<PAGE>
[OVERLAND EXPRESS LOGO]
Annual Report
......................................
DECEMBER 31, 1996
OVERLAND SWEEP FUND
OVERLAND EXPRESS FUNDS ARE NOT
FDIC INSURED AND ARE NOT OBLIGATIONS OF
OR GUARANTEED BY WELLS FARGO BANK.
<PAGE>
[LOGO]
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS......................................2
MANAGER COMMENTS............................................4
OVERLAND SWEEP FUND
Statement of Assets and Liabilities.......................5
Statement of Operations...................................6
Statements of Changes in Net Assets.......................7
Financial Highlights......................................8
Notes to Financial Statements............................10
Independent Auditors' Report.............................13
PORTFOLIO OF INVESTMENTS
Cash Investment Trust Master Portfolio...................14
CASH INVESTMENT TRUST
Statement of Assets and Liabilities......................17
Statement of Operations..................................18
Statements of Changes in Net Assets......................19
Notes to Financial Statements............................20
Independent Auditors' Report.............................23
LIST OF ABBREVIATIONS......................................24
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 THEIR FEES OR ASSUMED
RESPONSIBILITY FOR OTHER EXPENSES, WHICH HAS REDUCED
OPERATING EXPENSES FOR SHAREHOLDERS. WITHOUT THESE
REDUCTIONS, THE FUNDS' RETURNS WOULD HAVE BEEN LOWER.
THE OVERLAND SWEEP FUND (THE "FEEDER") AND THE CASH
INVESTMENT TRUST (THE "MASTER") ARE ORGANIZED AS A
"MASTER-FEEDER" STRUCTURE. INSTEAD OF INVESTING DIRECTLY
IN INDIVIDUAL PORTFOLIO SECURITIES, THE FEEDER FUND, WHICH
IS OFFERED TO THE PUBLIC, HOLDS INTERESTS IN THE MASTER
WHICH INVESTS IN INDIVIDUAL SECURITIES. REFERENCES TO THE
FUND ARE TO THE FEEDER OR MASTER AS THE CONTEXT REQUIRES.
THE MASTER PORTFOLIO IS ADVISED BY WELLS FARGO BANK.
WELLS FARGO BANK PROVIDES INVESTMENT ADVISORY SERVICES,
ADMINISTRATIVE SERVICES, SHAREHOLDER SERVICES AND CERTAIN
OTHER SERVICES FOR THE OVERLAND EXPRESS FUNDS. THE FUNDS
ARE SPONSORED, DISTRIBUTED AND CO-ADMINISTERED BY STEPHENS
INC., MEMBER NYSE/SIPC.
1
<PAGE>
OUR MESSAGE TO YOU
We appreciate the confidence that you have expressed in us by investing in the
Overland Express Funds. Thanks to the loyalty of our investors, Overland Express
has grown to a family of 14 mutual funds that includes cash management, current
income and capital growth options. Since 1988, investors have depended upon
Overland Express to deliver quality service and value. In the coming year we
will work hard to continue to meet your investment needs by providing reliable
service and effective investment options.
We encourage you to review this Annual Report. It includes commentaries from the
Funds' portfolio managers offering insights into each fund's performance and
portfolio strategies as well as the overall market environment. The Annual
Report also includes detailed financial information for each fund and a list of
the fund's portfolio holdings.
THE MARKETS
The U.S. economy sent mixed signals during 1996. Rapid growth in the second
quarter gave way to a more moderate growth rate during the second half of the
year. The overall growth rate for 1996 was in line with the economy's long-term
average and fairly typical for an expansion phase of the business cycle.
Reasonably strong profit growth during 1996 helped sustain an impressive rally
in the stock market, led by large-cap issues. The total return on S&P 500 stocks
was an impressive 23%. Together with the 38% return in 1995, this was the
market's best back-to-back performance in forty years. Bonds, on the other hand,
suffered from gyrating interest rates. The total return on the Lehman Brothers
Municipal Bond Index was less than 4% in 1996, compared to 22% in 1995.
A YEAR OF AWARENESS
The political and economic environment in 1996 left many investors with a
heightened awareness of the need for financial planning. Aging "baby boomers"
and other investors have realized the importance of retirement planning and
personal savings and, as a result, are increasingly emphasizing saving over
spending. On-going national debates over Medicare reform and Social Security
reform have led Americans in increasing numbers to realize that our future
financial security is becoming our own responsibility. By the end of 1996,
mutual fund assets in the United States totaled over $3.5 trillion, up from
about $2.8 trillion at the end of 1995.
