PRESIDENT'S MESSAGE
- ------------------------------------------------------------
Dear Investor:
I am pleased to present the semi-annual report for WCT Equity Fund, a portfolio
of the WCT Funds. This report covers the six-month period from November 1, 1998
through April 30, 1999. The report begins with a commentary on the stock market
environment and fund strategy by the portfolio manager, followed by a complete
list of fund holdings and financial information for the fund.
WCT Equity Fund gives you the opportunity to participate 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.
Many of the fund's holdings at the end of the reporting period were industry
leaders whose products and services are household names, such as Allstate,
Caterpillar, Ford, Goodyear, Intel, J.C. Penney, and Xerox.
During the first six months of its current fiscal year, the fund's holdings
produced a total return of 14.73%* (9.58% adjusted for the fund's maximum 4.5%
sales charge). This total return was the result of a $0.41 increase in net asset
value, dividends totaling $0.06 per share and capital gains totaling $0.80 per
share. At the end of the reporting period, the fund's net assets were $45.7
million.
Thank you for selecting WCT Equity Fund to help your money grow in pursuit of
your long-term financial goals. We'll continue to keep you informed about the
progress of your investment.
Sincerely,
[EDWARD C. GONZALES SIGNATURE]
Edward C. Gonzales
President
June 15, 1999
*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.
1
INVESTMENT REVIEW
- ------------------------------------------------------------
Market performance during the initial two months of the year continued to be
characterized by large-cap "growth" dominance, although to a lesser degree than
during the 1998 calendar year. Since mid-March, however, and continuing through
today, this market leadership dominance has been relinquished to economically
sensitive issues. Long ignored and undervalued, the energy, industrial and
manufacturing sectors have provided the leadership to a "broadening" market
participation.
In our opinion, the developing catalyst for this leadership rotation is the
mounting evidence of economic stabilization in Asia. Those companies most
penalized by difficulties in this region of the globe over the past eighteen
months will likely be the primary beneficiaries of improvement in Asian
economies.
Equities held by WCT Equity Fund have recovered nicely from the poor relative
performance of calendar year 1998. The fund's year-to-date total return as of
April 30, 1999, was 11.10%, gross of fees (10.48%, net of fees)*, versus 8.9%
for the capitalization-weighted Standard & Poor's 500 Index ("S&P 500"). The
Russell Mid-Cap Value Index enjoyed a year-to-date total return of 6.1%.**
During the past 18-24 months, we have argued that the Asian downfall was
principally responsible for the dramatic, superior performance of many large
capitalization growth stocks. Because it is capitalization-weighted, the S&P 500
has become a proxy for those same growth stocks. We have suggested that Asia's
difficulties prompted many foreign investors to sell their developing nations'
investments in favor of the perceived safety of the U.S. market. Foreign
investors bought more U.S. stocks immediately after the onset of the Asian
crisis than they had accumulated in the eight years from 1988 to 1996. Because
they were investing billions, foreign investors have been restricted to only
stocks of the largest U.S. companies, which have requisite trading liquidity.
Until recently, their stock price behavior had richly rewarded a handful of the
largest companies and masked a deteriorating broad market environment. Typifying
this deterioration is a recent report from one of the research services we
follow noting that between April 21, 1998 and April 8, 1999, while the S&P 500
was up 23%, the median DECLINE of some 3500 issues tracked by this service was
22%.
From our perspective, and in the absence of worldwide financial crisis, foreign
investors tend to view our markets and economy as mostly mature and slower
growing. Conversely, the longer-term growth prospects for the developing nations
are viewed far more optimistically, partially explaining why foreign investors
have traditionally, in large part, ignored the U.S. market. As Asia's recovery
begins to be more recognized, foreign investors will likely become sellers of
their U.S. stocks. And, to the extent that Asia and other troubled regions
recover, so do the prospects for many of the companies in your portfolio that
have been most negatively affected by overseas concerns.
* PAST PERFORMANCE NET OF FEES IS BASED ON NET ASSET VALUE 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. THE FUND'S YEAR-TO-DATE TOTAL RETURN ADJUSTED FOR THE FUND'S
4.50% SALES CHARGE WAS 5.49%.
**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 MID CAP VALUE INDEX MEASURES THE PERFORMANCE OF THOSE RUSSELL MIDCAP
COMPANIES WITH LOWER PRICE-TO- BOOK RATIOS AND LOWER FORECASTED GROWTH VALUES.
