% 1.15% 1.01%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 3.81% 4.57% 4.70%
- -----------------------------------------------------------------------------------------
</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 SEPTEMBER 6, 1996
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
70
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND (1) (CONT.)
--------------------------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) -------------------- --------------------
------------------------------------------ SIX SIX
YEAR YEAR YEAR YEAR MONTHS PERIOD MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, MAY 31, MAY 31, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1995 1994 1993 1992 1997 1996 (3) 1997 1996 (4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $16.17 $16.79 $16.07 $15.74 $10.07 $10.00 $16.42 $16.38
--------- --------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.82 0.84 0.86 0.91 0.17 0.00 0.39 0.72
Net realized and
unrealized gain (loss)
on investments 0.39 (0.43) 0.76 0.38 (0.05) 0.07 (0.11) 0.04
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 1.21 0.41 1.62 1.29 0.12 0.07 0.28 0.76
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.87) (0.82) (0.86) (0.92) (0.17) 0.00 (0.39) (0.72)
Distributions from net
realized gain (0.04) (0.21) (0.04) (0.04) (0.02) 0.00 (0.03) 0.00
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.91) (1.03) (0.90) (0.96) (0.19) 0.00 (0.42) (0.72)
--------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $16.47 $16.17 $16.79 $16.07 $10.00 $10.07 $16.28 $16.42
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 7.92% 2.33% 10.36% 8.45% 1.17% 0.70% 1.69% 5.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $52,245 $53,846 $45,435 $25,002 $287 $0 $8,175 $8,512
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.70% 0.62% 0.60% 0.60% 1.30% 0.00% 0.40% 0.63%
Ratio of net investment
income to average net
assets 5.19% 4.90% 5.34% 5.81% 3.23% 1.83% 4.72% 4.41%
Portfolio turnover 15% 22% 6% 17% 90% 27% 90% 27%
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.90% 0.84% 0.91% 0.98% 2.15% 0.00% 1.24% 0.93%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.99% 4.68% 5.03% 5.43% 2.38% 1.83% 3.88% 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 SEPTEMBER 6, 1996
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED AS
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
---------------------
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940 (the "1940 Act"), as an open-end series management
investment company. The Company commenced operations on January 1, 1992, and
currently offers the following nineteen separate diversified funds: the
Aggressive Growth, Asset Allocation, Balanced, Corporate Stock, Diversified
Income, Equity Value, Ginnie Mae, Growth and Income, Government Money Market
Mutual, Intermediate Bond, Money Market Mutual, Money Market Trust, National
Tax-Free, National Tax-Free Money Market Mutual, Prime Money Market Mutual,
Short-Intermediate U.S. Government Income, Small Cap, Treasury Money Market
Mutual, and U.S. Government Allocation Funds; and five non-diversified funds:
the Arizona Tax-Free, California Tax-Free Bond, California Tax-Free Income,
California Tax-Free Money Market Mutual, and Oregon Tax-Free Funds. These
financial statements represent the Arizona Tax-Free, California Tax-Free Bond,
California Tax-Free Income, National Tax-Free, and Oregon Tax-Free Funds (the
"Funds").
The Company changed its fiscal year-end from September 30 to March 31.
At a special shareholders meeting on July 16, 1996, the Shareholders of Pacifica
Funds Trust ("Pacifica") approved a plan of reorganization providing for the
transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach Fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach 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.
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.
- ---------------------
72
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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, transfer agency fees and distribution fees.
Shareholders of each class also bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of the Fund and earn
income from the portfolio pro rata based on the average daily net assets of each
class, without distinction between share classes. Dividends are determined
separately for each class based on income and expenses allocable to each class.
Gains are allocated to each class pro rata based upon net assets of each class
on the date of distribution. No class has preferential dividend rights.
