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[WAGON WHEEL]
OVERLAND
EXPRESS-R-
SEMI-ANNUAL REPORT
-------------------------------
J U N E 3 0 , 1 9 9 6
INSTITUTIONAL CLASS
Money Market Fund
National Tax-Free Institutional Money Market Fund
U.S. Treasury Money Market Fund
[PHOTO OF HORSES DRAWING STATECOACH]
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......................................3
MANAGER COMMENTS............................................5
PORTFOLIOS OF INVESTMENTS
Money Market Fund.........................................9
Master Investment Trust - Tax-Free Money Market
Master Portfolio........................................11
U.S. Treasury Money Market Fund..........................17
OVERLAND EXPRESS FUNDS
Statement of Assets and Liabilities......................18
Statement of Operations..................................19
Statements of Changes in Net Assets......................20
Financial Highlights.....................................22
Notes to Financial Statements............................27
MASTER INVESTMENT TRUST
Statement of Assets and Liabilities......................31
Statement of Operations..................................32
Statements of Changes in Net Assets......................33
Notes to Financial Statements............................34
LIST OF ABBREVIATIONS......................................36
OVERLAND EXPRESS FUNDS ARE NOT FDIC INSURED, ARE NOT
OBLIGATIONS OF WELLS FARGO BANK, AND ARE NOT GUARANTEED BY
WELLS FARGO BANK. 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. DURING THE PERIOD, WELLS FARGO BANK HAS
VOLUNTARILY WAIVED PORTIONS OF ITS FEES OR ASSUMED
RESPONSIBILITY FOR OTHER EXPENSES, WHICH HAS REDUCED
OPERATING EXPENSES FOR SHAREHOLDERS. WITHOUT THESE
REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
WELLS FARGO BANK PROVIDES INVESTMENT ADVISORY AND CERTAIN
OTHER SERVICES FOR THE OVERLAND EXPRESS FUNDS. THE FUNDS
ARE SPONSORED AND DISTRIBUTED BY STEPHENS INC., MEMBER
NYSE/SIPC.
1
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2
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TO OUR SHAREHOLDERS
CROSSCURRENTS IN THE STOCK AND BOND MARKETS
Broadly speaking, the stock and bond markets followed different paths during the
first half of 1996. The stock market's rise was primarily due to the economy's
strength and robust corporate profits, providing the foundation for positive
returns in the stock market. Growth stock funds, in particular, produced strong
returns as the demand for small capitalization stocks increased and record
amounts of money flowed into equity mutual funds.
The bond market moved in a different direction. Fears of "too much strength" in
the economy and the potential increase in inflation pushed long-term interest
rates up approximately 1%, from 5.95% to 6.87%. This increase in yields during
the first half of the year resulted in negative total returns for bonds with
maturities over four years. On the other hand, after a difficult 1995, the
municipal bond market fared well, with municipal bonds outperforming their
taxable counterparts by up to 2%.
THE STOCK MARKET
The stock market's rise was driven by three key elements: strong corporate
profit, attractive valuations and a positive flow of investments into equities.
A review of these factors suggests that the market may drift for a period,
although the fundamental backdrop remains positive.
The strength and sustained growth of corporate profits is the underlying support
for stock prices. Although the rate of profit growth is expected to slow from
double digits to more normal levels, corporate profit growth is expected to
continue through this year and into 1997. As expectations for earnings growth
become moderate in the short term, stock prices are likely to adjust
accordingly. Nevertheless, companies demonstrating the ability to sustain
profitability and increase earnings over the long run could be rewarded with
higher stock prices.
1995's declining interest-rate environment and rising profits have helped stock
price valuations remain attractive over the last 18 months. In the recent
environment of rising interest rates, company price-to-earnings ratios have been
on the higher side relative to historical standards. Other valuation measures
such as price-to-book value and dividend yield may be considered higher than in
the past as well. Barring a sharp rise in interest rates, our outlook for the
equity market is for increasing stock prices merited by strong corporate
earnings growth.
Increased cash flows into equities is the third component of the market's rise.
Net purchases of equity mutual funds have been at record levels since the start
of the year, spurring demand for stocks. Meanwhile the supply of stocks has
become somewhat limited due to the number of mergers and acquisitions, as well
as stock repurchase plans.
THE BOND MARKET
Interest rates rose as a number of factors suggested an increase in inflation.
Worries over wage pressures, signs of a strong economy and the anticipation that
the Federal Reserve (the "Fed") would shift to credit tightening and higher
interest rates sparked inflation fears. The possibility exists that a quarter
percentage point increase in the federal funds target rate
3
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(now at 5.25%) could be announced at the August 20, 1996 Federal Open Market
Committee ("FOMC") meeting. If so, this will be the Fed's first interest-rate
increase in 17 months. If the recent past is any guide, the fixed income market
and financial institutions are likely to respond to this move with moderate
across-the-board interest-rate increases, led by intermediate rates in the two-
to five-year maturity range.
Economic growth ultimately could slow to a more moderate and sustainable 2% to
3% rate in response to the first half's rising interest rates, weakened
household finances and more cautious lending practices.
Bond market conditions so far this year were similar to that of 1994's, when the
yield on 30-year Treasury bonds rose more than 1.80% amid successive rounds of
tightening credit by the Fed. However, if the Fed does begin to tighten credit
this year, the increase in bond yields is not expected to be as significant as
it was in 1994. The reasons are that long-term interest rates are already up
more than a percentage point this year, the target federal funds rate would be
higher and bank credit standards are being tightened. In addition to this, the
economy's aging growth cycle indicates that less tightening will be needed to
slow the economy.
Therefore, we believe the risk of a substantial increase in interest rates is
low. We ultimately expect interest rates to begin to decrease by late 1996 as
slowing economic growth eases inflation fears.
A LONG-TERM FOCUS
This second half of 1996 could be characterized by a slowdown in activity as
investors' lack of clear investment direction leads to indecision. During these
"summer doldrums," investors have a chance to reinforce their long-term approach
to investing. The recent decline in stock prices has made many stocks more
attractive and represents good buying opportunities. In addition, the increase
in interest rates is providing an opportunity to capture additional income
through the bond sector, while maintaining moderate risk. While this provides a
good way to capture current income, it is critical not to shy away from the
longer-term potential. Although the financial markets are not without risks and
uncertainties, today's opportunities can provide the foundation for a long-term
investment plan.
A COMMITMENT TO INVESTMENT QUALITY
We believe a conservative straightforward approach is the most effective
long-term investment strategy. We offer a variety of Overland Express Funds to
meet your financial goals. On the following pages you will find reports from the
investment adviser and portfolio managers of each of the Funds, offering insight
into individual Fund performance, strategies, portfolio holdings and other
helpful information.