1997, THE YEAR AHEAD
Investors look to 1997 with both optimism and anxiety. Investor optimism is
based on strength in the economy that is expected to propel consumer-led growth
during the early part of the year, with an assist from exports and housing.
Investor anxiety results from worries that higher interest rates could result
from an economic revival. The economy appears headed for another year of
moderate growth in 1997, restrained by heavy consumer-debt loads and by a lack
of "pent-up" demand. A stronger dollar also could undercut export growth by
eroding U.S. competitiveness. Higher operating rates may nudge inflation higher
during the year. But we believe the annual inflation rate will remain low, at
3.5% or less. Because labor market conditions already are tight, we believe that
the Federal
2
<PAGE>
Reserve probably won't wait long before raising short-term interest rates if the
economy shows signs of gaining momentum. Any interest rate increases should,
however, be restrained by historically low inflation rates and efforts to reduce
the federal government's budget deficit.
1996 FUND PERFORMANCE
The Overland Express Funds performed well overall for the year. Our capital
growth funds generally realized healthy returns. Our cash management and current
income funds posted steady performance as well.
The Overland Express Funds also marked two milestone events in 1996. In January,
the Strategic Growth Fund celebrated its third anniversary, posting strong
long-term returns as the fund's managers employed a consistent approach of
targeting growth opportunities through strategic equity investing. And in
September, we offered our newest fund, the Small Cap Strategy Fund. This Fund is
managed by the Wells Fargo Growth Equity Team, the same team that manages the
Strategic Growth Fund. Targeting the small capitalization segment of the stock
market, this fund reflects the ongoing efforts of Overland Express to meet
investors needs with smart and efficient investment options.
OUR COMMITMENT TO INVESTMENT QUALITY
We believe in a conservative, straightforward approach to investing. Working
with your financial advisor is the first step in planning an effective long-term
investment strategy. We also believe that a good understanding of your
investments is essential to making effective investment decisions. So we
encourage you to read this Annual Report. We believe that you will find it to be
useful and informative.
Just as we've done in the past, we will continue to work diligently to help you
reach your investment goals.
OVERLAND EXPRESS FUNDS, FEBRUARY 1997
3
<PAGE>
OVERLAND SWEEP FUND
(CASH INVESTMENT TRUST MASTER PORTFOLIO)
The Overland Sweep Fund seeks to provide investors with a high level of current
income while preserving capital and liquidity, by investing in high-quality,
short-term investments.
The Fund's seven-day simple yield for the period ended December 31, 1996 was
4.22%. The Fund achieved its goal of maintaining principal stability at a $1.00
per share net asset value while providing competitive money market yields.
FUND REVIEW
In January 1996, the Federal Reserve lowered the federal funds target rate by
0.25% from 5.50% to 5.25%. Nevertheless, short-term rates rose throughout the
first half of the year. The Fund purchased securities in the 9-12 month range in
July as the yield curve steepened. This turned out to be the high in yields for
the year as the economy showed signs of slowing. The Fund generated consistent
yields throughout the year, while providing a high quality, liquid portfolio.
During 1996 the Fund purchased floating-rate securities. Floating-rate
securities are those securities whose interest rates are tied to an index. These
securities typically provide competitive returns and help to reduce risk related
to changing interest rates. These securities normally track a specific index,
such as Treasury bills, LIBOR or the prime rate.
1997 OUTLOOK
With the current U.S. expansion continuing and the stock market coming off
another year of strong gains, money market funds in general could see cash
inflows as a result of cautious investors moving money to a more stable asset
class. Several regulatory changes permitting a broader use of money market funds
may increase assets in money funds in 1997.
We believe that the Federal Reserve is likely to leave the federal funds target
rates unchanged in the first quarter of 1997. We expect the next Federal Reserve
move will be to raise interest rates. Tightness in the labor markets and
relatively high capacity utilization in the manufacturing sector could trigger
an increase in inflation. With the money market yield curve very flat,
maturities of 2-3 months offer the best value, given a neutral Federal Reserve
interest rate policy. As we begin the year, LIBOR-based floaters are attractive
and are expected to outperform Prime and T-Bill-based floaters since higher
interest rates are anticipated.
