<PAGE>
- ------------------
ANNUAL
- ------------------
REPORT
- ------------------
TAX-FREE
- ------------------
FUNDS
- ------------------
Arizona Tax-Free Fund
California Tax-Free
Income Fund
National Tax-Free Fund
Oregon Tax-Free Fund
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Arizona Tax-Free Fund 4
California Tax-Free Income Fund 9
National Tax-Free Fund 14
Oregon Tax-Free Fund 18
PORTFOLIOS OF INVESTMENTS
Arizona Tax-Free Fund 22
California Tax-Free Income Fund 25
National Tax-Free Fund 29
Oregon Tax-Free Fund 36
STAGECOACH FUNDS
Statement of Assets and Liabilities 40
Statement of Operations 42
Statements of Changes in Net Assets 43
Financial Highlights 46
Notes to Financial Statements 56
Independent Auditors' Report 68
PROXY VOTING RESULTS 69
LIST OF ABBREVIATIONS 70
STAGECOACH FUNDS:
-------------------------------------------------------------------------
- - ARE NOT FDIC INSURED
- - ARE NOT GUARANTEED BY WELLS FARGO BANK [NO FDIC]
- - ARE NOT DEPOSITS OR OBLIGATIONS OF WELLS FARGO
BANK
- - INVOLVE INVESTMENT RISK, INCLUDING POSSIBLE LOSS
OF PRINCIPAL
---------------------
i
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
Thank you for your investment with the Stagecoach Funds.
The Annual and Semi-Annual Reports provide us with an opportunity to speak
directly to you. This year, we are pleased to announce strong returns in the
investment markets and a continued commitment to improving the Stagecoach Funds
to better serve you.
A review of three key indexes shows that returns for the period from April 1,
1997 through March 31, 1998 have been strong. Equities, as measured by the S&P
500 Index, returned 47.96%. Bonds, as measured by the Lehman Brothers Long
Government Bond Index, returned 20.71%. Money market funds, as measured by the
IBC/Donoghue Money Market Average, returned 4.89%.
Among the key drivers of these returns were strong corporate earnings, high
investor confidence and a positive inflation picture. The Federal Open Market
Committee of the Federal Reserve Board raised the federal funds target rate by
0.25% before the beginning of the reporting period. This was interpreted by
investors as a sign that the Fed was going to remain vigilant against inflation,
and long-term interest rates declined as a result, boosting the bond market. The
U.S. economy had been growing at a steady pace and inflationary pressures have
remained in check.
There is no guarantee that this positive environment will continue unabated,
although we remain optimistic about the long-term investment picture. We believe
that an understanding of the historical returns for the various asset classes,
as well as a realistic appraisal of the risks involved in investing, can help
you earn the financial growth you need to meet your goals. We are confident that
a carefully considered long-term plan can help you through short-term
uncertainty.
Our goal is to present a Family of Funds able to meet the increasingly
sophisticated needs of our investors. We are committed to reviewing the
investment options we offer shareholders. Stagecoach Funds has introduced the
Corporate Bond Fund and the Strategic Income Fund. We have also proposed the
consolidation of two Funds with similar investment objectives, the Intermediate
Bond and the Short-Intermediate U.S. Government Income Funds. These changes
follow the consolidation of the Overland Express and Stagecoach Fund families
and the introduction of our new "Plain English" prospectus and represent part of
our ongoing effort to meet your needs.
---------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
The following pages provide commentary from the Portfolio Managers designed to
give you a clearer understanding of the returns earned over the period, the
investment policies pursued and what you can expect from your Funds. Please
discuss any questions you may have with your financial consultant.
We look forward to learning how we can better serve you in the future.
STAGECOACH FUNDS
MAY 1998
THE "S&P 500 INDEX" IS A TRADEMARK OF STANDARD AND POOR'S CORPORATION. THE S&P
500 INDEX IS AN UNMANAGED INDEX OF 500 WIDELY HELD COMMON STOCKS REPRESENTING,
AMONG OTHERS, INDUSTRIAL, FINANCIAL, UTILITY AND TRANSPORTATION COMPANIES LISTED
OR TRADED ON NATIONAL EXCHANGES OR OVER-THE-COUNTER MARKETS. THE LEHMAN BROTHERS
LONG GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX COMPOSED OF U.S. TREASURY BONDS
WITH 20-YEAR OR LONGER MATURITIES. THE IBC/DONOGHUE MONEY MARKET AVERAGE IS AN
AVERAGE OF 700 TAXABLE MONEY MARKET FUNDS.
- ---------------------
2
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
3
<PAGE>
ARIZONA TAX-FREE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 9.67% total return for the period
exclusive of sales charges. See the "Performance at a Glance" table for the
total returns for other share classes.
WHAT DROVE THE FUND'S PERFORMANCE?
Falling interest rates were the primary reason for the Fund's strong returns. In
the third quarter of 1997, we extended duration, which is a measure of
sensitivity to interest rates, to about 110% to 115% of our benchmark, the
Lehman Brothers Municipal Bond Index, making the Fund more sensitive to rate
changes. This worked to our advantage because, as interest rates fell during the
period, bond prices increased. The benchmark is an unmanaged index of similar
securities that we use as a market comparison to the Fund's portfolio.
THE FEDERAL RESERVE RAISED RATES BEFORE THE BEGINNING OF THE REPORTING PERIOD,
YET LONG-TERM RATES FELL. WHY?
The Federal Reserve sets the federal funds target rates and thereby has a direct
influence over short-term interest rates. Long-term rates are more affected by
inflation expectations. The Fed's stance throughout the period was seen as a
check against inflation and, as a consequence, longer-term interest rates
declined.
INFLATION REMAINS LOW, THE ECONOMY IS GROWING AND RATES ARE FALLING. IS THIS AN
UNUSUAL PERIOD?
It is unusual in terms of the length of the cycle. The recovery has been going
on for a relatively long time. Part of the length and persistence of the
recovery may be fueled by high investor confidence in the financial markets.
DID THE ASIAN CRISIS HAVE A DIRECT IMPACT ON THE MUNICIPAL MARKETS?
The Asian situation did not directly affect the municipal market, but it did
influence interest rates in general. We often see a "flight to quality" in
response to bad news in foreign markets, in which international investors buy
short-term U.S. Treasury securities in quantities which may potentially
influence yields. Municipal bond yields tend to move along with Treasury yields,
albeit in a lagging manner. Another indirect effect may result from our
increasingly global economy. State and local economies, particularly in the
western United States, that have significant business ties to Asia, could be
adversely impacted if, for example, the Asian crisis ultimately reduces
production and tax revenues in those states.
- ---------------------
4
<PAGE>
ARIZONA TAX-FREE FUND
WHAT'S THE CURRENT OUTLOOK?
There are conflicting views in the marketplace. Some think that the Fed is going
to have to raise rates to keep inflation in check in the face of the hot housing
market and strong consumer spending. Others think that the full effects of the
Asian situation will not be felt until the fourth quarter of 1998 or beyond and
will have a dampening effect on the U.S. economy. They believe that the Fed may
have to ease monetary policy and lower interest rates to spark the economy. Our
outlook is that the Fed will probably remain neutral for now and eventually
lower interest rates as the economy slows down. This will encourage long-term
interest rates to come down even further.
WHAT IS THE OUTLOOK FOR THE ARIZONA ECONOMY?
Arizona was the Western region's fastest growing state for the 12-month period
covered by this report. The growth has been primarily in the Phoenix area, but
it also has been broad-based. We believe that the industrial diversification in
the state will favor long-term growth prospects and economic stability. We will
be keeping a close watch on some pending changes in school financing that may
have an impact on the state's municipal market.
WHAT TYPES OF BONDS DOES THE STATE TYPICALLY ISSUE?
School districts are still the predominate issuers of general obligation debt.
There have also been a significant number of issues for civic improvement and
industrial development due to the state's rapid growth.
ARE YOU MAKING ANY CHANGES IN THE FUND'S INVESTMENT APPROACH?
We have reoriented the Fund's investment focus somewhat from a purely total
return approach to placing more emphasis on the income component of return. We
will still consider the projected price performance of individual issues in the
Fund, but we see our shareholders' need for tax-exempt income as paramount. We
are lengthening the portfolio's average maturity range to an 18 to 22 year
average, which we feel offers an investor the best risk-adjusted return. This
maturity range does not have the volatility of longer bonds but enables us to
pick up most of the price appreciation longer-term funds enjoy when interest
rates decline. One way we hope to increase income in the Fund is to buy some
bonds that are subject to the alternative minimum tax (AMT). These bonds have
about a 0.15% higher yield than a similar non-AMT issue, but they may increase
tax exposure for some wealthy shareholders. Shareholders concerned about AMT
should consult a tax adviser.
---------------------
5
<PAGE>
ARIZONA TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 3/2/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 4.50% Sales Charge 4.76% 5.17% 4.95% 5.85%
- -------------------------------------------------------------------------------------------
Without Sales Charge 9.67% 6.78% 5.92% 6.65%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 3/2/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 3.90% 4.68% 4.45% 5.53%
- -------------------------------------------------------------------------------------------
Without Sales Charge 8.90% 5.59% 4.78% 5.53%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 3/2/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
This Share Class Has No Sales Charge 9.99% 7.00% 6.05% 6.76%
- -------------------------------------------------------------------------------------------
</TABLE>
The Stagecoach Arizona Tax-Free Fund is the successor fund to the Pacifica
Arizona Tax-Free 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 predecessor funds for the applicable periods. Class A
share performance reflects Pacifica Fund Class A and Westcore Fund performance.
Class B and Institutional Class share performance also reflects such performance
but has been adjusted to reflect Class B and Institutional Class share expense
levels as of the inception date of 3/2/92.
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Figures quoted represent past
performance, which is no guarantee of future results.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
6
<PAGE>
ARIZONA TAX-FREE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH ARIZONA TAX-FREE FUND CLASS A LEHMAN BROTHERS MUNICIPAL BOND
SHARES INDEX
<S> <C> <C>
Inception $9,550 $10,000
Mar-92 $9,522 $10,004
Apr-92 $9,603 $10,093
May-92 $9,717 $10,212
Jun-92 $9,857 $10,384
Jul-92 $9,896 $10,695
Aug-92 $10,001 $10,590
Sep-92 $10,110 $10,659
Oct-92 $9,996 $10,555
Nov-92 $10,193 $10,744
Dec-92 $10,291 $10,853
Jan-93 $10,456 $10,979
Feb-93 $10,769 $11,377
Mar-93 $10,601 $11,256
Apr-93 $10,692 $11,370
May-93 $10,737 $11,433
Jun-93 $10,902 $11,624
Jul-93 $10,869 $11,639
Aug-93 $11,095 $11,882
Sep-93 $11,253 $12,017
Oct-93 $11,274 $12,040
Nov-93 $11,195 $11,934
Dec-93 $11,377 $12,186
Jan-94 $11,507 $12,325
Feb-94 $11,208 $12,005
Mar-94 $10,954 $11,517
Apr-94 $11,016 $11,615
May-94 $11,089 $11,716
Jun-94 $11,048 $11,644
Jul-94 $11,206 $11,857
Aug-94 $11,260 $11,899
Sep-94 $11,148 $11,724
Oct-94 $10,964 $11,515
Nov-94 $10,800 $11,307
Dec-94 $11,001 $11,556
Jan-95 $11,247 $11,886
Feb-95 $11,514 $12,231
Mar-95 $11,607 $12,372
Apr-95 $11,656 $12,387
May-95 $11,904 $12,782
Jun-95 $11,879 $12,670
Jul-95 $11,997 $12,790
Aug-95 $12,115 $12,952
Sep-95 $12,159 $13,034
Oct-95 $12,272 $13,224
Nov-95 $12,409 $13,443
Dec-95 $12,507 $13,573
Jan-96 $12,602 $13,676
Feb-96 $12,532 $13,583
Mar-96 $12,325 $13,409
Apr-96 $12,333 $13,371
May-96 $12,283 $13,366
Jun-96 $12,399 $13,512
Jul-96 $12,552 $13,633
Aug-96 $12,506 $13,630
Sep-96 $12,610 $13,821
Oct-96 $12,745 $13,977
Nov-96 $12,988 $14,233
Dec-96 $12,937 $14,174
Jan-97 $12,978 $14,200
Feb-97 $13,060 $14,331
Mar-97 $12,885 $14,140
Apr-97 $12,983 $14,259
May-97 $13,159 $14,475
Jun-97 $13,305 $14,629
Jul-97 $13,704 $15,035
Aug-97 $13,530 $14,893
Sep-97 $13,702 $15,071
Oct-97 $13,755 $15,167
Nov-97 $13,837 $15,257
Dec-97 $14,063 $15,479
Jan-98 $14,179 $15,639
Feb-98 $14,159 $15,643
Mar-98 $14,132 $15,657
<CAPTION>
STAGECOACH ARIZONA TAX-FREE FUND INSTITUTIONAL CLASS
SHARES
<S> <C>
Inception $10,000
Mar-92 $9,971
Apr-92 $10,056
May-92 $10,175
Jun-92 $10,322
Jul-92 $10,362
Aug-92 $10,472
Sep-92 $10,586
Oct-92 $10,467
Nov-92 $10,673
Dec-92 $10,776
Jan-93 $10,949
Feb-93 $11,276
Mar-93 $11,100
Apr-93 $11,196
May-93 $11,243
Jun-93 $11,416
Jul-93 $11,381
Aug-93 $11,618
Sep-93 $11,783
Oct-93 $11,806
Nov-93 $11,722
Dec-93 $11,913
Jan-94 $12,049
Feb-94 $11,736
Mar-94 $11,470
Apr-94 $11,535
May-94 $11,612
Jun-94 $11,568
Jul-94 $11,734
Aug-94 $11,790
Sep-94 $11,673
Oct-94 $11,480
Nov-94 $11,309
Dec-94 $11,519
Jan-95 $11,777
Feb-95 $12,057
Mar-95 $12,154
Apr-95 $12,205
May-95 $12,465
Jun-95 $12,439
Jul-95 $12,563
Aug-95 $12,686
Sep-95 $12,732
Oct-95 $12,854
Nov-95 $13,000
Dec-95 $13,106
Jan-96 $13,208
Feb-96 $13,137
Mar-96 $12,923
Apr-96 $12,921
May-96 $12,885
Jun-96 $13,006
Jul-96 $13,170
Aug-96 $13,112
Sep-96 $13,223
Oct-96 $13,379
Nov-96 $13,637
Dec-96 $13,586
Jan-97 $13,631
Feb-97 $13,719
Mar-97 $13,538
Apr-97 $13,630
May-97 $13,817
Jun-97 $13,986
Jul-97 $14,395
Aug-97 $14,214
Sep-97 $14,411
Oct-97 $14,482
Nov-97 $14,571
Dec-97 $14,798
Jan-98 $14,925
Feb-98 $14,905
Mar-98 $14,890
</TABLE>
THE RETURNS FOR CLASS B SHARES OF THE FUND WILL VARY FROM THE RESULTS SHOWN DUE
TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach Arizona
Tax-Free Fund Class A and Institutional Class shares since inception with the
Lehman Brothers Municipal Bond Index. The chart assumes a hypothetical $10,000
initial investment in Class A and Institutional Class shares and reflects all
operating expenses and, for Class A shares, assumes the maximum initial sales
charge of 4.5%. The Lehman Brothers Municipal Bond Index is an unmanaged index
composed of municipal bonds. The Index presented here does not incur expenses
and is not available directly for investment. Had this Index incurred operating
expenses, its performances would have been lower.