We appreciate your participation in the Overland Express Funds. We will continue
working diligently to help you realize your financial goals.
OVERLAND EXPRESS FUNDS, JULY 1996
4
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OVERLAND EXPRESS MONEY MARKET FUND -
INSTITUTIONAL CLASS
Q. HOW DID THE OVERLAND EXPRESS MONEY MARKET FUND-INSTITUTIONAL CLASS PERFORM
DURING THE FIRST HALF OF 1996?
A. The Fund's seven day simple yield for the period ended June 30, 1996 was
5.02%. The Fund achieved its goal of maintaining principal stability at $1.00
per share net asset value while providing competitive money market yields.
Q. HOW HAS 1996'S ECONOMIC ENVIRONMENT INFLUENCED THE PERFORMANCE OF MONEY
MARKET FUNDS IN GENERAL?
A. Led by strong housing and auto sales, a strong economy led the Fed to
consider tightening monetary policy and increasing the federal funds target
rate. As credit markets began to anticipate this move, interest rates continued
their ascent. Generally as the Fed tightens monetary policy, money market yields
increase. The yield on three-month Treasury bills rose from a second quarter low
of 4.95% in early April to a high of 5.27% late in the quarter. We believe that
there is a strong likelihood that the Fed will increase the federal funds target
rate before the conclusion of the August 20, 1996 FOMC meeting.
Q. GIVEN 1996'S ECONOMIC ENVIRONMENT, WERE ANY CHANGES MADE TO THE PORTFOLIO?
A. As tighter monetary policy appeared increasingly imminent and short-term
yields rose, the weighted average maturity of the Fund was shortened from 60
days at the beginning of the second quarter to approximately 49 days by the end
of the first half of the year. The weighted average maturity will remain between
45 and 55 days under current market conditions.
Q. WHAT IS YOUR STRATEGY FOR THE REMAINDER OF 1996?
A. For the remainder of the year, under current market conditions, we will
continue to seek to provide investors with a high level of current income, while
preserving capital, by investing in high quality short-term securities. We will
continue our strategy of purchasing one- to three-month commercial paper and we
will increase our emphasis on widely-used floating rate notes under current
market conditions.
ALTHOUGH THE FUND SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET VALUE, THERE IS
NO ASSURANCE THAT IT WILL MEET THIS OBJECTIVE. AN INVESTMENT IN THE FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT OR ANY GOVERNMENT AGENCY,
NOR BY WELLS FARGO BANK.
ANNUALIZED YIELD IS FOR THE 7-DAY PERIOD ENDED JUNE 30, 1996. YIELD REFLECTS
FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND EXPENSES. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
5
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OVERLAND EXPRESS NATIONAL TAX-FREE INSTITUTIONAL
MONEY MARKET FUND
(TAX-FREE MONEY MARKET MASTER PORTFOLIO)
Q. HOW DID THE OVERLAND EXPRESS NATIONAL TAX-FREE INSTITUTIONAL MONEY MARKET
FUND PERFORM DURING 1996?
A. The Fund's seven day simple yield as of June 30, 1996 was 3.08%. The Fund
achieved its objective of seeking a high level of tax-free income, capital
preservation and liquidity.
Q. WHAT FACTORS IN THE SHORT-TERM TAX-EXEMPT MARKET INFLUENCED THE FUND'S
PERFORMANCE DURING THE FIRST HALF OF THE YEAR?
A. The short-term tax-exempt market followed traditional seasonal patterns
during the first half of 1996. In April tax-exempt money market funds
experienced large outflows around tax day as individual investors withdrew
liquid assets to pay taxes. Beginning in June the market became concerned about
the expected heavy cash inflows from a large bond call and redemption date
occurring on July 1, 1996. This bond call and redemption activity created an
increase in cash and a demand for municipal bonds in the marketplace, thus
causing the yield to decrease.
Q. WHAT STRATEGY WILL YOU TAKE FOR THE BALANCE OF 1996?
A. The Fund maintained its average maturity in the range between 20 to 30 days
during the quarter. Given current market conditions, we intend to target an
average maturity of 30 to 50 days for the remainder of the year. We will also
continue to maintain high credit quality as a primary objective of the Fund.
ALTHOUGH THE FUND SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET VALUE, THERE IS
NO ASSURANCE THAT IT WILL MEET THIS OBJECTIVE. AN INVESTMENT IN THE FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT OR ANY GOVERNMENT AGENCY,
NOR BY WELLS FARGO BANK.
THE OVERLAND EXPRESS NATIONAL TAX-FREE INSTITUTIONAL MONEY MARKET FUND (THE
"FEEDER") AND THE MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET 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 INTEREST 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.
ANNUALIZED YIELD IS FOR THE 7-DAY PERIOD ENDED JUNE 30, 1996. YIELD REFLECTS
FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND EXPENSES. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
6
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OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND -
INSTITUTIONAL CLASS
Q. HOW DID THE OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND-INSTITUTIONAL
CLASS PERFORM DURING 1996?
A. The Fund's seven day simple yield as of June 30, 1996 was 4.74%. The Fund
achieved its objective of maintaining principal stability at a $1.00 per share
net asset value while providing competitive money market yields.
Q. HOW HAS 1996'S ECONOMIC ENVIRONMENT INFLUENCED THE PERFORMANCE OF MONEY
MARKET FUNDS IN GENERAL?
A. Led by strong housing and auto sales, a strong economy led the Fed to
consider tightening monetary policy and increase the federal funds target rate.
As credit markets began to anticipate this move, interest rates continued their
ascent to higher yields. Generally, as the Fed tightens monetary policy, money
market yields increase. The yield on three-month Treasury bills rose from a
second quarter low of 4.95% in early April to a high of 5.27% in the last half
of the year. We believe that there is a strong likelihood that the Fed will
increase the federal funds target rate before the conclusion of the August 20,
1996 FOMC meeting.
Q. WITHIN 1996'S ECONOMIC ENVIRONMENT, WERE THERE ANY CHANGES MADE TO THE
PORTFOLIO?
A. As tighter monetary policy appeared increasingly imminent and short-term
yields rose, the weighted average days to maturity of the Fund was shortened
slightly during the first half of the year. We intend to maintain the weighted
average days to maturity between 45 to 55 days under current market conditions.
Q. WHAT IS THE CURRENT COMPOSITION OF THE PORTFOLIO?
A. As of June 30, 1996, the Fund's portfolio was comprised entirely of U.S.
Treasury bills.