Differences in per share dividend rates generally result from the relative
weightings of pro rata income and gain allocations and from differences in
separate class expenses, including distribution, shareholder servicing and
transfer agency fees.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT POLICY AND SECURITY VALUATION
Investments in securities for which the primary market is a national securities
exchange or the NASDAQ National Market System are valued at the last reported
sales price on the day of valuation. U.S. government obligations are valued at
the reported bid prices. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding debt securities
maturing in 60 days or less, the valuations are based on latest quoted bid
prices. Debt securities maturing in 60 days or less are valued at amortized
cost. Securities for which quotations are not readily available are valued at
fair value as determined by procedures approved by the Company's Board of
Directors.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded no later than one business day after 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.
---------------------
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Funds are declared
daily and distributed monthly. Any distributions to shareholders from net
realized capital gains are declared and distributed annually.
FEDERAL INCOME TAXES
Each Fund of the Company is treated as a separate entity for federal income tax
purposes. It is the policy of each Fund of the Company to continue to qualify as
a regulated investment company by complying with the provision applicable to
regulated investment companies, as defined in the Internal Revenue Code, and to
make distributions of substantially all of its investment company taxable income
and any net realized capital gains (after reduction for capital loss
carryforwards) sufficient to relieve it from all, or substantially all, federal
income taxes. Accordingly, no provision for federal income taxes was required at
December 31, 1996. The following funds had net capital loss carryforwards at
December 31, 1996:
<TABLE>
<CAPTION>
CAPITAL
YEAR LOSS
FUND EXPIRES CARRYFORWARD
- ----------------------------------------------------------------------------------
<S> <C> <C>
California Tax-Free Bond Fund 2002 $1,585,509
2003 478,564
California Tax-Free Income Fund 2002 29,650
2003 87,402
National Tax-Free Fund 2003 30,982
</TABLE>
The capital loss carryforwards shown above include carryforwards from Pacifica
Funds which were merged into the Funds. The Board of Directors intends to offset
net capital gains with each capital loss carryforward until each carryforward
has been fully utilized or expires. Thus, no capital gain distributions shall be
made until the capital loss carryforward has been fully utilized or expires.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by
the Fund. The differences between the income and gains distributed on a book
versus tax basis are shown as excess distributions of net investment income and
net realized gain on the sale of investments in the accompanying Statements of
Changes in Net Assets. The amount of distributions from net investment income
and net realized capital gains are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the
- ---------------------
74
<PAGE>
NOTES TO FINANCIAL STATEMENTS
extent that these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassifications.
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of the Funds and/or classes of shares.
These expenses are being amortized by the Funds on a straight-line basis over 60
months from the date each Fund and/or class commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Funds
with 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
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 the Funds whereby
WFB is responsible for providing custody and portfolio accounting services for
the Funds. WFB is entitled to certain transaction charges plus an annual fee for
custody services at an annual rate of 0.0167% of the average daily net assets of
each Fund. For portfolio accounting services, WFB is entitled to a monthly base
fee from each Fund of $2,000 plus an annual fee of 0.07% of the first $50
million of average daily net assets, 0.045% of the next $50 million, and 0.02%
of the average daily net assets in excess of $100 million.
For the period from October 1, 1995 to March 31, 1996, FICAL served as the
custodian for the 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 a contract on behalf of the Funds with WFB, whereby
WFB has agreed to act as transfer agent for the Funds. Under the
---------------------
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS
transfer agency contract, WFB is entitled to receive transfer agency fees at an
annual rate of 0.14% of the average daily net assets of the Class A and B shares
of the Arizona Tax-Free, California Tax Free Bond, National Tax-Free, and Oregon
Tax-Free Funds, 0.14% of the average daily net assets of the Class A shares of
the California Tax-Free Income Fund and 0.06% of the average daily net assets of
the Institutional Class shares of the Funds. Prior to February 1, 1997, under
the contracts with the California Tax-Free Bond and California Tax Free Income
Funds, WFB was entitled to be paid a per account fee plus other related costs
with a minimum monthly fee of $3,000 per Fund, unless net assets of the
respective Fund were less than $20 million. For as long as the assets remained
less than $20 million, a Fund would not be charged any transfer agency fees by
WFB. Prior to February 1, 1997, under the contract with the Arizona Tax-Free,
National Tax-Free, and Oregon Tax-Free Funds, WFB was entitled to be paid a fee
at the annual rate of 0.07% of the average daily net assets of each Fund.