---------------------
7
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
8
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 5.92% total return for the period
exclusive of sales charges. See the "Performance at a Glance" table for the
total returns for the other share class.
THE FUND HAD A STRONG YEAR. WHAT DROVE THE PERFORMANCE?
The Fund buys bonds between two to ten years in length. This maturity range is
particularly favorable in the current environment. As long-term yields decline,
bond prices tend to go up. Yields did fall throughout the period and the Fund
was able to pick up a good deal of the price appreciation through the longer
part of its maturity range. We also increased the amount of securities subject
to the Alternative Minimum Tax (AMT) from 12% to 19% throughout the period. The
Fund currently may invest up to 20% of its portfolio in securities subject to
the AMT. These bonds are generally higher yielding than similar non-AMT bonds.
Shareholders concerned about AMT should consult a tax advisor. Finally, we tried
to keep the cash position low, typically around 2%, although for a while it was
up to 5%. This small cash position helped add some yield to the Fund.
In the final quarter (the first quarter of 1998), the Fund's performance, and
the performance of the municipal market in general, was somewhat flat, with
municipal bonds underperforming Treasury securities. The most significant factor
impacting performance has been the supply of new issues, which was up 70% for
the first quarter of 1998 over the same time period in 1997. The market has
struggled to digest this inordinate supply, causing performance to lag over the
most recent quarter.
WHAT'S DRIVING THE NEW ISSUANCE?
A healthy economy makes voters more likely to approve spending measures.
Infrastructure needs have accumulated over the recent past, but they are now
being addressed and the State of California is issuing new debt to pay for them.
IS THE NEW ISSUANCE TYPICALLY OF A LONGER MATURITY TO TAKE ADVANTAGE OF THE
LOWER RATES?
Most of the new issuance is on the long end, generally over ten years. But at
the same time, some bonds have been pre-refunded to their earlier call dates.
The result is a shorter bond of about five to seven years. Longer bond funds
tend to sell pre-refunded bonds to buy longer maturities, so the secondary
supply of intermediate bonds increases as a result. Pre-refunding occurs when
interest rates fall far enough to make it economically advantageous for a
municipality to issue new bonds to pay off a previously issued higher coupon
bond at an earlier date. A bond with an original maturity of 2015, for example,
might be pre-refunded to 2005, leaving it with a much shorter maturity. The
pre-refunded bond is of
---------------------
9
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
high quality, since it is usually backed by Treasury securities, and often has a
better yield than a new issue of similar length.
WITH YIELDS ON THE LONGER END OF THE YIELD CURVE DRIFTING DOWN, DO INVESTORS
START TO FAVOR INTERMEDIATE AND SHORTER MATURITIES?
Yes, portfolio managers start to prefer intermediate bonds when they are not
getting rewarded for the risk involved in longer bonds. There has not been much
demand for long-term bonds with long-term municipal yields at about 5.20%. As
investors buy up the supply of intermediate bonds, it can drive up the price.
WHAT IS YOUR CURRENT OUTLOOK ON THE ECONOMY?
We believe that the economy will slow enough over the next quarter so that the
Federal Reserve will either remain neutral or lower the federal funds target
rate. The California economy continues to improve at about the same pace as the
rest of the U.S. economy.
WHEN THE CALIFORNIA AND OTHER STATE ECONOMIES GET OUT OF SYNCH IN TERMS OF
RELATIVE STRENGTH, IS THERE AN IMPACT ON THE CALIFORNIA MUNICIPAL MARKET?
There can be. When California was in a severe recession in the early 1990s,
spreads widened between California issues and comparably rated credits issued by
other states. In other words, yields had to increase on California bonds to
compensate investors for the risk presented by the weak state economy.
Currently, California is rated "A" by both Moody's and S&P, but it's trading at
yields of only 5 or 10 basis points higher than AA- rated bonds. That's a pretty
good indicator of a couple of things. One is that the state's credit is
perceived to be strong. It also reflects the ongoing demand for tax-free paper
in a high tax state.
IS THAT RELATIVELY SMALL SPREAD A SIGN THAT MOODY'S AND S&P MIGHT UPGRADE THE
STATE'S RATINGS?
Many investors thought the nationally recognized ratings organizations like S&P
and Moody's were going to upgrade the state's credit the last time they reviewed
the state's fiscal health. (They usually review it whenever there is a large
issue coming to market.) Some analysts thought they should have increased it to
"AA". We believe that both agencies are just conservative in general about
upgrading. It is also possible that they are punishing the state for revenue
anticipation warrants issued in the past to cover deficits and for their current
lack of a substantial cash position. Both Moody's and S&P indicated that they
wanted to see more of a cash reserve.
CALIFORNIA'S BALLOT INITIATIVE PROCESS GIVES VOTERS A DIRECT SAY IN REVENUE
RAISING. DOES THAT MAKE THE RATINGS ORGANIZATIONS NERVOUS?
Only when they look at credits that are subject to voters changing the revenue
stream. There's always legislative risk, but basically, general obligation bonds
are guaranteed by the full faith and credit of the state. When voters approve a
- ---------------------
10
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
general obligation bond issue, they are saying that the government can raise
state taxes as high as needed to pay that money back. Ballot initiatives do not
give voters the ability to cancel outstanding obligations.
WHAT KINDS OF BONDS DO YOU BUY FOR THE FUND?
We find state-backed credits such as California general obligation bonds or
California public works bonds attractive. We also hold pre-refunded bonds, which
are backed by Treasury bonds held in escrow. Also, we buy some select revenue
bonds such as airport revenue or water bonds. Fifty-seven percent of the Fund's
holdings are AAA-rated. There isn't much spread between A and AAA-rated bonds at
the moment.
WHAT ARE THE DIFFERENCES BETWEEN THIS FUND AND THE CALIFORNIA TAX-FREE BOND
FUND?
There's more volatility and risk in the California Tax-Free Bond Fund. It buys
bonds of significantly longer maturities. The duration, which measures
sensitivity to interest rates, is under five years for this Fund, while that of
the California Tax-Free Bond Fund can be as long as 8.5 years. The longer the
duration, the more sensitivity there is to changing interest rates, which can
increase price fluctuation. A potential shareholder should choose the Fund that
best suits their risk tolerance and investment horizon. Generally speaking,
higher returns come with higher risk.
---------------------
11
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
11/18/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 3.00% Sales Charge 2.72% 4.10% 3.88% 4.17%
- -------------------------------------------------------------------------------------------
Without Sales Charge 5.92% 5.16% 4.51% 4.77%
- -------------------------------------------------------------------------------------------
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
11/18/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
This Share Class Has No Sales Charge 5.92% 5.17% 4.51% 4.77%
- -------------------------------------------------------------------------------------------
</TABLE>
Average annual returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Figures quoted represent past
performance, which is no guarantee of future results. 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.
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 BROTHERS STAGECOACH CALIFORNIA STAGECOACH CALIFORNIA
MUNICIPAL BOND TAX-FREE INCOME FUND TAX-FREE INCOME FUND
INSTITUTIONAL CLASS
INDEX CLASS A SHARES SHARES
<S> <C> <C> <C>
Inception $10,000 $9,700 $10,000
11/30/92 $10,070 $9,708 $10,008
12/31/92 $10,130 $9,782 $10,084
01/31/93 $10,206 $9,871 $10,176
02/28/93 $10,367 $10,077 $10,389
03/31/93 $10,336 $9,994 $10,303
04/30/93 $10,395 $10,047 $10,358
05/31/93 $10,424 $10,062 $10,373
06/30/93 $10,490 $10,153 $10,467
07/31/93 $10,496 $10,128 $10,441
08/31/93 $10,593 $10,270 $10,587
09/30/93 $10,640 $10,351 $10,671
10/31/93 $10,662 $10,373 $10,693
11/30/93 $10,648 $10,343 $10,663
12/31/93 $10,760 $10,477 $10,801
01/31/94 $10,847 $10,551 $10,877
02/28/94 $10,746 $10,400 $10,722
03/31/94 $10,616 $10,283 $10,601
04/30/94 $10,679 $10,317 $10,636
05/31/94 $10,729 $10,353 $10,674
06/30/94 $10,732 $10,337 $10,657
07/31/94 $10,821 $10,435 $10,758
08/31/94 $10,860 $10,451 $10,774
09/30/94 $10,833 $10,414 $10,736
10/31/94 $10,807 $10,377 $10,698
11/30/94 $10,788 $10,308 $10,626
12/31/94 $10,834 $10,361 $10,681
01/31/95 $10,924 $10,478 $10,802
02/28/95 $11,039 $10,624 $10,953
03/31/95 $11,138 $10,714 $11,045
04/28/95 $11,176 $10,734 $11,066
05/31/95 $11,347 $10,886 $11,223
06/30/95 $11,374 $10,889 $11,226
07/31/95 $11,494 $10,984 $11,324
08/31/95 $11,584 $11,062 $11,404
09/29/95 $11,617 $11,107 $11,451
10/31/95 $11,673 $11,173 $11,518
11/30/95 $11,747 $11,251 $11,599
12/29/95 $11,796 $11,308 $11,658
01/31/96 $11,888 $11,399 $11,752
02/29/96 $11,890 $11,389 $11,741
03/31/96 $11,861 $11,315 $11,665
04/30/96 $11,876 $11,318 $11,668
05/31/96 $11,886 $11,315 $11,665
06/30/96 $11,957 $11,371 $11,723
07/31/96 $12,023 $11,452 $11,806
08/31/96 $12,042 $11,460 $11,815
09/30/96 $12,115 $11,535 $11,893
10/31/96 $12,200 $11,625 $11,975
11/30/96 $12,314 $11,752 $12,121
12/31/96 $12,321 $11,743 $12,111
01/31/97 $12,375 $11,795 $12,154
02/28/97 $12,435 $11,852 $12,213
03/31/97 $12,371 $11,763 $12,131
04/30/97 $12,424 $11,811 $12,170
05/31/97 $12,526 $11,920 $12,296
06/30/97 $12,600 $11,990 $12,369
07/31/97 $12,750 $12,156 $12,531
08/31/97 $12,724 $12,127 $12,500
09/30/97 $12,815 $12,199 $12,575
10/31/97 $12,872 $12,240 $12,619
11/30/97 $12,910 $12,264 $12,644
12/31/97 $12,997 $12,345 $12,728
01/31/98 $13,083 $12,456 $12,846
02/28/98 $13,111 $12,468 $12,858
03/31/98 $13,132 $12,459 $12,848
</TABLE>
The accompanying chart compares the performance of the Stagecoach California
Tax-Free Income Fund Class A and Institutional Class shares since inception with
the Lehman Brothers 3-Year Municipal Bond Index. The chart assumes a
hypothetical $10,000 initial investment in Class A and Institutional Class
shares and reflects all operating expenses and assumes, for Class A shares, the
maximum initial sales charge of 3.0%. The Lehman Brothers 3-Year Municipal Bond
Index is an unmanaged index composed of municipal bonds with an approximate
maturity of three years. 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 WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 10.44% total return for the period
exclusive of sales charges. See the "Performance at a Glance" table for the
total returns for other share classes.
THE OVERLAND EXPRESS MUNICIPAL INCOME FUND MERGED INTO THE STAGECOACH NATIONAL
TAX-FREE FUND IN DECEMBER AND SINCE THAT TIME YOU HAVE INSTALLED A NEW STYLE OF
MANAGING THE FUND. WOULD YOU TELL US ABOUT THAT?
The Fund is now managed with more of a "value" approach, similar to a value
approach used in equity investing. We try to pick and choose among the available
issues in the municipal market hoping to find bonds that are undervalued. By
that we mean bonds that are offering a little extra yield relative to their
quality rating.
WHY WOULD A BOND BE UNDERVALUED?
There are three primary reasons why a bond might be undervalued: an excess
supply, an inaccurate credit rating, or simply that investors fail to understand
the particular issue. Let's look at excess supply. Most municipalities operate
on some kind of a fiscal year and, as a result, there are occasions where in a
particular state there are a lot of bonds of a particular type available. For
instance, in Texas, bonds guaranteed by the Permanent School Fund are issued
during February, March and April. These AAA-rated bonds are among the highest
quality bonds in the nation. And yet, there are periods of surplus of these
bonds, during which they trade ten to fifteen basis points lower in yield than
their fair value.
THERE IS NO INCOME TAX IN TEXAS. DOES THAT REDUCE IN-STATE DEMAND FOR TEXAS
BONDS AND CONTRIBUTE TO THE EXCESS SUPPLY?
That is part of the reason that there is often an over supply of bonds in a no
income tax state, but there are examples of high-tax states where this happens
as well. For example, a lot of Michigan Guaranteed School Bonds seem to come at
one time of the year, and even though there's ample in-state demand, it isn't
always enough to absorb the supply. Those bonds also tend to sell cheaply at
times when there is a glut of new issues.
WHY WOULD A BOND HAVE AN INACCURATE CREDIT RATING?
Sometimes a bond is misunderstood by the nationally recognized ratings
organizations. One obvious reason is that ratings organizations take a
conservative view of smaller issues. They have to. They don't have time to cover
them all, so they might issue a lower credit rating than may be warranted. We
may find a bond that appears to be of lower quality, for example a BBB-rated
bond, but we've done the homework and we feel that the credit quality is better
than the bond is rated. That can make them a better value.
- ---------------------
14
<PAGE>
NATIONAL TAX-FREE FUND
HOW DO INVESTORS MISUNDERSTAND BONDS?
A given bond may not fit into the performance characteristic that investors are
looking for. For instance, good quality housing bonds are the highest yielding
in the municipal bond market right now. Many investors won't buy them because of
the call risk -- they might buy, for example, a thirty-year bond with a good
yield but they are concerned that it can be recalled in ten years. Call risk can
make it harder to control your Fund's duration and performance. However, if you
have a small core position it isn't going to hurt your Fund's performance that
much and it can provide a lot of extra yield. And because investors are so
cautious about them, you can often find issues with more favorable call
characteristics that are still ignored because of their general category.
WHAT WAS THE FUND'S INVESTMENT PRACTICE IN THE PAST?