THE STOCKS ARE ALSO MEMBERS OF THE RUSSELL 1000 VALUE INDEX. THE S&P 500 AND
THE RUSSELL MID CAP VALUE INDEX ARE NOT ADJUSTED FOR 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.
2
Corporate earnings continue to reflect a mixed picture of strong consumer
spending, offset by weak, but improving, export markets. Reported profits for
the S&P 500 for the 4th quarter of 1998 were down from the same period one year
earlier, but earnings for the 1st quarter of 1999 were robust and exceeded
consensus estimates. Typical of many companies has been a persistent pattern of
good unit/volume sales but very weak pricing, a situation which some have dubbed
"profitless prosperity." Clearly, a resumption of robust earnings growth will
take time as foreign economies recover and excess capacity in the world is
reduced. Tremendous operating leverage characterizes the more cyclical
businesses that have reduced costs to cope with the weak demand of the past
couple years and even modest revenue improvement should translate into
impressive earning gains. Companies which we would describe as economically
sensitive and industrially oriented, appear to offer the best values seen in
years. We will continue to focus on these sectors of the market.
We believe a sustainable turn in market leadership is unfolding. Initially, we
expect that the rotation will be volatile, complete with ebbs and flows, but it
appears to us to be 'real'. Earnings estimates for manufacturing, cyclical
companies are higher, market breadth has improved, evidence of Global economic
stabilization is materializing and many market pundits are increasing exposure
to economically sensitive issues. Investors may be reconnecting with valuation
reality. "Value" stocks are again being recognized for the appreciation
potential they afford.
Sincerely,
[DON WOLCOTT SIGNATURE]
Don Wolcott
Vice President, Portfolio Manager
Becker Capital Management, Inc.
3
WCT EQUITY FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
- ----------------------------------------------------------------------------
SHARES VALUE
- --------- ---------------------------------------- -----------
COMMON STOCKS--98.2%
- ---------------------------------------------------
CHEMICALS--2.4%
----------------------------------------
40,000 Millennium Chemicals, Inc. $ 1,080,000
---------------------------------------- -----------
COMMERCIAL SERVICES--1.7%
----------------------------------------
25,000 Standard Register 762,500
---------------------------------------- -----------
CONSUMER DURABLES--7.7%
----------------------------------------
67,000 Clayton Homes, Inc. 745,375
----------------------------------------
15,000 Ford Motor Co. 959,062
----------------------------------------
10,000 General Motors Corp. 889,375
----------------------------------------
16,000 Goodyear Tire & Rubber Co. 915,000
---------------------------------------- -----------
Total 3,508,812
---------------------------------------- -----------
CONSUMER NON-DURABLES--3.2%
----------------------------------------
20,000 American Greetings Corp., Class A 523,750
----------------------------------------
30,000 Dole Food, Inc. 952,500
---------------------------------------- -----------
Total 1,476,250
---------------------------------------- -----------
ELECTRONIC TECHNOLOGY--11.1%
----------------------------------------
65,000 (1) Cabletron Systems, Inc. 613,437
----------------------------------------
14,000 Intel Corp. 856,625
----------------------------------------
30,000 (1) LSI Logic Corp. 1,020,000
----------------------------------------
21,500 Lockheed Martin Corp. 925,844
----------------------------------------
18,000 Rockwell International Corp. 929,250
----------------------------------------
30,000 Tektronix, Inc. 727,500
---------------------------------------- -----------
Total 5,072,656
---------------------------------------- -----------
ENERGY MINERALS--14.2%
----------------------------------------
12,000 Atlantic Richfield Co. 1,007,250
----------------------------------------
60,000 Enron Oil & Gas Co. 1,140,000
----------------------------------------
30,000 Halliburton Co. 1,278,750
----------------------------------------
45,000 Repsol SA, ADR 742,500
----------------------------------------
50,000 Santa Fe International Corp. 1,075,000
----------------------------------------
30,000 YPF Sociedad Anonima, ADR 1,260,000
---------------------------------------- -----------
Total 6,503,500
---------------------------------------- -----------
4