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, NOR BY
WELLS FARGO BANK.
THE SEVEN-DAY SIMPLE YIELD IS FOR THE SEVEN-DAY PERIOD ENDED DECEMBER 31, 1996.
YIELD REFLECTS FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND
EXPENSES. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1996
<TABLE>
<CAPTION>
OVERLAND SWEEP
FUND
<S> <C>
...........................................................
ASSETS
INVESTMENTS:
In interests in Cash Investment Trust $2,002,862,594
Receivables:
Interest 7,936,602
TOTAL ASSETS 2,010,799,196
LIABILITIES
Payables:
Distribution to shareholders 6,498,779
Due to sponsor and distributor (Note
2) 956,041
Due to transfer agent (Note 2) 556,044
Other 62,927
TOTAL LIABILITIES 8,073,791
TOTAL NET ASSETS
$2,002,725,405
COMPUTATION OF NET ASSET VALUE
Net assets $2,002,725,405
Shares outstanding 2,003,291,525
Net asset value per share $1.00
</TABLE>
................................................................................
At December 31, 1996, net assets were comprised predominantly 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.
5
<PAGE>
STATEMENT OF OPERATIONS -
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
OVERLAND
SWEEP FUND
<S> <C>
........................................................
INVESTMENT INCOME
Interest income allocated from Cash
Investment Trust $72,347,404
Expenses allocated from Cash
Investment Trust (4,307,675)
Waived expenses allocated from Cash
Investment Trust 335,773
TOTAL INVESTMENT INCOME 68,375,502
EXPENSES (NOTE 2):
Administration fees 317,668
Transfer agency fees 4,637,643
Distribution fees 7,290,299
Amortization of organization expenses 26,071
Legal and audit fees 105,190
Other 103,616
TOTAL EXPENSES 12,480,487
Less:
Waived fees (18,502)
NET EXPENSES 12,461,985
NET INVESTMENT INCOME 55,913,517
REALIZED GAIN ON INVESTMENTS ALLOCATED
FROM CASH INVESTMENT TRUST 136,401
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $56,049,918
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
OVERLAND SWEEP FUND
...................................
For the For the
Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 55,913,517 $ 40,479,099
Realized gain on investments allocated
from Cash Investment Trust 136,401 0
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 56,049,918 40,479,099
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (55,913,517) (40,479,099)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 4,856,143,166 3,237,176,288
Reinvestment of dividends 4,923 5,201
Cost of shares redeemed (4,062,742,186) (2,840,557,449)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 793,405,903 396,624,040
INCREASE IN NET ASSETS 793,542,304 396,624,040
NET ASSETS:
Beginning net assets 1,209,183,101 812,559,061
ENDING NET ASSETS $ 2,002,725,405 $ 1,209,183,101
SHARES ISSUED AND REDEEMED:
Shares sold 4,856,835,054 3,237,176,288
Shares issued in reinvestment of
dividends 4,923 5,201
Shares redeemed (4,062,731,553) (2,840,557,449)
NET INCREASE IN SHARES OUTSTANDING 794,108,424 396,624,040
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
OVERLAND SWEEP FUND
..............................
Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.04 0.05
----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income (0.04) (0.05)
----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
------ ------
------ ------
TOTAL RETURN (NOT ANNUALIZED) 4.29% 4.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $2,002,725 $1,209,183
Number of shares outstanding, end of period (000) 2,003,292 1,209,183
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)(3):
Ratio of expenses to average net assets(1) 1.24% 1.25%
Ratio of net investment income to average net assets(2) 4.20% 4.70%
...........................................................................................................
(1) Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses: 1.26% 1.28%
(2) Ratio of net investment income to average net assets prior to waived
fees and reimbursed expenses: 4.18% 4.67%
</TABLE>
................................................................................
(3) THESE RATIOS INCLUDE EXPENSES CHARGED TO CIT. PRIOR TO 1995 RATIOS
HAVE BEEN ADJUSTED FOR COMPARABILITY PURPOSES.
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
OVERLAND SWEEP FUND (CONT.)
..............................................
Year Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.03 0.02 0.03
----- ----- -----
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.02) (0.03)
----- ----- -----
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED) 3.11% 1.97% 2.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $812,559 $528,072 $253,617
Number of shares
outstanding, end of
period (000) 812,559 528,072 253,628
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED)(3):
Ratio of expenses to
average net assets(1) 1.25% 1.25% 1.24%
Ratio of net investment
income to average net
assets(2) 2.92% 1.67% 2.20%
............................................................................................................
