<PAGE>
STAGECOACH FUNDS-Registered
Trademark-
Semi-Annual Report
MONEY MARKET
Trusts
California Tax-Free Money Market Trust
Money Market Trust
National Tax-Free Money Market Trust
September 30, 1998
<PAGE>
Money Market Trusts TABLE OF CONTENTS
- ------------------------------------------------------------------------
LETTER TO SHAREHOLDERS................................1
INVESTMENT ADVISOR COMMENTARY AND PERFORMANCE AT A GLANCE
California Tax-Free Money Market Trust............3
National Tax-Free Money Market Trust..............3
Money Market Trust................................6
PORTFOLIOS OF INVESTMENTS
California Tax-Free Money Market Trust............9
Money Market Trust...............................15
National Tax-Free Money Market Trust.............19
STAGECOACH FUNDS
Statement of Assets and Liabilities..............30
Statement of Operations..........................31
Statements of Changes in Net Assets..............32
Financial Highlights.............................34
Notes to Financial Statements....................37
LIST OF ABBREVIATIONS................................42
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
i
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
ii
<PAGE>
LETTER TO SHAREHOLDERS Money Market Trusts
- ------------------------------------------------------------------------
TO OUR SHAREHOLDERS
Thank you for your investment in the Stagecoach Funds.
We are pleased to present this Semi-Annual Report to you for the period ended
September 30, 1998. This report provides information about your investment,
including economic and market trends over the period as well as a performance
summary, portfolio review, and strategic outlook for each Fund.
During the six-month period ended September 30, 1998, global economic events
finally caught up with U.S. financial markets. Most acutely affected were
stocks, as measured by the S&P 500 Index,(1) with a decrease of 6.95%. By
contrast, fixed income securities did well, due to a "flight to quality" in
which investors sought to invest in U.S. Treasury securities. For example,
government bonds performed well during this period, with returns of 12.74% as
measured by the Lehman Brothers Long Government Bond Index.(2)
Throughout the period, the continued uncertainty in Asia's financial markets
spread into global economies, such as Russia and Latin America. Thus far, there
has been minimal evidence of a slowdown in the U.S. economy. However, over the
past six months, pressure built on the Federal Reserve Board (the Fed) to ease
monetary policy, as there was the potential for global and financial strains to
affect the U.S. market. As a result, the Fed decreased a key short-term interest
rate once on September 29, 1998 and again on October 15, 1998. This signaled an
important change in policy meant to impact the economy and hopefully stimulate
growth.
According to the Investment Company Institute, during 1997, U.S. households
invested 65% of their total net purchases of financial products in mutual
funds.(3) Many of these investors have benefited from unprecedented growth in
the market with little exposure to significant declines. However, the large
swings we have seen recently will test conservative and aggressive
1
<PAGE>
Money Market Trusts LETTER TO SHAREHOLDERS
- ------------------------------------------------------------------------
investors alike. It will become increasingly important to stay focused on the
long-term, evaluate the investment risk of your portfolio, and remain true to
your investment plan.
In our ongoing commitment to provide you with quality investment options, we
introduced two new Stagecoach Funds during the past six months. We launched the
Corporate Bond Fund in April 1998 and the Strategic Income Fund in July 1998.
We encourage you to review this Semi-Annual Report as we believe you will find
it useful and informative. We also recommend that you continually review your
investment portfolio with your financial consultant to determine an appropriate
mix of investments to meet your ongoing needs. Thank you for your continued
investment with the Stagecoach Funds.
Sincerely,
/s/ Michael J. Hogan
Michael J. Hogan
Senior Vice President
Wells Fargo Bank,
Mutual Fund Group
/s/ R. Greg Feltus
R. Greg Feltus
Chairman and President of
Stagecoach Funds
1 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.
2 The Lehman Brothers Long Government Bond Index is an unmanaged index composed
of U.S. Treasury bonds with 20-year or longer maturities.
3 Investment Company Institute, Mutual Fund Fact Book, 1998.
2
<PAGE>
INVESTMENT ADVISOR COMMENTARY Money Market Trusts
- ------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET TRUST
NATIONAL TAX-FREE MONEY MARKET TRUST
TWO STAGECOACH TAX-FREE MONEY MARKET TRUSTS (EACH, A "TRUST", COLLECTIVELY,
THE "TRUSTS") WILL BE HIGHLIGHTED IN THE FOLLOWING MANAGER DISCUSSION AND
ANALYSIS.
The Stagecoach California Tax-Free Money Market Trust seeks to obtain a high
level of income exempt from federal income tax and California personal income
tax, while preserving capital and liquidity, by investing in high-quality,
short-term, U.S. dollar-denominated money market instruments, primarily
municipal obligations.
The Stagecoach National Tax-Free Money Market Trust seeks to obtain a high
level of income exempt from federal income tax, while preserving capital and
liquidity, by investing in high-quality, U.S. dollar-denominated money market
instruments, primarily municipal obligations.
The Trusts are managed by Kevin Shaughnessy of Wells Capital Management
Incorporated. Mr. Shaughnessy joined Wells Fargo Bank in 1996 from Lehman
Brothers. He holds a BS in Business Administration and an MBA in Finance from
California State University, Hayward. Mr. Shaughnessy has over 10 years of
experience in the investment industry and is a Chartered Financial Analyst
candidate.
PERFORMANCE SUMMARY
The seven-day current yields for the Stagecoach Tax-Free Money Market Trusts as
of September 30, 1998 were as follows:
- --------------------------------------------------
<TABLE>
<S> <C>
CALIFORNIA TAX-FREE MONEY MARKET TRUST 3.27%
NATIONAL TAX-FREE MONEY MARKET TRUST 3.58%
</TABLE>
3
<PAGE>
Money Market Trusts INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
The cumulative total returns for the six month period ended September 30, 1998
for the Stagecoach Tax-Free Money Market Trusts were as follows:
- --------------------------------------------------
<TABLE>
<S> <C>
CALIFORNIA TAX-FREE MONEY MARKET TRUST 1.56%
NATIONAL TAX-FREE MONEY MARKET TRUST 1.68%
</TABLE>
These tax-free yields are generally higher than the after-tax return on a
comparable taxable investment. For example, an investor in the maximum combined
federal and California income tax bracket of 45.22% would need to earn 5.97%
from a taxable investment to match a 3.27% tax-free yield. In order to match a
3.58% tax-free yield, an investor in the maximum 39.60% federal income tax
bracket would need to earn 5.93% on a taxable investment. Keep in mind that past
performance is no guarantee of future results.
PORTFOLIO REVIEW
As a result of the low interest rate environment and in anticipation of an
interest rate decrease by the Federal Reserve Board, which occurred on September
29, 1998, we lengthened each Trust's weighted average maturity during the
six-month reporting period. Weighted average maturity is an indication of a
fund's sensitivity to interest rates. Our strategy to increase maturity was made
in an attempt to capture higher yields offered by securities such as one-year
tax-exempt notes and commercial paper. In addition, we decreased our exposure to
variable-rate securities during the period.
Based on international economic problems, particularly in the Asian markets,
the importance of each Trust's credit quality component increased. As a result,
we sold the Trusts' Japanese exposures at the beginning of the year and continue
to avoid such securities. While they may offer higher yields than other
securities, we feel it is more important to remain proactive and protective of
credit quality.
