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[LOGO]
OVERLAND
EXPRESS-REGISTERED TRADEMARK-
ANNUAL REPORT
-----------------
DECEMBER 31, 1995
OVERLAND SWEEP 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 3
Overland Sweep Fund
Manager Comments 5
Statement of Assets and Liabilities 7
Statement of Operations 8
Statements of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 12
Independent Auditors' Report 15
Cash Investment Trust Master Portfolio
Portfolio of Investments 16
Statement of Assets and Liabilities 18
Statement of Operations 19
Statements of Changes in Net Assets 20
Notes to Financial Statements 21
Independent Auditors' Report 24
OVERLAND EXPRESS FUNDS ARE NOT FDIC INSURED, ARE NOT OBLIGATIONS OF WELLS FARGO
BANK, AND ARE NOT GUARANTEED BY THE 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.
WELLS FARGO BANK PROVIDES INVESTMENT ADVISORY SERVICES, SHAREHOLDER SERVICES,
AND CERTAIN OTHER SERVICES FOR THE OVERLAND EXPRESS FUNDS. THE FUNDS ARE
SPONSORED AND DISTRIBUTED BY STEPHENS INC., MEMBER NYSE/SIPC.
THE OVERLAND SWEEP FUND (THE "FEEDER") AND THE CASH INVESTMENT TRUST 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.
1
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2
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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.
3
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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 restructurings, 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 the Fund 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.
4
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OVERLAND SWEEP FUND (CASH INVESTMENT TRUST
MASTER PORTFOLIO)
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 OCTOBER 1, 1991.
MADELINE GISH, LIQUIDITY MANAGEMENT SPECIALIST/PORTFOLIO MANAGER. MS GISH JOINED
WELLS FARGO BANK IN 1989 AS THE PORTFOLIO COORDINATOR FOR THE MUTUAL FUNDS
DIVISION. SINCE JOINING THE FIXED INCOME GROUP IN 1992, SHE HAS TRADED
ADJUSTABLE-RATE MORTGAGE SECURITIES IN RESEARCH AND TRADING AND IS CURRENTLY
MANAGING TAXABLE LIQUIDITY PORTFOLIOS. SHE HOLDS A BACHELOR OF SCIENCE DEGREE IN
BUSINESS ADMINISTRATION FROM THE UNIVERSITY OF KANSAS AND IS A CHARTERED
FINANCIAL ANALYST CANDIDATE. SHE HAS CO-MANAGED THE FUND SINCE MAY 1, 1993.
Q. HOW DID THE OVERLAND SWEEP FUND (THE "FUND") PERFORM DURING 1995?
A. The Fund's seven day yield for the period ended December 31, 1995 was 4.61%.
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 December 31, 1995 the Fund was composed of 62% commercial paper, 11%
federal agencies, 10% floating rate bonds and 17% cash equivalents. 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, NOR BY WELLS FARGO BANK.
5
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6
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STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<TABLE>
<CAPTION>
OVERLAND SWEEP FUND
<S> <C>
</TABLE>
................................................................................
<TABLE>
<S> <C>
ASSETS
INVESTMENTS:
In interests in Cash Investment Trust, at value $ 1,209,960,920
Receivables:
Interest 5,346,989
Organization expenses, net of amortization 26,071
Prepaid expenses 10,383
TOTAL ASSETS 1,215,344,363
LIABILITIES
Payables:
Distribution to shareholders 4,428,431
Due to sponsor and distributor (Note 2) 1,087,157
Due to transfer agent (Note 2) 597,191
Other 48,483
TOTAL LIABILITIES 6,161,262
NET ASSETS
$ 1,209,183,101
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
Net Assets $ 1,209,183,101
Shares Outstanding 1,209,183,101
Net Asset Value Per Share $ 1.00
</TABLE>
................................................................................
At December 31, 1995 net assets were comprised predominately of paid-in-capital.
The Overland Sweep Fund seeks to maintain a net asset value of $1.00 per share.
There is no assurance that the Fund will be able to do so.
