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[LOGO]
OVERLAND
EXPRESS-REGISTERED TRADEMARK-
ANNUAL REPORT
-----------------
DECEMBER 31, 1995
Asset Allocation Fund
California Tax Free Bond Fund
California Tax Free Money Market Fund
Money Market Fund
Municipal Income Fund
Short-Term Government Corporate Income Fund
Short-Term Municipal Income Fund
Stategic Growth Fund
U.S. Goverment Income Fund
U.S. Treasury Money Market Fund
Variable Rate Government Fund
[ART]
OVERLAND EXPRESS FUNDS ARE NOT
FDIC INSURED AND ARE NOT OBLIGATIONS OF
OR GUARANTEED BY WELLS FARGO BANK.
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[LOGO]
TABLE OF CONTENTS
Letter to Shareholders 2
Manager Comments
Asset Allocation Fund 4
California Tax-Free Bond Fund 8
California Tax-Free Money Market Fund 13
Money Market Fund 15
Municipal Income Fund 16
Short-Term Government-Corporate Income Fund 20
Short-Term Municipal Income Fund 24
Strategic Growth Fund 28
U.S. Government Income Fund 32
U.S. Treasury Money Market Fund 36
Variable Rate Government Fund 37
Overland Express Portfolio of Investments
Asset Allocation Fund 40
California Tax-Free Bond Fund 56
California Tax-Free Money Market Fund 68
Money Market Fund 77
Municipal Income Fund 79
Strategic Growth Fund 85
U.S. Government Income Fund 92
U.S. Treasury Money Market Fund 95
Variable Rate Government Fund 96
Statement of Assets and Liabilities 99
Statement of Operations 102
Statements of Changes in Net Assets 105
Financial Highlights 113
Notes to the Financial Statements 131
Independent Auditors' Report 143
Proxy Voting Results 144
Master Investment Trust Portfolio of Investments
Short-Term Government-Corporate Income Master Portfolio 145
Short-Term Municipal Income Master Portfolio 146
Master Investment Trust Financial Statements 151
Independent Auditors' Report 158
List of Abbreviations 159
OVERLAND EXPRESS FUNDS ARE NOT FDIC INSURED, ARE NOT OBLIGATIONS OF WELLS
FARGO BANK OR AFFILIATES OF BZW BARCLAYS GLOBAL INVESTORS, N.A. AND ARE NOT
GUARANTEED BY EITHER WELLS FARGO BANK OR AFFILIATES OF BZW BARCLAYS GLOBAL
INVESTORS, N.A. OVERLAND EXPRESS FUNDS INVOLVE INVESTMENT RISK, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
OVERLAND EXPRESS MONEY MARKET FUNDS SEEK TO MAINTAIN A STABLE NET ASSET VALUE
OF $1.00 PER SHARE; HOWEVER, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL
MEET THIS OBJECTIVE.
WELLS FARGO BANK PROVIDES INVESTMENT ADVISORY SERVICES, SHAREHOLDER SERVICES AND
CERTAIN OTHER SERVICES FOR THE OVERLAND EXPRESS FUNDS. AFFILIATES OF BZW
BARCLAYS GLOBAL INVESTORS, N.A. PROVIDE SUB-ADVISORY SERVICES AND CERTAIN OTHER
SERVICES FOR THE ASSET ALLOCATION FUND. THE FUNDS ARE SPONSORED AND DISTRIBUTED
BY STEPHENS INC., MEMBER NYSE/SIPC.
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TO OUR SHAREHOLDERS
A BANNER YEAR FOR BONDS & STOCKS
The year 1995 produced investment returns rarely captured in U.S. history.
Long-term bond returns were the third best results based on indices dating from
1950. The average U.S. government bond fund posted 1995 returns above 18%. The
stock market had its best gain since 1958, as measured by the Standard & Poor's
500 Index, with the average stock mutual fund generating total returns above
30%. While it is unlikely that 1996 will provide comparable returns, the
investment climate remains favorable for long-term investors.
THE BOND MARKET
For bond investors, 1995 was able to help offset their 1994 price erosion.
Short- and long-term interest rates fell sharply during 1995. The two-year
Treasury yield fell over 2.5% and 30-year rates dropped almost 2%.
Intermediate- and long-term interest rates responded to the combination of
moderating economic growth, subdued inflation and Federal Reserve easing by
moving still lower during the second half of 1995. The yield on 30-year Treasury
bonds dipped below 6% in late December for the first time in two years. In the
weeks leading up to the Federal Reserve's second cut in short-term rates on
December 19, 1995, yields on Treasury securities with maturities out to ten
years fell below the overnight rate for federal funds.
The investment outlook remains positive for fixed income markets in 1996.
Sluggish economic growth and low inflation should lead to further easing of
monetary policy early in the year, and both short- and long-term interest rates
have the potential to decline. Short-term rates are likely to be more affected
than long-term rates.
Several broad trends continue to support a declining interest rate environment.
An aging "baby boomer" population is increasingly focused on savings and
investments, not consumption. This has contributed to a slowdown in the consumer
sector of the economy. Further weakness in manufacturing activity and
consumer spending is expected to restrain overall growth. In addition,
pricing pressures should remain subdued by a variety of disinflationary
trends, including weak demand, intense foreign competition, and further gains
in labor productivity. Although any decline in interest rates in the months
ahead is not expected to be as impressive as the sharp drop seen over the
past year, 1996 should reward bond investors. The Federal Reserve will likely
lower the target rate of federal funds by 1/2 % to 1% from the 1995 year-end
5.50% level.
THE STOCK MARKET
U.S. equities generated near record returns in 1995. The 33% rise in the Dow
Jones Industrial Average was the fourth largest since the end of World War II.
The ingredients were all there for a spectacular year: declining interest rates,
low inflation, increasing profit margins and a positive flow of funds into the
market. Technology stocks were winners in 1995, reflecting the strength of
earnings growth. Financial stocks were also leaders in the market, benefiting
from falling interest rates, industry consolidation and record profit levels.
Lastly, strength was seen in traditional consumer goods companies. Large
U.S.-based companies with global exposure and consistent positive financial
results earned strong recommendations from industry analysts.
2
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TO OUR SHAREHOLDERS
It is important to remain focused on those companies working effectively to
enhance shareholder value. The low inflation environment expected in 1996 may
well support the generous valuations carried in the market today, but investors
will probably be less forgiving if profits should fall short. Currently, the
elements for attractive market returns are still present. A continual stream of
contributions into mutual funds, retirement plans and household savings suggests
that investors are taking a long-term approach to appreciation through equity
investment. A mild interest rate environment, corporate restructuring, merger
and acquisition activities and share repurchase programs should also contribute
to attractive market returns.
Over time, studies have shown the pitfalls of trying to time the peaks and
valleys of the stock market. Wise investors stay focused on their long-term
goals of capital growth and income generation. Concentrating on individual
issues or sectors that demonstrate potential for sustainable long-term growth
should ultimately reap the best rewards.
ENVIRONMENT REMAINS "FRIENDLY"
As we noted earlier, under the current economic environment, we expect the stock
and bond markets to continue to benefit from lower interest rates during 1996.
Modest growth and historically low inflation should set the stage for further
interest rate declines over the next several months. The inflation premium on
bond yields remains above its long-term average, and recent encouraging news on
plans to reduce the federal deficit should have a positive effect on investors.
Lower interest rates and an improved outlook for economic growth and corporate
earnings should help support the stock market as well. We do not foresee a
recession, but rather expect a sustained period of slow growth. Of course, the
financial markets are not without their risks and uncertainties. But with
sluggish economic growth and moderate inflation, the risk of interest rates
rising substantially appears to be low.
A COMMITMENT TO INVESTMENT QUALITY
We believe a conservative, straightforward approach to be the most effective
long-term investment strategy, and we offer a variety of Overland Express Funds
to meet a broad range of investment goals. On the following pages you will find
reports on each of the Funds, from the investment adviser and portfolio managers
offering insight into individual fund performance, strategies, portfolio
holdings and other helpful information.
We appreciate your participation in Overland Express Funds. We will continue
working diligently to help you realize your financial goals.
OVERLAND EXPRESS FUNDS, JANUARY 1996
THE DOW JONES INDUSTRIAL AVERAGE IS A REGISTERED TRADEMARK OF DOW JONES &
COMPANY, INC. AND IS AN UNMANAGED, PRICE-WEIGHTED INDEX COMPRISED OF 30 OF THE
LARGEST CAPITALIZATION, MOST WIDELY HELD INDUSTRIAL STOCKS THAT ARE TRADED ON
THE NEW YORK STOCK EXCHANGE.
THE S&P 500 INDEX OF STOCKS IS A TRADEMARK OF STANDARD AND POOR'S CORPORATION
AND IS AN UNMANAGED INDEX THAT TRACKS THE PERFORMANCE OF 500 COMPANIES,
INCLUDING INDUSTRIAL, TRANSPORTATION, UTILITY AND FINANCIAL COMPANIES.
3
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OVERLAND EXPRESS ASSET ALLOCATION FUND
Q. THE ASSET ALLOCATION FUND (THE "FUND") FINISHED 1995 WITH A STRONG
PERFORMANCE. WHAT CONTRIBUTED TO ITS PERFORMANCE THIS YEAR?
A. The Asset Allocation Fund uses a disciplined quantitative model based upon
Nobel Prize winning research to compare risk and return for different asset
classes. The model's recommendation is driven by the expected returns of stocks,
bonds and cash. Through time the model will recommend different allocations to
stocks, bonds and cash in order to seek to capture the best return without
taking unreasonable risk.
As interest rates declined in 1995, stocks became a more attractive investment.
Based upon the model's recommendations, the Fund increased its stock allocation
from 60% to 70% on February 28th, then to 90% on May 8th and to its allocation
of 100% in June of 1995. By carefully selling off bonds and moving gradually to
stocks, the Fund realized strong price appreciation. This move enabled the Fund
to lock in gains as interest rates fell. By year-end the recommended and actual
mixes remained at 100/0/0 (stocks/bonds/cash).
Q. THE FEDERAL RESERVE LOWERED THE FEDERAL FUNDS TARGET RATE BY 1/4% IN JULY AND
BY ANOTHER 1/4% IN DECEMBER. HOW DID THIS AFFECT THE FUND'S ALLOCATION AND
PERFORMANCE?
A. The cuts in the federal funds target rate signaled that the Federal Reserve
believed the threat of inflation had subsided. This was a primary cause of the
strong gains in the bond market. The drop in interest rates also helped fuel the
strong rally for stocks. The Fund started the year with a 40% allocation in
bonds. Declining bond yields reduced the attractiveness of bonds relative to
stocks or money market instruments. As a result, the Fund reduced its bond
position to 0% during the first half of the year, thus securing gains from the
bond market rally early in this year. Continued interest rate cuts by the
Federal Reserve, if they occur, should be positive for the stock market as well
as the bond market.
Q. HOW DID THE FUND'S PORTFOLIO ALLOCATION CHANGE DURING THE YEAR AND WHY?
A. The most consistent trend in the allocation shift during 1995 was the
gradual reduction of the Fund's bond allocation and the increase of its stock
allocation. The Fund began 1995 with an allocation of 60% invested in stocks.
As the attractiveness of stocks relative to bonds increased, the allocation in
stocks shifted to 70% at the end of February and to 90% in May. The Fund ended
the year in its long-term normal position, being fully invested in stocks by
June. The recommendation from the asset allocation model to increase the
equity position was based on the widening difference between the expected
returns of stocks relative to bonds.
Q. WHEN THE ASSET ALLOCATION MODEL MAKES RECOMMENDATIONS TO INCREASE THE FUND'S
POSITIONS IN STOCKS, WHY DOES IT ONLY CONSIDER THE S&P 500 FOR THE STOCK
POSITIONS?
A. The Fund seeks to add value and control risk by allocating across stocks,
bonds and cash. The S&P 500 provides an efficient and diversified method of
investing in the overall U.S. stock market.
The S&P 500 is designed to be a representative sample of the broad market for
stocks in the U.S. and is diversified across companies and industry sectors. By
investing in such a diversified portfolio, the Fund reduces the risk of
individual companies having an unduly
4
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high influence on the Fund's return while guaranteeing participation in a
broad cross section of the equity market.
Q. DOES THE MODEL INDICATE THAT STOCKS WILL CONTINUE TO PERFORM WELL IN 1996?
A. Not necessarily. The investment model does not attempt to make short-term
predictions; instead, the model seeks to identify long-term value across the
stock and bond markets. The strategy does not attempt to determine exactly when
or even how a market correction will occur, but rather to recognize when markets
are relatively over- or undervalued. In that way, the Fund seeks to be correctly
positioned whenever a market correction might occur.
Today the model indicates that the stock market is fairly valued relative to
both bonds and cash, although both stocks and bonds are offering lower returns
than they have averaged over the past ten years. According to the model, the
strategy's weighting in stocks indicates that investors are being fairly
compensated for the additional risk involved with investments in stocks.
Q. IN DECEMBER, SHAREHOLDERS APPROVED THE PROPOSAL TO ALLOW THE USE OF FUTURES.
HOW WILL THEY HELP THE FUND ACHIEVE ITS INVESTMENT OBJECTIVES?
A. The Fund plans to use futures contracts beginning in May 1996, in a carefully
controlled manner, solely to offset the effect of its cash reserve on investment
performance. The amount of futures held by the Fund will vary depending on the
allocation to stocks.
Q. WHAT IS THE INDUSTRY BREAKDOWN OF THE S&P 500?
A. As of 12/31/95, the industry breakdown is as follows: basic industries -
7.85%, technical capital goods - 12.56%, capital goods - 2.76%, consumer growth
staples - 20.09%, consumer cyclicals - 8.79%, consumer staples - 8.71%, credit
cyclicals - 3.98%, energy - 9.35%, finance - 11.75%, transportation - 1.50%, and
utilities - 12.66%.
Q. WHAT IS THE FUND'S STRATEGY FOR 1996?
A. Allocation across the various asset classes are, of course, generally based
on the model. Therefore, the Fund will remain in its long-term normal position
of 100/0/0 until the model suggests an increase in expected returns for bonds or
cash relative to stocks, on a risk weighted basis.
THE S&P 500 INDEX OF STOCKS IS A TRADEMARK OF STANDARD AND POOR'S CORPORATION
AND IS AN UNMANAGED INDEX THAT TRACKS THE PERFORMANCE OF 500 COMPANIES,
INCLUDING INDUSTRIAL, TRANSPORTATION, UTILITY AND FINANCIAL COMPANIES.
5
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OVERLAND EXPRESS ASSET ALLOCATION FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS ASSET ALLOCATION
FUND COMPARED WITH VARIOUS INDICES
The chart on the next page shows the performance of the Overland Express Asset
Allocation Fund compared with the S&P 500 Index, the Lehman Brothers Treasury
Bond Index and the IBC/Donoghue Money Market Average. The chart assumes a
hypothetical $10,000 initial investment. Class A shares reflect all Fund
expenses and the maximum 4.5% initial sales charge. The Standard and Poor's 500
Index is an unmanaged index of 500 widely held common stocks, representing
industrial, financial, utility and transportation companies, listed on the New
York Stock Exchange, American Stock Exchange and the Over-The-Counter market.
The Lehman Brothers Treasury Bond Index is an unmanaged index comprised of
Treasury bonds with maturities between 10 and 30 years. The IBC/Donoghue Money
Fund Average is comprised of the average yields of over 600 taxable money market
funds. Investors should note that the Fund is a professionally managed mutual
fund, while the indices are unmanaged, do not incur expenses and are not
available directly for investment. If Fund operating expenses had been applied
to the indices, their performance would have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which, for class A shares includes the maximum
4.5% initial sales charge, and for class D shares, the 1% CDSC, and represents
the average annual increase in value of the investment over the indicated
periods, assuming reinvestment of dividends and capital gains distributions at
net asset value. Your investment return and principal value will fluctuate with
market conditions, so that your shares, when redeemed, may be worth more or less
than their original cost. Past performance is not predictive of future
performance. Class A shares have been offered since April 7, 1988, and class D
shares have been offered since July 1, 1993. The average annual total return for
1-year with CDSC reflects the contingent deferred sales charge imposed on
redemptions within the first year of purchasing shares.
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS ASSET LEHMAN BROTHERS IBC/DONOGHUE S&P 500
Allocation Fund Class A Treasury Bond Index Money Market Index
Average
<S> <C> <C> <C> <C>
Inception $ 9,550 $ 10,000 $ 10,000 $ 10,000
Apr-88 $ 9,426 $ 9,825 $ 10,051 $ 10,111
May-88 $ 9,426 $ 9,677 $ 10,103 $ 10,198
Jun-88 $ 9,779 $ 10,084 $ 10,158 $ 10,666
Jul-88 $ 9,641 $ 9,885 $ 10,216 $ 10,626
Aug-88 $ 9,497 $ 9,927 $ 10,277 $ 10,265
Sep-88 $ 9,613 $ 10,294 $ 10,340 $ 10,702
Oct-88 $ 9,889 $ 10,607 $ 10,405 $ 11,000
Nov-88 $ 9,912 $ 10,370 $ 10,471 $ 10,843
Dec-88 $ 9,989 $ 10,503 $ 10,542 $ 11,033
Jan-89 $ 10,130 $ 10,725 $ 10,615 $ 11,841
Feb-89 $ 10,130 $ 10,502 $ 10,690 $ 11,548
Mar-89 $ 10,204 $ 10,614 $ 10,770 $ 11,815
Apr-89 $ 10,324 $ 10,864 $ 10,852 $ 12,426
May-89 $ 10,424 $ 11,264 $ 10,935 $ 12,931
Jun-89 $ 10,444 $ 11,829 $ 11,016 $ 12,858
Jul-89 $ 10,891 $ 12,211 $ 11,096 $ 14,019
Aug-89 $ 10,773 $ 11,865 $ 11,173 $ 14,293
Sep-89 $ 10,814 $ 11,920 $ 11,249 $ 14,235
Oct-89 $ 10,824 $ 12,400 $ 11,326 $ 13,904
Nov-89 $ 10,916 $ 12,513 $ 11,402 $ 14,168
Dec-89 $ 11,012 $ 12,490 $ 11,477 $ 14,528
Jan-90 $ 10,907 $ 12,041 $ 11,551 $ 13,553
Feb-90 $ 10,960 $ 12,006 $ 11,625 $ 13,726
Mar-90 $ 11,055 $ 11,957 $ 11,699 $ 14,091
Apr-90 $ 11,008 $ 11,671 $ 11,774 $ 13,740
May-90 $ 11,316 $ 12,212 $ 11,649 $ 15,080
Jun-90 $ 11,371 $ 12,493 $ 11,925 $ 14,978
Jul-90 $ 11,424 $ 12,612 $ 12,001 $ 14,930
Aug-90 $ 11,238 $ 12,060 $ 12,076 $ 13,580
Sep-90 $ 11,206 $ 12,220 $ 12,151 $ 12,919
Oct-90 $ 11,315 $ 12,500 $ 12,226 $ 12,864
Nov-90 $ 11,636 $ 13,021 $ 12,301 $ 13,696
Dec-90 $ 11,791 $ 13,279 $ 12,375 $ 14,077
Jan-91 $ 12,074 $ 13,436 $ 12,446 $ 14,890
Feb-91 $ 12,303 $ 13,495 $ 12,513 $ 15,741
Mar-91 $ 12,406 $ 13,549 $ 12,576 $ 16,122
Apr-91 $ 12,516 $ 13,721 $ 12,637 $ 16,160
May-91 $ 12,657 $ 13,708 $ 12,696 $ 16,856
Jun-91 $ 12,379 $ 13,607 $ 12,754 $ 16,085
Jul-91 $ 12,681 $ 13,810 $ 12,812 $ 16,635
Aug-91 $ 13,093 $ 14,266 $ 12,670 $ 17,234
Sep-91 $ 13,257 $ 14,736 $ 12,925 $ 16,945
Oct-91 $ 13,349 $ 14,768 $ 12,980 $ 17,173
Nov-91 $ 13,147 $ 14,851 $ 13,031 $ 16,481
Dec-91 $ 14,230 $ 15,736 $ 13,081 $ 16,366
Jan-92 $ 13,839 $ 15,242 $ 13,126 $ 18,024
Feb-92 $ 13,924 $ 15,332 $ 13,168 $ 18,258
Mar-92 $ 13,723 $ 15,163 $ 13,209 $ 17,903
Apr-92 $ 13,871 $ 15,148 $ 13,249 $ 18,246
May-92 $ 14,104 $ 15,569 $ 13,286 $ 18,519
Jun-92 $ 14,124 $ 15,796 $ 13,326 $ 18,243
Jul-92 $ 14,696 $ 16,452 $ 13,362 $ 18,968
Aug-92 $ 14,609 $ 16,566 $ 13,396 $ 18,599
Sep-92 $ 14,809 $ 16,828 $ 13,428 $ 18,818
Oct-92 $ 14,708 $ 16,474 $ 13,460 $ 18,883
Nov-92 $ 15,035 $ 16,537 $ 13,490 $ 19,526
Dec-92 $ 15,266 $ 16,990 $ 13,522 $ 19,766
Jan-93 $ 15,542 $ 17,474 $ 13,554 $ 19,931
Feb-93 $ 15,943 $ 18,056 $ 13,585 $ 20,202
Mar-93 $ 16,161 $ 18,103 $ 13,815 $ 20,629
Apr-93 $ 15,911 $ 18,242 $ 13,645 $ 20,130
May-93 $ 16,208 $ 18,302 $ 13,675 $ 20,669
Jun-93 $ 16,414 $ 19,077 $ 13,705 $ 20,729
Jul-93 $ 16,442 $ 19,364 $ 13,735 $ 20,646
Aug-93 $ 17,024 $ 20,165 $ 13,765 $ 21,429
Sep-93 $ 16,863 $ 20,234 $ 13,796 $ 21,265
Oct-93 $ 17,197 $ 20,379 $ 13,826 $ 21,705
Nov-93 $ 17,020 $ 19,858 $ 13,857 $ 21,498
Dec-93 $ 17,205 $ 19,921 $ 13,888 $ 21,758
Jan-94 $ 17,755 $ 20,399 $ 13,920 $ 22,498
Feb-94 $ 17,263 $ 19,563 $ 13,951 $ 21,887
Mar-94 $ 16,582 $ 18,704 $ 13,965 $ 20,833
Apr-94 $ 16,683 $ 18,483 $ 14,021 $ 21,201
May-94 $ 16,843 $ 18,361 $ 14,060 $ 21,549
Jun-94 $ 16,477 $ 18,167 $ 14,102 $ 21,021
Jul-94 $ 16,988 $ 18,803 $ 14,146 $ 21,711
Aug-94 $ 17,485 $ 18,664 $ 14,193 $ 22,601
Sep-94 $ 17,013 $ 18,076 $ 14,242 $ 22,049
Oct-94 $ 17,174 $ 18,013 $ 14,294 $ 22,544
Nov-94 $ 18,638 $ 18,119 $ 14,349 $ 21,723
Dec-94 $ 17,067 $ 18,396 $ 14,409 $ 22,045
Jan-95 $ 17,504 $ 18,870 $ 14,472 $ 22,618
Feb-95 $ 18,096 $ 19,405 $ 14,537 $ 23,497
Mar-95 $ 18,490 $ 19,573 $ 14,604 $ 24,189
Apr-95 $ 18,948 $ 19,922 $ 14,672 $ 24,901
May-95 $ 19,820 $ 21,450 $ 14,739 $ 25,894
Jun-95 $ 20,274 $ 21,700 $ 14,808 $ 26,495
Jul-95 $ 20,907 $ 21,354 $ 14,672 $ 27,374
Aug-95 $ 20,940 $ 21,827 $ 14,938 $ 27,422
Sep-95 $ 21,782 $ 22,229 $ 15,003 $ 28,600
Oct-95 $ 21,685 $ 22,851 $ 15,068 $ 28,497
Nov-95 $ 23,123 $ 23,422 $ 15,134 $ 29,747
Dec-95 $ 23,018 $ 24,045 $ 15,200 $ 30,320
</TABLE>
THE RETURN FOR CLASS D SHARES OF THE ASSET ALLOCATION FUND WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
..............................................................................
PERFORMANCE OF ASSET ALLOCATION FUND AS OF 12/31/95
<TABLE>
<CAPTION>
CLASS A SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR 3 YR 5 YR SINCE 4/7/88 INCEPTION
...............................................................................................
<S> <C> <C> <C> <C>
With Maximum 4.5% Sales Charge 28.68% 12.87% 13.27% 11.36%
Without Sales Charge 34.71% 14.61% 14.32% 12.02%
<CAPTION>
CLASS D SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 7/1/93 INCEPTION
...............................................................................................
<S> <C> <C>
With 1.0% Contingent Deferred Sales Charge 32.80% N/A
Without Contingent Deferred Sales Charge 33.72% 13.71%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS D SHARES WERE FIRST OFFERED JULY 1,
1993. CLASS A SHARES WERE FIRST OFFERED APRIL 7, 1988. THE AVERAGE ANNUAL TOTAL
RETURN FOR 1-YEAR WITH CDSC REFLECTS THE CONTINGENT DEFERRED SALES CHARGE WHICH
IS IMPOSED ON REDEMPTIONS WITHIN THE FIRST YEAR OF PURCHASING SHARES.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
7
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OVERLAND EXPRESS CALIFORNIA TAX-FREE BOND FUND
DAVID KLUG, SENIOR TAX-EXEMPT SPECIALIST/PORTFOLIO MANAGER. MR. KLUG HAS MANAGED
MUNICIPAL BOND PORTFOLIOS FOR WELLS FARGO FOR OVER TEN YEARS. PRIOR TO JOINING
WELLS FARGO, HE MANAGED THE MUNICIPAL BOND PORTFOLIO FOR A MAJOR PROPERTY AND
CASUALTY INSURANCE COMPANY. HIS INVESTMENT EXPERIENCE EXCEEDS 20 YEARS AND
INCLUDES ALL ASPECTS OF TAX-EXEMPT FIXED-INCOME INVESTMENTS. HE HOLDS AN M.B.A.
FROM THE UNIVERSITY OF CHICAGO AND IS A MEMBER OF THE NATIONAL FEDERATION OF
MUNICIPAL ANALYSTS AND ITS CALIFORNIA CHAPTER. HE HAS MANAGED THE FUND SINCE ITS
INCEPTION.
Q. THE CALIFORNIA TAX-FREE BOND FUND (THE "FUND") WAS AFFECTED BY 1995'S
DECLINING INTEREST RATE ENVIRONMENT. HOW DID THIS AND OTHER FACTORS
CONTRIBUTE TO THE OVERALL PERFORMANCE FOR 1995?
A. The Fund benefited from the decline in interest rates during 1995. Long-term
municipal interest rates dropped by over 1.2%, as measured by the Bond Buyer 20
Bond Index. With bond prices moving inversely relative to interest rates, a
significant amount of the Fund's total return came from price appreciation
experienced by individual holdings within the Fund.
Q. WHAT ARE YOUR CRITERIA FOR SELECTING THE SECURITIES FOR THE FUND?
A. Credit quality, call protection, liquidity and relative value are among the
criteria considered in selecting individual securities for the Fund. Among most
recent purchases was an AAA-rated insured San Diego Sewer Revenue bond with a 5%
coupon. This purchase offered high credit quality, good liquidity as well as
good call protection, with potential price appreciation should interest rates
continue to decline.
Q. WHAT LINGERING EFFECTS IN THE FUND DO YOU SEE FROM LAST YEAR'S FINANCIAL
TROUBLE IN ORANGE COUNTY?
A. Borrowing by municipalities in Orange County is dramatically less since
the County's bankruptcy filing in December, 1994. In turn, Orange County
securities continue to be penalized by the market as some investors continue
to avoid the Orange County name. In the effort to be out of bankruptcy by
June 30, 1996, the County has filed a reorganization plan with the bankruptcy
court with the goals of accessing the bond market and restructuring its
outstanding obligations.
The Orange County filing had little impact on the Fund when compared to its peer
funds because the Fund owned relatively few Orange County-related bonds without
credit support in 1995.
8
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OVERLAND EXPRESS CALIFORNIA TAX-FREE BOND FUND
Q. GIVEN THE CONTINUED DISCUSSION OF FEDERAL TAX REFORM, WHAT ARE THE IMPACTS ON
THE MUNICIPAL SECURITIES MARKET?
A. The continued discussions of federal tax reform and its negative implications
for municipal bonds have caused municipal securities to underperform Treasuries
of similar maturities since mid-April. For example, the yield ratio between
20-year, AAA-rated municipal obligations and 20-year Treasury bonds had been as
low as 77.4% in early 1995. As the threat that municipal securities may lose
their federal tax exempt status heightens, this ratio has risen to as high as
90.1% by late September. Most recently, the perceived threat of federal tax
reform has subsided, thus causing this ratio to drop to 87.6%. While this yield
ratio is above the average, for all of 1995, it is actually below the average
for the fourth quarter of 1995.
Q. WHAT IS YOUR OUTLOOK ON THE CALIFORNIA ECONOMY IN 1996 AND HOW WILL THIS
AFFECT YOUR FUTURE STRATEGY?
A. We expect the California economy to continue to recover in 1996, as the state
benefits from continued growth in the technology and entertainment industries,
among others. Improvement in the state economy should have a positive impact on
a wide variety of California debt issues, including tax allocation and lease
revenue bonds. The Fund will continue to purchase broadly diversified California
issues and avoid issues which appear most vulnerable to credit stress by
emphasizing credit quality and call protection in its new purchases. In
addition, the Fund is likely to continue to reduce its holdings of higher coupon
bonds that have poor call protection.
9
<PAGE>
OVERLAND EXPRESS CALIFORNIA TAX-FREE BOND FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS CALIFORNIA
TAX-FREE BOND FUND COMPARED WITH THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
The chart on the next page shows the performance of the Overland Express
California Tax-Free Bond Fund compared with the Lehman Brothers Municipal Bond
Index. The chart assumes a hypothetical $10,000 initial investment. Class A
shares reflect all Fund expenses and the maximum 4.5% initial sales charge. The
Lehman Brothers Municipal Bond Index is an unmanaged index that includes
approximately 15,000 bonds. Investors should note that the Fund is a
professionally managed mutual fund, while the index is unmanaged, does not incur
expenses and is not available directly for investment. If Fund operating
expenses had been applied to the index, its performance would have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which, for class A shares, includes the maximum
4.5% initial sales charge, and for class D shares, the 1% contingent deferred
sales charge ("CDSC"), and represents the average annual increase in value of
the investment over the indicated periods, assuming reinvestment of dividends
and capital gains distributions at net asset value. Your investment return and
principal value will fluctuate with market conditions, so that your shares, when
redeemed, may be worth more or less than their original cost. Past performance
is not predictive of future performance. Class A shares have been offered since
October 6, 1988, and class D shares have been offered since July 1, 1993. The
average annual total return for 1-year with CDSC reflects the contingent
deferred sales charge imposed on redemptions within the first year of purchasing
shares.
10
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS CALIFORNIA LEHMAN BROTHERS MUNICIPAL
Tax-Free Bond Fund Class A Bond Index
<S> <C> <C>
Inception $ 9,550 $ 10,000
Oct-88 $ 9,636 $ 10,176
Nov-88 $ 9,549 $ 10,082
Dec-88 $ 9,783 $ 10,185
Jan-89 $ 9,929 $ 10,396
Feb-89 $ 9,831 $ 10,276
Mar-89 $ 9,832 $ 10,253
Apr-89 $ 10,150 $ 10,496
May-89 $ 10,351 $ 10,714
Jun-89 $ 10,491 $ 10,660
Jul-89 $ 10,623 $ 11,008
Aug-89 $ 10,470 $ 10,900
Sep-89 $ 10,460 $ 10,867
Oct-89 $ 10,604 $ 11,000
Nov-89 $ 10,770 $ 11,192
Dec-89 $ 10,832 $ 11,284
Jan-90 $ 10,696 $ 11,231
Feb-90 $ 10,864 $ 11,331
Mar-90 $ 10,907 $ 11,334
Apr-90 $ 10,758 $ 11,253
May-90 $ 11,025 $ 11,496
Jun-90 $ 11,133 $ 11,599
Jul-90 $ 11,328 $ 11,770
Aug-90 $ 11,001 $ 11,599
Sep-90 $ 10,990 $ 11,606
Oct-90 $ 11,176 $ 11,816
Nov-90 $ 11,444 $ 12,053
Dec-90 $ 11,534 $ 12,106
Jan-91 $ 11,725 $ 12,269
Feb-91 $ 11,792 $ 12,375
Mar-91 $ 11,815 $ 12,380
Apr-91 $ 11,998 $ 12,545
May-91 $ 12,136 $ 12,657
Jun-91 $ 12,098 $ 12,644
Jul-91 $ 12,268 $ 12,796
Aug-91 $ 12,417 $ 12,967
Sep-91 $ 12,590 $ 13,136
Oct-91 $ 12,692 $ 13,254
Nov-91 $ 12,688 $ 13,291
Dec-91 $ 12,674 $ 13,577
Jan-92 $ 12,858 $ 13,608
Feb-92 $ 12,938 $ 13,612
Mar-92 $ 12,983 $ 13,618
Apr-92 $ 13,100 $ 13,739
May-92 $ 13,243 $ 13,901
Jun-92 $ 13,485 $ 14,135
Jul-92 $ 13,927 $ 14,559
Aug-92 $ 13,735 $ 14,416
Sep-92 $ 13,806 $ 14,510
Oct-92 $ 13,536 $ 14,367
Nov-92 $ 13,875 $ 14,625
Dec-92 $ 14,034 $ 14,774
Jan-93 $ 14,197 $ 14,945
Feb-93 $ 14,722 $ 15,466
Mar-93 $ 14,608 $ 15,322
Apr-93 $ 14,778 $ 15,477
May-93 $ 14,863 $ 15,563
Jun-93 $ 15,163 $ 15,823
Jul-93 $ 15,154 $ 15,844
Aug-93 $ 15,530 $ 16,173
Sep-93 $ 15,747 $ 16,358
Oct-93 $ 15,776 $ 16,389
Nov-93 $ 15,620 $ 16,245
Dec-93 $ 15,856 $ 16,567
Jan-94 $ 16,054 $ 16,777
Feb-94 $ 15,739 $ 16,342
Mar-94 $ 15,213 $ 15,677
Apr-94 $ 15,169 $ 15,810
May-94 $ 15,348 $ 15,948
Jun-94 $ 15,310 $ 15,850
Jul-94 $ 15,570 $ 16,140
Aug-94 $ 15,632 $ 16,197
Sep-94 $ 15,449 $ 15,959
Oct-94 $ 15,223 $ 15,675
Nov-94 $ 14,951 $ 15,391
Dec-94 $ 15,171 $ 15,730
Jan-95 $ 15,592 $ 16,179
Feb-95 $ 15,970 $ 16,650
Mar-95 $ 16,109 $ 16,841
Apr-95 $ 16,114 $ 16,861
May-95 $ 16,602 $ 17,399
Jun-95 $ 16,375 $ 17,247
Jul-95 $ 16,475 $ 17,410
Aug-95 $ 16,689 $ 17,631
Sep-95 $ 16,827 $ 17,743
Oct-95 $ 17,132 $ 18,001
Nov-95 $ 18,061 $ 18,300
Dec-95 $ 17,655 $ 18,475
</TABLE>
THE RETURN FOR CLASS D SHARES OF THE CALIFORNIA TAX-FREE BOND FUND WILL VARY
FROM THE RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
...............................................................................
PERFORMANCE OF CALIFORNIA TAX-FREE BOND FUND AS OF 12/31/95
<TABLE>
<CAPTION>
CLASS A SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR 3 YR 5 YR SINCE 10/6/88 INCEPTION
................................................................................................
<S> <C> <C> <C> <C>
With Maximum 4.5% Sales Charge 11.15% 6.32% 7.90% 8.16%
Without Sales Charge 16.38% 7.95% 8.89% 8.85%
<CAPTION>
CLASS D SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 7/1/93 INCEPTION
...............................................................................................
<S> <C> <C>
With 1.0% Contingent Deferred Sales Charge 14.60% N/A
Without Contingent Deferred Sales Charge 15.58% 5.42%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS D SHARES WERE FIRST OFFERED JULY 1,
1993. CLASS A SHARES WERE FIRST OFFERED OCTOBER 6, 1988. THE AVERAGE ANNUAL
TOTAL RETURN FOR 1-YEAR WITH CDSC REFLECTS THE CONTINGENT DEFERRED SALES CHARGE
WHICH IS IMPOSED ON REDEMPTIONS WITHIN THE FIRST YEAR OF PURCHASING SHARES.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
11
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
12
<PAGE>
OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET FUND
LAURA MILNER, TAX-EXEMPT SPECIALIST/MONEY MARKET PORTFOLIO MANAGER. MS. MILNER
JOINED WELLS FARGO IN 1988. HER BACKGROUND INCLUDES OVER SEVEN YEARS' EXPERIENCE
SPECIALIZING IN SHORT- AND LONG-TERM MUNICIPAL SECURITIES WITH SALOMON BROTHERS.
SHE IS A MEMBER OF THE NATIONAL FEDERATION OF MUNICIPAL ANALYSTS AND ITS
CALIFORNIA CHAPTER. MS. MILNER HAS BEEN MANAGING THE FUND SINCE ITS INCEPTION.
Q. HOW DID THE OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET FUND (THE
"FUND") PERFORM DURING 1995?
A. The Fund's yield for the period ended December 31, 1995 was 5.16%. Please
note the Fund received a one-time payment of income that had been unpaid by a
bond remarketing agent. Without this additional income payment the yield would
have been 3.96%. The Fund achieved its goal of seeking a high level of tax-free
income, capital preservation and liquidity.
Q. HOW DID ALL THE ATTENTION FOCUSED ON EXOTIC DERIVATIVES AFFECT THE FUND'S
PORTFOLIO?
A. Since the Fund neither purchases exotic derivative products nor leverages its
assets, the Fund's portfolio was not negatively impacted by these events.
Q. WHAT IS THE CURRENT COMPOSITION OF THE PORTFOLIO?
A. As of December 31, 1995 the Fund is composed of approximately 65% daily and
weekly variable rate demand notes which are in most cases backed by a letter of
credit from an A1/P1-rated bank and/or have municipal bond insurance. 17.5% of
the portfolio is invested in tax-exempt commercial paper which typically has a
letter of credit from a bank. Municipal notes comprise another 15% of the Fund.
A small portion of the Fund (3.5%) is invested in prerefunded bonds that are
fully collateralized by U.S. government obligations.
Q. THE FEDERAL BUDGET DEBATE MAY RESULT IN MORE FISCAL RESPONSIBILITIES BEING
SHIFTED TO THE STATES. WHAT EFFECT WOULD THIS HAVE ON THE YIELD AND CREDIT
QUALITY OF CALIFORNIA MUNICIPAL SECURITIES?
A. While federal shifting of some fiscal responsibilities to the states may
not be fully offset by federal block grants, California, with its growing
economy and state revenues, should be able to at least partially offset any
loss in federal funding. Improvement in the state economy and revenues should
have a positive impact on credit quality. We will be monitoring federal
budget developments and their possible effects on the state's credit quality.
Q. WHAT IS YOUR OUTLOOK FOR CALIFORNIA'S ECONOMY?
A. We expect the California economy to continue to recover in 1996. The state
should benefit from continued growth in the high technology and entertainment
industries, among others. We also expect state revenues to experience continued
growth.