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 shareholder servicing,
transfer agency related services and portfolio accounting.
The transfer agency fees for the Funds for the six months ended March 31, 1997,
were as follows:
<TABLE>
<CAPTION>
TRANSFER AGENCY
TRANSFER TRANSFER FEES
AGENCY FEES AGENCY FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 2,865 $ 49 $ 5,074
California Tax-Free Bond Fund 110,388 17,031 24,938
California Tax-Free Income Fund 29,896 N/A 2,038
National Tax-Free Fund 2,181 23 2,471
Oregon Tax-Free Fund 15,161 62 2,794
</TABLE>
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services to the Funds. Pursuant to the
contracts, WFB is entitled to an annual fee for providing shareholder services
of 0.30% of the average daily net assets attributable to the Class A and Class B
shares of the California Tax-Free Bond Fund and the Class A shares of the
California Tax-Free Income Fund, 0.25% of the average daily net assets
attributable to the Institutional Class shares of the California Tax-Free Bond
and California Tax-Free Income 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
finan-
- ---------------------
76
<PAGE>
NOTES TO FINANCIAL STATEMENTS
cial 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 Funds' shares owned by shareholders with
whom the Service Organization had a servicing relationship. During that period,
FIB was the only service organization to receive payments.
The shareholder servicing fees for the Funds for the six months ended March 31,
1997, were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 7,914 $ 101 $ 18,953
California Tax-Free Bond Fund 438,005 65,590 127,063
California Tax-Free Income Fund 115,476 N/A 9,816
National Tax-Free Fund 5,840 42 9,257
Oregon Tax-Free Fund 40,864 127 10,396
</TABLE>
The shareholder servicing fees for the Funds for the periods ended September 30,
1996, were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
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 N/A 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.
Subject to the overall supervision of the Company's Board of Directors, WFB as
administrator and Stephens Inc. ("Stephens") as co-administrator provide each
Fund with supervisory, administrative and distribution services. For these
administrative services, WFB and Stephens are entitled to receive monthly fees
at the annual rates of 0.04% and 0.02%, respectively, of each Fund's average
daily net assets. Prior to February 1, 1997, Stephens provided substantially the
same services as sole administrator to the Funds. Under the previous agreements,
Stephens was entitled to receive a monthly fee at the annual rate of 0.03% of
the average daily net assets of the California Tax-Free Bond and California
Tax-Free Income Funds, and 0.05% of the
---------------------
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS
average daily net assets of 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 receive 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, of up 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 Plans for Class A shares of the Funds provide that each Fund
may defray all or part of the cost of preparing, printing and distributing
prospectuses and other promotional materials by paying for costs incurred on an
annual basis of up to 0.05% of such Fund's Class A shares' average daily net
assets. Each of the 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 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 daily net assets of the Class A shares of the Fund.
Pacifica Funds Distributor Inc., an affiliate of Furman Selz, acted as
Distributor during such period.
The separate Class B Distribution Plans for the Funds provide that the Funds may
pay for distribution-related services, a monthly fee at an annual rate of up to
0.75% of the average daily net assets attributable to Class B shares of the
Arizona Tax-Free, National Tax-Free, and Oregon Tax-Free Funds and up to 0.70%
of the average daily net assets attributable to Class B shares of the California
Tax-Free Bond Fund.
- ---------------------
78
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distribution Plan expenses for Class A and Class B shares of the Funds for
the six months ended March 31, 1997, were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION
FEES FEES
FUND CLASS A CLASS B
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 1,583 $ 304
California Tax-Free Bond Fund 72,994 153,111
California Tax-Free Income Fund 19,246 N/A
National Tax-Free Fund 1,167 125
Oregon Tax-Free Fund 8,172 381
</TABLE>
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
California Tax-Free Income Fund** 30,358 N/A
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.