In the past the Fund took more of a higher-quality, plain vanilla approach by
buying national names, avoiding some of the lower tier investment grade bonds
and looking for fair value. We have increased the holdings of BBB-rated bonds or
non-rated bonds, but not excessively, typically not more than 10% of the Fund.
DO BBB-RATED BONDS AND NON-RATED BONDS INCREASE RISK?
Yes, they increase risk but we strive to keep that additional risk to a minimum.
We only devote a small portion to lower-rated bonds and we pick and choose bonds
that we think are superior to the rating they were given. We turn down 90% of
the BBB-rated bonds we're shown. We still have about 75% of the portfolio in
AAA-rated bonds, based on either insurance or on the bond's inherent credit
quality.
WHAT IS THE INTEREST RATE OUTLOOK?
Inflation, which has a large impact on long-term rates, continues to be subdued.
Consequently, we think that rates can get lower. The economy is strong right
now, but it is not likely to continue to grow at its current pace. We are trying
to reduce the Fund's volatility. This is done in part by buying bonds that we
think are a little cheap. That provides a cushion, since a bond that was under
priced should not fall in value as rapidly as a "correctly" priced bond in the
event of a downturn.
WHAT'S THE MATURITY RANGE FOR THIS FUND? IS IT PART OF YOUR VALUE APPROACH?
This is an important question. The municipal yield curve is always steeper than
the treasury yield curve up to twenty years, after which it gets very flat. The
yield curve measures interest rates at various maturities and typically shows
higher yields the further along the curve -- and longer in maturity -- you go.
At the end of the reporting period, going out from 20 years to 30 years on the
yield curve gained only about 5 extra basis points. Most incremental value is
found by extending from the 15 to 20 year area on the curve. We don't believe in
taking that extra price risk for so little extra yield. Our average maturity
will tend to be in the 19 to 21 year range to reduce volatility.
---------------------
15
<PAGE>
NATIONAL TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/15/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 4.50% Sales Charge 5.50% 5.52% 4.97% 5.01%
- -------------------------------------------------------------------------------------------
Without Sales Charge 10.44% 7.16% 5.94% 5.95%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/15/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 4.58% 4.89% 4.49% 4.68%
- -------------------------------------------------------------------------------------------
Without Sales Charge 9.58% 5.80% 4.82% 4.84%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
CLASS C SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/15/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 8.54% 5.78% 4.81% 4.83%
- -------------------------------------------------------------------------------------------
Without Sales Charge 9.54% 5.78% 4.81% 4.83%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/15/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
This Share Class Has No Sales Charge 10.51% 7.19% 5.96% 5.97%
- -------------------------------------------------------------------------------------------
</TABLE>
The Stagecoach National Tax-Free Fund is 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 predecessor funds for the applicable periods. Class A share
performance reflects Pacifica Fund Class A and Westcore Fund performance. The
performance of Class B shares reflects the performance of Class A shares, for
periods prior to 9/6/96, adjusted to reflect Class B share expense levels. Class
C share performance reflects the performance of Class A shares for periods prior
to 12/12/97, adjusted to reflect Class C share expense levels. Institutional
Class share performance reflects the performance of Class A shares for periods
prior to 9/6/96, adjusted to reflect Institutional Class share expense levels.
Average annual returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Figures quoted represent past
performance, which is no guarantee of future results.
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>
STAGECOACH NATIONAL
STAGECOACH NATIONAL LEHMAN BROTHERS TAX-FREE FUND
TAX-FREE FUND MUNICIPAL INSTITUTIONAL CLASS
CLASS A SHARES BOND INDEX SHARES
<S> <C> <C> <C>
Inception $9,550 $10,000 $10,000
Feb-93 $9,807 $10,362 $10,269
Mar-93 $9,646 $10,252 $10,101
Apr-93 $9,734 $10,356 $10,193
May-93 $9,753 $10,414 $10,212
Jun-93 $9,922 $10,588 $10,389
Jul-93 $9,887 $10,601 $10,353
Aug-93 $10,089 $10,822 $10,564
Sep-93 $10,235 $10,945 $10,717
Oct-93 $10,224 $10,966 $10,705
Nov-93 $10,168 $10,870 $10,647
Dec-93 $10,342 $11,099 $10,829
Jan-94 $10,464 $11,225 $10,957
Feb-94 $10,195 $10,935 $10,675
Mar-94 $9,909 $10,490 $10,376
Apr-94 $9,967 $10,579 $10,436
May-94 $10,050 $10,671 $10,524
Jun-94 $10,017 $10,606 $10,489
Jul-94 $10,151 $10,800 $10,629
Aug-94 $10,182 $10,838 $10,662
Sep-94 $10,039 $10,678 $10,512
Oct-94 $9,884 $10,488 $10,350
Nov-94 $9,711 $10,298 $10,168
Dec-94 $9,894 $10,525 $10,360
Jan-95 $10,107 $10,826 $10,583
Feb-95 $10,362 $11,141 $10,850
Mar-95 $10,463 $11,269 $10,956
Apr-95 $10,487 $11,282 $10,981
May-95 $10,751 $11,642 $11,257
Jun-95 $10,726 $11,540 $11,231
Jul-95 $10,835 $11,649 $11,346
Aug-95 $10,940 $11,797 $11,456
Sep-95 $10,980 $11,872 $11,498
Oct-95 $11,107 $12,045 $11,623
Nov-95 $11,243 $12,244 $11,773
Dec-95 $11,331 $12,362 $11,865
Jan-96 $11,434 $12,456 $11,965
Feb-96 $11,367 $12,371 $11,895
Mar-96 $11,201 $12,213 $11,729
Apr-96 $11,179 $12,179 $11,706
May-96 $11,152 $12,174 $11,670
Jun-96 $11,219 $12,307 $11,755
Jul-96 $11,361 $12,417 $11,904
Aug-96 $11,324 $12,415 $11,866
Sep-96 $11,434 $12,589 $11,974
Oct-96 $11,554 $12,731 $12,107
Nov-96 $11,776 $12,964 $12,332
Dec-96 $11,702 $12,909 $12,255
Jan-97 $11,730 $12,934 $12,292
Feb-97 $11,842 $13,053 $12,409
Mar-97 $11,658 $12,879 $12,208
Apr-97 $11,746 $12,988 $12,301
May-97 $11,923 $13,184 $12,477
Jun-97 $12,062 $13,325 $12,632
Jul-97 $12,406 $13,694 $12,984
Aug-97 $12,253 $13,565 $12,832
Sep-97 $12,416 $13,727 $12,994
Oct-97 $12,468 $13,814 $13,048
Nov-97 $12,527 $13,896 $13,111
Dec-97 $12,751 $14,099 $13,356
Jan-98 $12,875 $14,244 $13,492
Feb-98 $12,865 $14,248 $13,482
Mar-98 $12,875 $14,261 $13,492
</TABLE>
THE RETURNS FOR CLASS B AND CLASS C SHARES OF THE FUND, WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach National
Tax-Free Fund Class A and Institutional Class shares since inception with the
Lehman Brothers Municipal Bond Index. The chart assumes a hypothetical $10,000
initial investment in Class A and Institutional Class shares and reflects all
operating expenses and, for Class A shares, assumes the maximum initial sales
charge of 4.5%. The Lehman Brothers Municipal Bond Index is an unmanaged index
composed 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 WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 9.81% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
returns for other share classes.
WHAT DROVE THE FUND'S PERFORMANCE?
Falling interest rates were the primary reason for the Fund's strong returns. In
the third quarter of 1997, we extended duration, which is a measure of
sensitivity to interest rates, to about 110% to 115% of our benchmark, the
Lehman Brothers Municipal Bond Index, making the Fund more sensitive to rate
changes. This worked to our advantage because, as interest rates fell during the
period, bond prices increased. The benchmark is an unmanaged index of similar
securities that we use as a market comparison to the Fund's portfolio.
THE FEDERAL RESERVE RAISED RATES BEFORE THE BEGINNING OF THE REPORTING PERIOD,
YET LONG-TERM RATES FELL. WHY?
The Federal Reserve sets the federal funds target rates and thereby has a direct
influence over short-term interest rates. Long-term rates are more affected by
inflation expectations. The Fed's stance throughout the period was seen as a
check against inflation and, as a consequence, longer-term interest rates
declined.
INFLATION REMAINS LOW, THE ECONOMY IS GROWING AND RATES ARE FALLING. IS THIS AN
UNUSUAL PERIOD?
It is unusual in terms of the length of the cycle. The recovery has been going
on for a relatively long time. Part of the length and persistence of the
recovery may be fueled by high investor confidence in the financial markets.
DID THE ASIAN CRISIS HAVE A DIRECT IMPACT ON THE MUNICIPAL MARKETS?
The Asian situation did not directly affect the municipal market, but it did
influence interest rates in general. We often see a "flight to quality" in
response to bad news in foreign markets, in which international investors buy
short-term U.S. Treasury securities in quantities which may potentially
influence yields. Municipal bond yields tend to move along with Treasury yields,
albeit in a lagging manner. Another indirect effect may result from our
increasingly global economy. State and local economies, particularly in the
western United States, that have significant business ties to Asia, could be
adversely impacted if, for example, the Asian crisis ultimately reduces
production and tax revenues in those states.
WHAT'S THE CURRENT OUTLOOK?
There are conflicting views in the marketplace. Some think that the Fed is going
to have to raise rates to keep inflation in check in the face of the hot housing
market and strong consumer
- ---------------------
18
<PAGE>
OREGON TAX-FREE FUND
spending. Others thinks that the full effects of the Asian situation will not be
felt until the fourth quarter of 1998 or beyond and will have a dampening effect
on the U.S. economy. They believe that the Fed may have to ease monetary policy
and lower interest rates to spark the economy. Our outlook is that the Fed will
probably remain neutral for now and eventually lower interest rates as the
economy slows down. This will encourage long-term interest rates to come down
even further.
WHAT'S THE OUTLOOK ON THE OREGON ECONOMY?
The state's economy continues to grow and there are no new tax initiatives on
the horizon that would affect municipal revenue flow. We could see some
dampening effects on growth due to the Asian crisis, but overall we feel that
the state, which has become increasingly well diversified, will be able to
endure the decline.
WHAT TYPES OF BONDS DOES THE STATE TYPICALLY ISSUE?
Most of the new bond debt over the past year was revenue issues for correctional
facilities, housing and general purposes (primarily education), backed by
lottery revenues. Until 1998, there were not many new money general obligation
bonds issued. Recently, probably due to voter confidence in the state's thriving
economy, school district debt issues have brought a wave of general obligation
bonds into the market.
ARE YOU MAKING ANY CHANGES IN THE FUND'S APPROACH?
We have reoriented the Fund's investment focus somewhat from a purely total
return approach to placing more emphasis on the income component of return. We
will still consider the projected price performance of individual issues in the
Fund, but we see our shareholder's need for tax-exempt income as paramount. We
are lengthening the portfolio's average maturity range to an 18 to 22 year
average, which we feel offers an investor the best risk-adjusted return. This
maturity range does not have the volatility of longer bonds but enables us to
pick up most of the price appreciation longer-term funds enjoy when interest
rates decline. One way we hope to increase income in the Fund is to buy some
bonds that are subject to the alternative minimum tax (AMT). These bonds have
about a 0.15% higher yield than a similar non-AMT issue, but they may increase
tax exposure for some wealthy shareholders. Shareholders concerned about AMT
should consult a tax adviser.
---------------------
19
<PAGE>
OREGON TAX-FREE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 4.50% Sales Charge 4.85% 5.32% 5.01% 6.67%
- -------------------------------------------------------------------------------------------
Without Sales Charge 9.81% 6.95% 5.97% 7.17%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 3.77% 5.11% 4.80% 6.37%
- -------------------------------------------------------------------------------------------
Without Sales Charge 8.77% 6.01% 5.13% 6.37%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption.
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 6/1/88
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
This Share Class Has No Sales Charge 10.08% 7.08% 6.05% 7.21%
- -------------------------------------------------------------------------------------------
</TABLE>
The Stagecoach Oregon Tax-Free Fund is the successor to the Pacifica Oregon
Tax-Exempt Fund (10/95 to 9/96) and the Westcore Oregon Tax-Exempt Fund (6/88 to
9/95). Historical performance has been calculated using returns produced by
these predecessor funds for the applicable periods. Class A share performance
reflects Pacifica Fund Class A and Westcore Fund performance. Class B and
Institutional Class share performance also reflects such performance but has
been adjusted to reflect Class B and Institutional Class share expense levels as
of the inception date of 6/1/88.
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Figures quoted represent past
performance, which is no guarantee of future results.