13
<PAGE>
OVERLAND EXPRESS CALIFORNIA TAX-FREE MONEY MARKET FUND
Q. WHAT LINGERING EFFECTS DO YOU SEE FROM LAST YEAR'S FINANCIAL TROUBLE IN
ORANGE COUNTY?
A. The Fund does not hold any Orange County issues that are not credit
enhanced(for example, backed by a line of credit) or revenue-backed (backed by
the income from a particular project) so that the resolution of the bankruptcy
will have no direct impact on the Fund. Orange County has filed a reorganization
plan with the bankruptcy court. If it is successful in accessing the bond market
in the next few months in order to restructure some of its outstanding
obligations, the County expects to be out of bankruptcy by June 30, 1996 and to
have repaid its outstanding short-term notes by that time. Orange County
obligations continue to be penalized by the market, perhaps by as much as 0.2%,
as some investors continue to avoid Orange County names. Borrowing by Orange
County municipalities has dropped since the County's bankruptcy filing in
December, 1994.
ALTHOUGH THE FUND SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET VALUE, THERE IS
NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY GOVERNMENT AGENCY, NOR BY WELLS FARGO BANK.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S YIELDS WOULD HAVE BEEN LOWER.
14
<PAGE>
OVERLAND EXPRESS MONEY MARKET FUND -- CLASS A
MARK KRASCHEL, LIQUIDITY MANAGEMENT SPECIALIST/PORTFOLIO MANAGER. MR. KRASCHEL
HAS SPECIALIZED IN BOND INVESTMENT APPLICATIONS FOR OVER A DECADE. HE JOINED
WELLS FARGO BANK IN 1988 AFTER FIVE YEARS IN FIXED-INCOME MANAGEMENT AT FIRST
BOSTON CORPORATION. MR. KRASCHEL HOLDS A B.S. IN BUSINESS ADMINISTRATION FROM
THE UNIVERSITY OF OREGON AND AN M.B.A. IN FINANCE FROM THE UNIVERSITY OF SAN
FRANCISCO. HE HAS CO-MANAGED THE FUND SINCE MARCH 26, 1993.
JEFF L. WEAVER, TAXABLE LIQUIDITY MANAGEMENT SPECIALIST/PORTFOLIO MANAGER. MR.
WEAVER JOINED WELLS FARGO BANK AFTER THREE YEARS AS A SHORT-TERM FIXED INCOME
TRADER AND PORTFOLIO MANAGER IN THE INVESTMENT MANAGEMENT GROUP OF BANKERS TRUST
COMPANY IN NEW YORK. HE HOLDS A B.A. IN ECONOMICS FROM THE UNIVERSITY OF
COLORADO AND IS A CHARTERED FINANCIAL ANALYST CANDIDATE. HE HAS ALSO CO-MANAGED
THE FUND SINCE MAY 1, 1994.
Q. HOW DID THE OVERLAND EXPRESS MONEY MARKET FUND -- CLASS A (THE "FUND")
PERFORM DURING 1995?
A. The Fund's seven day yield for the period ended December 31, 1995 was 5.19%.
The Fund achieved its goal of maintaining principal stability at a $1.00 per
share net asset value while providing competitive money market yields.
Q. THE FEDERAL RESERVE LOWERED THE FEDERAL FUNDS TARGET RATE BY 1/4% IN JULY AND
BY ANOTHER 1/4% IN DECEMBER. WHAT EFFECT DID THIS HAVE ON THE FUND?
A. After peaking in February, money market yields declined marginally over the
course of the year. As a result, the Fund's yield fell as well. In anticipation
of further Federal Reserve easings, average weighted maturity has been extended
in order to lock in current rates for a longer period of time.
Q. WHAT STEPS ARE YOU TAKING AS YOU LOOK AHEAD IN 1996 IN PURSUIT OF CONSISTENT
RETURNS IN LIGHT OF LOWER FEDERAL FUNDS RATES?
A. Under the current declining interest rate environment, we expect to maintain
the Fund's average weighted maturity in a longer range. This should enable the
Fund to take advantage of proper yield curve positioning and potentially
declining interest rates.
Q. HOW DID THE ATTENTION FOCUSED ON EXOTIC DERIVATIVES AFFECT THE FUND'S
PORTFOLIO?
A. Since the Fund neither purchases exotic derivative products nor leverages its
assets, the Fund's portfolio was not negatively impacted by these events.
Q. WHAT IS THE CURRENT COMPOSITION OF THE PORTFOLIO?
A. As of year-end, the Fund was composed of 61% commercial paper, 15% floating
rate notes, 16% U.S. Treasury bills, 3% repurchase agreements, 2% federal agency
discount notes and 3% bank notes. All commercial paper purchased by the Fund is
rated A1+/P1 or A1/P1 by Standard & Poor's and Moody's respectively.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES , WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S YIELDS WOULD HAVE BEEN LOWER.
ALTHOUGH THE FUND SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET VALUE, THERE IS
NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY GOVERNMENT AGENCY, NOR BY WELLS FARGO BANK.
15
<PAGE>
OVERLAND EXPRESS MUNICIPAL INCOME FUND
MARY J. SEBRELL, TAX EXEMPT SPECIALIST/PORTFOLIO MANAGER. MS. SEBRELL HAS
MANAGED MUNICIPAL BOND PORTFOLIOS AT WELLS FARGO FOR 15 YEARS HER TOTAL
MUNICIPAL INVESTMENT EXPERIENCE EXCEEDS 21 YEARS. PRIOR TO JOINING WELLS FARGO,
SHE WORKED AT JOHN NUVEEN AND COMPANY, A FIRM SPECIALIZING IN MUNICIPAL
INVESTMENTS. SHE HOLDS A B.A. FROM WASHBURN UNIVERSITY AND IS A MEMBER OF THE
NATIONAL FEDERATION OF MUNICIPAL ANALYSTS. SHE BEGAN CO-MANAGING THE FUND
SHORTLY AFTER ITS INCEPTION, AND BECAME THE SOLE MANAGER IN MAY 1995.
Q. THE MUNICIPAL INCOME FUND (THE "FUND") POSTED RELATIVELY STRONG PERFORMANCE
DURING 1995 AS COMPARED TO LAST YEAR. WHAT FACTORS CONTRIBUTED TO THE FUND'S
PERFORMANCE?
A. During 1995, the Overland Express Municipal Income Fund's performance was
similar to the average returns realized by General Market Debt Funds as tracked
by Lipper Analytical Services, while maintaining a AAAf rating by Standard and
Poor's.
The main factor that allows this high credit quality Fund to perform similar to
the average
of general municipal funds, many of which have lower credit quality, is the
Fund's concentration on bonds subject to the alternative minimum tax ("AMT"). To
compensate investors for this additional tax exposure, bonds subject to the AMT
carry yield premiums over non-AMT bonds. Because not very many taxpayers are
subject to AMT, we believe it makes sense for the Fund's investors to capture
this yield premium. This allows the Fund to maintain the highest credit quality
possible as well as provide a competitive return.
Q. WHAT IS THE FUND'S LARGEST HOLDING?
A. The Fund holds a large position of Riverside, California Single Family
Mortgage Revenue bonds. The bonds have an 8.35% coupon with a maturity of
6/1/13. The income from the bonds are subject to the AMT and were originally
secured by the Government National Mortgage Association ("GNMA"). These bonds
were escrowed-to-maturity with all interest and principal payment secured by
U.S. Government obligations. This position now represents over 18% of the
portfolio and has provided price appreciation as interest rates have moved
lower.
Q. HOW HAVE RECENT INTEREST RATE MOVEMENTS AFFECTED THE FUND?
A. Whenever interest rates decline, bond prices tend to move up. This price
appreciation added to the total return of the Fund for 1995. In addition, lower
market interest rates have effectively shortened the duration of the portfolio.
As market interest rates move lower the risk of bonds being called increases,
which causes the market to price the bonds based on their shorter call dates. On
December 31, 1995 the Funds effective maturity was 11.62 years with a duration
of 7.54 years. This is down from 17.04 years and 8.99 years at the end of 1994.
Q. WERE THERE ANY CHANGES IN THE ECONOMIC, POLITICAL OR TAX ENVIRONMENT THAT
AFFECTED THE FUND'S PORTFOLIO HOLDINGS OR PERFORMANCE?
A. The discussions of federal tax reform and the flat tax had negative
implications for the municipal bond market and have caused municipal securities
to underperform Treasuries of similar maturities since mid-April. As an example,
the yield ratio between 20-year, AAA-rated
16
<PAGE>
OVERLAND EXPRESS MUNICIPAL INCOME FUND
municipal obligations and 20-year Treasury bonds had been as low as 77.4% in
early 1995. As the threat that municipal obligations may lose their federal
tax-exempt status heightens, this yield ratio had risen to as high as 90.1% by
late September. Most recently, the issue of federal tax reform has somewhat
receded thus causing this ratio to drop by 87.6% While this yield ratio remains
above the average for all of 1995, it is actually below the average for the
fourth quarter of 1995.
Q. WHAT CHANGES DID YOU MAKE IN THE FUND'S PORTFOLIO OVER THE PAST SIX MONTHS
AND WHY?
A. The Fund increased its concentration in AMT bonds and housing bonds. On
December 31, 1995, 91% of the bonds in the portfolio were subject to the AMT. Of
the total portfolio, 78% is invested in mortgage revenue bonds. This represents
a substantial increase from December 31, 1994, when figures were 80.7% and
62.6%, respectively. The increased allocations to these categories provided a
relatively higher yield for shareholders.
Q. WHAT MAKES YOUR INVESTMENT STRATEGY STAND OUT?
A. The Fund's investment strategy offers the investor a high-quality AAA-rated
tax-exempt bond portfolio which provides a high level of federally tax-exempt
income.
Q. WHAT IS YOUR OUTLOOK AS 1996 BEGINS?
A. We currently expect a favorable environment with a stable economy and
slightly lower interest rates. Although mortgage rates are likely to decline, at
least early in the year, the demand from low-income wage earners for first time
home mortgages should be limited. A subdued demand for low-income mortgages
(which qualify for tax-exempt new issue bond sales) should again result in a
limited supply of new municipal mortgage revenue bonds. This supply/demand
situation should help support prices in this market.
Q. WHAT IS THE FUND'S STRATEGY FOR 1996?
A. The Fund will continue to pursue its strategy of diversification, by
investing in securities from over 35 different states, which helps to protect
the Fund's share price from fluctuations tied to any one region's economy.
17
<PAGE>
OVERLAND EXPRESS MUNICIPAL INCOME FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS MUNICIPAL INCOME
FUND COMPARED WITH THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
The chart on the next page shows the performance of the Overland Express
Municipal Income Fund compared with the Lehman Brothers Municipal Bond Index.
The chart assumes a hypothetical $10,000 initial investment. Class A shares
reflect all Fund expenses and the maximum 3% initial sales charge. The Lehman
Brothers Municipal Bond Index is an unmanaged index that includes approximately
15,000 bonds. Investors should note that the Fund is a professionally managed
mutual fund, while the index is unmanaged, does not incur expenses and is not
available directly for investment. If Fund operating expenses had been applied
to the index, its performance would have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which, for class A shares, includes the maximum
3% initial sales charge, and for class D shares, the 1% contingent deferred
sales charge ("CDSC"), and represents the average annual increase in value of
the investment over the indicated periods, assuming reinvestment of dividends
and capital gains distributions at net asset value. Your investment return and
principal value will fluctuate with market conditions, so that your shares, when
redeemed, may be worth more or less than their original cost. Past performance
is not predictive of future performance. Class A shares have been offered since
July 17, 1991, and class D shares have been offered since July 1, 1993. The
average annual total return for 1-year with CDSC reflects the contingent
deferred sales charge imposed on redemptions within the first year of purchasing
shares.
18
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS MUNICIPAL LEHMAN BROTHERS
Income Fund Class A Municipal Bond Index
<S> <C> <C>
Jul-91 $ 9,700 $ 10,000
Aug-91 $ 9,769 $ 10,132
Sep-91 $ 9,953 $ 10,264
Oct-91 $ 10,049 $ 10,356
Nov-91 $ 10,046 $ 10,385
Dec-91 $ 10,264 $ 10,608
Jan-92 $ 10,310 $ 10,633
Feb-92 $ 10,354 $ 10,636
Mar-92 $ 10,360 $ 10,640
Apr-92 $ 10,468 $ 10,735
May-92 $ 10,586 $ 10,862
Jun-92 $ 10,766 $ 11,044
Jul-92 $ 11,145 $ 11,375
Aug-92 $ 10,975 $ 11,264
Sep-92 $ 11,064 $ 11,337
Oct-92 $ 10,860 $ 11,226
Nov-92 $ 11,152 $ 11,427
Dec-92 $ 11,284 $ 11,544
Jan-93 $ 11,419 $ 11,677
Feb-93 $ 11,865 $ 12,100
Mar-93 $ 11,742 $ 11,972
Apr-93 $ 11,866 $ 12,093
May-93 $ 11,961 $ 12,161
Jun-93 $ 12,183 $ 12,364
Jul-93 $ 12,185 $ 12,380
Aug-93 $ 12,453 $ 12,637
Sep-93 $ 12,599 $ 12,781
Oct-93 $ 12,669 $ 12,806
Nov-93 $ 12,548 $ 12,693
Dec-93 $ 12,764 $ 12,961
Jan-94 $ 12,934 $ 13,108
Feb-94 $ 12,513 $ 12,769
Mar-94 $ 11,953 $ 12,249
Apr-94 $ 11,896 $ 12,353
May-94 $ 12,057 $ 12,461
Jun-94 $ 11,941 $ 12,385
Jul-94 $ 12,208 $ 12,611
Aug-94 $ 12,221 $ 12,656
Sep-94 $ 12,009 $ 12,470
Oct-94 $ 11,796 $ 12,248
Nov-94 $ 11,559 $ 12,026
Dec-94 $ 11,893 $ 12,290
Jan-95 $ 12,229 $ 12,642
Feb-95 $ 12,615 $ 13,009
Mar-95 $ 12,720 $ 13,159
Apr-95 $ 12,692 $ 13,174
May-95 $ 13,068 $ 13,595
Jun-95 $ 12,904 $ 13,476
Jul-95 $ 12,938 $ 13,604
Aug-95 $ 13,061 $ 13,776
Sep-95 $ 13,208 $ 13,863
Oct-95 $ 13,403 $ 14,065
Nov-95 $ 13,650 $ 14,296
Dec-95 $ 13,850 $ 14,436
</TABLE>
THE RETURN FOR CLASS D SHARES OF THE MUNICIPAL INCOME FUND WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
...............................................................................
PERFORMANCE OF MUNICIPAL INCOME FUND AS OF 12/31/95
<TABLE>
<CAPTION>
CLASS A SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR 3 YR SINCE 7/17/91 INCEPTION
........................................................................................
<S> <C> <C> <C>
With Maximum 3.0% Sales Charge 12.92% 5.97% 7.58%
Without Sales Charge 16.45% 7.07% 8.32%
<CAPTION>
CLASS D SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 7/1/93 INCEPTION
........................................................................................
<S> <C> <C>
With 1.0% Contingent Deferred Sales Charge 14.75% N/A
Without Contingent Deferred Sales Charge 15.75% 4.53%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS D SHARES WERE FIRST OFFERED JULY 1,
1993. CLASS A SHARES WERE FIRST OFFERED JULY 17, 1991. THE AVERAGE ANNUAL TOTAL
RETURN FOR 1-YEAR WITH CDSC REFLECTS THE CONTINGENT DEFERRED SALES CHARGE WHICH
IS IMPOSED ON REDEMPTIONS WITHIN THE FIRST YEAR OF PURCHASING SHARES.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
19
<PAGE>
OVERLAND EXPRESS SHORT-TERM
GOVERNMENT-CORPORATE INCOME FUND
MARK KRASCHEL, LIQUIDITY MANAGEMENT SPECIALIST/PORTFOLIO MANAGER. MR. KRASCHEL
HAS SPECIALIZED IN BOND INVESTMENT APPLICATIONS FOR OVER A DECADE. HE JOINED
WELLS FARGO BANK IN 1988 AFTER FIVE YEARS IN FIXED-INCOME MANAGEMENT AT FIRST
BOSTON CORPORATION. MR. KRASCHEL HOLDS A B.S. IN BUSINESS ADMINISTRATION FROM
THE UNIVERSITY OF OREGON AND AN M.B.A. IN FINANCE FROM THE UNIVERSITY OF SAN
FRANCISCO. MR. KRASCHEL HAS CO-MANAGED THE FUND SINCE ITS INCEPTION AND ASSUMED
SOLE RESPONSIBILITY FOR MANAGEMENT OF THE FUND ON FEBRUARY 1, 1995.
Q. THE OVERLAND EXPRESS SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND ("THE FUND")
WAS AFFECTED BY 1995'S DECLINING INTEREST RATE ENVIRONMENT. HOW DID THIS AND
OTHER FACTORS CONTRIBUTE TO THE FUND'S OVERALL PERFORMANCE FOR 1995?
A. Short-term interest rates declined in 1995. As fears of inflation subsided,
and economic growth became sluggish, a shift toward easier monetary policy and
lower interest rates by the Federal Reserve occurred. Yields on one-year
Treasury bills fell from 7.25% in January to a low of 5.14% at year end.
As these events progressed, the Fund moved from a conservative stance to a more
bullish one. Throughout a good environment for fixed-income securities, the Fund
was positioned bullishly with its duration extended longer than the Merrill
Lynch One Year Treasury Bill Index.
Q. HOW DID THE FUND BEHAVE OVER THE LAST SIX MONTHS?
A. Over the past six months, the Fund continued to benefit from falling
short-term interest rates. With two 1/4% moves, on July 5 and December 19, the
Federal Reserve lowered the federal funds target rate from 6.00% to 5.50%. Both
moves were anticipated by the financial markets.
Q. HOW DID 1995'S ATTENTION ON EXOTIC DERIVATIVES AFFECT THE FUND'S PORTFOLIO?
A. Since the Fund neither purchases exotic derivative products nor leverages its
assets, the Fund's portfolio was not negatively impacted by these events.
Q. WHY IS THE CURRENT PORTFOLIO MADE UP OF 100% TREASURY OBLIGATIONS?
A. Until the Master Portfolio acheives a certain asset size (approximately $10
million), the investment adviser intends to invest substantially all of the
Master Portfolio's assets in U.S. Treasury bonds, notes, bills and repurchase
agreements.
20
<PAGE>
OVERLAND EXPRESS SHORT-TERM
GOVERNMENT-CORPORATE INCOME FUND
Q. WHAT IS YOUR ECONOMIC OUTLOOK AS 1996 BEGINS?
A. Currently, the prospects for lower interest rates in 1996 are good. The
ongoing and often stagnating budget talks in Washington have been a primary
focus of Wall Street. A completed budget deal could solidify lower inflation
expectations and calm market anxieties. Government shutdowns have a negative
impact on the economy and delay key government economic releases. Nonetheless,
the environment remains positive as we expect the Federal Reserve to continue
its easing cycles. With the Fund's average maturity extended beyond one year,
continued easing by the Federal Reserve should favorably impact the Fund.
THE SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND (THE "FEEDER") AND THE
SHORT-TERM GOVERNMENT-CORPORATE INCOME MASTER PORTFOLIO (THE "MASTER") ARE
ORGANIZED AS A "MASTER-FEEDER" STRUCTURE. INSTEAD OF INVESTING DIRECTLY IN
INDIVIDUAL PORTFOLIO SECURITIES, THE FEEDER FUND, WHICH IS OFFERED TO THE
PUBLIC, HOLDS INTERESTS IN THE MASTER, WHICH INVESTS IN INDIVIDUAL SECURITIES.
REFERENCES TO THE FUND ARE TO THE FEEDER OR MASTER, AS THE CONTEXT REQUIRES. THE
MASTER PORTFOLIO IS ADVISED BY WELLS FARGO BANK.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY GOVERNMENT AGENCY, NOR BY WELLS FARGO BANK.
21
<PAGE>
OVERLAND EXPRESS SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS SHORT-TERM
GOVERNMENT-CORPORATE INCOME FUND COMPARED WITH THE MERRILL LYNCH 1-YEAR TREASURY
BILL INDEX
The chart on the next page shows the performance of the Overland Express
Short-Term Government-Corporate Income Fund compared with the Merrill Lynch
1-Year Treasury Bill Index. The chart assumes a hypothetical $10,000 initial
investment in the Fund and reflects all Fund expenses and the maximum 3% initial
sales charge. Investors should note that the Fund is a professionally managed
mutual fund, while the Merrill Lynch 1-Year Treasury Bill Index is an unmanaged
index and does not incur expenses. If Fund operating expenses had been applied
to the Merrill Lynch 1-Year Treasury Bill Index, its performance would have been
lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which includes the maximum 3% initial sales
charge, and represents the average annual increase in value of the investment
over the indicated periods, assuming reinvestment of dividends and capital gains
distributions at net asset value. Your investment return and principal value
will fluctuate with market conditions, so that your shares, when redeemed, may
be worth more or less than their original cost. Past performance is not
predictive of future performance. The Fund's inception was September 19, 1994.
22
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MERRILL LYNCH
OVERLAND EXPRESS SHORT-TERM 1-YEAR TREASURY BILL
GOVERNMENT-CORPORATE INCOME FUND INDEX
<S> <C> <C>
Inception $9,700 $10,000
09/30/94 $9,714 $10,015
10/31/94 $9,744 $10,054
11/30/94 $9,696 $10,049
12/31/94 $9,727 $10,083
01/31/95 $9,837 $10,184
02/28/95 $9,962 $10,273
03/31/95 $9,995 $10,333
04/28/95 $10,059 $10,392
05/31/95 $10,129 $10,485
06/30/95 $10,181 $10,545
07/31/95 $10,229 $10,597
08/31/95 $10,279 $10,648
09/29/95 $10,311 $10,692
10/31/95 $10,384 $10,756
11/30/95 $10,457 $10,820
12/29/95 $10,510 $10,881
</TABLE>
PERFORMANCE OF SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND AS OF 12/31/95
..............................................................................
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 9/19/94 INCEPTION
..............................................................................
<S> <C> <C>
With Maximum 3.0% Sales Charge 4.86% 4.00%
Without Sales Charge 8.05% 6.41%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. THE FUND WAS FORMERLY CALLED 1-3 YEAR
DURATION FULL FAITH AND CREDIT GOVERNMENT INCOME FUND.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
23
<PAGE>
OVERLAND EXPRESS SHORT-TERM MUNICIPAL INCOME FUND
DAVID KLUG, TAX EXEMPT SPECIALIST/PORTFOLIO MANAGER. MR. DAVID KLUG, PORTFOLIO
CO-MANAGER FOR THE SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO, HAS MANAGED
MUNICIPAL BOND PORTFOLIOS FOR WELLS FARGO BANK FOR OVER TEN YEARS. PRIOR TO
JOINING WELLS FARGO BANK, HE MANAGED THE MUNICIPAL BOND PORTFOLIO FOR A MAJOR
PROPERTY AND CASUALTY INSURANCE COMPANY. HIS INVESTMENT EXPERIENCE EXCEEDS 20
YEARS AND INCLUDES ALL ASPECTS OF TAX-EXEMPT FIXED-INCOME INESTMENTS. HE HOLDS
AN M.B.A. FROM THE UNIVERSITY OF CHICAGO AND IS A MEMBER OF THE NATIONAL
FEDERATION OF MUNICIPAL ANALYSTS AND ITS CALIFORNIA CHAPTER. MR. KLUG HAS BEEN
CO-MANAGING THE FUND SINCE INCEPTION.
LAURA L. MILNER, TAX EXEMPT SPECIALIST/PORTFOLIO MANAGER. MS. MILNER JOINED
WELLS FARGO BANK IN 1988. HER BACKGROUND INCLUDES OVER SEVEN YEARS' EXPERIENCE
SPECIALIZING IN SHORT- AND LONG-TERM MUNICIPAL SECURITIES WITH SALOMON BROTHERS.
SHE IS A MEMBER OF THE NATIONAL FEDERATION OF MUNICIPAL ANALYSTS AND ITS
CALIFORNIA CHAPTER. MS. MILNER HAS BEEN CO-MANAGING THE FUND SINCE INCEPTION.
Q. THE OVERLAND EXPRESS SHORT-TERM MUNICIPAL INCOME FUND (THE "FUND") WAS
AFFECTED BY 1995'S DECLINING INTEREST RATE ENVIRONMENT. HOW DID THIS AND
OTHER FACTORS CONTRIBUTE TO THE FUND'S OVERALL PERFORMANCE FOR 1995?
A. The lowering of the federal funds rate by the Federal Reserve during the year
had a positive impact on the Fund's performance. The action by the Federal
Reserve was the result of low inflation and a slowing economy--both of which are
good environments for fixed-income instruments. We currently anticipate a
favorable environment for further easing of rates in 1996 which should also have
a positive impact on the Fund. The Fund's maturity is concentrated in the short-
to intermediate- part of the yield curve.
Q. WHAT CHANGES DID YOU MAKE IN THE FUND'S PORTFOLIO OVER THE PAST SIX MONTHS
AND WHY?
A. The average maturity during the past six months was extended given our
outlook for low inflation and continued interest rate declines. The Fund also
purchased a BAA1-rated Puerto Rico bond at a 0.60% lower price than AAA-rated
government obligations as the value between the two securities had widened.
Q. WHAT IS THE FUND'S LARGEST HOLDING AND WHY?
A. The Fund's largest holding is in Arizona State Department of Transportation
Revenue Bonds which are additionally insured by the Municipal Bond Insurance
Association ("MBIA"). Arizona is a "specialty" state meaning that at times it
trades at a premium relative to comparably rated bonds in other states due to
the high state tax rate and strong demand for Arizona municipal bonds. This
purchase was made when Arizona debt securities were undervalued caused by a
temporary increase in supply.
Q. WHAT IS SPECIAL ABOUT THE FUND'S INVESTMENT STRATEGY?
A. Our investment strategy for the Fund is based upon the business cycle. This
means that we manage the portfolio beginning with a business cycle analysis,
involving research and exploitation of recurring events and major trends in the
economy. These macroeconomic cycles and their effects on short- to long-term
interest rates guide the Fund's management
24
<PAGE>
OVERLAND EXPRESS SHORT-TERM MUNICIPAL INCOME FUND
through an investment process: yield
curve positioning, sector allocation and security selection, all play a part in
this process.
Q. GIVEN THE CONTINUED DISCUSSION OF FEDERAL TAX REFORM, WAS THERE AN IMPACT ON
THE MUNICIPAL SECURITIES MARKET?
A. The continued discussions of the flat tax and its negative implications on
municipal bonds have caused municipal securities to underperform Treasuries of
similar maturities since mid-April. For example, the yield ratio between 20-year
AAA-rated municipal securities and 20-year Treasury bonds had been as low as
77.4% in early 1995. As the threat that municipal securities may lose their
federal tax-exempt status heightened, this ratio rose as high as 90.1% by late
September. Most recently, the perceived threat of federal tax reform has
somewhat receded, thus causing this ratio to drop to 87.6%. While this figure
remains above the average for all of 1995, it is actually below the average for
the fourth quarter of 1995.
Q. HOW DID 1995'S FOCUS ON EXOTIC DERIVATIVES AFFECT THE FUND'S PORTFOLIO?
A. Since the Fund neither purchases exotic derivative products nor leverages its
assets, the Fund's portfolio was not negatively impacted by these events.
Q. WHAT IS YOUR OUTLOOK AS 1996 BEGINS RELATIVE TO THE FUND?
A. Currently we expect a favorable economic environment for further interest
rate declines in 1996. In addition, short- to intermediate- maturity municipal
securities should continue to experience strong demand in the marketplace as
1996 is expected to be the third largest year for redemption of outstanding
municipal bonds. In addition, as the threat of federal tax reform and its
implications on the municipal bond tax status lingers over the market, a fair
amount of these redemption proceeds should return back to this short sector of
the yield curve. With the Fund's maturity extended, this declining interest rate
environment should positively impact the Fund.
THE SHORT-TERM MUNICIPAL INCOME FUND (THE "FEEDER") AND THE SHORT-TERM MUNICIPAL
INCOME MASTER PORTFOLIO (THE "MASTER") ARE ORGANIZED AS A "MASTER-FEEDER"
STRUCTURE. INSTEAD OF INVESTING DIRECTLY IN INDIVIDUAL PORTFOLIO SECURITIES, THE
FEEDER FUND, WHICH IS OFFERED TO THE PUBLIC, HOLDS INTERESTS IN THE MASTER,
WHICH INVESTS IN INDIVIDUAL SECURITIES. REFERENCES TO THE FUND ARE TO THE FEEDER
OR MASTER, AS THE CONTEXT REQUIRES. THE MASTER PORTFOLIO IS ADVISED BY WELLS
FARGO BANK.
25
<PAGE>
OVERLAND EXPRESS SHORT-TERM
MUNICIPAL INCOME FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS SHORT-TERM
MUNICIPAL INCOME FUND COMPARED WITH THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
The chart on the next page shows the performance of the Overland Express
Short-Term Municipal Income Fund compared with the Lehman Brothers Municipal
Bond Index. The chart assumes a hypothetical $10,000 initial investment in the
Fund and reflects all Fund expenses and the maximum 3% initial sales charge. The
Lehman Brothers Municipal Bond Index is an unmanaged index that includes
approximately 15,000 bonds. Investors should note that the Fund is a
professionally managed mutual fund, while the index is unmanaged, does not incur
expenses and is not available directly for investment. If Fund operating
expenses had been applied to the index, its performance would have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which includes the maximum 3% initial sales
charge, and represents the average annual increase in value of the investment
over the indicated periods, assuming reinvestment of dividends and capital gains
distributions at net asset value Your investment return and principal value will
fluctuate with market conditions, so that your shares, when redeemed, may be
worth more or less than their original cost. Past performance is not predictive
of future performance. The Fund's inception date was June 3, 1994.
26
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS SHORT-TERM LEHMAN BROTHERS
MUNICIPAL INCOME FUND MUNICIPAL BOND INDEX
<S> <C> <C>
Inception $9,700 $10,000
Jun-94 $9,683 $9,939
Jul-94 $9,726 $10,121
Aug-94 $9,665 $10,156
Sep-94 $9,679 $10,007
Oct-94 $9,688 $9,829
Nov-94 $9,698 $9,651
Dec-94 $9,713 $9,863
Jan-95 $9,790 $10,145
Feb-95 $9,866 $10,440
Mar-95 $9,826 $10,560
Apr-95 $9,862 $10,573
May-95 $10,040 $10,910
Jun-95 $10,079 $10,815
Jul-95 $10,113 $10,917
Aug-95 $10,172 $11,055
Sep-95 $10,186 $11,125
Oct-95 $10,243 $11,287
Nov-95 $10,290 $11,475
Dec-95 $10,306 $11,585
<CAPTION>
LIPPER TAX-FREE MONEY MARKET FUND AVERAGE
<S> <C>
Inception $10,000
Jun-94 $10,018
Jul-94 $10,036
Aug-94 $10,058
Sep-94 $10,061
Oct-94 $10,101
Nov-94 $10,127
Dec-94 $10,157
Jan-95 $10,183
Feb-95 $10,210
Mar-95 $10,241
Apr-95 $10,271
May-95 $10,305
Jun-95 $10,335
Jul-95 $10,363
Aug-95 $10,393
Sep-95 $10,421
Oct-95 $10,450
Nov-95 $10,480
Dec-95 $10,507
</TABLE>
..............................................................................
PERFORMANCE OF SHORT-TERM MUNICIPAL INCOME FUND AS OF 12/31/95
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 6/3/94 INCEPTION
..............................................................................
<S> <C> <C>
With Maximum 3.0% Sales Charge 2.96% 1.98%
Without Sales Charge 6.10% 3.90%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. THE FUND WAS FORMERLY CALLED 1-3 YEAR
DURATION MUNICIPAL INCOME FUND.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
27
<PAGE>
OVERLAND EXPRESS STRATEGIC GROWTH FUND
JON HICKMAN, PORTFOLIO MANAGER. MR. HICKMAN SHARES PRIMARY RESPONSIBILITY FOR
THE DAY-TO-DAY MANAGEMENT OF THE STRATEGIC GROWTH FUND. HE HAS WORKED FOR WELLS
FARGO SINCE 1986. HE HAS APPROXIMATELY 15 YEARS OF EXPERIENCE IN THE INVESTMENT
MANAGEMENT FIELD AND IS A MEMBER OF WELLS FARGO'S EQUITY STRATEGY COMMITTEE. MR.
HICKMAN HAS A B.A. AND AN M.B.A. IN FINANCE FROM BRIGHAM YOUNG UNIVERSITY AND
HAS CO-MANAGED THE FUND SINCE ITS INCEPTION.
ROBERT BISSELL, PORTFOLIO MANAGER. MR. ROBERT BISSELL IS ALSO RESPONSIBLE FOR
THE DAY-TO-DAY MANAGEMENT OF THE STRATEGIC GROWTH FUND AND HAS PERFORMED SUCH
DUTIES SINCE THE FUND'S INCEPTION. MR. BISSELL JOINED WELLS FARGO BANK AT THE
TIME OF THE MERGER WITH CROCKER BANK AND HAS BEEN WITH THE COMBINED ORGANIZATION
FOR OVER 20 YEARS. PRIOR TO JOINING WELLS FARGO BANK, HE WAS A VICE PRESIDENT
AND INVESTMENT COUNSELOR WITH M.H. EDIE INVESTMENT COUNSELING, WHERE HE MANAGED
INSTITUTIONAL AND HIGH-NET-WORTH PORTFOLIOS. MR. BISSELL HOLDS A FINANCE DEGREE
FROM THE UNIVERSITY OF VIRGINIA. HE IS A CHARTERED FINANCIAL ANALYST AND A
MEMBER OF THE LOS ANGELES SOCIETY OF FINANCIAL ANALYSTS AND HAS CO-MANAGED THE
FUND SINCE ITS INCEPTION.
Q. THE OVERLAND EXPRESS STRATEGIC GROWTH FUND (THE "FUND") POSTED STRONG
PERFORMANCE FOR 1995. WHAT CONTRIBUTED TO THIS EXCEPTIONAL PERFORMANCE?
A. The Fund's performance resulted primarily from its focus on earnings growth,
helped by its continued exposure to quality issues in the technology and
healthcare sectors.
Q. THE FUND CONTINUED TO FAVOR THE TECHNOLOGY AND HEALTHCARE SECTORS IN 1995.
HOW WAS THE FUND AFFECTED BY THESE SECTORS?
A. During 1995, the Fund's investments in the technology sector included
semiconductor manufacturers and capital equipment companies. Semiconductor
companies experienced strong growth in earnings due to supply shortages. Also
emphasized in the technology sector were areas such as CD ROM,
Internet/Networking and data storage companies. Under current market
conditions, the Fund will continue to favor the technology sector. However
because some future volatility is expected to occur in this area, individual
stock selection will be a key focus to achieving competitive performance.
Strong performing technology and semiconductor stocks held in the Fund's
portfolio as of December 31, 1995, included Veritas Software, Envoy,
PanAmSat, and Solectron.
During the last quarter of 1995, the Fund increased its weightings in the
biotechnology and other healthcare sectors that were experiencing strong
performance. Many healthcare companies reported an increased P/E ratio and share
price in 1995 due to high demand for medical and healthcare attention for the
elderly. Strong performances were posted from portfolio holdings such as
Healthsouth Corp., Genzyme, and Liposome.
Q. ARE THERE OTHER SECTORS AND ISSUES THE FUND WILL PLACE PARTICULAR FOCUS ON AS
1996 BEGINS?
A. Under current market conditions, networking issues and the electronic storage
areas of technology are expected to be a focus for the Fund in 1996. Networking
issues are experiencing strong growth as businesses continue to focus on group
communications and Internet/Networking spending. The rapid growth in multimedia
applications, on-line services
28
<PAGE>
OVERLAND EXPRESS STARTEGIC GROWTH FUND
and communications is increasing the need for digital storage. With the
recent growth of the CD ROM industry and the Internet replacing televisions
and other entertainment and communication systems, the CD ROM/Internet area
will be a focus as we enter 1996. The Biotechnology/Medical Technology area
also is expected to continue to be an area of focus.
In anticipation of favorable news from the final approval stages of many new
drug and medical devices, the Fund's strategy for 1996 will include an increase
in exposure to healthcare issues. An anticipated consolidation in the healthcare
industry is expected to continue and may also benefit this sector as a whole.
Q. WHAT IS YOUR OUTLOOK FOR THE ECONOMY AS 1996 BEGINS AND HOW WILL THIS AFFECT
YOUR OVERALL STRATEGY FOR THE FUND?
A. Slow growth in the economy should provide a favorable environment for
aggressive growth stocks in 1996. In a slow growth economic environment,
companies with high, consistent rates of earnings growth tend to perform well
due to low levels of inflation. The Fund's current strategy is based on the
assumption that consistent growth in revenues and earnings results in upward
moves in stock prices.
29
<PAGE>
OVERLAND EXPRESS STRATEGIC GROWTH FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS STRATEGIC GROWTH
FUND COMPARED WITH THE S&P 500 INDEX
The chart on the next page shows the performance of the Overland Express
Strategic Growth Fund compared with the S&P 500 Index. The chart assumes a
hypothetical $10,000 initial investment. Class A shares reflect all Fund
expenses and the maximum 4.5% initial sales charge. The Standard and Poor's 500
Index is an unmanaged index of 500 widely held common stocks, representing
industrial, financial, utility and transportation companies, listed on the New
York Stock Exchange, American Stock Exchange and the Over-The-Counter market.
Investors should note that the Fund is a professionally managed mutual fund,
while the index is unmanaged, does not incur expenses and is not available
directly for investment. If Fund operating expenses had been applied to the
index, its performance would have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which for class A shares, includes the maximum
4.5% initial sales charge, and for class D shares, the 1% contingent deferred
sales charge ("CDSC"), and represents the average annual increase in value of
the investment over the indicated periods, assuming reinvestment of dividends
and capital gains distributions at net asset value. Your investment return and
principal value will fluctuate with market conditions, so that your shares, when
redeemed, may be worth more or less than their original cost. Past performance
is not predictive of future performance. Class A shares have been offered since
January 20, 1993, and class D shares have been offered since July 1, 1993. The
average annual total return for 1-year with CDSC reflects the contingent
deferred sales charge imposed on redemptions within the first year of purchasing
shares.
30
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS
STRATEGIC GROWTH FUND
CLASS A S & P 500 INDEX
<S> <C> <C>
Jan-93 $9,550 $10,000
Feb-93 $9,789 $10,136
Mar-93 $10,305 $10,350
Apr-93 $10,219 $10,100
May-93 $11,242 $10,370
Jun-93 $11,355 $10,401
Jul-93 $11,384 $10,359
Aug-93 $12,140 $10,752
Sep-93 $12,916 $10,669
Oct-93 $12,928 $10,890
Nov-93 $12,507 $10,786
Dec-93 $13,042 $10,917
Jan-94 $13,724 $11,266
Feb-94 $13,743 $10,981
Mar-94 $12,419 $10,503
Apr-94 $12,516 $10,637
May-94 $12,508 $10,812
Jun-94 $11,609 $10,547
Jul-94 $11,915 $10,893
Aug-94 $13,042 $11,340
Sep-94 $13,002 $11,063
Oct-94 $13,625 $11,311
Nov-94 $13,279 $10,899
Dec-94 $13,593 $11,061
Jan-95 $13,388 $11,346
Feb-95 $14,135 $11,789
Mar-95 $14,841 $12,137
Apr-95 $15,076 $12,494
May-95 $15,546 $12,992
Jun-95 $17,449 $13,294
Jul-95 $19,055 $13,734
Aug-95 $19,226 $13,769
Sep-95 $19,709 $14,349
Oct-95 $21,491 $14,298
Nov-95 $19,510 $14,925
Dec-95 $19,372 $15,213
</TABLE>
THE RETURN FOR CLASS D SHARES OF THE STRATEGIC GROWTH FUND WILL VARY FROM THE
RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
...............................................................................