The accompanying notes are an integral part of these financial statements.
7
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STATEMENT OF OPERATIONS
- FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
OVERLAND SWEEP FUND
<S> <C>
</TABLE>
................................................................................
<TABLE>
<S> <C>
INVESTMENT INCOME ALLOCATED FROM CASH INVESTMENT TRUST
Interest income allocated from Cash Investment Trust $ 51,213,316
Expenses allocated from Cash Investment Trust (2,815,815)
Waived expenses from Cash Investment Trust 252,531
NET INVESTMENT INCOME ALLOCATED FROM CASH INVESTMENT TRUST 48,650,032
EXPENSES (NOTE 2):
Adminstration fees 215,624
Transfer Agency fees 3,018,737
Distribution fees 4,743,731
Amortization of organization expenses 35,004
Legal and audit 112,385
Other 45,452
TOTAL EXPENSES 8,170,933
NET INVESTMENT INCOME AND NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 40,479,099
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
8
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
. For The Year OVERLAND SWEEP FUND
For The Year
Ended Dec. 31, 1995 Ended Dec. 31, 1994
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income and net increase in net assets resulting
from operations $ 40,479,099 $ 18,338,584
DISTRIBUTION TO SHAREHOLDERS:
From net investment income (40,479,099) (18,338,412)
CAPITAL SHARE TRANSACTIONS AT $1.00 PER SHARE:
Shares sold 3,237,176,288 2,310,876,149
Dividend reinvestments 5,201 3,061
Cost of shares redeemed (2,840,557,449) (2,026,392,087)
NET INCREASE IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS 396,624,040 284,487,123
INCREASE IN NET ASSETS
396,624,040 284,487,295
NET ASSETS:
Beginning net assets 812,559,061 528,071,766
ENDING NET ASSETS $ 1,209,183,101 $ 812,559,061
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
9
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FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OVERLAND SWEEP FUND(3)
..............................................
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 $1.00 $1.00 $1.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.03 0.02
----- ----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income (0.05) (0.03) (0.02)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT ANNUALIZED) 4.80% 3.11% 1.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $1,209,183 $812,559 $528,072
Number of shares outstanding, end of period (000) 1,209,183 812,559 528,072
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)(4):
Ratio of expenses to average net assets(1) 1.25% 1.25% 1.25%
Ratio of net investment income to average net assets(2) 4.70% 2.92% 1.67%
............................................................................................................
(1) Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses: 1.28% 1.33% 1.31%
(2) Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses: 4.67% 2.84% 1.61%
</TABLE>
................................................................................
(3) THE FUND COMMENCED OPERATIONS OCTOBER 1, 1991
(4) THESE RATIOS INCLUDE EXPENSES CHARGED TO CIT. PRIOR YEAR RATIOS HAVE
BEEN ADJUSTED FOR COMPARABILITY PURPOSES.
The accompanying notes are an integral part of these financial statements.
10
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<TABLE>
<CAPTION>
OVERLAND SWEEP FUND(3) (CONT.)
..............................
Year Ended Period Ended
Dec. 31, 1992 Dec. 31, 1991
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00
------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.03 0.01
----- -----
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.01)
----- -----
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00
------ ------
------ ------
TOTAL RETURN (NOT
ANNUALIZED) 2.31% 0.93%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $253,617 $14,010
Number of shares
outstanding, end of
period (000) 253,628 14,010
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED)(4):
Ratio of expenses to
average net assets(1) 1.24% 1.23%
Ratio of net investment
income to average net
assets(2) 2.20% 3.46%
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses: 1.51% 6.92%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses: 1.93% (2.23)%
</TABLE>
................................................................................
(3) THE FUND COMMENCED OPERATIONS OCTOBER 1, 1991
(4) THESE RATIOS INCLUDE EXPENSES CHARGED TO CIT. PRIOR YEAR RATIOS HAVE
BEEN ADJUSTED FOR COMPARABILITY PURPOSES.
The accompanying notes are an integral part of these financial statements.