WCT EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------
FINANCE--14.4%
----------------------------------------
20,000 Allstate Corp. $ 727,500
----------------------------------------
32,002 Comdisco, Inc. 842,053
----------------------------------------
13,000 Fannie Mae 922,188
----------------------------------------
21,000 GATX Corp. 721,875
----------------------------------------
16,000 PNC Bank Corp. 926,000
----------------------------------------
22,000 SAFECO Corp. 874,500
----------------------------------------
20,000 SLM Holding Corp. 853,750
----------------------------------------
33,500 Washington Federal, Inc. 741,187
---------------------------------------- -----------
Total 6,609,053
---------------------------------------- -----------
HEALTH SERVICES--1.9%
----------------------------------------
35,000 Columbia/HCA Healthcare Corp. 864,063
---------------------------------------- -----------
HEALTH TECHNOLOGY--2.4%
----------------------------------------
31,500 Mallinckrodt, Inc. 1,104,469
---------------------------------------- -----------
PROCESS INDUSTRIES--10.2%
----------------------------------------
15,000 PPG Industries, Inc. 974,063
----------------------------------------
31,000 Sherwin-Williams Co. 964,875
----------------------------------------
30,000 Tenneco, Inc. 810,000
----------------------------------------
14,000 Weyerhaeuser Co. 939,750
----------------------------------------
20,000 Willamette Industries, Inc. 935,000
---------------------------------------- -----------
Total 4,623,688
---------------------------------------- -----------
PRODUCER MANUFACTURING--13.8%
----------------------------------------
25,000 Allegheny Teledyne, Inc. 559,375
----------------------------------------
18,000 Caterpillar, Inc. 1,158,750
----------------------------------------
12,500 Eaton Corp. 1,146,094
----------------------------------------
20,000 (1) Gulfstream Aerospace Corp. 975,000
----------------------------------------
Koninklijke (Royal) Philips Electronics
9,000 NV, ADR 768,375
----------------------------------------
32,000 Raychem Corp. 846,000
----------------------------------------
15,000 Xerox Corp. 881,250
---------------------------------------- -----------
Total 6,334,844
---------------------------------------- -----------
REAL ESTATE--2.0%
----------------------------------------
30,000 Mack-Cali Realty Corp. 928,125
---------------------------------------- -----------
5
WCT EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------
RETAIL TRADE--1.3%
----------------------------------------
13,000 Penney (J.C.) Co., Inc. $ 593,125
---------------------------------------- -----------
TECHNOLOGY SERVICES--3.0%
----------------------------------------
50,000 (1) Arrow Electronics, Inc. 909,375
----------------------------------------
30,000 (1) Marshall Industries 483,750
---------------------------------------- -----------
Total 1,393,125
---------------------------------------- -----------
TRANSPORTATION--6.9%
----------------------------------------
12,000 (1) AMR Corp. 837,750
----------------------------------------
39,000 Knightbridge Tankers Ltd. 733,687
----------------------------------------
20,000 Norfolk Southern Corp. 653,750
----------------------------------------
35,000 Tidewater, Inc. 927,500
---------------------------------------- -----------
Total 3,152,687
---------------------------------------- -----------
UTILITIES--2.0%
----------------------------------------
10,000 (1) Telecomunicacoes Brasileiras SA, ADR 911,875
----------------------------------------
10,000 Telecomunicacoes Brasileiras SA, ADR 781
---------------------------------------- -----------
Total 912,656
---------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST
$32,939,641) 44,919,553
---------------------------------------- -----------
MUTUAL FUNDS--1.8%
- ---------------------------------------------------
830,527 Seven Seas Money Market Fund $ 830,527
---------------------------------------- -----------
TOTAL MUTUAL FUNDS (AT NET ASSET
VALUE) 830,527
---------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST
$33,770,168)(2) $45,750,080
---------------------------------------- -----------
(1) Non-income producing security.
(2) The cost of investments for federal tax purposes amounts to $33,770,168.
The net unrealized appreciation of investments on a federal tax basis
amounts to $11,979,912 which is comprised of $13,585,843 appreciation and
$1,605,931 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($45,723,296) at April 30, 1999.
