<PAGE>
[OVERLAND EXPRESS LOGO]
Semi - Annual Report
......................................
JUNE 30, 1997
INSTITUTIONAL CLASS
Money Market Fund
National Tax-Free Institutional Money
Market Fund
U.S. Treasury Money Market 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......................................3
MANAGER COMMENTS
Money Market Fund-Institutional Class.....................5
National Tax-Free Institutional Money Market Fund.........6
U.S. Treasury Money Market Fund-Institutional Class.......7
OVERLAND EXPRESS PORTFOLIOS OF INVESTMENTS
Money Market Fund.........................................9
U.S. Treasury Money Market Fund..........................12
OVERLAND EXPRESS FUNDS
Statement of Assets and Liabilities......................14
Statement of Operations..................................15
Statements of Changes in Net Assets......................16
Financial Highlights.....................................18
Notes to Financial Statements............................24
MASTER INVESTMENT TRUST PORTFOLIO OF INVESTMENTS
Tax-Free Money Market Master Portfolio...................29
MASTER INVESTMENT TRUST
Statement of Assets and Liabilities......................35
Statement of Operations..................................36
Statements of Changes in Net Assets......................37
Notes to Financial Statements............................38
LIST OF ABBREVIATIONS......................................40
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 FUNDS' RETURNS WOULD HAVE BEEN LOWER.
WELLS FARGO BANK PROVIDES INVESTMENT ADVISORY,
ADMINISTRATIVE SERVICES, SHAREHOLDER SERVICES 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:
WELCOME TO THE 1997 OVERLAND EXPRESS FUNDS
SEMI-ANNUAL REPORT.
Short-term market volatility reinforces the benefit of a long-term perspective.
Markets have ups and downs. They sometimes behave in very unpredictable ways,
but, over the long haul, history has shown the financial markets have delivered
growth. 1997 has been an example of short-term setbacks attracting more
attention than generally solid overall performance.
For the bond markets, the recently completed reporting period saw market
volatility and the long-expected increase in the federal funds target rate.
After months of debate on the rate of economic growth and the potential for
increased rates of inflation, the Federal Reserve acted in March to raise the
federal funds target rate by 0.25%. The bond market had begun to slide in
February in anticipation of a potential increase and did not begin to recover
until the beginning of May. Bonds rallied somewhat in June and showed a modest
2.09% gain at the halfway point in 1997, as measured by the Lehman Brothers
20+Year Treasury Index.
Equity market volatility was even more pronounced. After climbing steadily from
January into late March, the stock market fell precipitously until near the end
of April. Stocks rallied again, however, and, as measured by the Standard &
Poor's 500 Index, enjoyed a 1997 year-to-date return as of June 30 of 20.61%.
Of course, equity issues do not rise and fall in unison. Large company stocks
have fared well recently as investors sought greater security and shunned
volatility. In contrast to recent years, various sectors such as technology and
financial services have fluctuated in recent months.
It is all too easy to be confused by such a variety of returns and apparently
conflicting information. That's why it is so important to truly understand the
investment philosophies and long-range goals that govern your Fund. We have
always felt that the more you understand your investment, the less likely you
are to be unduly concerned with short-term developments.
The following pages contain discussions about some of the relevant market
conditions and other factors that affected the performance of the Overland
Express Funds during the reporting period. These commentaries were written for
you--our shareholders--as part of the Overland Express Funds' commitment to
education, information and service, as we help you meet your financial goals.
We are pleased to tell you that, pending shareholder approval, we plan to bring
together the strengths of Overland Express and Stagecoach Funds, another family
of mutual funds advised by Wells Fargo Bank. We plan to consolidate Overland
Express Funds into similar corresponding Stagecoach Funds, in some instances
into new Stagecoach Funds created expressly for this purpose. The Stagecoach
Funds have several additional Funds with
3
<PAGE>
investment objectives that complement the Overland Express product line. The
result will be a Fund Family with over thirty Funds and over $20 billion in
assets. You will find full details of this proposed merger in proxy materials
that will be sent to you separately.
OVERLAND EXPRESS FUNDS, AUGUST 1997
THE S&P 500 INDEX IS AN UNMANAGED INDEX OF 500 WIDELY HELD COMMON STOCKS
REPRESENTING, AMONG OTHERS, INDUSTRIAL, FINANCIAL, UTILITY AND TRANSPORTATION
COMPANIES LISTED OR TRADED ON NATIONAL EXCHANGES OR OVER-THE-COUNTER MARKETS.
THE LEHMAN BROTHERS 20+YEAR TREASURY INDEX IS AN UNMANAGED INDEX COMPOSED OF
U.S. TREASURY ISSUES WITH 20-YEAR OR LONGER MATURITIES.
4
<PAGE>
OVERLAND EXPRESS MONEY MARKET FUND-INSTITUTIONAL CLASS
Q. WHAT WAS THE SEVEN-DAY YIELD AS OF JUNE 30, 1997?
A. The seven-day yield for Institutional Class shares of the Fund as of June 30,
1997 was 5.43%. The yield as of December 31, 1996 was 5.07%.
Q. WAS THE HIGHER YIELD THE RESULT OF THE FEDERAL RESERVE'S ACTION IN RAISING
THE FEDERAL FUNDS TARGET RATE?
A. Only in part. Yields change daily as notes are sold on the open market. It is
important to keep an eye on the general trend in yields rather than draw
conclusions based on a single-day "snapshot" of current returns. The Wall Street
Journal's Market Diary section, for example, publishes a useful graph tracking
interest rates for investors interested in following this sort of information.
The graph indicates that there are frequent spikes and valleys in interest
rates--and therefore in money market fund returns--based on market pressures
even without Fed action.
Q. WHAT ARE SOME OF THE MARKET PRESSURES THAT AFFECT YIELDS?
A. There are a number of influences. If the economy is expected to grow rapidly,
interest rates usually move higher in anticipation of a Fed rate hike. Cash
flows into money market mutual funds are another important factor. The dynamics
of supply and demand as managers invest shareholders' cash can drive yields
higher or drag them lower, particularly for variable rate securities.
Q. WHAT DOES "WEIGHTED AVERAGE MATURITY" TELL US ABOUT THE FUND? HOW HAS IT
CHANGED DURING THE PERIOD?