FEES WAIVED AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statements of
Operations for the six months ended March 31, 1997, were waived and/or
reimbursed by WFB. The following amounts of fees were waived for the periods
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.
---------------------
79
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens. WFB and Stephens have agreed to waive or reimburse all or a portion of
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 March 31,1997, Stephens owned 7 shares of the Arizona Tax-Free, 6,747 shares
of the California Tax-Free Bond, 11,810 shares of the California Tax-Free
Income, 6 shares of the National Tax-Free and 6 shares of the Oregon Tax-Free
Funds.
Stephens has retained $1,960,806 as sales charges from the proceeds of Class A
shares sold and $335,437 from the proceeds of Class B shares redeemed by the
Company for the six months ended March 31, 1997. Wells Fargo Securities Inc., a
subsidiary of WFB, received $1,938,506 as sales charges from the proceeds of
Class A shares sold and $335,437 from the proceeds of Class B shares redeemed by
the Company for the six months ended March 31, 1997.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for each
Fund for the six months ended March 31, 1997, were as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA CALIFORNIA NATIONAL OREGON
AGGREGATE PURCHASES TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
AND SALES FUND BOND FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Total purchases at cost $34,344,450 $16,972,840 $11,454,947 $21,933,725 $73,206,408
Total sales proceeds 15,909,019 29,059,996 27,057,982 10,272,695 35,712,514
</TABLE>
- ---------------------
80
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL SHARE TRANSACTIONS
As of March 31, 1997, there were 91 billion shares of $0.001 par value capital
stock authorized by the Company. At March 31, 1997, each Fund was authorized to
issue 100 million shares of $0.001 par value capital stock for each class of
shares. Capital share transactions for the Funds were as follows:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND
<S> <C> <C> <C> <C>
---------------------------------------------------
<CAPTION>
FOR THE
FOR THE SIX FOR THE FOUR MONTHS FOR THE
MONTHS ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30, MAY 31,
1997 1996 1995 1995
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 8,351 115,400 146,719 597,182
Shares issued in reinvestment of
dividends -- Class A 10,155 31,157 9,677 27,333
Shares redeemed -- Class A (170,242) (1,743,227) (160,074) (722,419)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (151,736) (1,596,670) (3,678) (97,904)
Shares sold -- Class B 17,936 1,999 N/A N/A
Shares issued in reinvestment of
dividends -- Class B 88 0 N/A N/A
Shares redeemed -- Class B (1,997) 0 N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 16,027 1,999 N/A N/A
Shares sold -- Institutional Class 75,496 1,818,383 N/A N/A
Shares issued in reinvestment of
dividends -- Institutional Class 111 584 N/A N/A
Shares redeemed -- Institutional Class (192,725) (327,320) N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (117,118) 1,491,647 N/A N/A
</TABLE>
---------------------
81
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
-----------------------------------
FOR THE FOR THE
SIX NINE
MONTHS MONTHS FOR THE
ENDED ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,057,092 6,024,391 3,122,899
Shares issued in reinvestment of
dividends -- Class A 453,949 685,330 1,007,045
Shares redeemed -- Class A (3,229,101) (5,635,998) (8,380,512)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,718,060) 1,073,723 (4,250,568)
Shares sold -- Class B 879,927 1,559,230 2,411,791
Shares issued in reinvestment of
dividends -- Class B 63,451 73,909 28,834
Shares redeemed -- Class B (278,515) (372,322) (51,005)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 664,863 1,260,817 2,389,620
Shares sold -- Institutional Class 231,443 10,233,225 N/A
Shares issued in reinvestment of
dividends -- Institutional Class 17,209 39 N/A
Shares redeemed -- Institutional
Class (1,263,973) (338,844) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (1,015,321) 9,894,420 N/A
</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 SIX FOR THE NINE YEAR
MONTHS ENDED MONTHS ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (2) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,071,029 4,281,601 5,048,517
Shares issued in reinvestment of
dividends -- Class A 121,088 199,260 159,491
Shares redeemed -- Class A (2,630,399) (3,992,269) (2,650,715)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,438,282) 488,592 2,557,293
Shares sold -- Institutional Class 45,913 1,002,052 N/A
Shares issued in reinvestment of
dividends -- Institutional Class 2,624 0 N/A
Shares redeemed -- Institutional Class (346,660) (5,243) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (298,123) 996,809 N/A
</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.