The following acronyms are used throughout this portfolio: ADR--American
Depositary Receipt SA--Support Agreement (See Notes which are an integral part
of the Financial Statements)
6
WCT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
- ----------------------------------------------------------------------------
ASSETS:
- --------------------------------------------------
Total investments in securities, at value
(identified and tax cost $33,770,168) $45,750,080
- --------------------------------------------------
Income receivable 69,218
- --------------------------------------------------
Deferred organizational costs 6,993
- -------------------------------------------------- -----------
Total assets 45,826,291
- --------------------------------------------------
LIABILITIES:
- ----------------------------------------
Accrued expenses 102,995
- ---------------------------------------- --------
Total liabilities 102,995
- -------------------------------------------------- -----------
NET ASSETS for 4,678,894 shares outstanding $45,723,296
- -------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------
Paid in capital $32,105,553
- --------------------------------------------------
Net unrealized appreciation of investments 11,979,912
- --------------------------------------------------
Accumulated net realized gain on investments 1,570,380
- --------------------------------------------------
Undistributed net investment income 67,451
- -------------------------------------------------- -----------
Total Net Assets $45,723,296
- -------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- --------------------------------------------------
Net Asset Value Per Share ($45,723,296
DIVIDED BY 4,678,894 shares outstanding) $9.77
- -------------------------------------------------- -----------
Offering Price Per Share (100/95.50 x $9.77)(1) $10.23
- -------------------------------------------------- -----------
Redemption Proceeds Per Share $9.77
- -------------------------------------------------- -----------
(1) See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
7
WCT EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- --------------------------------------------------
Dividends (net of foreign taxes withheld of
$4,961) $ 485,754
- --------------------------------------------------
Interest 26,323
- -------------------------------------------------- -----------
Total income 512,077
- --------------------------------------------------
EXPENSES:
- ----------------------------------------
Investment advisory fee $168,748
- ----------------------------------------
Administrative personnel and services
fee 33,750
- ----------------------------------------
Custodian fees 7,190
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 13,348
- ----------------------------------------
Directors'/Trustees' fees 2,145
- ----------------------------------------
Auditing fees 6,797
- ----------------------------------------
Legal fees 1,933
- ----------------------------------------
Portfolio accounting fees 20,218
- ----------------------------------------
Shareholder services fee 17,718
- ----------------------------------------
Share registration costs 21,188
- ----------------------------------------
Printing and postage 5,111
- ----------------------------------------
Insurance premiums 1,357
- ----------------------------------------
Miscellaneous 6,391
- ---------------------------------------- --------
Total expenses 305,894
- ----------------------------------------
Waiver--
Waiver of investment advisory fee (56,249)
- ---------------------------------------- --------
Net expenses 249,645
- -------------------------------------------------- -----------
Net investment income 262,432
- -------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
- --------------------------------------------------
Net realized gain on investments 1,665,192
- --------------------------------------------------
Net change in unrealized appreciation of
investments 4,196,527
- -------------------------------------------------- -----------
Net realized and unrealized gain on
investments 5,861,719
- -------------------------------------------------- -----------
Change in net assets resulting from
operations $ 6,124,151
- -------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
8
WCT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
SIX MONTHS ENDED
(UNAUDITED) PERIOD ENDED
APRIL 30, OCTOBER 31,
1999 1998 (1)
- ---------------------------------------- ----------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 262,432 $ 635,864
- ----------------------------------------
Net realized gain on investments
($1,665,912 and
$4,000,157, respectively, as computed
for federal tax purposes) 1,665,192 3,905,629
- ----------------------------------------
Net change in unrealized appreciation 4,196,527 7,783,385
- ---------------------------------------- ----------------- -------------
Change in net assets resulting
from operations 6,124,151 12,324,878
- ---------------------------------------- ----------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (289,537) (541,308)
- ----------------------------------------
Distributions from net realized gains (4,000,441) --
- ---------------------------------------- ----------------- -------------
Change in net assets resulting
from distributions to
shareholders (4,289,978) (541,308)
----------------- -------------
- ----------------------------------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 2,682,563 53,909,696
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 1,902,516 264,287
- ----------------------------------------
Cost of shares redeemed (9,801,910) (16,951,599)
----------------- -------------
- ----------------------------------------
Change in net assets resulting from
share transactions (5,216,831) 37,222,384
- ---------------------------------------- ----------------- -------------
Change in net assets (3,382,658) 49,005,954
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 49,105,954 100,000
----------------- -------------
- ----------------------------------------
End of period (including undistributed
net investment income of $67,451 and
$94,556, respectively) $45,723,296 $49,105,954
- ---------------------------------------- ----------------- -------------
(1) For the period from December 16, 1997 (date of initial public investment)
to October 31, 1998.