A. Weighted average maturity is a measure of the average length of time before
securities in a portfolio mature on a dollar for dollar basis. It is one of the
measures of a fund's sensitivity to interest rate changes. Funds with longer
maturities generally are more sensitive to interest rate fluctuations.
Typically, for a money market mutual fund, managers will increase maturity to
lock in higher rates or shorten maturity if they anticipate higher rates being
available soon. Market forces may also make one range relatively more attractive
than another. For the most part, the weighted average maturity for the Fund has
been fairly steady and in the short-to-intermediate range of 45 to 60 days.
Q. SINCE THE FEDERAL RESERVE RAISED THE FEDERAL FUNDS TARGET RATE IN MARCH, DO
YOU EXPECT FURTHER ACTION?
A. The Federal Reserve has rarely effected a single increase when changing
monetary policy, so additional increases seem likely. However, the federal funds
target rate is relatively high compared to the Consumer Price Index (the prime
measure of inflation), so we believe that substantial increases are unlikely.
Recent comments by Federal Reserve Chairman Alan Greenspan, however, have
increased optimism that we may finish the year without seeing another increase.
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 SEVEN-DAY YIELD IS FOR THE SEVEN-DAY PERIOD ENDED JUNE 30, 1997. YIELD
REFLECTS FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND
EXPENSES. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
5
<PAGE>
OVERLAND EXPRESS NATIONAL TAX-FREE INSTITUTIONAL
MONEY MARKET FUND
Q. WHAT WAS THE SEVEN-DAY YIELD AS OF JUNE 30, 1997?
A. The Fund's seven-day yield for the period ended June 30, 1997 was 3.94%. The
Fund achieved its goal of maintaining principal stability at a $1.00 per share
net asset value while providing competitive yields. The yield as of December 31,
1996 was 3.42%.
Q. WAS THE HIGHER YIELD THE RESULT OF THE FEDERAL RESERVE'S ACTION IN RAISING
THE FEDERAL FUNDS TARGET RATE?
A. Only in part. Yields change daily as notes are sold on the open market. It is
important to keep an eye on the general trend in yields rather than draw
conclusions based on a single-day "snapshot" of current returns. The Wall Street
Journal's Market Diary section, for example, publishes a useful graph tracking
interest rates for investors interested in following this sort of information.
The graph indicates that there are frequent spikes and valleys in interest
rates--and therefore in money market fund returns--based on market pressures
even without Fed action.
Q. WHAT ARE SOME OF THE MARKET PRESSURES THAT AFFECT YIELDS?
A. There are a number of influences. If the economy is expected to grow rapidly,
interest rates usually move higher in anticipation of a Fed rate hike. Cash
flows into money market mutual funds are another important factor. The dynamics
of supply and demand as managers invest shareholders' cash can drive yields
higher or drag them lower, particularly for variable rate securities.
Q. SINCE THE FEDERAL RESERVE RAISED THE FEDERAL FUNDS TARGET RATE IN MARCH, DO
YOU EXPECT FURTHER ACTION?
A. The Federal Reserve has rarely effected a single increase when changing
monetary policy, so additional increases seem likely. However, the federal funds
target rate is relatively high compared to the Consumer Price Index (the prime
measure of inflation), so we believe that substantial increases are unlikely.
Recent comments by Federal Reserve Chairman Alan Greenspan, however, have
increased optimism that we may finish the year without seeing another increase.
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 SEVEN-DAY YIELD IS FOR THE SEVEN-DAY PERIOD ENDED JUNE 30, 1997. YIELD
REFLECTS FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND
EXPENSES. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
6
<PAGE>
OVERLAND EXPRESS U.S. TREASURY MONEY MARKET FUND- INSTITUTIONAL CLASS
Q. WHAT WAS THE SEVEN-DAY YIELD AS OF JUNE 30, 1997?
A. The seven-day yield for Institutional Class shares of the Fund as of June 30,
1997 was 5.23%. The yield as of December 31, 1996 was 4.57%.
Q. WAS THE HIGHER YIELD THE RESULT OF THE FEDERAL RESERVE'S ACTION IN RAISING
THE FEDERAL FUNDS TARGET RATE?
A. Only in part. Yields change daily as notes are sold on the open market. It is
important to keep an eye on the general trend in yields rather than draw
conclusions based on a single-day "snap shot" of current returns. The Wall
Street Journal's Market Diary section, for example, publishes a useful graph
tracking interest rates for investors interested in following this sort of
information. You can see from that graph that there are frequent spikes and
valleys in interest rates--and therefore in money market fund returns--based on
market pressures even without Fed action.
Q. WHAT ARE SOME OF THE MARKET PRESSURES THAT AFFECT YIELDS?
A. There are a number of influences. If the economy is expected to grow rapidly,
interest rates usually move higher in anticipation of a federal funds target
rate hike. Cash flows into money market mutual funds are another important
factor. The dynamics of supply and demand as managers invest shareholders' cash
can drive yields higher or drag them lower, particularly for variable rate
securities.
Q. WHAT DOES "WEIGHTED AVERAGE MATURITY" TELL US ABOUT THE FUND? HOW HAS IT
CHANGED DURING THE PERIOD?
A. Weighted average maturity is a measure of the average length of time before
securities in a portfolio mature on a dollar for dollar basis. It is one of the
measures of a fund's sensitivity to interest rate changes. Funds with longer
maturities generally are more sensitive to interest rate fluctuations.
Typically, for a money market mutual fund, managers will increase maturity to
lock in higher rates or shorten maturity if they anticipate higher rates being
available soon. Market forces may also make one range relatively more attractive
than another. For the most part, the weighted average maturity for these Funds
has been fairly steady and in the short-to-intermediate range of 45 to 60 days.
Q. SINCE THE FEDERAL RESERVE RAISED THE FEDERAL FUNDS TARGET RATE IN MARCH, DO
YOU EXPECT FURTHER ACTION?
A. The Federal Reserve has rarely effected a single increase when changing
monetary policy, so additional increases seem likely. However, the federal funds
target rate is relatively high compared to the Consumer Price Index (the prime
measure of inflation), so we believe that substantial increases are unlikely.
Recent comments by Federal Reserve Chairman Alan Greenspan, however, have
increased optimism that we may finish the year without seeing another increase.