11
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OVERLAND SWEEP FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Overland Sweep Fund (the "Fund") is a series of Overland Express Funds, Inc.
(the "Company"), which is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a diversified, open-end management investment
company. The Company commenced operations on April 7, 1988 and consists of
twelve separate funds (the "Funds"): the Asset Allocation, California Tax-Free
Bond, California Tax-Free Money Market, Money Market, Municipal Income, Overland
Sweep, Short-Term Government-Corporate Income, Short-Term Municipal Income,
Strategic Growth, U.S. Government Income, U.S. Treasury Money Market and
Variable Rate Government Funds. These financial statements represent only the
Overland Sweep Fund (the "Fund").
The following significant accounting policies are consistently followed by the
Fund 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 Fund invests only in interests of the Cash Investment Trust Master Portfolio
("CIT") of the Master Investment Trust (the "Trust"). CIT has the same
investment objective as the Fund. The value of the Fund's investment in CIT
reflects the Fund's interest in CIT (99.99%). CIT 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.
CIT 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 CIT 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
The Fund records security transactions in CIT on the date interests are
purchased or sold (trade date). Interest income is recognized on a daily accrual
basis. Realized gains or losses are reported on the basis of identified cost of
securities delivered.
12
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OVERLAND SWEEP FUND
NOTES TO FINANCIAL STATEMENTS
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders are declared daily and distributed monthly. Any
distributions to shareholders from net realized capital gains are declared and
distributed annually.
FEDERAL INCOME TAXES
The Company's policy is for the Fund to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute substantially all its net investment income to its shareholders.
Therefore, no federal or state income tax provision is required. Cost for
federal income tax purposes is the same as for financial statement purposes. The
Overland Sweep Fund has a capital loss carryforward of $85,119, which will
expire in the year 2002 and $606,577 which will expire in 2003. The Board of
Directors intends to offset net capital gains with the capital loss carryforward
until the 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 Fund's administrator, sponsor and distributor,
has incurred expenses in connection with the Fund's organization and initial
registration. These expenses are being amortized over 60 months on a
straightline basis from the date the Fund commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a contract on behalf of the Fund with Wells Fargo
Bank, N.A. ("WFB,") whereby WFB will provide transfer agent and shareholder
servicing functions for the Fund. Under the contract, WFB is entitled to be
compensated at an annual rate of 0.35% of the average daily net assets of the
Fund.
The Company has entered into an administration agreement on behalf of the Fund
with Stephens. Under the agreement, Stephens will provide supervisory and
administrative services to the Fund. For providing supervisory and
administrative services, the Fund has agreed to pay Stephens a monthly fee at
the annual rate of 0.025% of its average daily net assets.
Under the contracts and agreements described above, WFB and Stephens may each
voluntarily waive fees payable or reimburse expenses to the Fund. Reimbursed
expenses and waived fees continue at the discretion of the transfer agent,
administrator and directors.
The Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan"), whereby the Company pays Stephens, as compensation for
distribution-related services, a monthly fee at an annual rate of up to 0.55% of
the average daily net assets of the Fund. The actual fee payable to Stephens is
determined within such limit, from time to time by mutual agreement between the
Company and Stephens.
13
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OVERLAND SWEEP FUND
NOTES TO FINANCIAL STATEMENTS
Certain officers and directors of the Company are also officers of Stephens. As
of December 31, 1995, Stephens owned 113,706 shares of the Overland Sweep Fund.
3. CAPITAL SHARE TRANSACTIONS
As of December 31, 1995, the Overland Sweep Fund was authorized to issue 3
billion shares of capital stock with a par value of $0.001. Transactions in
capital shares for the years ended December 31, 1995 and 1994 are disclosed in
detail in the Statement of Changes in Net Assets.
4. ORANGE COUNTY, CALIFORNIA DEBT SECURITIES
During the year CIT held securities 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 securities on July 10, 1995. The
bankruptcy court trustee approved an extension of the securities' 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 Trust entered into a Credit Enhancement Agreement
(the "Agreement") with WFB, pursuant to which CIT 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 securities such that Bank of America would make
certain payments to CIT under defined circumstances.
