WCT
Equity
Fund
LOGO
WCT FUNDS
Semi-Annual Report
April 30, 1998
A Portfolio of WCT Funds, an Open-End
Management Investment Company
PRESIDENT'S MESSAGE
- -------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the first semi-annual report for WCT Equity Fund, a
portfolio of the WCT Funds. This report covers the period between December 16,
1997, when the fund first began operation, through April 30, 1998. The report
begins with a commentary on the stock market environment and fund strategy by
the portfolio manager. Starting on page 4 you can find a complete list of fund
holdings. The report also contains complete financial information for the fund.
WCT Equity Fund invests primarily in a diversified portfolio of stocks issued by
established, large- and mid-size companies. Value investing is at the core of
the fund's stock selection strategy. In following a value strategy, the fund's
management seeks stocks with low price to earnings ratios. These stocks are
priced below what the fund manager believes to be their true market value. They
generally offer a less aggressive approach to stock investing than more
aggressive growth stocks that are appreciating in price.
As you can see from the fund's holdings, many of these stocks are industry
leaders whose products and services are part of daily life, such as Bankers
Trust, Caterpillar, Callaway Golf, Ford, Goodyear, Intel, J.C. Penney,
Weyerhaeuser, and Xerox.
For the period from December 16, 1997 (date of initial public investment) to
April 30, 1998, the fund produced a total return of 11.38%* (6.33% adjusted for
the fund's maximum 4.5% sales charge). This total return was the result of a
$1.20 increase in net asset value and dividends totaling $0.04 per share. At the
end of the reporting period, the fund's net assets reached $63.6 million.
Thank you for selecting WCT Equity Fund to help your money grow in pursuit of
your long-term financial goals. We look forward to keeping you informed about
the progress of your investment.
Sincerely,
LOGO
Edward C. Gonzales
Edward C. Gonzales
President
June 15, 1998
*Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed may be worth more or less than their original
cost.
INVESTMENT REVIEW
- -------------------------------------------------------------------------------
We continue to be pleasantly surprised, even astonished, by the stock market's
ability to sustain its upward momentum. In the first three months of the year,
the Standard & Poors 500 Index ("S&P 500") raced ahead at a remarkable
annualized pace of more than 50% (+14.0% for the quarter). The more publicized
Dow Jones Industrial Average pierced 9,000 for the first time, taking a mere two
months to advance from the 8,000 mark.
Our equity selections have participated, matching results of the broader market
indices, but have trailed the large-cap dominated S&P 500's impressive
performance. Nevertheless, we remain steadfast in our conviction toward "value
stocks" and are unwilling to violate our disciplines to "reach" for value.
<TABLE>
<CAPTION>
TOTAL RETURN FOR
3-MONTHS ENDED
MARCH 31, 1998
----------------
<S> <C>
WCT Equity Fund 10.4%*
S&P 500** 14.0%
Russell 2000 Index** (small-cap index) 10.1%
</TABLE>
Momentum is seemingly the primary motive of investor purchases. Extended
valuations, especially among the "biggest" of the big cap stocks, and
decelerating earnings growth are almost irrelevant. As stock prices rise,
investor conviction that the increases will continue also rises, kindling
enthusiasm among the trend followers. Stock prices, in large part, are
determined by supply and demand considerations and the demand for stocks has
been extraordinary while the supply, due to corporate buy backs, and mergers and
acquisitions, has dwindled. Money continues to pour into U.S. stocks and stock
mutual funds. In March alone, $37.5 billion was invested in stock mutual funds.
The primary beneficiaries of this unprecedented demand have been the stocks of
the largest U.S. corporations. Market participation narrowed considerably during
the initial quarter of 1998 (actually, leadership narrowed with the onset of the
Asian economic crisis in October). Leadership has become very concentrated in
the very largest companies resulting in a meaningful valuation disparity between
the large-cap market and most other shares. While the P/E ratio of the S&P 500
has reached near record levels of 24X (multiples were higher in 1933-34), the
P/E ratio of the largest 50 S&P 500 companies stood at 32X earnings. Further, of
those largest 50, only 16 commanded a P/E multiple that was less the S&P 500
index average of 24X. Only 11 had a multiple of less than 20X earnings.