ALTHOUGH THE FUND SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET VALUE, THERE IS
NO ASSURANCE THAT IT WILL MEET THIS OBJECTIVE. AN INVESTMENT IN THE FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT OR ANY GOVERNMENT AGENCY,
NOR BY WELLS FARGO BANK.
ANNUALIZED YIELD IS FOR THE 7-DAY PERIOD ENDED JUNE 30, 1996. YIELD REFLECTS
FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND EXPENSES. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
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8
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MONEY MARKET FUND - JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER - 69.79%
$ 25,000,000 Abbey National North America 5.30 % 08/09/96 24,856,458
25,000,000 ABN Amro North American Finance Corp Inc 5.27 09/03/96 24,765,778
20,000,000 American Express Credit Corp 5.28 08/21/96 19,850,400
35,000,000 Asset Securitization Cooperative Corp++ 5.42 08/22/96 34,725,989
30,000,000 Bank of Nova Scotia 5.29 08/01/96 29,863,342
30,000,000 Canadian Imperial Holdings Inc 5.28 07/30/96 29,872,400
40,000,000 Ciesco LP++ 5.32 07/10/96 39,946,900
30,000,000 CIT Group Holdings Inc 5.33 08/28/96 29,742,383
20,000,000 Daimler-Benz North America Corp 5.28 07/31/96 19,912,000
25,000,000 Den Danske Co Inc 5.29 08/30/96 24,779,583
35,000,000 Electronic Data Systems Corp 5.32 08/29/96 34,694,839
30,525,000 Falcon Asset Securitization Corp++ 5.33 07/11/96 30,479,806
20,000,000 Ford Motor Credit Corp 5.28 07/24/96 19,932,533
42,500,000 General Electric Capital Corp 5.32 07/08/96 42,456,036
40,000,000 Glaxo Wellcome Plc++ 5.40 09/16/96 39,538,428
35,000,000 Greenwich Funding Corp++ 5.28 08/19/96 34,748,467
42,500,000 Morgan (J P) & Co 5.27 07/03/96 42,487,557
40,000,000 National Rural Utilities Cooperative Finance
Corp 5.28 07/18/96 39,900,267
32,500,000 New Center Asset Funding Corp 5.28 08/21/96 32,256,900
15,000,000 Societe Generale 5.05 07/22/96 14,955,813
17,500,000 Transamerica Finance Corp 5.28 07/22/96 17,446,100
22,500,000 Transamerica Finance Corp 5.30 08/07/96 22,377,438
15,000,000 Walt Disney Co Inc++ 5.20 07/16/96 14,967,500
30,000,000 WCP Funding Corp++ 5.38 08/14/96 29,802,917
------------
TOTAL COMMERCIAL PAPER $694,359,834
SHORT-TERM FEDERAL AGENCIES - 5.02%
$ 50,000,000 Federal Home Loan Mortgage Corp 5.27 % 07/15/96 49,897,528
</TABLE>
9
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MONEY MARKET FUND - JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
VARIABLE AND FLOATING RATE BONDS - 16.68%
$ 30,000,000 Beta Finance Corp++ 5.43 % 01/27/97 29,988,000
21,000,000 Chemical Banking Corp 5.69 08/19/96 21,005,884
20,000,000 Comerica Inc 5.44 08/12/96 19,997,693
20,000,000 FCC National Bank 5.27 10/31/96 19,990,356
25,000,000 Household Finance Corp 5.45 05/27/97 25,000,000
40,000,000 PNC Funding Corp 5.40 05/15/97 39,970,432
10,000,000 Wachovia Corp 5.36 04/25/97 9,990,018
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TOTAL VARIABLE AND FLOATING RATE BONDS $165,942,383
U.S. TREASURY BILLS - 7.77%
$ 50,000,000 U.S. Treasury Bills 5.46 %F 02/06/97 48,533,715
30,000,000 U.S. Treasury Bills 5.53 F 04/03/97 28,806,223
------------
TOTAL U.S. TREASURY BILLS $ 77,339,938
REPURCHASE AGREEMENTS - 1.15%
$ 11,438,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.30 07/03/96 11,438,000
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $998,977,683)* (Note 1) 100.41 % $998,977,683
Other Assets and Liabilities, Net (0.41 ) (4,049,426)
------- ------------
TOTAL NET ASSETS 100.00 % $994,928,257
------- ------------
------- ------------
..........................................................................................................
</TABLE>
F YIELD TO MATURITY.
++ 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.
10
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MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET MASTER PORTFOLIO -
JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS + - 98.95%
ALASKA - 2.42%
$ 1,300,000 Valdez AK Marine Terminal Revenue Exxon
Pipeline Co V/R 3.50 % 12/01/33 $ 1,300,000
ARIZONA - 2.61%
$ 1,400,000 Maricopa County AZ PCR Arizona Public Service
Co V/R Series D LOC - Bank of America 3.55 % 05/01/29 $ 1,400,000
COLORADO - 4.09%
$ 900,000 Colorado State Student Loan Obligation Bond
Authority V/R AMT Series A LOC - SLMA 3.40 % 07/01/00 $ 900,000
1,300,000 Englewood CO IDA Revenue V/R 3.45 12/01/10 1,300,000
------------
$ 2,200,000
CONNECTICUT - 0.19%
$ 100,000 Connecticut State HFA V/R Series G AMBAC
Insured 3.45 % 05/15/18 $ 100,000
DELAWARE - 1.12%
$ 600,000 Delaware State Waste Disposal and Sewer
Facilities Geigy Corp V/R AMT Series A LOC -
Union Bank of Switzerland 3.65 % 03/01/26 $ 600,000
DISTRICT OF COLUMBIA - 2.98%
$ 1,600,000 Washington DC EDFA Catholic University V/R
Series A LOC - Sanwa Bank Ltd 3.55 % 12/01/09 $ 1,600,000
FLORIDA - 9.77%
$ 1,400,000 Florida HFA MFHR V/R LOC - Citibank 3.35 % 12/01/07 $ 1,400,000
2,000,000 Indian River FL Hospital CP LOC - Kredietbank
NV 3.70 09/10/96 2,000,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
11
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MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET MASTER PORTFOLIO -
JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS + - CONTINUED
FLORIDA - CONTINUED
$ 600,000 Sarasota County FL Hospital CP LOC - Sumitomo
Bank Ltd 3.65 % 07/31/96 $ 600,000
1,250,000 Volusia FL MFHR Sun Point Apartment Project V/R
Series H LOC - Citibank 3.35 12/01/05 1,250,000
------------
$ 5,250,000