During the period from September 19, 1995 through October 17, 1995, CIT sold all
of the Orange County securities subject to the Agreement. Under the terms of the
Agreement, the sale of such securities did not result in any payments from Bank
of America to CIT.
14
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TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OVERLAND EXPRESS FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities of the
Overland Sweep Fund (one 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, 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 the
Overland Sweep Fund of Overland Express Funds, Inc. as of December 31, 1995, the
results of its operations, the changes in its net assets and its financial
highlights for the periods indicated herein in conformity with generally
accepted accounting principles.
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1996
15
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CASH INVESTMENT TRUST MASTER PORTFOLIO - 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 - 62.42%
$ 20,000,000 Asset Securitization Cooperative Corp++ 5.65 % 02/29/96 $ 19,814,806
26,000,000 Asset Securitization Cooperative Corp++ 5.70 01/23/96 25,909,433
50,000,000 Associates Corp of North America 5.60 04/11/96 49,214,444
25,000,000 AT & T Corp 5.65 02/13/96 24,831,285
25,000,000 Cargill Financial Services Corp++ 5.62 02/13/96 24,832,181
22,500,000 Ciesco LP++ 5.65 02/14/96 22,344,625
50,000,000 Corporate Receivables Corp++ 5.55 03/06/96 49,498,958
20,000,000 Daimler-Benz North America Corp 5.50 03/28/96 19,734,167
37,000,000 Daimler-Benz North America Corp 5.67 02/15/96 36,737,763
40,000,000 Den Danske Corp Inc 5.67 02/09/96 39,754,300
20,000,000 Glaxo Wellcome Plc++ 5.65 02/12/96 19,868,167
25,000,000 Glaxo Wellcome Plc++ 5.70 01/12/96 24,956,458
25,000,000 Greenwich Funding Corp++ 5.55 03/18/96 24,703,229
30,000,000 Greenwich Funding Corp++ 5.68 02/27/96 29,730,200
25,000,000 Hanson Finance Plc 5.65 02/28/96 24,772,431
50,000,000 National Australia Funding Inc 5.57 03/11/96 49,458,472
25,000,000 National Rural Utilities Cooperative Finance
Corp 5.63 02/22/96 24,796,694
50,000,000 New Center Asset Funding++ 5.60 03/15/96 49,424,444
50,000,000 Philip Morris Co Inc 5.55 02/07/96 49,714,792
25,000,000 Sony Capital Corp++ 5.67 02/14/96 24,826,750
20,000,000 Sony Capital Corp++ 5.67 02/20/96 19,842,500
25,000,000 Sweden (Kingdom of) 5.65 02/28/96 24,772,431
25,000,000 Swedish Export Credit Corp 5.48 03/26/96 24,676,528
26,100,000 U.S. Borax & Chemical Corp++ 5.64 02/27/96 25,866,927
25,000,000 WCP Funding Corp++ 5.65 02/28/96 24,772,431
------------
TOTAL COMMERCIAL PAPER $754,854,416
SHORT TERM FEDERAL AGENCIES - 11.54%
$ 50,000,000 Federal Home Loan Bank 5.50 % 01/31/96 $ 49,770,833
50,000,000 Federal Home Loan Mortgage Corp 5.45 01/22/96 49,841,042
40,000,000 Federal National Mortgage Assoc 5.45 01/17/96 39,903,111
------------
TOTAL SHORT TERM FEDERAL AGENCIES $139,514,986
</TABLE>
16
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO - DECEMBER 31, 1995
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
VARIABLE AND FLOATING RATE BONDS - 9.92%
$ 25,000,000 Comerica Inc 5.84 % 10/30/96 $ 24,987,963
40,000,000 FCC National Bank 5.59 10/31/96 39,983,979
30,000,000 First Bank N.A. 5.90 01/17/96 29,999,743
25,000,000 PNC Bank Corp 5.64 07/29/96 24,995,824
------------
TOTAL VARIABLE AND FLOATING RATE BONDS $119,967,509
U.S. TREASURY BILLS - 12.21%
$ 152,000,000 U.S. Treasury Bills 5.19 %F 07/25/96 $147,643,386
REPURCHASE AGREEMENTS - 4.33%
$ 52,415,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.75 01/02/96 $ 52,415,000
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $1,214,395,297)* (Note 1) 100.42 % $1,214,395,297
Other Assets and Liabilities, Net (0.42 ) (5,060,324)
---------- --------------
TOTAL NET ASSETS 100.00 % $1,209,313,707
---------- --------------
---------- --------------
.................................................................................