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>
STAGECOACH OREGON TAX-FREE FUND CASS A LEHMAN BROTHERS MUNICIPAL BOND
SHARES INDEX
<S> <C> <C>
Inception $9,550 $10,000
Sep-88 $9,890 $10,406
Mar-89 $10,022 $10,669
Sep-89 $10,519 $11,308
Mar-90 $10,836 $11,795
Sep-90 $11,095 $12,077
Mar-91 $11,793 $12,883
Sep-91 $12,416 $13,669
Mar-92 $12,776 $14,171
Sep-92 $13,504 $15,099
Mar-93 $14,116 $15,944
Sep-93 $15,201 $17,022
Mar-94 $14,611 $16,314
Sep-94 $14,621 $16,607
Mar-95 $15,425 $17,525
Sep-95 $16,076 $18,463
Mar-96 $16,455 $18,994
Sep-96 $16,902 $19,578
Mar-97 $17,182 $20,030
Sep-97 $18,273 $21,348
Mar-98 $18,867 $22,179
<CAPTION>
STAGECOACH OREGON TAX-FREE FUND INSTITUTIONAL CLASS
SHARES
<S> <C>
Inception $10,000
Sep-88 $10,356
Mar-89 $10,494
Sep-89 $11,015
Mar-90 $11,347
Sep-90 $11,617
Mar-91 $12,349
Sep-91 $13,001
Mar-92 $13,378
Sep-92 $14,141
Mar-93 $14,781
Sep-93 $15,918
Mar-94 $15,299
Sep-94 $15,310
Mar-95 $16,152
Sep-95 $16,834
Mar-96 $17,235
Sep-96 $17,716
Mar-97 $18,016
Sep-97 $19,190
Mar-98 $19,831
</TABLE>
THE RETURNS FOR CLASS B SHARES OF THE FUND WILL VARY FROM THE RESULTS SHOWN DUE
TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
The accompanying chart compares the performance of the Stagecoach Oregon
Tax-Free Fund Class A and Institutional Class shares since inception with the
Lehman Brothers Municipal Bond Index. The chart assumes a hypothetical $10,000
initial investment in Class A and Institutional Class shares and reflects all
operating expenses and, for Class A shares, assumes the maximum initial sales
charge of 4.5%. The Lehman Brothers Municipal Bond Index is an unmanaged index
composed 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, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
ARIZONA MUNICIPAL BONDS - 93.58%
$ 130,000 Bullhead City AZ Special Assessment Parkway
Improvement District 6.10 % 01/01/02 $ 138,288
170,000 Bullhead City AZ Special Assessment Parkway
Improvement District 6.10 01/01/03 182,538
500,000 Chandler AZ Street & Highway User Revenue 6.00 07/01/11 560,775
110,000 Glendale AZ Improvement District 6.00 01/01/01 115,335
175,000 Glendale AZ Improvement District 6.00 01/01/02 186,044
235,000 Glendale AZ Water & Sewer Revenue 9.00 07/01/03 286,956
900,000 Greenlee County AZ IDA Pollution Control
Revenue Project 5.45 06/01/09 937,125
750,000 Maricopa County AZ Hospital District 5.00 06/01/21 732,188
250,000 Maricopa County AZ IDA Multifamily Housing
Revenue Project 4.65 07/01/09 249,553
500,000 Maricopa County AZ USD Mesa University Project
Series E 5.00 07/01/09 513,880
625,000 Maricopa County AZ USD Phoenix Elementary 6.00 07/01/08 696,563
500,000 Maricopa County AZ USD Project Series A 5.00 07/01/09 513,880
415,000 Maricopa County AZ USD Tolleson AMBAC Insured 5.80 07/01/07 436,871
1,000,000 Mesa AZ GO Series A 6.50 07/01/09 1,160,000
500,000 Mohave County AZ IDA Baptist Hospital MBIA
Insured 5.70 09/01/15 528,320
100,000 Peoria AZ Improvement District 7.30 01/01/99 102,492
750,000 Phoenix AZ Civic improvement Corporation AMT
Lien 5.00 07/01/14 739,688
1,000,000 Phoenix AZ Civic Improvement Corporation
Wastewater System 6.00 07/01/05 1,100,260
200,000 Phoenix AZ Civic Plaza Building Corporation
Excise Tax Revenue 6.38 07/01/06 227,094
1,000,000 Phoenix AZ GO Series A 6.25 07/01/16 1,166,900
900,000 Phoenix AZ IDA Hospital Revenue Series B 5.65 12/01/12 954,927
</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)
$ 215,000 Phoenix AZ Special Assessment Central Avenue
Improvement District 7.00 % 01/01/99 $ 218,128
750,000 Phoenix AZ Street & Highway User Revenue 6.40 07/01/04 826,650
335,000 Pima County AZ Community College District 5.50 07/01/12 353,174
750,000 Pima County AZ IDA Multifamily Housing Revenue
Project 5.50 03/01/28 750,488
310,000 Pinal County AZ Community College District 5.00 07/01/12 306,785
500,000 Scottsdale AZ IDA Hospital Revenue Series A 6.50 09/01/07 573,125
1,000,000 Tucson AZ GO MBIA Insured 5.13 07/01/21 996,640
500,000 Tucson AZ LOC Business Development Finance
Corporation 4.60 07/01/10 493,350
500,000 Tucson AZ Street & Highway Revenue Series C 7.00 01/01/11 609,535
500,000 Tucson AZ Street & Highway Revenue Series C 7.00 07/01/12 615,400
500,000 Yuma AZ IDA Hopital Revenue Project 5.75 08/01/07 546,246
--------------
TOTAL ARIZONA MUNICIPAL BONDS $ 17,819,198
(Cost $17,726,555)
PUERTO RICO MUNICIPAL BONDS - 13.20%
$ 500,000 Commonwealth of Puerto Rico Electric Power
Authority Revenue Series EE 5.00 % 07/01/28 $ 477,570
1,000,000 Commonwealth of Puerto Rico Electric Power
Authority Revenue Series X 5.50 07/01/25 1,015,000
1,000,000 Commonwealth of Puerto Rico Highway &
Transportation Authority Revenue 5.50 07/01/26 1,021,250
--------------
TOTAL PUERTO RICO MUNICIPAL BONDS $ 2,513,820
(Cost $2,004,705)
</TABLE>
---------------------
23
<PAGE>
ARIZONA TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.53%
MONEY MARKET FUNDS - 1.53%
$ 290,874 AIM Institutional Tax-Free Fund $ 290,874
(Cost $290,874)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $20,022,134)* (Notes 1 and 3) 108.31% $ 20,623,892
Other Assets and Liabilities, Net (8.31) (1,582,086)
------ --------------
TOTAL NET ASSETS 100.00% $ 19,041,806
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 641,286
Gross Unrealized Depreciation (39,528)
------------
NET UNREALIZED APPRECIATION $ 601,758
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
24
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - 99.00%
$ 1,250,000 California State AMT Veterans Bonds Series B 4.65 % 12/01/05 $ 1,249,188
2,000,000 California State AMT Veterans Bonds Series B 4.95 12/01/07 2,001,560
1,540,000 California State Department Water Resource
Revenue Project 6.00 12/01/06 1,719,025
500,000 California State EDFA Revenue Pooled College &
University Financing 5.10 06/01/98 500,910
2,615,000 California State Health Facility Finance
Authority Revenue 5.00 07/01/01 2,689,658
500,000 California State HFFA Revenue Episcopal Homes
Mortgage Insurance 7.20 07/01/99 506,495
200,000 California State HFFA Revenue Mortgage
Insurance 7.40 12/01/00 208,380
1,000,000 California State Public Revenue CA State
University Projects 6.70 10/01/17 1,122,500
1,000,000 California State Public Works Board Lease
Revenue Series A 6.63 10/01/10 1,119,340
1,000,000 California Statewide CDA Revenue COP United
Western Medical Centers 6.75 12/01/21 1,106,250
250,000 Carlsbad CA USD COP Phase III 6.70 11/01/99 259,743
500,000 Emeryville CA PFA Housing Increment Revenue
Series A 5.40 05/01/98 500,648
600,000 Encinitas CA USD COP Measure B Capital Projects 4.38 09/01/98 601,140
820,000 Foster City CA PFA 4.70 09/01/98 821,796
685,000 Foster City CA PFA 5.40 09/01/01 708,420
1,750,000 Industry CA Urban Development Agency FSA
Insured 4.70 05/01/04 1,783,915
2,000,000 Los Angeles CA Airport Revenue Series A 6.00 05/15/05 2,205,000
1,460,000 Los Angeles CA Department of Water & Power
Revenue Project 9.00 10/15/03 1,802,574
2,500,000 Los Angeles CA Harbor Department Revenue AMT
Series B 5.00 08/01/02 2,580,100
</TABLE>
---------------------
25
<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)
$ 725,000 Los Angeles CA Judgment Obligation Bonds Series
A 4.70 % 08/01/98 $ 727,393
1,300,000 Los Angeles CA Waste Water System Revenue
Series A MBIA Insured 8.50 06/01/03 1,553,214
2,000,000 Los Angeles CA Waste Water System Revenue
Series D MBIA Insured 8.70 11/01/03 2,437,440
300,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue Series A 6.10 07/01/99 308,214
500,000 Morgan Hill CA RDFA Tax Allocation Ojo De Agua
Community Development Project 5.60 03/01/00 505,675
1,075,000 Mount Diablo CA USD Community Facilities
District Special Tax AMBAC Insured 8.00 08/01/03 1,265,071
2,625,000 Orange County CA LOC Transportation Authority
Sales Tax Revenue 9.50 02/15/03 3,217,725
3,500,000 Orange County CA Public Finance Authority Waste
Management System 5.50 12/01/06 3,731,210
2,500,000 Rancho CA Water District Financing Authority
Revenue 4.70 08/15/21 2,542,050
3,000,000 Riverside County CA Transportation Commission
Tax Revenue Series A 6.50 06/01/01 3,220,410
300,000 Sacramento CA Light Rail Transportation Project 6.30 07/01/00 312,681
500,000 Sacramento CA MUD Electric Revenue MBIA Insured 7.50 08/15/99 516,295
995,000 Sacramento CA Workers Compensation Project
Series C 5.75 06/01/03 1,036,581
500,000 San Diego CA Transportation Authority COP Bus
Acquisition Project 6.60 12/01/01 518,270
1,000,000 San Diego County CA Regional Transportation
Commission Sales Tax Revenue Series A FGIC
Insured 6.25 04/01/02 1,078,470
1,090,000 San Francisco CA City & County International
Airport Revenue MBIA Insured 8.00 05/01/05 1,315,423
1,150,000 San Francisco CA City & County International
Revenue AMT MBIA Insured 8.00 05/01/05 1,383,968
</TABLE>
- ------------------------
26
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 1,000,000 San Francisco CA City & County RDFA Lease
Revenue George R Moscone Center AMBAC Insured 6.20 % 10/01/00 $ 1,053,750
750,000 San Francisco CA Redevelopment Agency Lease
Revenue George Moscone Center Project 7.40 07/01/98 755,940
2,065,000 San Mateo County CA Joint Powers Lease Project
Series A 4.50 07/15/06 2,083,647
500,000 Santa Monica CA Wastewater Enterprise Revenue
Hyperion Project 12.00 01/01/01 601,035
1,000,000 South Orange County CA Public Finance Authority
Tax Revenue 5.75 08/15/05 1,086,250
2,000,000 Southern California Rapid Transit District
Certificates Participation MBIA Insured 7.50 07/01/05 2,216,580
1,100,000 Southern California State Public Power
Authority 6.75 07/01/00 1,160,500
3,000,000 Southern California State Public Power
Authority Project 6.88 07/01/03 3,202,500
1,185,000 Southern California State Waterworks Revenue
Series C 6.00 07/01/06 1,316,796
580,000 Turlock CA Irrigation District Revenue Series A 5.00 01/01/05 602,788
1,000,000 University of California Multiple Projects
Revenue Series A MBIA Insured 6.50 09/01/03 1,105,428
1,000,000 University of California Multiple Projects
Revenue Series B 6.00 09/01/02 1,078,850
--------------
TOTAL CALIFORNIA MUNICIPAL BONDS $ 65,420,796
(Cost $64,554,739)
</TABLE>
---------------------
27
<PAGE>
CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.46%
MONEY MARKET FUNDS - 1.46%
$ 964,000 Provident Institutional CA Municipal Fund $ 964,000
(Cost $964,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $65,518,739)* (Notes 1 and 3) 100.46% $ 66,384,796
Other Assets and Liabilities, Net (0.46) (304,618)
------ --------------
TOTAL NET ASSETS 100.00% $ 66,080,178
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 936,435
Gross Unrealized Depreciation (70,378)
------------
NET UNREALIZED APPRECIATION $ 866,057
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
28
<PAGE>
NATIONAL TAX-FREE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.26%
ALASKA - 4.22%
$ 2,250,000 Alaska State Housing Finance Corporation 5.50 % 12/01/17 $ 2,278,125
100,000 Anchorage Alaska GO MBIA Insured 6.75 07/01/05 107,808
100,000 Valdez Alaska Marine Term Revenue Pipelines Inc
Series A 5.85 08/01/25 102,875
--------------
$ 2,488,808
CALIFORNIA - 0.04%
$ 20,000 California State GO 6.00 % 02/01/01 $ 21,064
COLORADO - 7.46%
$ 2,000,000 Colorado Health Facility Authority Revenue 5.75 % 09/15/22 $ 2,023,400
2,000,000 Denver CO City & County Airport Revenue Series
A 5.60 11/15/20 2,063,420
270,000 El Paso County CO USD 6.15 12/15/08 305,438
--------------
$ 4,392,258
CONNECTICUT - 1.77%
$ 1,000,000 Connecticut State Housing Finance Authority 7.30 % 11/15/03 $ 1,045,260
FLORIDA - 0.31%
$ 170,000 Brevard County FL HFA SFMR Refunded Series B
FSA Insured 7.00 % 03/01/13 $ 181,050
HAWAII - 0.47%
$ 250,000 Hawaii State Series CL GO 6.00 % 03/01/09 $ 278,300
</TABLE>
---------------------
29
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
ILLINOIS - 15.10%
$ 200,000 Chicago IL O'Hare International Airport Revenue
Series A 6.75 % 01/01/06 $ 228,180
500,000 Chicago IL O'Hare International Airport Special
Facilities Revenue AMT LOC - Bayerische
Landesbank 7.13 05/01/18 541,250
2,965,000 Chicago IL Board of Education School Reform
Series A 5.25 12/01/18 2,984,213
1,500,000 Chicago IL Park District Project 5.38 01/01/25 1,508,730
1,000,000 Chicago IL GO Series A 5.25 01/01/20 990,000
600,000 Illinois Development Finance Authority Revneue
Series C 5.65 07/01/19 594,060
1,000,000 Illinois Development Finance Authority Revneue
Series A 5.75 07/01/18 1,008,120
1,000,000 Illinois Health Facility Authority Revenue
Edward Hospital Series A 5.75 02/15/09 1,035,770
--------------
$ 8,890,323
INDIANA - 5.05%
$ 1,940,000 Howard County IN Jail & Juvenile Detention
Center 5.25 % 01/15/12 $ 1,971,641
1,000,000 Indiana State Educational Facility Authority
Revenue Butler University Project 5.30 01/01/27 1,001,910
--------------
$ 2,973,551