In our view, value has become very difficult to identify among the larger
company stocks; the portion of the market enjoying the performance leadership.
Consequently, our portfolios remain skewed in
*Performance quoted is based on net asset value, reflects past performance and
is not indicative of future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Total return for the 3 month period ended March 31,
1998, reflecting the sales charge was 5.5%
**The S&P 500 and the Russell 2000 Index are not adjusted to reflect sales
charges, expenses or other fees that the SEC requires to be reflected in a
mutual fund's performance. These indices are unmanaged, and investments cannot
be made in an index. The S&P 500 is an index consisting of common stocks of
industrial, utility, transportation, and financial companies in the United
States market. The Russell 2000 Index is an index consisting of approximately
2000 small capitalization common stocks. Small cap stocks have historically
experienced greater volatility than average.
favor of mid-sized and smaller companies. Sound fundamental quality can be found
among less recognizable names with reasonable valuations while offering growth
and financial characteristics which rival, or exceed, those of larger more
visible companies.
While we are confident that long-term complete market cycle performance will
exceed market results, near term performance has been more difficult. In
addition to the "broad market exposure penalty", our over-weighted positions in
energy and the material/service sectors have proven "early" and penalized
near-term results. Nevertheless, we remain comfortable that value is being
acquired without increasing risk or vulnerability in an uncertain
market/economic environment.
We remain concerned about the Asian economic/currency problems and the impact on
the course of the U.S. economy. Dwindling export markets and competitive market
forces at home, aimed at maintaining or increasing market share will surely
decelerate corporate earnings growth and U.S. corporate profit margins seem
likely to narrow. With earnings momentum slowing, interest rate movements will
be critical to stock market trends.
Recent economic reports have been encouraging in this regard. Inflation
continues to be virtually absent, although wages require close attention, and
consumer spending, the engine of our economy, is finally showing signs of
slowing; March retail sales were considerably weaker than the first two months.
As further evidence of a moderating economy materializes, interest rates which
are at historically very high levels, should drift lower. Bond prices will
improve and stock prices can continue to advance although not at the current
pace.
In the near term, we worry about excessive market valuation and the need for a
correction to reconnect investors with reality. We are comfortable with our
positioning, confident that as a normal correction develops, our holdings and
their respective valuations are far less vulnerable.
Sincerely,
LOGO
Don Wolcott
Vice President, Portfolio
Manager
Becker Capital Management, Inc.
WCT EQUITY FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------------------------- -----------
<C> <S> <C>
COMMON STOCKS--98.4%
------------------------------------------
CHEMICALS--4.2%
--------------------------------
23,400 Arco Chemical Co. $ 1,243,125
--------------------------------
40,000 Millennium Chemicals, Inc. 1,435,000
-------------------------------- -----------
Total 2,678,125
-------------------------------- -----------
COMMERCIAL SERVICES--1.9%
--------------------------------
30,000 Standard Register 1,198,125
-------------------------------- -----------
CONSUMER DURABLES--7.0%
--------------------------------
43,000 Callaway Golf Co. 1,171,750
--------------------------------
60,000 Clayton Homes, Inc. 1,203,750
--------------------------------
20,300 Ford Motor Co. 929,994
--------------------------------
16,000 Goodyear Tire & Rubber Co. 1,120,000
-------------------------------- -----------
Total 4,425,494
-------------------------------- -----------
CONSUMER SERVICES--1.8%
--------------------------------
55,000 (a)Lone Star Steakhouse & Saloon 1,168,750
-------------------------------- -----------
ELECTRONIC TECHNOLOGY--5.0%
--------------------------------
45,000 (a)Andrew Corp. 1,029,375
--------------------------------
16,600 Intel Corp. 1,341,488
--------------------------------
60,000 (a)Read-Rite Corp. 828,750
-------------------------------- -----------
Total 3,199,613
-------------------------------- -----------
ENERGY MINERALS--9.9%
--------------------------------
16,000 Atlantic Richfield Co. 1,248,000
--------------------------------
38,100 Occidental Petroleum Corp. 1,121,569
--------------------------------
26,400 Repsol SA, ADR 1,443,750
--------------------------------
34,700 Ultramar Diamond Shamrock Corp. 1,121,244
--------------------------------
39,200 YPF Sociedad Anonima, ADR 1,367,100
-------------------------------- -----------