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 SEVEN-DAY YIELD IS FOR THE SEVEN-DAY PERIOD ENDED JUNE 30, 1997. YIELD
REFLECTS FLUCTUATIONS IN INTEREST RATES ON PORTFOLIO INVESTMENTS AND FUND
EXPENSES. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
7
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(THIS PAGE INTENTIONALLY LEFT BLANK)
8
<PAGE>
MONEY MARKET FUND - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSITS - 22.36%
$ 50,000,000 Branch Banking & Trust Co 6.50 % 07/01/97 $ 50,000,000
10,000,000 CC USA Inc 6.18 05/26/98 10,000,000
35,000,000 Commercial Bank of Detroit 6.18 05/27/98 34,991,600
35,000,000 Huntington National Bank 6.05 01/06/98 35,000,000
30,000,000 Northern Trust Corp 5.40 08/22/97 30,000,000
50,000,000 Societe Generale (Yankee) 5.81 01/13/98 49,995,213
50,000,000 U.S. National Bank of Oregon 5.56 07/11/97 50,000,000
25,000,000 Union Bank of California 5.73 11/03/97 25,000,000
------------
TOTAL CERTIFICATES OF DEPOSITS $284,986,813
COMMERCIAL PAPER - 46.61%
$ 20,000,000 ABN-Ambro North America Finance Inc 5.50 %F 12/08/97 $ 19,511,111
35,000,000 Asset Securitization Cooperative Corp++ 5.56 F 07/14/97 34,929,728
50,000,000 Bankers Trust Corp 5.34 F 08/11/97 49,695,917
20,000,000 Caisee National De Credit Agricole 5.94 F 06/23/98 19,988,531
25,000,000 Canadian Imperial Holding Inc 5.54 F 07/10/97 24,965,363
45,000,000 Corporate Receivables Corp++ 5.54 F 07/09/97 44,944,600
35,000,000 First Bank System Inc 5.55 F 07/07/97 34,967,625
45,000,000 Ford Motor Corp 5.55 F 08/08/97 44,736,375
25,000,000 General Electric Capital Corp 5.29 F 08/08/97 24,860,403
30,000,000 General Electric Capital Corp 5.37 F 07/28/97 29,879,175
25,000,000 Goldman Sachs & Co 5.54 F 07/08/97 24,973,069
55,000,000 Merrill Lynch Corp 5.55 F 07/07/97 54,949,125
30,000,000 Morgan Stanley Group Inc 5.57 F 07/22/97 29,902,525
50,000,000 Preferred Receivables Funding Corp 6.20 F 07/01/97 50,000,000
32,300,000 Sherrield Receivables Corp++ 5.56 F 07/21/97 32,200,229
25,000,000 Sweden Kingdom Corp 5.47 F 12/01/97 24,418,813
25,000,000 Sweden Kingdom Corp 5.60 F 12/05/97 24,389,444
25,000,000 WCP Funding Inc++ 5.56 F 08/19/97 24,810,804
------------
TOTAL COMMERCIAL PAPER $594,122,837
</TABLE>
9
<PAGE>
MONEY MARKET FUND - JUNE 30, 1997 (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 - 21.14%
$ 43,500,000 Abbey National North America 5.58 % 07/17/97 $ 43,469,985
34,000,000 Barclays Bank Plc 5.62 02/20/98 33,983,561
45,000,000 FCC National Bank 5.60 06/11/98 44,965,242
25,000,000 Federal Home Loan Bank 5.28 08/08/97 24,983,138
15,000,000 Morgan Guaranty Trust 5.96 06/22/98 14,994,956
44,000,000 PHH Corp 5.37 09/22/97 44,000,000
43,000,000 PNC Bank Corp 5.59 10/01/97 42,992,868
20,000,000 Sony Capital Corp 5.78 08/29/97 19,999,153
------------
TOTAL VARIABLE AND FLOATING RATE BONDS $269,388,903
REPURCHASE AGREEMENTS - 9.90%
$ 63,172,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.85 % 07/01/97 $ 63,172,000
31,000,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.80 07/01/97 31,000,000
32,000,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.95 07/01/97 32,000,000
------------
TOTAL REPURCHASE AGREEMENTS $126,172,000
</TABLE>
10
<PAGE>
MONEY MARKET FUND - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $1,274,670,553)* (Note 1) 100.01 % $1,274,670,553
Other Assets and Liabilities, Net (0.01 ) (86,030)
------- ------------
TOTAL NET ASSETS 100.00 % $1,274,584,523
------- ------------
------- ------------
..........................................................................................................
</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 ADVISOR
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.
11
<PAGE>
U.S. TREASURY MONEY MARKET FUND - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 36.69%
U.S. TREASURY BILLS - 19.94%
$ 40,000,000 U.S. Treasury Bills 5.01 %F 07/24/97 $ 39,875,289
10,000,000 U.S. Treasury Bills 5.11 F 08/21/97 9,927,821
20,000,000 U.S. Treasury Bills 5.15 F 11/13/97 19,603,250
25,000,000 U.S. Treasury Bills 5.16 F 10/16/97 24,609,896
------------
TOTAL U.S. TREASURY BILLS $ 94,016,256
U.S. TREASURY NOTES - 16.75%
$ 9,620,000 U.S. Treasury Notes 5.13 % 04/30/98 $ 9,541,109
15,300,000 U.S. Treasury Notes 5.88 07/31/97 15,306,209
20,000,000 U.S. Treasury Notes 6.13 05/15/98 20,017,364
8,000,000 U.S. Treasury Notes 7.88 01/15/98 8,080,184
10,000,000 U.S. Treasury Notes 7.88 04/15/98 10,136,517
6,660,000 U.S. Treasury Notes 8.50 07/15/97 6,668,008
9,200,000 U.S. Treasury Notes 8.75 10/15/97 9,283,232
------------
TOTAL U.S. TREASURY NOTES $ 79,032,623
TOTAL U.S. TREASURY SECURITIES $173,048,879
REPURCHASE AGREEMENTS - 63.47%
$ 81,640,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.85 % 07/01/97 $ 81,640,000
78,723,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.80 07/01/97 78,723,000
82,000,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.95 07/01/97 82,000,000
57,000,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.00 07/01/97 57,000,000
------------
TOTAL REPURCHASE AGREEMENTS $299,363,000
</TABLE>
12
<PAGE>
U.S. TREASURY MONEY MARKET FUND - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $472,411,879)* (Note 1) 100.16 % $472,411,879
Other Assets and Liabilities, Net (0.16 ) (746,231)
------- ------------
TOTAL NET ASSETS 100.00 % $471,665,648
------- ------------
------- ------------
..........................................................................................................