IDAHO - 1.79%
$ 1,000,000 Idaho State HFA SFMR Series C-2 AMT 6.35 % 07/01/15 $ 1,055,770
</TABLE>
- ------------------------
30
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
IOWA - 6.43%
$ 2,000,000 Iowa Finance Authority Revenue Health Systems
Series V 5.25 % 08/15/27 $ 1,956,300
1,435,000 Iowa State HFA SFMR Series B AMT GNMA/FNMA
Collateralized 6.95 07/01/24 1,532,982
280,000 Iowa State HFA SFMR Series B AMT GNMA/FNMA
Collateralized 7.45 07/01/23 300,336
--------------
$ 3,789,618
KENTUCKY - 0.26%
$ 140,000 Kentucky State Housing Corporation Revenue FHA
Insured 6.50 % 07/01/17 $ 150,325
LOUISIANA - 0.64%
$ 355,000 Louisiana State Public Facilities Authority
Student Loan Revenue AMT FSA Insured 6.85 % 01/01/09 $ 379,641
MASSACHUSETTS - 1.80%
$ 1,000,000 Massachusetts State HFA Residential Development
FNMA Collateralized 6.90 % 11/15/21 $ 1,059,030
MICHIGAN - 2.53%
$ 1,435,000 Armada MI Area School District 5.63 % 05/01/17 $ 1,491,568
MINNESOTA - 1.13%
$ 250,000 Minneapolis MN Community Development Agency
Series 7A 5.50 % 06/01/12 $ 254,413
390,000 Minneapolis-St Paul MN Housing Finance Board
Revenue SFMR Phase IX AMT GNMA Collateralized 7.30 08/01/31 413,755
--------------
$ 668,168
</TABLE>
---------------------
31
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
MISSISSIPPI - 6.44%
$ 500,000 Jones County MS Hospital Revenue Regional
Medical Center 4.90 % 12/01/04 $ 503,580
1,050,000 Jones County MS Hospital Revenue South Central
Regional Medical Center 5.00 12/01/06 1,052,279
2,230,000 Mississippi Home Corporation Single Family
Revenue Series H 5.35 06/01/26 2,240,035
--------------
$ 3,795,894
NEBRASKA - 1.68%
$ 1,000,000 Nebraska Public Power District Revenue System
Series A 5.25 % 01/01/28 $ 991,220
NEVADA - 1.77%
$ 500,000 Clark County NV Las Vegas Convention & Visitors
Authority FSA Insured 6.00 % 07/01/26 $ 529,520
500,000 Reno NV Hospital Revenue 5.63 05/15/23 511,250
--------------
$ 1,040,770
NEW JERSEY - 2.30%
$ 1,250,000 New Jersey State MFHR FHA Collateralized 7.00 % 05/01/30 $ 1,354,000
NEW YORK - 3.23%
$ 250,000 Erie County NY Public Improvement 6.13 % 01/15/10 $ 282,830
250,000 New York NY FGIC Series E 6.00 08/01/12 271,150
1,300,000 New York State Dormitory Authority Revenue
Mental Health Services 5.63 02/15/21 1,346,982
--------------
$ 1,900,962
NORTH DAKOTA - 2.56%
$ 1,500,000 Fargo ND Health Systems Revenue 5.38 % 06/01/27 $ 1,509,900
</TABLE>
- ------------------------
32
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
OKLAHOMA - 2.25%
$ 200,000 Pryor Creek OK Economic Development Authority
Mortgage Revenue Series A FNMA Collateralized 7.13 % 07/01/21 $ 210,118
550,000 Tulsa County OK HFA Mortgage Revenue Series B
Remarket AMT GNMA Collateralized 7.10 06/01/22 586,647
500,000 Tulsa County OK HFA Mortgage Revenue Series B
Remarket AMT GNMA Collateralized 7.55 05/01/23 528,650
--------------
$ 1,325,415
PENNSYLVANIA - 0.90%
$ 500,000 Pennsylvania State Higher EDFA Student Loan
Revenue Series D AMT AMBAC Insured 7.05 % 10/01/16 $ 530,625
TENNESSEE - 1.75%
$ 1,000,000 Shelby County TN Health Educational & Housing
Facility 6.00 % 07/01/28 $ 1,032,120
TEXAS - 6.41%
$ 400,000 Austin TX Utility Systems Revenue 5.90 % 10/01/99 $ 411,500
250,000 Decatur TX Indeptness School District 6.13 08/01/25 269,128
250,000 El Paso TX GO 7.00 08/15/06 293,990
125,000 Port Authur TX MBIA Insured 8.50 02/15/03 148,451
1,250,000 Port Corpus Christi TX Industrial Development
Corporation 5.13 04/01/09 1,246,875
390,000 Travis County TX HFC Residential Mortgage
Revenue Series A GNMA/FNMA Collateralized 7.00 12/01/11 420,202
1,000,000 Webb County TX COP Series A 5.25 10/01/22 983,836
--------------
$ 3,773,982
</TABLE>
---------------------
33
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
UTAH - 4.22%
$ 250,000 Salt Lake City UT RDA Neighborhood Tax Revenue 6.50 % 10/01/01 $ 268,338
500,000 Utah State Board of Regents Student Loan
Revenue Series F AMT AMBAC Insured 7.45 11/01/08 536,545
1,100,000 Utah State Board of Regents Student Loan
Revenue Series H AMT AMBAC Insured 6.70 11/01/15 1,165,285
250,000 Utah State Building Ownership Authority Lease
Series A 6.00 05/15/09 266,068
5,000 Utah State HFA SFMR Series D-2 AMT FHA
Collateralized 6.45 01/01/11 5,415
225,000 Washington County UT USD St Georges FGIC
Insured 6.00 03/01/03 244,280
--------------
$ 2,485,931
VERMONT - 0.98%
$ 500,000 Burlington VT Electricity Revenue Series A MBIA
Insured 6.38 % 07/01/10 $ 577,640
VIRGINIA - 1.71%
$ 1,000,000 Virginia State Multifamily Housing Development
Project Series I 5.45 % 05/01/18 $ 1,008,750
WASHINGTON - 13.06%
$ 1,000,000 King County WA Lease Revenue 5.25 % 06/01/26 $ 995,750
500,000 Clark County WA Sewer Revenue 6.00 12/01/06 552,645
100,000 Island County WA USD South Whidbey 6.75 12/01/07 118,373
100,000 South Columbian Basin WA Improvement District
Revenue 6.00 12/01/02 107,241
350,000 Tacoma WA Solid Waste Utility Revenue Series B 6.00 12/01/09 390,359
2,000,000 Washington State Public Power Supply System
Nuclear Project Series A 5.00 07/01/13 1,959,700
1,000,000 Washington State Public Power Supply System
Nuclear Project Series B 5.13 07/01/13 992,500
</TABLE>
- ------------------------
34
<PAGE>
NATIONAL TAX-FREE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS (CONTINUED)
$ 1,000,000 Washington State GO Series DD-12 5.50 % 03/01/28 $ 1,058,680
1,440,000 Washington State SFMR Series D AMT GNMA/FNMA
Collateralized 7.10 07/01/22 1,517,313
--------------
$ 7,692,561
TOTAL MUNICIPAL BONDS $ 57,884,504
(Cost $56,604,597)
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.60%
MONEY MARKET FUNDS - 1.60%
941,000 Dreyfus General CA Municipal Money Market Fund $ 941,000
(Cost $941,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $57,545,597)* (Notes 1 and 3) 99.86% $ 58,825,504
Other Assets and Liabilities, Net 0.14 82,626
------ --------------
TOTAL NET ASSETS 100.00% $ 58,908,130
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 1,394,240
Gross Unrealized Depreciation (114,333)
------------
NET UNREALIZED APPRECIATION $ 1,279,907
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
35
<PAGE>
OREGON TAX-FREE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
OREGON MUNICIPAL BONDS - 93.05%
$ 300,000 Chemeketa OR Community College District AMBAC
Insured 5.40 % 06/01/07 $ 320,199
1,100,000 Chemeketa OR Community College District FGIC
Insured 6.00 06/01/06 1,225,312
1,000,000 Chemeketa OR Community College District Series
B 5.60 06/01/14 1,063,750
250,000 Chemeketa OR Community College MBIA Insured 6.50 07/01/07 288,130
495,000 Clackamas County HFFA Jennings Lodge Project
GNMA FHA credit support 7.50 10/20/31 531,843
300,000 Clackamas County HFFA Sisters of Providence
Series A 6.38 10/01/05 327,222
2,675,000 Emerald Peoples OR MUD Revenue FGIC Insured 7.35 11/01/13 3,448,289
1,750,000 Emerald Peoples OR Utility District 7.35 11/01/07 2,139,988
845,000 Eugene OR Public Safety Facilities 6.00 06/01/06 932,086
1,000,000 Hillsboro OR Hospital Healthcare Facility 5.75 10/01/12 1,035,430
620,000 Hood River County OR USD GO AMBAC Insured 5.65 06/01/08 656,493
500,000 Josephine County OR USD FGIC 5.75 06/01/07 549,780
1,000,000 Linn & Benton OR School District GO 5.35 06/01/08 1,073,300
100,000 Marion & Polk Counties OR USD Salem GO 5.90 10/01/07 107,319
500,000 Multnomah County OR COP MBIA Insured 4.70 08/01/12 486,250
1,000,000 Multnomah-Clackamas County OR USD Project 5.00 01/01/08 1,035,000
500,000 North Clackamas OR Parks & Recreation District
Facility 5.40 04/01/05 528,270
750,000 Oregon State Board of Higher Education GO
Series C 5.95 08/01/26 800,933
250,000 Oregon State Department General Services AMBAC
Insured 7.50 09/01/15 274,758
500,000 Oregon State Department of Administrative
Services COP Series A 5.20 05/01/06 526,300
</TABLE>
- ------------------------
36
<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)
$ 500,000 Oregon State Department of Administrative
Services COP Series A 5.80 % 05/01/24 $ 534,375
1,500,000 Oregon State Department of Administrative
Services Series B 5.60 11/01/16 1,570,545
480,000 Oregon State GO 7.25 07/01/07 580,306
175,000 Oregon State GO 9.00 10/01/05 226,480
575,000 Oregon State Housing Educational & Cultural
Facilities Authority Revenue Reed College
Project 6.75 07/01/21 630,879
1,715,000 Oregon State Housing Educational & Cultural
Facilities Series A 4.75 12/01/30 1,712,856
5,000 Oregon State SFMR Program FHA/VA Insured 7.05 07/01/09 5,315
2,000,000 Oregon State Veterans Welfare Series 77 5.30 10/01/29 1,997,500
1,750,000 Port Saint Helens OR Pollution Control Project 5.65 12/01/27 1,782,113
500,000 Portland OR Airport Revenue Series 11 5.30 07/01/07 527,380
485,000 Portland OR Arena Gas Tax Revenue Series A 5.35 06/01/07 515,667
1,000,000 Portland OR GO Series A 4.88 06/01/18 975,000
200,000 Portland OR Horizon Air Inc Project 3.80 06/05/27 200,000
150,000 Portland OR MUD Sewer System Revenue Series A 6.05 06/01/09 165,563
250,000 Portland OR Sewer System Revenue Series A 5.75 06/01/06 272,053
1,000,000 South Fork Water Board Revenue Series B 6.00 02/01/14 1,078,260
40,000 Tri-County Metropolitan OR Transportation
District Revenue 5.70 08/01/13 41,167
400,000 Umatilla County OR GO 5.20 10/01/08 419,660
250,000 Washington & Clackamas County OR School
District J Tigard 5.50 06/01/06 266,238
1,000,000 Washington County OR GO 5.75 10/01/11 1,103,750
2,000,000 Washington County OR Unified Sewer Agency
Revenue FGIC Insured 5.50 10/01/13 2,113,320
1,000,000 Washington County OR USD Project 5.25 06/01/10 1,055,000
</TABLE>
---------------------
37
<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)
$ 725,000 Washington County School District J Sherwood
FSA Insured 6.10 % 06/01/12 $ 789,750
550,000 Western Lane OR HFFA Revenue Sisters of St.
Joseph Peace Services MBIA Insured 5.63 08/01/07 591,309
--------------
TOTAL OREGON MUNICIPAL BONDS $ 36,505,138
(Cost $35,221,592)
PUERTO RICO MUNICIPAL BONDS - 7.83%
$ 40,000 Commonwealth of Puerto Rico Aqueduct & Sewer
Revenue 10.25 % 07/01/09 $ 55,316
2,000,000 Commonwealth of Puerto Rico Infrastructure
Financing Authority Project 5.00 07/01/28 1,937,500
350,000 Commonwealth of Puerto Rico MFHR LOC -
Government Development Bank of Puerto Rico 7.50 04/01/22 367,567
425,000 Commonwealth of Puerto Rico PCR Facilities
Financing Authority Upjohn Co Project 7.50 12/01/23 448,095
250,000 Commonwealth of Puerto Rico SFMR GNMA Insured 7.50 10/15/12 264,323
--------------
TOTAL PUERTO RICO MUNICIPAL BONDS $ 3,072,801
(Cost $3,057,653)
<CAPTION>
SHARES
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 2.79%
MONEY MARKET FUNDS - 2.79%
1,095,407 AIM Institutional Tax-Free Fund $ 1,095,407
(Cost $1,095,407)
</TABLE>
- ------------------------
38
<PAGE>
OREGON TAX-FREE FUND
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $39,374,652)* (Notes 1 and 3) 103.67% $ 40,673,346
Other Assets and Liabilities, Net (3.67) (1,438,811)
------ --------------
TOTAL NET ASSETS 100.00% $ 39,234,535
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 1,388,072
Gross Unrealized Depreciation (89,378)
------------
NET UNREALIZED APPRECIATION $ 1,298,694
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
39
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1998
<TABLE>
<CAPTION>
ARIZONA
TAX-FREE
FUND
<S> <C>
- --------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $20,623,892
Cash 1,423
RECEIVABLES:
Interest 254,486
Fund shares sold 60,000
Investment securities sold 0
Organization expenses, net of
amortization 0
Prepaid expenses 0
TOTAL ASSETS 20,939,801
LIABILITIES
Payables:
Investment securities purchased 1,756,126
Distribution to shareholders 65,435
Capital shares redeemed 0
Due to sponsor and distributor (Note
2) 4,478
Due to adviser (Note 2) 3,549
Other 68,407
TOTAL LIABILITIES 1,897,995
TOTAL NET ASSETS
$19,041,806
NET ASSETS CONSIST OF:
Paid-in capital $18,256,964
Undistributed net realized gain (loss)
on investments 183,084
Net unrealized appreciation of
investments 601,758
TOTAL NET ASSETS $19,041,806
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $ 5,467,233
Shares outstanding - Class A 507,618
Net asset value per share - Class A $ 10.77
Maximum offering price per share - Class
A $ 11.28(1)
Net assets - Class B $ 1,545,907
Shares outstanding - Class B 148,797
Net asset value and offering price per
share - Class B $ 10.39
Net assets - Class C N/A
Shares outstanding - Class C N/A
Net asset value and offering price per
share - Class C N/A
Net assets - Institutional Class $12,028,666
Shares outstanding - Institutional Class 1,116,327
Net asset value and offering price per
share - Institutional Class $ 10.78
INVESTMENT AT COST (NOTE 3) $20,022,134
- --------------------------------------------------------
</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.