PERFORMANCE OF STRATEGIC GROWTH FUND AS OF 12/31/95
<TABLE>
<CAPTION>
CLASS A SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 1/20/93 INCEPTION
...............................................................................
<S> <C> <C>
With Maximum 4.5% Sales Charge 36.06% 25.05%
Without Sales Charge 42.51% 27.01%
<CAPTION>
CLASS D SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 7/1/93 INCEPTION
...............................................................................
<S> <C> <C>
With 1.0% Contingent Deferred Sales Charge 40.57% N/A
Without Contingent Deferred Sales Charge 41.54% 22.68%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS D SHARES WERE FIRST OFFERED JULY 1,
1993. CLASS A SHARES WERE FIRST OFFERED JANUARY 20, 1993. THE AVERAGE ANNUAL
TOTAL RETURN FOR 1-YEAR WITH CDSC REFLECTS THE CONTINGENT DEFERRED SALES CHARGE
WHICH IS IMPOSED ON REDEMPTIONS WITHIN THE FIRST YEAR OF PURCHASING SHARES.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
31
<PAGE>
OVERLAND EXPRESS U.S. GOVERNMENT INCOME FUND
MICHAEL NIEDERMEYER, EXECUTIVE VICE PRESIDENT/PORTFOLIO MANAGER. MR. MICHAEL
NIEDERMEYER, IS RESPONSIBLE FOR THE DAY-TO-DAY MANAGEMENT OF THE U.S. GOVERNMENT
INCOME FUND. MR. NIEDERMEYER IS THE CHIEF FIXED-INCOME INVESTMENT OFFICER FOR
THE ASSET MANAGEMENT DIVISION AND CHAIRMAN OF THE FIXED-INCOME STRATEGY
COMMITTEE. HE JOINED WELLS FARGO BANK'S ASSET MANAGEMENT DIVISION IN 1987. PRIOR
TO JOINING WELLS FARGO BANK, HE WAS A PORTFOLIO MANAGER AT U.S. NATIONAL BANK OF
OREGON RESPONSIBLE FOR THE BANK'S BOND PORTFOLIO AND WAS MANAGER OF THE
MUNICIPAL TRADING AND UNDERWRITING DEPARTMENT. HE RECEIVED A B.A. IN BUSINESS
ADMINISTRATION FROM CARROLL COLLEGE IN 1975 AND AN M.B.A. IN FINANCE FROM THE
UNIVERSITY OF OREGON IN 1977. MR. NIEDERMEYER HAS CO-MANAGED THE FUND SINCE IT'S
INCEPTION.
PAUL SINGLE, SENIOR TAXABLE SPECIALIST/PORTFOLIO MANAGER. MR. SINGLE HAS MANAGED
TAXABLE BOND PORTFOLIOS FOR OVER A DECADE WITH SPECIFIC EXPERTISE IN
MORTGAGE-BACKED SECURITIES ("MBS"). PRIOR TO JOINING WELLS FARGO IN EARLY 1988,
HE WAS A SENIOR PORTFOLIO MANAGER FOR BENHAM CAPITAL MANAGEMENT GROUP. MR.
SINGLE RECEIVED HIS B.S. FROM SPRINGFIELD COLLEGE. HE HAS CO-MANAGED THE FUND
SINCE ITS INCEPTION.
Q. THE OVERLAND EXPRESS U.S. GOVERNMENT INCOME FUND (THE "FUND") WAS AFFECTED BY
1995'S DECLINING INTEREST RATE ENVIRONMENT. HOW DID THIS AND OTHER FACTORS
CONTRIBUTE TO THE OVERALL PERFORMANCE FOR 1995?
A. With interest rates falling throughout 1995, we did two things to help
improve performance. First, we increased the average weighted maturity of the
Fund which made it more price sensitive to market interest rates. Secondly, we
reduced the exposure to mortgage backed securities ("MBSs") (from about 70% of
the portfolio to about 29%) and bought Treasury notes and bonds. The Treasuries
are not subject to prepayment risk and, therefore, generally, have better price
appreciation when interest rates decline. We believe these two actions
contributed to the Fund's overall perfomance in 1995.
Q. THE FEDERAL RESERVE LOWERED THE FEDERAL FUNDS TARGET RATE BY 1/4% IN JULY AND
BY ANOTHER 1/4% IN DECEMBER. HOW DID THIS AFFECT THE FUND'S PERFORMANCE?
A. In general, when interest rates fall, the value of fixed income securities
rises. This was beneficial to the Fund on a total return basis. The common
belief in the financial market is that monetary policy currently is too
restrictive. With the Federal Reserve easing monetary policy at a slow pace, the
stage is set for the economy to weaken more. With a weaker economy, interest
rates should fall. It is currently expected that the environment will remain
favorable for continued rate declines in 1996.
Q. HOW DO YOU EXPECT THE PREPAYMENT OF MORTGAGES TO AFFECT THE PERFORMANCE OF
THE FUND IN 1996 ASSUMING THE FEDERAL RESERVE CONTINUES TO EASE RATES?
A. We expect prepayments to increase in 1996, which is typical as rates decline.
Currently the portfolio plans to continue its strategy of maintaining a low
level of MBSs as well as aggressively managing prepayment risks. There are
certain methods used to pursue these goals. The Fund currently owns a number of
older MBSs, supported by mortgages, that have already lived through low interest
rates and did not experience prepayment because the value of the underlying real
estate had fallen and the amount owed on the mortgage was more than the value of
the home. Another way to manage risk is to purchase MBSs that are supported by
newer mortgages that have low interest rates.
32
<PAGE>
OVERLAND EXPRESS U.S. GOVERNMENT INCOME FUND
Q. HOW DID ALL THE ATTENTION FOCUSED ON EXOTIC DERIVATIVES AFFECT THE FUND'S
PORTFOLIO?
A. Since the Fund neither purchases exotic derivative products nor leverages its
assets, the Fund's portfolio was not negatively impacted by these events.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY GOVERNMENT AGENCY, NOR BY WELLS FARGO BANK.
33
<PAGE>
OVERLAND EXPRESS U.S. GOVERNMENT INCOME FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS U.S. GOVERNMENT
INCOME FUND COMPARED WITH THE LEHMAN BROTHERS LONG-TERM GOVERNMENT BOND INDEX
The chart on the next page shows the performance of the Overland Express U.S.
Government Income Fund compared with the Lehman Brothers Long-Term Government
Bond Index. The chart assumes a hypothetical $10,000 initial investment. Class A
shares reflect all Fund expenses and the maximum 4.5% initial sales charge. The
Lehman Brothers Long-Term Government Bond Index is comprised of publicly issued
long-term government debt securities and has an average maturity of 23-25 years.
Investors should note that the Fund is a professionally managed mutual fund,
while the index is unmanaged, does not incur expenses and is not available
directly for investment. If Fund operating expenses had been applied to the
index, its performance would have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which for class A shares, includes the maximum
4.5% initial sales charge, and for class D shares, the 1% contingent deferred
sales charge ("CDSC"), and represents the average annual increase in value of
the investment over the indicated periods, assuming reinvestment of dividends
and capital gains distributions at net asset value. Your investment return and
principal value will fluctuate with market conditions, so that your shares, when
redeemed, may be worth more or less than their original cost. Past performance
is not predictive of future performance. Class A shares have been offered since
April 7, 1988, and class D shares have been offered since July 1, 1993. The
average annual total return for 1-year with CDSC reflects the contingent
deferred sales charge imposed on redemptions within the first year of purchasing
shares.
34
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS U.S. LEHMAN BROTHERS
GOVERNMENT INCOME FUND LONG-TERM GOVERNMENT
CLASS A BOND INDEX
<S> <C> <C>
Inception $ 9,550 $ 10,000
Apr-88 $ 9,550 $ 9,820
May-88 $ 9,499 $ 9,689
Jun-88 $ 9,716 $ 10,079
Jul-88 $ 9,691 $ 9,877
Aug-88 $ 9,698 $ 9,919
Sep-88 $ 9,945 $ 10,291
Oct-88 $ 10,085 $ 10,605
Nov-88 $ 9,920 $ 10,367
Dec-88 $ 9,860 $ 10,503
Jan-89 $ 10,038 $ 10,727
Feb-89 $ 9,960 $ 10,508
Mar-89 $ 9,965 $ 10,619
Apr-89 $ 10,146 $ 10,690
May-89 $ 10,463 $ 11,293
Jun-89 $ 10,772 $ 11,942
Jul-89 $ 10,987 $ 12,224
Aug-89 $ 10,600 $ 11,896
Sep-89 $ 10,879 $ 11,931
Oct-89 $ 11,174 $ 12,411
Nov-89 $ 11,287 $ 12,526
Dec-89 $ 11,321 $ 12,502
Jan-90 $ 11,206 $ 12,047
Feb-90 $ 11,257 $ 12,011
Mar-90 $ 11,286 $ 11,959
Apr-90 $ 11,169 $ 11,666
May-90 $ 11,584 $ 12,214
Jun-90 $ 11,755 $ 12,499
Jul-90 $ 11,689 $ 12,816
Aug-90 $ 11,557 $ 12,076
Sep-90 $ 11,669 $ 12,215
Oct-90 $ 11,883 $ 12,499
Nov-90 $ 12,242 $ 13,026
Dec-90 $ 12,473 $ 13,285
Jan-91 $ 12,661 $ 13,445
Feb-91 $ 12,744 $ 13,509
Mar-91 $ 12,759 $ 13,562
Apr-91 $ 12,910 $ 13,734
May-91 $ 12,937 $ 13,723
Jun-91 $ 12,865 $ 13,620
Jul-91 $ 13,094 $ 13,834
Aug-91 $ 13,491 $ 14,314
Sep-91 $ 13,678 $ 14,766
Oct-91 $ 13,893 $ 14,790
Nov-91 $ 13,922 $ 14,870
Dec-91 $ 14,728 $ 15,770
Jan-92 $ 14,327 $ 15,274
Feb-92 $ 14,357 $ 15,368
Mar-92 $ 14,244 $ 15,202
Apr-92 $ 14,240 $ 15,185
May-92 $ 14,622 $ 15,616
Jun-92 $ 14,612 $ 15,836
Jul-92 $ 15,255 $ 16,500
Aug-92 $ 15,370 $ 16,614
Sep-92 $ 15,526 $ 16,865
Oct-92 $ 15,275 $ 16,510
Nov-92 $ 15,364 $ 16,588
Dec-92 $ 15,650 $ 17,046
Jan-93 $ 15,935 $ 17,532
Feb-93 $ 16,236 $ 18,128
Mar-93 $ 16,284 $ 18,171
Apr-93 $ 16,377 $ 18,308
May-93 $ 16,411 $ 18,388
Jun-93 $ 16,841 $ 19,148
Jul-93 $ 16,951 $ 19,470
Aug-93 $ 17,355 $ 20,270
Sep-93 $ 17,452 $ 20,337
Oct-93 $ 17,502 $ 20,488
Nov-93 $ 17,238 $ 19,957
Dec-93 $ 17,319 $ 20,019
Jan-94 $ 17,546 $ 20,487
Feb-94 $ 17,196 $ 19,657
Mar-94 $ 16,755 $ 18,792
Apr-94 $ 16,602 $ 18,569
May-94 $ 16,580 $ 18,440
Jun-94 $ 16,491 $ 18,260
Jul-94 $ 16,814 $ 18,664
Aug-94 $ 16,607 $ 18,739
Sep-94 $ 16,473 $ 18,147
Oct-94 $ 16,387 $ 18,079
Nov-94 $ 16,535 $ 18,193
Dec-94 $ 16,486 $ 18,472
Jan-95 $ 16,806 $ 18,951
Feb-95 $ 17,184 $ 19,494
Mar-95 $ 17,252 $ 19,683
Apr-95 $ 17,493 $ 20,011
May-95 $ 18,243 $ 21,554
Jun-95 $ 18,470 $ 21,806
Jul-95 $ 18,327 $ 21,452
Aug-95 $ 18,569 $ 21,932
Sep-95 $ 18,778 $ 22,340
Oct-95 $ 19,072 $ 22,963
Nov-95 $ 19,387 $ 23,552
Dec-95 $ 19,871 $ 24,180
</TABLE>
THE RETURN FOR CLASS D SHARES OF THE U.S. GOVERNMENT INCOME FUND WILL VARY FROM
THE RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
................................................................................
PERFORMANCE OF U.S. GOVERNMENT INCOME FUND AS OF 12/31/95
<TABLE>
<CAPTION>
CLASS A SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR 3 YR 5 YR SINCE 4/7/88 INCEPTION
...............................................................................................
<S> <C> <C> <C> <C>
With Maximum 4.5% Sales Charge 13.89% 6.27% 8.53% 9.12%
Without Sales Charge 19.32% 7.92% 9.54% 9.77%
<CAPTION>
CLASS D SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 7/1/93 INCEPTION
...............................................................................................
<S> <C> <C>
With 1.0% Contingent Deferred Sales Charge 17.54% N/A
Without Contingent Deferred Sales Charge 18.54% 5.60%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS D SHARES WERE FIRST OFFERED JULY 1,
1993. CLASS A SHARES WERE FIRST OFFERED APRIL 7, 1988. THE AVERAGE ANNUAL TOTAL
RETURN FOR 1-YEAR WITH CDSC REFLECTS THE CONTINGENT DEFERRED SALES CHARGE WHICH
IS IMPOSED ON REDEMPTIONS WITHIN THE FIRST YEAR OF PURCHASING SHARES.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
35
<PAGE>
OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND
MARK KRASCHEL, LIQUIDITY MANAGEMENT SPECIALIST/PORTFOLIO MANAGER. MR. KRASCHEL
HAS SPECIALIZED IN BOND INVESTMENT APPLICATIONS FOR OVER A DECADE. HE JOINED
WELLS FARGO BANK IN 1988 AFTER FIVE YEARS IN FIXED-INCOME MANAGEMENT AT FIRST
BOSTON CORPORATION. MR. KRASCHEL HOLDS A B.S. IN BUSINESS ADMINISTRATION FROM
THE UNIVERSITY OF OREGON AND AN M.B.A. IN FINANCE FROM THE UNIVERSITY OF SAN
FRANCISCO. HE HAS CO-MANAGED THE FUND SINCE MAY 12, 1992.
MARK GREEN, LIQUIDITY MANAGEMENT SPECIALIST/PORTFOLIO MANAGER. MR. GREEN JOINED
WELL FARGO BANK IN 1990 AND SPECIALIZES IN MANAGING TAXABLE, FIXED INCOME,
LIQUIDITY ACCOUNTS. PRIOR TO JOINING THE INVESTMENT MANAGEMENT GROUP, HE WORKED
AS AN ECONOMIST IN THE BANK'S ECONOMICS DIVISION, ANALYZING AND FORECASTING
TRENDS IN THE U.S. ECONOMY AND FINANCIAL MARKETS. PRIOR TO JOINING WELLS FARGO,
HE SPENT THREE YEARS AT MONEY MARKET SERVICES INTERNATIONAL, PROVIDING FIXED
INCOME RESEARCH TO INSTITUTIONAL INVESTORS AND PRIMARY DEALERS. MR. GREEN HOLDS
A B.A. IN BOTH ECONOMICS AND INTERNATIONAL RELATIONS, AS WELL AS AN M.A. IN
ECONOMICS. HE IS ALSO A CHARTERED FINANCIAL ANALYST CANDIDATE. HE HAS CO-MANAGED
THE FUND SINCE MAY 12, 1992.
Q. HOW DID THE OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -- CLASS A (THE
"FUND") PERFORM DURING 1995?
A. The Fund's seven day yield for the period ended December 31, 1995 was 4.89%.
The Fund achieved its goal of maintaining principal stability at a $1.00 per
share net asset value while providing competitive money market yields.
Q. THE FEDERAL RESERVE LOWERED THE FEDERAL FUNDS TARGET RATE BY 1/4% IN JULY AND
BY ANOTHER 1/4% IN DECEMBER. WHAT EFFECT DID THIS HAVE ON THE FUND?
A. After peaking in February, money market yields declined marginally over the
course of the year. As a result, the Fund's yield fell as well. In anticipation
of further Federal Reserve easings, average maturity has been extended in order
to lock in current rates for a longer period of time.
Q. WHAT STEPS ARE YOU TAKING AS YOU LOOK AHEAD IN 1996 IN PURSUIT OF CONSISTENT
RETURNS IN LIGHT OF LOWER FEDERAL FUNDS RATES?
A. Currently we are extending the maturity of the Fund. This should enable the
Fund to take advantage of proper yield curve positioning and potentially
declining interest rates.
Q. HOW DID THE ATTENTION FOCUSED ON EXOTIC DERIVATIVES AFFECT THE FUND'S
PORTFOLIO?
A. Since the Fund neither purchases exotic derivative products nor leverages its
assets, the Fund's portfolio was not negatively impacted by these events.
Q. WHAT IS THE CURRENT COMPOSITION OF THE PORTFOLIO?
A. As of December 31, 1995 the Fund was composed of 100% U.S. Treasury bills.
DURING THE PERIOD, WELL FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S YIELDS WOULD HAVE BEEN LOWER.
ALTHOUGH THE FUND SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET VALUE, THERE IS
NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY GOVERNMENT AGENCY, NOR BY WELLS FARGO BANK.
36
<PAGE>
OVERLAND EXPRESS VARIABLE RATE GOVERNMENT FUND
PAUL SINGLE, SENIOR TAXABLE SPECIALIST/PORTFOLIO MANAGER. MR. SINGLE HAS MANAGED
TAXABLE BOND PORTFOLIOS FOR OVER A DECADE WITH SPECIFIC EXPERTISE IN
MORTGAGE-BACKED SECURITIES. PRIOR TO JOINING WELLS FARGO BANK IN EARLY 1988, HE
WAS A SENIOR PORTFOLIO MANAGER FOR BENHAM CAPITAL MANAGEMENT GROUP. MR. SINGLE
RECEIVED HIS B.S. FROM SPRINGFIELD COLLEGE. HE HAS CO-MANAGED THE FUND SINCE ITS
INCEPTION.
SCOTT SMITH, PORTFOLIO MANAGER. MR. SMITH JOINED WELLS FARGO BANK IN 1988 AS A
TAXABLE MONEY MARKET PORTFOLIO SPECIALIST. HIS EXPERIENCE INCLUDES A POSITION
WITH A PRIVATE MONEY MANAGEMENT FIRM CONDUCTING MUTUAL FUND INVESTMENT
OPERATIONS. MR. SMITH HOLDS A B.A. DEGREE FROM THE UNIVERSITY OF SAN DIEGO, AND
HAS CO-MANAGED THE FUND SINCE MAY 1995.
Q. THE OVERLAND EXPRESS VARIABLE RATE GOVERNMENT FUND (THE "FUND") WAS AFFECTED
BY 1995'S DECLINING INTEREST RATE ENVIRONMENT. HOW DID THIS AND OTHER FACTORS
CONTRIBUTE TO THE OVERALL PERFORMANCE FOR 1995?
A. With the yield curve flattening, the chances of homeowners paying off their
adjustable-rate mortgages and refinancing into fixed-rate mortgages (by doing so
the homeowner can reduce their monthly mortgage payment) have increased. As a
result, prepayments on adjustable-rate mortgages have increased and their value
has remained relatively stable despite the declining interest rate environment.
Q. WAS THE FUND'S PERFORMANCE AS ANTICIPATED, CONSIDERING THE ECONOMIC
ENVIRONMENT OF THE LAST SIX MONTHS?
A. Yes. We anticipated the decline in short-term and long-term interest rates.
To take advantage of the expected move in interest rates, we positioned the
portfolio to limit the speed at which coupon income would decline. In response,
the Fund experienced appreciation in its net asset value ("NAV") and an increase
in its monthly dividend.
Q. WHAT CHANGES DID YOU MAKE IN THE PORTFOLIO OVER THE LAST SIX MONTHS OF 1995
AND WHY?
A. Because we anticipated declining interest rates, we decreased the position of
the Fund's portfolio invested in high coupon adjustable rate mortgages ("ARMs").
The purchase of Government National Mortgage Association ("GNMA") ARMs helped
the performance of the Fund. GNMA ARMs have a lower prepayment rate than Federal
National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC") ARMs. Lower prepayment rates mean that when interest rates
declined this year, the Fund experienced appreciation of these securities. With
interest rates falling in 1995, GNMA ARMs contributed to the increase in the
Fund's NAV.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY GOVERNMENT AGENCY, NOR BY WELLS FARGO BANK.
37
<PAGE>
OVERLAND EXPRESS VARIABLE RATE GOVERNMENT FUND
CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE OVERLAND EXPRESS VARIABLE RATE
GOVERNMENT FUND COMPARED WITH THE LEHMAN BROTHERS ARM INDEX
The chart on the next page shows the performance of the Overland Express
Variable Rate Government Fund compared with the Lehman Brothers ARM Index. The
chart assumes a hypothetical $10,000 initial investment. Class A shares reflect
all Fund expenses and the maximum 3% initial sales charge. Investors should note
that the Fund is a professionally managed mutual fund, while the index is
unmanaged, does not incur expenses and is not available directly for investment.
If Fund operating expenses had been applied to the index, its performance would
have been lower.
Average annual total returns for the indicated periods assume shares were
purchased at the offering price, which for class A shares includes the maximum
3% initial sales charge, and for class D shares, the 1% contingent deferred
sales charge ("CDSC"), and represents the average annual increase in value of
the investment over the indicated periods, assuming reinvestment of dividends
and capital gains distributions at net asset value. Your investment return and
principal value will fluctuate with market conditions, so that your shares, when
redeemed, may be worth more or less than their original cost. Past performance
is not predictive of future performance. Class A shares have been offered since
November 1, 1990, and class D shares have been offered since July 1, 1993. The
average annual total return for 1-year with CDSC reflects the contingent
deferred sales charge imposed on redemptions within the first year of purchasing
shares.
38
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OVERLAND EXPRESS VARIABLE
RATE GOVERNMENT FUND CLASS A LEHMAN BROTHERS ARM INDEX
<S> <C> <C>
Inception $ 9,700 $ 10,000
Nov-90 $ 9,878 $ 10,086
Dec-90 $ 9,967 $ 10,197
Jan-91 $ 10,085 $ 10,291
Feb-91 $ 10,184 $ 10,360
Mar-91 $ 10,220 $ 10,432
Apr-91 $ 10,271 $ 10,527
May-91 $ 10,384 $ 10,587
Jun-91 $ 10,395 $ 10,635
Jul-91 $ 10,454 $ 10,719
Aug-91 $ 10,533 $ 10,847
Sep-91 $ 10,620 $ 10,947
Oct-91 $ 10,675 $ 11,057
Nov-91 $ 10,739 $ 11,163
Dec-91 $ 10,625 $ 11,309
Jan-92 $ 10,676 $ 11,361
Feb-92 $ 10,916 $ 11,409
Mar-92 $ 10,933 $ 11,364
Apr-92 $ 10,993 $ 11,467
May-92 $ 11,061 $ 11,590
Jun-92 $ 11,126 $ 11,711
Jul-92 $ 11,192 $ 11,762
Aug-92 $ 11,245 $ 11,862
Sep-92 $ 11,273 $ 11,927
Oct-92 $ 11,232 $ 11,829
Nov-92 $ 11,259 $ 11,846
Dec-92 $ 11,282 $ 11,956
Jan-93 $ 11,337 $ 12,080
Feb-93 $ 11,413 $ 12,186
Mar-93 $ 11,465 $ 12,241
Apr-93 $ 11,508 $ 12,313
May-93 $ 11,539 $ 12,343
Jun-93 $ 11,628 $ 12,472
Jul-93 $ 11,695 $ 12,530
Aug-93 $ 11,759 $ 12,605
Sep-93 $ 11,790 $ 12,607
Oct-93 $ 11,797 $ 12,612
Nov-93 $ 11,779 $ 12,578
Dec-93 $ 11,831 $ 12,673
Jan-94 $ 11,896 $ 12,758
Feb-94 $ 11,876 $ 12,717
Mar-94 $ 11,797 $ 12,616
Apr-94 $ 11,729 $ 12,549
May-94 $ 11,636 $ 12,539
Jun-94 $ 11,652 $ 12,567
Jul-94 $ 11,645 $ 12,644
Aug-94 $ 11,677 $ 12,706
Sep-94 $ 11,623 $ 12,654
Oct-94 $ 11,586 $ 12,643
Nov-94 $ 11,440 $ 12,606
Dec-94 $ 11,380 $ 12,674
Jan-95 $ 11,482 $ 12,684
Feb-95 $ 11,587 $ 13,143
Mar-95 $ 11,673 $ 13,206
Apr-95 $ 11,739 $ 13,346
May-95 $ 11,847 $ 13,562
Jun-95 $ 11,871 $ 13,618
Jul-95 $ 11,937 $ 13,667
Aug-95 $ 11,994 $ 13,676
Sep-95 $ 12,039 $ 13,773
Oct-95 $ 12,108 $ 13,859
Nov-95 $ 12,215 $ 13,977
Dec-95 $ 12,255 $ 14,083
</TABLE>
THE RETURN FOR CLASS D SHARES OF THE VARIABLE RATE GOVERNMENT FUND WILL VARY
FROM THE RESULTS SHOWN DUE TO DIFFERENT EXPENSES AND LOAD STRUCTURES.
...............................................................................
PERFORMANCE OF VARIABLE RATE GOVERNMENT FUND AS OF 12/31/95
<TABLE>
<CAPTION>
CLASS A SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR 3 YR 5 YR SINCE 11/1/90 INCEPTION
................................................................................................
<S> <C> <C> <C> <C>
With Maximum 3.0% Sales Charge 4.50% 1.75% 3.59% 4.01%
Without Sales Charge 7.69% 2.80% 4.22% 4.63%
<CAPTION>
CLASS D SHARE PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS 1 YR SINCE 7/1/93 INCEPTION
................................................................................................
<S> <C> <C>
With 1.0% Contingent Deferred Sales Charge 6.09% N/A
Without Contingent Deferred Sales Charge 7.08% 1.53%
</TABLE>
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NAV. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE PERFORMANCE. CLASS D SHARES WERE FIRST OFFERED JULY 1,
1993. CLASS A SHARES WERE FIRST OFFERED NOVEMBER 1, 1990. THE AVERAGE ANNUAL
TOTAL RETURN FOR 1-YEAR WITH CDSC REFLECTS THE CONTINGENT DEFERRED SALES CHARGE
WHICH IS IMPOSED ON REDEMPTIONS WITHIN THE FIRST YEAR OF PURCHASING SHARES.
DURING THE PERIOD, WELLS FARGO BANK HAS VOLUNTARILY WAIVED PORTIONS OF ITS FEES
OR REIMBURSED OTHER EXPENSES, WHICH HAS REDUCED OPERATING EXPENSES FOR
SHAREHOLDERS. WITHOUT THIS REDUCTION, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
39
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.16%
11,334 Abbott Laboratories $ 364,201 $ 473,195
1,491 Advanced Micro Devices+ 45,243 24,602
1,654 Aetna Life & Casualty Co 98,398 114,540
1,722 Ahmanson (H F) & Co 35,216 45,633
1,567 Air Products & Chemicals Inc 72,329 82,659
7,043 Airtouch Communications+ 172,234 198,965
366 Alberto-Culver Co Class B 9,964 12,581
3,608 Albertson's Inc 102,520 118,613
3,204 Alcan Aluminium Ltd 76,446 99,725
1,580 Alco Standard Corp 46,219 72,088
692 Alexander & Alexander Services 16,429 13,148
880 Allergan Inc 21,823 28,600
4,030 Allied Signal Inc 154,897 191,425
6,377 Allstate Corp 180,642 262,254
2,719 Alltel Corp 78,280 80,211
2,544 Aluminum Co of America 101,545 134,514
1,222 ALZA Corp+ 27,178 30,245
1,667 Amdahl Corp+ 12,806 14,170
1,283 Amerada Hess Corp 66,121 67,999
2,722 American Brands Inc 97,131 121,469
2,669 American Electric Power Inc 96,643 108,095
6,966 American Express Corp 221,319 288,218
2,913 American General Corp 97,116 101,591
1,045 American Greetings Corp Class A 30,460 28,868
4,463 American Home Products Corp 308,728 432,911
6,795 American International Group Inc 460,909 628,538
2,075 American Stores Co 49,696 55,506
7,928 Ameritech Corp 341,835 467,752
3,734 Amgen Inc+ 95,299 221,706
7,088 Amoco Corp 429,656 509,450
3,083 AMP Inc 111,447 118,310
1,059 AMR Corp+ 70,857 78,631
567 Andrew Corp+ 13,856 21,688
3,684 Anheuser-Busch Inc 190,429 246,368
1,750 Apple Computer Inc 60,803 55,781
</TABLE>
40
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
2,519 Applied Materials Inc+ $ 74,933 $ 99,186
7,716 Archer-Daniels-Midland Co 119,244 138,888
1,518 Armco Inc+ 10,011 8,918
516 Armstrong World Industries Inc 22,991 31,992
564 ASARCO Inc 13,275 18,048
952 Ashland Inc 31,931 33,439
22,655 AT & T Corp 1,279,209 1,466,911
2,325 Atlantic Richfield Corp 265,275 257,494
638 Autodesk Inc 19,311 21,852
2,020 Automatic Data Processing 113,442 149,985
771 Avery Dennison Corp 24,279 38,646
987 Avon Products Inc 58,510 74,395
1,986 Baker Hughes Inc 47,365 48,409
395 Ball Corp 12,419 10,863
651 Bally Entertainment Corp+ 6,228 9,114
2,132 Baltimore Gas & Electric Co 54,494 60,762
5,620 Banc One Corp 198,488 212,155
1,584 Bank of Boston Corp 45,276 73,260
2,698 Bank of New York Inc 95,325 131,528
5,339 BankAmerica Corp 257,644 345,700
1,159 Bankers Trust N Y Corp 82,521 77,074
808 Bard (C R) Inc 20,996 26,058
1,350 Barnett Banks Inc 62,527 79,650
5,079 Barrick Gold Corp 140,746 133,959
815 Bausch & Lomb Inc 35,361 32,294
3,921 Baxter International Inc 114,508 164,192
945 Becton Dickinson & Co 42,703 70,875
6,258 Bell Atlantic Corp 366,952 418,504
14,146 BellSouth Corp 423,755 615,351
711 Bemis Co Inc 17,258 18,219
727 Beneficial Corp 29,381 33,896
1,639 Bethlehem Steel Corp+ 25,607 22,946
1,388 Beverly Enterprises+ 15,963 14,748
1,703 Biomet Inc+ 20,088 30,441
1,261 Black & Decker Corp 30,333 44,450
</TABLE>
41
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
1,518 Block (H & R) Inc $ 60,554 $ 61,479
1,832 Boatmen's Bancshares Inc 58,542 74,883
4,936 Boeing Co 231,395 386,859
648 Boise Cascade Corp 18,773 22,437
2,324 Boston Scientific Corp+ 56,898 113,876
412 Briggs & Stratton Corp 14,769 17,871
7,280 Bristol-Myers Squibb Co 441,567 625,170
278 Brown Group Inc 8,427 3,962
969 Brown-Forman Corp Class B 28,451 35,369
3,026 Browning-Ferris Industries Inc 88,604 89,267
1,423 Brunswick Corp 25,436 34,152
2,011 Burlington Northern Santa Fe 105,405 156,858
1,757 Burlington Resources Inc 75,246 68,962
982 Cabletron Systems Inc+ 52,598 79,542
3,545 Campbell Soup Co 153,490 212,700
2,210 Capital Cities/ABC Inc 150,120 272,659
2,246 Carolina Power & Light Co 69,800 77,487
2,878 Caterpillar Inc 137,976 169,083
414 Centex Corp 14,627 14,387
2,711 Central & South West Corp 79,143 75,569
842 Ceridian Corp+ 25,616 34,733
1,415 Champion International Corp 51,722 59,430
1,460 Charming Shoppes Inc 13,786 4,198
2,489 Chase Manhattan Corp 96,324 150,896
3,574 Chemical Banking Corp Class A 156,240 209,973
9,343 Chevron Corp 438,230 490,508
5,426 Chrysler Corp 245,898 300,465
1,205 Chubb Corp 103,978 116,584
1,001 CIGNA Corp 68,088 103,353
472 Cincinnati Milacron Inc 11,025 12,390
2,254 Cinergy Corp 55,479 69,029
1,427 Circuit City Stores Inc 37,833 39,421
3,919 Cisco Systems Inc+ 147,761 292,455
6,059 Citicorp 265,467 407,468
738 Clorox Co 43,313 52,859
</TABLE>
42
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
1,451 Coastal Corp $ 42,197 $ 54,050
17,908 Coca-Cola Co 906,498 1,329,669
2,069 Colgate-Palmolive Co 125,232 145,347
714 Columbia Gas System Inc+ 19,460 31,327
6,357 Columbia HCA Healthcare Corp 264,456 322,618
3,483 Comcast Corp Class A 68,321 63,347
1,681 Comerica Inc 62,861 67,450
623 Community Psychiatric Centers+ 7,378 7,632
3,764 Compaq Computer Corp+ 103,696 180,672
3,436 Computer Associates International Inc 107,579 195,423
752 Computer Sciences Corp+ 31,924 52,828
3,459 ConAgra Inc 99,028 142,684
1,113 Conrail Inc 62,342 77,910
3,367 Consolidated Edison Co 110,036 107,744
612 Consolidated Freightways 12,069 16,218
1,375 Consolidated Natural Gas Co 65,662 62,391
1,506 Cooper Industries Inc 68,429 55,346
1,159 Cooper Tire & Rubber Co 29,726 28,540
543 Coors (Adolph) Co Class B 9,978 12,014
1,972 CoreStates Financial Corp 58,265 74,690
3,237 Corning Inc 103,802 103,584
2,047 CPC International Inc 104,116 140,475
411 Crane Co 12,362 15,156
383 Cray Research Inc+ 8,580 9,479
1,312 Crown Cork & Seal Co+ 52,778 54,776
2,950 CSX Corp 114,685 134,594
2,449 CUC International Inc+ 65,829 83,572
591 Cummins Engine Co Inc 26,276 21,867
1,359 Cyprus Amax Minerals 36,809 35,504
1,464 Dana Corp 39,634 42,822
2,300 Darden Restaurants Inc+ 25,309 27,313
623 Data General Corp+ 6,597 8,566
1,014 Dayton-Hudson Corp 69,970 76,050
2,377 Dean Witter Discover & Co 100,333 111,719
3,755 Deere & Co 95,691 132,364
</TABLE>
43
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
692 Delta Air Lines Inc $ 41,157 $ 51,122
1,217 Deluxe Corp 42,684 35,293
2,109 Detroit Edison Co 68,155 72,761
1,291 Dial Corp 28,047 38,246
2,068 Digital Equipment Corp+ 83,040 132,611
1,658 Dillard Department Stores Inc Class A 54,855 47,253
7,394 Disney (Walt) Co 345,085 436,246
2,505 Dominion Resources Inc 107,069 103,331
2,221 Donnelley (R R) & Sons Co 72,106 87,452
1,605 Dover Corp 47,120 59,184
3,738 Dow Chemical Co 241,828 263,062
1,353 Dow Jones & Co Inc 45,803 53,951
2,624 Dresser Industries Inc 58,232 63,960
1,649 DSC Communications Corp+ 57,162 60,807
2,937 Duke Power Co 121,532 139,140
2,448 Dun & Bradstreet Corp 143,485 158,508
7,972 DuPont (E I) de Nemours 448,829 557,044
303 Eastern Enterprises 8,320 10,681
1,162 Eastman Chemical Co 63,054 72,770
4,905 Eastman Kodak Co 256,988 328,635
1,146 Eaton Corp 57,990 61,454
834 Echlin Inc 27,501 30,441
1,624 Echo Bay Mines Ltd 16,250 16,849
906 Ecolab Inc 20,855 27,180
794 EG & G Inc 14,708 19,255
3,161 Emerson Electric Co 201,007 258,412
2,065 Engelhard Corp 42,663 44,914
3,614 Enron Corp 126,002 137,784
1,024 Enserch Corp 18,740 16,640
3,272 Entergy Corp 103,692 95,706
17,687 Exxon Corp 1,194,713 1,417,171
769 Federal Express Corp+ 47,740 56,810
2,620 Federal Home Loan Mortgage Corp 154,153 218,770
3,892 Federal National Mortgage Assoc 327,517 483,095
693 Federal Paper Board Co 18,796 35,949
</TABLE>
44
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
2,880 Federated Department Stores Inc+ $ 78,333 $ 79,200
1,926 First Bank System Inc 99,941 95,578
4,545 First Chicago NBD Corp 134,355 179,528
3,180 First Data Corp 185,630 212,663
1,135 First Fidelity Bancorp 56,518 85,551
1,105 First Interstate Bancorp 81,993 150,833
2,450 First Union Corp 112,667 136,281
3,510 Fleet Financial Group Inc 108,576 143,033
675 Fleetwood Enterprises Inc 14,762 17,381
515 Fleming Co Inc 14,280 10,622
1,162 Fluor Corp 54,345 76,692
493 FMC Corp+ 29,922 33,339
15,381 Ford Motor Co 423,598 446,049
491 Foster Wheeler Corp 16,720 20,868
2,592 FPL Group Inc 99,526 120,204
2,923 Freeport McMoRan Copper & Gold Inc Class B 79,653 82,209
1,140 Fruit of the Loom Inc Class A+ 30,580 27,788
2,028 Gannett Co Inc 107,254 124,469
2,099 Gap Inc 67,774 88,158
898 General Dynamics Corp 39,687 53,094
23,846 General Electric Co 1,261,946 1,716,912
2,300 General Mills Inc 117,388 132,825
10,654 General Motors Corp 499,942 563,330
1,692 General Public Utilities 50,713 57,528
1,220 General Re Corp 156,340 189,100
659 General Signal Corp 23,122 21,335
1,726 Genuine Parts Co 65,201 70,766
1,325 Georgia-Pacific Corp 93,460 90,928
816 Giant Food Inc Class A 20,352 25,704
474 Giddings & Lewis Inc 9,691 7,821
6,318 Gillette Co 214,050 329,326
851 Golden West Financial 36,942 47,018
372 Goodrich (B F) Co 17,309 25,343
2,192 Goodyear Tire & Rubber Co 90,771 99,462
1,379 Grace (W R) & Co 65,736 81,533
</TABLE>
45
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
708 Grainger (W W) Inc $ 42,054 $ 46,905
558 Great Atlantic & Pacific Tea Co 14,389 12,834
880 Great Lakes Chemical Corp 57,877 63,360
1,977 Great Western Financial Corp 38,443 50,414
13,801 GTE Corp 490,370 607,244
1,595 Halliburton Co 60,611 80,747
364 Handleman Co 4,049 2,093
1,081 Harcourt General Inc 40,678 45,267
415 Harland (John H) Co 10,143 8,663
651 Harnischfeger Industries Inc 17,683 21,646
1,425 Harrah's Entertainment Inc+ 43,756 34,556
535 Harris Corp 24,381 29,224
1,295 Hasbro Inc 45,407 40,145
5,225 Heinz (H J) Co 137,363 173,078
326 Helmerich & Payne Inc 10,044 9,699
1,599 Hercules Inc 64,319 90,144
1,064 Hershey Foods Corp 53,266 69,160
7,307 Hewlett Packard Co 371,950 611,961
668 Hilton Hotels Corp 40,984 41,082
6,798 Home Depot Inc 283,026 325,454
2,044 Homestake Mining Co 36,903 31,938
1,778 Honeywell Inc 66,856 86,455
1,362 Household International Inc 56,042 80,528
3,776 Houston Industries Inc 83,137 91,568
2,277 Humana Inc+ 63,761 62,333
1,686 Illinois Tool Works Inc 75,434 99,474
1,739 Inco Ltd 40,685 57,822
1,560 Ingersoll-Rand Co 56,817 54,795
745 Inland Steel Industries Inc 20,931 18,718
11,729 Intel Corp 480,003 665,621
638 Intergraph Corp+ 7,189 10,049
8,116 International Business Machines Corp 524,299 744,643