</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.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) -
JUNE 30, 1997
<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 and
identified cost (U.S. Treasury Money
Market Fund includes repurchase
agreements of $299,363,000) $1,274,670,553 $89,821,675(1) $472,411,879
Cash 1,926 0 0
Receivables:
Interest 5,093,046 169,264 1,550,291
Due from co-administrator (Note 2) 0 1,753 0
Organizational expenses, net of
amortization 24,773 31,951 7,825
Prepaid expenses 167,039 1,024 49,031
TOTAL ASSETS 1,279,957,337 90,025,667 474,019,026
LIABILITIES
Cash overdraft due to custodian (Note 2) 0 0 7,622
Payables:
Distribution to shareholders 4,712,430 167,781 1,903,425
Due to sponsor and distributor (Note
2) 307,698 943 278,327
Due to WFB (Note 2) 334,188 0 138,315
Other 18,498 13,333 25,689
TOTAL LIABILITIES 5,372,814 182,057 2,353,378
TOTAL NET ASSETS
$1,274,584,523 $89,843,610 $471,665,648
NET ASSETS CONSIST OF:
Paid-in capital $1,274,649,212 $89,849,961 $471,622,679
Undistributed net realized gain (loss)
on investments (64,689) (6,351) 42,969
TOTAL NET ASSETS $1,274,584,523 $89,843,610 $471,665,648
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $ 589,281,220 N/A $294,130,493
Shares outstanding - Class A 589,354,186 N/A 294,119,766
Net asset value and offering price per
share - Class A $1.00 N/A $1.00
Net assets - Institutional Class $ 685,303,303 $89,843,610 $177,535,155
Shares outstanding - Institutional Class 685,294,984 89,850,442 177,506,276
Net asset value and offering price per
share - Institutional Class $1.00 $1.00 $1.00
</TABLE>
................................................................................
(1) INVESTMENT IN MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) -
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE U.S.
INSTITUTIONAL TREASURY
MONEY MONEY MONEY
MARKET MARKET MARKET
FUND FUND FUND
<S> <C> <C> <C>
.......................................................................................
INVESTMENT INCOME (NOTE 4)
Interest $32,245,239 $1,111,793(1) $12,343,997
Net expenses allocated from Master
Portfolio N/A (66,335) N/A
TOTAL INVESTMENT INCOME 32,245,239 1,045,458 12,343,997
EXPENSES (NOTE 2)
Advisory fees 1,452,657 0 583,294
Administration fees 505,374 16,919 202,404
Custody fees 99,861 0 41,616
Portfolio accounting fees 146,708 0 77,160
Transfer agency fees 198,830 8,889 141,025
Distribution fees 553,548 0 365,922
Amortization of organization expenses 5,506 4,260 4,901
Legal and audit fees 48,251 11,163 21,296
Registration fees 28,319 15,356 23,219
Directors' fees 2,188 2,281 2,480
Shareholder reports 18,328 5,405 9,917
Other 7,768 1,920 9,829
TOTAL EXPENSES 3,067,338 66,193 1,483,063
Less:
Waived fees and reimbursed expenses (199,275) (37,121) (181,195)
NET EXPENSES 2,868,063 29,072 1,301,868
NET INVESTMENT INCOME 29,377,176 1,016,386 11,042,129
REALIZED GAIN ON INVESTMENTS
Net realized gain on sale of
investments 13,572 0 3,245
NET GAIN ON INVESTMENTS 13,572 0 3,245
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $29,390,748 $1,016,386 $11,045,374
</TABLE>
................................................................................
(1) ALLOCATED FROM THE MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND
...................................
(Unaudited)
For the Six For the
Months Ended Year Ended
June 30, 1997 Dec. 31, 1996
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income $ 29,377,176 $ 51,015,787
Net realized gain (loss) on sale of
investments 13,572 115,019
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 29,390,748 51,130,806
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A (10,865,954) (20,095,416)
Institutional Class (18,511,222) (30,920,371)
From net realized gain on sales of
investments
Class A 0 0
Institutional Class 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 2,155,540,503 2,266,030,281
Reinvestment of dividends - Class A 4,654,270 8,654,713
Cost of shares redeemed - Class A (1,955,445,899) (2,265,443,706)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS
A 204,748,874 9,241,288
Proceeds from shares sold -
Institutional Class 1,361,969,915 2,542,261,944
Reinvestment of dividends -
Institutional Class 16,918,020 26,404,912
Cost of shares redeemed -
Institutional Class (1,447,685,327) (2,138,796,870)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (68,797,392) 429,869,986
INCREASE IN NET ASSETS 135,965,054 439,226,293
NET ASSETS:
Beginning net assets 1,138,619,469 699,393,176
ENDING NET ASSETS $ 1,274,584,523 $ 1,138,619,469
SHARES ISSUED AND REDEEMED:
Shares sold - Class A 2,155,540,503 2,266,030,281
Shares issued in reinvestment of
dividends - Class A 4,654,270 8,654,713
Shares redeemed - Class A (1,955,445,899) (2,265,443,706)
NET INCREASE IN SHARES OUTSTANDING -
CLASS A 204,748,874 9,241,288
Shares sold - Institutional Class 1,361,969,915 2,542,261,944
Shares issued in reinvestment of
dividends - Institutional Class 16,918,020 26,404,912
Shares redeemed - Institutional Class (1,447,685,327) (2,138,796,870)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING - INSTITUTIONAL CLASS (68,797,392) 429,869,986
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE INSTITUTIONAL MONEY U.S. TREASURY MONEY MARKET FUND
MARKET FUND
............................... ...................................