- ------------------------
40
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1998
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL OREGON
TAX-FREE TAX-FREE TAX-FREE
INCOME FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $66,384,796 $58,825,504 $40,673,346
Cash 1,815 13,346 1,878
RECEIVABLES:
Interest 1,188,249 985,157 717,292
Fund shares sold 0 18,200 45,011
Investment securities sold 2,157,670 519,375 0
Organization expenses, net of
amortization 0 0 8,675
Prepaid expenses 53,236 837 26
TOTAL ASSETS 69,785,766 60,362,419 41,446,228
LIABILITIES
Payables:
Investment securities purchased 3,148,266 985,880 2,003,828
Distribution to shareholders 200,890 215,573 125,830
Capital shares redeemed 258,591 38,884 0
Due to sponsor and distributor (Note
2) 30,581 4,044 26,459
Due to adviser (Note 2) 30,213 21,593 12,888
Other 37,047 188,315 42,688
TOTAL LIABILITIES 3,705,588 1,454,289 2,211,693
TOTAL NET ASSETS
$66,080,178 $58,908,130 $39,234,535
NET ASSETS CONSIST OF:
Paid-in capital $64,903,947 $58,266,211 $37,546,286
Undistributed net realized gain (loss)
on investments 310,174 (637,988) 389,555
Net unrealized appreciation of
investments 866,057 1,279,907 1,298,694
TOTAL NET ASSETS $66,080,178 $58,908,130 $39,234,535
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $59,011,496 $42,316,158 $27,837,080
Shares outstanding - Class A 5,653,079 2,657,414 1,655,643
Net asset value per share - Class A $ 10.44 $ 15.92 $ 16.81
Maximum offering price per share - Class
A $ 10.76(2) $ 16.67(1) $ 17.60(1)
Net assets - Class B N/A $ 1,329,682 $ 3,762,333
Shares outstanding - Class B N/A 126,603 365,269
Net asset value and offering price per
share - Class B N/A $ 10.50 $ 10.30
Net assets - Class C N/A $ 7,607,893 N/A
Shares outstanding - Class C N/A 724,074 N/A
Net asset value and offering price per
share - Class C N/A $ 10.51 N/A
Net assets - Institutional Class $ 7,068,682 $ 7,654,397 $ 7,635,122
Shares outstanding - Institutional Class 688,210 480,854 454,232
Net asset value and offering price per
share - Institutional Class $ 10.27 $ 15.92 $ 16.81
INVESTMENT AT COST (NOTE 3) $65,518,739 $57,545,597 $39,374,652
- ----------------------------------------------------------------------------------------
</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.
---------------------
41
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
CALIFORNIA
ARIZONA TAX-FREE NATIONAL OREGON
TAX-FREE INCOME TAX-FREE TAX-FREE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 969,781 $3,177,905 $1,408,272 $1,959,677
TOTAL INVESTMENT INCOME 969,781 3,177,905 1,408,272 1,959,677
EXPENSES (NOTE 2)
Advisory fees 95,284 348,186 128,786 187,554
Administration fees 12,043 43,808 16,707 23,433
Custody fees 3,269 12,903 4,390 6,351
Shareholder servicing fees 48,964 210,537 65,727 95,071
Portfolio accounting fees 36,480 68,595 41,260 50,712
Transfer agency fees 16,891 94,424 30,851 46,900
Distribution fees 9,115 32,268 29,769 23,543
Organization costs 19,631 13,536 59,829 4,003
Legal and audit fees 27,857 24,106 31,377 24,603
Registration fees 16,338 19,142 31,476 14,692
Directors' fees 4,892 4,858 4,753 4,766
Shareholder reports 20,437 27,684 26,837 22,616
Other 18,992 11,774 15,648 17,514
TOTAL EXPENSES 330,193 911,821 487,410 521,758
Less:
Waived fees and reimbursed expenses (224,807) (434,096) (302,873) (291,269)
Net Expenses 105,386 477,725 184,537 230,489
NET INVESTMENT INCOME 864,395 2,700,180 1,223,735 1,729,188
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 425,355 525,212 (633,882) 600,687
Net change in unrealized appreciation
of investments 543,222 896,098 1,310,218 1,227,645
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 968,577 1,421,310 676,336 1,828,332
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,832,972 $4,121,490 $1,900,071 $3,557,520
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
42
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND
----------------------------------------------------
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 864,395 $ 503,920 $ 1,120,096
Net realized gain (loss) on sale of investments 425,355 117,123 336,608
Net change in unrealized appreciation
(depreciation) of investments 543,222 (97,594) (564,971)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 1,832,972 523,449 891,733
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (241,375) (143,470) (370,176)
CLASS B (29,604) (1,534) (11)
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (593,416) (358,916) (749,909)
From net realized gain on sale of investments
CLASS A (99,458) 0 (109,463)
CLASS B (21,224) 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (238,712) 0 (227,136)
In excess of net realized gain
CLASS A 0 0 (12,756)
CLASS B 0 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 (24,754)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 473,873 88,082 1,232,906
Reinvestment of dividends - Class A 265,218 107,419 329,709
Cost of shares redeemed - Class A (1,192,150) (1,794,342) (18,720,996)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS A (453,059) (1,598,841) (17,158,381)
Proceeds from shares sold - Class B 1,453,702 183,000 20,025
Reinvestment of dividends - Class B 39,432 900 0
Cost of shares redeemed - Class B (127,727) (20,119) 0
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS B 1,365,407 163,781 20,025
Proceeds from shares sold - Class C N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A
Cost of shares redeemed - Class C N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C N/A N/A N/A
Proceeds from shares sold - Institutional Class 1,272,595 795,737 19,525,762
Reinvestment of dividends - Institutional Class 10,674 1,171 6,149
Cost of shares redeemed - Institutional Class (4,037,264) (2,034,842) (3,485,066)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL
CLASS (2,753,995) (1,237,934) 16,046,845
INCREASE (DECREASE) IN NET ASSETS (1,232,464) (2,653,465) (1,693,983)
NET ASSETS:
Beginning net assets 20,274,270 22,927,735 24,621,718
ENDING NET ASSETS $ 19,041,806 $ 20,274,270 $ 22,927,735
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
43
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
----------------------------------------------------
FOR THE NINE
FOR THE FOR THE SIX MONTHS ENDED
YEAR ENDED MONTHS ENDED SEPT. 30,
MARCH 31, 1998 MARCH 31, 1997 1996 (1)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 2,700,180 $ 1,580,769 $ 2,349,987
Net realized gain (loss) on sale of investments 525,212 248,774 2,344
Net change in unrealized appreciation
(depreciation) of investments 896,098 (98,200) (677,786)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 4,121,490 1,731,343 1,674,545
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (2,439,178) (1,432,926) (2,330,216)
CLASS B N/A N/A N/A
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (261,002) (147,843) (19,771)
From net realized gain on sale of investments
CLASS A (226,771) 0 0
CLASS B N/A N/A N/A
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (23,115) 0 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B N/A N/A N/A
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 19,705,630 11,076,589 44,078,871
Reinvestment of dividends - Class A 2,375,541 1,252,455 2,046,401
Cost of shares redeemed - Class A (31,777,362) (27,177,264) (41,016,574)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS A (9,696,191) (14,848,220) 5,108,698
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 - Class C N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A
Cost of shares redeemed - Class C N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C N/A N/A N/A
Proceeds from shares sold - Institutional Class 1,040,195 467,025 10,078,900
Reinvestment of dividends - Institutional Class 87,332 26,714 0
Cost of shares redeemed - Institutional Class (1,230,497) (3,513,007) (52,763)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL
CLASS (102,970) (3,019,268) 10,026,137
INCREASE (DECREASE) IN NET ASSETS (8,627,737) (17,716,914) 14,459,393
NET ASSETS:
Beginning net assets 74,707,915 92,424,829 77,965,436
ENDING NET ASSETS $ 66,080,178 $ 74,707,915 $ 92,424,829
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) "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.
(2) INCLUDES AMOUNTS RELATED TO THE CONSOLIDATION OF THE OVERLAND EXPRESS
MUNICIPAL INCOME FUND. SEE NOTE 1.
(3) THE CLASS C SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
- ---------------------
44
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND
----------------------------------------------------
FOR THE
YEAR ENDED FOR THE SIX FOR THE
MARCH 31, MONTHS ENDED YEAR ENDED
1998 (2) MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 1,223,735 $ 291,522 $ 636,397
Net realized gain (loss) on sale of investments (633,882) 28,242 12,999
Net change in unrealized appreciation
(depreciation) of investments 1,310,218 (87,198) (92,672)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 1,900,071 232,566 556,724
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (746,374) (112,378) (298,145)
CLASS B (23,330) (654) 0
CLASS C (95,551)(3) N/A N/A
INSTITUTIONAL CLASS (358,480) (178,490) (338,252)
From net realized gain on sale of investments
CLASS A (18,814) 0 0
CLASS B (3,377) 0 0
CLASS C 0(3) N/A N/A
INSTITUTIONAL CLASS (30,309) 0 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C 0(3) N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 39,883,662 163,757 252,284
Reinvestment of dividends - Class A 375,942 83,037 186,973
Cost of shares redeemed - Class A (3,464,028) (558,651) (9,944,744)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS A 36,795,576 (311,857) (9,505,487)
Proceeds from shares sold - Class B 1,173,456 151,670 25
Reinvestment of dividends - Class B 20,658 163 0
Cost of shares redeemed - Class B (613) (29,618) 0
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS B 1,193,501 122,215 25
Proceeds from shares sold - Class C 8,974,820(3) N/A N/A
Reinvestment of dividends - Class C 28,180(3) N/A N/A
Cost of shares redeemed - Class C (647,934)(3) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C 8,355,066(3) N/A N/A
Proceeds from shares sold - Institutional Class 2,720,368 1,266,444 9,318,896
Reinvestment of dividends - Institutional Class 133,806 60,571 104,965
Cost of shares redeemed - Institutional Class (2,912,585) (1,038,276) (2,185,445)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL
CLASS (58,411) 288,739 7,238,416
INCREASE (DECREASE) IN NET ASSETS 46,909,568 40,141 (2,346,719)
NET ASSETS:
Beginning net assets 11,998,562 11,958,421 14,305,140
ENDING NET ASSETS $ 58,908,130 $ 11,998,562 $ 11,958,421
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
OREGON TAX-FREE FUND
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 1,729,188 $ 936,894 $ 2,213,042
Net realized gain (loss) on sale of investments 600,687 503,644 226,397
Net change in unrealized appreciation
(depreciation) of investments 1,227,645 (719,337) (105,222)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 3,557,520 721,201 2,334,217
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,311,235) (738,895) (1,836,397)
CLASS B (43,691) (1,673) 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (374,262) (196,326) (376,645)
From net realized gain on sale of investments
CLASS A (475,455) (64,075) 0
CLASS B (29,182) (68) 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (128,424) (16,029) 0
In excess of net realized gain
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 2,372,220 705,873 1,339,221
Reinvestment of dividends - Class A 1,381,033 603,836 1,177,977
Cost of shares redeemed - Class A (7,505,296) (4,118,599) (19,138,811)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS A (3,752,043) (2,808,890) (16,621,613)
Proceeds from shares sold - Class B 3,439,482 290,001 25
Reinvestment of dividends - Class B 54,270 1,006 0
Cost of shares redeemed - Class B (6,373) 0 0
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS B 3,487,379 291,007 25
Proceeds from shares sold - Class C N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A
Cost of shares redeemed - Class C N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C N/A N/A N/A
Proceeds from shares sold - Institutional Class 895,262 737,208 10,508,693
Reinvestment of dividends - Institutional Class 119,243 46,958 74,828
Cost of shares redeemed - Institutional Class (1,808,127) (1,060,607) (1,972,408)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL
CLASS (793,622) (276,441) 8,611,113
INCREASE (DECREASE) IN NET ASSETS 136,985 (3,090,189) (7,889,300)
NET ASSETS:
Beginning net assets 39,097,550 42,187,739 50,077,039
ENDING NET ASSETS $ 39,234,535 $ 39,097,550 $ 42,187,739
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) "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.
(2) INCLUDES AMOUNTS RELATED TO THE CONSOLIDATION OF THE OVERLAND EXPRESS
MUNICIPAL INCOME FUND. SEE NOTE 1.
(3) THE CLASS C SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
---------------------
45
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND (1)
----------------------------------
CLASS A
----------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (2) 1996
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.44 $10.45 $10.71
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.46 0.24 0.48
Net realized and unrealized gain (loss) on investments 0.53 (0.01) (0.09)
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.99 0.23 0.39
LESS DISTRIBUTIONS:
Dividends from net investment income (0.46) (0.24) (0.48)
Distributions from net realized gain (0.20) 0.00 (0.17)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.66) (0.24) (0.65)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $10.77 $10.44 $10.45
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 9.67% 2.18% 3.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $5,467 $5,744 $7,331
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.64% 0.60% 0.78%
Ratio of net investment income to average net assets 4.32% 4.54% 4.45%
Portfolio turnover 127% 77% 42%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.77% 1.58% 1.46%
Ratio of net investment income(loss) to average net
assets prior to waived fees and reimbursed expenses 3.19% 3.56% 3.77%
- --------------------------------------------------------------------------------------------
</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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
46
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND (1) (CONT.)
----------------------------------------------------------------------------------
CLASS A (CONT.)
---------------------------------------------- CLASS B
FOUR ----------------------------------
MONTHS SIX MONTHS PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
SEPT. 30, MAY 31, MAY 31, MAY 31, MARCH 31, MARCH 31, SEPT. 30,
1995 (3) 1995 1994 1993 1998 1997 (2) 1996 (4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.68 $10.48 $10.64 $10.09 $10.07 $10.07 $10.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.17 0.51 0.50 0.49 0.37 0.11 0.01
Net realized and
unrealized gain (loss)
on investments 0.06 0.23 (0.15) 0.55 0.51 0.00 0.07
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.23 0.74 0.35 1.04 0.88 0.11 0.08
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.20) (0.53) (0.50) (0.49) (0.37) (0.11) (0.01)
Distributions from net
realized gain 0.00 (0.01) (0.01) 0.00 (0.19) 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.20) (0.54) (0.51) (0.49) (0.56) (0.11) (0.01)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $10.71 $10.68 $10.48 $10.64 $10.39 $10.07 $10.07
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 6.55%** 7.35% 3.28% 10.50% 8.90% 1.09% 0.76%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $24,622 $24,581 $25,153 $22,430 $1,546 $182 $20
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.45% 0.40% 0.31% 0.20% 1.37% 1.30% 1.16%
Ratio of net investment
income to average net
assets 4.73% 4.89% 4.72% 4.98% 3.49% 3.83% 3.59%
Portfolio turnover 62% 14% 28% 4% 127% 77% 42%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.35% 1.13% 1.00% 1.18% 3.26% 2.96% 1.81%
Ratio of net investment
income(loss) to average
net assets prior to waived
fees and reimbursed
expenses 3.83% 4.16% 4.03% 4.00% 1.60% 2.17% 2.94%
- ----------------------------------------------------------------------------------------------------------------
</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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
The accompanying notes are an integral part of these financial statements.
---------------------
47
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ARIZONA TAX-FREE FUND (1) (CONT.)