GEORGIA - 8.77%
$ 800,000 Georgia State Municipal Electric Authority CP
Multiple LOC's 3.55 % 07/11/96 $ 800,000
1,000,000 Georgia State Municipal Electric Authority CP
Multiple LOC's 3.55 07/12/96 1,000,000
2,910,000 Georgia State Municipal Electric Authority CP
Multiple LOC's 3.55 10/10/96 2,910,000
------------
$ 4,710,000
INDIANA - 5.96%
$ 3,200,000 Jasper County IN PCR CP LOC - Union Bank of
Switzerland 3.35 % 08/16/96 $ 3,200,000
KANSAS - 2.23%
$ 1,200,000 Burlington KS Kansas City Power & Light CP LOC
-Societe Generale 3.45 % 09/24/96 $ 1,200,000
LOUISIANA - 1.67%
$ 300,000 New Orleans LA Aviation Board Revenue V/R
Series B MBIA Insured 3.25 % 08/01/16 $ 300,000
200,000 New Orleans LA Aviation Board Revenue V/R
Series C MBIA Insured 3.25 08/01/11 200,000
400,000 West Feliciana Parish LA PCR Gulf State Utility
Company Project V/R LOC - Canadian Imperial
Bank of Commerce 3.60 04/01/16 400,000
------------
$ 900,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
12
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET MASTER PORTFOLIO -
JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS + - CONTINUED
MASSACHUSETTS - 3.72%
$ 2,000,000 Massachusetts State Health Facilities CP
Harvard University 3.55 % 10/29/96 $ 2,000,000
MICHIGAN - 10.24%
$ 2,000,000 Delta County MI EDA Mead Escanola Paper CP LOC
-Swiss Bank 3.50 % 08/19/96 $ 2,000,000
1,000,000 Michigan State Fund Limited Obligation Revenue
V/R 3.55 09/01/30 1,000,000
1,500,000 Midland MI Economic Development Corp Limited
Obligation Revenue Dow Chemical Co V/R Project
B 3.55 12/01/15 1,500,000
1,000,000 Midland MI Economic Development Corp Obligatory
Revenue Dow Chemical Co V/R AMT Series A 3.65 12/01/23 1,000,000
------------
$ 5,500,000
MINNESOTA - 3.72%
$ 2,000,000 Southern Minnesota State Municipal Power CP LOC
-Credit Suisse 3.60 % 10/16/96 $ 2,000,000
MISSOURI - 1.12%
$ 600,000 Perry MO PCR Leaf River Forest Project V/R LOC
-Credit Suisse 3.60 % 03/01/02 $ 600,000
NEW YORK - 7.82%
$ 700,000 New York City NY GO V/R Series B FGIC Insured 3.75 % 10/01/20 $ 700,000
1,100,000 New York City NY MUD Water and Sewer Revenue
V/R Series A FGIC Insured 3.75 06/15/25 1,100,000
1,500,000 New York State PCR V/R Series A LOC - Toronto
Dominion Bank 3.55 07/01/15 1,500,000
900,000 New York State V/R Subseries A8 LOC - Sanwa
Bank Ltd 3.65 08/01/17 900,000
------------
$ 4,200,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
13
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET MASTER PORTFOLIO -
JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS + - CONTINUED
NORTH CAROLINA - 2.51%
$ 1,350,000 Charlotte NC Airport Revenue V/R Series A MBIA
Insured 3.30 % 07/01/16 $ 1,350,000
OHIO - 2.05%
$ 1,100,000 Ohio State Development Authority Cincinnati Gas
& Electric V/R Series A LOC - ABN Amro of North
America 3.50 % 09/01/30 $ 1,100,000
OREGON - 1.12%
$ 600,000 Port St Helens OR PCR Portland General Electric
Company V/R LOC - Canadian Imperial Bank of
Commerce 3.55 % 04/01/10 $ 600,000
PENNSYLVANIA - 1.86%
$ 1,000,000 Delaware County PA PCR Philadelphia Electric CP
FGIC Insured 3.60 % 09/10/96 $ 1,000,000
RHODE ISLAND - 2.79%
$ 1,500,000 Rhode Island State Industrial Facilities Corp
Blackstone Valley Electric Co V/R LOC - Bank of
New York 3.40 % 12/01/14 $ 1,500,000
SOUTH CAROLINA - 0.74%
$ 400,000 Charleston County SC Industrial Revenue V/R
Massey Coal Terminal Corp LOC - Morgan Guaranty
Trust 3.60 % 01/01/07 $ 400,000
TEXAS - 11.82%
$ 2,350,000 Brazos River TX Harbor Navigation District CP
Dow Chemical Project 3.55 % 10/08/96 $ 2,350,000
1,000,000 Guadalupe-Blanco River Authority Texas PCR
Central Power & Light Co V/R LOC - ABN Amro of
North America 3.60 11/01/15 1,000,000
1,000,000 Gulf Coast Waste Disposal Authority PCR Exxon
Project V/R 3.55 06/01/20 1,000,000
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
14
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET MASTER PORTFOLIO -
JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS + - CONTINUED
TEXAS - CONTINUED
$ 1,000,000 North Central TX HFFA V/R Series B MBIA Insured 3.80 % 10/01/15 $ 1,000,000
1,000,000 North Texas State Higher Education Authority
Student Loan Revenue V/R AMT Series A AMBAC
Insured 3.40 04/01/36 1,000,000
------------
$ 6,350,000
UTAH - 5.40%
$ 1,500,000 Salt Lake City UT Pooled Hospital Revenue CP
LOC - West Deutsche Lenderbank 3.45 % 11/24/96 $ 1,500,000
1,400,000 Utah State Intermountain Power Agency CP LOC -
Swiss Bank 3.60 11/14/96 1,400,000
------------
$ 2,900,000
WASHINGTON - 0.74%
$ 400,000 Washington State HFA Revenue V/R Series E 3.55 % 10/01/05 $ 400,000
WYOMING - 1.49%
$ 200,000 Uinta County WY PCR Chevron USA Inc Project V/R 3.00 %F 08/18/20 $ 200,000
600,000 Uinta County WY PCR Chevron USA Inc V/R 3.50 12/01/22 600,000
------------
$ 800,000
TOTAL SHORT-TERM INSTRUMENTS $ 53,160,000
(Cost $53,160,000)
</TABLE>
................................................................................
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
15
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET MASTER PORTFOLIO -
JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $53,160,000)* (Note 1) 98.95 % $ 53,160,000
Other Assets and Liabilities, Net 1.05 566,117
------- ------------
TOTAL NET ASSETS 100.00 % $ 53,726,117
------- ------------
------- ------------
..........................................................................................................
</TABLE>
F YIELD TO MATURITY.
* 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.