From April 2,
1996
(commencement (Unaudited)
(Unaudited) of
For the Six operations) For the Six For the
Months Ended to Months Ended Year Ended
June 30, 1997 Dec. 31, 1996 June 30, 1997 Dec. 31, 1996
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income $ 1,016,386 $ 1,442,053 $ 11,042,129 $ 18,292,799
Net realized gain (loss) on sale of
investments 0 (6,351) 3,245 89,127
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 1,016,386 1,435,702 11,045,374 18,381,926
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A N/A N/A (6,789,774) (12,422,629)
Institutional Class (1,016,386) (1,442,053) (4,252,355) (5,870,170)
From net realized gain on sales of
investments
Class A N/A N/A 0 (15,959)
Institutional Class 0 0 0 (7,621)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A N/A N/A 1,067,751,044 2,168,619,387
Reinvestment of dividends - Class A N/A N/A 1,955,948 3,858,257
Cost of shares redeemed - Class A N/A N/A (1,053,394,514) (2,093,456,183)
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS
A N/A N/A 16,312,478 79,021,461
Proceeds from shares sold -
Institutional Class 470,784,428 609,187,756 215,349,510 515,834,680
Reinvestment of dividends -
Institutional Class 29,607 102,072 3,673,481 5,208,358
Cost of shares redeemed -
Institutional Class (441,262,112) (548,991,790) (198,296,617) (427,392,856)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 29,551,923 60,298,038 20,726,374 93,650,182
INCREASE IN NET ASSETS 29,551,923 60,291,687 37,042,097 172,737,190
NET ASSETS:
Beginning net assets 60,291,687 0 434,623,551 261,886,361
ENDING NET ASSETS $ 89,843,610 $ 60,291,687 $ 471,665,648 $ 434,623,551
SHARES ISSUED AND REDEEMED:
Shares sold - Class A N/A N/A 1,067,751,044 2,168,619,388
Shares issued in reinvestment of
dividends - Class A N/A N/A 1,955,948 3,858,257
Shares redeemed - Class A N/A N/A (1,053,394,514) (2,093,452,821)
NET INCREASE IN SHARES OUTSTANDING -
CLASS A N/A N/A 16,312,478 79,024,824
Shares sold - Institutional Class 470,784,428 609,188,237 215,349,510 515,834,680
Shares issued in reinvestment of
dividends - Institutional Class 29,607 102,072 3,673,481 5,208,358
Shares redeemed - Institutional Class (441,262,112) (548,991,790) (198,296,617) (427,392,856)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING - INSTITUTIONAL CLASS 29,551,923 60,298,519 20,726,374 93,650,182
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
17
<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, 1997 Dec. 31, 1996 Dec. 31, 1995
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.05 0.05
Net realized and unrealized gain on investments 0.00 0.00 0.00
----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.05 0.05
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.05) (0.05)
Distributions from net realized gain 0.00 0.00 0.00
----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.05)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (NOT ANNUALIZED) 2.45% 4.89% 5.44%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $589,281 $384,527 $375,218
Number of shares outstanding, end of period (000) 589,354 384,605 375,364
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.65% 0.65% 0.65%
Ratio of net investment income to average net assets 4.90% 4.79% 5.43%
............................................................................................................
Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses: 0.71% 0.66% 0.69%
Ratio of net investment income to average net assets prior
to waived fees and reimbursed expenses: 4.84% 4.78% 5.39%
</TABLE>
................................................................................
(1) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON AUGUST 18,
1994.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND (CONT.)
..............................................................................................
INSTITUTIONAL CLASS (1)
..............................................
CLASS A (CONT.) (Unaudited)
.............................................. Six Months
Year Ended Year Ended Year Ended Ended Year Ended Year Ended
Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 June 30, 1997 Dec. 31, 1996 Dec. 31, 1995
<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 0.04 0.03 0.03 0.03 0.05 0.06
Net realized and
unrealized gain on
investments 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.04 0.03 0.03 0.03 0.05 0.06
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.04) (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.04) (0.03) (0.03) (0.03) (0.05) (0.06)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED) 3.70% 2.57% 3.23% 2.58% 5.15% 5.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $307,878 $228,084 $268,424 $685,303 $754,092 $324,175
Number of shares
outstanding, end of
period (000) 307,915 228,085 268,434 685,295 754,092 324,222
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.68% 0.74% 0.75% 0.40% 0.40% 0.39%
Ratio of net investment
income to average net
assets 3.71% 2.54% 3.17% 5.14% 5.04% 5.70%
............................................................................................................................
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses: 0.72% 0.74% 0.75% 0.41% 0.41% 0.45%
Ratio of net investment
income to average net assets
prior to waived fees and
reimbursed expenses: 3.67% 2.54% 3.17% 5.13% 5.03% 5.64%
<CAPTION>
Period Ended
Dec. 31, 1994
<S> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00
------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.02
Net realized and
unrealized gain on
investments 0.00
-----
TOTAL FROM INVESTMENT
OPERATIONS 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02)
Distributions from net
realized gain 0.00
-----
TOTAL FROM DISTRIBUTIONS (0.02)
------
NET ASSET VALUE, END OF
PERIOD $1.00
------
------
TOTAL RETURN (NOT
ANNUALIZED) 1.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $11,237
Number of shares
outstanding, end of
period (000) 11,238
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.38%
Ratio of net investment
income to average net
assets 5.05%
............................
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses: 0.55%
Ratio of net investment
income to average net assets
prior to waived fees and
reimbursed expenses: 4.88%
</TABLE>
................................................................................
(1) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON AUGUST 18,
1994.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE INSTITUTIONAL
MONEY MARKET FUND (1)
..............................
(Unaudited)
Six Months
Ended Period Ended
June 30, 1997 Dec. 31, 1996
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.02
Net realized and unrealized gain on investments 0.00 0.00
----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.02
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.02)
Distributions from net realized gain 0.00 0.00
----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.02)
------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
------ ------
------ ------
TOTAL RETURN (NOT ANNUALIZED) 1.61% 2.27%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $89,844 $60,292
Number of shares outstanding, end of period (000) 89,850 60,299
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.30 (3) 0.40%(3)
Ratio of net investment income to average net assets 3.19 (3) 2.99%(3)
...........................................................................................................
Ratio of expenses to average net assets prior to waived fees and reimbursed
expenses: 0.56 (3) 0.51%(3)
Ratio of net investment income to average net assets prior to waived fees
and reimbursed expenses: 2.93 (3) 2.88%(3)
</TABLE>
................................................................................