(See Notes which are an integral part of the Financial Statements)
9
WCT EQUITY FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED
(UNAUDITED) PERIOD ENDED
APRIL 30, OCTOBER 31,
1999 1998 (1)
- ---------------------------------------- ----------------- -------------
NET ASSET VALUE, BEGINNING OF PERIOD $9.36 $10.09
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.06 0.12
- ----------------------------------------
Net realized and unrealized gain
(loss) on investments 1.21 (0.75)
------- -------------
- ----------------------------------------
Total from investment operations 1.27 (0.63)
------- -------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.06) (0.10)
- ----------------------------------------
Distributions from net realized gain
on investments (0.80) --
------- -------------
- ----------------------------------------
Total distributions (0.86) (0.10)
------- -------------
- ----------------------------------------
NET ASSET VALUE, END OF PERIOD $9.77 $9.36
------- -------------
TOTAL RETURN (2) 14.73% (6.25%)
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses (3) 1.36%(4) 1.48%(4)
- ----------------------------------------
Net investment income (3) 0.92%(4) 0.92%(4)
- ----------------------------------------
Expenses (after waivers) 1.11%(4) 1.13%(4)
- ----------------------------------------
Net investment income (after
waivers) 1.17%(4) 1.27%(4)
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $45,723 $49,106
- ----------------------------------------
Portfolio turnover 28% 69%
- ----------------------------------------
(1) Reflects operations for the period from December 16, 1997 (date of initial
public investment) to October 31, 1998. For the period from November 17,
1997 (start of business) to December 15, 1997, the net investment income
was distributed to Federated Services Company, the Fund's Administrator.
(2) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(3) During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
10
WCT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (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 diversified portfolio, the WCT Equity Fund (the "Fund"), whose
financial statements are contained herein. 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.
11
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:
PERIOD ENDED
SIX MONTHS ENDED OCTOBER 31,
APRIL 30, 1999 1998 (1)
---------------- ------------
Shares sold 297,059 6,998,669
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 219,775 26,439
- ----------------------------------------
Shares redeemed (1,084,844) (1,788,204)
- ---------------------------------------- ---------------- ------------
Net change resulting from share
transactions (568,010) 5,236,904
- ---------------------------------------- ---------------- ------------
(1) Reflects operations from December 16, 1997 (date of initial public
investment) to October 31, 1998.
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 a 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, 1999, Becker Capital Management
earned a sub-advisory fee of $114,120.
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 Fund 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, 1999, the Fund did not incur a distribution
services fee.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services Company ("FSSC"), the Fund
will pay FSSC up to 0.25% of average daily net assets of the Fund shares for
the period. The fee paid to FSSC is used to finance certain services for
12
WCT EQUITY FUND
- --------------------------------------------------------------------------------
shareholders and to maintain shareholder accounts. FSSC may voluntarily
choose to waive any portion of its fee. FSSC can modify or terminate this
voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, 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.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:
PURCHASES $12,112,187
- -------------------------------------------------- -----------
SALES $19,536,968
- -------------------------------------------------- -----------
6. 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 Administrator 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.
13
TRUSTEES OFFICERS
- ------------------------------------------------------------
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
John F. Cunningham
Lawrence D. Ellis, M.D.
Peter E. Madden
Charles F. Mansfield, Jr.
John E. Murray, Jr.
Marjorie P. Smuts
John S. Walsh
John F. Donahue
CHAIRMAN
Edward C. Gonzales
PRESIDENT AND TREASURER
J. Christopher Donahue
EXECUTIVE VICE PRESIDENT
John W. McGonigle
EXECUTIVE VICE PRESIDENT AND SECRETARY
Richard B. Fisher
VICE PRESIDENT
C. Christine Thomson
VICE PRESIDENT AND ASSISTANT TREASURER
C. Todd Gibson
ASSISTANT SECRETARY
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.
14
WCT FUNDS
WCT Equity Fund
5800 Corporate Drive
Pittsburgh, PA 15237-7010
DISTRIBUTOR
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237-7002
INVESTMENT ADVISER
West Coast Trust Company, Inc.
1000 SW Broadway, Suite 1100
Portland, OR 97205
SUB-ADVISER
Becker Capital Management, Inc.
1211 SW Fifth Avenue, Ste. 2185
Portland, OR 97204
CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 1713
Boston, MA 02266-8600
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INDEPENDENT PUBLIC
ACCOUNTANTS
Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812
[WCT FUNDS LOGO]
SEMI-ANNUAL REPORT
APRIL 30, 1999
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Edgewood Services, Inc.
Distributor
A Portfolio of
WCT Funds, an Open-End
G02365-01 (6/99) [LOGO] Management Investment
Company