16
<PAGE>
U.S. TREASURY MONEY MARKET FUND - JUNE 30, 1996 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY BILLS - 100.32%
$ 34,730,000 U.S. Treasury Bills 4.30 % 07/05/96 $ 34,712,612
29,625,000 U.S. Treasury Bills 4.34 07/11/96 29,584,852
24,825,000 U.S. Treasury Bills 4.68 07/25/96 24,745,174
31,405,000 U.S. Treasury Bills 4.82 08/01/96 31,271,555
30,355,000 U.S. Treasury Bills 4.87 08/08/96 30,195,786
174,200,000 U.S. Treasury Bills 4.92 08/15/96 173,140,895
25,000,000 U.S. Treasury Bills 5.04 08/22/96 24,818,903
20,620,000 U.S. Treasury Bills 5.06 08/29/96 20,449,682
17,745,000 U.S. Treasury Bills 5.15 09/05/96 17,584,546
32,995,000 U.S. Treasury Bills 5.15 09/12/96 32,656,400
19,120,000 U.S. Treasury Bills 5.15 09/26/96 18,888,394
38,135,000 U.S. Treasury Bills 5.18 09/19/96 37,701,422
19,395,000 U.S. Treasury Bills 5.21 10/03/96 19,139,772
12,570,000 U.S. Treasury Bills 5.22 10/10/96 12,390,837
30,000,000 U.S. Treasury Bills 5.26 10/17/96 29,541,900
------------
TOTAL U.S. TREASURY BILLS $536,822,730
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $536,822,730)* (Note 1) 100.32 % $536,822,730
Other Assets and Liabilities, Net (0.32 ) (1,720,400)
------- ------------
TOTAL NET ASSETS 100.00 % $535,102,330
------- ------------
------- ------------
..........................................................................................................
</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.
17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) - JUNE 30, 1996
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE U.S.
INSTITUTIONAL TREASURY
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
............................................................................................
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $ 998,977,683 $50,722,813(2) $536,822,730
Cash 4,646 0 369,026
Receivables:
Dividends and interest 1,011,425 146,161 0
Due from administrator (Note 2) 0 8,481 0
Organization expenses, net of
amortization 32,894 6,033 18,184
Prepaid expenses 45,560 279 3,784
TOTAL ASSETS 1,000,072,208 50,883,767 537,213,724
LIABILITIES
Payables:
Investment securities purchased 0 0 0
Distribution to shareholders 4,098,788 154,111 1,552,673
Fund shares redeemed 0 0 0
Due to sponsor and distributor (Note
2) 338,141 11,339 300,754
Due to adviser (Note 2) 669,011 0 210,335
Other 38,011 14,228 47,632
TOTAL LIABILITIES 5,143,951 179,678 2,111,394
TOTAL NET ASSETS
$ 994,928,257 $50,704,089 $535,102,330
NET ASSETS CONSIST OF:
Paid-in capital, Class A (1) $ 400,253,778 $50,706,149 $406,908,870
Paid-in capital, Class I 594,758,085 N/A 128,198,976
Undistributed (overdistributed) net
investment income 0 0 0
Undistributed net realized gain(loss)
on investments (83,606) (2,060) (5,516)
Net unrealized appreciation
(depreciation) of investments 0 0 0
TOTAL NET ASSETS $ 994,928,257 $50,704,089 $535,102,330
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE (NOTE 4)
Net assets - Class A (1) $ 400,170,742 $50,704,089 $406,891,143
Shares outstanding - Class A (1) 400,251,514 50,706,149 406,912,233
Net asset value per share - Class A (1) $1.00 $1.00 $1.00
Maximum offering price per share - Class
A (1) $1.00 $1.00 $1.00
Net assets - Class I $ 594,757,515 N/A $128,211,187
Shares outstanding - Class I 594,760,307 N/A 128,198,976
Net asset value and offering price per
share - Class I $1.00 $ N/A $1.00
INVESTMENTS AT COST (NOTE 3) $ 998,977,683 $ N/A $536,822,730
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) INVESTMENT IN CORRESPONDING MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) -
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE U.S.
INSTITUTIONAL TREASURY
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND(2) FUND
<S> <C> <C> <C>
......................................................................................
INVESTMENT INCOME (1)
Dividends $ 0 $ 0 $ 0
Interest 24,121,686 456,008 8,926,488
Expenses N/A (37,734) N/A
TOTAL INVESTMENT INCOME 24,121,686 418,274 8,926,488
EXPENSES (NOTE 2)
Advisory fees 1,110,704 0 441,743
Administration fees 444,282 6,253 176,697
Custody fees 76,930 0 32,501
Portfolio accounting fees 118,913 0 65,954
Transfer agency fees 21,880 0 18,399
Distribution fees 490,961 0 316,425
Amortization of organization expenses 2,326 1,948 5,398
Legal and audit fees 32,457 4,255 20,392
Registration fees 12,983 7,703 17,405
Directors' fees 2,486 1,119 2,486
Shareholder reports 14,919 2,918 9,945
Other 2,384 419 4,987
TOTAL EXPENSES 2,331,225 24,615 1,112,332
Less:
Waived fees and reimbursed expenses
(Note 2) (61,723) (12,108) (123,407)
NET EXPENSES 2,269,502 12,507 988,925
NET INVESTMENT INCOME 21,852,184 405,767 7,937,563
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (1)
Net realized gain (loss) on sale of
investments 109,674 (2,060) 20,307
Net change in unrealized appreciation
(depreciation) of investments 0 0 0
NET GAIN (LOSS) ON INVESTMENTS 109,674 (2,060) 20,307
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $21,961,858 $ 403,707 $7,957,870
</TABLE>
................................................................................
(1) FOR THE NATIONAL TAX-FREE INSTITUTIONAL MONEY MARKET FUND, THE INCOME,
EXPENSES AND REALIZED AND UNREALIZED GAINS AND LOSSES ARE ALLOCATED FROM
EACH FUND'S CORRESPONDING MASTER PORTFOLIO.
(2) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND
...................................