</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.
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.
17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<TABLE>
<CAPTION>
CASH INVESTMENT TRUST
MASTER PORTFOLIO
<S> <C>
ASSETS
INVESTMENTS:
In securities, at value and identified cost $ 1,214,395,297
Cash 18,347
Receivables:
Interest 740,119
Organization expenses, net of amortization 18,350
Prepaid expenses 9,370
TOTAL ASSETS 1,215,181,483
LIABILITIES
Allocations to unitholders 5,347,245
Due to sponsor (Note 2) 24,281
Due to adviser (Note 2) 480,842
Other 15,408
TOTAL LIABILITIES 5,867,776
TOTAL NET ASSETS
$ 1,209,313,707
</TABLE>
................................................................................
At December 31, 1995, net assets were comprised predominately of
paid-in-capital.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
CASH INVESTMENT TRUST
MASTER PORTFOLIO
<S> <C>
INVESTMENT INCOME
Interest income $ 51,231,618
EXPENSES (NOTE 2):
Advisory fees 2,157,654
Administration fees 215,765
Custody fees 149,559
Portfolio accounting fees 234,446
Legal and Audit fees 48,827
Amortization of organization expenses 25,650
Other 12,357
TOTAL EXPENSES 2,844,258
Less:
Waived fees (Notes 2) (255,082)
NET EXPENSES 2,589,176
NET INVESTMENT INCOME 48,642,442
REALIZED LOSS ON INVESTMENTS (NOTE 3)
(606,617)
NET INVESTMENT INCOME AND NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 48,035,825
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CASH INVESTMENT TRUST
. For The MASTER PORTFOLIO
For The
Year Ended Year Ended
Dec. 31, 1995 Dec. 31,1994
<S> <C> <C>
INCREASE IN NET ASSETS
Net investment income and net increase in net assets resulting
from operations $ 48,642,442 $ 23,759,529
Net realized loss on sale of investments (606,617) (85,297)
NET INCREASE RESULTING FROM OPERATIONS 48,035,825 23,674,232
NET INCREASE IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS 348,618,395 260,993,235
INCREASE IN NET ASSETS 396,654,220 284,667,467
NET ASSETS:
Beginning net assets 812,659,487 527,992,020
ENDING NET ASSETS $ 1,209,313,707 $ 812,659,487
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICES
ORGANIZATION
The Cash Investment Trust Master Portfolio ("CIT") is a series of Master
Investment Trust (the "Trust"), a business trust organized under the laws of
Delaware as of September 23, 1991. The Declaration of Trust permits the issuance
of an unlimited number of interests ("Interests"). Substantially all of CIT's
outstanding interests are owned by Overland Sweep Fund, a series of Overland
Express Funds, Inc. The following significant accounting policies are
consistently followed by CIT 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
CIT 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.
CIT uses the amortized cost method to value its portfolio securities and
attempts to maintain a constant net asset value value of $1.00 per interest.
There is no assurance that CIT 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
CIT records security transactions on the date the securities are purchased or
sold (trade date). Interest income is recognized on an accrual basis. 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
("repurchase agreements") are treated as collateralized financing transactions
and are recorded at their contracted resale amounts. These repurchase
agreements, if any, are detailed in CIT's Portfolio of Investments. The adviser
to CIT pools its cash with the cash of other funds advised by the adviser and
invests in repurchase agreements entered into by CIT and the funds. 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
21
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
resale price. The repurchase agreement held by CIT at December 31, 1995 are
collateralized by U.S. Treasury or federal agency obligations. The repurchase
agreement was entered into on December 29, 1995.