Total 6,301,663
-------------------------------- -----------
FINANCE--16.2%
--------------------------------
13,000 Allstate Corp. 1,251,250
--------------------------------
</TABLE>
WCT EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
-----------------------------------------------
FINANCE--CONTINUED
-------------------------------------
10,500 Bankers Trust New York Corp. $ 1,355,813
-------------------------------------
29,001 Comdisco, Inc. 1,283,294
-------------------------------------
19,600 Federal National Mortgage Association 1,173,550
-------------------------------------
15,000 GATX Corp. 1,243,125
-------------------------------------
21,400 PNC Bank Corp. 1,293,363
-------------------------------------
60,000 Prime Retail, Inc. 851,250
-------------------------------------
14,000 SAFECO Corp. 699,125
-------------------------------------
40,430 Washington Federal, Inc. 1,137,094
------------------------------------- -----------
Total 10,287,864
------------------------------------- -----------
HEALTH TECHNOLOGY--7.5%
-------------------------------------
33,000 Allergan, Inc. 1,371,562
-------------------------------------
33,000 Bard (C.R.), Inc. 1,181,812
-------------------------------------
18,600 (a)Genentech, Inc. 1,288,050
-------------------------------------
30,000 Mallinckrodt, Inc. 967,500
------------------------------------- -----------
Total 4,808,924
------------------------------------- -----------
INSURANCE--1.9%
-------------------------------------
16,000 Exel Ltd. 1,195,000
------------------------------------- -----------
NON-ENERGY MINERALS--3.4%
-------------------------------------
36,300 Quanex Corp. 1,064,044
-------------------------------------
19,100 Weyerhaeuser Co. 1,100,638
------------------------------------- -----------
Total 2,164,682
------------------------------------- -----------
PROCESS INDUSTRIES--4.5%
-------------------------------------
50,819 Archer-Daniels-Midland Co. 1,092,608
-------------------------------------
35,175 Hanna (M.A.) Co. 806,826
-------------------------------------
25,000 Willamette Industries, Inc. 970,312
------------------------------------- -----------
Total 2,869,746
------------------------------------- -----------
PRODUCER MANUFACTURING--15.8%
-------------------------------------
44,000 AGCO Corp. 1,177,000
-------------------------------------
51,000 British Steel PLC, ADR 1,386,562
-------------------------------------
</TABLE>
WCT EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------
25,000 Caterpillar, Inc. $ 1,423,437
--------------------------------------------------
23,000 Deere & Co. 1,344,062
--------------------------------------------------
13,500 Eaton Corp. 1,247,062
--------------------------------------------------
69,000 (a)Griffon Corp. 922,875
--------------------------------------------------
29,000 (a)Gulfstream Aerospace Corp. 1,216,188
--------------------------------------------------
12,000 Xerox Corp. 1,362,000
-------------------------------------------------- -----------
Total 10,079,186
-------------------------------------------------- -----------
REAL ESTATE--3.0%
--------------------------------------------------
29,000 Mack-Cali Realty Corp. 1,089,313
--------------------------------------------------
50,000 Wilshire Real Estate Investment Trust, Inc. 800,000
-------------------------------------------------- -----------
Total 1,889,313
-------------------------------------------------- -----------
RETAIL TRADE--6.0%
--------------------------------------------------
35,000 Dillards, Inc., Class A 1,281,875
--------------------------------------------------
18,300 Penney (J.C.) Co., Inc. 1,300,444
--------------------------------------------------
45,000 (a)Toys "R' Us, Inc. 1,240,312
-------------------------------------------------- -----------
Total 3,822,631
-------------------------------------------------- -----------
TECHNOLOGY SERVICES--3.3%
--------------------------------------------------
17,100 General Motors Corp. 1,152,112
--------------------------------------------------
30,000 (a)Marshall Industries 973,125
-------------------------------------------------- -----------
Total 2,125,237
-------------------------------------------------- -----------
TRANSPORTATION--4.9%
--------------------------------------------------
8,500 (a)AMR Corp. 1,295,188
--------------------------------------------------
4,415 Delta Air Lines, Inc. 513,244
--------------------------------------------------
45,500 Knightbridge Tankers Ltd. 1,308,125
-------------------------------------------------- -----------
Total 3,116,557
-------------------------------------------------- -----------
UTILITIES--2.1%
--------------------------------------------------
27,000 Enron Corp. 1,328,064
-------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $42,943,280) 62,658,974
-------------------------------------------------- -----------
</TABLE>