4
<PAGE>
INVESTMENT ADVISOR COMMENTARY Money Market Trusts
- ------------------------------------------------------------------------
STRATEGIC OUTLOOK
We feel the concern over global markets will eventually work its way into our
domestic economy and consumer spending. Since yields have already declined in
the money fund market, we will continue to maintain longer maturities in the
Trusts and will increase our fixed-rate exposure if we feel security prices are
attractive.
In California, there are stronger ties to the Pacific Rim than in other
states, so we believe the slowdown in Asia could have a greater impact on the
California economy. We do not, however, expect a credit deterioration in
California and believe the California Tax-Free Money Market Trust is diversified
appropriately among issuers and liquidity providers.
Overall, we feel both Trusts are positioned well given the international
economic turmoil and low interest rate environment. As a result, we intend to
maintain the Trusts at their current positioning with a bias toward longer
maturity and fixed-rate securities. As always, we will continue to focus on
safety of principal, credit quality and liquidity as we strive to deliver a high
level of tax-free income.
The Trusts are neither insured nor guaranteed by the U.S. Government. Figures
quoted represent past performance, which is no guarantee of future results.
The Trusts' manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions,
the Trusts' returns would have been lower.
A portion of the Trusts' distributions may be subject to federal, state, and/or
local taxes or to the alternative minimum tax (AMT).
Money market funds seek to maintain a stable net asset value of $1.00 per
share; however, there can be no assurance that the Trusts will meet this
objective.
5
<PAGE>
Money Market Trusts INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
MONEY MARKET TRUST
The Money Market Trust (the "Trust") seeks to provide investors with current
income and stability of principal, by investing in high-quality, U.S. dollar-
denominated money market instruments with remaining maturities not exceeding 397
days (13 months).
The Money Market Trust is managed by Michael Neitzke of Wells Capital
Management Incorporated. Mr. Neitzke joined Wells Fargo Bank in 1996 from First
Interstate Capital Management. He has over a decade of experience in managing
taxable money market mutual funds at First Interstate Bank and Union Capital
Advisors. He holds a B.A. in Finance from California State University, Los
Angeles.
PERFORMANCE SUMMARY
For the six month period ending September 30, 1998 the Stagecoach Money Market
Trust's cumulative total return was 2.75%. The seven-day current yield for the
Trust was 5.40% as of September 30, 1998. Keep in mind that past performance is
no guarantee of future results.
PORTFOLIO REVIEW
Throughout the period, the U.S. economy was subject to volatile market
conditions caused by international economic turmoil in markets such as Asia,
Russia and Latin America. One outcome of these conditions was a "flight to
quality" in which investors moved into treasury securities, driving interest
rates down rapidly. The problems overseas and an anticipation of an interest
rate cut by the Federal Reserve Board (the Fed), which eventually occurred on
September 29, led us to lengthen the weighted average maturity of the Trust by
adding later dated securities. Weighted average maturity is an indication of a
fund's sensitivity to interest rates. By adding later dated securities to our
portfolio, we were able to maintain competitive yields in the low interest rate
environment.
6
<PAGE>
INVESTMENT ADVISOR COMMENTARY Money Market Trusts
- ------------------------------------------------------------------------
With a strict focus on high credit quality for the portfolio, we did not add
to our foreign positions during the period and do not hold any positions that
have had their credit rating downgraded. We will continue to avoid securities
that could be adversely affected by problems overseas. By maintaining high
credit quality, liquidity and longer maturities, we were able to maintain
stability and competitive yields for the period.
STRATEGIC OUTLOOK
We feel the concern over global markets will continue to work its way into our
domestic economy and consumer spending. We will continue to maintain a longer
average maturity because we expect the Fed to continue to ease monetary policy.
We will monitor interest rates, being particularly mindful that the market might
anticipate the Fed to decrease rates more than will actually occur.
The Trust is well positioned given the current international economic
conditions and low interest rate environment. As a result, we intend to maintain
the Money Market Trust at its current positioning with a bias toward a defensive
posture and increased liquidity. We believe under these uncertain economic
conditions, it is prudent to focus more on credit quality and stability rather
than purely on yield. As always, we will continue to focus on capital
preservation and liquidity.
The Fund is neither insured nor guaranteed by the U.S. Government. Figures
quoted represent past performance, which is no guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
Money market mutual funds seek to maintain a stable net asset value of $1.00 per
share; however, there can be no assurance that the Fund will meet this
objective.
7
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
8
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) California Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL SECURITIES - 102.01%
$ 3,000,000 San Diego County CA TRANS Revenue 7.25 % 04/01/01 $ 3,114,102
4,600,000 Alameda-Contra Costa County School Financing
Authority - Series D 3.55 07/01/18 4,600,000
700,000 Anaheim CA Police Facilities Refinancing
Project 3.00 08/01/08 700,000
15,000,000 Anaheim CA Housing Authority Revenue South Park
Vista Series A "AMT" 3.90 12/15/23 15,000,000
6,400,000 Big Bear Lake CA IDA Series A "AMT" 3.10 12/01/28 6,400,000
2,700,000 California HFFA Catholic Health 3.00 07/01/16 2,700,000
1,200,000 California HFFA 3.70 09/01/15 1,200,000
2,300,000 California HFFA 3.00 07/01/20 2,300,000
3,700,000 California HFFA Scripps Health Series B 3.33 12/01/15 3,700,000
6,700,000 California HFFA Scripps Hospital Series B 3.10 10/01/21 6,700,000
2,000,000 California HFFA Memorial Health Services 3.10 10/01/24 2,000,000