(1) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
(2) THE CLASS A SHARES COMMENCED OPERATIONS ON MAY 12, 1992.
(3) THE RATIO INCLUDES INCOME AND/OR EXPENSES CHARGED TO THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
..............................................................................................
CLASS A (2)
..............................................................................................
(Unaudited)
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Period Ended
June 30, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<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 0.02 0.05 0.05 0.03 0.03 0.02
Net realized and
unrealized gain on
investments 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.02 0.05 0.05 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02) (0.05) (0.05) (0.03) (0.03) (0.02)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.05) (0.03) (0.03) (0.02)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (NOT
ANNUALIZED) 2.32% 4.60% 5.09% 3.44% 2.56% 1.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $294,130 $277,816 $198,753 $195,031 $118,169 $137,412
Number of shares
outstanding, end of
period (000) 294,120 227,807 198,782 195,042 118,169 137,416
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.65% 0.65% 0.65% 0.63% 0.52% 0.27%
Ratio of net investment
income to average net
assets 4.62% 4.60% 4.97% 3.47% 2.55% 3.12%
............................................................................................................................
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses: 0.75% 0.71% 0.73% 0.80% 0.77% 0.79%
Ratio of net investment
income to average net assets
prior to waived fees and
reimbursed expenses: 4.52% 4.54% 4.89% 3.30% 2.30% 2.60%
</TABLE>
................................................................................
(1) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
(2) THE CLASS A SHARES COMMENCED OPERATIONS ON MAY 12, 1992.
(3) THE RATIO INCLUDES INCOME AND/OR EXPENSES CHARGED TO THE MASTER
PORTFOLIO.
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>
U.S. TREASURY MONEY MARKET FUND (CONT.)
..................................................................
INSTITUTIONAL CLASS (1)
..................................................................
(Unaudited)
Six Months
Ended Year Ended Year Ended Period Ended
June 30, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.05 0.05 0.02
Net realized and unrealized gain on investments 0.00 0.00 0.00 0.00
----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.05 0.05 0.02
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.05) (0.05) (0.02)
Distributions from net realized gain 0.00 0.00 0.00 0.00
----- ----- ----- -----
TOTAL FROM DISTRIBUTIONS (0.02) (0.05) (0.05) (0.02)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN (NOT ANNUALIZED) 2.44% 4.86% 5.35% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $177,535 $156,808 $63,134 $3,898
Number of shares outstanding, end of period (000) 177,506 156,780 63,130 3,900
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.40% 0.40% 0.39% 0.23%
Ratio of net investment income to average net assets 4.91% 4.79% 5.16% 4.42%
..........................................................................................................................
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses: 0.44% 0.45% 0.49% 0.57%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses: 4.87% 4.74% 5.06% 4.08%
</TABLE>
................................................................................
(1) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON JUNE 20, 1994.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
23
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
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 management investment
company. The Company commenced operations on April 7, 1988 and consists of
twelve separate diversified funds: the Index 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 Money Market, National Tax-Free Institutional
Money Market and U.S. Treasury Money Market Funds.
The Money Market and U.S. Treasury Money Market Funds each offers Class A and
Institutional Class shares. The National Tax-Free Institutional Money Market
Fund offers Institutional Class shares only. The two classes of shares differ
principally in distribution fees, shareholder servicing fees and transfer agency
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 on
the net assets of each class on the date of distribution. No class has
preferential dividend rights. Differences in per share dividend rates generally
result from the relative weightings of pro rata income and gain allocations and
from differences in separate class expenses, including distribution, shareholder
servicing and transfer agency 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 ("GAAP") for investment
companies. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, 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. These estimates should not be
an indication of actual or expected figures; actual results may differ.
INVESTMENT POLICY AND SECURITY VALUATION
The Funds invest only in securities with remaining maturities not exceeding 397
days (thirteen months). Certain floating- and variable-rate instruments in the
portfolios may have maturities in excess of 397 days, but carry a demand feature
that permits the holder to tender the instruments back to the issuer at par
value prior to maturity.
24
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
The Funds use the amortized cost method to value their portfolio securities. 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. The Funds seek to maintain a constant net asset value
of $1.00 per share, although there is no assurance that they will be able to do
so.
The National Tax-Free Institutional Money Market Fund invests only in beneficial
interests ("Interests") of the Tax-Free Money Market Master Portfolio (the
"Master Portfolio") of Master Investment Trust (the "Trust"). 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, 1997, the Fund owned
approximately 81.28% of the outstanding Interests of the Master Portfolio.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are recorded no later than one business day after trade
date. Interest income is accrued daily. Realized gains or losses are reported on
the basis of identified cost of securities delivered. Bond discounts are
accreted and premiums are amortized as required by the Internal Revenue Code of
1986, as amended (the "Code").
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 (in this paragraph, the "Funds") Portfolio of Investments. The Funds
may participate in pooled repurchase agreement transactions with other funds
advised by Wells Fargo Bank, N.A. ("WFB"). 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
custodian's responsibility to value collateral daily and to take action to
obtain additional collateral as necessary to maintain market value equal to or
greater than the resale price. Repurchase agreements held in the Funds are
collateralized by instruments such as U.S. Treasury or federal agency
obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared daily and distributed
monthly. Any distributions to shareholders from net realized capital gains are
declared and distributed annually.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. It is
the policy of each Fund of the Company to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined in the Code, and to make distributions of
substantially all of its investment company taxable income and any net realized
capital gains (after reduction for capital loss carryforwards) sufficient to
relieve it from all, or
25
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
substantially all, federal income taxes. Accordingly, no provision for federal
income taxes was required at December 31, 1996. At December 31, 1996, the Money
Market Fund had a net capital loss carryforward of $78,261 which will expire in
the year 2003 and the National Tax-Free Institutional Money Market Fund had a
capital loss carryforward of $6,351 which will expire in the year 2004. The
Company's Board of Directors intends to offset net capital gains with each
capital loss carryforward, and no capital gain distribution shall be made until
each carryforward has been fully utilized or expires.
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of the various Funds and/or classes of
shares. These expenses are being amortized by the Funds on a straight-line basis
over 60 months from the date the Fund and/or class of shares 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 WFB. Pursuant to the contracts, WFB
has agreed to provide the Money Market and U.S. Treasury Money Market with daily
portfolio management. Under the contracts with the Money Market and U.S.