1,551 International Flavors & Fragrances 65,863 74,448
3,676 International Paper Co 129,959 139,229
1,082 Interpublic Group Cos Inc 34,518 46,932
</TABLE>
46
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
1,633 ITT Corp+ $ 65,560 $ 86,549
1,633 ITT Hartford Group Inc+ 63,461 78,996
1,633 ITT Industries Inc 28,259 39,192
1,212 James River Corp 25,919 29,240
1,026 Jefferson-Pilot Corp 36,917 47,709
9,187 Johnson & Johnson 476,072 786,637
543 Johnson Controls Inc 30,328 37,331
562 Jostens Inc 11,411 13,629
6,634 K Mart Corp 124,989 48,097
432 Kaufman & Broad Home Corp 7,470 6,426
3,105 Kellogg Co 178,630 239,861
700 Kerr-McGee Corp 36,902 44,450
3,247 KeyCorp 98,651 117,704
4,013 Kimberly-Clark Corp 183,343 332,076
493 King World Productions+ 19,508 19,165
747 Knight-Ridder Inc 41,255 46,688
1,711 Kroger Co+ 39,622 64,163
4,304 Laidlaw Inc Class B 38,327 44,116
7,858 Lilly (Eli) & Co 244,372 442,013
5,082 Limited Inc 107,198 88,300
1,516 Lincoln National Corp 65,986 81,485
1,114 Liz Claiborne Inc 25,343 30,914
2,847 Lockheed Martin Corp 141,680 224,913
1,714 Loews Corp 96,116 134,335
305 Longs Drug Stores Corp 10,302 14,602
2,485 Loral Corp 48,087 87,907
445 Louisiana Land & Exploration Co 18,592 19,079
1,571 Louisiana-Pacific Corp 49,990 38,097
2,331 Lowe's Co Inc 59,402 78,089
1,826 LSI Logic Corp+ 66,451 59,802
381 Luby's Cafeterias Inc 8,448 8,477
1,134 Mallinckrodt Group Inc 36,297 41,249
939 Manor Care Inc 22,668 32,865
1,830 Marriott International 52,059 69,998
1,046 Marsh & McLennan Companies Inc 88,268 92,833
</TABLE>
47
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
2,241 Masco Corp $ 66,673 $ 70,311
3,186 Mattel Inc 68,071 97,970
3,535 May Co Department Stores Co 140,956 149,354
1,530 Maytag Corp 25,930 30,983
2,152 MBNA Corp 57,662 79,355
764 McDermott International Inc 21,096 16,808
9,870 McDonald's Corp 306,301 445,384
1,649 McDonnell Douglas Corp 69,792 151,708
681 McGraw-Hill Inc 48,477 59,332
9,688 MCI Communications 233,426 253,099
719 Mead Corp 34,693 37,568
3,287 Medtronic Inc 86,838 183,661
2,123 Mellon Bank Corp 85,462 114,111
1,545 Melville Corp 64,888 47,509
506 Mercantile Stores Co Inc 19,748 23,403
17,605 Merck & Co Inc 681,765 1,157,529
428 Meredith Corp 9,494 17,923
2,520 Merrill Lynch & Co Inc 117,702 128,520
2,912 Micron Technology Inc 85,887 115,388
8,456 Microsoft Corp+ 549,532 742,014
597 Millipore Corp 12,889 24,552
6,046 Minnesota Mining & Manufacturing Co 336,808 400,548
5,619 Mobil Corp 484,768 629,328
1,693 Monsanto Co 120,149 207,393
1,480 Moore Corp Ltd 28,602 27,565
2,697 Morgan (J P) & Co Inc 194,444 216,434
1,048 Morgan Stanley Group 104,090 84,495
2,073 Morton International Inc 61,300 74,369
8,443 Motorola Inc 447,192 481,251
137 NACCO Industries Inc Class A 6,482 7,604
930 Nalco Chemical Co 33,069 28,016
2,146 National City Corp 60,941 71,086
1,820 National Semiconductor+ 36,229 40,495
702 National Service Industries Inc 18,651 22,727
3,901 NationsBank 205,081 271,607
</TABLE>
48
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
1,086 Navistar International Corp+ $ 21,186 $ 11,403
1,367 New York Times Co Class A 33,372 40,497
2,282 Newell Co 48,066 59,047
1,277 Newmont Mining Corp 52,008 57,784
2,118 Niagara Mohawk Power Corp 42,085 20,386
699 NICOR Inc 18,913 19,223
1,993 Nike Inc Class B 63,906 138,763
1,771 NorAm Energy Corp 13,773 15,718
1,214 Nordstrom Inc 41,859 49,167
1,866 Norfolk Southern Corp 125,332 148,114
939 Northern States Power Co 43,096 46,128
3,626 Northern Telecom Ltd 110,688 155,918
666 Northrop Grumman Corp 28,300 42,624
5,082 Norwest Corp 139,473 167,706
5,303 Novell Inc+ 104,378 75,568
1,285 Nucor Corp 61,370 73,406
6,065 NYNEX Corp 261,680 327,510
4,539 Occidental Petroleum Corp 97,600 97,021
694 Ogden Corp 15,262 14,834
2,194 Ohio Edison Co 50,661 51,559
353 ONEOK Inc 7,181 8,075
6,159 Oracle Systems Corp+ 153,281 260,988
1,487 Oryx Energy Co+ 27,388 19,889
253 Outboard Marine Corp 5,247 5,155
699 Owens Corning Fiberglass+ 28,783 31,368
524 PACCAR Inc 26,446 22,074
1,214 Pacific Enterprises 30,943 34,296
6,072 Pacific Gas & Electric Co 194,580 172,293
6,074 Pacific Telesis Group 189,011 204,238
4,125 PacifiCorp 79,397 87,656
1,596 Pall Corp 31,773 42,893
2,179 Panhandle Eastern Corp 52,909 60,740
1,007 Parker Hannifin Corp 28,324 34,490
3,162 PECO Energy Co 94,095 95,255
3,203 Penney (J C) Co Inc 145,952 152,543
</TABLE>
49
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
619 Pennzoil Co $ 35,821 $ 26,153
486 Peoples Energy Corp 14,963 15,431
848 Pep Boys-Manny Moe & Jack 21,766 21,730
11,265 Pepsico Inc 465,257 629,432
588 Perkin-Elmer Corp 19,390 22,197
9,014 Pfizer Inc 335,622 567,882
7,216 Pharmacia and Upjohn Inc+ 208,742 279,620
1,004 Phelps Dodge Corp 50,598 62,499
12,017 Philip Morris Co Inc 700,001 1,087,539
3,706 Phillips Petroleum Co 123,645 126,467
1,158 Pioneer Hi Bred International Inc 43,392 64,414
2,163 Pitney Bowes Inc 85,864 101,661
568 Pittston Services Group 13,206 17,821
3,418 Placer Dome Inc 76,684 82,459
3,272 PNC Bank Corp 92,437 105,522
646 Polaroid Corp 23,111 30,604
384 Potlatch Corp 16,512 15,360
2,268 PP & L Resources Inc 58,727 56,700
2,921 PPG Industries Inc 106,622 133,636
2,008 Praxair Inc 38,028 67,519
894 Premark International Inc 35,274 45,259
2,771 Price/Costco Inc+ 47,973 42,258
9,807 Procter & Gamble Co 579,939 813,981
1,341 Providian Corp 51,809 54,646
3,475 Public Services Enterprise Group 111,090 106,422
413 Pulte Corp 13,138 13,887
1,960 Quaker Oats Co 67,000 67,620
1,471 Ralston-Purina Group 60,884 91,754
598 Raychem Corp 23,195 34,011
3,516 Raytheon Co 119,542 166,131
1,103 Reebok International Ltd 31,703 31,160
792 Republic New York Corp 46,427 49,203
858 Reynolds Metals Co 42,713 48,584
1,177 Rite Aid Corp 24,148 40,312
536 Roadway Services Inc 28,707 26,197
</TABLE>
50
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
3,049 Rockwell International Corp $ 120,244 $ 161,216
962 Rohm & Haas Co 54,069 61,929
1,178 Rowan Co Inc+ 10,128 11,633
7,619 Royal Dutch Petroleum Co 843,553 1,075,231
2,249 Rubbermaid Inc 70,144 57,350
526 Russell Corp 15,230 14,597
681 Ryan's Family Steak House+ 5,480 4,767
1,127 Ryder System Inc 27,697 27,893
1,782 SAFECO Corp 54,464 61,479
795 Safety-Kleen Corp 12,637 12,422
1,560 Salomon Inc 67,922 55,380
1,257 Santa Fe Energy Resources Inc+ 12,390 12,099
1,888 Santa Fe Pacific Gold Corp 26,174 22,892
6,865 Sara Lee Corp 181,147 218,822
8,729 SBC Communication Inc 384,622 501,918
6,310 SCEcorp 131,257 112,003
5,310 Schering-Plough Corp 186,532 290,723
3,486 Schlumberger Ltd 221,762 241,406
1,135 Scientific-Atlanta Inc 20,926 17,030
5,343 Seagram Co Ltd 147,490 185,001
5,560 Sears Roebuck & Co 160,726 216,840
1,468 Service Corp International 40,642 64,592
342 Shared Medical System Corp 9,075 18,596
1,171 Sherwin Williams Co 40,574 47,718
593 Shoney's Inc+ 9,844 6,078
704 Sigma-Aldrich Corp 28,369 34,848
2,213 Silicon Graphics Inc+ 78,398 60,858
597 Snap-On Inc 23,691 27,014
1,233 Sonat Inc 39,706 43,926
9,462 Southern Co 204,390 233,002
2,020 Southwest Airlines Co 51,762 46,965
270 Springs Industries Inc Class A 10,321 11,171
5,017 Sprint Corp 174,376 200,053
1,012 St Jude Medical Inc+ 27,428 43,516
1,236 St Paul Co Inc 57,089 68,753
</TABLE>
51
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
622 Stanley Works $ 25,678 $ 32,033
1,377 Stone Container Corp+ 19,707 19,794
678 Stride Rite Corp 9,059 5,085
1,046 Sun Co Inc 31,303 28,634
2,776 Sun Microsystems Inc+ 46,793 126,655
1,650 SunTrust Banks Inc 82,602 113,025
993 Super Value Inc 31,993 31,280
2,562 Sysco Corp 73,270 83,265
1,725 Tandem Computers Inc+ 20,131 18,328
922 Tandy Corp 40,597 38,263
500 Tektronix Inc 16,653 24,563
9,275 Tele-Communication Inc Class A+ 162,610 184,341
787 Teledyne Inc 19,174 20,167
1,229 Tellabs Inc+ 58,733 45,473
762 Temple-Inland Inc 33,764 33,623
2,911 Tenet Healthcare Corp+ 40,705 60,403
2,617 Tenneco Inc 129,213 129,869
3,695 Texaco Inc 244,934 290,058
2,722 Texas Instruments Inc 121,434 140,864
3,235 Texas Utilities Co 136,266 133,039
1,250 Textron Inc 70,052 84,375
295 Thomas & Betts Corp 18,892 21,756
5,554 Time Warner Inc 219,640 210,358
1,638 Times Mirror Co Class A 36,210 55,487
456 Timken Co 15,997 17,442
1,043 TJX Companies Inc 22,886 19,687
1,015 Torchmark Corp 49,410 45,929
3,916 Toys R Us Inc+ 128,576 85,173
985 Transamerica Corp 57,903 71,782
4,543 Travelers Inc 194,087 285,641
933 Tribune Co 51,585 57,030
421 Trinova Corp 12,348 12,051
907 TRW Inc 62,445 70,293
2,154 Tyco International Inc 53,233 76,736
2,160 U.S. Bancorp 63,465 72,630
</TABLE>
52
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
2,202 U.S. Healthcare Inc $ 91,448 $ 102,393
481 U.S. Life Corp 12,579 14,370
6,770 U.S. West Inc 177,466 242,028
6,770 U.S. West Media Group+ 120,615 128,630
3,072 Unicom Corp 87,017 100,608
2,304 Unilever NV 265,563 324,288
994 Union Camp Corp 48,490 47,339
1,965 Union Carbide Corp 45,634 73,688
1,420 Union Electric Co 57,778 59,285
2,921 Union Pacific Corp 176,085 192,786
2,525 Unisys Corp+ 27,344 14,203
2,481 United Healthcare Corp 108,630 162,506
786 United States Surgical 17,522 16,801
1,710 United Technologies Corp 111,582 162,236
3,495 Unocal Corp 100,721 101,792
997 UNUM Corp 51,984 54,835
847 USAir Group Inc+ 10,225 11,223
1,670 USF & G Corp 27,498 28,181
2,794 UST Inc 79,260 93,250
4,288 USX - Marathon Group 81,857 83,616
1,178 USX - US Steel Group 38,825 36,224
605 Varity Corp+ 24,768 22,461
901 VF Corp 43,707 47,528
5,129 Viacom Inc Class B+ 216,808 242,986
2,478 Wachovia Corp 93,484 113,369
32,818 Wal Mart Stores Inc 828,062 734,303
3,559 Walgreen Co 74,947 106,325
1,924 Warner Lambert Co 142,190 186,869
712 Wells Fargo & Co 94,579 153,792
1,497 Wendy's International Inc 23,529 31,811
732 Western Atlas Inc+ 29,826 36,966
5,657 Westinghouse Electric Corp 85,301 93,341
1,462 Westvaco Corp 37,888 40,571
2,943 Weyerhaeuser Co 123,067 127,285
1,051 Whirlpool Corp 62,687 55,966
</TABLE>
53
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
1,505 Whitman Corp $ 25,343 $ 34,991
825 Willamette Industries Inc 56,324 46,406
1,413 Williams Co Inc 43,677 61,995
2,204 Winn-Dixie Stores Inc 65,993 81,273
6,912 WMX Technologies Inc 199,118 206,496
1,982 Woolworth Corp 41,679 25,766
1,356 Worthington Industries Inc 26,469 28,222
1,617 Wrigley (Wm) Jr Co 68,843 84,893
1,567 Xerox Corp 146,503 214,627
393 Yellow Corp 8,745 4,863
------------ ------------
TOTAL COMMON STOCKS $ 52,255,144 $ 65,464,545
</TABLE>
54
<PAGE>
ASSET ALLOCATION FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 4.08%
$ 2,714,000 U.S. Treasury Bills 5.03 % 03/07/96 $ 2,690,133
90,000 U.S. Treasury Bills 5.06 03/14/96 89,113
------------
TOTAL SHORT-TERM INSTRUMENTS $ 2,779,246
(Cost $2,777,223)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $55,032,367)* (Notes 1 and 3) 100.24 % $ 68,243,791
Other Assets and Liabilities, Net (0.24 ) (162,164)
---------- -------------
TOTAL NET ASSETS 100.00 % $ 68,081,627
---------- -------------
---------- -------------
................................................................................
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 14,267,221
Gross Unrealized Depreciation (1,055,797)
-------------
NET UNREALIZED APPRECIATION $ 13,211,424
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
55
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - 95.74%
$ 1,000,000 ABAG Finance Authority for Nonprofit Corp CA
State Insured 7.10 % 12/01/20 $ 1,065,500
1,000,000 ABAG Finance Authority for Nonprofit Corp
Stanford University Hospital MBIA Insured 5.25 11/01/20 962,410
1,000,000 Alameda CA USD AMBAC Insured 6.05 07/01/11 1,062,140
1,000,000 Alameda CA USD MBIA Insured 5.70 12/01/14 1,019,940
1,000,000 Alameda County CA Public Facilities Corp COP 6.25 06/01/06 1,059,690
1,000,000 Alameda County CA Water District Revenue COP
Water System Project MBIA Insured 6.20 06/01/13 1,055,120
100,000 Albany CA Public Facilities FA Lease Revenue
Capital Improvement Project 6.90 09/01/12 105,873
500,000 Albany CA Public Facilities FA Lease Revenue
Capital Improvement Project 7.85 09/01/09 539,890
1,000,000 Antioch CA Development Agency Tax Allocation
Project 1 FGIC Insured 6.40 09/01/17 1,078,500
3,550,000 California State DWR Central Valley Project
Revenue Series L 5.75 12/01/14 3,655,471
1,000,000 California State DWR Central Valley Project
Revenue Series L MBIA Insured 5.50 12/01/09 1,020,970
2,000,000 California State EDFA Revenue Chapman College
Refunding Pending 7.30 01/01/02 2,195,880
1,000,000 California State EDFA Revenue Claremont
Colleges Pooled Facilities 6.38 05/01/22 1,064,850
350,000 California State EDFA Revenue Loyola Marymount
University 6.00 10/01/14 360,210
710,000 California State EDFA Revenue Loyola Marymount
University Series B 6.55 10/01/12 769,576
1,200,000 California State EDFA Revenue University of San
Diego Project 6.50 10/01/08 1,313,124
1,355,000 California State GO AMBAC Insured 5.75 03/01/15 1,395,989
525,000 California State HFA Home Mortgage Revenue AMT
Series B Multiple Credit Enhancements 8.00 08/01/29 553,124
</TABLE>
56
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 1,455,000 California State HFA Home Mortgage Revenue AMT
Series D Multiple Credit Enhancements 7.75 08/01/10 $ 1,549,371
345,000 California State HFA Home Mortgage Revenue AMT
Series G Multiple Credit Enhancements 8.15 08/01/19 358,962
1,535,000 California State HFA Home Mortgage Revenue
Series A Multiple Credit Enhancements 7.35 08/01/11 1,669,405
445,000 California State HFA Home Mortgage Revenue
Series B Multiple Credit Enhancements 7.25 08/01/10 479,296
130,000 California State HFA Home Mortgage Revenue
Series F Multiple Credit Enhancements 7.75 08/01/08 133,992
140,000 California State HFA Insured Housing Revenue
AMT Series C MBIA Insured 7.00 08/01/23 149,226
1,575,000 California State HFA Multi-Unit Rental Housing
Revenue Series A AMT 5.50 08/01/15 1,508,992
700,000 California State HFFA American Baptist Homes
West State Insured 7.65 04/01/14 750,246
1,000,000 California State HFFA Cedar Knoll Insured
Series B State Insured 7.50 08/01/20 1,093,370
1,000,000 California State HFFA Episcopal Homes
Foundation Project State Insured 7.75 07/01/18 1,028,460
400,000 California State HFFA Episcopal Homes
Foundation Project State Insured 7.85 07/01/15 412,072
1,000,000 California State HFFA Gould Medical Foundation
Escrowed to Maturity 7.25 04/01/10 1,129,870
1,250,000 California State HFFA Gould Medical Foundation
Escrowed to Maturity 7.30 04/01/20 1,423,650
2,855,000 California State HFFA Kaiser Permanente Series
A 6.50 12/01/20 3,047,170
2,000,000 California State HFFA Revenue Catholic
Healthcare West AMBAC Insured 5.75 07/01/15 2,044,780
1,000,000 California State HFFA Revenue Insured Health
Facilities Valleycare Series State Insured 6.50 05/01/05 1,084,110
</TABLE>
57
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 1,750,000 California State HFFA Revenue Small Insured
Health Facilities Series A 6.75 03/01/20 $ 1,846,320
1,000,000 California State HFFA San Diego Hospital
Association MBIA Insured 6.20 08/01/12 1,058,660
1,000,000 California State Maritime Infrastructure
Authority Revenue Port of San Diego Project
AMBAC Insured 5.25 11/01/15 966,370
2,500,000 California State PCFA Resource Recovery Revenue
Waste Management AMT Series A 7.15 02/01/11 2,768,850
1,000,000 California State PCFA San Diego Gas & Electric
Co AMT 6.80 06/01/15 1,153,950
1,000,000 California State PCFA Southern California
Edison AMT 6.90 09/01/06 1,077,340
180,000 California State Public Capital Improvements FA
Revenue Joint Powers Agency Pooled Projects
Series 8.25 03/01/98 191,657
1,000,000 California State Public Works Board Lease
Revenue University Of California Project Series
A AMBAC Insured 6.30 12/01/09 1,083,180
1,500,000 California State Public Works Board Lease
Revenue University Of California Project Series
B MBIA Insured 5.38 12/01/19 1,479,150
1,590,000 California Statewide CDA Motion Picture and
Television Development AMBAC Insured 5.25 01/01/13 1,566,897
1,500,000 California Statewide CDA Motion Picture and
Television Development AMBAC Insured 5.25 01/01/14 1,477,515
1,500,000 California Statewide CDA Revenue COP Hospital
Cedars Sinai Medical Center 6.50 08/01/12 1,654,470
3,840,000 Cathedral City CA PFA RevenueTax Allocation
Redevelopment Projects Series A MBIA Insured 5.25 08/01/13 3,783,014
1,000,000 Cerritos CA PFA Redevelopment Los Cerritos
Redevelopment Project Revenue AMBAC Insured 5.75 11/01/22 1,019,720
</TABLE>
58
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 870,000 Chula Vista CA COP Town Centre II Package
Project RDA 6.00 09/01/11 $ 896,483
1,200,000 Contra Costa County CA COP Public Facilities
Merrithew Memorial Hospital Replacement 6.60 11/01/12 1,283,856
500,000 Contra Costa County CA COP Public Facilities
Merrithew Memorial Hospital Replacement 6.63 11/01/22 529,000
270,000 Contra Costa County CA Home Mortgage Revenue
AMT Escrowed to Maturity 7.75 05/01/22 346,834
755,000 Contra Costa County CA Transportation Authority
Sales Tax Revenue Series A Escrowed to Maturity 6.50 03/01/09 854,418
4,000,000 Contra Costa County CA Transportation Authority
Sales Tax Revenue Series A FGIC Insured 5.50 03/01/08 4,119,440
3,000,000 Contra Costa County CA Water District Water
Revenue Series G MBIA Insured 5.75 10/01/14 3,088,080
1,000,000 Covina CA COP Water System Improvement Project 7.30 04/01/16 1,059,020
1,500,000 Cupertino CA Series A AMBAC Insured 5.75 07/01/16 1,526,340
2,675,000 East Bay CA MUD Water System Revenue MBIA
Insured 6.00 06/01/12 2,802,758
3,655,000 East Bay CA Regional Park District Series B 5.75 09/01/13 3,730,585
500,000 Eastern Municipal Water District CA Water &
Sewer Revenue Certificates FGIC Insured 6.30 07/01/20 524,970
2,500,000 El Dorado County CA Bond Authority Lease
Revenue Capital Facilities Project 7.40 11/01/09 2,773,350
1,000,000 Emeryville CA PFA Housing Increment Revenue
Series A 6.35 05/01/10 1,049,330
1,725,000 Escondido CA PFA Lease Revenue Center for the
Arts AMBAC Insured 5.80 09/01/09 1,816,977
2,000,000 Escondido CA PFA Lease Revenue Center for the
Arts AMBAC Insured 6.00 09/01/18 2,105,460
1,410,000 Fairfield CA PFA CGIC Insured 5.20 08/01/08 1,411,340
</TABLE>
59
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 3,000,000 Fontana CA USD Convertible Series C FGIC
Insured 6.03 F 05/01/20 $ 2,813,970
700,000 Fontana CA USD Series B AMBAC Insured 5.40 07/01/08 717,325
1,000,000 Fresno CA COP Street Improvement Project 6.63 12/01/11 1,064,090
1,000,000 Fresno CA Sewer Revenue Series A MBIA Insured 5.00 09/01/15 965,870
2,000,000 Fresno CA USD Series A MBIA Insured 5.70 08/01/15 2,053,840
1,250,000 Fresno County CA Solid Waste Revenue American
Avenue Landfill Project MBIA Insured 5.75 05/15/14 1,277,663
3,840,000 Hayward CA COP Capital Improvement Projects 6.80 08/01/17 4,008,230
2,800,000 Huntington Beach CA PFA Revenue Bond 7.00 08/01/10 2,846,900
500,000 Industry CA Urban Development Agency 6.70 11/01/03 544,790
1,080,000 Industry CA Urban Development Agency 6.85 11/01/04 1,179,803
500,000 Industry CA Urban Development Agency Project 3 6.60 11/01/02 544,505
1,000,000 Industry CA Urban Development Agency Tax
Allocation MBIA Insured 5.80 05/01/09 1,041,370
1,500,000 Inglewood CA COP Civic Center Improvement
Project PFA 7.00 08/01/19 1,591,065
485,000 Inglewood CA PFA Revenue Series C 7.00 05/01/22 514,449
1,000,000 Lincoln CA USD Special Tax Community District
Number 1B 7.20 09/01/21 1,088,730
1,000,000 Long Beach CA Finance Authority Revenue AMBAC
Insured 6.00 11/01/17 1,092,670
2,900,000 Los Angeles CA Airport Revenue Series A FGIC
Insured 5.50 05/15/08 2,977,633
1,000,000 Los Angeles CA Community College District COP
Series A CGIC Insured 6.00 08/15/08 1,067,670
4,000,000 Los Angeles CA DW&P Electric Plant Revenue 5.38 09/01/23 3,964,040
1,000,000 Los Angeles CA DW&P Electric Plant Revenue 6.38 02/01/20 1,065,060
</TABLE>
60
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 1,000,000 Los Angeles CA DW&P Electric Plant Revenue
Second Issue 6.00 08/15/32 $ 1,038,320
100,000 Los Angeles CA Harbor Revenue Escrowed to
Maturity 7.60 10/01/18 111,461
2,775,000 Los Angeles CA Harbor Revenue Series B AMT 6.50 08/01/13 2,977,520
115,000 Los Angeles CA SFMR Series A AMT Multiple
Credit Enhancements 7.55 12/01/23 121,072
7,250,000 Los Angeles CA Wastewater System Revenue Series
A 5.70 06/01/20 7,361,868
3,000,000 Los Angeles CA Wastewater System Revenue Series
D FGIC Insured 5.20 11/01/21 2,925,210
4,000,000 Los Angeles County CA Metropolitan
Transportation Authority Sales Tax Revenue
Series A AMBAC Insured 5.50 07/01/17 4,039,120
1,000,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue Series B 5.75 07/01/18 1,004,810
480,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue Series B FGIC Insured 6.50 07/01/15 516,835
2,395,000 Lucia Mar CA USD COP Prerefunded 6.90 05/01/15 2,503,853
1,000,000 Menlo Park CA CDA Tax Allocation Las Pulgas
Community Project AMBAC Insured 6.70 10/01/22 1,095,980
2,800,000 Metropolitan Water District of Southern CA
Waterworks Revenue 5.50 07/01/19 2,802,380
665,000 Mid Peninsula CA Regional Open Space District
Promissory Notes 6.30 07/10/10 708,245
2,000,000 Mid Peninsula CA Regional Open Space District
Promissory Notes 7.00 09/01/14 2,197,720
520,000 Mojave CA Water Agency Improvement District M
Morongo Basin 6.25 09/01/02 555,994
500,000 Mojave CA Water Agency Improvement District M
Morongo Basin 6.60 09/01/12 532,805
1,000,000 Mountain View CA Shoreline Regional Park
Community Tax Allocation Series A 5.60 08/01/09 986,540
1,450,000 Nevada County CA Solid Waste Revenue 6.50 10/01/06 1,560,157
345,000 Nevada County CA Solid Waste Revenue 7.00 06/01/98 352,138
</TABLE>
61
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 345,000 Nevada County CA Solid Waste Revenue 7.10 06/01/99 $ 355,340
1,000,000 Nevada County CA Solid Waste Revenue 7.50 06/01/21 1,030,660
1,035,000 Northridge CA Water District AMBAC Insured 5.40 02/01/11 1,048,113
1,000,000 Nuview CA USD COP 7.25 02/01/16 1,055,500
1,500,000 Ontario CA RDFA Revenue Project One MBIA
Insured 6.00 08/01/15 1,549,905
1,000,000 Orange County CA Water District Revenue Series
A 5.50 08/15/10 1,001,880
1,000,000 Palm Springs CA Municipal Golf Course Expansion
Project 7.40 11/01/18 1,068,530
2,400,000 Pittsburg CA RDFA Tax Allocation Los Medanos
Community Project FGIC Insured 5.50 08/01/07 2,484,816
2,250,000 Pittsburg CA RDFA Tax Allocation Los Medanos
Community Project FGIC Insured 5.50 08/01/15 2,251,643
1,500,000 Pittsburg CA RDFA Tax Allocation Los Medanos
Community Project Series 90-1 7.40 08/15/20 1,600,560
1,000,000 Port of Oakland CA Special Facilities Revenue
Mitsui OSK Lines Limited Series A AMT LOC -
Industrial Bank of Japan Ltd 6.70 01/01/07 1,093,570
1,000,000 Rancho Cucamonga CA RDFA Tax Allocation MBIA
Insured 5.50 09/01/23 1,000,800
1,100,000 Richmond CA Joint Powers Financing Authority
Lease and Gas Tax Revenue Series A 5.25 05/15/13 1,034,022
100,000 Richmond CA RDFA Tax Allocation Harbour Project
CGIC Insured 7.00 07/01/09 113,973
1,055,000 Riverside CA Sewer Revenue FGIC Insured 5.00 08/01/10 1,040,736
1,750,000 Riverside County CA Asset Leasing Corp Revenue
Riverside County Hospital Project A 6.38 06/01/09 1,830,605
3,000,000 Riverside County CA COP Series A 6.88 11/01/09 3,214,890
1,000,000 Riverside County CA PFA Special Tax Revenue
Series A MBIA Insured 5.25 09/01/13 990,720
</TABLE>
62
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 370,000 Riverside County CA SFMR Project A AMT GNMA
Collateralized 6.85 10/01/16 $ 411,718
1,250,000 Riverside County CA Transportation Commission
Sales Tax Revenue Series A 6.50 06/01/09 1,318,913
1,370,000 Rosemead CA RDFA Tax Allocation Redevelopment
Project Area 1-A 5.50 10/01/18 1,263,003
1,335,000 Roseville CA Joint USD Capital Appreciation
Series A 8.39 F 08/01/06 778,879
1,900,000 Sacramento CA Light Rail Transportation Project 6.75 07/01/07 2,108,829
3,600,000 Sacramento CA MUD Electric Revenue Series E
MBIA- Insured 5.70 05/15/12 3,681,756
500,000 Sacramento CA MUD Electric Revenue Series Z
FGIC Insured 6.45 07/01/10 540,935
3,000,000 Sacramento County Main Detention Facility MBIA
Insured 5.75 06/01/15 3,052,770
1,000,000 San Bernardino CA Municipal Water Department
COP FGIC Insured 6.25 02/01/12 1,055,950
2,000,000 San Buenaventura CA Capital Improvement Project
COP 6.85 08/01/16 2,063,720
230,000 San Carlos CA RDFA Tax Allocation Series A 7.00 09/01/01 251,054
250,000 San Carlos CA RDFA Tax Allocation Series A 7.00 09/01/02 274,865
225,000 San Carlos CA RDFA Tax Allocation Series A 7.00 09/01/03 246,650
235,000 San Carlos CA RDFA Tax Allocation Series A 7.00 09/01/04 256,401
235,000 San Carlos CA RDFA Tax Allocation Series A 7.10 09/01/05 256,933
1,520,000 San Diego CA COP 6.90 07/15/16 1,629,562
5,000,000 San Diego CA PFA Sewer Revenue FGIC Insured 5.00 05/15/15 4,830,800
1,000,000 San Diego CA Regional Building Authority Lease
Revenue San Miguel Consolidated Fire Protection
District MBIA Insured 5.65 01/01/20 1,014,940
</TABLE>
63
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 1,230,000 San Diego County CA COP East Mesa Detention
Facilities Project 7.00 10/01/09 $ 1,299,569
500,000 San Diego County CA Regional Transportation
Community Sales Tax Revenue Series A Escrowed
to Maturity 6.00 04/01/08 542,305
2,715,000 San Elijo Joint Powers Authority San Diego
County CA Water Pollution Control Facility FGIC
Insured 5.38 03/01/13 2,722,113
2,250,000 San Francisco CA BART Sales Tax Revenue FGIC
Insured 5.50 07/01/15 2,270,385
1,800,000 San Joaquin County CA COP North County Landfill
Project 7.00 04/01/11 1,880,496
2,000,000 San Joaquin Hills CA Transportation Corridor
Agency Toll Road Revenue Capital Appreciation 4.72 F 01/01/10 1,525,220
1,395,000 San Jose RDFA Merged Area Project MBIA Insured 5.25 08/01/16 1,372,499
1,935,000 San Mateo County CA Board of Education COP 7.10 05/01/21 2,043,050
1,700,000 Santa Clara County CA COP Multiple Facilities
Project AMBAC Insured 6.00 05/15/12 1,780,818
100,000 Santa Clara County CA COP Public Facilities
Corp 7.75 11/01/08 111,482
750,000 Santa Maria CA RDFA Town Center West Side
Parking Facilities FSA Insured 5.25 06/01/11 747,450
2,000,000 Santa Monica - Malibu CA USD Facilities
Reconstruction Projects 5.50 08/01/15 1,996,360
1,195,000 Santa Rosa CA High School District FGIC Insured 5.90 05/01/13 1,252,754
1,000,000 Shasta CA Dam Area Public Utility District COP 7.25 03/01/12 1,071,280
350,000 Shasta CA Joint Powers Financing Authority
Landfill Revenue Series A 7.20 07/01/09 370,293
500,000 Shasta CA Joint Powers Financing Authority
Landfill Revenue Series A 7.20 07/01/10 528,990
1,500,000 Snowline CA Joint USD COP 6.40 07/01/18 1,525,845
520,000 Sonoma County CA COP 6.75 10/01/06 566,212
</TABLE>
64
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 1,000,000 South County CA Regional Wastewater Authority
Revenue Capital Improvement FGIC Insured 5.75 08/01/10 $ 1,038,470
1,000,000 Southern California State Public Power
Authority 5.50 07/01/12 1,002,410
2,750,000 Southern California State Public Power
Authority Transmission Project Revenue Southern
Transmission Project 6.13 07/01/18 2,843,060
1,450,000 Southern California State Public Power
Authority Transmission Revenue Project 5.75 07/01/21 1,462,717
1,030,000 Southern California State SFMR Series A AMT
GNMA Collateralized 7.63 10/01/22 1,077,988
530,000 Southern California State SFMR Series A AMT
GNMA Collateralized 7.63 10/01/23 563,008
670,000 Southern California State SFMR Series A AMT
GNMA/FNMA Collateralized 6.75 09/01/22 710,502
695,000 Southern California State SFMR Series A AMT
GNMA/FNMA Collateralized 7.35 09/01/24 732,697
2,000,000 Stanislaus County CA COP Series A 6.85 06/01/12 2,107,320
750,000 Stockton CA Port District Revenue Series A 8.10 01/01/14 808,185
20,000 Stockton CA SFMR Government Agency
Collateralized 7.50 02/01/23 21,992
265,000 Sulphur Springs CA USD COP AMBAC Insured 7.15 02/01/11 292,483
5,690,000 Sulphur Springs CA USD Series A MBIA Insured
Zero Coupon 8.58 F 09/01/13 2,168,175
1,000,000 Sunnyvale CA Financing Authority Utilities
Revenue Solid Waste Materials Series B AMT MBIA
Insured 6.00 10/01/08 1,055,730
1,000,000 Temecula Valley CA USD Series D FGIC Insured 6.00 09/01/14 1,045,350
1,900,000 Torrance CA COP AMBAC Insured 5.50 04/01/12 1,938,722
1,705,000 Torrance CA COP AMBAC Insured 5.75 04/01/16 1,755,383
1,000,000 Twentynine Palms CA Water District CA COP 7.00 08/01/17 1,055,350
1,000,000 University of California Housing System Revenue
Series A MBIA Insured 5.00 11/01/13 962,110
</TABLE>
65
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL BONDS - CONTINUED
$ 3,000,000 University of California Revenue Multiple
Purpose Project C AMBAC Insured 5.25 09/01/11 $ 3,002,790
2,300,000 University of California Revenue Multiple
Purpose Projects Series C AMBAC Insured 5.25 09/01/12 2,291,881
1,750,000 University of California Revenue Seismic Safety
Project MBIA Insured 5.50 11/01/10 1,791,720
1,095,000 University of California Revenues Multiple
Purpose Projects Series B MBIA Insured 6.00 09/01/13 1,153,440
990,000 Upland CA HFA Revenue Issue A 7.85 07/01/20 1,036,490
1,000,000 Vacaville CA PFA Tax Allocation Redevelopment
Project MBIA Insured 6.35 09/01/22 1,052,910
1,135,000 Walnut Valley CA USD Series C FGIC Insured 5.75 08/01/15 1,161,215
1,000,000 West & Central Basin CA Financing Authority
Redevelopment AMBAC Insured 6.13 08/01/12 1,057,080
1,000,000 Yolo County CA HFA Mortgage Revenue AMT FHA
Collateralized 7.20 08/01/33 1,079,330
------------
TOTAL CALIFORNIA MUNICIPAL BONDS $263,677,834
(Cost $248,725,174)
SHORT-TERM INSTRUMENTS - 3.58%
CALIFORNIA MUNICIPAL VARIABLE RATE SECURITIES+ - 3.25%
$ 1,300,000 California State HFFA St Francis Hospital V/R 5.90 % 11/01/19 $ 1,300,000
1,000,000 California State HFFA Sutter Hospital V/R LOC -
Morgan Guaranty Trust 5.90 03/01/20 1,000,000
1,000,000 Irvine Ranch CA Water District V/R LOC -
Commerzbank AG 5.90 01/01/21 1,000,000
500,000 Irvine Ranch CA Water District V/R LOC -
Sumitomo Bank Ltd 5.90 10/01/10 500,000
900,000 Los Angeles County CA IDA Komax System Inc V/R
AMT LOC - Dai-Ichi Kangyo Bank Ltd 6.25 12/01/06 900,000
</TABLE>
66
<PAGE>
CALIFORNIA TAX-FREE BOND FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - CONTINUED
CALIFORNIA MUNICIPAL VARIABLE RATE SECURITIES+ - CONTINUED
$ 1,350,000 Los Angeles County CA IDA V/R AMT LOC -
Dai-Ichi Kangyo Bank Ltd 6.25 12/01/06 $ 1,350,000
900,000 Los Angeles County CA V/R 6.25 12/01/05 900,000
1,000,000 Orange County CA Sanitation District V/R LOC -
National Westminster Bank Plc 5.90 08/01/15 1,000,000
1,000,000 Orange County CA Sanitation District V/R
Multiple Credit Enhancements 5.90 08/01/16 1,000,000
------------
$ 8,950,000
MONEY MARKET FUNDS - 0.33%
$ 123,773 Arbor Fund CA Tax-Exempt Portfolio $ 123,773
800,186 Nuveen Institutional CA Tax-Exempt Fund 800,186
------------
$ 923,959
TOTAL SHORT-TERM INSTRUMENTS $ 9,873,959
(Cost $9,873,950)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $258,599,124)* (Notes 1 and 3) 99.32 % $ 273,551,793
Other Assets and Liabilities, Net 0.68 1,863,007
---------- -------------
TOTAL NET ASSETS 100.00 % $ 275,414,800
---------- -------------
---------- -------------
................................................................................