9,000,000 California HFFA Memorial Hospital AMBAC Insured 3.00 07/01/12 9,000,000
1,000,000 California PCR Colma Energy "AMT" 3.10 12/01/16 1,000,000
5,000,000 California PCR Shell Oil Waster Disposal
Revenue "AMT" 3.70 10/01/24 5,000,000
7,400,000 California PCR Sierra Pacific 3.50 02/01/13 7,400,000
5,100,000 California PCR Borax Incorporated 3.90 06/01/10 5,100,000
1,200,000 California PCR Solid Waste Disposal "AMT" 3.70 12/01/24 1,200,000
10,400,000 California State Public Works 3.71 09/01/17 10,400,000
7,500,000 California Statewide Community Development
Authority Revenue 3.20 10/01/26 7,500,000
1,490,000 California Statewide Community Development
Authority Revenue "AMT" 3.75 12/15/24 1,490,000
1,000,000 California PCR CP 3.40 01/07/99 1,000,000
400,000 California PCR CP Shell Oil Company Project
Series C 3.75 11/01/00 400,000
1,245,000 California PCR "AMT" 3.65 12/01/17 1,245,000
3,800,000 California School Facilities Financing
Corporation 3.15 07/01/22 3,800,000
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS -
California Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 2,300,000 California PCR CP 3.00 % 10/05/98 $ 2,300,000
10,900,000 California HFFA Catholic Healthcare 3.00 07/01/05 10,900,000
1,230,000 California Housing Revenue Multi-Family Series
A 3.00 07/15/13 1,230,000
2,400,000 California PCR Financing Authority CP 3.20 10/05/98 2,400,000
15,000,000 California PCR Financing Authority CP 3.30 10/06/98 15,000,000
3,600,000 California PCR Financing Authority CP 3.50 10/07/98 3,600,000
2,000,000 California PCR Financing Authority Series A
"AMT" 3.15 12/01/16 2,000,000
2,500,000 California PCR CP Environmental Improvement
Revenue 3.15 09/01/17 2,500,000
1,195,000 California School Improvement COP 3.10 07/01/24 1,195,000
20,000,000 California School Cash Reserve Pool Series A 4.50 07/02/99 20,109,900
25,000,000 California State GO 4.00 06/30/99 25,154,500
5,000,000 California State Community Revenue 3.80 09/30/99 5,000,000
2,000,000 California State CP 3.40 10/01/98 2,000,000
14,000,000 California State CP 3.40 10/02/98 14,000,000
1,000,000 California State Economic Development 4.00 04/01/08 1,000,000
1,564,000 California DW & P 2.70 11/13/98 1,564,000
800,000 California Catholic Healthcare Facility 3.00 07/01/09 800,000
5,000,000 Chula Vista CA CP 3.15 10/01/98 5,000,000
5,000,000 Chula Vista CA CP 3.10 10/01/98 5,000,000
2,000,000 Chula Vista CA Charter City 3.70 12/01/10 2,000,000
2,000,000 Anaheim Public Improvement Revenue 3.00 08/01/19 2,000,000
4,700,000 Foothill/Eastern Transportation Corridor Agency
Series C 3.00 01/02/35 4,700,000
3,000,000 Hayward CA MFHR 3.60 08/01/14 3,000,000
2,000,000 Huntington Beach CA Rivermeadow Series B 3.45 12/01/05 2,000,000
500,000 Irvine Ranch CA Water District 3.80 04/01/33 500,000
400,000 Irvine Ranch CA Water District Series B LOC -
Sumitomo Bank 3.95 10/01/99 400,000
1,300,000 Irvine Ranch CA Water District LOC - National
Westminster Bank PLC 3.80 08/01/16 1,300,000
400,000 Irvine Ranch CA Water District Series A 3.95 11/15/13 400,000
</TABLE>
10
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) California Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 4,500,000 Los Angeles CA USD Belmont Learning Complex
Series A COP 3.10 % 12/01/17 $ 4,500,000
2,500,000 Los Angeles County CA Pension Obligation Series
B 3.00 06/30/07 2,500,000
8,100,000 Los Angeles County CA Pension Obligation Series
C 3.00 06/30/07 8,100,000
1,935,000 Lemoore CA COP Municipal Golf Course
Refinancing Project 4.25 11/01/20 1,935,000
500,000 Livermore CA Multi-Family Revenue 3.00 07/15/18 500,000
2,500,000 Los Angeles CA Wastewater System Revenue 3.40 01/04/99 2,500,000
7,000,000 Los Angeles CA DW & P 2.95 01/04/99 7,000,000
10,200,000 Los Angeles CA DW & P 3.10 01/05/99 10,200,000
4,000,000 Los Angeles CA DW & P 3.15 12/17/98 4,000,000
10,000,000 Los Angeles CA DW & P 3.25 01/05/99 10,000,000
6,980,000 Los Angeles CA USD 3.70 07/01/21 6,980,000
11,550,000 Los Angeles County CA Capital Asset Leasing
Corporation 2.95 11/18/98 11,550,000
1,000,000 Los Angeles County CA Pension Obligation Series
A AMBAC Insured 3.00 06/30/07 1,000,000
15,000,000 Los Angeles County CA 4.50 06/30/99 15,089,334
5,482,000 Los Angeles County CA Metropolitan
Transportation CP 3.30 10/02/98 5,482,000
13,000,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
Series A 3.00 07/01/12 13,000,000
8,000,000 Los Angeles CA DW & P 3.55 10/07/98 8,000,000
12,000,000 Metropolitan Water District Southern California 3.55 10/06/98 12,000,000
3,700,000 Metropolitan Water District Southern California 3.20 10/02/98 3,700,000
5,500,000 Metropolitan Water District Southern California 3.30 10/06/98 5,500,000
1,000,000 Metropolitan Water District Southern California 3.40 01/04/99 1,000,000
1,700,000 Metropolitan Water District Southern California 3.50 10/07/98 1,700,000
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS -
California Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 1,500,000 Metropolitan Water District Southern California 3.15 % 02/09/99 $ 1,500,000
5,200,000 MSR Public Power Agency San Juan Project Series
B 3.55 07/01/22 5,200,000
1,000,000 MSR Public Power Agency San Juan Project Series
D 3.50 07/01/18 1,000,000
2,100,000 Oakland CA Revenue Children's Hospital Medical
Center Series B 3.05 07/01/99 2,100,000
1,800,000 Orange County CA Niguel Summit Series U 3.30 11/01/09 1,800,000
3,300,000 Orange County CA Sanitation 3.60 08/01/13 3,300,000
2,700,000 Orange County CA ADR 2.70 12/01/06 2,700,000
1,000,000 Orange County CA ADR Series Z 3.35 11/01/07 1,000,000
1,365,000 Redlands CA COP 3.10 09/01/15 1,365,000
1,300,000 Riverside County CA COP LOC - Sanwa Bank 3.90 12/01/15 1,300,000
5,000,000 Riverside County CA Financing Authority Series
A30 3.80 09/30/99 5,000,000
1,900,000 Riverside County CA MFHR Woodcreek Series D 3.00 07/15/18 1,900,000
980,000 Riverside County CA IDA 3.45 03/01/17 980,000
7,000,000 Riverside County CA 4.50 09/30/99 7,080,644
7,000,000 Sacramento CA MUD 3.00 10/01/98 7,000,000
2,000,000 Salinas CA ADR Series B 3.70 04/01/05 2,000,000
2,400,000 San Bernardino County CA COP 3.10 07/01/15 2,400,000
10,000,000 San Diego CA COP Area Local Gov't Series A25 3.80 09/30/99 10,000,000
4,200,000 San Diego CA HFA Revenue 3.65 12/01/08 4,200,000
3,600,000 San Diego CA Multi-Family Housing Revenue 4.25 04/01/07 3,600,000
1,965,000 San Diego CA Unified Port District 3.10 10/02/98 1,965,000
1,500,000 San Diego CA Unified Port District 3.30 11/02/98 1,500,000