FEDERAL INCOME TAXES
CIT intends to qualify for federal income tax purposes as a partnership. CIT
therefore believes that it will not be subject to any federal income tax on its
income and any net capital gains. However, each investor in CIT will be taxable
on its distributive share of the partnership's income for purposes of
determining its federal income tax on its income and any net capital gains. The
determination of such share will be made in accordance with the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations promulgated
thereunder.
It is intended that CIT's assets, income and distributions will be managed in
such a way that a regulated investment company investing in CIT will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the
investment company invested all of its assets in CIT.
ORGANIZATION EXPENSES
Costs incurred in connection with organization and initial registration as an
investment company under the 1940 Act are being amortized on a straightline
basis over 60 months from the date CIT commenced operation.
If any of the initial interests of CIT are redeemed during the amortization
period, the amount paid by CIT on any withdrawal of initial interests in the
Trust will be reduced by a portion of any unamortized organization expenses,
determined by the proportion of the amount of interests withdrawn to the initial
interests of all holders after taking into account any prior withdrawals of any
such initial interests.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into an advisory contract with Wells Fargo Bank, N.A.
("WFB"). Pursuant to the contract, WFB furnishes to the Trust investment
guidance and policy direction in connection with daily portfolio management of
the Trust. Under the contract WFB is entitled to be paid a monthly advisory fee
based on an annual rate of 0.25% of average daily net assets. For the year ended
December 31, 1995, WFB retained payment of $1,902,572, after waivers of
$255,082, in advisory fees payable to it under the advisory contract.
The Trust has entered into a contract with WFB, whereby WFB will provide custody
and portfolio accounting services for the Trust. WFB is entitled to be
compensated for these services plus certain transaction expenses at an annual
rate of 0.0167% of average daily net assets of the Trust.
For portfolio accounting WFB is entitled to be compensated at a base rate of
$2,000 monthly plus 0.07% for the first $50 million, 0.045% for the next $50
million, and 0.020% over $100 million of average daily net assets
22
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
On behalf of CIT the Trust has entered into administration and distribution
agreements with Stephens. Under these agreements, Stephens will provide
supervisory, administrative and distribution services to CIT. For providing
supervisory and administrative services, the Trust pays Stephens a monthly fee
at the annual rate of 0.025% of CIT's average daily net assets.
3. ORANGE COUNTY, CALIFORNIA DEBT SECURITIES
During the year CIT held securities 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 securities on July 10, 1995. The
bankruptcy court trustee approved an extension of the securities' 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 Trust entered into a Credit Enhancement Agreement
(the "Agreement") with WFB, pursuant to which CIT 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 securities such that Bank of America would make
certain payments to CIT under defined circumstances.
During the period from September 19, 1995, through October 17, 1995, CIT sold
all of the Orange County securities subject to the Agreement. Under the terms of
the Agreement, the sale of such securities did not result in any payments from
Bank of America to CIT.
23
<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 Cash Investment Trust Master Portfolio (one of
the series 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 for each of the two years in the period then ended, and
financial highlights for the periods indicated herein. 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 Cash
Investment Trust Master Portfolio of Master Investment Trust as of December 31,
1995, the results of its operations, the changes in its net assets and its
financial highlights for the periods indicated herein in conformity with
generally accepted accounting principles.
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1996
24
<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]
OVERLAND
EXPRESS-REGISTERED TRADEMARK-
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.
THIS BOOKLET INCLUDES THE ANNUAL REPORT AND A
PROSPECTUS SUPPLEMENT. THIS PROSPECTUS SUPPLEMENT
APPEARS ON THE INSIDE BACK COVER.
OEX AR SWP 2/96
DATED MATERIAL - PLEASE EXPEDITE