Treasury Money Market Funds, WFB is entitled to be paid a monthly advisory fee
at the annual rate of 0.25% of each Fund's average daily net assets.
The National Tax-Free Institutional Money Market Fund does not directly retain
an investment adviser because the Fund invests all of its assets in the Tax-Free
Money Market Master Portfolio which, in turn, retains WFB as investment adviser.
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 of each Fund's average daily net
assets, 0.045% of the next $50 million and 0.02% of each Fund's average daily
net assets in excess of $100 million. WFB will not be entitled to compensation
for its custodial services to the National Tax-Free Institutional Money Market
Fund so long as it is entitled to compensation for providing advisory services
to the Tax-Free Money Market Master Portfolio.
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB provides transfer agency services for the Funds. Under the contract, WFB is
entitled to receive transfer agency fees at an annual rate of 0.10% of the
average daily net assets of the Class A shares of the Money Market and U.S.
Treasury Money Market Funds and 0.02% of the average daily net assets of the
Institutional Class shares of the Money Market, National Tax-Free Institutional
Money Market and U.S. Treasury Money Market Funds.
26
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
Prior to February 1, 1997, under the contract with the Money Market and U.S.
Treasury Money Market Funds, WFB was entitled to be 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 were less than $20 million. For as long as the net assets of a
Fund remained under $20 million, a Fund would not be charged any transfer agency
fees by WFB. WFB served as the National Tax-Free Institutional Money Market
Fund's transfer agent and dividend disbursing agent, but did not receive a fee
for such services.
Transfer agency fees paid on behalf of the Funds for the six months ended June
30, 1997 were as follows:
<TABLE>
<CAPTION>
TRANSFER AGENCY FEES TRANSFER AGENCY FEES
FUND CLASS A INSTITUTIONAL CLASS
<S> <C> <C>
...............................................................................................................
Money Market Fund $ 148,790 $ 50,040
National Tax-Free Institutional Money Market Fund N/A 8,889
U.S. Treasury Money Market Fund 125,053 15,972
</TABLE>
WFB as administrator and Stephens Inc. ("Stephens") as co-administrator provide
each Fund with administration services. For these services, WFB and Stephens are
entitled to receive monthly fees at the annual rates of 0.04% and 0.02%,
respectively, of each Fund's average daily net assets. Prior to May 1, 1997,
Stephens provided substantially the same services as sole administrator to the
Funds. Under the previous agreements, Stephens was entitled to receive a monthly
fee at the annual rate of 0.10% of the average daily net assets of the Money
Market and U.S. Treasury Money Market Funds and 0.05% of the average daily net
assets of the National Tax-Free Institutional Money Market Fund.
The Company has adopted a Distribution 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
Waived fees and reimbursed expenses for the six months ended June 30, 1997 were
as follows:
<TABLE>
<CAPTION>
FEES WAIVED EXPENSES REIMBURSED
FUND BY WFB BY STEPHENS
<S> <C> <C>
...............................................................................................................
Money Market Fund $ 199,275 $ 0
National Tax-Free Institutional Money Market Fund 19,694 17,427
U.S. Treasury Money Market Fund 181,195 0
</TABLE>
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens.
Certain officers and one director of the Company are also officers of Stephens.
As of June 30, 1997, Stephens owned 1,439,638 shares of the Money Market Fund,
100 shares of the National Tax-Free Institutional Money Market Fund and 131,321
shares of the U.S. Treasury Money Market Fund.
27
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
3. CAPITAL SHARE TRANSACTIONS
As of June 30, 1997, the Money Market and U.S. Treasury Money Market Funds were
each authorized to issue 1 billion shares of $0.001 par value capital stock for
each class of shares. As of June 30, 1997, the National Tax-Free Institutional
Money Market Fund was authorized to issue 3 billion shares of $.001 par value
capital stock. Transactions in capital shares for the six months ended June 30,
1997 and the year ended December 31, 1996 are disclosed in detail in the
Statements of Changes in Net Assets.
4. INCOME AND EXPENSE ALLOCATIONS
The components of total investment income of the National Tax-Free Institutional
Money Market Fund are allocated from the Tax-Free Money Market Master Portfolio.
The detail of allocated total investment income for the National Tax-Free
Institutional Money Market Fund for the six months ended June 30, 1997 was as
follows:
<TABLE>
<CAPTION>
GROSS WAIVED
FUND INTEREST EXPENSES FEES
<S> <C> <C> <C>
...............................................................................................................
National Tax-Free Institutional Money Market Fund $ 1,111,793 $ (112,010) $ 45,675
</TABLE>
5. REORGANIZATION OF OVERLAND EXPRESS FUNDS, INC.
At a meeting held on July 23, 1997, the Company's Board of Directors approved an
Agreement and Plan of Consolidation to reorganize Overland Express Funds, Inc.
into Stagecoach Funds, Inc. This Plan of Consolidation is subject to approval by
Overland Express Fund shareholders. The agreement provides, among other things,
for the transfer of assets and liabilities of each Overland Express Fund (each a
"Predecessor Fund") to a corresponding series of Stagecoach Funds, Inc. (each a
"Stagecoach Fund"). The Agreement provides that each Stagecoach Fund will assume
certain identified liabilities of the corresponding Predecessor Fund and will
deliver to that Predecessor Fund shares of common stock of the Stagecoach Fund
having an aggregate net asset value equivalent to the aggregate net asset value
of the assets transferred to the Stagecoach Fund by the Predecessor Fund
(collectively, the "Consolidation"). At the time of Consolidation, the Funds
that currently are structured as "feeder" Funds in a "master-feeder" structure
will be restructured to invest directly in a portfolio of securities, rather
than to invest in portfolio securities through a "master" Fund. The
Consolidation is expected to be a tax-free exchange.
Dividends from net investment income and net realized capital gains, if any, of
the Predecessor Funds will be distributed to Overland Express Fund shareholders
prior to the Consolidation. The Consolidation is expected to close in December,
1997. All of the expenses incurred in connection with the Consolidation will be
paid by Wells Fargo or Stephens.