1,000,000 San Diego CA USD Series B 4.75 01/29/99 1,003,622
11,500,000 San Diego CA Transportation 3.40 01/07/99 11,500,000
5,800,000 San Diego CA Transportation 3.40 10/02/98 5,800,000
1,419,000 San Diego CA Unified Port District 3.20 10/02/98 1,419,000
4,410,000 San Francisco CA City & County RDA 3.80 01/01/27 4,410,000
1,150,000 San Francisco CA City & County RDA 3.10 09/01/06 1,150,000
</TABLE>
12
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) California Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 3,050,000 San Francisco County CA 4.50 % 10/30/98 $ 3,052,285
2,000,000 San Francisco CA City & County Airport 3.10 01/05/99 2,000,000
1,000,000 San Jose CA RDA 3.40 07/01/26 1,000,000
2,600,000 San Jose CA RDA 3.05 07/01/26 2,600,000
3,400,000 San Jose/Santa Clara Clean Water Financing
Authority Revenue Series B FGIC Insured 3.00 11/15/20 3,400,000
1,700,000 Santa Ana CA IDA Newport Electronics Project
Series A 4.00 11/01/18 1,700,000
3,000,000 Santa Clara Electric Revenue Series C 3.05 07/01/10 3,000,000
6,400,000 Santa Clara Electric Revenue Series B 3.05 07/01/10 6,400,000
2,000,000 Santa Clara County CA Financing Authority
Revenue VMC Facility Replacement Project
Series B 3.10 11/15/25 2,000,000
4,000,000 Santa Clara County CA 3.75 11/15/22 4,000,000
2,000,000 San Francisco CA City & County RDA 3.25 12/01/17 2,000,000
4,200,000 San Francisco CA City & County RDA Series B1 3.25 12/01/17 4,200,000
5,300,000 Simi Valley Public Financing Authority Revenue 3.05 09/01/15 5,300,000
1,350,000 Southern CA Public Power Authority Revenue 3.00 07/01/17 1,350,000
10,000,000 Sonoma County CA Tax Revenue 4.50 02/01/99 10,039,344
1,270,000 Southern CA Public Power Authority Revenue 3.00 07/01/09 1,270,000
2,000,000 Turlock CA Irrigation District COP 3.05 01/01/26 2,000,000
5,000,000 University of California GO CP 3.25 01/04/99 5,000,000
4,000,000 University of California GO CP 3.35 01/13/99 4,000,000
4,000,000 University of California GO CP 3.15 12/17/98 4,000,000
10,000,000 University of California GO CP 3.10 01/07/99 10,000,000
1,000,000 University of California GO CP 3.40 01/04/99 1,000,000
5,479,000 University of California GO CP 3.00 01/13/99 5,479,000
2,700,000 Vallecitos CA Water District Revenue COP Twin
Oaks Reservoir Project 3.00 07/01/30 2,700,000
7,100,000 Vallejo CA MFHR Series C LOC - Citibank 3.25 01/01/08 7,100,000
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS -
California Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 3,000,000 Water Utility Improvements Lease Revenue 3.15 % 05/01/28 $ 3,000,000
400,000 West Basin CA Water District Revenue 2.95 08/01/27 400,000
--------------
TOTAL CALIFORNIA MUNICIPAL SECURITIES $ 568,402,730
(Cost $568,402,730)
PUERTO RICO MUNICIPAL SECURITIES - 2.03%
$ 1,800,000 Puerto Rico Commonwealth Highway &
Transportation Authority Revenue - Series X 4.28 % 07/01/99 $ 1,800,000
9,500,000 Puerto Rico Commonwealth Highway &
Transportation Authority Revenue - Series A 3.80 07/01/28 9,500,000
--------------
TOTAL PUERTO RICO MUNICIPAL SECURITIES $ 11,300,000
(Cost $11,300,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $579,702,730)* 104.04% $ 579,702,730
(Note 1)
Other Assets and Liabilities, Net (4.04) (22,529,353)
------ --------------
TOTAL NET ASSETS 100.00% $ 557,173,377
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A
DEMAND FEATURE WHICH REDUCES THE REMAINING MATURITY.
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS - 30.97%
$ 5,200,000 Associates Corporation 6.00 % 03/15/99 $ 5,205,796
10,000,000 CC USA Incorporated 5.78 06/11/99 9,998,621
15,000,000 CIT Group Holdings 5.57 01/27/99 14,996,121
20,000,000 First National Bank of Chicago 5.63 03/16/99 19,995,204
10,000,000 First Union Bank 5.35 09/09/99 10,000,000
12,000,000 Huntington National Bank 5.74 05/05/99 11,996,940
20,000,000 IBM Credit Corporation 5.57 08/17/99 19,988,058
10,000,000 JP Morgan & Company Incorporated 5.61 09/15/99 10,000,000
10,000,000 Morgan Guaranty Corporation 5.71 01/08/99 9,998,970
7,000,000 National Rural Utilities 5.40 01/15/99 6,989,826
20,000,000 NationsBank Corporation 5.50 02/04/99 20,000,000
20,000,000 Sigma Finance Incorporated 5.95 11/20/98 20,000,000
--------------
TOTAL CORPORATE BONDS $ 159,169,536
(Cost $159,169,536)
COMMERCIAL PAPER - 26.58%
$20,000,000 Asset Securitization Coop Corporation++ 5.41 %# 11/23/98 $ 19,839,822
10,000,000 CC USA Incorporated 5.53 # 02/05/98 9,807,031
20,000,000 Corporate Asset Funding Company Incorporated++ 5.48 # 11/23/98 19,837,761
20,000,000 General Electric Capital Services 5.07 # 10/19/98 19,947,200
20,000,000 Goldman Sachs Group LP 5.45 # 11/13/98 19,868,611
7,638,000 Greenwich Funding Corporation++ 5.50 # 01/04/99 7,527,546
20,000,000 Preferred Receivables Funding Corporation 5.20 # 10/14/98 19,960,133
10,000,000 Sun Trust Banks 5.24 # 10/16/98 9,977,042
10,000,000 Sun Trust Banks 5.35 # 12/22/98 9,878,367
--------------
TOTAL COMMERCIAL PAPER $ 136,643,513
(Cost $136,643,513)
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS -
Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
VARIABLE AND FLOATING RATE BONDS - 17.90%
$20,000,000 American Express Centurion 5.14 % 12/15/98 $ 20,000,000
20,000,000 Commercial Bank 5.58 07/13/99 19,990,766
12,000,000 First National Bank 5.62 09/28/99 12,000,000
25,000,000 Key Bank N.A. 5.30 02/24/99 24,993,200
15,000,000 Wachovia Bank N.A. 5.44 05/14/99 14,993,620
--------------
TOTAL VARIABLE AND FLOATING RATE BONDS $ 91,977,586
(Cost $91,977,586)
FEDERAL AGENCIES - 3.52%
$ 3,000,000 Federal Home Loan Bank 5.57 % 04/07/99 $ 2,998,613
10,000,000 Federal Home Loan Mortgage Corporation 5.01 03/19/99 9,769,033
3,700,000 Federal National Mortgage Association 5.48 07/09/99 3,696,750
1,700,000 Federal National Mortgage Association 5.45 08/04/99 1,624,325
--------------
TOTAL FEDERAL AGENCIES $ 18,088,721
(Cost $18,088,721)
BANKER'S ACCEPTANCE - 3.38%
$17,500,000 Bank of America 5.19 % 11/04/98 $ 17,412,072
(Cost $17,412,072)
</TABLE>
16
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS - 17.50%
$22,223,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 22,223,000
1,353,000 Morgan Stanley & Company Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.35 10/01/98 1,353,000
66,344,000 JP Morgan Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.30 10/01/98 66,344,000
--------------
TOTAL REPURCHASE AGREEMENTS $ 89,920,000
(Cost $89,920,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $513,211,428)* 99.85% $ 513,211,428
(Note 1)