(1) Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses: 1.33% 1.31% 1.51%
(2) Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses: 2.84% 1.61% 1.93%
</TABLE>
................................................................................
(3) THESE RATIOS INCLUDE EXPENSES CHARGED TO CIT. PRIOR TO 1995 RATIOS
HAVE BEEN ADJUSTED FOR COMPARABILITY PURPOSES.
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
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 diversified funds (the "Funds"): the Asset Allocation, Money
Market, Municipal Income, National Tax-Free Institutional Money Market, Overland
Sweep, Short-Term Government-Corporate Income, Short-Term Municipal Income,
Small Cap Strategy, Strategic Growth, U.S. Government Income, U.S. Treasury
Money Market and Variable Rate Government Funds, and two non-diversified funds:
the California Tax-Free Bond and California Tax-Free Money Market Funds. These
financial statements represent only the Overland Sweep 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 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 accrued daily. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
10
<PAGE>
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 of its net investment income to its
shareholders. Therefore, no federal or state income tax provision is required.
The Overland Sweep Fund has a capital loss carryforward of $555,468 which will
expire in the year 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.
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 by the Fund over 60 months on a
straight-line basis from the date the Fund commenced operations. The
organization expenses were fully amortized at December 31, 1996.
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 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 a contract on behalf of the Fund with WFB whereby
WFB provides transfer agency services for the Funds. Under the transfer agency
agreement, WFB is paid a per account fee and other related costs with a minimum
monthly fee of $3,000 per fund. Effective February 1, 1997, WFB will be entitled
to receive transfer agency fees at an annual rate of 0.02% 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 provides 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's Board of Directors has approved a change in fund administrative
duties. Effective May 1, 1997, WFB will become Administrator to the Fund and
Stephens will become Co-Administrator to the Fund. WFB and Stephens will be
entitled to receive monthly fees at the annual rates of 0.04% and 0.02%,
respectively, of the average daily net assets of the Fund.
11
<PAGE>
OVERLAND SWEEP FUND
NOTES TO FINANCIAL STATEMENTS
The Company has adopted a plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (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.
All officers and one director of the Company are also officers of Stephens. At
December 31, 1996, Stephens owned 119,039 shares of the Overland Sweep Fund.
3. CAPITAL SHARE TRANSACTIONS
As of December 31, 1996, the Overland Sweep Fund was authorized to issue 3
billion shares of capital stock with a par value of $0.001 per share.
Transactions in capital shares for the years ended December 31, 1996 and 1995
are disclosed in detail in the Statements of Changes in Net Assets.
12
<PAGE>
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, 1996, 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 confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian 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, 1996, 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.
[KPMG SIG.]
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1997
13
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO - DECEMBER 31, 1996
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 4.71%
U.S. TREASURY BILLS - 4.71%
$ 70,000,000 U.S. Treasury Bills 5.17 %F 02/06/97 $ 69,664,700
25,000,000 U.S. Treasury Bills 5.21 F 04/03/97 24,668,417
------------
TOTAL U.S. TREASURY SECURITIES $ 94,333,117
CERTIFICATES OF DEPOSITS - 11.69%
$ 20,000,000 Bank of Nova Scotia 5.44 % 02/10/97 $ 20,000,660
50,000,000 Morgan Guaranty Trust 5.38 02/13/97 50,000,589
50,000,000 National Westminster Bank Plc 5.39 02/03/97 50,000,381