WCT EQUITY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------------------------------------------- -----------
<C> <S> <C>
MUTUAL FUND--1.6%
-------------------------------------------------------------
1,015,225 Seven Seas Money Market Fund 1,015,225
--------------------------------------------------- -----------
TOTAL MUTUAL FUNDS (AT NET ASSET VALUE) 1,015,225
--------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $43,958,505)(B) $63,674,199
--------------------------------------------------- -----------
</TABLE>
(a) Non-income producing security.
(b) The cost of investments for federal tax purposes amounts to $43,958,505. The
net unrealized appreciation of investments on a federal tax basis amounts to
$19,715,694 which is comprised of $20,542,799 appreciation and $827,105
depreciation at April 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($63,649,032) at April 30, 1998.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
WCT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------
Total investments in
securities, at value
(identified and tax cost
$43,958,505) $63,674,199
- ---------------------------
Income receivable 104,200
- ---------------------------
Receivable for shares sold 100
- --------------------------- -----------
Total assets 63,778,499
- ---------------------------
LIABILITIES:
- -----------------
Accrued expenses $ 129,467
- ----------------- ---------
Total liabilities 129,467
- --------------------------- -----------
NET ASSETS for 5,681,225 $63,649,032
shares outstanding -----------
- ---------------------------
NET ASSETS CONSIST OF:
- ---------------------------
Paid in capital $41,140,297
- ---------------------------
Net unrealized appreciation
of investments 19,715,694
- ---------------------------
Accumulated net realized
gain on investments 2,725,593
- ---------------------------
Undistributed net 67,448
investment income -----------
- ---------------------------
Total Net Assets $63,649,032
- --------------------------- -----------
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
- ---------------------------
Net Asset Value Per Share
($63,649,032 / 5,681,225 $11.20
shares outstanding) -----------
- ---------------------------
Offering Price Per Share $11.73
(100/95.50 of $11.20)* -----------
- ---------------------------
Redemption Proceeds Per $11.20
Share -----------
- ---------------------------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
WCT EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30, 1998 (A) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------
Dividends $ 491,820
- ------------------------------------------------------------------
Interest 55,768
- ------------------------------------------------------------------ -----------
Total income 547,588
- ------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------
Investment advisory fee $169,207
- --------------------------------------------------------
Administrative personnel and services fee 33,841
- --------------------------------------------------------
Custodian fees 9,630
- --------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 16,600
- --------------------------------------------------------
Directors'/Trustees' fees 1,700
- --------------------------------------------------------
Auditing fees 6,375
- --------------------------------------------------------
Legal fees 2,125
- --------------------------------------------------------
Portfolio accounting fees 23,400
- --------------------------------------------------------
Share registration costs 28,804
- --------------------------------------------------------
Printing and postage 7,582
- --------------------------------------------------------
Insurance premiums 1,488
- --------------------------------------------------------
Miscellaneous 15,100
- -------------------------------------------------------- --------
Total expenses 315,852
- --------------------------------------------------------
Waivers--
- --------------------------------------------------------
Waiver of investment advisory fee (56,402)
- -------------------------------------------------------- --------
Net expenses 259,450
- ------------------------------------------------------------------ -----------
Net investment income 288,138
- ------------------------------------------------------------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------
Net realized gain on investments 2,725,593
- ------------------------------------------------------------------
Net change in unrealized appreciation of investments 19,715,694
- ------------------------------------------------------------------ -----------
Net realized and unrealized gain on investments 22,441,287
- ------------------------------------------------------------------ -----------
Change in net assets resulting from operations $22,729,425
- ------------------------------------------------------------------ -----------
</TABLE>
(a) Reflects operations for the period from November 17, 1997 (start of
business) to April 30, 1998.