</TABLE>
F YIELD TO MATURITY.
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 14,988,173
Gross Unrealized Depreciation (35,504)
-------------
NET UNREALIZED APPRECIATION $ 14,952,669
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
67
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - 103.45%
$ 4,400,000 ABAG Finance Authority for Nonprofit Corp CA
Lucile Salter Packard Project V/R AMBAC Insured 5.00 % 08/01/23 $ 4,400,000
3,000,000 Alameda County CA TRAN LOC - Union Bank of
Switzerland 4.75 07/25/96 3,013,204
1,700,000 Alhambra CA IDA Sunclipse V/R LOC - Bank of
America 3.50 05/01/07 1,700,000
2,500,000 Anaheim CA Public Improvement COP LOC -
Industrial Bank of Japan Ltd 5.30 08/01/19 2,500,000
3,000,000 Brea & Olinda CA USD Brea High School
Prerefunded 7.70 08/01/18 3,125,445
9,055,000 California State DWR Central Valley Project
Revenue V/R 5.15 12/01/05 9,055,000
2,600,000 California State HFFA Adventist Health System
V/R LOC - Toronto Dominion Bank 4.75 08/01/21 2,600,000
4,900,000 California State HFFA Kaiser Permanente V/R 4.90 05/01/28 4,900,000
1,300,000 California State HFFA Kaiser Permanente V/R 5.90 11/01/19 1,300,000
3,650,000 California State HFFA St Joseph Health Center
Series A V/R 5.90 07/01/13 3,650,000
965,000 California State PCFA Chevron Project V/R 4.06 11/15/01 965,000
1,500,000 California State PCFA Revenue Pacific Gas &
Electric CP 3.70 01/10/96 1,500,000
2,000,000 California State PCFA Revenue Pacific Gas &
Electric CP 3.75 01/11/96 2,000,000
5,000,000 California State PCFA Solid Waste Disposal
Revenue Colmac Energy Project Series B V/R AMT
LOC - Swiss Bank 5.05 12/01/16 5,000,000
1,800,000 California State PCFA Solid Waste Disposal
Revenue Shell Oil Co Martinez Project Series A
V/R AMT 4.29 10/01/24 1,800,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
68
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 1,000,000 California State PCFA Solid Waste Disposal
Revenue Taormina Industries Project Series B
V/R LOC - Sanwa Bank 5.40 08/01/14 $ 1,000,000
2,900,000 California State PCFA Southern California
Edison V/R 5.40 02/28/08 2,900,000
2,400,000 California State PCFA Southern California
Edison V/R Series A 5.40 02/28/08 2,400,000
3,200,000 California State PCFA Southern California
Edison V/R Series C 5.40 02/28/08 3,200,000
4,600,000 California State PCFA Southern California
Edison V/R Series D 5.40 02/28/08 4,600,000
3,200,000 California State PCFA Stanislaus Project V/R
AMT LOC - Swiss Bank 6.00 12/01/17 3,200,000
4,000,000 California State PCFA V/R San Diego Gas &
Electric Co V/R Series A 4.25 12/01/07 4,000,000
7,300,000 California State PCFA Wadham Project V/R AMT
LOC - Banque Paribas 5.15 11/01/17 7,300,000
1,000,000 California State PCFA Western Waste Industries
Project V/R LOC - Citibank 5.38 12/01/00 1,000,000
10,000,000 California State RAW Series C Multiple LOC's 5.75 04/25/96 10,063,200
1,500,000 California State RAW Series C V/R FGIC Insured 5.91 04/25/96 1,508,846
6,000,000 California State School Cash Reserve Program
Pool Series A MBIA Insured 4.75 07/03/96 6,025,308
8,000,000 California State School Cash Reserve Program
Pool Series B MBIA Insured 4.50 12/20/96 8,052,140
2,500,000 California Statewide CDA Apartment Development
Revenue Series A-6 V/R FNMA Collateralized 4.70 05/15/25 2,500,000
500,000 California Statewide CDA Apartment Revenue
Series A-7 V/R AMT FNMA Collateralized 4.85 05/15/25 500,000
2,300,000 California Statewide CDA St Joseph Health
System V/R 4.90 07/01/08 2,300,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
69
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 1,800,000 California Statewide CDA Sutter Health Group
V/R AMBAC Insured 5.90 07/01/15 $ 1,800,000
1,600,000 California Statewide CDA Industrial Revenue Tri
H Food Multiple LOC's 5.55 08/01/11 1,600,000
9,000,000 Chula Vista CA IDA San Diego Gas & Electric CP 3.80 02/12/96 9,000,000
3,000,000 Chula Vista CA IDA San Diego Gas & Electric CP 3.80 02/13/96 3,000,000
5,100,000 Colton CA RDFA Las Palomas Associates Project
V/R LOC - Bank of America 5.10 11/01/15 5,100,000
1,000,000 Colton CA RDFA MFHR V/R LOC - Federal Home Loan
Bank of San Francisco 4.55 05/01/10 1,000,000
1,100,000 Concord CA MFHR Bel Air Apartments V/R AMT LOC
-Bank of America 5.00 12/01/16 1,100,000
2,000,000 Duarte CA RDFA COP Johnson Duarte Partners
Project V/R Series B LOC - Bank of America 4.90 12/01/14 2,000,000
8,100,000 Eagle Trust V/R Series 94 MBIA Insured 5.20 09/01/03 8,100,000
3,950,000 East Bay CA MUD CP 3.40 01/30/96 3,950,000
4,000,000 East Bay CA MUD CP 3.75 02/22/96 4,000,000
4,400,000 Escondido CA CDA V/R AMT LOC - Bank of America 5.25 10/01/16 4,400,000
3,800,000 Escondido CA MFHR Morning View Terrace V/R LOC
-Bank of America 4.80 02/15/07 3,800,000
1,000,000 Foothill / Eastern CA Transportation Corridor
Agency Toll Road Revenue Series B V/R LOC -
Morgan Guaranty Trust 4.75 01/02/35 1,000,000
2,000,000 Foothill / Eastern CA Transportation Corridor
Toll Road Development Series D V/R LOC -
Industrial Bank of Japan Ltd 5.00 01/02/35 2,000,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
70
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 3,800,000 Huntington Beach CA MFHR Seabridge Villas V/R
LOC - Bank of America 4.00 02/01/10 $ 3,800,000
4,100,000 Industry CA IDR Helene Curtis Inc Project V/R
LOC - Harris Trust & Savings Bank 5.10 10/01/06 4,100,000
3,330,000 Inglewood CA RDFA Tax Allocation Series B
Prerefunded 7.88 09/01/18 3,484,677
1,800,000 Irvine CA IDA Irvine East Investment Co V/R LOC
-Bank of America 5.10 12/01/05 1,800,000
500,000 Irvine Ranch CA Water District LOC - National
Westminster Bank Plc 5.90 08/01/16 500,000
1,400,000 Irvine Ranch CA Water District LOC - Sumitomo
Bank Ltd 5.90 10/01/00 1,400,000
7,700,000 Irvine Ranch CA Water District V/R LOC -
Commerzbank AG 5.90 01/01/21 7,700,000
2,500,000 Irvine Ranch CA Water District V/R LOC -
Dai-Ichi Kangyo Bank Ltd 5.90 09/02/20 2,500,000
600,000 Irvine Ranch CA Water District V/R LOC -
Sumitomo Bank Ltd 5.90 10/01/05 600,000
2,000,000 Irwindale CA IDA Revenue Toys R Us Project 5.13 12/01/19 2,000,000
3,000,000 Long Beach CA Harbor CP 3.50 01/19/96 3,000,000
2,500,000 Long Beach CA Harbor CP 3.70 03/14/96 2,500,000
2,500,000 Long Beach CA Harbor CP 3.80 01/18/96 2,500,000
6,500,000 Long Beach CA Health Facilities Memorial Health
Services V/R 4.90 10/01/16 6,500,000
1,000,000 Los Angeles CA MFHR Channel Gateway Apartments
Series B V/R LOC - Fuji Bank Ltd 5.30 08/01/19 1,000,000
1,900,000 Los Angeles CA MFHR Series B V/R AMT LOC -
Federal Home Loan Bank of San Francisco 6.25 12/01/26 1,900,000
3,800,000 Los Angeles CA MFHR V/R AMT LOC - Federal Home
Loan Bank of San Francisco 6.25 08/01/26 3,800,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
71
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 3,500,000 Los Angeles CA Wastewater System CP 3.45 02/08/96 $ 3,500,000
1,000,000 Los Angeles County CA COP Van Nuys Courthouse
Project Prerefunded 9.00 06/01/15 1,041,092
1,100,000 Los Angeles County CA HFA MFHR Harbor Cove
Project V/R LOC - Citibank 5.30 10/01/06 1,100,000
1,000,000 Los Angeles County CA HFA MFHR Sand Canyon
Ranch Project V/R LOC - Citibank 5.30 11/01/06 1,000,000
2,000,000 Los Angeles County CA Metropolitan
Transportation Commission CP 3.30 02/09/96 2,000,000
3,000,000 Los Angeles County CA Metropolitan
Transportation Commission CP 3.55 03/27/96 3,000,000
4,000,000 Los Angeles County CA Metropolitan
Transportation Commission CP 3.60 02/08/96 4,000,000
1,000,000 Los Angeles County CA Metropolitan
Transportation Commission CP 3.75 01/12/96 1,000,000
15,000,000 Los Angeles County CA TRAN Multiple LOC's 4.50 07/01/96 15,047,159
5,000,000 Los Angeles County CA Transportation Authority
Revenue Union Station Gateway V/R Series A FSA
Insured 4.75 07/01/25 5,000,000
1,100,000 Metropolitan Water District of Southern CA
Waterworks Revenue CP 3.40 01/30/96 1,100,000
2,900,000 Montebello CA V/R LOC - Bank of America 3.50 04/01/05 2,900,000
3,000,000 Monterey CA Regional Waste Management Authority
Revenue Series A V/R LOC - Dai-Ichi Kangyo Bank
Ltd 5.30 04/01/15 3,000,000
1,500,000 Ontario CA MFHR Daisy Apartments V/R LOC - Bank
of America 4.80 11/01/04 1,500,000
6,000,000 Ontario CA MFHR Park Centre Apartments V/R LOC
-Bank of New York 4.80 08/01/07 6,000,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
72
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 2,100,000 Ontario CA MFHR Vineyard Village Apartments V/R
LOC - Industrial Bank of Japan Ltd 5.35 12/01/05 $ 2,100,000
4,000,000 Orange County CA HFA Bear Brand Apartments
Project Series Z LOC - Fuji Bank Ltd 5.80 11/01/07 4,000,000
5,000,000 Orange County CA HFA Harbor Pointe Apartment
V/R Issue D LOC - Citibank 5.15 12/01/06 5,000,000
1,000,000 Orange County CA HFA Seaside Meadow Apartments
Series C LOC - Bank of America 5.65 08/01/08 1,000,000
2,000,000 Orange County CA HFA Vintage Wood Apartments
V/R LOC - Mitsubishi Bank Ltd 5.40 11/01/08 2,000,000
3,000,000 Orange County CA Office & Courthouse Projects
V/R LOC - Dai-Ichi Kangyo Bank 5.90 12/01/15 3,000,000
1,000,000 Orange County CA Sanitation District Multiple
Credit Enhancments 5.05 08/01/13 1,000,000
1,500,000 Orange County CA Sanitation District V/R LOC -
National Westminster Bank Plc 5.90 08/01/15 1,500,000
1,000,000 Orange County CA Sanitation District V/R
Multiple Credit Enhancements 5.90 08/01/16 1,000,000
4,000,000 Sacramento CA MUD CP 3.30 02/28/96 4,000,000
2,637,000 Sacramento CA MUD CP 3.70 01/10/96 2,637,000
4,524,000 Sacramento CA MUD CP 3.80 01/12/96 4,524,000
200,000 Sacramento County CA MFHR Series A V/R LOC -
Dai-Ichi Kangyo Bank Ltd 5.30 04/15/07 200,000
2,780,000 Salinas CA MFHR Brentwood Gardens V/R LOC -
Bank of America 4.80 03/01/05 2,780,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
73
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 5,000,000 San Bernardino CA Alta Loma Apartments V/R LOC
-Federal Home Loan Bank of Atlanta 4.65 02/01/23 $ 5,000,000
2,185,000 San Bernardino County CA MFHR V/R LOC - Federal
Home Loan Bank of San Francisco 4.65 05/01/17 2,185,000
8,100,000 San Bernardino County CA TRAN Multiple LOC's 4.50 07/05/96 8,122,039
2,000,000 San Diego CA IDR San Diego Gas & Electric CP 3.70 01/09/96 2,000,000
2,000,000 San Diego CA MFHR Los Serano V/R LOC - Citibank 4.80 02/01/09 2,000,000
5,000,000 San Diego CA MFHR Lusk Mira Mesa Apartments V/R
LOC - Bank of America 5.00 04/01/07 5,000,000
1,000,000 San Diego CA Regional Transportation Commission
CP 3.60 02/16/96 1,000,000
3,300,000 San Diego CA Regional Transportation Commission
CP 3.70 02/07/96 3,300,000
3,600,000 San Francisco CA City & County V/R LOC -
Industrial Bank of Japan Ltd 5.00 12/01/05 3,600,000
1,200,000 San Francisco CA MFHR Winterland Project V/R
LOC - Citibank 5.30 06/01/06 1,200,000
2,200,000 San Joaquin County CA Transportation Authority
Sales Tax Revenue V/R LOC - Sumitomo Bank Ltd 5.15 04/01/11 2,200,000
1,300,000 San Jose CA MFHR Kimberly Woods Apartments V/R
LOC - Bank of America 4.80 11/01/08 1,300,000
300,000 Santa Clara CA Electric Revenue V/R Series 85A
LOC - National Westminster Bank Plc 4.90 07/01/10 300,000
500,000 Santa Clara CA Electric Revenue V/R Series 85B
LOC - National Westminster Bank Plc 4.90 07/01/10 500,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
74
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE + VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - CONTINUED
$ 1,500,000 Santa Clara County CA HFA Lincoln Pajaro
Apartments Series 85A LOC - Sumitomo Bank 5.05 01/01/97 $ 1,500,000
1,000,000 Santa Clara County CA MFHR Foxchase Apartments
V/R Series E FGIC Insured 5.00 11/01/07 1,000,000
2,575,000 Santa Clara County CA MFHR Grove Garden
Apartments V/R LOC - Citibank 5.30 03/01/17 2,575,000
4,800,000 Simi Valley CA MFHR Lincoln Wood Ranch V/R LOC
-Sumitomo Bank 5.30 06/01/10 4,800,000
3,000,000 Southern California State Public Power
Authority Hydroelectric Revenue Hoover Updating
Project Prerefunded 8.13 10/01/17 3,162,012
7,000,000 Southern California State Public Power
Authority Southern Transmission Project V/R LOC
-Swiss Bank 4.75 07/01/19 7,000,000
1,000,000 Southern California State Rapid Transit
District COP V/R MBIA Insured 3.00 07/01/99 1,000,000
3,200,000 Stockton CA COP 1986 Water Facility Project
Prerefunded 7.50 08/01/16 3,280,467
2,200,000 Tracy CA MFHR Sycamore Village Apartments V/R
LOC - Bank of America 4.55 05/01/15 2,200,000
1,770,000 Turlock CA Irrigation District Revenue V/R
Series A LOC - Canadian Imperial Bank of
Commerce 4.85 01/01/14 1,770,000
2,500,000 University of California Housing Revenue
Prerefunded 7.60 11/01/18 2,626,230
2,000,000 Vacaville CA MFHR Western Properties Sycamores
Project V/R LOC - Bank of America 4.55 04/01/05 2,000,000
2,600,000 Walnut Creek CA MFHR Creekside Drive Apartments
V/R LOC - Bank of America 4.55 04/01/07 2,600,000
------------
TOTAL SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES $368,142,819
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
75
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $368,142,819)* (Note 1) 103.45 % $ 368,142,819
Other Assets and Liabilities, Net (3.45 ) (12,274,986)
---------- -------------
TOTAL NET ASSETS 100.00 % $ 355,867,833
---------- -------------
---------- -------------
</TABLE>
................................................................................
<TABLE>
<C> <S> <C> <C>
+ SECURITIES WITH MATURITIES IN EXCESS OF
397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING
MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
</TABLE>
The accompanying notes are an integral part of these financial statements.
76
<PAGE>
MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER - 60.89%
$ 27,500,000 Abbey National North America 5.72 % 01/31/96 $ 27,368,917
30,000,000 ANZ Delaware Inc 5.67 02/13/96 29,797,004
30,000,000 Associates Corp of North America 5.60 04/11/96 29,528,667
14,900,000 Corporate Asset Funding Co Inc++ 5.67 02/12/96 14,801,437
32,500,000 Corporate Receivables Corp++ 5.57 03/14/96 32,132,922
7,500,000 Daimler-Benz North America Corp 5.50 03/28/96 7,400,313
22,500,000 Den Danske Corp Inc 5.67 02/08/96 22,365,338
7,000,000 Den Danske Corp Inc 5.67 02/09/96 6,957,003
25,000,000 Glaxo Wellcome Plc++ 5.70 01/12/96 24,956,458
20,360,000 Greenwich Funding Corp++ 5.75 01/18/96 20,304,717
17,000,000 Hanson Finance Plc++ 5.66 02/21/96 16,863,688
12,500,000 Hanson Finance Plc++ 5.67 02/12/96 12,417,313
20,000,000 International Business Machines Credit Corp 5.66 02/02/96 19,899,378
30,000,000 Morgan (J P) & Co Inc 5.57 03/18/96 29,642,592
32,500,000 National Australia Funding Inc 5.57 03/15/96 32,127,893
32,500,000 New Center Asset Funding++ 5.60 03/15/96 32,125,889
22,000,000 Penney (J C) Co Inc 5.66 02/20/96 21,827,059
15,600,000 Pitney Bowes Credit Corp 5.70 01/02/96 15,597,530
30,000,000 Swedish Export Credit Corp 5.60 03/01/96 29,720,000
------------
TOTAL COMMERCIAL PAPER $425,834,118
SHORT TERM FEDERAL AGENCIES - 2.14%
$ 15,000,000 Federal Home Loan Mortgage Corp 5.57 % 01/05/96 $ 14,990,714
U.S. TREASURY BILLS - 15.97%
$ 115,000,000 U.S. Treasury Bills 5.19 % 07/25/96 $111,704,183
</TABLE>
77
<PAGE>
MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSITS - 2.86%
$ 20,000,000 Banque Nationale de Paris (Yankee) 5.81 % 01/30/96 $ 20,000,000
VARIABLE AND FLOATING RATE BONDS - 15.16%
$ 21,000,000 Chemical Banking Corp 6.08 % 08/19/96 21,027,737
20,000,000 Comerica Inc 5.25 08/12/96 19,987,698
20,000,000 FCC National Bank 5.59 10/31/96 19,990,356
15,000,000 First Bank N.A. 5.90 01/17/96 14,999,872
10,000,000 First Chicago Corp 6.22 02/23/96 10,004,977
20,000,000 PNC Bank Corp 5.64 07/29/96 19,994,162
------------
TOTAL VARIABLE AND FLOATING RATE BONDS $106,004,802
REPURCHASE AGREEMENTS - 3.39%
$ 23,731,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 23,731,000
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $702,264,817)* (Note 1) 100.41 % $ 702,264,817
Other Assets and Liabilities, Net (0.41 ) (2,871,641)
---------- -------------
TOTAL NET ASSETS 100.00 % $ 699,393,176
---------- -------------
---------- -------------
................................................................................
</TABLE>
++ THESE SECURITIES ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933.
RULE 144A UNDER THAT ACT PERMITS THESE SECURITIES TO BE RESOLD IN
TRANSACTIONS EXEMPT FROM REGISTRATION TO QUALIFIED INSTITUTIONAL
BUYERS. THESE SECURITIES WERE 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.
78
<PAGE>
MUNICIPAL INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - 95.21%
ALABAMA - 0.24%
$ 160,000 Alabama State SFMR Series B AMT Multiple Credit
Enhancements 7.40 % 04/01/22 $ 170,085
ALASKA - 0.91%
605,000 Alaska State Housing Finance Corporation Second
Series AMT Government Agency Collateralized 7.10 06/01/22 640,949
CALIFORNIA - 24.64%
145,000 California State HFA Insured Housing Revenue
AMT Series C MBIA Insured 7.00 08/01/23 154,556
2,000,000 Contra Costa County CA Mortgage Revenue Cedar
Point Apartments Project A FHA Collateralized 6.15 09/01/25 2,072,440
120,000 Riverside County CA SFMR Project A AMT GNMA
Collateralized 6.85 10/01/16 133,530
9,750,000 Riverside County CA SFMR Series B AMT GNMA
Collateralized 8.35 06/01/13 12,890,378
1,055,000 Sacramento CA SFMR AMT Escrowed to Maturity 7.25 10/01/23 1,288,619
830,000 Southern California State SFMR Series A AMT
GNMA/FNMA Collateralized 6.90 10/01/24 885,087
DISTRICT OF COLUMBIA - 0.48%
320,000 District of Columbia SFMR AMT GNMA
Collateralized 7.10 12/01/24 341,478
FLORIDA - 0.43%
285,000 Brevard County FL HFA SFMR Series B FSA Insured 7.00 03/01/13 303,821
HAWAII - 6.28%
725,000 Hawaii State Airports Systems Revenue AMT FGIC
Insured 7.00 07/01/20 808,854
500,000 Hawaii State Harbor Capital Improvement Revenue
AMT MBIA Insured 7.00 07/01/17 549,930
3,000,000 Hawaii State SFMR AMT Multiple Credit
Enhancements 6.00 07/01/26 3,084,300
</TABLE>
79
<PAGE>
MUNICIPAL INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
IDAHO - 2.20%
$ 1,500,000 Idaho State HFA SFMR Series C-2 AMT 6.35 07/01/15 $ 1,552,710
ILLINOIS - 5.11%
500,000 Chicago IL O'Hare International Airport Special
Facilities Revenue AMT LOC - Bayerische
Landesbank 7.13 05/01/18 556,770
1,900,000 Chicago IL O'Hare International Airport Special
Facilities Revenue AMT MBIA Insured 6.75 01/01/18 2,055,040
1,000,000 Saint Claire County IL AMT FGIC Insured 5.75 10/01/23 1,002,580
INDIANA - 3.65%
2,500,000 Indiana State HFA Series A-2 AMT FHA
Collateralized 6.45 07/01/14 2,581,975
IOWA - 3.31%
1,450,000 Iowa State HFA SFMR Series B AMT GNMA/FNMA
Collateralized 6.95 07/01/24 1,533,013
420,000 Iowa State HFA SFMR Series B AMT GNMA/FNMA
Collateralized 7.45 07/01/23 445,637
365,000 Iowa State HFA SFMR Series B AMT Government
Agency Collateralized 5.95 07/01/23 364,518
KANSAS - 0.28%
185,000 Kansas City KS Mortgage Revenue AMT Multiple
Credit Enhancements 7.35 12/01/23 198,694
KENTUCKY - 4.77%
1,100,000 Kenton County KY Cincinnati/Northern Kentucky
International Airport Revenue AMT FSA Insured 6.30 03/01/15 1,152,426
925,000 Kentucky State HFA MFHR AMT Multiple Credit
Enhancements 5.90 01/01/15 940,244
1,230,000 Kentucky State HFA MFHR Series D AMT FHA
Collateralized 7.45 01/01/23 1,276,888
</TABLE>
80
<PAGE>
MUNICIPAL INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
LOUISIANA - 2.44%
$ 1,000,000 Louisiana State MFHR AMT FHA Collateralized 5.90 12/01/18 $ 1,006,430
670,000 Louisiana State Public Facilities Authority
Student Loan Revenue AMT FSA Insured 6.85 01/01/09 718,783
MASSACHUSETTS - 5.08%
1,000,000 Massachusetts State HFA Residential Development
FNMA Collateralized 6.90 11/15/21 1,071,910
2,500,000 Massachusetts State HFA Revenue Series A AMT
FSA Insured 6.10 06/01/26 2,520,300
MINNESOTA - 0.68%
455,000 Minneapolis-St Paul MN Housing Finance Board
Revenue SFMR Phase IX AMT GNMA Collateralized 7.30 08/01/31 483,151
NEVADA - 8.71%
1,340,000 Nevada State SFMR Series A-2 AMT FHA
Collateralized 6.55 10/01/15 1,398,357
1,825,000 Nevada State SFMR Series C AMT FHA
Collateralized 6.35 10/01/13 1,879,440
2,700,000 Washoe County NV Gas Facilities Sierra Pacific
Power AMT MBIA Insured 6.55 09/01/20 2,878,333
NEW JERSEY - 1.89%
1,250,000 New Jersey State MFHR FHA Collateralized 7.00 05/01/30 1,333,413
NEW YORK - 0.76%
500,000 New York State Energy R & D Authority Electric
Facilities Revenue Cons Edison Co New York City
AMT MBIA Insured 7.25 11/01/24 538,385
OKLAHOMA - 2.01%
200,000 Pryor Creek OK Economic Development Authority
Mortgage Revenue Series A 7.13 07/01/21 211,328
</TABLE>
81
<PAGE>
MUNICIPAL INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
OKLAHOMA - CONTINUED
$ 635,000 Tulsa County OK HFA Mortgage Revenue Series B
Remarket AMT GNMA Collateralized 7.10 06/01/22 $ 678,605
500,000 Tulsa County OK HFA Mortgage Revenue Series B
Remarket AMT GNMA Collateralized 7.55 05/01/23 532,830
PENNSYLVANIA - 2.14%
990,000 Allegheny County PA Residential FA SFMR AMT
GNMA/FNMA Collateralized 5.63 11/01/23 974,408
500,000 Pennsylvania State Higher EDFA Student Loan
Revenue Series D AMT AMBAC Insured 7.05 10/01/16 538,845
TEXAS - 0.74%
480,000 Travis County TX HFA Residential Mortgage
Revenue Series A AMT GNMA/FNMA Collateralized 7.00 12/01/11 519,518
UTAH - 8.43%
500,000 Utah State Board of Regents Student Loan
Revenue Series F AMT AMBAC Insured 7.45 11/01/08 541,670
1,100,000 Utah State Board of Regents Student Loan
Revenue Series H AMT AMBAC Insured 6.70 11/01/15 1,160,863
2,000,000 Utah State HFA SFMR Series B-2 AMT FHA
Collateralized 6.50 07/01/15 2,072,980
1,360,000 Utah State HFA SFMR Series C-2 AMT FHA
Collateralized 6.50 07/01/15 1,406,308
750,000 Utah State HFA SFMR Series D-2 AMT FHA
Collateralized 6.45 01/01/11 781,133
VIRGINIA - 1.80%
1,250,000 Virginia State HFA Commonwealth Mortgage Series
B-5 AMT FSA Insured 6.20 07/01/21 1,271,275
</TABLE>
82
<PAGE>
MUNICIPAL INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
WASHINGTON - 4.11%
$ 1,310,000 Washington State SFMR Series D AMT GNMA/FNMA
Collateralized 6.15 01/01/26 $ 1,385,089
1,440,000 Washington State SFMR Series D AMT GNMA/FNMA
Collateralized 7.10 07/01/22 1,523,994
WEST VIRGINIA - 4.12%
3,000,000 West Virginia State Housing Revenue AMT AMBAC
Insured 5.70 05/01/24 2,914,110
------------
TOTAL MUNICIPAL BONDS $ 67,325,980
(Cost $63,778,413)
SHORT-TERM INSTRUMENTS - 3.80%
MONEY MARKET FUNDS - 0.55%
$ 386,156 National Municipal Fund $ 386,156
VARIABLE RATE MUNICIPAL BONDS+ - 3.25%
$ 1,900,000 Phenix City AL IDA Environmental Improvement
Mead Coates Project Series A V/R LOC - Toronto
Dominion Bank 6.05 06/01/08 $ 1,900,000
400,000 Babylon NY Individual Development Agency V/R
AMT LOC - Union Bank of Switzerland 6.00 12/01/24 400,000
------------
TOTAL VARIABLE RATE MUNICIPAL BONDS $ 2,300,000
TOTAL SHORT-TERM INSTRUMENTS $ 2,686,156
(COST $2,686,156)
</TABLE>
83
<PAGE>
MUNICIPAL INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $66,464,569)* (Notes 1 and 3) 99.01 % $ 70,012,136
Other Assets and Liabilities, Net 0.99 698,372
---------- -------------
TOTAL NET ASSETS 100.00 % $ 70,710,508
---------- -------------
---------- -------------
................................................................................
</TABLE>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 3,649,531
Gross Unrealized Depreciation (101,964)
-------------
NET UNREALIZED APPRECIATION $ 3,547,567
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
84
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 94.80%
ADVERTISING - 0.90%
25,000 HA-LO Industries inc+ $ 410,000 $ 768,750
BASIC INDUSTRIES - 0.17%
10,000 Cronos Group $ 100,000 $ 101,250
55,000 Quadrax Corp+ 212,492 46,406
------------ ------------
$ 312,492 $ 147,656
BIOTECHNOLOGY - 4.50%
10,000 Cephalon Inc+ $ 277,250 $ 407,500
30,000 Genzyme Corp - General Division+ 1,550,250 1,871,250
40,000 Genzyme Corp - Tissue Repair+ 601,250 635,000
35,000 Liposome Co Inc+ 426,103 700,000
25,000 Neurex Corp+ 112,500 228,125
------------ ------------
$ 2,967,353 $ 3,841,875
COMMERCIAL SERVICES - 2.20%
20,000 AccuStaff Inc+ $ 318,229 $ 880,000
11,000 Central Parking Corp+ 198,000 316,250
22,000 Sylvan Learning Systems Inc+ 562,625 654,500
86,000 Work Recovery Inc+ 367,812 21,500
------------ ------------
$ 1,446,666 $ 1,872,250
COMPUTER SOFTWARE - 16.90%
20,000 Adobe Systems Inc $ 1,270,195 $ 1,240,000
26,000 Avant! Corp+ 803,308 500,500
25,000 First Data Corp 1,608,075 1,671,875
48,500 IKOS Systems Inc+ 397,989 539,563
20,000 Imnet Systems Inc+ 364,750 480,000
33,000 LifeRate Systems Inc+ 259,875 367,125
45,000 Metatec Corp Class A+ 530,657 495,000
12,500 MetaTools Inc+ 312,500 325,000
10,000 Microsoft Corp+ 668,063 877,500
12,000 Minnesota Educational Computing Corp+ 360,469 300,000
48,000 Oracle Systems Corp+ 1,815,084 2,034,000
</TABLE>
85
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
COMPUTER SOFTWARE - CONTINUED
20,000 Phamis Inc+ $ 520,435 $ 595,000
22,000 Premenos Tech Corp+ 562,709 580,250
100,000 Sanctuary Woods Multimedia+ 512,831 287,500
10,000 Software 2000 Inc+ 110,000 77,500
10,000 Syncronys Softcorp+ 127,078 28,750
20,000 Synopsys Inc+ 559,875 760,000
50,000 Veritas Software Corp+ 1,126,348 1,900,000
20,000 Verity Inc+ 326,850 885,000
40,000 Viasoft Inc+ 404,688 475,000
------------ ------------
$ 12,641,779 $ 14,419,563
COMPUTER SYSTEMS - 12.81%
5,000 3Com Corp+ $ 214,313 $ 233,125
45,000 Adaptec Inc+ 1,329,158 1,845,000
30,000 Cisco Systems Inc+ 1,054,875 2,238,750
19,000 Clarify Inc+ 442,875 570,000
60,000 Komag Inc+ 2,865,072 2,767,500
40,000 RadiSys Corp+ 517,500 470,000
15,000 Silicon Storage Technology Inc+ 135,000 198,750
36,000 Solectron Corp+ 851,938 1,588,500
22,500 Sync Research Inc+ 1,153,750 1,018,125
------------ ------------
$ 8,564,481 $ 10,929,750
ELECTRICAL EQUIPMENT - 2.12%
45,000 Interlink Electronics Inc+ $ 225,000 $ 292,500
32,000 Nokia Corp ADR Class A 1,197,215 1,244,000
50,000 Power (R F) Products Inc+ 348,463 275,000
------------ ------------
$ 1,770,678 $ 1,811,500
ENERGY & RELATED - 4.70%
28,200 Camco International Inc $ 703,960 $ 789,600
40,000 Digicon Inc+ 232,400 320,000
15,000 Ensco International Inc+ 250,367 345,000
15,000 Global Industries Ltd+ 389,375 450,000
</TABLE>
86
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
ENERGY & RELATED - CONTINUED
32,400 J Ray McDermott SA+ $ 700,762 $ 579,150
15,000 Marine Drilling Co Inc+ 71,250 76,875
10,000 Petroleum Geo-Services ADR+ 244,167 250,000
10,000 Sonat Offshore Drilling Co 350,561 447,500
15,000 Sun Co Inc 469,950 410,625
17,500 Trigen Energy Corp 300,850 341,250
------------ ------------
$ 3,713,642 $ 4,010,000
ENTERTAINMENT & LEISURE - 3.19%
40,000 Family Golf Centers Inc+ $ 600,000 $ 730,000
30,000 Mirage Resorts Inc+ 971,405 1,035,000
8,000 Morrow Snowboards Inc+ 88,000 130,000
5,000 Mountasia Entertainment International Inc+ 24,063 24,063
19,500 Sports Club Inc+ 136,260 60,938
20,000 Station Casino Inc+ 293,750 292,500
45,000 Stratosphere Corp+ 378,617 444,375
------------ ------------
$ 2,492,095 $ 2,716,876
ENVIRONMENTAL CONTROL - 3.29%
55,000 Molten Metal Technology Inc+ $ 1,248,970 $ 1,794,375
15,000 Republic Industries Inc+ 349,107 541,875
25,000 U.S.A. Waste Services Inc+ 505,045 471,873
------------ ------------
$ 2,103,122 $ 2,808,123
FINANCE & RELATED - 4.76%
60,000 Capital One Financial Corp $ 1,655,226 $ 1,432,500
20,000 Cole Taylor Financial Group Inc 391,740 597,500
70,000 Envoy Corp (New)+ 414,846 1,211,875
20,000 NHP Inc+ 252,500 370,000
20,000 Oxford Corp Class A+ 534,709 450,000
------------ ------------
$ 3,249,021 $ 4,061,875
FOOD & RELATED - 1.75%
40,000 Garden Fresh Restaurant Corp+ $ 328,375 $ 260,000
</TABLE>
87
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
FOOD & RELATED - CONTINUED
30,000 General Nutrition Co Inc+ $ 378,750 $ 690,000
10,000 NuCo2 Inc+ 126,040 130,000
30,000 Whole Foods Market Inc+ 566,125 416,250
------------ ------------
$ 1,399,290 $ 1,496,250
GENERAL BUSINESS & RELATED - 0.27%
12,500 LeCroy Corp+ $ 176,875 $ 231,250
HEALTHCARE - 8.28%
15,000 Coventry Corp+ $ 309,550 $ 309,375
40,000 Genesis Health Ventures Inc+ 909,602 1,460,000
60,000 Healthsouth Corp+ 1,229,949 1,747,500
25,000 Owen Healthcare Inc+ 454,375 690,625
40,000 Renal Treatment Centers+ 973,000 1,760,000
40,000 Value Health Inc+ 1,337,160 1,100,000
------------ ------------
$ 5,213,636 $ 7,067,500
MANUFACTURING PROCESSING - 1.50%
8,200 Intertape Polymer Group Inc+ $ 247,180 $ 257,275
25,000 Lydall Inc+ 371,040 568,750
25,000 Waters Corp+ 414,500 456,250
------------ ------------
$ 1,032,720 $ 1,282,275
MEDICAL EQUIPMENT & SUPPLIES - 6.57%
30,000 AVECOR Cardiovascular Inc+ $ 468,125 $ 532,500
50,000 Bioject Medical Technologies+ 229,063 93,750
40,000 Biomatrix Inc+ 347,292 670,000
50,000 CompuMed Inc+ 475,938 212,500
60,000 Endosonics Corp+ 553,906 907,500
40,000 Heart Technology Inc+ 777,569 1,315,000
35,000 ICU Medical Inc+ 465,000 595,000
30,000 InStent Inc+ 514,031 450,000
12,500 Life Med Sciences Inc+ 92,188 112,500
</TABLE>
88
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
32,500 Molecular Devices Corp+ $ 358,750 $ 341,250
15,000 Sola International Inc+ 261,879 378,750
------------ ------------
$ 4,543,741 $ 5,608,750
PHARMACEUTICALS - 0.74%
16,000 Ergo Science Corp+ $ 144,000 $ 228,000
1,000 Fuisz Technologies Ltd+ 12,000 15,250
20,000 Medarex Inc+ 111,250 142,500
60,000 Seragen Inc+ 414,940 247,500
------------ ------------
$ 682,190 $ 633,250
RETAIL & RELATED - 2.70%
30,000 Barnes & Noble+ $ 875,857 $ 870,000
15,000 Concord Camera Corp+ 63,750 67,500
30,000 Corporate Express Inc+ 723,750 903,750
15,000 PetSmart Inc+ 383,125 465,000
------------ ------------
$ 2,046,482 $ 2,306,250
SEMICONDUCTORS - 5.00%
93,500 Integrated Device Technology Inc+ $ 2,335,108 $ 1,203,813
18,000 Intel Corp 904,125 1,021,500
40,000 OnTrak Systems Inc+ 991,438 580,000
15,000 S3 Inc+ 262,188 264,375
40,000 Semtech Corp+ 857,655 780,000
40,600 Tegal Corp+ 518,414 416,150
------------ ------------
$ 5,868,928 $ 4,265,838
TELECOMMUNICATIONS - 10.93%
65,000 Accom Inc+ $ 552,594 $ 422,500
25,000 AML Communications Inc+ 232,750 262,500
15,000 Anicom Inc+ 135,000 159,375
15,000 Arch Communications Group Inc+ 408,681 360,000
15,000 Cascade Communications Corp+ 1,218,005 1,278,750
15,000 Celeritek Inc+ 112,500 159,375
</TABLE>
89
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - CONTINUED
TELECOMMUNICATIONS - CONTINUED
45,000 Comdial Corp+ $ 541,000 $ 410,625
42,800 DSC Communications Corp+ 1,864,154 1,578,250
100,000 LCI International Inc+ 913,174 2,050,000
50,000 PanAmSat Corp+ 805,536 1,103,125
15,000 Premisys Communications Inc+ 674,063 840,000
20,000 WorldCom Inc+ 605,000 705,000
------------ ------------
$ 8,062,457 $ 9,329,500
TRANSPORTATION - 1.52%
20,000 Greenbrier Companies Inc $ 307,323 $ 242,500
40,000 Landair Services Inc+ 666,866 530,000
10,000 Marten Transportation Ltd+ 196,250 165,000
40,000 Mesa Airlines Inc+ 622,588 360,000
------------ ------------
$ 1,793,027 $ 1,297,500
TOTAL COMMON STOCKS $ 70,490,675 $ 80,906,581
WARRANTS - 2.22%
50,000 Intel Corp expires 3/14/1998+ $ 1,337,500
3,000 Interlink Electronics Inc expires 06/07/1996+ 3,188
100,000 Viacom Inc Class E expires 07/07/1999+ 550,000
------------
TOTAL WARRANTS $ 1,890,688
(Cost $1,099,271)
</TABLE>
90
<PAGE>
STRATEGIC GROWTH FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 1.47%
CONVERTIBLE CORPORATE BONDS - 1.47%
$ 240,000 First Financial Management Corp 5.00 % 12/15/99 $ 383,280
100,000 Genesis Health Ventures Inc 6.00 11/30/03 162,000
100,000 LDDS Communications Inc 5.00 08/15/03 105,000
800,000 Softkey International Inc 5.50 11/01/00 604,000
------------
TOTAL CORPORATE BONDS & NOTES $ 1,254,280
(Cost $1,215,624)
SHORT-TERM INSTRUMENTS - 1.92%
REPURCHASE AGREEMENTS - 1.92%
$ 1,638,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 1,638,000
(Cost $1,638,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $74,443,570)* (Notes 1 and 3) 100.41 % $ 85,689,549
Other Assets and Liabilities, Net (0.41 ) (347,079)
---------- -------------
TOTAL NET ASSETS 100.00 % $ 85,342,470
---------- -------------
---------- -------------
................................................................................