Other Assets and Liabilities, Net 0.15 747,470
------ --------------
TOTAL NET ASSETS 100.00% $ 513,958,898
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
# YIELD TO MATURITY.
++ REPRESENTS COMMERCIAL PAPER SOLD WITHIN TERMS OF PRIVATE PLACEMENT
MEMORANDUM, EXEMPT FROM REGISTRATION UNDER SECTION 4(2) OF THE
SECURITIES ACT OF 1933, THAT MAY BE RESOLD TO QUALIFIED INSTITUTIONAL
BUYERS. THIS SECURITY WAS DEEMED LIQUID BY THE INVESTMENT ADVISER IN
ACCORDANCE WITH PROCEDURES APPROVED BY THE FUND'S BOARD OF DIRECTORS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
18
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) National Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES - 99.75%
ALABAMA - 1.14%
$ 2,700,000 Birmingham AL Medical Clinic Revenue 3.50 % 12/01/26 $ 2,700,000
ARIZONA - 3.46%
$ 600,000 Apache County AZ IDA 3.55 % 12/15/18 $ 600,000
2,000,000 Arizona School District Financing Program COP
Series A 4.10 07/30/99 2,008,498
2,000,000 Maricopa AZ CP 3.50 12/15/98 2,000,000
300,000 Maricopa County AZ PCR 4.10 05/01/29 300,000
3,300,000 Scottsdale AZ IDA Scottsdale Memorial Health
System Series B 3.50 09/01/22 3,300,000
--------------
$ 8,208,498
CALIFORNIA - 2.11%
$ 1,000,000 California HFFA Catholic Healthcare
West - B 3.00 % 07/01/05 $ 1,000,000
500,000 California PCR Financing Authority Pacific Gas
& Electric Series C 4.10 11/01/26 500,000
3,000,000 California PCR Waste Disposal Revenue Series
94-A AMT 3.70 10/01/24 3,000,000
500,000 Irvine Ranch Water District No. 182 Series A 3.95 11/15/13 500,000
--------------
$ 5,000,000
COLORADO - 2.83%
$ 700,000 Colorado HFFA Revenue Catholic Healthcare
Series B MBIA Insured 3.55 % 12/01/25 $ 700,000
5,000,000 Colorado HFFA Revenue North Colorado Medical
Center 3.90 05/15/20 5,000,000
1,000,000 Colorado HFFA Revenue Series C MBIA Insured 3.90 10/01/14 1,000,000
--------------
$ 6,700,000
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS -
National Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
FLORIDA - 4.31%
$ 500,000 Dade County FL MFHR 4.05 % 07/01/06 $ 500,000
2,400,000 Dade County FL School District 4.50 02/15/99 2,409,885
5,000,000 Lee County FL IDA Healthcare Facility Revenue
Cypress Cove Healthcare Series C 3.55 10/01/04 5,000,000
2,300,000 Orange County FL HFA 3.70 10/01/08 2,300,000
--------------
$ 10,209,885
GEORGIA - 7.94%
$ 500,000 Burke County GA Development Authority PCR 4.10 % 07/01/24 $ 500,000
900,000 Clayton County GA Huntington Woods MFHR 3.60 01/01/21 900,000
1,100,000 Georgia Municipal Gas Authority Revenue 3.50 11/01/06 1,100,000
2,600,000 Georgia Municipal Gas Authority Revenue Series
B 3.50 09/01/07 2,600,000
3,100,000 Georgia Municipal Gas Authority Revenue Series
C 3.50 01/01/08 3,100,000
800,000 Georgia State Municipal Electric Authority 3.55 % 01/07/99 800,000
400,000 Hapeville GA Development Authority Revenue
Hapeville Hotel 4.10 11/01/15 400,000
5,000,000 Richmond County GA Solid Waste Disposal Revenue
Evergreen Nylon 3.65 07/01/32 5,000,000
3,700,000 Roswell GA MFHR Greenhouse Apartments Project 3.65 08/01/30 3,700,000
700,000 Savannah GA Downtown Development Authority
Revenue 3.55 09/01/05 700,000
--------------
$ 18,800,000
</TABLE>
20
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) National Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
HAWAII - 2.11%
$ 5,000,000 Hawaii State Department of Budget & Finance
Queens Health System Series A Special Purpose
Revenue 3.90 % 07/01/26 $ 5,000,000
IDAHO - 0.85%
$ 2,000,000 Idaho State General Obligation 4.50 % 06/30/99 $ 2,012,942
ILLINOIS - 4.39%
$ 2,100,000 Chicago IL O'Hare International Airport Revenue 3.50 % 01/01/15 $ 2,100,000
5,000,000 Chicago IL Park District 3.55 01/31/00 5,000,000
1,000,000 Chicago IL Park District 4.30 09/17/99 1,006,938
2,300,000 Cook County IL General Obligation 3.60 12/01/01 2,300,000
--------------
$ 10,406,938
INDIANA - 3.22%
$ 1,000,000 Fort Wayne IN Hospital Revenue 3.55 % 01/01/16 $ 1,000,000
3,800,000 Indiana HFFA Revenue Clarian Health Partners 3.55 02/15/26 3,800,000
2,800,000 Indiana HFFA Revenue Deaconess Hospital
Incorporated 3.55 01/01/22 2,800,000
--------------
$ 7,600,000
KENTUCKY - 0.63%
$ 1,500,000 Kentucky Development Financing Authority
Revenue Series A 3.90 % 12/01/15 $ 1,500,000
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS -
National Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
LOUISIANA - 4.71%
$ 3,770,000 Calcasieu Parish LA Sales Tax District No. 4-A 4.00 % 09/01/01 $ 3,770,000
1,200,000 East Baton Rouge LA Georgia Pacific Corporation 3.90 10/01/99 1,200,000
2,100,000 Louisiana GO 3.60 09/01/27 2,100,000
2,100,000 Louisiana PFA Willis Knighton Medical Center
Hospital Revenue 3.60 09/01/23 2,100,000
2,000,000 West Baton Rouge Parish LA Industrial District 3.40 10/02/98 2,000,000
--------------
$ 11,170,000
MARYLAND - 3.59%
$ 2,000,000 Baltimore County MD CP 3.50 % 10/02/98 $ 2,000,000
3,000,000 Baltimore County MD CP 3.40 11/04/98 3,000,000
1,500,000 Howard County MD Multi-Family Revenue Avalon
Meadows Project 3.50 06/15/26 1,500,000
2,000,000 Maryland Community Development Revenue Avalon
Lea Apartments Project 3.50 06/15/26 2,000,000
--------------
$ 8,500,000
MASSACHUSETTS - 5.78%
$ 5,000,000 Massachusetts State Refunded Series B 3.90 % 09/01/16 $ 5,000,000
6,000,000 Massachusetts State Water CP 3.60 10/06/98 6,000,000
2,700,000 Massachusetts State Water Resource Authority
Series A 3.45 04/01/28 2,700,000
--------------
$ 13,700,000
</TABLE>
22
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) National Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
MICHIGAN - 4.01%
$ 600,000 Michigan State Higher Education Student Loan
Authority Revenue AMT 3.60 % 10/01/13 $ 600,000
1,400,000 Michigan State Strategic Fund IDA Allen Group
Incorporated Project 3.45 11/01/25 1,400,000
3,700,000 Michigan State Strategic Fund Pollution 3.55 12/09/98 3,700,000
3,800,000 Michigan State Strategic Fund Pollution 3.45 11/09/98 3,800,000
--------------
$ 9,500,000
MISSOURI - 2.51%
$ 700,000 Columbia MO Special Obligation Series A 3.55 % 06/01/08 $ 700,000
2,550,000 Missouri State Environmental Improvement & PCR
Project 3.70 02/01/09 2,550,000
700,000 Missouri State Health & Educational Facilities