40,000,000 Societe Generale 6.13 09/12/97 40,132,823
50,000,000 Union Bank of California 5.50 08/21/97 50,000,000
9,000,000 Union Bank of California 5.71 03/17/97 9,004,288
15,000,000 Union Bank of California 5.75 02/04/97 15,003,256
------------
TOTAL CERTIFICATES OF DEPOSITS $234,141,997
COMMERCIAL PAPER - 58.04%
$ 60,000,000 ABN Amro Finance Inc 5.32 %F 01/21/97 $ 59,823,333
50,000,000 American Express Corp 5.27 F 06/02/97 48,887,444
50,000,000 Asset Securitization Corp++ 5.32 F 01/09/97 49,940,889
35,000,000 Associates Corp 5.35 F 09/19/97 33,642,438
50,000,000 Canadian Imperial Holdings Inc 5.33 F 02/04/97 49,748,258
54,300,000 Corporate Asset Funding Inc 5.29 F 03/04/97 53,805,297
45,000,000 Corporate Receivables Corp++ 5.30 F 01/29/97 44,814,500
25,000,000 Corporate Receivables Corp++ 5.30 F 01/30/97 24,893,264
40,000,000 Daimler-Benz North America Corp 5.32 F 01/30/97 39,828,578
43,300,000 Electronic Data Systems Corp 5.30 F 02/04/97 43,083,259
50,000,000 Ford Motor Credit Co 5.32 F 01/15/97 49,896,556
50,000,000 General Electric Capital Corp 5.29 F 02/12/97 49,691,417
20,000,000 General Electric Co 5.31 F 05/30/97 19,560,450
30,000,000 Goldman Sachs & Co 5.42 F 04/11/97 29,556,667
50,000,000 Greenwich Funding Corp++ 5.65 F 01/15/97 49,890,139
50,000,000 International Business Machines Credit Corp 5.31 F 02/05/97 49,741,875
50,000,000 Merrill Lynch Corp 5.35 F 01/23/97 49,836,528
</TABLE>
14
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO - DECEMBER 31, 1996
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER - CONTINUED
$ 50,000,000 Morgan Stanley Corp 5.32 %F 01/17/97 $ 49,881,778
50,000,000 National Rural Utilities Corp 5.31 F 01/28/97 49,800,875
50,000,000 Philip Morris Corp 5.29 F 01/16/97 49,889,792
46,000,000 Riverwoods Funding Corp 5.31 F 01/22/97 45,857,515
30,000,000 RTZ America Corp++ 5.26 F 05/27/97 29,360,033
41,000,000 Sweden Kingdom Corp 5.30 F 03/05/97 40,619,725
16,000,000 Transamerica Finance Corp 5.29 F 04/16/97 15,753,133
30,906,000 Triple-A One Funding Corp++ 5.40 F 02/14/97 30,702,020
25,000,000 USAA Capital Corp 5.38 F 03/07/97 24,757,153
20,000,000 WCP Funding Inc++ 5.31 F 02/14/97 19,870,200
60,000,000 WCP Funding Inc++ 5.42 F 03/07/97 59,412,833
------------
TOTAL COMMERCIAL PAPER $1,162,545,949
SHORT-TERM FEDERAL AGENCIES - 1.74%
$ 35,000,000 Federal Home Loan Mortgage Corp Discount Note 5.40 % 02/24/97 $ 34,716,500
VARIABLE AND FLOATING RATE BONDS - 17.22%
$ 20,000,000 Abbey National North America 5.35 % 05/21/97 $ 19,992,187
25,000,000 Abbey National North America 5.55 07/17/97 24,990,730
60,000,000 Bankers Trust Corp 5.26 12/10/97 59,971,808
50,000,000 Beta Finance Corp++ 5.56 01/27/97 49,998,587
40,000,000 Colorado National Bank 5.57 04/16/97 39,996,554
25,000,000 Federal Home Loan Bank 5.37 08/08/97 24,989,883
25,000,000 Household Finance Corp 5.45 05/27/97 25,000,000
50,000,000 PHH Corp 5.52 09/22/97 50,000,000
50,000,000 PNC Funding Corp 5.32 05/15/97 49,986,429
------------
TOTAL VARIABLE AND FLOATING RATE BONDS $344,926,178
</TABLE>
15
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO - DECEMBER 31, 1996
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS - 6.81%
$ 45,507,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.58 01/02/97 $ 45,507,000
9,319,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.00 01/02/97 9,319,000
68,637,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.37 01/02/97 68,637,000
13,000,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.50 01/02/97 13,000,000
------------
TOTAL REPURCHASE AGREEMENTS $136,463,000
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $2,007,126,741)* (Note 1) 100.21 % $2,007,126,741
Other Assets and Liabilities, Net (0.21 ) (4,205,896)
------- ------------
TOTAL NET ASSETS 100.00 % $2,002,920,845
------- ------------
------- ------------
..........................................................................................................
</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
TRUSTEES.
* 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>
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1996
<TABLE>
<CAPTION>
CASH
INVESTMENT
TRUST
MASTER
PORTFOLIO
<S> <C>
...........................................................