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 18,980,372
Gross Unrealized Depreciation (7,734,393)
-------------
NET UNREALIZED APPRECIATION $ 11,245,979
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
91
<PAGE>
U.S. GOVERNMENT INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 64.37%
ADJUSTABLE RATE MORTGAGES - 1.07%
$ 21,630 GNMA #8109 (CMT) 6.75 % 03/20/16 $ 22,157
36,931 GNMA #8119 (CMT) 7.38 04/20/16 37,923
11,123 GNMA #8137 (CMT) 7.38 06/20/16 11,408
6,944 GNMA #8268 (CMT) 7.25 08/20/17 7,148
17,835 GNMA #8292 (CMT) 6.75 11/20/17 18,237
31,474 GNMA #8293 (CMT) 6.75 12/20/17 32,182
8,979 GNMA #8310 (CMT) 6.75 01/20/18 9,209
37,918 GNMA #8392 (CMT) 7.25 08/20/18 38,961
37,173 GNMA #8393 (CMT) 7.25 08/20/18 38,218
21,651 GNMA #8429 (CMT) 6.75 11/20/18 22,192
116,795 GNMA #8761 (CMT) 6.50 03/20/21 119,423
------------
$ 357,058
FEDERAL AGENCY - OTHER - 31.10%
$ 10,000,000 Tennessee Valley Authority 6.38 % 06/15/05 $ 10,343,700
FIXED RATE MORTGAGES - 27.78%
$ 46,330 FHLMC #275825 9.50 % 08/01/16 $ 49,514
47,920 FHLMC #304114 9.00 05/01/18 50,510
125,703 FHLMC #304398 9.00 06/01/18 132,723
41,824 FHLMC #305831 10.00 08/01/18 45,666
9,614 FHLMC #307323 9.50 09/01/18 10,266
72,883 FHLMC #307637 9.50 07/01/16 77,979
43,173 FHLMC #307915 9.50 10/01/18 46,207
5,862 FHLMC #308074 9.50 10/01/18 6,273
23,699 FHLMC #360020 10.00 01/01/18 25,891
33,575 FHLMC #360045 10.00 02/01/19 36,659
55,369 FHLMC #532468 9.50 04/01/19 59,175
108,358 GNMA #17087 9.00 09/15/16 115,688
17,544 GNMA #33080 9.00 08/15/22 18,663
14,695 GNMA #150499 10.50 03/15/16 16,405
166,910 GNMA #173055 9.00 09/15/16 178,201
105,823 GNMA #176892 9.00 10/15/16 113,147
494,118 GNMA #190848 9.00 01/15/17 527,545
</TABLE>
92
<PAGE>
U.S. GOVERNMENT INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - CONTINUED
FIXED RATE MORTGAGES - CONTINUED
$ 186,294 GNMA #191961 9.00 % 02/15/20 $ 198,316
56,652 GNMA #202624 9.00 11/15/19 60,352
62,121 GNMA #236877 9.00 04/15/18 66,226
64,393 GNMA #285963 9.00 01/15/20 68,598
18,574 GNMA #289319 9.00 11/15/20 19,773
179,260 GNMA #303235 9.00 05/15/21 190,688
212,038 GNMA #304653 9.00 09/15/21 225,556
7,281 GNMA #314150 9.00 10/15/21 7,751
2,088,927 GNMA #319413 7.25 12/15/18 2,131,227
23,972 GNMA #335400 9.00 12/15/22 25,501
1,936,206 GNMA #358863 7.25 01/15/24 1,975,473
249,220 GNMA II #85 10.00 02/20/22 271,181
168,019 GNMA II #908 10.00 01/20/18 182,825
938,676 GNMA II #1124 11.00 01/20/19 1,053,363
477,778 GNMA II #1221 11.00 07/20/19 536,152
147,997 GNMA II #1562 10.00 02/20/21 161,038
32,293 GNMA II #194221 10.00 09/20/20 35,139
368,102 GNMA II #266120 10.00 08/20/19 402,049
6,901 GNMA II #272537 10.00 08/20/19 7,536
18,555 GNMA II #278055 10.00 07/20/19 20,258
82,630 GNMA II #289000 10.00 05/20/20 89,912
------------
$ 9,239,426
U.S. GOVERNMENT AGENCY NOTES - 4.42%
$ 1,700,000 FNMA Principal Strip 8.21 %F 03/09/22 $ 1,471,588
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 21,411,772
(Cost $20,553,453)
U.S. TREASURY SECURITIES - 34.53%
U.S. TREASURY BONDS - 24.90%
$ 3,000,000 U.S. Treasury Bonds 11.63 % 11/15/04 $ 4,245,930
2,500,000 U.S. Treasury Bonds 12.50 08/15/14 4,035,550
------------
$ 8,281,480
</TABLE>
93
<PAGE>
U.S. GOVERNMENT INCOME FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - CONTINUED
U.S. TREASURY NOTES - 9.63%
$ 2,000,000 U.S. Treasury Notes 6.50 % 08/15/05 $ 2,130,620
1,000,000 U.S. Treasury Notes 7.50 10/31/99 1,073,590
------------
$ 3,204,210
TOTAL U.S. TREASURY SECURITIES $ 11,485,690
(Cost $11,365,623)
SHORT-TERM INSTRUMENTS - 0.91%
REPURCHASE AGREEMENTS - 0.91%
$ 303,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 303,000
(Cost $303,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $32,222,076)* (Notes 1 and 3) 99.81 % $33,200,462
Other Assets and Liabilities, Net 0.19 63,394
---------- -----------
TOTAL NET ASSETS 100.00 % $33,263,856
---------- -----------
---------- -----------
..............................................................................
</TABLE>
F YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 1,141,523
Gross Unrealized Depreciation (163,137)
-----------
NET UNREALIZED APPRECIATION $ 978,386
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
94
<PAGE>
U.S. TREASURY MONEY MARKET FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY BILLS - 100.54%
$ 13,070,000 U.S. Treasury Bills 1.93 % 01/04/96 $ 13,064,240
14,875,000 U.S. Treasury Bills 4.06 01/11/96 14,853,032
20,000,000 U.S. Treasury Bills 4.49 01/25/96 19,929,933
19,190,000 U.S. Treasury Bills 4.54 01/18/96 19,142,523
17,870,000 U.S. Treasury Bills 4.58 02/01/96 17,788,924
18,280,000 U.S. Treasury Bills 4.71 02/15/96 18,158,520
28,595,000 U.S. Treasury Bills 4.74 02/08/96 28,443,045
13,355,000 U.S. Treasury Bills 4.78 02/29/96 13,238,935
22,585,000 U.S. Treasury Bills 4.81 02/22/96 22,411,480
18,995,000 U.S. Treasury Bills 5.02 03/21/96 18,775,924
26,035,000 U.S. Treasury Bills 5.03 03/07/96 25,792,503
14,139,000 U.S. Treasury Bills 5.06 03/14/96 13,987,787
18,590,000 U.S. Treasury Bills 5.07 04/18/96 18,315,613
19,650,000 U.S. Treasury Bills 5.12 04/04/96 19,386,012
------------
TOTAL U.S. TREASURY BILLS $263,288,471
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $263,288,471)* (Note 1) 100.54 % $ 263,288,471
Other Assets and Liabilities, Net (0.54 ) (1,402,110)
---------- -------------
TOTAL NET ASSETS 100.00 % $ 261,886,361
---------- -------------
---------- -------------
................................................................................
</TABLE>
* 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.
95
<PAGE>
VARIABLE RATE GOVERNMENT FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 92.33%
ADJUSTABLE RATE MORTGAGES - 91.08%
$ 47,135,170 FHLMC #410055 (CMT) 6.87 % 11/01/24 $ 48,203,253
24,114,685 FHLMC #609684 (CMT) 5.99 05/01/24 24,759,030
19,690,503 FHLMC #610237 (CMT) 5.93 10/01/25 20,090,417
10,000,000 FHLMC #610268 (CMT) 5.88 11/01/25 10,185,900
2,539,816 FHLMC #640065 (CMT) 7.38 01/01/18 2,600,136
7,985,642 FHLMC #755102 (CMT) 7.36 06/01/18 8,130,342
9,291,790 FHLMC #845130 (CMT) 7.17 06/01/22 9,479,113
47,595 FHLMC #845410 (CMT) 7.63 07/01/23 48,398
21,585 FHLMC #845613 (CMT) 6.24 01/01/24 21,967
37,237,433 FHLMC #845752 (CMT) 6.05 05/01/24 38,057,773
10,084,326 FHLMC #845819 (CMT) 6.41 05/01/24 10,304,971
22,895,531 FHLMC #845897 (CMT) 7.64 06/01/24 23,230,721
31,173,412 FHLMC #845916 (CMT) 7.64 09/01/24 31,830,548
22,394,710 FHLMC #845969 (6 month LIBOR) 7.32 12/01/24 23,056,025
19,163,421 FHLMC #846150 (CMT) 8.11 04/01/21 19,834,141
21,987,819 FHLMC #846206 (CMT) 5.96 12/01/25 22,306,642
9,815,145 FNMA #136014 (COFI) 5.43 05/01/18 10,223,553
26,406,337 FNMA #190166 (CMT) 7.69 11/01/23 27,247,907
9,188,412 FNMA #190826 (CMT) 7.54 03/01/24 9,481,246
9,679,443 FNMA #303386 (CMT) 5.97 06/01/25 9,848,834
6,581,372 FNMA #303431 (CMT) 6.59 07/01/24 6,711,025
14,601,831 FNMA #326091 (6 month Treasury) 6.01 07/01/25 14,875,615
11,528,049 FNMA #333938 (CMT) 6.05 12/01/25 11,695,206
4,712,307 FNMA #70485 (CMT) 7.19 04/01/27 4,777,101
4,896,958 FNMA #90031 (CMT) 7.52 01/01/20 4,994,897
10,000,000 GNMA ARM TBA 5.50 01/24/96 10,021,000
15,000,000 GNMA II ARM TBA 5.00 01/24/96 15,030,000
7,957,862 GNMA II #8121 (CMT) 6.50 01/20/23 8,102,138
9,185,342 GNMA II #8358 (CMT) 6.00 01/20/24 9,354,720
13,619,289 GNMA II #8373 (CMT) 6.00 02/20/24 13,870,429
32,185,225 GNMA II #8387 (CMT) 6.00 03/20/24 32,778,720
11,023,593 GNMA II #8443 (CMT) 6.50 06/20/24 11,219,923
157,858 GNMA II #8623 (CMT) 7.50 04/20/25 161,089
2,620,462 GNMA II #8633 (CMT) 7.50 05/20/25 2,674,102
</TABLE>
96
<PAGE>
VARIABLE RATE GOVERNMENT FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - CONTINUED
ADJUSTABLE RATE MORTGAGES - CONTINUED
$ 1,846,706 GNMA II #8644 (CMT) 7.50 06/20/25 $ 1,884,509
9,668,108 GNMA II #8705 (CMT) 7.00 09/20/25 9,903,817
13,798,258 GNMA II #8710 (CMT) 5.50 10/20/25 13,815,506
24,633,652 GNMA II #8717 (CMT) 6.00 10/20/25 24,879,988
40,146,885 GNMA II #8744 (CMT) 5.50 11/20/25 40,197,069
15,300,000 GNMA II #8765 (CMT) 5.50 12/20/25 15,293,880
1,385,128 GNMA II #8998 (CMT) 7.38 06/20/22 1,410,021
------------
$602,591,672
REAL ESTATE MORTGAGE INVESTMENT CONDUITS - 1.25%
$ 8,344,327 FNMA 1995-210 FL 6.07 % 09/25/23 $ 8,292,008
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $610,883,680
(Cost $607,547,078)
U.S. TREASURY SECURITIES - 11.87%
U.S. TREASURY NOTES - 11.87%
$ 50,000,000 U.S. Treasury Notes 5.38 % 11/30/97 $ 50,164,000
28,000,000 U.S. Treasury Notes 6.00 08/31/97 28,345,520
------------
TOTAL U.S. TREASURY SECURITIES $ 78,509,520
(Cost $78,213,804)
SHORT-TERM INSTRUMENTS - 0.22%
REPURCHASE AGREEMENTS - 0.22%
$ 1,448,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 1,448,000
(Cost $1,448,000)
</TABLE>
97
<PAGE>
VARIABLE RATE GOVERNMENT FUND - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $687,208,882)* (Notes 1 and 3) 104.42 % $ 690,841,200
Other Assets and Liabilities, Net (4.42 ) (29,214,295)
---------- -------------
TOTAL NET ASSETS 100.00 % $ 661,626,905
---------- -------------
---------- -------------
................................................................................
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 4,381,590
Gross Unrealized Depreciation (749,272)
-------------
NET UNREALIZED APPRECIATION $ 3,632,318
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
98
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<TABLE>
<CAPTION>
CALIFORNIA
ASSET CALIFORNIA TAX-FREE
ALLOCATION TAX-FREE MONEY
FUND BOND FUND MARKET FUND
<S> <C> <C> <C>
.....................................................................................
ASSETS
INVESTMENTS:
In securities, at market
value
(see cost below) $ 68,243,791 $ 273,551,793 $ 368,142,819
Cash 0 391 770,449
Receivables:
Dividends and interest 214,075 4,650,928 2,771,267
Fund shares sold 56,663 19,100 0
Investment securities sold 0 0 0
Due from administrator
(Note 2) 0 0 0
Organization expenses, net
of amortization 10,906 2,465 0
Prepaid expenses 22,817 18,364 0
TOTAL ASSETS 68,548,252 278,243,041 371,684,535
LIABILITIES
Cash overdraft due to
custodian 26,874 0 0
Payables:
Investment securities
purchased 0 984,100 13,928,600
Distribution to
shareholders 251,526 1,177,050 1,094,288
Fund shares redeemed 3,300 114,439 0
Due to sponsor and
distributor (Note 2) 65,066 198,277 497,911
Due to adviser (Note 2) 83,060 291,868 223,691
Other 36,799 62,507 72,212
TOTAL LIABILITIES 466,625 2,828,241 15,816,702
TOTAL NET ASSETS
$ 68,081,627 $ 275,414,800 $ 355,867,833
NET ASSETS CONSIST OF:
Paid-in capital, Class
A(1) $ 39,516,327 $ 250,777,820 $ 355,939,961
Paid-in capital, Class D
or I(1) 14,481,832 7,704,783 N/A
Undistributed
(overdistributed) net
investment income 0 (15,018) 0
Undistributed net realized
gain (loss) on
investments 872,044 1,994,546 (72,128)
Net unrealized
appreciation
(depreciation) of
investments 13,211,424 14,952,669 0
TOTAL NET ASSETS $ 68,081,627 $ 275,414,800 $ 355,867,833
COMPUTATION OF NET ASSET
VALUE AND OFFERING PRICE
(NOTE 4)
Net assets - Class A(1) $ 52,006,874 $ 268,351,721 $ 355,867,833
Shares outstanding - Class
A(1) 3,778,222 24,749,623 355,939,965
Net asset value per share -
Class A(1) $13.76 $10.84 $1.00
Maximum offering price per
share - Class A(1) $14.41(2) $11.35(2) $1.00
Net assets - Class D or I $ 16,074,753 $ 7,063,079 N/A
Shares outstanding - Class D
or I 939,789 498,931 N/A
Net asset value and offering
price per share - Class D
or I $17.10 $14.16 N/A
INVESTMENTS AT COST (NOTE 3) $ 55,032,367 $ 258,599,124 $ 368,142,819
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
(3) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
The accompanying notes are an integral part of these financial statements.
99
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHORT-TERM
MONEY MUNICIPAL GOVERNMENT-
MARKET INCOME CORPORATE
FUND FUND INCOME FUND
<S> <C> <C> <C>
.....................................................................................
ASSETS
INVESTMENTS:
In securities, at market
value
(see cost below) $ 702,264,817 $ 70,012,136 $ 5,922,594(4)
Cash 9,407 0 0
Receivables:
Dividends and interest 817,012 1,195,201 32,688
Fund shares sold 0 291 0
Investment securities sold 0 0 0
Due from administrator
(Note 2) 0 0 912
Organization expenses, net
of amortization 35,220 21,951 71,311
Prepaid expenses 52,985 10,422 454
TOTAL ASSETS 703,179,441 71,240,001 6,027,959
LIABILITIES
Cash overdraft due to
custodian 0 0 0
Payables:
Investment securities
purchased 0 0 0
Distribution to
shareholders 3,114,797 307,779 31,144
Fund shares redeemed 0 21,575 0
Due to sponsor and
distributor (Note 2) 309,355 64,333 4,388
Due to adviser (Note 2) 318,503 67,509 0
Other 43,610 68,297 37,960
TOTAL LIABILITIES 3,786,265 529,493 73,492
TOTAL NET ASSETS
$ 699,393,176 $ 70,710,508 $ 5,954,467
NET ASSETS CONSIST OF:
Paid-in capital, Class
A(1) $ 375,366,288 $ 57,860,364 $ 5,936,048
Paid-in capital, Class D
or I(1) 324,220,168 13,061,371 0
Undistributed
(overdistributed) net
investment income 0 0 0
Undistributed net realized
gain (loss) on
investments (193,280) (3,758,794) 3,851
Net unrealized
appreciation
(depreciation) of
investments 0 3,547,567 14,568
TOTAL NET ASSETS $ 699,393,176 $ 70,710,508 $ 5,954,467
COMPUTATION OF NET ASSET
VALUE AND OFFERING PRICE
(NOTE 4)
Net assets - Class A(1) $ 375,217,777 $ 58,439,806 $ 5,954,467
Shares outstanding - Class
A(1) 375,364,023 5,347,075 1,185,070
Net asset value per share -
Class A(1) $1.00 $10.93 $5.02
Maximum offering price per
share - Class A(1) $1.00 $11.27(3) $5.18(3)
Net assets - Class D or I $ 324,175,399 $ 12,270,702 N/A
Shares outstanding - Class D
or I 324,222,390 829,082 N/A
Net asset value and offering
price per share - Class D
or I $1.00 $14.80 N/A
INVESTMENTS AT COST (NOTE 3) $ 702,264,817 $ 66,464,569 N/A
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
(3) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
(4) INVESTMENT IN CORRESPONDING MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
100
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM
MUNICIPAL STRATEGIC U.S. GOVERNMENT U.S. TREASURY VARIABLE RATE
INCOME GROWTH INCOME MONEY MARKET GOVERNMENT
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
...........................................................................................................................
ASSETS
INVESTMENTS:
In securities, at market
value
(see cost below) $ 16,448,917(4) $ 85,689,549 $ 33,200,462 $ 263,288,471 $ 690,841,200
Cash 0 2,170 1,428 921 1,956
Receivables:
Dividends and interest 63,483 14,679 324,713 3,363 5,519,337
Fund shares sold 0 277,987 148 0 1,337,000
Investment securities sold 0 0 5,848 0 4,932,782
Due from administrator
(Note 2) 8,888 0 0 0 0
Organization expenses, net
of amortization 64,215 35,626 9,328 23,582 10,617
Prepaid expenses 512 35,008 20,606 2,210 1,463
TOTAL ASSETS 16,586,015 86,055,019 33,562,533 263,318,547 702,644,355
LIABILITIES
Cash overdraft due to
custodian 0 0 0 0 0
Payables:
Investment securities
purchased 0 468,750 0 0 36,556,636
Distribution to
shareholders 57,984 0 172,090 1,068,293 3,032,611
Fund shares redeemed 0 44,362 72,029 0 242,347
Due to sponsor and
distributor (Note 2) 15,745 90,525 0 220,284 529,786
Due to adviser (Note 2) 0 93,585 24,764 107,584 603,624
Other 25,821 15,327 29,794 36,025 52,446
TOTAL LIABILITIES 99,550 712,549 298,677 1,432,186 41,017,450
TOTAL NET ASSETS
$ 16,486,465 $ 85,342,470 $ 33,263,856 $ 261,886,361 $ 661,626,905
NET ASSETS CONSIST OF:
Paid-in capital, Class
A(1) $ 16,355,584 $ 50,306,393 $ 30,683,514 $ 198,782,464 $ 801,254,033
Paid-in capital, Class D
or I(1) 0 22,955,679 3,564,121 63,129,720 8,787,922
Undistributed
(overdistributed) net
investment income 0 (1,105,810) (12,644) 0 0
Undistributed net realized
gain (loss) on
investments (195) 1,940,229 (1,949,521) (25,823) (152,047,368)
Net unrealized
appreciation
(depreciation) of
investments 131,076 11,245,979 978,386 0 3,632,318
TOTAL NET ASSETS $ 16,486,465 $ 85,342,470 $ 33,263,856 $ 261,886,361 $ 661,626,905
COMPUTATION OF NET ASSET
VALUE AND OFFERING PRICE
(NOTE 4)
Net assets - Class A(1) $ 16,486,465 $ 59,016,086 $ 30,471,202 $ 198,752,763 $ 653,896,801
Shares outstanding - Class
A(1) 3,301,804 3,508,125 2,825,738 198,782,464 69,952,079
Net asset value per share -
Class A(1) $4.99 $16.82 $10.78 $1.00 $9.35
Maximum offering price per
share - Class A(1) $5.14(3) $17.61(2) $11.29(2) $1.00 $9.64(3)
Net assets - Class D or I N/A $ 26,326,384 $ 2,792,654 $ 63,133,598 $ 7,730,103
Shares outstanding - Class D
or I N/A 1,266,478 189,435 63,129,720 553,192
Net asset value and offering
price per share - Class D
or I N/A $20.79 $14.74 $1.00 $13.97
INVESTMENTS AT COST (NOTE 3) N/A $ 74,443,570 $ 32,222,076 $ 263,288,471 $ 687,208,882
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
(3) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $100,000 OR MORE THE OFFERING PRICE IS REDUCED.
(4) INVESTMENT IN CORRESPONDING MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
101
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
CALIFORNIA
ASSET CALIFORNIA TAX-FREE
ALLOCATION TAX-FREE MONEY
FUND BOND FUND MARKET FUND
<S> <C> <C> <C>
.....................................................................................
INVESTMENT INCOME(1)
Dividends $ 1,407,563 $ 0 $ 0
Interest 631,530 17,521,368 11,537,586
Expenses N/A N/A N/A
TOTAL INVESTMENT INCOME 2,039,093 17,521,368 11,537,586
EXPENSES (NOTE 2)
Advisory fees 424,416 1,414,023 1,330,839
Administration fees 60,627 384,015 297,191
Custody fees 6,247 50,563 50,845
Shareholder servicing fees 31,150 18,322 0
Portfolio accounting fees 0 118,303 125,975
Transfer agency fees 50,453 162,269 41,752
Distribution fees 213,867 36,643 120,094
Amortization of
organization expenses 4,220 1,210 0
Legal and audit fees 33,018 35,550 31,390
Registration fees 55,092 4,438 10,000
Directors' fees 5,715 5,000 5,000
Shareholder reports 28,055 33,424 4,774
Other 7,196 13,435 12,252
TOTAL EXPENSES 920,056 2,277,195 2,030,112
Less:
Waived fees and reimbursed
expenses (Note 2) (39,137) (579,182) (17,718)
NET EXPENSES 880,919 1,698,013 2,012,394
NET INVESTMENT INCOME (LOSS) 1,158,174 15,823,355 9,525,192
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS(1)
Net realized gain (loss)
on sale of investments 2,440,725 11,707,680 8,582
Net change in unrealized
appreciation
(depreciation) of
investments 14,291,076 15,517,216 0
NET GAIN (LOSS) ON
INVESTMENTS 16,731,801 27,224,896 8,582
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 17,889,975 $ 43,048,251 $ 9,533,774
</TABLE>
................................................................................
(1) FOR THE SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND AND THE SHORT-TERM
MUNICIPAL INCOME FUND THE INCOME, EXPENSES AND REALIZED AND UNREALIZED
GAINS AND LOSSES ARE ALLOCATED FROM EACH FUND'S CORRESPONDING MASTER
PORTFOLIO. SEE NOTE 5 FOR DETAILS OF INCOME ALLOCATIONS FROM THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
102
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
MONEY MUNICIPAL GOVERNMENT- MUNICIPAL STRATEGIC
MARKET INCOME CORPORATE INCOME GROWTH
FUND FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C> <C>
...........................................................................................................................
INVESTMENT INCOME(1)
Dividends $ 0 $ 0 $ 0 $ 0 $ 132,455
Interest 29,280,765 5,081,588 150,854 617,987 186,812
Expenses N/A N/A 0 0 N/A
TOTAL INVESTMENT INCOME 29,280,765 5,081,588 150,854 617,987 319,267
EXPENSES (NOTE 2)
Advisory fees 1,230,778 408,252 0 0 302,821
Administration fees 492,311 82,019 3,560 19,436 91,128
Custody fees 88,546 14,742 0 0 22,191
Shareholder servicing fees 0 35,700 0 0 49,492
Portfolio accounting fees 158,791 73,409 0 0 63,554
Transfer agency fees 48,139 53,759 10,060 9,962 56,926
Distribution fees 866,432 151,382 5,933 32,393 250,865
Amortization of
organization expenses 3,895 28,300 15,640 10,836 14,899
Legal and audit fees 44,287 33,294 24,312 24,366 29,255
Registration fees 21,302 57,760 41,726 35,479 43,014
Directors' fees 5,000 5,000 3,785 3,797 5,000
Shareholder reports 19,316 40,075 13,001 11,439 35,206
Other 8,699 12,133 3,000 3,000 18,734
TOTAL EXPENSES 2,987,496 995,825 121,017 150,708 983,085
Less:
Waived fees and reimbursed
expenses (Note 2) (145,674) (326,109) (113,896) (101,721) (57,496)
NET EXPENSES 2,841,822 669,716 7,121 48,987 925,589
NET INVESTMENT INCOME (LOSS) 26,438,943 4,411,872 143,733 569,000 (606,322)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS(1)
Net realized gain (loss)
on sale of investments (155,089) (157,864) 3,975 19,197 10,895,873
Net change in unrealized
appreciation
(depreciation) of
investments 0 8,364,389 15,944 159,456 8,601,611
NET GAIN (LOSS) ON
INVESTMENTS (155,089) 8,206,525 19,919 178,653 19,497,484
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 26,283,854 $ 12,618,397 $ 163,652 $ 747,653 $ 18,891,162
</TABLE>
................................................................................
(1) FOR THE SHORT-TERM GOVERNMENT-CORPORATE INCOME FUND AND THE SHORT-TERM
MUNICIPAL INCOME FUND THE INCOME, EXPENSES AND REALIZED AND UNREALIZED
GAINS AND LOSSES ARE ALLOCATED FROM EACH FUND'S CORRESPONDING MASTER
PORTFOLIO. SEE NOTE 5 FOR DETAILS OF INCOME ALLOCATIONS FROM THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
103
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. TREASURY VARIABLE RATE
INCOME MONEY MARKET GOVERNMENT
FUND FUND FUND
<S> <C> <C> <C>
.....................................................................................
INVESTMENT INCOME
Dividends $ 0 $ 0 $ 0
Interest 2,893,181 12,944,520 53,768,325
Expenses N/A N/A N/A
TOTAL INVESTMENT INCOME 2,893,181 12,944,520 53,768,325
EXPENSES (NOTE 2)
Advisory fees 188,719 575,257 4,115,581
Administration fees 37,744 230,103 923,116
Custody fees 21,103 44,428 156,528
Shareholder servicing fees 8,291 0 24,977
Portfolio accounting fees 52,185 107,519 226,122
Transfer agency fees 55,947 38,680 75,667
Distribution fees 16,582 492,571 2,082,768
Amortization of
organization expenses 3,500 11,109 19,374
Legal and audit fees 23,242 41,586 245,313
Registration fees 44,918 41,946 29,703
Directors' fees 5,000 5,000 5,000
Shareholder reports 23,780 21,287 31,711
Other 19,736 5,600 47,764
TOTAL EXPENSES 500,747 1,615,086 7,983,624
Less:
Waived fees and reimbursed
expenses (Note 2) (142,902) (203,631) (1,012,797)
NET EXPENSES 357,845 1,411,455 6,970,827
NET INVESTMENT INCOME (LOSS) 2,535,336 11,533,065 46,797,498
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
on sale of investments (736,709) (13,382) (7,586,997)
Net change in unrealized
appreciation
(depreciation) of
investments 4,863,922 0 23,216,208
NET GAIN (LOSS) ON
INVESTMENTS 4,127,213 (13,382) 15,629,211
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,662,549 $ 11,519,683 $ 62,426,709
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
104
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
. For the For the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 1,158,174 $ 1,490,375
Net realized (loss) on
sale of investments 2,440,725 3,975,711
Net change in unrealized
appreciation
(depreciation) of
investments 14,291,076 (6,051,202)
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 17,889,975 (585,116)
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A (996,012) (1,253,254)
Class D or I (162,162) (192,825)
In excess of net
investment income
Class A 0 0
Class D or I 0 0
From net realized gain on
sales of investments
Class A (1,201,148) (3,165,196)
Class D or I (367,533) (766,987)
From tax return of capital
Class A 0 0
Class D or I 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A 4,025,824 5,857,662
Reinvestment of dividends
- Class A 5,040,708 694,596
Cost of shares redeemed -
Class A (9,469,024) (14,543,493)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (402,492) (7,991,235)
Proceeds from shares sold
- Class D or I 5,176,687 5,046,708
Reinvestment of dividends
- Class D or I 1,070,410 87,663
Cost of shares redeemed -
Class D or I (3,031,687) (3,194,348)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I 3,215,410 1,940,023
INCREASE (DECREASE) IN NET
ASSETS 17,976,038 (12,014,590)
NET ASSETS:
Beginning net assets 50,105,589 62,120,179
ENDING NET ASSETS $ 68,081,627 $ 50,105,589
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 324,722 497,697
Shares issued in
reinvestment of
dividends - Class A 441,179 60,791
Shares redeemed - Class A (766,534) (1,244,313)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS A (633) (685,825)
Shares sold - Class D or I 328,419 344,653
Shares issued in
reinvestment of
dividends - Class D or I 75,254 6,181
Shares redeemed - Class D
or I (202,929) (221,506)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I 200,744 129,328
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
The accompanying notes are an integral part of these financial statements.
105
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
. For the For the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 15,823,355 $ 19,402,678
Net realized (loss) on
sale of investments 11,707,680 4,054,017
Net change in unrealized
appreciation
(depreciation) of
investments 15,517,216 (39,374,337)
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 43,048,251 (15,917,642)
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A (15,466,590) (18,973,436)
Class D or I (356,764) (429,242)
In excess of net
investment income
Class A 0 0
Class D or I 0 0
From net realized gain on
sales of investments
Class A (9,468,118) (3,947,872)
Class D or I (245,016) (106,145)
From tax return of capital
Class A 0 0
Class D or I 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A 13,066,837 15,317,908
Reinvestment of dividends
- Class A 17,283,285 14,574,219
Cost of shares redeemed -
Class A (52,153,705) (80,201,764)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (21,803,583) (50,309,637)
Proceeds from shares sold
- Class D or I 1,423,486 2,864,757
Reinvestment of dividends
- Class D or I 397,321 348,941
Cost of shares redeemed -
Class D or I (2,565,176) (2,499,120)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I (744,369) 714,578
INCREASE (DECREASE) IN NET
ASSETS (5,036,189) (88,969,396)
NET ASSETS:
Beginning net assets 280,450,989 369,420,385
ENDING NET ASSETS $ 275,414,800 $ 280,450,989
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 1,213,665 1,401,041
Shares issued in
reinvestment of
dividends - Class A 1,620,338 1,315,610
Shares redeemed - Class A (4,864,665) (7,464,971)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS A (2,030,662) (4,748,320)
Shares sold - Class D or I 102,025 197,191
Shares issued in
reinvestment of
dividends - Class D or I 28,596 24,268
Shares redeemed - Class D
or I (183,326) (179,799)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I (52,705) 41,660
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) CLASS I SHARES COMMENCED OPERATIONS ON AUGUST 18, 1994.
The accompanying notes are an integral part of these financial statements.
106
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY MARKET FUND
........... MONEY MARKET FUND
. For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994(2)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 9,525,192 $ 7,235,197 $ 26,438,943 $ 11,484,645
Net realized (loss) on
sale of investments 8,582 (76,188) (155,089) (36,799)
Net change in unrealized
appreciation
(depreciation) of
investments 0 0 0 0
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 9,533,774 7,159,009 26,283,854 11,447,846
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A (9,525,192) (7,235,197) (18,371,046) (11,414,964)
Class D or I 0 0 (8,067,897) (69,681)
In excess of net
investment income
Class A 0 0 0 0
Class D or I 0 0 0 0
From net realized gain on
sales of investments
Class A 0 0 0 0
Class D or I 0 0 0 0
From tax return of capital
Class A 0 0 0 0
Class D or I 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A 659,698,172 630,837,073 1,969,443,796 1,991,327,766
Reinvestment of dividends
- Class A 2,986,292 2,663,580 8,012,050 4,615,464
Cost of shares redeemed -
Class A (595,234,606) (742,727,104) (1,910,005,001) (1,916,112,891)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 67,449,858 (109,226,451) 67,450,845 79,830,339
Proceeds from shares sold
- Class D or I 0 0 918,045,967 19,768,852
Reinvestment of dividends
- Class D or I 0 0 6,132,104 26,043
Cost of shares redeemed -
Class D or I 0 0 (611,195,414) (8,557,384)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I 0 0 312,982,657 11,237,511
INCREASE (DECREASE) IN NET
ASSETS 67,458,440 (109,302,639) 380,278,413 91,031,051
NET ASSETS:
Beginning net assets 288,409,393 397,712,032 319,114,763 228,083,712
ENDING NET ASSETS $ 355,867,833 $ 288,409,393 $ 699,393,176 $ 319,114,763
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 659,698,172 630,837,073 1,969,427,483 1,991,327,765
Shares issued in
reinvestment of
dividends - Class A 2,986,292 2,663,580 8,012,052 4,615,464
Shares redeemed - Class A (595,234,606) (742,727,100) (1,909,990,912) (1,916,112,891)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS A 67,449,858 (109,226,447) 67,448,623 79,830,338
Shares sold - Class D or I 0 0 918,035,650 19,768,852
Shares issued in
reinvestment of
dividends - Class D or I 0 0 6,132,104 26,043
Shares redeemed - Class D
or I 0 0 (611,182,876) (8,557,384)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I 0 0 312,984,878 11,237,511
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) CLASS I SHARES COMMENCED OPERATIONS ON AUGUST 18, 1994.
The accompanying notes are an integral part of these financial statements.
107
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
. For the For the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 4,411,872 $ 6,025,578
Net realized (loss) on
sale of investments (157,864) (3,600,931)
Net change in unrealized
appreciation
(depreciation) of
investments 8,364,389 (11,048,257)
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 12,618,397 (8,623,610)
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A (3,711,863) (5,151,955)
Class D or I (700,009) (873,623)
In excess of net
investment income
Class A 0 (137,633)
Class D or I 0 (26,101)
From net realized gain on
sales of investments
Class A 0 0
Class D or I 0 0
From tax return of capital
Class A 0 0
Class D or I 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A 2,879,523 14,853,144
Reinvestment of dividends
- Class A 1,817,939 2,696,820
Cost of shares redeemed -
Class A (26,842,190) (35,965,725)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (22,144,728) (18,415,761)
Proceeds from shares sold
- Class D or I 444,177 6,605,791
Reinvestment of dividends
- Class D or I 263,711 363,289
Cost of shares redeemed -
Class D or I (5,395,020) (3,876,822)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I (4,687,132) 3,092,258
INCREASE (DECREASE) IN NET
ASSETS (18,625,335) (30,136,425)
NET ASSETS:
Beginning net assets 89,335,843 119,472,268
ENDING NET ASSETS $ 70,710,508 $ 89,335,843
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 276,270 1,375,339
Shares issued in
reinvestment of
dividends - Class A 174,511 257,416
Shares redeemed - Class A (2,549,296) (3,481,504)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS A (2,098,515) (1,848,749)
Shares sold - Class D or I 31,359 447,121
Shares issued in
reinvestment of
dividends - Class D or I 18,704 25,788
Shares redeemed - Class D
or I (379,181) (283,002)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I (329,118) 189,907
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(3) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 19, 1994.
(4) THE FUND COMMENCED OPERATIONS ON JUNE 3, 1994.
The accompanying notes are an integral part of these financial statements.
108
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM GOVERNMENT- CORPORATE INCOME SHORT-TERM MUNICIPAL INCOME FUND
FUND ...........
. For the For the For the For the
Year Ended Period Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994(3) Dec. 31, 1995 Dec. 31, 1994(4)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 143,733 $ 1,538 $ 569,000 $ 68,324
Net realized (loss) on
sale of investments 3,975 (1,534) 19,197 (33,634)
Net change in unrealized
appreciation
(depreciation) of
investments 15,944 157 159,456 4,179
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 163,652 161 747,653 38,869
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A (143,733) (1,538) (569,000) (68,324)
Class D or I 0 0 0 0
In excess of net
investment income
Class A 0 0 0 0
Class D or I 0 0 0 0
From net realized gain on
sales of investments
Class A (123) 0 (18,317) 0
Class D or I 0 0 0 0
From tax return of capital
Class A 0 0 0 0
Class D or I 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A 6,608,129 97,090 13,131,189 12,358,144
Reinvestment of dividends
- Class A 62,845 564 559,579 30,765
Cost of shares redeemed -
Class A (832,585) 0 (9,142,984) (581,114)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 5,838,389 97,654 4,547,784 11,807,795
Proceeds from shares sold
- Class D or I 0 0 0 0
Reinvestment of dividends
- Class D or I 0 0 0 0
Cost of shares redeemed -
Class D or I 0 0 0 0
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I 0 0 0 0
INCREASE (DECREASE) IN NET
ASSETS 5,858,185 96,277 4,708,120 11,778,340
NET ASSETS:
Beginning net assets 96,282 5 11,778,345 5
ENDING NET ASSETS $ 5,954,467 $ 96,282 $ 16,486,465 $ 11,778,345
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 1,319,177 19,418 2,632,568 2,502,660
Shares issued in
reinvestment of
dividends - Class A 12,545 114 112,388 6,232
Shares redeemed - Class A (166,185) 0 (1,834,871) (117,174)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS A 1,165,537 19,532 910,085 2,391,718
Shares sold - Class D or I 0 0 0 0
Shares issued in
reinvestment of
dividends - Class D or I 0 0 0 0
Shares redeemed - Class D
or I 0 0 0 0
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I 0 0 0 0
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(3) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 19, 1994.