Authority Revenue Christian Health Services
Series A 3.65 11/01/19 700,000
2,000,000 Missouri State Health & Educational Facilities
Authority Revenue Series B 3.50 12/01/16 2,000,000
--------------
$ 5,950,000
NEW MEXICO - 1.14%
$ 1,700,000 Albuquerque NM Airport Revenue AMBAC Insured 3.50 % 07/01/14 $ 1,700,000
1,000,000 Farmington NM PCR Letter of Credit - Barclays 4.05 09/01/24 1,000,000
--------------
$ 2,700,000
</TABLE>
23
<PAGE>
PORTFOLIO OF INVESTMENTS -
National Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
NEW YORK - 4.09%
$ 500,000 Washoe County NV Water Facility Revenue Sierra
Pacific Power Company Project AMT 4.25 % 12/01/20 $ 500,000
1,100,000 Long Island Power Authority Revenue New York
Electric Systems Revenue 4.00 05/01/33 1,100,000
2,000,000 Long Island Power Authority Revenue New York
Electric Systems Revenue Series 2 3.50 05/01/33 2,000,000
200,000 Municipal Assistance Corporation for City of
New York Series K-2 3.30 07/01/08 200,000
3,300,000 New York City Health & Hospital Corporation
Series A 3.35 02/15/26 3,300,000
500,000 New York NY Series B 4.10 08/15/04 500,000
1,100,000 New York State PCR Orange/Rockland Utility
Series A 3.30 08/01/15 1,100,000
1,000,000 Suffolk County NY IDA Target Rock Corporation 3.40 02/01/07 1,000,000
--------------
$ 9,700,000
NORTH CAROLINA - 8.30%
$ 2,400,000 Greensboro NC GO 3.50 % 06/01/22 $ 2,400,000
6,175,000 North Carolina Eastern Municipal Power Agency 3.60 01/04/99 6,175,000
4,000,000 North Carolina Medical Care Community Hospital
Baptist Hospitals Project 3.90 06/01/12 4,000,000
1,700,000 North Carolina Medical Care Community Hospital
Baptist Hospitals Project Series B 3.90 06/01/22 1,700,000
1,200,000 North Carolina Medical Care Community Hospital
Moses H Cone Memorial Hospital Project 3.90 09/01/02 1,200,000
</TABLE>
24
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) National Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
$ 2,200,000 North Carolina Medical Care Community Hospital
Moses H Cone Memorial Hospital Project 3.90 % 10/01/23 $ 2,200,000
2,000,000 Wake County NC Industrial Facilities & PCR
Carolina Power & Light Company Series B 3.60 09/01/15 2,000,000
--------------
$ 19,675,000
OHIO - 2.15%
$ 2,100,000 Clermont County OH Hospital Facility Revenue
Mercy Health System Series B 3.50 % 09/01/21 $ 2,100,000
3,000,000 Ohio State Air Quality CP 3.40 12/07/98 3,000,000
--------------
$ 5,100,000
OKLAHOMA - 0.51%
$ 1,200,000 Muskogee OK PCR Oklahoma Gas & Electric Company
Series A 3.55 % 01/01/25 $ 1,200,000
OREGON - 1.86%
$ 3,500,000 Oregon State Housing & Community Services
Deparment Series K AMT 3.88 % 12/03/98 $ 3,500,000
900,000 Portland OR Multi-Family Housing Revenue South
Park Block Project Series A 3.80 12/01/11 900,000
--------------
$ 4,400,000
PENNSYLVANIA - 1.18%
$ 1,400,000 Pennsylvania State Higher Education AMT 3.80 % 07/01/18 $ 1,400,000
1,400,000 Pennsylvania State Higher Education Assistance
AMT 3.80 12/01/24 1,400,000
--------------
$ 2,800,000
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS -
National Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
PUERTO RICO - 2.24%
$ 5,300,000 Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Series A 3.10 % 07/01/28 $ 5,300,000
SOUTH CAROLINA - 4.85%
$ 2,000,000 Piedmont SC Municipal Power & Electric Agency
Revenue Series B MBIA Insured 3.50 % 01/01/19 $ 2,000,000
3,500,000 Piedmont SC Municipal Power & Electric Agency
Revenue Series C 3.50 01/01/22 3,500,000
1,500,000 South Carolina Educational Facilities Authority
Private Nonprofit Institutions for Higher
Learning Furman University Project Series B 3.85 10/01/26 1,500,000
2,000,000 South Carolina Jobs Economic Development
Authority Revenue Series B 3.90 11/01/25 2,000,000
2,500,000 Spartanburg County SC Health Services District
Incorporated 3.85 04/15/23 2,500,000
--------------
$ 11,500,000
TEXAS - 5.70%
$ 500,000 Brazos River TX PCR Series A 4.25 % 03/01/26 $ 500,000
2,500,000 Brazos TX Higher Education AMT 3.60 06/01/23 2,500,000
2,300,000 Gulf Coast TX CP 3.50 12/09/98 2,300,000
100,000 Harris County TX Health Facilities Development
Revenue Series B 3.50 06/01/24 100,000
1,900,000 Harris County TX Sub Lien Toll Road 3.50 08/01/15 1,900,000
1,000,000 Panhandle Plains TX Authority Revenue Series A
AMT 3.60 06/01/21 1,000,000
</TABLE>
26
<PAGE>
PORTFOLIO OF INVESTMENTS -
SEPTEMBER 30, 1998 (UNAUDITED) National Tax-Free Money Market Trust
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
$ 1,700,000 Panhandle Plains TX Higher Education Authority
Revenue Series Y AMT 3.60 % 10/01/02 $ 1,700,000
3,500,000 Texas Health Facilities Development Corporation 3.55 10/01/98 3,500,000
--------------
$ 13,500,000
UTAH - 8.06%
$ 5,000,000 Intermountain UT Power Agency 3.50 % 12/08/98 $ 5,000,000
3,000,000 Intermountain UT Power Agency 3.50 10/05/98 3,000,000
1,100,000 Salt Lake City UT Revenue Project 3.50 01/01/20 1,100,000
10,000,000 Utah State CP 3.35 12/09/98 10,000,000
--------------
$ 19,100,000
VIRGINIA - 2.15%
$ 2,300,000 Fairfax County VA 3.45 % 10/01/25 $ 2,300,000
2,787,000 Hampton VA Redevelopment & Housing Authority
Avalon Pointe Project AMT 3.60 06/15/26 2,787,000
--------------
$ 5,087,000
WASHINGTON - 0.63%
$ 1,000,000 Washington State Series 96B 3.40 % 06/01/20 $ 1,000,000
495,000 Washington State Single Family Housing Series
5A-S AMT 3.90 12/01/31 495,000
--------------
$ 1,495,000
WISCONSIN - 0.80%
$ 1,900,000 Oak Creek WI PCR 3.55 % 08/01/16 $ 1,900,000
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS -
National Tax-Free Money Market Trust SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
WYOMING - 2.50%
$ 2,300,000 Lincoln County WY GO 3.50 % 12/08/98 $ 2,300,000
2,500,000 Sweetwater County WY PCR 3.65 07/01/15 2,500,000
1,100,000 Uinta County WY PCR 4.00 08/15/20 1,100,000
--------------
$ 5,900,000
TOTAL MUNICIPAL SECURITIES $ 236,315,264
(Cost $236,315,264)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $236,315,264)* 99.75% $ 236,315,264
(Note 1)
Other Assets and Liabilities, Net 0.25 593,405
------ --------------
TOTAL NET ASSETS 100.00% $ 236,908,669
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A
DEMAND FEATURE WHICH REDUCES THE REMAINING MATURITY.