(Unaudited) For the
Six Months Year Ended
Ended December 31,
June 30, 1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 21,852,184 $ 26,438,943
Net realized gain (loss) on sale of
investments 109,674 (155,089)
Net change in unrealized appreciation
(depreciation) of investments 0 0
NET INCREASE (DECREASE) RESULTING FROM
OPERATIONS 21,961,858 26,283,854
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A (9,399,189) (18,371,046)
Class I (12,452,995) (8,067,897)
From net realized gain on sales of
investments
Class A 0 0
Class I 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A
(1) 1,064,825,253 1,969,443,796
Reinvestment of dividends - Class A
(1) 4,222,839 8,012,050
Cost of shares redeemed - Class A (1) (1,044,160,602) (1,910,005,001)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS
A (1) 24,887,490 67,450,845
Proceeds from shares sold - Class I 1,072,733,415 918,045,967
Reinvestment of dividends - Class I 10,466,201 6,132,104
Cost of shares redeemed - Class I (812,661,699) (611,195,414)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS
I 270,537,917 312,982,657
INCREASE (DECREASE) IN NET ASSETS 295,535,081 380,278,413
NET ASSETS:
Beginning net assets 699,393,176 319,114,763
ENDING NET ASSETS $ 994,928,257 $ 699,393,176
SHARES ISSUED AND REDEEMED:
Shares sold - Class A (1) 1,064,825,254 1,969,427,483
Shares issued in reinvestment of
dividends - Class A (1) 4,222,839 8,012,052
Shares redeemed - Class A (1) (1,044,160,602) (1,909,990,912)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING - CLASS A (1) 24,887,491 67,448,623
Shares sold - Class I 1,072,733,415 918,035,650
Shares issued in reinvestment of
dividends - Class I 10,466,201 6,132,104
Shares redeemed - Class I (812,661,699) (611,182,876)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING - CLASS I 270,537,917 312,984,878
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE
INSTITUTIONAL
MONEY MARKET U.S. TREASURY MONEY MARKET FUND
FUND
............. ...............................
(Unaudited) (Unaudited) For the
Period Ended Six Months Year Ended
June 30, Ended December 31,
1996(2) June 30, 1996 1995
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 405,767 $ 7,937,563 $ 11,533,065
Net realized gain (loss) on sale of
investments (2,060) 20,307 (13,382)
Net change in unrealized appreciation
(depreciation) of investments 0 0 0
NET INCREASE (DECREASE) RESULTING FROM
OPERATIONS 403,707 7,957,870 11,519,683
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A (405,767) (5,567,916) (9,781,347)
Class I N/A (2,369,647) (1,751,718)
From net realized gain on sales of
investments
Class A 0 0 0
Class I N/A 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A
(1) 155,433,339 1,372,334,030 746,154,757
Reinvestment of dividends - Class A
(1) 93,832 1,862,115 4,323,454
Cost of shares redeemed - Class A (1) (104,821,122) (1,166,069,739) (746,737,367)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS
A (1) 50,706,049 208,126,406 3,740,844
Proceeds from shares sold - Class I N/A 254,309,553 496,751,048
Reinvestment of dividends - Class I N/A 2,113,476 1,309,335
Cost of shares redeemed - Class I N/A (191,353,773) (438,830,786)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS
I N/A 65,069,256 59,229,597
INCREASE (DECREASE) IN NET ASSETS 50,703,989 273,215,969 62,957,059
NET ASSETS:
Beginning net assets 100 261,886,361 198,929,302
ENDING NET ASSETS $ 50,704,089 $ 535,102,330 $ 261,886,361
SHARES ISSUED AND REDEEMED:
Shares sold - Class A (1) 15,543,339 1,372,334,032 746,154,757
Shares issued in reinvestment of
dividends - Class A (1) 8,012,052 1,862,115 4,323,454
Shares redeemed - Class A (1) (1,909,990,912) (1,166,066,376) (746,737,367)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING - CLASS A (1) 50,706,049 208,129,771 3,740,844
Shares sold - Class I N/A 254,309,552 496,751,048
Shares issued in reinvestment of
dividends - Class I N/A 2,113,476 1,309,335
Shares redeemed - Class I N/A (191,353,774) (438,830,787)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING - CLASS I N/A 65,069,254 59,229,596
</TABLE>
................................................................................
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET FUND
..............................................
CLASS A
..............................................
(Unaudited)
Six Months
Ended Year Ended Year Ended
June 30, 1996 Dec. 31, 1995 Dec. 31, 1994
<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 0.05 0.04
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.05 0.04
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.05) (0.04)
Distributions from net realized gain 0.00 0.00 0.00
----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.04)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT ANNUALIZED)+ 2.40% 5.44% 3.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $400,171 $375,218 $307,878
Number of shares outstanding, end of period (000) 400,252 375,364 307,915
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.65% 0.65% 0.68%
Ratio of net investment income to average net assets(2) 4.76% 5.43% 3.71%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.66% 0.69% 0.72%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.74% 5.39% 3.67%
</TABLE>
................................................................................
(3) THIS CLASS COMMENCED OPERATIONS ON AUGUST 18, 1994.
+ TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
22
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND (CONT.)
..............................................................................................
CLASS I(3)
..............................................
CLASS A (CONT.) (Unaudited)
.............................................. Six Months
Year Ended Year Ended Year Ended Ended Year Ended Period Ended
Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991 June 30, 1996 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) 0.03 0.03 0.06 0.02 0.06 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 0.03 0.03 0.06 0.02 0.06 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.03) (0.06) (0.02) (0.06) (0.02)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.03) (0.03) (0.06) (0.02) (0.06) (0.02)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED)+ 2.57% 3.23% 5.65% 2.52% 5.71% 1.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $228,084 $268,424 $229,863 $594,758 $324,175 $11,237
Number of shares
outstanding, end of
period (000) 228,085 268,434 229,866 594,760 324,222 11,238
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.74% 0.75% 0.74% 0.40% 0.39% 0.38%
Ratio of net investment
income to average net
assets(2) 2.54% 3.17% 5.54% 5.00% 5.70% 5.05%
............................................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 0.74% 0.75% 0.75% 0.41% 0.45% 0.55%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 2.54% 3.17% 5.53% 4.98% 5.64% 4.88%
</TABLE>
................................................................................
(3) THIS CLASS COMMENCED OPERATIONS ON AUGUST 18, 1994.
+ TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
23
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL TAX-FREE INSTITUTIONAL
MONEY MARKET FUND(4)
...............................
(Unaudited)
Period Ended
June 30, 1996
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.01
Net realized and unrealized gain (loss) on investments 0.00
-----
TOTAL FROM INVESTMENT OPERATIONS 0.01
LESS DISTRIBUTIONS:
Dividends from net investment income (0.01)
Distributions from net realized gain 0.00
-----
TOTAL FROM DISTRIBUTIONS (0.01)
------
NET ASSET VALUE, END OF PERIOD $1.00
------
------
TOTAL RETURN (NOT ANNUALIZED)+ 0.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $50,697
Number of shares outstanding, end of period (000) 50,706
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.40%(5)
Ratio of net investment income to average net assets(2) 3.19%(5)
.....................................................................................................................