----------------------------------
INSTITUTIONAL CLASS
----------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (2) 1996 (3)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.44 $10.44 $10.71
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.49 0.25 0.49
Net realized and unrealized gain (loss) on investments 0.54 0.00 (0.10)
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.03 0.25 0.39
LESS DISTRIBUTIONS:
Dividends from net investment income (0.49) (0.25) (0.49)
Distributions from net realized gain (0.20) 0.00 (0.17)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.69) (0.25) (0.66)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $10.78 $10.44 $10.44
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 9.99% 2.38% 3.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $12,029 $14,349 $15,577
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.44% 0.40% 0.48%
Ratio of net investment income to average net assets 4.52% 4.73% 4.63%
Portfolio turnover 127% 77% 42%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.55% 1.50% 1.20%
Ratio of net investment income(loss) to average net
assets prior to waived fees and reimbursed expenses 3.41% 3.63% 3.91%
- --------------------------------------------------------------------------------------------
</TABLE>
(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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
- ---------------------
48
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
----------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------
NINE
SIX MONTHS MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, DEC. 31, DEC. 31, DEC. 31,
1998 1997 (2) 1996 (4) 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.27 $10.26 $10.35 $9.84 $10.36 $10.05
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.39 0.19 0.29 0.38 0.40 0.39
Net realized and
unrealized gain (loss)
on investments 0.20 0.01 (0.09) 0.51 (0.52) 0.31
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.59 0.20 0.20 0.89 (0.12) 0.70
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.39) (0.19) (0.29) (0.38) (0.40) (0.39)
Distributions from net
realized gain (0.03) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.42) (0.19) (0.29) (0.38) (0.40) (0.39)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $10.44 $10.27 $10.26 $10.35 $9.84 $10.36
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 5.92% 1.97% 2.01% 9.14% (1.10)% 7.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $59,011 $67,647 $82,359 $77,965 $48,998 $52,873
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.68% 0.65% 0.65% 0.65% 0.16% 0.34%
Ratio of net investment
income to average net
assets 3.78% 3.73% 3.83% 3.70% 4.03% 3.74%
Portfolio turnover 88% 14% 48% 31% 33% 11%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.29% 1.18% 1.14% 1.22% 1.21% 1.23%
Ratio of net investment
income(loss) to average
net assets prior to waived
fees and reimbursed
expenses 3.17% 3.20% 3.34% 3.13% 2.98% 2.85%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
49
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
(CONT.)
----------------------------------
INSTITUTIONAL CLASS
----------------------------------
SIX MONTHS PERIOD
YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (2) 1996 (3)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.11 $10.10 $10.06
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.39 0.19 0.02
Net realized and unrealized gain (loss) on investments 0.19 0.01 0.04
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.58 0.20 0.06
LESS DISTRIBUTIONS:
Dividends from net investment income (0.39) (0.19) (0.02)
Distributions from net realized gain (0.03) 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.42) (0.19) (0.02)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $10.27 $10.11 $10.10
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 5.91% 2.00% 0.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $7,069 $7,061 $10,066
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.62% 0.60% 0.55%
Ratio of net investment income to average net assets 3.84% 3.73% 3.06%
Portfolio turnover 88% 14% 48%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.17% 1.05% 0.92%
Ratio of net investment income(loss) to average net
assets prior to waived fees and reimbursed expenses 3.29% 3.28% 2.69%
- --------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS THE QUALITY TAX-EXEMPT INCOME FUND OF WESTCORE
TRUST AND WAS ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM
ITS COMMENCEMENT OF OPERATIONS ON JANUARY 15, 1993 UNTIL IT WAS
REORGANIZED AS A SERIES OF PACIFICA FUNDS TRUST ON OCTOBER 1, 1995,
WHEN FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM") ASSUMED
INVESTMENT ADVISORY RESPONSIBILITIES. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(5) THE FUND COMMENCED OPERATIONS ON JANUARY 15, 1993.
The accompanying notes are an integral part of these financial statements.
- ---------------------
50
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND (1)
----------------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------------
FOUR
SIX MONTHS MONTHS PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30, SEPT. 30, MAY 31, MAY 31, MAY 31,
1998 1997 (2) 1996 1995 (4) 1995 1994 1993 (5)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $15.17 $15.24 $15.34 $15.28 $14.98 $15.17 $15.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.75 0.37 0.72 0.24 0.68 0.64 0.17
Net realized and
unrealized gain (loss)
on investments 0.81 (0.07) (0.10) 0.08 0.32 (0.17) 0.15
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.56 0.30 0.62 0.32 1.00 0.47 0.32
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.75) (0.37) (0.72) (0.26) (0.70) (0.64) (0.15)
Distributions from net
realized gain (0.06) 0.00 0.00 0.00 0.00 (0.02) 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.81) (0.37) (0.72) (0.26) (0.70) (0.66) (0.15)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $15.92 $15.17 $15.24 $15.34 $15.28 $14.98 $15.17
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 10.44% 1.95% 4.03% 6.53%** 6.97% 3.07% 5.65%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $42,316 $4,526 $4,827 $14,305 $14,458 $13,600 $7,457
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.71% 0.35% 0.42% 0.35% 0.35% 0.27% 0.25%
Ratio of net investment
income to average net
assets 4.69% 4.81% 4.69% 4.65% 4.59% 4.29% 3.88%
Portfolio turnover 78% 86% 73% 86% 23% 19% 18%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.61% 2.11% 1.42% 1.85% 1.51% 1.58% 1.99%
Ratio of net investment
income(loss) to average
net assets prior to waived
fees and reimbursed
expenses 3.79% 3.05% 3.69% 3.15% 3.43% 2.99% 2.14%
- ----------------------------------------------------------------------------------------------------------------
</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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
(5) THE FUND COMMENCED OPERATIONS ON JANUARY 15, 1993.
The accompanying notes are an integral part of these financial statements.
---------------------
51
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND (1) (CONT.)
-----------------------------------
CLASS B
-----------------------------------
SIX
YEAR MONTHS PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (3) 1996 (4)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.01 $10.06 $10.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.42 0.06 0.00
Net realized and unrealized gain (loss) on
investments 0.53 (0.05) 0.06
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.95 0.01 0.06
LESS DISTRIBUTIONS:
Dividends from net investment income (0.42) (0.06) 0.00
Distributions from net realized gain (0.04) 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.46) (0.06) 0.00
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.50 $10.01 $10.06
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 9.58% 0.10% 0.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $1,330 $119 $0
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.26% 1.10% 0.00%
Ratio of net investment income to average net assets 3.88% 3.80% 1.83%
Portfolio turnover 78% 86% 73%
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 5.74% 13.74% 0.00%
Ratio of net investment income(loss) to average net
assets prior to waived fees and reimbursed expenses (0.60)% (8.84)% 1.83%
- ----------------------------------------------------------------------------------------------
</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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) 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. 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. 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 AND WFB ASSUMED INVESTMENT
ADVISORY RESPONSIBILITIES.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE CLASS C SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(6) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(7) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
- ---------------------
52
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND (1)
NATIONAL TAX-FREE FUND (1) (CONT.) ----------------------------------------------
---------------------------------------------- CLASS A
CLASS C INSTITUTIONAL CLASS ----------------------------------------------
---------- ---------------------------------- FOUR
PERIOD SIX MONTHS SIX MONTHS MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, SEPT. 30,
1998 (5) 1998 1997 (3) 1996 (6) 1998 1997 (3) 1996 1995 (7)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.48 $15.17 $15.24 $15.34 $16.29 $16.42 $16.38 $16.47
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.13 0.76 0.37 0.71 0.76 0.37 0.79 0.28
Net realized and
unrealized gain (loss)
on investments 0.03 0.81 (0.07) (0.10) 0.81 (0.10) 0.04 (0.08)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.16 1.57 0.30 0.61 1.57 0.27 0.83 0.20
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.13) (0.76) (0.37) (0.71) (0.76) (0.37) (0.79) (0.29)
Distributions from net
realized gain 0.00 (0.06) 0.00 0.00 (0.29) (0.03) 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.13) (0.82) (0.37) (0.71) (1.05) (0.40) (0.79) (0.29)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $10.51 $15.92 $15.17 $15.24 $16.81 $16.29 $16.42 $16.38
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 1.49% 10.51% 1.95% 4.04% 9.81% 1.65% 5.03% 3.67%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $7,608 $7,654 $7,354 $7,132 $27,837 $30,635 $33,676 $50,077
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.40% 0.42% 0.35% 0.36% 0.62% 0.60% 0.85% 0.70%
Ratio of net investment
income to average net
assets 4.09% 4.82% 4.82% 4.66% 4.54% 4.52% 4.87% 5.01%
Portfolio turnover 78% 78% 86% 73% 82% 90% 27% 57%
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.28% 1.92% 2.03% 1.45% 1.36% 1.31% 1.15% 1.01%
Ratio of net investment
income(loss) to average
net assets prior to waived
fees and reimbursed
expenses 3.21% 3.32% 3.14% 3.57% 3.80% 3.81% 4.57% 4.70%
- ----------------------------------------------------------------------------------------------------------------------------
</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. 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. 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 AND WFB
ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(2) 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. 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. 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 AND WFB ASSUMED INVESTMENT
ADVISORY RESPONSIBILITIES.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE CLASS C SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(6) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(7) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
53
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND (1) (CONT.)
----------------------------------
CLASS A (CONT.)
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, MAY 31, MAY 31,
1995 1994 1993
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $16.17 $16.79 $16.07
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.82 0.84 0.86
Net realized and unrealized gain (loss) on investments 0.39 (0.43) 0.76
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 1.21 0.41 1.62
LESS DISTRIBUTIONS:
Dividends from net investment income (0.87) (0.82) (0.86)
Distributions from net realized gain (0.04) (0.21) (0.04)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.91) (1.03) (0.90)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $16.47 $16.17 $16.79
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 7.92% 2.33% 10.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $52,245 $53,846 $45,435
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.70% 0.62% 0.60%
Ratio of net investment income to average net assets 5.19% 4.90% 5.34%
Portfolio turnover 15% 22% 6%
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.90% 0.84% 0.91%
Ratio of net investment income(loss) to average net
assets prior to waived fees and reimbursed expenses 4.99% 4.68% 5.03%
- --------------------------------------------------------------------------------------------
</TABLE>
(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. 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. 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 AND WFB ASSUMED INVESTMENT
ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(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.
- ---------------------
54
<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
---------------------------------- ----------------------------------
SIX MONTHS PERIOD SIX MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (2) 1996 (3) 1998 1997 (2) 1996 (4)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.00 $10.07 $10.00 $16.28 $16.42 $16.38
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.39 0.17 0.00 0.79 0.39 0.72
Net realized and
unrealized gain (loss)
on investments 0.47 (0.05) 0.07 0.82 (0.11) 0.04
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.86 0.12 0.07 1.61 0.28 0.76
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.39) (0.17) 0.00 (0.79) (0.39) (0.72)
Distributions from net
realized gain (0.17) (0.02) 0.00 (0.29) (0.03) 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.56) (0.19) 0.00 (1.08) (0.42) (0.72)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $10.30 $10.00 $10.07 $16.81 $16.28 $16.42
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 8.77% 1.17% 0.70% 10.08% 1.69% 5.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $3,762 $287 $0 $7,635 $8,175 $8,512
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.43% 1.30% 0.00% 0.43% 0.40% 0.63%
Ratio of net investment
income to average net
assets 3.56% 3.23% 1.83% 4.72% 4.72% 4.41%
Portfolio turnover 82% 90% 27% 82% 90% 27%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.39% 2.15% 0.00% 1.27% 1.24% 0.93%
Ratio of net investment
income(loss) to average
net assets prior to waived
fees and reimbursed
expenses 2.60% 2.38% 1.83% 3.88% 3.88% 4.11%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(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. 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. 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 AND WFB ASSUMED INVESTMENT
ADVISORY RESPONSIBILITIES.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(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.
---------------------
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and currently offers thirty-three separate series. These financial
statements represent the Arizona Tax-Free, California Tax-Free Income, National
Tax-Free and Oregon Tax-Free Funds (each, a "Fund", collectively, the "Funds"),
each, with the exception of the National Tax-Free Fund, a non-diversified series
of the Company. The National Tax-Free Fund is a diversified series of the
Company.
At a meeting held on July 23, 1997, the Boards of Directors of Overland Express
Funds, Inc. ("Overland") and the Company approved a consolidation agreement
providing for the transfer of the assets and liabilities of each Overland fund
to a corresponding fund of the Company in exchange for shares of designated
classes of the corresponding Stagecoach fund (the "Consolidation"). The
Consolidation was subsequently approved by Overland shareholders. As a result of
this Consolidation, effective at the close of business on December 12, 1997, the
Stagecoach National Tax-Free Fund acquired all of the assets and assumed all of
the liabilities of the Overland Municipal Income Fund. The Stagecoach National
Tax-Free Fund issued 3,194,646 shares, valued at $46,529,720, to the Overland
Municipal Income Fund. At the date of the Consolidation, the components of net
assets for each Fund were as follows:
<TABLE>
<CAPTION>
STAGECOACH
OVERLAND NATIONAL
MUNICIPAL TAX-FREE
DECEMBER 12, 1997 INCOME FUND FUND
- --------------------------------------------------------------------------------
<S> <C> <C>
Paid-in Capital $46,620,882 $13,773,969
Undistributed Net Realized Loss (1,154,077) 0
Unrealized Appreciation 1,062,915 530,550
----------- -----------
Total Net Assets $46,529,720 $14,304,519
----------- -----------
----------- -----------
</TABLE>
The combined net assets for the Stagecoach National Tax-Free Fund immediately
after the Consolidation were $60,834,239. The acquisition was accomplished in a
tax-free exchange for shares of the Stagecoach National Tax-Free Fund.
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
- ---------------------
56
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 Income
Fund acquired all of the assets and assumed all of the liabilities of the
Pacifica California Short-Term Tax-Exempt Fund. These acquisitions were
accomplished in separate tax-free exchanges for shares of the respective Fund.
All performance and financial data 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.
The Funds, excluding National Tax-Free Fund, concentrate their investments in a
single state and therefore may have more credit risk related to the economic
conditions of the respective state than Funds that have a broader geographical
diversification.
The Arizona Tax-Free and Oregon Tax-Free Funds offer Class A, Class B, and
Institutional Class shares. The California Tax-Free Income Fund offers Class A
and Institutional Class shares. The National Tax-Free Fund offers Class A, Class
B, Class C and Institutional Class shares. The separate classes of shares differ
principally in the applicable sales charges (if any), distribution fees,
shareholder servicing fees and transfer agency 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. Realized gains are
allocated to each class pro rata based on the 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 realized 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 ("GAAP") for investment
companies.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported
---------------------
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
SECURITY VALUATION
All securities are valued at the close of each business day. Securities for
which the primary market is a national or foreign recognized securities or
commodities exchange or the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System are valued at the last reported
sales price on the day of valuation. Debt securities are generally traded in the
over-the-counter market and are valued at a price deemed best to reflect fair
value as quoted by dealers who make markets in those securities or by an
independent pricing source. U.S. Government obligations are valued at the last
reported bid price. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding money market
instruments 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. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value. Securities for which
quotations are not readily available are valued at fair value as determined by
policies set by the Company's Board of Directors.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. 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 under provisions of the Internal Revenue Code of 1986, as amended (the
"Code").