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
29
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES -
Money Market Trusts SEPTEMBER 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL
TAX-FREE MONEY TAX-FREE
MONEY MARKET MARKET MONEY MARKET
TRUST TRUST TRUST
<S> <C> <C> <C>
ASSETS
INVESTMENTS:
In securities, at market value and
cost (includes repurchase agreements
of $89,920,000 for the Money Market
Trust) $579,702,730 $513,211,428 $236,315,264
Cash 736,546 12,264 278,044
RECEIVABLES:
Interest 3,218,004 3,443,596 973,405
Organizational expenses, net of
amortization 16,436 0 21,700
Prepaid expenses 192,893 9,484 74,025
TOTAL ASSETS 583,866,609 516,676,772 237,662,438
LIABILITIES
Payables:
Investment securities purchased 25,154,500 0 0
Distribution to shareholders 1,437,220 2,381,667 673,725
Due to distributor (Note 2) 19,858 17,569 34,654
Due to adviser (Note 2) 72,007 57,745 26,483
Other 9,647 260,893 18,907
TOTAL LIABILITIES 26,693,232 2,717,874 753,769
TOTAL NET ASSETS $557,173,377 $513,958,898 $236,908,669
NET ASSETS CONSIST OF:
Paid-in capital $557,188,819 $513,908,434 $236,896,566
Undistributed net realized gain (loss)
on investments (15,442) 50,464 12,103
TOTAL NET ASSETS $557,173,377 $513,958,898 $236,908,669
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
Net Assets $557,173,377 $513,958,898 $236,908,669
Shares outstanding 557,188,819 513,985,169 236,896,565
Net asset value and offering price per
share $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS
ENDED SEPTEMBER 30, 1998 (UNAUDITED) Money Market Trusts
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA NATIONAL
TAX-FREE TAX-FREE
MONEY MONEY MONEY
MARKET MARKET MARKET
TRUST TRUST TRUST
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 8,914,473 $14,454,247 $3,895,327
TOTAL INVESTMENT INCOME 8,914,473 14,454,247 3,895,327
EXPENSES (NOTE 2)
Advisory fees 1,351,434 644,404 274,599
Administration fees 190,361 180,432 77,005
Custody fees 45,415 43,046 18,371
Shareholder servicing fees 543,889 515,523 220,013
Portfolio accounting fees 85,222 82,385 52,834
Transfer agency fees 54,389 51,552 22,001
Organization costs 2,295 0 2,648
Legal and audit fees 13,615 17,747 10,341
Registration fees 10,026 37,603 15,041
Directors' fees 2,242 2,242 2,242
Shareholder reports 6,017 10,027 7,521
Other 9,979 9,290 2,270
TOTAL EXPENSES 2,314,884 1,594,251 704,886
Less:
Waived fees and reimbursed expenses (1,770,730) (1,077,727) (484,679)
Net Expenses 544,154 516,524 220,207
NET INVESTMENT INCOME (LOSS) 8,370,319 13,937,723 3,675,120
Net realized gain (loss) on sale of
investments (13,289) 9,591 4,735
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,357,030 $13,947,314 $3,679,855
- ---------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
Money Market Trusts STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY MARKET
TRUST
---------------------------------
FROM MAY 5,
(UNAUDITED) 1997
FOR THE SIX (COMMENCEMENT
MONTHS ENDED OF OPERATIONS)
SEPT. 30, TO
1998 MARCH 31, 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 8,370,319 $ 11,310,951
Net realized gain (loss) on sale of
investments (13,289) (2,153)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 8,357,030 11,308,798
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (8,370,319) (11,310,951)
From net realized gain on sale of
investments 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 742,156,839 1,750,384,724
Reinvestment of dividends 210,025 269,738
Cost of shares redeemed (821,620,770) (1,114,211,737)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (79,253,906) 636,442,725
INCREASE (DECREASE) IN NET ASSETS (79,267,195) 636,440,572
NET ASSETS:
Beginning net assets 636,440,572 0
ENDING NET ASSETS $ 557,173,377 $ 636,440,572
- ------------------------------------------------------------------------------
</TABLE>
Shares issued and redeemed at constant $1.00 NAV
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS Money Market Trusts
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATIONAL TAX-FREE MONEY MARKET
TRUST
------------------------------
MONEY MARKET TRUST FROM NOV.
--------------------------------- 10, 1997
(COMMENCEMENT
(UNAUDITED) (UNAUDITED) OF
FOR THE SIX FOR THE SIX OPERATIONS)
MONTHS ENDED FOR THE MONTHS ENDED TO
SEPT. 30, YEAR ENDED SEPT. 30, MARCH 31,
1998 MARCH 31, 1998 1998 1998
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 13,937,723 $ 36,943,556 $ 3,675,120 $ 2,920,354
Net realized gain (loss) on sale of
investments 9,591 108,337 4,735 7,368
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 13,947,314 37,051,893 3,679,855 2,927,722
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (13,937,723) (36,943,556) (3,675,120) (2,920,354)
From net realized gain on sale of
investments 0 (85,012) 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 644,595,403 1,309,060,229 364,912,993 409,222,975
Reinvestment of dividends 5 47 49 0
Cost of shares redeemed (761,416,174) (1,485,316,752) (357,455,712) (179,783,739)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (116,820,766) (176,256,476) 7,457,330 229,439,236
INCREASE (DECREASE) IN NET ASSETS (116,811,175) (176,233,151) 7,462,065 229,446,604
NET ASSETS:
Beginning net assets 630,770,073 807,003,224 229,446,604 0
ENDING NET ASSETS $ 513,958,898 $ 630,770,073 $ 236,908,669 $229,446,604
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Shares issued and redeemed at constant $1.00 NAV
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
Money Market Trusts FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
MONEY MARKET TRUST
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
SEPT. 30, MARCH 31,
1998 1998 (1)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.03
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.03)
---------- ----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
---------- ----------
---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 1.56% 2.94%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $557,173 $636,441
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.20% 0.20%
Ratio of net investment income to average net assets 3.06% 3.18%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 0.85% 0.85%
Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses 2.41% 2.53%
- -----------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND COMMENCED OPERATIONS ON MAY 5, 1997.