(1) Ratio of expenses to average net assets prior to waived fees and reimbursed
expenses 0.49%
(2) Ratio of net investment income to average net assets prior to waived fees and
reimbursed expenses 3.10%
</TABLE>
................................................................................
(3) THIS FUND COMMENCED OPERATIONS ON MAY 12, 1992.
(4) THIS FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
(5) THESE RATIOS INCLUDE EXPENSES CHARGED TO THE MASTER PORTFOLIO.
24
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
..............................................................................
CLASS A
..............................................................................
(Unaudited)
Six Months Period Ended
Ended Year Ended Year Ended Year Ended Dec. 31,
June 30, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 1992(3)
<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) 0.02 0.05 0.03 0.03 0.02
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.02 0.05 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02) (0.05) (0.03) (0.03) (0.02)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.03) (0.03) (0.02)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED)+ 2.24% 5.09% 3.44% 2.56% 1.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $406,891 $198,753 $195,031 $118,169 $137,412
Number of shares
outstanding, end of
period (000) 406,912 198,782 195,042 118,169 137,416
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets(1) 0.63% 0.65% 0.63% 0.52% 0.27%
Ratio of net investment
income to average net
assets(2) 4.46% 4.97% 3.47% 2.55% 3.12%
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 0.60% 0.73% 0.80% 0.77% 0.79%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 4.49% 4.89% 3.30% 2.30% 2.60%
</TABLE>
................................................................................
(3) THIS FUND COMMENCED OPERATIONS ON MAY 12, 1992.
(4) THIS FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
(5) THESE RATIOS INCLUDE EXPENSES CHARGED TO THE MASTER PORTFOLIO.
25
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND (CONT.)
..............................................
CLASS I
..............................................
(Unaudited)
Six Months Period Ended
Ended Year Ended Dec. 31,
June 30, 1996 Dec. 31, 1995 1994(3)
<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 0.05 0.02
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.05 0.02
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.05) (0.02)
Distributions from net realized gain 0.00 0.00 0.00
----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.02)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT ANNUALIZED)+ 2.37% 5.35% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $128,211 $63,134 $3,898
Number of shares outstanding, end of period (000) 128,199 63,130 3,900
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets(1) 0.39% 0.39% 0.23%
Ratio of net investment income to average net assets(2) 4.70% 5.16% 4.42%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.32% 0.49% 0.57%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.77% 5.06% 4.08%
</TABLE>
................................................................................
(3) THIS CLASS COMMENCED OPERATIONS ON JUNE 20, 1994.
26
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Money Market, National Tax-Free Institutional Money Market and U.S. Treasury
Money Market Funds (the "Funds") are three series of Overland Express Funds,
Inc. (the "Company"), which 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 consists of eleven separate
diversified funds: the Asset Allocation, Money Market, Municipal Income,
National Tax-Free Institutional Money Market, Short-Term Government-Corporate
Income, Short-Term Municipal Income, Strategic Growth, Overland Sweep, 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. These financial statements and notes to
financial statements represent the Money Market, National Tax-Free Institutional
Money Market and U.S. Treasury Money Market Funds only.
The Money Market and U.S. Treasury Money Market Funds commenced offering
Institutional Class ("Class I") shares on August 18, 1994, and June 20, 1994,
respectively. The Class I shares differ from each Fund's Class A shares
principally in the applicable shareholder servicing 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. Neither class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses, including distribution
and shareholder servicing 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.
INVESTMENT POLICY AND SECURITY VALUATION
The Funds invest in securities with remaining maturities not exceeding 397 days
(13 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.
27
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
The National Tax-Free Institutional Money Market Fund invests only in interests
("Interests") of the Tax-Free Money Market Master Portfolio (the "Master
Portfolio") of Master Investment Trust (the "Trust"), an open-end series
investment company. The Master Portfolio has the same investment objective as
the Fund. The value of the Fund's investment in the Master Portfolio reflects
the Fund's interest in the net assets of the Master Portfolio. As of June 30,
1996 the Fund held approximately 94.41% of the Master Portfolio's outstanding
Interests. The Master Portfolio invests only in securities with remaining
maturities not exceeding 397 days (13 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 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 the Funds will be able to
do so. The amortized cost method involves valuing a security at its cost and
accreting any discount or amortizing any premium over the period until maturity,
which approximates market value.
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 or losses
are reported on the basis of identified cost of securities delivered.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
securities ("repurchase agreements") are treated as collateralized financing
transactions and are recorded at their contracted resale amounts. These
repurchase agreements, if any, are detailed in each Fund's and the Master
Portfolio's Portfolio of Investments. The Funds' and the Master Portfolio's
adviser pools the Funds' and the Master Portfolio's cash and invests in
repurchase agreements entered into by the Funds. The repurchase agreements must
be fully collateralized based on values that are marked to market daily. The
collateral is held by an agent bank. 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 Master Portfolio and the Funds at June 30, 1996, are
collateralized by U.S. Treasury or federal agency obligations. The repurchase
agreements were entered into on June 28, 1996.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from each Fund's net investment income are declared daily and
distributed monthly to shareholders of the Funds. Any distributions to
shareholders from net realized capital gains are declared and distributed
annually.
28
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
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 each 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 Money
Market Fund has capital loss carryforwards of $1,392 which will expire in the
year 2001, $36,799 which will expire in the year 2002 and $155,089 which will
expire in the year 2003. The U.S. Treasury Money Market Fund has capital loss
carryforwards of $12,441 which will expire in the year 2002 and $13,382 which
will expire in the year 2003. 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 has expired.
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the Funds' administrator, sponsor and distributor,
has incurred expenses in connection with the organization and initial
registration of the Funds. These expenses were charged to the individual Fund or
class and are being amortized on a straightline basis over 60 months from the
date the Fund or class commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into advisory contracts on behalf of the Money Market
and U.S. Treasury Money Market Funds with Wells Fargo Bank, N.A. ("WFB").
Pursuant to the contracts, WFB has agreed to provide the Money Market Fund and
the U.S. Treasury Money Market Fund with investment guidance and policy
direction in connection with daily portfolio management. Under the contracts
with the Money Market Fund and the U.S. Treasury Money Market Fund, WFB is
entitled to be paid a monthly advisory fee at the annual rate of 0.25% of each
Fund's average daily net assets.
The Company has entered into contracts on behalf of the Money Market and U.S.
Treasury Money Market Funds, with WFB whereby WFB is responsible for providing
custody and portfolio accounting services for such Funds. Pursuant to the
contracts, WFB is entitled to an annual fee for custody services at the 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 of each Fund.
The Company also has entered into a contract on behalf of the Money Market and
U.S. Treasury Money Market Funds with WFB whereby WFB provides transfer agency
services for such Funds. Under the contract, 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.