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income, if any, are declared daily
and distributed monthly. Any distributions to shareholders from net realized
capital gains are declared and distributed annually.
- ---------------------
58
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. It is
the policy of each Fund of the Company to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined in the 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 March 31, 1998. The National
Tax-Free Fund had net capital loss carryforwards at December 31, 1997, the end
of the most recent tax year, as follows:
<TABLE>
<CAPTION>
YEAR CAPITAL LOSS
FUND EXPIRES CARRYFORWARDS
- ---------------------------------------------------------------------------
<S> <C> <C>
National Tax-Free Fund 2001 $669,919
2002 169,257
2003 245,237
</TABLE>
Any loss carryforwards from Pacifica and Overland are included in the Fund's
carryforwards as shown above. The Company's Board of Directors intends to offset
net capital gains with each capital loss carryforward, and no capital gain
distribution shall be made until each 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 a
Fund. The differences between the income or gains distributed on a book versus
tax basis are shown as excess distributions of net investment income and net
realized gain on sales 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 GAAP. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassifications.
ORGANIZATION COSTS
Certain costs incurred in connection with the organization of the Funds and
their initial registration with the Securities and Exchange Commission and with
the various states are amortized on a straight-line basis over 60 months from
the date each Fund commenced operations.
---------------------
59
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 has agreed
to provide the Funds with daily portfolio management. Under the contracts, 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.
The Company has entered into contracts on behalf of each Fund with WFB, whereby
WFB is responsible for providing custody and portfolio accounting services for
the Funds. Pursuant to the contracts, WFB is entitled to certain transaction
charges plus a monthly 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 each Fund's average daily net assets,
0.045% of the next $50 million, and 0.02% of each Fund's average daily net
assets in excess of $100 million.
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB provides transfer agency services for the Funds. Under the transfer agency
contract, WFB is entitled to receive transfer agency fees at an annual rate of
0.14% of the average daily net assets of the Class A and Class B shares of the
Arizona Tax-Free, 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, 0.14% of the average daily net assets of the Class C shares of the
National Tax-Free Fund, and 0.06% of the average daily net assets of the
Institutional Class shares of the Funds.
The transfer agency fees paid on behalf of the Funds for the year ended March
31, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C* CLASS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 7,823 $ 1,180 N/A $7,888
California Tax-Free Income Fund 90,350 N/A N/A 4,074
National Tax-Free Fund 22,294 816 $ 3,278 4,463
Oregon Tax-Free Fund 40,448 1,698 N/A 4,754
</TABLE>
* REPRESENTS THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services for the Funds. Pursuant to the
contracts, WFB is entitled to receive shareholder servicing fees at an annual
rate of 0.30% of the average daily net assets of the Class A shares of the
California Tax-Free Income Fund, 0.25% of the average daily net assets of the
Institutional Class shares of
- ---------------------
60
<PAGE>
NOTES TO FINANCIAL STATEMENTS
the California Tax-Free Income Fund, and 0.25% of the average daily net assets
of each of the classes of the Arizona Tax-Free, National Tax-Free, and Oregon
Tax-Free Funds.
The shareholder servicing fees paid on behalf of the Funds for the year ended
March 31, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C* CLASS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 13,993 $ 2,106 N/A $32,865
California Tax-Free Income Fund 193,608 N/A N/A 16,929
National Tax-Free Fund 39,810 1,476 $ 5,852 18,589
Oregon Tax-Free Fund 72,229 3,033 N/A 19,809
</TABLE>
* REPRESENTS THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
The Company has entered into administration agreements on behalf of the Funds
whereby WFB as administrator and Stephens Inc. ("Stephens") as co-administrator
provide each Fund with administration services. For these services, WFB and
Stephens are entitled to receive monthly fees at the annual rates of 0.03% and
0.04%, respectively, of each Fund's average daily net assets. Prior to February
1, 1998, WFB and Stephens were entitled to receive monthly fees at the annual
rates of 0.04% and 0.02%, respectively, of each Fund's average daily net assets.
The Company has adopted separate Distribution Plans for Class A and Class B
shares of the Funds, and the Class C shares of the National Tax-Free Fund
pursuant to Rule 12b-1 under the 1940 Act (each, a "Plan"). The Plan for the
Class A shares of the Arizona Tax-Free, National Tax-Free and Oregon Tax-Free
Funds provides that each such Fund may pay to Stephens, as compensation for
distribution-related services or as reimbursement for distribution-related
expenses, up to 0.05% of the average daily net assets attributable to its Class
A shares. The Plan for Class A shares of the California Tax-Free Income Fund
provides that the 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 the average daily net assets
attributable to its Class A shares.
---------------------
61
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Plan for Class B shares of the Arizona Tax-Free, National Tax-Free and
Oregon Tax-Free Funds provides that each such Fund may pay to Stephens, as
compensation for distribution-related services or as reimbursement for
distribution-related expenses, up to 0.75% of the average daily net assets
attributable to its Class B shares.
The Plan for Class C shares of the National Tax-Free Fund provides that the Fund
may pay to Stephens, as compensation for distribution-related services or as
reimbursement for distribution-related expenses, up to 0.75% of the average
daily net assets attributable to its Class C shares.
Each Fund may participate in joint distribution activities with other Funds, in
which event, expenses reimbursed out of the assets of one of the Funds may be
attributable, in part, to the distribution-related activities of another Fund.
Generally, the expenses of joint distribution activities are allocated among the
Funds in proportion to their relative net asset sizes.
The distribution fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C*
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 2,793 $ 6,322 N/A
California Tax-Free Income Fund 32,268 N/A N/A
National Tax-Free Fund 7,784 4,428 $ 17,557
Oregon Tax-Free Fund 14,445 9,098 N/A
</TABLE>
* REPRESENTS THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
The registration fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C* CLASS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $ 5,334 $ 3,312 N/A $ 7,692
California Tax-Free Income Fund 12,637 N/A N/A 6,505
National Tax-Free Fund 10,149 6,465 $ 2,639 12,223
Oregon Tax-Free Fund 6,416 3,703 N/A 4,573
</TABLE>
* REPRESENTS THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
- ---------------------
62
<PAGE>
NOTES TO FINANCIAL STATEMENTS
WAIVED FEES AND REIMBURSED EXPENSES
The following amounts of fees and expenses were waived or reimbursed for the
year ended March 31, 1998:
<TABLE>
<CAPTION>
EXPENSES
REIMBURSED FEES WAIVED
FUND BY STEPHENS BY WFB
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Arizona Tax-Free Fund $25,793 $199,014
California Tax-Free Income Fund 0 434,096
National Tax-Free Fund 88,767 214,106
Oregon Tax-Free Fund 0 291,269
</TABLE>
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens. WFB and Stephens agreed to waive or reimburse all or a portion of
their respective fees charged to, or expenses paid by, each Fund to ensure that
the total Fund operating expenses did not exceed, on an annual basis, 0.60%,
0.65%, 0.35% and 0.60% of the average daily net assets of the Class A shares and
0.40%, 0.60%, 0.35% and 0.40% of the average daily net assets of the
Institutional Class shares of the Arizona Tax-Free, California Tax-Free Income,
National Tax-Free, and Oregon Tax-Free Funds, respectively, through August 31,
1997.
Certain officers and one director of the Company are also officers of Stephens.
As of March 31, 1998, Stephens owned 8 shares of the Arizona Tax-Free Fund,
12,344 shares of the California Tax-Free Income Fund, 10,285 shares of the
National Tax-Free Fund and 6 shares of the Oregon Tax-Free Fund.
Stephens has retained $5,404,593 as sales charges from the proceeds of Class A
shares sold, $1,120,619 from the proceeds of Class B shares redeemed and $12,732
from the proceeds of Class C shares redeemed by the Company for the year ended
March 31, 1998. Wells Fargo Securities Inc., a subsidiary of WFB, received
$4,508,566 as sales charges from the proceeds of Class A shares sold, $840,060
from the proceeds of Class B shares redeemed and $0 from the proceeds of Class C
shares redeemed by the Company for the year ended March 31, 1998.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each Fund
for the year ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA NATIONAL OREGON
AGGREGATE PURCHASES TAX-FREE TAX-FREE TAX-FREE TAX-FREE
AND SALES FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Total purchases at cost $23,994,599 $59,839,968 $22,599,890 $30,608,250
Total sales proceeds 24,305,761 66,553,766 20,417,641 30,649,963
</TABLE>
---------------------
63
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL SHARE TRANSACTIONS
As of March 31, 1998, there were over 106 billion shares of $0.001 par value
capital stock authorized by the Company. As of March 31, 1998, 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
---------------------------------
FOR THE
SIX FOR THE
FOR THE MONTHS YEAR
YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 43,843 8,351 115,400
Shares issued in reinvestment of
dividends -- Class A 24,687 10,155 31,157
Shares redeemed -- Class A (110,898) (170,242) (1,743,227)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (42,368) (151,736) (1,596,670)
Shares sold -- Class B 139,190 17,936 1,999
Shares issued in reinvestment of
dividends -- Class B 3,792 88 0
Shares redeemed -- Class B (12,211) (1,997) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 130,771 16,027 1,999
Shares sold -- Institutional Class 116,767 75,496 1,818,383
Shares issued in reinvestment of
dividends -- Institutional Class 991 111 584
Shares redeemed -- Institutional Class (375,960) (192,725) (327,320)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (258,202) (117,118) 1,491,647
</TABLE>
- ---------------------
64
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE INCOME FUND
-----------------------------------
FOR THE FOR THE
SIX NINE
FOR THE MONTHS MONTHS
YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996 (1)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,890,485 1,071,029 4,281,601
Shares issued in reinvestment of
dividends -- Class A 228,242 121,088 199,260
Shares redeemed -- Class A (3,052,403) (2,630,399) (3,992,269)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (933,676) (1,438,282) 488,592
Shares sold -- Institutional Class 101,348 45,913 1,002,052
Shares issued in reinvestment of
dividends -- Institutional Class 8,519 2,624 0
Shares redeemed -- Institutional
Class (120,343) (346,660) (5,243)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (10,476) (298,123) 996,809
</TABLE>
(1) "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.
---------------------
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NATIONAL TAX-FREE FUND
--------------------------------------
FOR THE SIX
FOR THE MONTHS FOR THE
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 (2) 1997 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 2,553,367 12,514 16,315
Shares issued in reinvestment of dividends
-- Class A 23,740 5,388 12,154
Shares redeemed -- Class A (218,009) (36,331) (644,452)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 2,359,098 (18,429) (615,983)
Shares sold -- Class B 112,758 14,844 3
Shares issued in reinvestment of dividends
-- Class B 1,979 16 0
Shares redeemed -- Class B (59) (2,938) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 114,678 11,922 3
Shares sold -- Class C (3) 782,874 N/A N/A
Shares issued in reinvestment of dividends
-- Class C (3) 2,672 N/A N/A
Shares redeemed -- Class C (3) (61,472) N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS C (3) 724,074 N/A N/A
Shares sold -- Institutional Class 172,762 80,275 603,337
Shares issued in reinvestment of dividends
-- Institutional Class 8,516 3,930 6,841
Shares redeemed -- Institutional Class (185,287) (67,239) (142,281)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (4,009) 16,966 467,897
</TABLE>
(2) "SHARES SOLD" INCLUDES AMOUNTS RELATED TO THE CONSOLIDATION OF THE
STAGECOACH NATIONAL TAX-FREE AND OVERLAND MUNICIPAL INCOME FUNDS. SEE NOTE
1.
(3) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
- ---------------------
66
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
OREGON TAX-FREE FUND
------------------------------------
FOR THE SIX
FOR THE MONTHS FOR THE
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 140,558 42,353 80,771
Shares issued in reinvestment of dividends
-- Class A 82,429 36,482 71,455
Shares redeemed -- Class A (448,209) (248,818) (1,158,830)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
-- CLASS A (225,222) (169,983) (1,006,604)
Shares sold -- Class B 331,842 28,610 3
Shares issued in reinvestment of dividends
-- Class B 5,330 99 0
Shares redeemed -- Class B (615) 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
-- CLASS B 336,557 28,709 3
Shares sold -- Institutional Class 53,185 44,591 633,826
Shares issued in reinvestment of dividends
-- Institutional Class 7,122 2,838 4,545
Shares redeemed -- Institutional Class (108,163) (63,838) (119,874)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
-- INSTITUTIONAL CLASS (47,856) (16,409) 518,497
</TABLE>
5. SUBSEQUENT EVENTS
The Funds have changed their fiscal year-ends to June 30.
---------------------
67
<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
Income Fund, National Tax-Free Fund and Oregon Tax-Free Fund (four of the funds
comprising Stagecoach Funds, Inc.) as of March 31, 1998, and the related
statement of operations for the year then ended, the statements of changes in
net assets of the Arizona Tax-Free Fund, National Tax-Free Fund and Oregon
Tax-Free Fund for the year ended March 31, 1998, the six months ended March 31,
1997, and the year ended September 30, 1996, and the California Tax-Free Income
Fund for the year ended March 31, 1998, the six months ended March 31, 1997, and
the nine months ended September 30, 1996, and financial highlights for the
periods indicated herein. These financial statements and financial highlights
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. For the Arizona Tax-Free Fund, National Tax-Free Fund and Oregon
Tax-Free Fund, all years or periods indicated in the accompanying financial
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, 1998, 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, 1998, the
results of their operations, the changes in their net assets and their financial
highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 1, 1998
- ---------------------
68
<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>
---------------------
69
<PAGE>
STAGECOACH FUNDS
- -----------------------------------------
SHAREHOLDERS' MEETING AND PROXY VOTING RESULTS
The following proposals were passed by the required majority of shareholders of
the indicated Predecessor Fund at a Special Shareholders' meeting held on
November 20, 1997, for the purpose of voting on the proposals.
PROPOSAL 1
To approve a proposed Agreement and Plan of Consolidation providing for the
transfer of the assets and stated liabilities of specific Overland portfolios to
corresponding investment portfolios of Stagecoach Funds, Inc., in exchange for
shares of equal value of designated classes of the Stagecoach Funds.
MUNICIPAL INCOME FUND
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
- -----------------------------------
2,146,961 179,116 103,977
</TABLE>
PROPOSAL 2
For Class D shareholders of specific Overland portfolios to approve a twenty-
five basis point (0.25%) increase in the maximum level of distribution fees
payable under the rule 12b-1 distribution plan for the Class C shares of
corresponding portfolios of Stagecoach Funds, Inc.
MUNICIPAL INCOME FUND
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
- -----------------------------------
227,779 18,154 28,081
</TABLE>
- ---------------------
70
<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-222-8222. Read the
prospectus carefully before you invest or send money.
SC TF R (5/98)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1998 Stagecoach Funds