(See Notes which are an integral part of the Financial Statements)
WCT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30,
1998 (A)
- --------------------------------------------------------------- ------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 288,138
- ---------------------------------------------------------------
Net realized gain (loss) on investments
($2,725,593 net gain as computed for federal tax purposes) 2,725,593
- ---------------------------------------------------------------
Net change in unrealized appreciation/depreciation 19,715,694
- --------------------------------------------------------------- -----------
Change in net assets resulting from operations 22,729,425
-------------------------------------------------------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------
Distributions from net investment income (220,690)
- --------------------------------------------------------------- -----------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------
Proceeds from sale of shares 45,967,897
- ---------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 107,726
- ---------------------------------------------------------------
Cost of shares redeemed (5,035,326)
- --------------------------------------------------------------- -----------
Change in net assets resulting from share transactions 41,040,297
- --------------------------------------------------------------- -----------
Change in net assets 63,549,032
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 100,000
- --------------------------------------------------------------- -----------
End of period (including undistributed net investment income of $63,649,032
$67,448) -----------
- ---------------------------------------------------------------
</TABLE>
(a) For the period from November 17, 1997 (start of business) to April 30, 1998.
(See Notes which are an integral part of the Financial Statements)
WCT EQUITY FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
APRIL 30,
1998 (A)
- ------------------------------------------------------- ------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
- -------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------
Net investment income 0.05
------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.19
------------------------------------------------------
-------
Total from investment operations 1.24
------------------------------------------------------
-------
LESS DISTRIBUTIONS
- -------------------------------------------------------
Distributions from net investment income (0.04)
------------------------------------------------------
-------
NET ASSET VALUE, END OF PERIOD $11.20
- -------------------------------------------------------
-------
TOTAL RETURN (B) 11.38%
- -------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------
Expenses 1.15%*
------------------------------------------------------
Net investment income 1.28%*
------------------------------------------------------
Expense waiver/reimbursement (c) 0.25%*
------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------
Net assets, end of period (000 omitted) $63,649
------------------------------------------------------
Average commission rate paid (d) $0.0588
------------------------------------------------------
Portfolio turnover 18%
------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 16, 1997 (date of initial
public investment) to April 30, 1998. For the period from November 17, 1997
(start of business) to December 15, 1997, the investment income was
distributed to Federated Services Company, the Fund's Administrator.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
WCT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
1. ORGANIZATION
WCT Funds (the "Trust") is registered under the Investment Company Act of 1940,
as amended (the "Act") as an open-end, management investment company. The Trust
consists of one portfolio. The financial statements included herein are only
those of WCT Equity Fund (the "Fund"), a diversified portfolio. The investment
objective of the Fund is to provide long-term capital appreciation.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies are
valued at net asset value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-
issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
WCT EQUITY FUND
- -------------------------------------------------------------------------------
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED PERIOD ENDED
APRIL 30, DECEMBER 15,
1998 (A) 1997 (B)
------------ ------------
<S> <C> <C>
Seeded shares -- 10,000
- ----------------------------------------------
Shares sold 6,126,390 --
- ----------------------------------------------
Shares issued to shareholders in payment of
distributions declared 9,782 --
- ----------------------------------------------
Shares redeemed (464,947) --
- ---------------------------------------------- --------- ------
Net change resulting from share transactions 5,671,225 10,000
- ---------------------------------------------- --------- ------
</TABLE>
(a) Reflects operations from December 16, 1997 (date of initial public
investment) to April 30, 1998.
(b) Reflects the issuance of 10,000 shares at $10.00 per share to the
Administrator on November 17, 1997 (start of business).