ASSETS
INVESTMENTS:
In securities, at value and identified
cost $2,007,126,741
Cash 1,346
Receivables:
Interest 4,266,082
TOTAL ASSETS 2,011,394,169
LIABILITIES
Allocations to unitholders 7,936,848
Due to sponsor (Note 2) 39,764
Due to advisor (Note 2) 429,431
Other 67,281
TOTAL LIABILITIES 8,473,324
TOTAL NET ASSETS
$2,002,920,845
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
STATEMENT OF OPERATIONS -
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CASH
INVESTMENT
TRUST
MASTER
PORTFOLIO
<S> <C>
........................................................
INVESTMENT INCOME
Interest income $72,350,480
TOTAL INVESTMENT INCOME 72,350,480
EXPENSES (NOTE 2):
Advisory fees 3,310,083
Administration fees 331,009
Custody fees 227,655
Portfolio accounting fees 326,845
Legal and audit fees 79,917
Amortization of organization expenses 18,350
Other 13,999
TOTAL EXPENSES 4,307,858
Less:
Waived fees (335,787)
NET EXPENSES 3,972,071
NET INVESTMENT INCOME 68,378,409
REALIZED GAIN ON INVESTMENTS 136,408
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $68,514,817
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CASH INVESTMENT TRUST MASTER
PORTFOLIO
...................................
For the For the
Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995
<S> <C> <C>
INCREASE IN NET ASSETS
Net investment income $ 68,378,409 $ 48,642,442
Net realized gain (loss) on sale of
investments 136,408 (606,617)
NET INCREASE RESULTING FROM OPERATIONS 68,514,817 48,035,825
NET INCREASE IN NET ASSETS RESULTING
FROM UNIT TRANSACTIONS 725,092,321 348,618,395
INCREASE IN NET ASSETS 793,607,138 396,654,220
NET ASSETS:
Beginning net assets 1,209,313,707 812,659,487
ENDING NET ASSETS $ 2,002,920,845 $ 1,209,313,707
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
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 the 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 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 bought 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 CIT's Portfolio of Investments.
The adviser to CIT pools its cash with the cash of other funds and invests in
repurchase agreements entered into by CIT and the funds. The repurchase
agreements must be fully collateralized based on values that are marked to
market daily. The collateral may be held by an agent bank under a tri-party
agreement. It is the adviser's responsibility to value the collateral daily and
to obtain additional collateral as necessary to maintain market value equal to
or greater than
20
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
the resale price. The repurchase agreements held by CIT at December 31, 1996 are
collateralized by U.S. Treasury or federal agency obligations. The repurchase
agreements were entered into on December 31, 1996.
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 net capital gains. However, each investor in CIT will be taxed on its
distributive share of the partnership's income for purposes of determining its
federal income tax on its income and 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
regulated 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 Investment Company Act of 1940 are being amortized
on a straightline basis over 60 months from the date CIT commenced operations.
The organization costs were fully amortized at December 31, 1996.
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 daily portfolio management for
CIT. Under the contract WFB is paid a monthly advisory fee based on an annual
rate of 0.25% of average daily net assets. For the year ended December 31, 1996,
WFB waived $335,787 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 CIT. 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 CIT.
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.
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, Stephens is paid a monthly fee at the
annual rate of 0.025% of average daily net assets.
21
<PAGE>
CASH INVESTMENT TRUST MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
The Board of Trustees has approved a change in fund administrative duties.
Effective May 1, 1997, WFB will become Administrator to the Trust on behalf of
the Fund and Stephens will become Co-Administrator to the Trust on behalf of the
Fund. Under the new agreement, administrative fees will not be charged to CIT.
22
<PAGE>
TO THE UNITHOLDERS AND BOARD OF TRUSTEES
MASTER INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Cash Investment Trust Master Portfolio (one
of the master portfolios comprising Master Investment Trust) as of December 31,
1996, and the related statement of operations for the year then ended, and the
statements of changes in net assets for each of the two years in the period then
ended. These financial statements are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements 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 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
confirmation of securities owned as of December 31, 1996, by correspondence with
the cutodian 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 referred to above present fairly, in
all material respects, the financial position of the Cash Investment Trust
Master Portfolio of Master Investment Trust as of December 31, 1996, the results
of its operations, and the changes in its net assets in conformity with
generally accepted accounting principles.
[KPMG SIG.]
SAN FRANCISCO, CALIFORNIA
FEBRUARY 14, 1997
23
<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>
24