29
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
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. The
Money Market 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 and the National Tax-Free Institutional Money Market
Fund has agreed to pay Stephens at the annual rate of 0.05% of the Fund's
average daily net assets.
The Company has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act,
whereby Class A shares of the Money Market and U.S. Treasury Money Market Funds
may pay Stephens, as compensation for distribution-related services, a monthly
fee at an annual rate of up to 0.25% of the average daily net assets
attributable to the Class A shares of each Fund.
WAIVED FEES AND REIMBURSED EXPENSES
Fees waived and expenses reimbursed for the six months ended June 30, 1996 are
as follows:
<TABLE>
<CAPTION>
EXPENSES
FEES WAIVED REIMBURSED BY
FUND BY WFB STEPHENS
<S> <C> <C>
................................................................................................................
National Tax-Free Institutional Money Market $ 0 $ 12,108
Money Market 61,723 0
U.S. Treasury Money Market 123,407 0
</TABLE>
Fees waived continue at the discretion of WFB.
All of the officers and certain of the directors of the Company are also
officers of Stephens. As of June 30, 1996, Stephens owned 1,344,975 shares of
the Money Market Fund and 123,930 shares of the U.S. Treasury Money Market Fund
and less than 1% of the shares of the National Tax-Free Institutional Money
Market Fund.
3. CAPITAL SHARES TRANSACTIONS
As of June 30, 1996, the Money Market Fund and the U.S. Treasury Money Market
Fund were each authorized to issue 1 billion shares of $.001 par value capital
stock for each class of shares. As of June 30, 1996, the National Tax-Free
Institutional Money Market was authorized to issue 3 billion shares of $.001 par
value capital stock. Transactions in capital shares for the period ended June
30, 1996 and 1994 are disclosed in detail in the Statements of Changes in Net
Assets.
The Money Market Fund has two shareholders who own greater than 5% of the
outstanding shares of the Fund. This concentration of ownership may increase the
Fund's exposure to the risks associated with significant redemptions.
30
<PAGE>
MASTER INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) -
JUNE 30, 1996
<TABLE>
<CAPTION>
TAX-FREE
MONEY
MARKET
MASTER
PORTFOLIO
<S> <C>
.........................................................
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $ 53,160,000
Cash 571,651
Receivables:
Dividends and interest 179,998
TOTAL ASSETS 53,911,649
LIABILITIES
Payables:
Distribution to shareholders 159,530
Due to sponsor and distributor (Note
2) 4,426
Due to adviser (Note 2) 18,706
Other 2,870
TOTAL LIABILITIES 185,532
TOTAL NET ASSETS
$ 53,726,117
INVESTMENTS AT COST (NOTE 3) $ 53,160,000
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
MASTER INVESTMENT TRUST
STATEMENT OF OPERATIONS (UNAUDITED) -
FOR THE PERIOD FROM APRIL 2, 1996 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1996
<TABLE>
<CAPTION>
TAX-FREE
MONEY
MARKET
MASTER
PORTFOLIO
<S> <C>
.......................................................
INVESTMENT INCOME
Interest $ 471,950
TOTAL INVESTMENT INCOME 471,950
EXPENSES (NOTE 2)
Advisory fees 38,945
Amortization of organization
expenses 4,426
Other 4,549
TOTAL EXPENSES 47,920
Less:
Waived fees and reimbursed expenses
(Note 2) (8,869)
NET EXPENSES 39,051
NET INVESTMENT INCOME (LOSS) 432,899
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (1)
Net realized gain (loss) on sale of
investments (2,223)
NET GAIN (LOSS) ON INVESTMENTS (2,223)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 430,676
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
MASTER INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM APRIL 2, 1996 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1996
<TABLE>
<CAPTION>
TAX-FREE
MONEY
MARKET
MASTER
PORTFOLIO
<S> <C>
.........................................................
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 432,899
Net realized gain (loss) on sale of
investments (2,223)
Net change in unrealized appreciation
(depreciation) of investments 0
NET INCREASE (DECREASE) RESULTING FROM
OPERATIONS 430,676
NET INCREASE IN NET ASSETS RESULTING
FROM UNIT TRANSACTIONS 53,292,109
INCREASE (DECREASE) IN NET ASSETS 53,722,785
NET ASSETS:
Beginning net assets 3,332
ENDING NET ASSETS $ 53,726,117
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
MASTER INVESTMENT TRUST
TAX-FREE MONEY MARKET MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Tax-Free Money Market Master Portfolio (the "Master Portfolio") is a 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 eight series of interests: the Asset
Allocation, Capital Appreciation, Cash Investment Trust, Corporate Stock,
Tax-Free Money Market, Short-Term Government-Corporate Income, Short-Term
Municipal Income and U.S. Government Allocation Master Portfolios. 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 represent only the Tax-Free Money Market
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
The Master Portfolio invests only 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 Master Portfolio uses the amortized cost method to value its portfolio
securities and attempts to maintain a constant net asset value of $1.00 per
interest. There is no assurance that the Master Portfolio will meet this goal.
The amortized cost method involves valuing a security at its cost, plus
accretion of discount or minus amortization of premium over the period until
maturity, which approximates market value.
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.
34
<PAGE>
MASTER INVESTMENT TRUST
TAX-FREE MONEY MARKET MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FEDERAL INCOME TAXES
The Master Portfolio intends to qualify for federal income tax purposes as a
partnership. Management of the Master Portfolio therefore believes that it will
not be subject to any federal or state income tax on its income and net capital
gains (if any). However, each investor in the 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 Portfolio's assets, income, gain/loss 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 the Master Portfolio 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 an advisory contract with WFB on behalf of the Master
Portfolio. Pursuant to the contract, WFB furnishes investment guidance and
policy direction in connection with daily portfolio management of the Master
Portfolio. Under the contract, WFB is entitled to receive a monthly advisory fee
at an annual rate of 0.30% of the average daily net assets.
WAIVED FEES
Waived fees for the period from April 2, 1996 (commencement of operations) to
June 30, 1996, were $8,869. Waived fees continue at the discretion of WFB.
35
<PAGE>
LIST OF ABBREVIATIONS
<TABLE>
<S> <C> <C>
ABAG -- Association of Bay Area Governments
ADR -- American Depository Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance, Incorporated
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
LIBOR -- London Interbank Offered Rate
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFMR -- Single Family Mortgage Revenue
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
</TABLE>
36
<PAGE>
[WAGON WHEEL]
OVERLAND
EXPRESS-R-
POST OFFICE BOX 63084
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.
OEX SAR2 9/96
DATED MATERIAL -- PLEASE EXPEDITE