(2) THE FUND OPERATED AS THE MONEY MARKET FUND OF WESTCORE TRUST AND WAS
ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM ITS COMMENCEMENT
OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF PACIFICA FUNDS
TRUST ON OCTOBER 1, 1995, WHEN FIRST INTERSTATE CAPITAL MANAGEMENT,
INC. ("FICM") ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES. 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, WFB ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
FINANCIAL HIGHLIGHTS Money Market Trusts
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
(UNAUDITED) FOUR MONEY MARKET TRUST (2)
SIX MONTHS SIX MONTHS MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, SEPT. 30, MAY 31, MAY 31,
1998 1998 1997 (3) 1996 1995 (4) 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.03 0.05 0.03 0.05 0.02 0.05 0.03
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.05) (0.03) (0.05) (0.02) (0.05) (0.03)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 2.75% 5.62% 2.66% 5.43% 5.70%** 5.05% 3.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $513,959 $630,770 $807,003 $1,143,767 $286,863 $290,483 $300,894
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.20% 0.20% 0.20% 0.18% 0.19% 0.17% 0.18%
Ratio of net investment
income to average net
assets 5.43% 5.46% 5.28% 5.33% 5.70% 5.06% 3.21%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.62% 0.61% 0.61% 0.55% 1.11% 1.07% 1.02%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.01% 5.05% 4.87% 4.96% 4.78% 4.16% 2.37%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND COMMENCED OPERATIONS ON MAY 5, 1997.
(2) THE FUND OPERATED AS THE MONEY MARKET FUND OF WESTCORE TRUST AND WAS
ADVISED BY FIRST INTERSTATE BANK OF OREGON, N.A. FROM ITS COMMENCEMENT
OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF PACIFICA FUNDS
TRUST ON OCTOBER 1, 1995, WHEN FIRST INTERSTATE CAPITAL MANAGEMENT,
INC. ("FICM") ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES. 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, WFB ASSUMED INVESTMENT ADVISORY RESPONSIBILITIES.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM MAY 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
Money Market Trusts FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE
MONEY MARKET TRUST
SIX MONTHS PERIOD
ENDED ENDED
SEPT. 30, MARCH 31,
1998 1998 (1)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.01
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.01)
---------- ----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
---------- ----------
---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 1.68% 1.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $236,909 $229,447
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.21% 0.20%
Ratio of net investment income to average net assets 3.45% 3.32%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 0.66% 0.63%
Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses 3.00% 2.89%
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND COMMENCED OPERATIONS ON NOVEMBER 10, 1997.
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Money Market Trusts
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 is currently comprised of thirty-three separate series. These
financial statements represent the Money Market Trust and National Tax-Free
Money Market Trust, diversified series of the Company, and the California
Tax-Free Money Market Trust, a non-diversified series of the Company (each, a
"Fund", collectively, the "Funds").
At a special shareholders meeting on July 16, 1996, the Shareholders of
Pacifica Funds Trust ("Pacifica") approved a plan of reorganization providing
for the transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Money Market Trust was established
to acquire all of the assets and assume all of the liabilities of the Pacifica
Money Market Trust, formerly the Prime Money Market Fund of Westcore Trust, (the
"Predecessor Fund"). This acquisition was accomplished in a tax-free exchange
for shares of the Stagecoach Money Market Trust. All performance and financial
data for the Money Market Trust for periods prior to September 6, 1996 refers to
the Predecessor Fund.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles ("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 amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
SECURITY VALUATION
The Funds invest only in securities with remaining maturities not exceeding
397 days (thirteen months). Certain floating- and variable-rate instruments in
the portfolios may have maturities in excess of 397 days, but carry a demand
feature that permits the holder to tender the instruments back to the issuer at
par value prior to maturity.
37
<PAGE>
Money Market Trusts NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------------------
The Funds use the amortized cost method to value their portfolio securities.
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. The Funds seek to maintain a constant
net asset value of $1.00 per share, although there is no assurance that they
will be able to do so.
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").
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
securities ("repurchase agreements") are treated as collateralized financing
transactions and are recorded at their contracted resale amounts. These
repurchase agreements, if any, are detailed in each Fund's Portfolio of
Investments. The Funds may participate in pooled repurchase agreement
transactions with other funds advised by Wells Fargo Bank, N.A. ("WFB"). The
repurchase agreements must be fully collateralized based on values that are
marked to market daily. The collateral may be held by an agent bank under a
tri-party agreement. It is the custodian's responsibility to value collateral
daily and to take action to obtain additional collateral as necessary to
maintain market value equal to or greater than the resale price. The repurchase
agreements held in the Funds are collateralized by instruments such as U.S.
Treasury or federal agency obligations.
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 at least annually.
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
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Money Market Trusts
- ------------------------------------------------------------------------
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 September 30, 1998.
The California Tax-Free Money Market Trust had a net capital loss carryforward
at September 30, 1998 of $6,489 expiring in 2005 and $8,954 expiring in 2006.
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 such 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.
DEFERRED 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.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the
Funds with WFB. Pursuant to the contracts, WFB 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 the California Tax-Free Money Market Trust and 0.25% of the average
daily net assets of the Money Market Trust and National Tax-Free Money Market
Trust. On August 1, 1998, Wells Capital Management Incorporated ("WCM"), a
wholly-owned subsidiary of WFB, began acting as investment sub-advisor to the
Funds. WCM is entitled to receive from WFB, as compensation for its sub-advisory
services to the Funds, a monthly fee at the annual rate of 0.05% of the Funds'
average daily net assets up to $960 million
39
<PAGE>
Money Market Trusts NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------------------
and 0.04% of the Funds' average daily net assets in excess of $960 million.
WCM's minimum annual fee is $120,000 for each Fund. This minimum annual fee does
not increase the advisory fees paid by the Funds to WFB.
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 0.02% of the average daily net assets of the Funds.
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 0.20% of the average daily net assets of the Funds.
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.
WAIVED FEES AND REIMBURSED EXPENSES
The amount shown as waived fees and reimbursed expenses on the Statement of
Operations for the period ended September 30, 1998 was waived by WFB. Waived
fees and reimbursed expenses continue at the discretion of WFB and Stephens.
Certain officers and one director of the Company are also officers of
Stephens. As of September 30, 1998, Stephens owned 10 shares of the California
Tax-Free Money Market Trust, 26 shares of the Money Market Trust, and 1 share of
the National Tax-Free Money Market Trust.
3. CAPITAL SHARE TRANSACTIONS
As of September 30, 1998, there were over 242 billion shares of $0.001 par
value capital stock authorized by the Company. As of September 30, 1998, each
Fund was authorized to issue 10 billion shares of $0.001 par value capital
stock. Capital shares are issued and redeemed at a constant $1.00 net asset
value as disclosed in the Statement of Changes in Net Assets.
40
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
41
<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
FRN -- Floating Rate Notes
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
LP -- Limited Partnerships
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MTN -- Medium Term Note
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>
42
<PAGE>
Wells Fargo Bank, N.A. provides investment advisory services, shareholder
services and/or certain other services for the Stagecoach Funds. Wells
Capital Management Incorporated ("WCM") provides investment sub-advisory
services for certain Stagecoach Funds. The Funds are distributed by
STEPHENS INC., Member NYSE/SIPC. Wells Fargo Bank, N.A. and WCM are not
affiliated with Stephens Inc.
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the Stagecoach Funds. If this
report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call
1-800-260-5969. Read the prospectus carefully before you invest or send money.
STAGECOACH FUNDS-Registered
Trademark-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
SC MMT SAR (11/98)