(4) THE FUND COMMENCED OPERATIONS ON JUNE 3, 1994.
The accompanying notes are an integral part of these financial statements.
109
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
STRATEGIC GROWTH FUND
. For the For the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ (606,322) $ (449,157)
Net realized (loss) on
sale of investments 10,895,873 1,481,221
Net change in unrealized
appreciation
(depreciation) of
investments 8,601,611 336,969
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 18,891,162 1,369,033
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A(1) 0 0
Class D or I 0 0
In excess of net
investment income
Class A(1) 0 0
Class D or I 0 0
From net realized gain on
sales of investments
Class A(1) (6,182,997) (655,929)
Class D or I (2,772,646) (376,137)
From tax return of capital
Class A(1) 0 (278,477)
Class D or I 0 (170,680)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A(1) 36,545,391 11,769,539
Reinvestment of dividends
- Class A(1) 4,705,176 403,346
Cost of shares redeemed -
Class A(1) (15,571,514) (10,877,764)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A(1) 25,679,053 1,295,121
Proceeds from shares sold
- Class D or I 11,752,195 6,859,821
Reinvestment of dividends
- Class D or I 1,754,560 175,834
Cost of shares redeemed -
Class D or I (5,858,015) (3,485,125)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I 7,648,740 3,550,530
INCREASE (DECREASE) IN NET
ASSETS 43,263,312 4,733,461
NET ASSETS:
Beginning net assets 42,079,158 37,345,697
ENDING NET ASSETS $ 85,342,470 $ 42,079,158
SHARES ISSUED AND REDEEMED:
Shares sold - Class A(1) 2,168,399 890,673
Shares issued in
reinvestment of
dividends - Class A(1) 292,301 30,559
Shares redeemed - Class
A(1) (965,246) (834,218)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS
A(1) 1,495,454 87,014
Shares sold - Class D or I 552,068 410,160
Shares issued in
reinvestment of
dividends - Class D or I 88,848 10,884
Shares redeemed - Class D
or I (301,590) (214,855)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I 339,326 206,189
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) CLASS I SHARES COMMENCED OPERATIONS ON JUNE 20, 1994.
The accompanying notes are an integral part of these financial statements.
110
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
U.S. GOVERNMENT INCOME FUND
. For the For the ........... For the For the
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994(2)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 2,535,336 $ 3,493,708 $ 11,533,065 $ 4,895,405
Net realized (loss) on
sale of investments (736,709) (1,212,813) (13,382) (12,441)
Net change in unrealized
appreciation
(depreciation) of
investments 4,863,922 (5,164,808) 0 0
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 6,662,549 (2,883,913) 11,519,683 4,882,964
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A(1) (2,334,261) (3,066,842) (9,781,347) (4,799,315)
Class D or I (201,075) (426,866) (1,751,718) (96,090)
In excess of net
investment income
Class A(1) 0 0 0 0
Class D or I 0 0 0 0
From net realized gain on
sales of investments
Class A(1) 0 0 0 0
Class D or I 0 0 0 0
From tax return of capital
Class A(1) 0 0 0 0
Class D or I 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A(1) 4,782,569 11,812,017 746,154,757 628,656,179
Reinvestment of dividends
- Class A(1) 620,986 1,241,308 4,323,454 1,652,082
Cost of shares redeemed -
Class A(1) (14,528,380) (22,062,966) (746,737,367) (553,436,130)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A(1) (9,124,825) (9,009,641) 3,740,844 76,872,131
Proceeds from shares sold
- Class D or I 190,856 1,463,572 496,751,048 310,876,391
Reinvestment of dividends
- Class D or I 116,849 271,695 1,309,335 21,937
Cost of shares redeemed -
Class D or I (1,606,274) (6,683,335) (438,830,786) (306,998,204)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I (1,298,569) (4,948,068) 59,229,597 3,900,124
INCREASE (DECREASE) IN NET
ASSETS (6,296,181) (20,335,330) 62,957,059 80,759,814
NET ASSETS:
Beginning net assets 39,560,037 59,895,367 198,929,302 118,169,488
ENDING NET ASSETS $ 33,263,856 $ 39,560,037 $ 261,886,361 $ 198,929,302
SHARES ISSUED AND REDEEMED:
Shares sold - Class A(1) 472,576 1,143,944 746,154,757 628,656,178
Shares issued in
reinvestment of
dividends - Class A(1) 60,905 120,007 4,323,454 1,652,082
Shares redeemed - Class
A(1) (1,418,306) (2,181,814) (746,737,367) (553,436,130)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS
A(1) (884,825) (917,863) 3,740,844 76,872,130
Shares sold - Class D or I 13,647 101,936 496,751,048 310,876,391
Shares issued in
reinvestment of
dividends - Class D or I 8,425 19,155 1,309,335 21,937
Shares redeemed - Class D
or I (114,517) (485,093) (438,830,787) (306,998,204)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I (92,445) (364,002) 59,229,596 3,900,124
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) CLASS I SHARES COMMENCED OPERATIONS ON JUNE 20, 1994.
The accompanying notes are an integral part of these financial statements.
111
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VARIABLE RATE GOVERNMENT FUND
. For the For the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 46,797,498 $ 74,993,269
Net realized (loss) on
sale of investments (7,586,997) (125,280,826)
Net change in unrealized
appreciation
(depreciation) of
investments 23,216,208 (11,149,757)
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 62,426,709 (61,437,314)
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income
Class A (46,275,296) (74,426,329)
Class D or I (522,203) (566,940)
In excess of net
investment income
Class A 0 0
Class D or I 0 0
From net realized gain on
sales of investments
Class A 0 0
Class D or I 0 0
From tax return of capital
Class A 0 0
Class D or I 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold
- Class A 12,727,285 357,940,526
Reinvestment of dividends
- Class A 10,963,115 24,395,946
Cost of shares redeemed -
Class A (600,782,109) (980,573,296)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (577,091,709) (598,236,824)
Proceeds from shares sold
- Class D or I 282,762 7,287,276
Reinvestment of dividends
- Class D or I 231,329 232,670
Cost of shares redeemed -
Class D or I (5,190,680) (5,418,428)
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS D OR I (4,676,589) 2,101,518
INCREASE (DECREASE) IN NET
ASSETS (566,139,088) (732,565,889)
NET ASSETS:
Beginning net assets 1,227,765,993 1,960,331,884
ENDING NET ASSETS $ 661,626,905 $ 1,227,765,993
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 1,367,861 36,230,262
Shares issued in
reinvestment of
dividends - Class A 1,180,210 2,505,413
Shares redeemed - Class A (64,851,613) (101,611,784)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS A (62,303,542) (62,876,109)
Shares sold - Class D or I 20,310 495,723
Shares issued in
reinvestment of
dividends - Class D or I 16,653 16,111
Shares redeemed - Class D
or I (373,247) (380,431)
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING - CLASS D
OR I (336,284) 131,403
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
112
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
..............................................
CLASS A
..............................................
Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.67 $11.90 $11.45
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.28 0.31 0.30
Net realized and unrealized gain (loss) on investments 3.42 (0.39) 1.12
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 3.70 (0.08) 1.42
LESS DISTRIBUTIONS:
Dividends from net investment income (0.28) (0.31) (0.30)
Distributions from net realized gain (0.33) (0.84) (0.67)
Tax return of capital 0.00 0.00 0.00
------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.61) (1.15) (0.97)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $13.76 $10.67 $11.90
------- ------- -------
------- ------- -------
TOTAL RETURN (NOT ANNUALIZED)(3) 34.71% (0.68)% 12.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $52,007 $40,308 $53,124
Number of shares outstanding, end of period (000) 3,778 3,779 4,465
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 1.30% 1.30% 1.36%
Ratio of net investment income to average net assets(2) 2.07% 2.41% 2.64%
Portfolio turnover 47% 50% 53%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.35% 1.38% 1.47%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 2.02% 2.33% 2.53%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
The accompanying notes are an integral part of these financial statements.
113
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.)
..............................
CLASS A (CONT.)
..............................
Year Ended Year Ended
Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.95 $10.31
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.47 0.57
Net realized and unrealized gain (loss) on investments 0.36 1.51
------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.83 2.08
LESS DISTRIBUTIONS:
Dividends from net investment income (0.63) (0.44)
Distributions from net realized gain (0.70) 0.00
Tax return of capital 0.00 0.00
------ ------
TOTAL FROM DISTRIBUTIONS (1.33) (0.44)
------- -------
NET ASSET VALUE, END OF PERIOD $11.45 $11.95
------- -------
------- -------
TOTAL RETURN (NOT ANNUALIZED)(3) 7.44% 20.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $41,165 $38,663
Number of shares outstanding, end of period (000) 3,596 3,235
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 1.25% 1.38%
Ratio of net investment income to average net assets(2) 4.08% 5.23%
Portfolio turnover 38% 18%
...........................................................................................................
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 1.71% 1.56%
(2) Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses 3.62% 5.05%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
114
<PAGE>
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.) CALIFORNIA TAX-FREE BOND FUND
.............................................. ..............................................
CLASS D(4) CLASS A
.............................................. ..............................................
Year Ended Year Ended Period Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $13.26 $14.75 $15.00 $10.20 $11.47 $10.92
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.20 0.25 0.07 0.60 0.64 0.63
Net realized and
unrealized gain (loss)
on investments 4.24 (0.45) 0.61 1.03 (1.13) 0.75
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 4.44 (0.20) 0.68 1.63 (0.49) 1.38
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.20) (0.25) (0.10) (0.60) (0.64) (0.63)
Distributions from net
realized gain (0.40) (1.04) (0.83) (0.39) (0.14) (0.20)
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.60) (1.29) (0.93) (0.99) (0.78) (0.83)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $17.10 $13.26 $14.75 $10.84 $10.20 $11.47
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
TOTAL RETURN (NOT
ANNUALIZED)(3) 33.72% (1.38)% 4.56% 16.38% (4.32)% 12.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $16,075 $9,798 $8,996 $268,352 $273,105 $361,779
Number of shares
outstanding, end of
period (000) 940 739 610 24,750 26,780 31,529
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 2.05% 2.01% 0.96% 0.58% 0.50% 0.69%
Ratio of net investment
income to average net
assets(2) 1.30% 1.75% 0.53% 5.59% 5.87% 5.54%
Portfolio turnover 47% 50% 53% 38% 4% 10%
............................................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 2.17% 2.20% 1.12% 0.78% 0.95% 0.85%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 1.18% 1.56% 0.37% 5.39% 5.42% 5.38%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
115
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND
(CONT.)
..............................
CLASS A (CONT.)
..............................
Year Ended Year Ended
Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.73 $10.27
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.68 0.69
Net realized and unrealized gain (loss) on investments 0.26 0.46
------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.94 1.15
LESS DISTRIBUTIONS:
Dividends from net investment income (0.68) (0.69)
Distributions from net realized gain (0.07) 0.00
Tax return of capital 0.00 0.00
------ ------
TOTAL FROM DISTRIBUTIONS (0.75) (0.69)
------- -------
NET ASSET VALUE, END OF PERIOD $10.92 $10.73
------- -------
------- -------
TOTAL RETURN (NOT ANNUALIZED)(3) 9.01% 11.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $375,376 $332,845
Number of shares outstanding, end of period (000) 34,376 31,008
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.50% 0.45%
Ratio of net investment income to average net assets(2) 6.24% 6.56%
Portfolio turnover 24% 8%
...........................................................................................................
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 0.85% 0.87%
(2) Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses 5.89% 6.14%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
116
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE BOND FUND (CONT.)
.............................................. CALIFORNIA TAX-FREE MONEY
CLASS D(4) MARKET FUND
.............................................. ..............................
Year Ended Year Ended Period Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $13.32 $14.98 $15.00 $1.00 $1.00
------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.68 0.73 0.34 0.03 0.02
Net realized and
unrealized gain (loss)
on investments 1.35 (1.47) 0.24 0.00 0.00
------ ------ ------ ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 2.03 (0.74) 0.58 0.03 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.68) (0.73) (0.34) (0.03) (0.02)
Distributions from net
realized gain (0.51) (0.19) (0.26) 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ----- -----
TOTAL FROM DISTRIBUTIONS (1.19) (0.92) (0.60) (0.03) (0.02)
------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD $14.16 $13.32 $14.98 $1.00 $1.00
------- ------- ------- ------ ------
------- ------- ------- ------ ------
TOTAL RETURN (NOT
ANNUALIZED)(3) 15.58% (5.00)% 3.92% 3.25% 2.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $7,063 $7,346 $7,641 $355,868 $288,409
Number of shares
outstanding, end of
period (000) 499 552 510 355,940 288,409
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 1.30% 1.20% 1.32% 0.68% 0.68%
Ratio of net investment
income to average net
assets(2) 4.87% 5.15% 4.50% 3.20% 2.17%
Portfolio turnover 38% 4% 10% N/A N/A
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 1.57% 1.82% 1.61% 0.68% 0.70%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.60% 4.53% 4.21% 3.20% 2.15%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
117
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONT.)
..............................................
Year Ended Year Ended Year Ended
Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.03 0.04
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.03 0.04
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.03) (0.04)
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00
----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.03) (0.04)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT ANNUALIZED)(3) 1.84% 2.54% 3.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $397,712 $363,067 $299,234
Number of shares outstanding, end of period (000) 397,717 363,069 299,234
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.66% 0.66% 0.66%
Ratio of net investment income to average net assets(2) 1.82% 2.50% 3.92%
Portfolio turnover N/A N/A N/A
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.70% 0.69% 0.70%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 1.68% 2.47% 3.88%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
The accompanying notes are an integral part of these financial statements.
118
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
..............................................................................
CLASS A
..............................................................................
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.05 0.04 0.03 0.03 0.06
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.05 0.04 0.03 0.03 0.06
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.05) (0.04) (0.03) (0.03) (0.06)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.05) (0.04) (0.03) (0.03) (0.06)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED)(3) 5.44% 3.70% 2.57% 3.23% 5.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $375,218 $307,878 $228,084 $268,424 $229,863
Number of shares
outstanding, end of
period (000) 375,364 307,915 228,085 268,434 229,866
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.65% 0.68% 0.74% 0.75% 0.74%
Ratio of net investment
income to average net
assets(2) 5.43% 3.71% 2.54% 3.17% 5.54%
Portfolio turnover N/A N/A N/A N/A N/A
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 0.69% 0.72% 0.74% 0.75% 0.75%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.39% 3.67% 2.54% 3.17% 5.53%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
The accompanying notes are an integral part of these financial statements.
119
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET FUND (CONT.)
..............................
CLASS I(4)
..............................
Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 0.02
Net realized and unrealized gain (loss) on investments 0.00 0.00
----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.06 0.02
LESS DISTRIBUTIONS:
Dividends from net investment income (0.06) (0.02)
Distributions from net realized gain 0.00 0.00
Tax return of capital 0.00 0.00
----- -----
TOTAL FROM DISTRIBUTIONS (0.06) (0.02)
------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
------ ------
------ ------
TOTAL RETURN (NOT ANNUALIZED)(3) 5.71% 1.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $324,175 $11,237
Number of shares outstanding, end of period (000) 324,222 11,238
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.39% 0.38%
Ratio of net investment income to average net assets(2) 5.70% 5.05%
Portfolio turnover N/A N/A
...........................................................................................................
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 0.45% 0.55%
(2) Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses 5.64% 4.88%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON AUGUST 18, 1994.
(5) THE FUND COMMENCED OPERATIONS ON JULY 15, 1991.
The accompanying notes are an integral part of these financial statements.
120
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
..............................................................................
CLASS A(5)
..............................................................................
Year Ended Year Ended Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $9.91 $11.27 $10.56 $10.25 $10.00
------ ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.57 0.60 0.64 0.66 0.28
Net realized and
unrealized gain (loss)
on investments 1.02 (1.36) 0.71 0.32 0.25
----- ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 1.59 (0.76) 1.35 0.98 0.53
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.57) (0.60) (0.64) (0.66) (0.28)
Distributions from net
realized gain 0.00 0.00 0.00 (0.01) 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00
----- ------ ------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.57) (0.60) (0.64) (0.67) (0.28)
------ ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $10.93 $9.91 $11.27 $10.56 $10.25
------ ------- ------- ------- -------
------ ------- ------- ------- -------
TOTAL RETURN (NOT
ANNUALIZED)(3) 16.45% (6.82)% 13.11% 9.94% 5.81%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $58,440 $73,791 $104,701 $52,553 $16,585
Number of shares
outstanding, end of
period (000) 5,347 7,446 9,294 4,976 1,618
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.71% 0.43% 0.39% 0.23% 0.00%
Ratio of net investment
income to average net
assets(2) 5.49% 5.77% 5.56% 6.05% 6.38%
Portfolio turnover 14% 32% 15% 67% 5%
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 1.09% 0.98% 1.09% 1.20% 3.02%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.11% 5.22% 4.86% 5.08% 3.36%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON AUGUST 18, 1994.
(5) THE FUND COMMENCED OPERATIONS ON JULY 15, 1991.
The accompanying notes are an integral part of these financial statements.
121
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND (CONT.)
..............................................
CLASS D(4)
..............................................
Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.42 $15.26 $15.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.69 0.73 0.36
Net realized and unrealized gain (loss) on investments 1.38 (1.84) 0.26
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.07 (1.11) 0.62
LESS DISTRIBUTIONS:
Dividends from net investment income (0.69) (0.73) (0.36)
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00
------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.69) (0.73) (0.36)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $14.80 $13.42 $15.26
------- ------- -------
------- ------- -------
TOTAL RETURN (NOT ANNUALIZED)(3) 15.75% (7.37)% 4.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $12,271 $15,545 $14,771
Number of shares outstanding, end of period (000) 829 1,158 968
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 1.32% 1.02% 1.13%
Ratio of net investment income to average net assets(2) 4.88% 5.17% 4.14%
Portfolio turnover 14% 32% 15%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.78% 1.74% 1.84%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.42% 4.45% 3.43%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
(5) THE FUND COMMENCED OPERATIONS ON JANUARY 20, 1993.
(6) THIS RATIO INCLUDES INCOME AND EXPENSES CHARGED TO THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
122
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM GOVERNMENT- SHORT-TERM MUNICIPAL INCOME
CORPORATE INCOME FUND FUND STRATEGIC GROWTH FUND
.............................. .............................. ..............................
From Sept. 19, From June 3, CLASS A(5)
1994 1994 ..............................
Year Ended (inception) to Year Ended (inception) to Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $4.93 $5.00 $4.92 $5.00 $13.29 $13.20
------ ------ ------ ------ ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.30 0.08 0.22 0.09 (0.04) (0.11)
Net realized and
unrealized gain (loss)
on investments 0.09 (0.07) 0.07 (0.08) 5.66 0.67
----- ----- ----- ----- ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 0.39 0.01 0.29 0.01 5.62 0.56
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.30) (0.08) (0.22) (0.09) 0.00 0.00
Distributions from net
realized gain 0.00 0.00 0.00 0.00 (2.09) (0.33)
Tax return of capital 0.00 0.00 0.00 0.00 0.00 (0.14)
----- ----- ----- ----- ------ ------
TOTAL FROM DISTRIBUTIONS (0.30) (0.08) (0.22) (0.09) (2.09) (0.47)
------ ------ ------ ------ ------- -------
NET ASSET VALUE, END OF
PERIOD $5.02 $4.93 $4.99 $4.92 $16.82 $13.29
------ ------ ------ ------ ------- -------
------ ------ ------ ------ ------- -------
TOTAL RETURN (NOT
ANNUALIZED)(3) 8.05% 0.28% 6.10% 0.13% 42.51% 4.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $5,954 $96 $16,486 $11,778 $59,016 $26,744
Number of shares
outstanding, end of
period (000) 1,185 20 3,302 2,392 3,508 2,013
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.30%(6) 0.30%(6) 0.38%(6) 0.27%(6) 1.28% 1.20%
Ratio of net investment
income to average net
assets(2) 6.01%(6) 5.77%(6) 4.39%(6) 3.67%(6) (0.76)% (0.81)%
Portfolio turnover N/A N/A N/A N/A 171% 149%
............................................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 6.79%(6) 67.89%(6) 1.97%(6) 1.98%(6) 1.38% 1.55%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses (0.48)%(6) (61.82)%(6) 2.80%(6) 1.96%(6) (0.86)% (1.16)%
<CAPTION>
Period Ended
Dec. 31, 1993
<S> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.00
-------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.03)
Net realized and
unrealized gain (loss)
on investments 3.68
------
TOTAL FROM INVESTMENT
OPERATIONS 3.65
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03)
Distributions from net
realized gain (0.41)
Tax return of capital (0.01)
------
TOTAL FROM DISTRIBUTIONS (0.45)
-------
NET ASSET VALUE, END OF
PERIOD $13.20
-------
-------
TOTAL RETURN (NOT
ANNUALIZED)(3) 36.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $25,413
Number of shares
outstanding, end of
period (000) 1,926
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.66%
Ratio of net investment
income to average net
assets(2) (0.01)%
Portfolio turnover 182%
............................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 1.64%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses (0.99)%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
(5) THE FUND COMMENCED OPERATIONS ON JANUARY 20, 1993.
(6) THIS RATIO INCLUDES INCOME AND EXPENSES CHARGED TO THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
123
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
STRATEGIC GROWTH FUND (CONT.)
..............................................
CLASS D(4)
..............................................
Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $16.54 $16.55 $15.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.16) (0.24) (0.43)
Net realized and unrealized gain (loss) on investments 6.99 0.81 2.51
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 6.83 0.57 2.08
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain (2.58) (0.40) (0.53)
Tax return of capital 0.00 (0.18) 0.00
------ ------ ------
TOTAL FROM DISTRIBUTIONS (2.58) (0.58) (0.53)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $20.79 $16.54 $16.55
------- ------- -------
------- ------- -------
TOTAL RETURN (NOT ANNUALIZED)(3) 41.54% 3.46% 13.84%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $26,326 $15,335 $11,932
Number of shares outstanding, end of period (000) 1,266 927 721
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 2.02% 1.95% 0.61%
Ratio of net investment income to average net assets(2) (1.49)% (1.56)% (1.00)%
Portfolio turnover 171% 149% 182%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.09% 2.23% 2.14%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses (1.56)% (1.84)% (2.53)%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
124
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
..............................................................................
CLASS A
..............................................................................
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $9.66 $10.87 $10.56 $10.97 $10.30
------ ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.69 0.70 0.74 0.79 0.86
Net realized and
unrealized gain (loss)
on investments 1.12 (1.21) 0.36 (0.14) 0.90
----- ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 1.81 (0.51) 1.10 0.65 1.76
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.69) (0.70) (0.74) (0.79) (0.86)
Distributions from net
realized gain 0.00 0.00 (0.05) (0.27) (0.23)
Tax return of capital 0.00 0.00 0.00 0.00 0.00
----- ------ ------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.69) (0.70) (0.79) (1.06) (1.09)
------ ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $10.78 $9.66 $10.87 $10.56 $10.97
------ ------- ------- ------- -------
------ ------- ------- ------- -------
TOTAL RETURN (NOT
ANNUALIZED)(3) 19.32% (4.81)% 10.67% 6.27% 18.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $30,471 $35,838 $50,301 $40,883 $20,457
Number of shares
outstanding, end of
period (000) 2,826 3,711 4,628 3,871 1,865
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.88% 0.76% 0.53% 0.47% 0.00%
Ratio of net investment
income to average net
assets(2) 6.79% 6.84% 6.79% 6.26% 8.30%
Portfolio turnover 95% 50% 115% 128% 100%
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 1.24% 1.08% 1.01% 1.13% 1.87%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 6.44% 6.52% 6.31% 5.60% 6.43%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
125
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND (CONT.)
..............................................
CLASS D(4)
..............................................
Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.20 $14.85 $15.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.85 0.86 0.42
Net realized and unrealized gain (loss) on investments 1.54 (1.65) (0.08)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.39 (0.79) 0.34
LESS DISTRIBUTIONS:
Dividends from net investment income (0.85) (0.86) (0.42)
Distributions from net realized gain 0.00 0.00 (0.07)
Tax return of capital 0.00 0.00 0.00
------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.85) (0.86) (0.49)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $14.74 $13.20 $14.85
------- ------- -------
------- ------- -------
TOTAL RETURN (NOT ANNUALIZED)(3) 18.54% (5.45)% 2.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $2,793 $3,722 $9,594
Number of shares outstanding, end of period (000) 189 282 646
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 1.62% 1.37% 0.90%
Ratio of net investment income to average net assets(2) 6.07% 6.14% 5.90%
Portfolio turnover 95% 50% 115%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.29% 1.87% 2.03%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 5.40% 5.64% 4.77%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
(5) THE FUND COMMENCED OPERATIONS ON MAY 12, 1992.
(6) THIS CLASS COMMENCED OPERATIONS ON JUNE 20, 1994.
The accompanying notes are an integral part of these financial statements.
126
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
..............................................................................................
CLASS A (5) CLASS I (6)
.............................................................. ..............................
Year Ended Year Ended Year Ended Period Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.05 0.03 0.03 0.02 0.05 0.02
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.05 0.03 0.03 0.02 0.05 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.05) (0.03) (0.03) (0.02) (0.05) (0.02)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.05) (0.03) (0.03) (0.02) (0.05) (0.02)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED)(3) 5.09% 3.44% 2.56% 1.97% 5.35% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $198,753 $195,031 $118,169 $137,412 $63,134 $3,898
Number of shares
outstanding, end of
period (000) 198,782 195,042 118,169 137,416 63,130 3,900
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.65% 0.63% 0.52% 0.27% 0.39% 0.23%
Ratio of net investment
income to average net
assets(2) 4.97% 3.47% 2.55% 3.12% 5.16% 4.42%
Portfolio turnover N/A N/A N/A N/A N/A N/A
............................................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 0.73% 0.80% 0.77% 0.79% 0.49% 0.57%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.89% 3.30% 2.30% 2.60% 5.06% 4.08%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
(5) THE FUND COMMENCED OPERATIONS ON MAY 12, 1992.
(6) THIS CLASS COMMENCED OPERATIONS ON JUNE 20, 1994.
The accompanying notes are an integral part of these financial statements.
127
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
VARIABLE RATE GOVERNMENT FUND
..............................................
CLASS A(4)
..............................................
Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.19 $9.99 $9.95
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.53 0.43 0.44
Net realized and unrealized gain (loss) on investments 0.16 (0.80) 0.04
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.69 (0.37) 0.48
LESS DISTRIBUTIONS:
Dividends from net investment income (0.53) (0.43) (0.44)
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00
----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.53) (0.43) (0.44)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $9.35 $9.19 $9.99
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT ANNUALIZED)(3) 7.69% (3.81)% 4.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $653,897 $1,215,546 $1,949,013
Number of shares outstanding, end of period (000) 69,952 132,256 195,132
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.84% 0.79% 0.76%
Ratio of net investment income to average net assets(2) 5.71% 4.40% 4.37%
Portfolio turnover 317% 164% 201%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.96% 0.94% 0.95%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 5.59% 4.25% 4.18%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THE FUND COMMENCED OPERATIONS ON NOVEMBER 1, 1990.
(5) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
128
<PAGE>
<TABLE>
<CAPTION>
VARIABLE RATE GOVERNMENT FUND (CONT.)
..............................................................................
CLASS A(4) (CONT.) CLASS D(5)
.............................. ..............................................
Year Ended Period Ended Year Ended Year Ended Period Ended
Dec. 31, 1992 Dec. 31, 1991 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.13 $10.12 $13.74 $14.93 $15.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.59 0.78 0.73 0.57 0.27
Net realized and
unrealized gain (loss)
on investments (0.18) 0.01 0.23 (1.19) (0.07)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 0.41 0.79 0.96 (0.62) 0.20
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.59) (0.78) (0.73) (0.57) (0.27)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
TOTAL FROM DISTRIBUTIONS (0.59) (0.78) (0.73) (0.57) (0.27)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $9.95 $10.13 $13.97 $13.74 $14.93
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN (NOT
ANNUALIZED)(3) 4.23% 8.60% 7.08% (4.25)% 1.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $2,559,363 $566,840 $7,730 $12,220 $11,319
Number of shares
outstanding, end of
period (000) 257,238 55,933 553 889 758
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.75% 0.50% 1.35% 1.29% 1.26%
Ratio of net investment
income to average net
assets(2) 5.62% 7.36% 5.23% 3.94% 3.41%
Portfolio turnover 197% 250% 317% 164% 201%
............................................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 0.94% 1.08% 1.64% 1.55% 1.75%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.43% 6.78% 4.95% 3.68% 2.92%
</TABLE>
................................................................................
(3) TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(4) THE FUND COMMENCED OPERATIONS ON NOVEMBER 1, 1990.
(5) THIS CLASS COMMENCED OPERATIONS ON JULY 1, 1993.
The accompanying notes are an integral part of these financial statements.
129
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
130
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Overland Express Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
investment company. The Company commenced operations on April 7, 1988 and
includes ten separate diversified funds: the Asset Allocation, Money Market,
Municipal Income, Overland Sweep, Short-Term Government-Corporate Income
(formerly, the 1-3 Year Duration Full Faith and Credit Government Income),
Short-Term Municipal Income (formerly, the 1-3 Year Duration Municipal Income),
Strategic Growth, U.S. Government Income, U.S. Treasury Money Market and
Variable Rate Government Funds, and two non-diversified funds: the California
Tax-Free Bond and California Tax-Free Money Market Funds. The financial
statements for the Overland Sweep Fund are presented separately. These Funds
invest in a range of securities, generally including money market instruments,
equities and U.S. government securities.
Each of the funds presented in this book (the "Funds"), with the exception of
the Money Market, California Tax-Free Money Market, Short-Term
Government-Corporate Income, Short-Term Municipal Income and U.S. Treasury Money
Market Funds, commenced offering Class D shares on July 1, 1993. The U.S.
Treasury Money Market and Money Market Funds commenced offering Class I shares
on June 20, 1994 and August 18, 1994, respectively. The three classes of shares
differ principally in their respective sales charges (if any), service fees, and
distribution fees. Shareholders of each class also bear certain expenses that
pertain to that particular class. All shareholders bear the common expenses of
the Fund and earn income from the portfolio, pro rata based on the average daily
net assets of each class, without distinction between share classes. Dividends
are declared separately for each class. Gains are allocated to each class pro
rata based upon net assets of each class on the date of distribution. No class
has preferential dividend rights. Differences in per share dividend rates
generally result from the relative weightings of pro rata income and gain
allocations and from differences in separate class expenses, including
distribution and service fees.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with Generally Accepted Accounting Principles for investment
companies.
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
SECURITY VALUATION
Investments in securities for which the primary market is a national securities
exchange or the Nasdaq National Market System are valued at the last reported
sales price on the day of valuation.
131
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
U.S. Government obligations are valued at the mean between the last reported bid
and ask prices. In the absence of any sale of such securities on the valuation
date and in the case of other securities, excluding debt securities maturing in
60 days or less, the valuations are based on latest quoted bid prices. Debt
securities maturing in 60 days or less are valued at amortized cost. Debt
securities other than those maturing in 60 days or less and other than U.S.
Government obligations are valued at the latest quoted bid price. Securities for
which quotations are not readily available are valued at fair value as
determined by procedures set by the Board of Directors.
The California Tax-Free Money Market, Money Market and U.S. Treasury Money
Market Funds use the amortized cost method to value their portfolio securities
and seek to maintain constant net asset values of $1.00 per share. There is no
assurance these Funds will meet this objective. The amortized cost method
involves valuing a security at its cost and amortizing any discount or premium
over the period until maturity, which approximates market value.
The California Tax-Free Money Market, Money Market, and U.S. Treasury Money
Market Funds invest in securities with remaining maturities not exceeding 397
days (thirteen months), including obligations of the U.S. Government, bankers
acceptances, commercial paper and certain floating-and variable-rate
instruments. Certain of these floating- and variable-rate instruments may carry
a demand feature that would permit the holder to tender them back to the issuer
at par value prior to maturity.
The Short-Term Government-Corporate Income Fund invests only in shares of the
Short-Term Government-Corporate Income Master Portfolio of Master Investment
Trust (the "Trust"). The Short-Term Municipal Income Fund invests only in shares
of the Short-Term Municipal Income Master Portfolio (together with the
Short-Term Government-Corporate Income Master Portfolio, the "Master
Portfolios") of the Trust. Each Master Portfolio has the same investment
objective as the Fund bearing the corresponding name. The value of each Fund's
investment in its corresponding Master Portfolio reflects that Fund's interest
in the net assets of that Master Portfolio (99.99% and 99.99%) for the
Short-Term Government-Corporate Income and the Short-Term Municipal Income
Funds, respectively, at December 31, 1995. The Master Portfolio's investments
include fixed-, variable-, and floating-rate instruments. Certain of these
floating- and variable-rate instruments may carry a demand feature that would
permit the holder to tender them back to the issuer at par value prior to
maturity. Except for debt obligations with remaining maturities of 60 days or
less, which are valued at amortized cost, assets are valued at current market
prices, or if such prices are not readily available, at fair value as determined
by procedures approved by the Trust's Board of Trustees.
Cash equivalents relating to firm commitment purchase agreements are segregated
by the custodian and may not be sold without appropriate replacement while any
firm commitment purchase agreement is outstanding.
132
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Dividend income is recognized on the ex-dividend date, and
interest income is accrued daily. Realized gains or losses are reported on the
basis of identified cost of securities delivered. Bond discounts are accreted
and premiums are amortized as required by the Internal Revenue Code.
TBA PURCHASE COMMITMENTS
The Variable Rate Government Fund enters into "TBA" (to be announced) purchase
commitments to purchase securities for a fixed price at a future date beyond
customary settlement time. Although the unit price of a TBA has been
established, the principal value has not been finalized. However, the amount of
the commitment will not flucuate more than 2% from the principal amount. The
Fund holds, and maintains until the settlement date, cash or high-quality debt
obligations in an amount sufficient to meet the purchase price. TBA purchase
commitments may be considered securities in themselves, and involve a risk of
loss if the value of the security to be purchased declines prior to the
settlement date. This risk is in addition to the risk of decline in the value of
the Fund's other assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, generally acording to the
procedures described under "Security Valuation" above.
Although the Fund generally enters into TBA purchase commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to settlement if the Fund's adviser deems it appropriate to do
so.
TBA purchase commitments at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
DELIVERY COUPON MARKET
AGENCY SHARES/PAR DATE RATE VALUE
<S> <C> <C> <C> <C>
..........................................................................................................
Ginnie Mae II ARM TBA 15,000,000 1/24/96 5.0% $ 15,030,000
Ginnie Mae ARM TBA 10,000,000 1/24/96 5.5% 10,021,000
</TABLE>
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell
("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' and Master Portfolios' adviser pools the cash and invests in repurchase
agreements entered into by the Funds and Master Portfolios. The repurchase
agreements must be fully collateralized based on values that are marked to
market daily. The collateral is held by an agent bank under a tri-party
agreement. It is the adviser's responsibility to value collateral daily and 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 and
Master Portfolios at December 31, 1995 are collateralized by U.S. Treasury or
federal agency obligations. The repurchase agreements were entered into on
December 29, 1995.
133
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Asset Allocation
Fund, if any, are declared and distributed quarterly. Dividends to shareholders
from net investment income of the Strategic Growth Fund, if any, are declared
and distributed annually. Dividends to shareholders from net investment income
are declared daily and distributed monthly for the California Tax-Free Bond,
California Tax-Free Money Market, Money Market, Municipal Income, Short-Term
Government-Corporate Income, Short-Term Municipal Income, U.S. Government
Income, U.S. Treasury Money Market and Variable Rate Government Funds. Any
distributions to shareholders from net realized capital gain are declared and
distributed annually.
FEDERAL INCOME TAXES
The Company's policy with respect to each Fund is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute substantially all of the Fund's net
investment income and any net realized capital gains to its shareholders.
Therefore, no federal or state income tax provision is required. The following
funds had net capital loss carryforwards at December 31, 1995:
<TABLE>
<CAPTION>
YEAR NET CAPITAL LOSS
FUND EXPIRES CARRYFORWARD
<S> <C> <C>
................................................................................................................
California Tax-Free Money Market Fund 2002 $ 67,605
Money Market Fund 2001 1,392
2002 36,799
2003 155,089
Municipal Income Fund 2002 3,600,931
2003 157,864
U.S. Government Income Fund 2002 1,212,813
2003 725,379
U.S. Treasury Money Market Fund 2002 12,441
2003 13,382
Variable Rate Government Fund 1999 978,191
2000 15,382,953
2001 2,818,400
2002 125,280,827
2003 7,526,188
</TABLE>
The Board intends to offset net capital gains with each capital loss
carryforward until each carryforward has been fully utilized or expires. No
capital gain distribution shall be made until the capital loss carryforward has
been fully utilized or expires.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in
134
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
which amounts are distributed may differ from the year in which the income and
realized gains (losses) were recorded by the portfolio. 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.
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the Funds' administrator, sponsor and distributor,
has incurred expenses in connection with the organization and initial
registration of the various funds and their classes. These expenses were charged
to the individual Funds and are being amortized by the Funds or their classes on
a straightline basis over 60 months from the date the Funds commenced
operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Funds,
except the Short-Term Government-Corporate Income and Short-Term Municipal
Income Funds, with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contracts,
WFB has agreed to provide the Funds with investment guidance and policy
direction in connection with daily portfolio management. Under the contract with
the Asset Allocation Fund, WFB is entitled to be paid a monthly advisory fee at
the annual rate of 0.70% of the Fund's average daily net assets up to $500
million and 0.60% of the remaining average daily net assets. Under the contracts
with the California Tax-Free Bond, Municipal Income, Strategic Growth, U.S.
Government Income and Variable Rate Government Funds, WFB is entitled to be paid
a monthly advisory fee at the annual rate of 0.50% of the average daily net
assets of each Fund. Under the contract with the California Tax-Free Money
Market Fund, WFB is entitled to be paid a monthly advisory fee at the annual
rate of 0.45% of the average daily net assets. Under the contracts with the
Money Market and U.S. Treasury Money Market Funds, WFB is entitled to be paid a
monthly advisory fee at the annual rate of 0.25% of the average daily net
assets.
The Company has entered into contracts on behalf of each Fund, except the Asset
Allocation Fund, with WFB whereby WFB is responsible for providing custody and
portfolio accounting services for the Funds. For all of these Funds, WFB is
entitled to an annual fee for custody services at the 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, 0.045% of the next $50 million and 0.02%
of the remaining average daily net assets.
In connection with the Asset Allocation Fund, the Company has entered into a
sub-advisory contract with Wells Fargo Nikko Investment Advisors ("WFNIA").
WFNIA is an affiliate of Wells Fargo & Company. Pursuant to the agreement WFB
pays WFNIA a subadvisory fee. Wells Fargo Institutional Trust Company N.A.
("WFITC"), a subsidiary of WFNIA, acts as custodian for this Fund. Custody fees
are paid to WFITC from the sub-advisory fee paid to WFNIA.