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--West Coast Trust Company, Inc., the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.75% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Under the terms of a sub-advisory agreement between the Adviser and Becker
Capital Management, Becker Capital Management receives an annual fee from the
Adviser equal to 0.50% of the Fund's average daily net assets. In addition,
Becker Capital Management may voluntarily choose to reduce its compensation.
For the period ended April 30, 1998, Becker Capital Management earned a
sub-advisory fee of $112,805.
ADMINISTRATIVE FEE--Federated Services Company ("FServ") provides the Fund
with certain administrative personnel and services. The fee paid to FServ is
based on the level of average aggregate net assets of the Trust for the
period.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Fund will compensate Edgewood Services, Inc., the principal distributor, from
the net assets of the Fund to finance activities intended to result in the
sale of the Fund's shares. The Plan provides that the Fund may incur
distribution expenses up to 0.25% of the average daily net assets of the Fund
shares, annually, to compensate Edgewood Services, Inc.
For the period ended April 30, 1998, the Fund shares did not incur a
distribution services fee.
WCT EQUITY FUND
- -------------------------------------------------------------------------------
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts.
For the period ended April 30, 1998, the Fund shares did not incur a
shareholder services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on
the size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses estimated at $5,000 were
borne initially by Adviser. The Fund has agreed to reimburse Adviser for the
organizational expenses during the five year period following effective date.
For the period ended April 30, 1998, the Fund did not reimburse the Adviser
pursuant to this agreement.
17A-7 TRANSACTIONS--During the period ended April 30, 1998, the Fund engaged
in a purchase transaction with common trust funds advised by the Adviser. This
purchase transaction was made at current market value pursuant to Rule 17a-7
under the Act amounting to $59,281,235.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
5. YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and FServ are taking measures that they believe are
reasonably designed to address the Year 2000 issue with respect to computer
systems that they use and to obtain reasonable assurances that comparable steps
are being taken by each of the Fund's other service providers. At this time,
however, there can be no assurance that these steps will be sufficient to avoid
any adverse impact to the Fund.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1998, were as follows:
<TABLE>
<S> <C>
Purchases $50,888,497
- --------- -----------
Sales $10,670,811
- --------- -----------
</TABLE>
Trustees Officers
- -------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Chairman
Thomas G. Bigley Edward C. Gonzales
President and Treasurer
John T. Conroy, Jr. J. Christopher Donahue
Executive Vice President
William J. Copeland John W. McGonigle
Executive Vice President and Secretary
James E. Dowd Richard B. Fisher
Vice President
Lawrence D. Ellis, M.D.
C. Christine Thomson
Edward L. Flaherty, Jr. Vice President and Assistant Treasurer
C. Todd Gibson
Edward C. Gonzales Assistant Secretary
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR INSURED BY ANY BANK NOR ARE THEY INSURED
BY THE FEDERAL GOVERNMENT OR ANY OF ITS AGENCIES. INVESTMENT IN THESE SHARES
INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its investment objective and policies, management fees, expenses and
other information.
WCT Funds Custodian
WCT Equity Fund State Street Bank and
5800 Corporate Drive Trust Company
Pittsburgh, PA 15237-7010 P.O. Box 1713
Boston, MA 02266-8600
Distributor
Edgewood Services, Inc. Transfer Agent and
5800 Corporate Drive Dividend Disbursing Agent
Pittsburgh, PA 15237-5829 Federated Shareholder
Services Company
Investment Adviser Federated Investors Tower
West Coast Trust Company, Inc. 1001 Liberty Avenue
1000 SW Broadway, Suite 1100 Pittsburgh, PA 15222-3779
Portland, OR 97205
Independent Public
Sub-Adviser Accountants
Becker Capital Management, Inc. Arthur Andersen LLP
1211 SW Fifth Avenue, Ste. 2185 2100 One PPG Place
Portland, OR 97204 Pittsburgh, PA 15222
Edgewood Services, Inc.
Distributor
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G02365-01 (6/98) RECYCLED PAPER