- ---------------------
82
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND
-----------------------------------------------
FOR THE
FOR THE SIX FOUR FOR THE
MONTHS FOR THE MONTHS YEAR
ENDED YEAR ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30, MAY 31,
1997 1996 1995 1995
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 12,514 16,315 40,810 385,307
Shares issued in reinvestment of
dividends -- Class A 5,388 12,154 7,417 19,534
Shares redeemed -- Class A (36,331) (644,452) (61,901) (366,565)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (18,429) (615,983) (13,674) 38,276
Shares sold -- Class B 14,844 3 N/A N/A
Shares issued in reinvestment of
dividends -- Class B 16 0 N/A N/A
Shares redeemed -- Class B (2,938) 0 N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 11,922 3 N/A N/A
Shares sold -- Institutional
Class 80,275 603,337 N/A N/A
Shares issued in reinvestment of
dividends -- Institutional
Class 3,930 6,841 N/A N/A
Shares redeemed -- Institutional
Class (67,239) (142,281) N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL
CLASS 16,966 467,897 N/A N/A
</TABLE>
---------------------
83
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND
---------------------------------------------
FOR THE FOR THE
SIX FOR THE FOUR FOR THE
MONTHS YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30, MAY 31,
1997 1996 1995 1995
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 42,353 80,771 84,114 360,914
Shares issued in
reinvestment of dividends
-- Class A 36,482 71,455 32,705 116,237
Shares redeemed -- Class A (248,818) (1,158,830) (231,037) (636,342)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING -- CLASS A (169,983) (1,006,604) (114,218) (159,191)
Shares sold -- Class B 28,610 3 N/A N/A
Shares issued in
reinvestment of dividends
-- Class B 99 0 N/A N/A
Shares redeemed -- Class B 0 0 N/A N/A
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING -- CLASS B 28,709 3 N/A N/A
Shares sold -- Institutional
Class 44,591 633,826 N/A N/A
Shares issued in
reinvestment of dividends
-- Institutional Class 2,838 4,545 N/A N/A
Shares redeemed --
Institutional Class (63,838) (119,874) N/A N/A
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING --
INSTITUTIONAL CLASS (16,409) 518,497 N/A N/A
</TABLE>
- ---------------------
84
<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 March
31, 1997, and the related statements of operations for the six months ended
March 31, 1997, and for the Arizona Tax-Free Fund, National Tax-Free Fund and
Oregon Tax-Free Fund for the year ended September 30, 1996, and for the
California Tax-Free Bond Fund and California Tax-Free Income Fund for the nine
months ended September 30, 1996, the statements of changes in net assets of the
Arizona Tax-Free Fund, National Tax-Free Fund and Oregon Tax-Free Fund for the
six months ended March 31, 1997, and the year ended September 30, 1996, and for
the California Tax-Free Bond Fund and California Tax-Free Income Fund for the
six months ended March 31, 1997, the nine months ended September 30, 1996, and
the year 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 the 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 confirmation of securities owned as of March
31, 1997, by correspondence with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds of Stagecoach Funds, Inc. as of March 31, 1997, the
results of their operations, the changes in their net assets and their financial
highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 9, 1997
---------------------
85
<PAGE>
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- ---------------------
86
<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>
---------------------
87
<PAGE>
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- ---------------------
88
<PAGE>
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---------------------
89
<PAGE>
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- ---------------------
90
<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-260-5969. Read the
prospectus carefully before you invest or send money.
SCF 075 (5/97)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1997 Stagecoach Funds