Effective January 1, 1996, BZW Barclays Global Fund Advisors ("BGFA") replaced
WFNIA as investment sub-adviser to the Asset Allocation Fund. BGFA was created
by the reorganization of
135
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
WFNIA with and into an affiliate of WFITC. Pursuant to a sub-advisory contract
with the Fund and subject to the overall supervision of WFB, the Fund's
investment adviser, BGFA is responsible for day-to-day portfolio management of
the Fund. BGFA will continue to employ substantially the same personnel and will
continue to use the computer-based investment model developed and previously
used by WFNIA to determine the recommended mix of assets in the Fund's
portfolio. BGFA is entitled to receive from WFB an annual fee of $60,000 and
monthly fees at the annual rate of 0.20% of the Fund's average daily net assets
as compensation for its sub-advisory services. BGFA is an indirect subsidiary of
Barclays Bank PLC and is located at 45 Fremont Street, San Francisco, CA 94105.
As of January 1, 1996 BGFA and its affiliates provide investment advisory
services for over $220 billion of assets under management. As of January 1,
1996, WFB provides investment advisory services for approximately $33 billion of
assets.
Effective January 1, 1996, WFITC became a wholly owned subsidiary of BZW
Barclays Global Investors Holdings Inc. (formerly, The Nikko Building U.S.A.,
Inc.) and WFITC was renamed BZW Barclays Global Investors, N.A. ("BGI"). BGI
currently acts as the Asset Allocation Fund's custodian. BGFA is a subsidiary of
BGI. BGI will not be entitled to receive compensation for its services to the
Fund so long as BGFA is entitled to receive fees for providing investment
sub-advisory services to the Fund. The principal business address of BGI is 45
Fremont Street, San Francisco, California 94105.
The Company has entered into a contract on behalf of the Funds with WFB whereby
WFB provides transfer agent services for the Funds. Under the transfer agency
agreement, WFB is paid a per account fee and other related costs with a minimum
monthly fee of $3,000 per fund unless net assets of a fund are under $20
million. For as long as the assets remain under $20 million the fund will not be
charged any transfer agency fees by WFB.
The Funds, except the California Tax-Free Money Market, Money Market, Short-Term
Government-Corporate Income, Short-Term Municipal Income and U.S. Treasury Money
Market Funds, may enter into service agreements with one or more servicing
agents on behalf of Class D shares of the Funds. Under such agreements,
servicing agents have agreed to provide shareholder liaison services, including
responding to customer inquiries and providing information on their investments,
and to provide such other related services as the Fund or a Class D shareholder
may reasonably request. For these services, a servicing agent receives a fee, on
an annualized basis for
136
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
the Fund's then-current fiscal year, not to exceed 0.25% of the average daily
net assets of the Class D shares of the Fund. Service fees paid on behalf of
Class D shares for the year ended December 31, 1995 are described below:
<TABLE>
<CAPTION>
SERVICE FEE
FUND CLASS D
<S> <C>
.................................................................................................................
Asset Allocation Fund $ 31,150
California Tax-Free Bond Fund 18,322
Municipal Income Fund 35,700
Strategic Growth Fund 49,492
U.S. Government Income Fund 8,291
Variable Rate Government Fund 24,977
</TABLE>
The Company has entered into administration and distribution agreements on
behalf of the Funds with Stephens. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services to the Funds. For
providing supervisory and administrative services, the California Tax-Free Bond,
Short-Term Government-Corporate Income, Short-Term Municipal Income, Strategic
Growth and Variable Rate Government Funds have each agreed to pay Stephens a
monthly fee at the annual rate of 0.15% of each Fund's average daily net assets
up to $200 million and 0.10% of the average daily net assets in excess of $200
million. For the Asset Allocation, California Tax-Free Money Market and U.S.
Government Income Funds, Stephens is entitled to be compensated for
administrative services monthly at the annual rate of 0.10% of the average daily
net assets of such Fund up to $200 million and 0.05% of the average daily net
assets in excess of $200 million. The Money Market, Municipal Income and U.S.
Treasury Money Market Funds have each agreed to pay Stephens a monthly
administrative fee at the annual rate of 0.10% of each Fund's average daily net
assets.
The Company has adopted separate Distribution Plans for Class A and Class D
shares pursuant to Rule 12b-1 under the 1940 Act (each, a "Distribution Plan").
The Class A Distribution Plans for the California Tax-Free Bond, California
Tax-Free Money Market and U.S. Government Income Funds provide that each Fund
may defray all or part of the cost of preparing, printing and distributing
prospectuses and other promotional materials by paying on an annual basis up to
the greater of $100,000 or 0.05% of the Class A shares of a Fund's average daily
net assets for costs incurred. Each Fund may participate in joint distribution
activities with the other Funds, in which event expenses reimbursed out of the
assets of one of the Funds may be attributable, in part, to the distribution-
related activities of another Fund. Generally, the expenses of joint
distribution activities are allocated among the Funds in proportion to their
relative net asset sizes.
The Company also has adopted separate distribution plans pursuant to Rule 12b-1
under the 1940 Act, whereby on behalf of Class A shares of the Asset Allocation,
Money Market, Municipal Income, Strategic Growth, U.S. Treasury Money Market and
Variable Rate Government Funds and shares of the Short-Term Government-Corporate
and Short-Term Municipal Income Funds, a Fund may pay Stephens, as compensation
for distribution-related services, a monthly fee at an annual rate of up to
137
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
0.25% of the average daily net assets attributable to the Fund's shares.
Payments under the Distribution Plan for the Class A shares of the Municipal
Income Fund currently are capped by WFB and Stephens at the annual rate of 0.15%
of the average daily net assets of the Class A shares. The Class D Distribution
Plan of the Asset Allocation Fund and Strategic Growth Fund provides that a Fund
may pay the Distributor a monthly fee at an annual rate of up to 0.75% of each
such Fund's average daily net assets attributable to Class D shares. In
addition, the Class D Distribution Plan for the California Tax-Free Bond,
Municipal Income, U.S. Government Income and Variable Rate Government Funds may
pay Stephens, as compensation for distribution-related services, a monthly fee
at annual rates of up to 0.50% of the average daily net assets attributable to
the Fund's Class D shares. Through February 28, 1995, a portion of the Municipal
Income Fund Class A distribution fee was charged to net capital for income tax
purposes.
<TABLE>
<CAPTION>
DISTRIBUTION FEES
FUND CLASS A
<S> <C>
.................................................................................................................
Asset Allocation Fund $ 120,417
California Tax-Free Bond Fund 0
Municipal Income Fund 83,443
Strategic Growth Fund 102,390
U.S. Government Income Fund 0
Variable Rate Government Fund 2,032,814
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION FEES
FUND CLASS D
<S> <C>
.................................................................................................................
Asset Allocation Fund $ 93,450
California Tax-Free Bond Fund 36,643
Municipal Income Fund 67,939
Strategic Growth Fund 148,475
U.S. Government Income Fund 16,582
Variable Rate Government Fund 49,954
</TABLE>
138
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
WAIVED FEES AND REIMBURSED EXPENSES
The following fees/expenses were waived/reimbursed for the year ended December
31, 1995:
<TABLE>
<CAPTION>
REIMBURSED
FUND WAIVED FEES EXPENSES TOTAL
<S> <C> <C> <C>
..............................................................................................................
Asset Allocation $ 39,137 $ 0 $ 39,137
California Tax-Free Bond 574,744 0 574,744
California Tax-Free Money Market 17,718 0 17,718
Money Market 145,674 0 145,674
Municipal Income 321,109 0 321,109
Short-Term Government-Corporate Income 10,060 103,836 113,896
Short-Term Municipal Income 9,962 91,759 101,721
Strategic Growth 57,496 0 57,496
U.S. Government Income 142,902 0 142,902
U.S. Treasury Money Market 203,631 0 203,631
Variable Rate Government 983,094 0 983,094
</TABLE>
Waived fees and reimbursed expenses continue at the discretion of WFB and the
administrator.
All of the officers and certain of the directors of the Company are also
officers of Stephens. At December 31, 1995, Stephens owned 180,335 shares of the
Asset Allocation Fund, 1,667 shares of the California Tax-Free Bond Fund, 46,012
shares of the California Tax-Free Money Market Fund, 1,344,975 shares of the
Money Market Fund, 13,005 shares of the Municipal Income Fund, 6,030 shares of
the Strategic Growth Fund, 2,851 shares of the U.S. Government Income Fund,
123,930 shares of the U.S. Treasury Money Market Fund and 13,444 shares of the
Variable Rate Government Fund.
Stephens has retained $1,424,127 as sales charges from the proceeds of Class A
capital shares sold and $23,048 as proceeds from Class D capital shares redeemed
by the Company for the year ended December 31, 1995. Wells Fargo Securities
Inc., a subsidiary of WFB, received $31,366 as sales charges from the proceeds
of Class A capital shares sold by the Company for the year ended December 31,
1995.
139
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for each
Fund for the year ended December 31, 1995, were as follows:
<TABLE>
<CAPTION>
ASSET CALIFORNIA MUNICIPAL
AGGREGATE PURCHASES ALLOCATION TAX-FREE INCOME
AND SALES OF: FUND BOND FUND FUND
<S> <C> <C> <C>
..............................................................................................................
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $ 1,925,625 $ 0 $ 0
Sales proceeds 24,476,791 0 0
OTHER SECURITIES:
Purchases at cost 25,759,100 102,928,974 11,320,000
Sales proceeds 7,490,150 136,242,403 38,242,630
<CAPTION>
U.S.
STRATEGIC GOVERNMENT VARIABLE RATE
AGGREGATE PURCHASES GROWTH INCOME GOVERNMENT
AND SALES OF: FUND FUND FUND
<S> <C> <C> <C>
..............................................................................................................
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $ 0 $ 14,373,672 $ 185,689,844
Sales proceeds 0 24,558,750 201,433,047
OTHER SECURITIES:
Purchases at cost 122,483,641 19,956,049 1,811,104,565
Sales proceeds 100,543,477 19,605,320 2,300,349,324
..............................................................................................................
</TABLE>
ALL FUNDS NOT REFLECTED IN THIS SCHEDULE TRADED EXCLUSIVELY IN SHORT-TERM
SECURITIES OR WERE FEEDER FUNDS THAT INVEST ALL THEIR ASSETS IN A CORRESPONDING
MASTER PORTFOLIO.
4. CAPITAL SHARES TRANSACTIONS
As of December 31, 1995, there were 20 billion shares of $.001 par value capital
stock authorized by the Company. As of December 31, 1995, each Fund was
authorized to issue 100 million shares of $.001 par value capital stock for each
class of shares, except the California Tax-Free Money Market Fund, the Money
Market Fund, the U.S. Treasury Money Market Fund, and the Variable Rate
Government Fund which are as follows:
<TABLE>
<CAPTION>
SHARES
FUND AUTHORIZED
<S> <C>
.................................................................................................................
California Tax-Free Money Market Fund 3 billion
Money Market Fund 1 billion
U.S. Treasury Money Market Fund 1 billion
Variable Rate Government Fund 500 million
</TABLE>
Transactions in capital shares for the year ended December 31, 1995 are
disclosed in detail in the Statements of Changes in Net Assets.
140
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
The following funds have shareholders who own greater than 5% of the outstanding
share capital of the Fund. This concentration of ownership may expose the Fund
to the risks associated with significant redemptions.
<TABLE>
<CAPTION>
NUMBER OF
SHAREHOLDERS WITH GREATER
FUND THAN 5% OWNERSHIP
<S> <C>
.................................................................................................................
California Tax-Free Money Market Fund 1
Money Market Fund 2
Short-Term Government-Corporate Income Fund 7
Short-Term Municipal Income Fund 5
U.S. Treasury Money Market Fund 3
Variable Rate Government Fund 2
</TABLE>
5. INCOME ALLOCATIONS
The Short-Term Government Corporate-Income and Short-Term Municipal Income Funds
are each allocated net investment income from their corresponding Master
Portfolio. The detail of allocated net investment income for the year ended
December 31, 1995 is as follows:
<TABLE>
<CAPTION>
NET
WAIVED INVESTMENT
INTEREST DIVIDENDS EXPENSES FEES INCOME
<S> <C> <C> <C> <C> <C>
...........................................................................................................
Short-Term Government-Corporate Income
Fund $ 150,854 $ 0 $ 41,340 $ (41,340) $ 150,854
Short-Term Municipal Income Fund 617,987 0 104,339 (104,339) 617,987
</TABLE>
6. ORANGE COUNTY CALIFORNIA DEBT OBLIGATIONS
During the year the Money Market Fund held obligations issued by Orange County,
California. Orange County filed for protection under Chapter 9 of the Federal
Bankruptcy Code on December 6, 1994 and defaulted on such obligations on July
10, 1995. The bankruptcy court trustee approved an extension of the obligations'
maturity to June 30, 1996 and modification of certain other terms, including
increasing the interest rate and providing for some portion of interest to
accrue until the maturity date rather than being due and payable monthly.
Concurrent with the default by Orange County, the Company entered into a Credit
Enhancement Agreement (the "Agreement") with WFB, pursuant to which the Fund was
named as a beneficiary of an irrevocable letter of credit issued by Bank of
America National Trust and Savings Association ("Bank of America"). The
Agreement provided support for a portion of the Orange County obligations such
that Bank of America would make certain payments to the Fund under defined
circumstances.
During the period from September 19, 1995 through October 17, 1995, the Money
Market Fund sold all of the Orange County obligations. The sale of such
obligations did not result in any payments from Bank of America to the Money
Market Fund.
141
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
7. VARIABLE RATE GOVERNMENT FUND LITIGATION
A purported class action lawsuit was filed on March 14, 1995 in the United
States District Court for the Southern District of California by Conrad D.
Schaefer and Diane L. Schaefer, Trustees for the Schaefer Family Trust of 1992
against the Overland Express Variable Rate Government Fund, WFB and Wells Fargo
& Company. Plaintiffs voluntarily withdrew that complaint and served defendants
with a First Amended Complaint, also a putative class action, on June 2, 1995.
In the First Amended Complaint, as in the original complaint, plaintiffs sought
to sue on behalf of persons who bought the fund during the period from January
1, 1991 and March 10, 1995, alleging that defendants violated the Securities Act
of 1933, the Securities Exchange Act of 1934, the 1940 Act and common law by,
among other things, failing to disclose adequately the risks of investing in the
Fund. By Order dated October 30, 1995, the Court granted defendants' motions to
dismiss the First Amended Complaint in its entirety. The Court dismissed certain
claims with prejudice, but gave plaintiffs permission to replead other claims.
On January 11, 1996, plaintiffs served defendants with a Second Amended
Complaint. The Second Amended Complaint names Stephens as an additional
defendant and changes the alleged Class to those who purchased, acquired or held
shares of the Fund from June 30, 1993 through December 31, 1994. The Second
Amended Complaint seeks to assert claims under federal and California securities
laws and common law relating to alleged misstatements and omissions in the
prospectuses, reports and marketing materials pertaining to the Fund; it alleges
that the Class as a whole suffered substantial, but unspecified damages in
connection with the purchase of securities covered by the Fund's offering
documents over the course of the specified period. The Company continues to
believe that the case is without merit and intends to defend vigorously against
the action.
8. SHAREHOLDER MEETINGS
A. OVERLAND EXPRESS ASSET ALLOCATION FUND APPROVAL OF NEW SUB-ADVISER AND
INVESTMENTS IN FUTURES AND RELATED TRANSACTIONS
The Company received shareholder approval for a new sub-advisory contract for
the Asset Allocation Fund with Wells Fargo Bank, as adviser, and BZW Barclays
Global Fund Advisors (the successor entity to WFNIA), as sub-adviser. This
action was necessary because of the purchase by a subsidiary of Barclays Bank
PLC of WFNIA. The Company also received shareholder approval for an investment
policy to permit the Fund to engage in the purchase and sale of certain futures
contracts and related transactions.
B. OVERLAND EXPRESS STRATEGIC GROWTH FUND APPROVAL OF REORGANIZATION TO
MASTER-FEEDER STRUCTURE
The Company received shareholder approval for a proposed reorganization of the
Strategic Growth Fund into a master-feeder structure. Under this structure, the
Fund will become a feeder fund and will invest in a corresponding newly
established Master Portfolio. The reorganization will not result in any changes
to the Fund's investment objective. WFB has agreed to absorb the additional
expenses for at least one year after the reorganization.
142
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OVERLAND EXPRESS FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Asset Allocation Fund, California Tax-Free
Bond Fund, California Tax-Free Money Market Fund, Money Market Fund, Municipal
Income Fund, Short-Term Government-Corporate Income Fund (formerly the 1-3 Year
Duration Full Faith and Credit Government Income Fund), Short-Term Municipal
Income Fund (formerly the 1-3 year Duration Municipal Income Fund), Strategic
Growth Fund, U.S. Government Income Fund, U.S. Treasury Money Market Fund and
Variable Rate Government Fund (eleven of the funds comprising Overland Express
Funds, Inc.) as of December 31, 1995, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, except for Short-Term Government Corporate
Income Fund which is for the period from September 19, 1994 (commencement of
operations) to December 31, 1994, and Short-Term Municipal Income Fund which is
for the period from June 3, 1994 (commencement of operations) to December 31,
1994, and financial highlights for the periods indicated herein. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1995, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds of Overland Express Funds, Inc. as of December 31,
1995, the results of their operations, the changes in their net assets and their
financial highlights for the periods indicated herein in conformity with
generally accepted accounting principles.
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1996
143
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
PROXY VOTING RESULTS
At an adjourned meeting held on December 5, 1995, shareholders voted on the two
proposals for the Asset Allocation Fund. Both proposals received the required
majority of votes and were adopted.
PROPOSAL 1.
To consider approval of a proposed Sub-Advisory Contract for the Company, on
behalf of the Asset Allocation Fund, with Wells Fargo Bank N.A. ("Wells Fargo
Bank"), as adviser, and BZW Global Investors (the anticipated successor in
interest to Wells Fargo Nikko Investment Advisors ("WFNIA") as sub-adviser.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,554,372 39,945 220,463
</TABLE>
PROPOSAL 2.
To consider approval of a proposed investment policy to authorize the Asset
Allocation Fund to engage in the purchase and sale of certain futures contracts
and related transactions with amendments to certain fundamental investment
restrictions that would otherwise preclude the Asset Allocation Fund from
engaging in such transactions.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,901,309 274,931 241,019
</TABLE>
Another special shareholder meeting was held on January 30, 1996, to vote on the
following proposal for the Strategic Growth Fund. The proposal received the
required majority of votes and was adopted.
PROPOSAL 1.
To consider approval of the proposal to reorganize the Strategic Growth Fund
into a master/feeder structure, with amendments to certain fundamental
investment restrictions to permit the Strategic Growth Fund to invest all of its
assets in another investment company.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,138,338 119,480 133,942
</TABLE>
144
<PAGE>
MASTER INVESTMENT TRUST SHORT-TERM GOVERNMENT-CORPORATE INCOME MASTER
PORTFOLIO - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 97.62%
U.S. TREASURY NOTES - 97.62%
$ 3,200,000 U.S. Treasury Notes 6.13 % 05/31/97 $ 3,239,008
2,500,000 U.S. Treasury Notes 6.75 02/28/97 2,542,575
------------
TOTAL U.S. TREASURY SECURITIES $ 5,781,583
(Cost $5,766,993)
SHORT-TERM INSTRUMENTS - 1.57%
REPURCHASE AGREEMENTS - 1.57%
$ 93,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 93,000
(Cost $93,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $5,859,993)* (Notes 1 and 3) 99.19 % $5,874,583
Other Assets and Liabilities, Net 0.81 48,039
---------- ----------
TOTAL NET ASSETS 100.00 % $5,922,622
---------- ----------
---------- ----------
.............................................................................
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 14,590
Gross Unrealized Depreciation 0
----------
NET UNREALIZED APPRECIATION $ 14,590
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
145
<PAGE>
MASTER INVESTMENT TRUST SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO -
DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - 88.09%
ARIZONA - 5.94%
$ 200,000 Arizona State Transportation Board Excise Tax
Revenue Maricopa County Regional Area Road
Funding MBIA Insured 6.70 % 07/01/96 $ 202,864
700,000 Arizona State Transportation Board Tax Revenue
Maricopa County Regional Area Road Fund MBIA
Insured 7.00 07/01/00 774,662
CALIFORNIA - 10.90%
420,000 California State Maritime Infrastructure
Authority Port of San Diego Revenue AMBAC
Insured 4.20 11/01/98 419,202
500,000 Los Angeles CA DW&P Electric Plant Revenue
Second Issue 9.00 11/15/97 545,370
500,000 Los Angeles County CA COP Van Nuys Courthouse
Project Prerefunded 8.90 06/01/06 520,460
300,000 Modesto CA Irrigation District 86 Geysers
Geothermal Power Project Series A 6.60 10/01/97 310,614
DELAWARE - 2.47%
400,000 Delaware State GO Series C 4.70 07/01/98 406,576
ILLINOIS - 7.58%
200,000 Chicago IL AMBAC Insured 6.00 01/01/98 207,088
500,000 Illinois State Municipal Electric Agency Power
Supply System Revenue Series A 5.70 02/01/96 500,810
500,000 Illinois State Sales Tax Revenue Series E
Prerefunded 8.10 06/15/10 538,340
INDIANA - 3.04%
500,000 Indiana State Bond Bank Advance Funding Notes
Series A-2 5.75 01/10/96 500,282
MARYLAND - 1.41%
225,000 Prince Georges County MD Series A 6.60 02/01/97 232,110
</TABLE>
146
<PAGE>
MASTER INVESTMENT TRUST SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO -
DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
MINNESOTA - 2.86%
$ 200,000 Minneapolis MN Special School District No. One
COP Prerefunded 7.38 02/01/15 $ 213,304
255,000 Minnesota State Convention Center Prerefunded 6.75 04/01/12 256,948
MISSOURI - 1.24%
200,000 Branson MO Tax Allocation Revenue Street
Improvement Project CGIC Insured 4.95 10/01/97 203,524
NEW JERSEY - 8.28%
500,000 Mercer County NJ Solid Waste Site Project
Prerefunded 7.90 04/01/13 533,495
600,000 New Jersey State Transportation Authority Fund
Series A Escrowed to Maturity 4.10 06/15/97 602,076
225,000 New Jersey State Wastewater Revenue Series B 6.50 05/15/96 227,293
NEW YORK - 6.28%
250,000 New York State Mortgage Agency Revenue
Homeowner Mortgage Series 44 AMT FHA
Collateralized 6.00 04/01/99 256,245
250,000 New York State Power Authority Revenue &
General Purpose Series T Prerefunded 7.40 01/01/06 255,048
500,000 United Nations Development Corp Revenue Phase
Two & Three Series B Prerefunded 8.13 07/01/06 520,875
NORTH CAROLINA - 3.12%
500,000 North Carolina State Municipal Power Agency
Catawba No 1 Electrical Revenue FGIC Insured 5.10 01/01/99 512,665
OREGON - 1.87%
300,000 Lane County OR School District No. 52 FGIC
Insured 5.20 12/01/97 306,771
</TABLE>
147
<PAGE>
MASTER INVESTMENT TRUST SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO -
DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
PENNSYLVANIA - 1.36%
$ 200,000 Montgomery County PA Higher Education & Health
Authority Hospital Revenue Bryn Manor Hospital
Project Prerefunded 9.38 12/01/19 $ 223,258
PUERTO RICO - 3.03%
500,000 Commonwealth of Puerto Rico Aquaduct and Sewer
Authority Revenue 4.50 07/01/99 497,920
TEXAS - 8.46%
240,000 Brazos TX Higher Education Authority AMT Series
C-1 6.00 11/01/99 252,761
275,000 Dallas TX Waterworks & Sewer System Revenue
Series A 9.00 10/01/97 298,268
500,000 Northside TX Independent School District PSFG
Insured 8.60 08/01/97 534,640
275,000 Port of Houston Authority TX AMT 8.50 10/01/98 305,143
VIRGINIA - 4.49%
700,000 Virginia State Public School Authority Series A 7.00 01/01/98 738,031
WASHINGTON - 9.39%
200,000 Southern Columbia Basin WA Irrigation District 5.50 12/01/98 208,990
200,000 Tacoma WA Sewer Revenue Series B FGIC Insured 5.00 12/01/96 201,492
500,000 Thirstin County WA Olympia USD No 111 FGIC
Insured 5.25 12/01/98 516,855
300,000 Washington State HFFA Revenue Highline
Community Hospital LOC - Bank of Tokyo Ltd 7.40 08/15/09 312,618
300,000 Washington State Public Power Supply System
Nuclear Project Number Three Revenue Series B 6.70 07/01/96 303,726
</TABLE>
148
<PAGE>
MASTER INVESTMENT TRUST SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO -
DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
MUNICIPAL BONDS - CONTINUED
WEST VIRGINIA - 3.29%
$ 500,000 West Virginia State HFFA Charleston Area
Medical Center Series A MBIA Insured 4.30 09/01/99 $ 500,475
40,000 West Virginia State Hospital Financing
Authority West Virginia Hospital Inc MBIA
Insured 7.20 06/01/16 41,363
WISCONSIN - 3.08%
500,000 Wisconsin State Transportation Series A 6.50 07/01/96 506,510
------------
TOTAL MUNICIPAL BONDS $ 14,488,672
(Cost $14,359,819)
SHORT-TERM INSTRUMENTS - 10.43%
MONEY MARKET FUNDS - 3.74%
$ 615,000 National Municipal Fund $ 615,000
VARIABLE RATE MUNICIPAL BONDS+ - 6.69%
$ 500,000 Northeast Maryland State Waste Disposal
Authority Harford County V/R AMBAC Insured 5.05 % 01/01/08 $ 500,000
600,000 Clark County NV Airport Improvement Revenue
Series A-1 V/R LOC - Toronto Dominion Bank 5.05 07/01/25 600,000
------------
TOTAL VARIABLE RATE MUNICIPAL BONDS $ 1,100,000
TOTAL SHORT-TERM INSTRUMENTS $ 1,715,000
(Cost $1,715,000)
</TABLE>
149
<PAGE>
MASTER INVESTMENT TRUST SHORT-TERM MUNICIPAL INCOME MASTER PORTFOLIO -
DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $16,074,819)* (Notes 1 and 3) 98.52 % $ 16,203,672
Other Assets and Liabilities, Net 1.48 243,032
---------- -------------
TOTAL NET ASSETS 100.00 % $ 16,446,704
---------- -------------
---------- -------------
................................................................................
</TABLE>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH
REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 129,315
Gross Unrealized Depreciation (462)
-------------
NET UNREALIZED APPRECIATION $ 128,853
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
150
<PAGE>
MASTER INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
GOVERNMENT- MUNICIPAL
CORPORATE INCOME INCOME
MASTER PORTFOLIO MASTER PORTFOLIO
<S> <C> <C>
..............................................................................................
ASSETS
INVESTMENTS:
In securities, at market value (see cost below) $ 5,874,583 $ 16,203,672
Cash 1,148 1,746
Receivables:
Dividends and interest 74,174 293,490
Due from administrator (Note 2) 5,729 14,604
Organization expenses, net of amortization 2,742 2,087
Prepaid expenses 73 74
TOTAL ASSETS 5,958,449 16,515,673
LIABILITIES
Payables:
Allocations to beneficial interest holders 32,688 63,483
Other 3,139 5,486
TOTAL LIABILITIES 35,827 68,969
TOTAL NET ASSETS $ 5,922,622 $ 16,446,704
INVESTMENTS AT COST (NOTE 3) $ 5,859,993 $ 16,074,819
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
151
<PAGE>
MASTER INVESTMENT TRUST
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
GOVERNMENT- MUNICIPAL
CORPORATE INCOME INCOME
MASTER PORTFOLIO MASTER PORTFOLIO
<S> <C> <C>
..............................................................................................
INVESTMENT INCOME
Interest $ 150,854 $ 617,988
TOTAL INVESTMENT INCOME 150,854 617,988
EXPENSES (NOTE 2)
Advisory fees 11,944 62,512
Custody fees 399 2,156
Amortization of organization expenses 685 275
Legal and audit fees 26,312 34,921
Other 2,000 4,475
TOTAL EXPENSES 41,340 104,339
Less:
Waived and reimbursed fees (Note 2) (41,340) (104,339)
NET EXPENSES 0 0
NET INVESTMENT INCOME (LOSS) 150,854 617,988
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on sale of investments 3,975 19,197
Net change in unrealized appreciation (depreciation)
of investments 16,126 157,711
NET GAIN ON INVESTMENTS 20,101 176,908
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 170,955 $ 794,896
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
152
<PAGE>
MASTER INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-TERM GOVERNMENT- CORPORATE INCOME
. For the MASTER PORTFOLIO
For the
Period Ended
Year Ended December 31,
December 31, 1995 1994(1)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 150,854 $ 1,617
Net realized gain (loss) on sale of investments 3,975 0
Net change in unrealized appreciation (depreciation) of
investments 16,126 (1,536)
NET INCREASE (DECREASE) RESULTING FROM OPERATIONS 170,955 81
NET INCREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST
TRANSACTIONS] 5,655,489 97,709
INCREASE IN NET ASSETS 5,826,444 96,173
NET ASSETS:
Beginning net assets 96,178 5
ENDING NET ASSETS $ 5,922,622 $ 96,178
</TABLE>
................................................................................
(1) THE MASTER PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER 19, 1994.
The accompanying notes are an integral part of these financial statements.
153
<PAGE>
MASTER INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-TERM MUNICIPAL INCOME MASTER
. For the PORTFOLIO
For the
Period Ended
Year Ended December 31,
December 31, 1995 1994(1)
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income
(loss) $ 617,988 $ 73,315
Net realized gain (loss)
on sale of investments 19,197 (1,075)
Net change in unrealized
appreciation
(depreciation) of
investments 157,711 (28,859)
NET INCREASE (DECREASE)
RESULTING FROM OPERATIONS 794,896 43,381
NET INCREASE IN NET ASSETS
RESULTING FROM BENEFICIAL
INTEREST
TRANSACTIONS] 3,872,671 11,809,066
INCREASE IN NET ASSETS 4,667,567 11,779,132
NET ASSETS:
Beginning net assets 11,779,137 5
ENDING NET ASSETS $ 16,446,704 $ 11,779,137
</TABLE>
................................................................................
(1) THE MASTER PORTFOLIO COMMENCED OPERATIONS ON JUNE 3, 1994.
The accompanying notes are an integral part of these financial statements.
154
<PAGE>
MASTER INVESTMENT TRUST
SHORT-TERM MASTER PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Short-Term Municipal Income Master Portfolio and the Short-Term
Government-Corporate Income Master Portfolio (the "Master Portfolios") are two
series of Master Investment Trust (the "Trust"), a business trust organized
under the laws of Delaware on August 14, 1991. The Trust is registered as an
investment company under the Investment Company Act of 1940 as amended (the
"1940 Act"). The Declaration of Trust permits the issuance of beneficial
interests ("interests"). The Trust currently issues three series of investment
portfolios: the Cash Investment Trust Master Portfolio, the Short-Term
Government-Corporate Income Master Portfolio and the Short-Term Municipal Income
Master Portfolio. These Funds invest in a range of securities, generally
including money market instruments, equities and U.S. government securities.
The following significant accounting policies are consistently followed by the
Trust in the preparation of its financial statements, and such policies are in
conformity with Generally Accepted Accounting Principles for investment
companies. These financial statements are representative of only the Short-Term
Government-Corporate Income Master Portfolio and the Short-Term Municipal Income
Master Portfolio.
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT POLICY AND SECURITY VALUATION
Each Master Portfolio's investments include fixed-, variable- and floating-rate
instruments. Except during temporary defensive periods, each Master Portfolio
seeks to maintain an average weighted maturity ranging from 90 days to 2 years.
Except for debt obligations with remaining maturities of 60 days or less which
are valued at amortized cost, assets are valued at current market prices, or if
such prices are not readily available, at fair value as determined in accordance
with procedures adopted by the Board of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Interest income is accrued daily. Realized gains and
losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized as required by the Internal Revenue
Code.
FEDERAL INCOME TAXES
Each Master Portfolio intends to qualify for federal income tax purposes as a
partnership. Management of each Master Portfolio therefore believes that it will
not be subject to any federal or
155
<PAGE>
MASTER INVESTMENT TRUST
SHORT-TERM MASTER PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
state income tax on its income and net capital gains (if any). However, each
investor in a Master Portfolio will be taxed on its distributive share of the
partnership's income for purposes of determining its federal and state income
tax liabilities. The determination of such share will be made in accordance with
the Internal Revenue Code of 1986, as amended ("Code"), and the regulations
promulgated thereunder.
It is intended that the Master Portfolios' assets, income and allocations will
be managed in such a way that a regulated investment company investing in the
Master Portfolio will be able to satisfy the requirements of Subchapter M of the
Code, assuming that the investment company invests all of its assets in the
Master Portfolio.
ORGANIZATION EXPENSES
Costs incurred in connection with organization and initial registration as an
investment company under the 1940 Act were advanced by Stephens Inc.
("Stephens"). Organization expenses of each series are being amortized on a
straight line basis over 60 months from the date the series of the Trust
commenced operation.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into separate advisory contracts with WFB on behalf of
each Master Portfolio. Pursuant to the contracts, WFB furnishes investment
guidance and policy direction in connection with daily portfolio management of
each Master Portfolio. Under the contract, WFB is entitled to receive a monthly
advisory fee at an annual rate of 0.50% of the average daily net assets.
The Trust has also entered into a contract with WFB whereby WFB has agreed to
provide custody services for each Master Portfolio. For providing these
services, WFB is entitled to be compensated for custody services based on a rate
of 0.0167% of the average daily net assets of each Master Portfolio.
WAIVED FEES AND REIMBURSED EXPENSES
Waived fees and reimbursed expenses for the year ended December 31, 1995, were
as follows:
<TABLE>
<CAPTION>
WAIVED FEES REIMBURSED EXPENSES
MASTER PORTFOLIO BY WFB BY STEPHENS
<S> <C> <C>
...............................................................................................................
Short-Term Government-Corporate Income $12,343 $28,997
Short-Term Municipal Income 64,668 39,671
</TABLE>
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens.
156
<PAGE>
MASTER INVESTMENT TRUST
SHORT-TERM MASTER PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments exclusive of securities with maturities of
one year or less at purchase date for the Short-Term Government-Corporate Income
Master Portfolio and the Short-Term Municipal Income Master Portfolio,
respectively, for the year ended December 31, 1995, were as follows:
<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT - SHORT-TERM
AGGREGATE PURCHASES CORPORATE INCOME MUNICIPAL INCOME
AND SALES OF: MASTER PORTFOLIO MASTER PORTFOLIO
<S> <C> <C>
................................................................................................................
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $10,833,717 $0
Sales proceeds 5,159,266 0
OTHER LONG-TERM SECURITIES:
Purchases at cost 0 10,485,249
Sales proceeds 0 4,115,783
</TABLE>
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, excluding securities with maturities of one year
or less at purchase date for each Master Portfolio for the year ended December
31, 1995 are as follows:
<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT- SHORT-TERM
CORPORATE INCOME MUNICIPAL INCOME
MASTER PORTFOLIO MASTER PORTFOLIO
<S> <C> <C> <C> <C>
......................................... ........................................
<CAPTION>
FROM FROM
SEPTEMBER 19, 1994 JUNE 3, 1994
YEAR (INCEPTION) YEAR (INCEPTION)
ENDED TO ENDED TO
DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C> <C> <C>
.......................................................................................................................
PORTFOLIO TURNOVER 227% 0% 46% 8%
</TABLE>
157
<PAGE>
TO THE UNITHOLDERS AND BOARD OF TRUSTEES
MASTER INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Short-Term Government-Corporate Income
Master Portfolio (formerly the 1-3 Year Duration Full Faith and Credit
Government Income Master Portfolio) and Short-Term Municipal Income Master
Portfolio (formerly the 1-3 year Duration Municipal Income Master Portfolio)
(two of the master portfolios comprising Master Investment Trust) as of December
31, 1995, and the related statement of operations for the year then ended, the
statements of changes in net assets and financial highlights for the year then
ended and for Short-Term Government-Corporate Income Master Portfolio, the
period from September 19, 1994 (commencement of operations) to December 31,
1994, and for Short-Term Municipal Income Master Portfolio, the period from June
3, 1994 (commencement of operations) to December 31, 1994. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1995, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned master portfolios of Master Investment Trust as of
December 31, 1995, the results of their operations, the changes in their net
assets and their financial highlights for the periods indicated herein in
conformity with generally accepted accounting principles.
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1996
158
<PAGE>
LIST OF ABBREVIATIONS
ABAG - Association of Bay Area Governments
ADR - American Depository Receipts
AMBAC - American Municipal Bond Assurance Corp
AMT - Alternative Minimum Tax
ARM - Adjustable Rate Mortgage
BART - Bay Area Rapid Transit
CDA - Community Development Authority
CDSC - Contingent Deferred Sales Charge
CGIC - Capital Guaranty Insurance Co
CGY - Capital Guaranty Corp
CMT - Constant Maturity Treasury
COFI - Cost of Funds Index
CONNIE LEE - Connie Lee Insurance Co
COP - Certificate of Participation
CP - Commercial Paper
DW&P - Department of Water & Power
DWR - Department of Water Revenue
FGIC - Financial Guaranty Insurance Corp
FHA - Federal Housing Authority
FHLMC - Federal Home Loan Mortgage Corp
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance, Inc
GNMA - Government National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority
HFFA - Health Facilities Financing Authority
IDA - Industrial Development Authority
LIBOR - London Interbank Offered Rate
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
MFHR - Multi-Family Housing Authority
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
159
<PAGE>
[LOGO]
OVERLAND EXPRESS FUNDS
Asset Allocation Fund
California Tax-Free Bond Fund
California Tax-Free Money Market Fund
Money Market Fund
Municipal Income Fund
Short-Term Government-Corporate Income Fund
Short-Term Municipal Income Fund
Strategic Growth Fund
U.S. Government Income Fund
U.S. Treasury Money Market Fund
Variable Rate Government Fund
INVESTMENT ADVISER & TRANSFER AGENT
Wells Fargo Bank
P.O. Box 63084
San Francisco, CA 94163
SPONSOR & DISTRIBUTOR
Stephens Inc.
111 Center Street
Little Rock, AR 72201
FOR MORE INFORMATION
ABOUT OVERLAND EXPRESS FUNDS
CALL 1.800.552.9612
OR WRITE:
Overland Express Funds
P.O. Box 63084
San Francisco, CA 94163
160
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED JANUARY 2, 1996
TO THE CURRENT PROSPECTUS, AS PREVIOUSLY SUPPLEMENTED, AND STATEMENT OF
ADDITIONAL INFORMATION OF EACH FUND OF OVERLAND EXPRESS FUNDS, INC.
As of January 1, 1996, Wells Fargo Bank, N.A. provides investment advisory
services for approximately $33 billion of assets.
Each Fund's current Prospectus, as supplemented, and Statement of
Additional Information are hereby amended accordingly.
<PAGE>
[LOGO] BULK RATE
OVERLAND U.S. POSTAGE
EXPRESS-REGISTERED TRADEMARK- PAID
PERMIT NO 1933
POST OFFICE BOX 63084 FULLERTON CA
SAN FRANCISCO, CA 94163
This report and the financial statements
contained herein are submitted for the general
information of the shareholders of the Overland
Express 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 1.800.552.9612. Read the prospectus
carefully before you invest.
THIS BOOKLET INCLUDES THE ANNUAL REPORT AND A
PROSPECTUS SUPPLEMENT. THIS PROSPECTUS SUPPLEMENT
APPEARS ON THE INSIDE BACK COVER.
OEX ARI 2'96
DATED MATERIAL - PLEASE EXPEDITE