28
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET
MASTER PORTFOLIO - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 97.02%
ARIZONA - 1.36%
$ 1,000,000 Chandler AZ Industrial Development V/R Project
LOC -
Citibank N.A. 3.89 % 12/01/02 $ 1,000,000
500,000 Maricopa County AZ PCR Public Service Co Series
B 4.00 05/01/29 500,000
------------
$ 1,500,000
CALIFORNIA - 8.42%
$ 5,000,000 Arbor Fund CA Tax-Exempt Portfolio 3.68 % 01/00/00 $ 5,000,000
1,800,000 California HFFA Revenue - Sutter Health Series
B 3.75 03/01/20 1,800,000
600,000 California HFFA V/R FSA Insured 3.75 07/01/22 600,000
100,000 California Pollution Control Finance Authority
Revenue V/R 3.95 02/01/16 100,000
100,000 California State PCFA Stanislaus Project V/R
AMT LOC - Swiss Bank 3.85 12/01/17 100,000
200,000 California State PCFA V/R Shell Oil Co Project
Series B 3.70 10/01/11 200,000
1,000,000 California Statewide CDA COP 4.10 06/01/26 1,000,000
100,000 Chula Vista CA Industrial Development Revenue
San Diego Gas & Electric Series B 5.40 12/01/21 100,000
100,000 Irvine Ranch CA Water District V/R LOC - Bank
of America 3.75 04/01/33 100,000
300,000 Riverside County CA COP Series A 3.82 12/01/15 300,000
------------
$ 9,300,000
COLORADO
$ 4,000,000 Colorado HFFA V/R Sisters of Charity Healthcare 4.15 % 05/15/25 $ 4,000,000
1,000,000 Colorado State HFFA Boulder County Hospital
Project V/R Series C 4.15 10/01/14 1,000,000
</TABLE>
29
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET
MASTER PORTFOLIO - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - CONTINUED
COLORADO - CONTINUED
$ 1,000,000 Colorado State HFFA North Colorado Medical
Center 4.15 % 05/15/20 $ 1,000,000
600,000 Colorado State Student Loan Obligation Bond
Authority Series A 4.25 07/01/00 600,000
------------
$ 6,600,000
FLORIDA - 9.95%
$ 2,000,000 Indian River County FL Hospital Series 1990 3.75 % 08/15/97 $ 2,000,000
3,000,000 Jacksonville FL Electric Authority 3.70 08/15/97 3,000,000
3,000,000 Sarasota County FL Public Hospital District -
Sarasota Memorial Hospital Series 96-A 3.80 08/14/97 3,000,000
3,000,000 Sunshine State FL Government Financing
Authority 3.85 09/12/97 3,000,000
------------
$ 11,000,000
GEORGIA - 5.06%
$ 700,000 Fulton County GA Residential Care Facility V/R
-Lenbrook Square Foundation 4.25 % 01/01/18 $ 700,000
2,895,000 Municipal Electric Authority of Geogia 3.65 07/01/97 2,895,000
2,000,000 Municipal Electric Authority of Georgia 4.15 03/01/20 2,000,000
------------
$ 5,595,000
ILLINOIS - 2.72%
$ 3,000,000 Illinois State Highway Toll Revenue V/R Series
B 4.15 % 01/01/10 $ 3,000,000
INDIANA - 0.45%
$ 500,000 Princeton IN PCR V/R Energy Project LOC -
Canadian Imperial Bank 4.05 % 03/01/19 $ 500,000
</TABLE>
30
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET
MASTER PORTFOLIO - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - CONTINUED
KANSAS - 1.99%
$ 2,200,000 Burlington KS PCR - Kansas City Power & Light 3.75 % 08/14/97 $ 2,200,000
LOUISIANA - 2.53%
$ 1,200,000 Calcasieu Parish Inc LA Industrial Development
Revenue Series B 3.93 % 02/01/16 $ 1,200,000
1,600,000 New Orleans Aviation Board Revenue MBIA Insured 4.15 08/05/15 1,600,000
------------
$ 2,800,000
MASSACHUSETTS - 13.94%
$ 1,400,000 Massachusetts State HFFA Revenue V/R Asset
Program LOC - Credit Suisse 3.75 % 01/01/19 $ 1,400,000
14,000,000 Massachusetts State IDA Resources Recovery V/R
Ogden Haver 3.85 12/01/11 14,000,000
------------
$ 15,400,000
MINNESOTA - 2.72%
$ 3,000,000 Cohasset MN Power & Light Co V/R Series A 4.00 % 06/01/20 $ 3,000,000
NEBRASKA - 2.26%
$ 2,500,000 Nebraska Higher Education Loan Program Series B 4.30 % 12/01/16 $ 2,500,000
NEVADA - 0.91%
$ 1,000,000 Clark County NV Airport Improvement Revenue
Series A 4.15 % 07/01/12 $ 1,000,000
NEW JERSEY - 0.91%
$ 1,000,000 New Jersey State Turnpike Revenue Series D 3.80 % 01/01/18 $ 1,000,000
</TABLE>
31
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET
MASTER PORTFOLIO - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - CONTINUED
NEW MEXICO - 1.72%
$ 1,000,000 Albuquerque NM Airport Revenue Project AMBAC
Insured 4.15 % 07/01/14 $ 1,000,000
900,000 Farmington NM PCR V/R Arizona Public Services
Co. Series B 4.05 09/01/24 900,000
------------
$ 1,900,000
NEW YORK - 3.35%
$ 1,200,000 New York NY Assistance Corp LOC - Series B 4.05 % 04/01/23 $ 1,200,000
300,000 New York NY Muni Finance Authority Water &
Sewer System Revenue Series C 4.15 06/15/23 300,000
1,200,000 New York NY Muni Water Finance Authority Water
& Sewer System Revenue FGIC Insured 4.05 06/15/24 1,200,000
1,000,000 Suffolk County NY Industrial Development
Revenue V/R 3.85 02/01/07 1,000,000
------------
$ 3,700,000
NORTH CAROLINA - 3.80%
$ 400,000 Charlotte NC Airport Revenue V/R Series A MBIA
Insured 4.15 % 07/01/16 $ 400,000
3,800,000 North Carolina Eastern Municipal Power Agency 3.65 07/01/97 3,800,000
------------
$ 4,200,000
PENNSYLVANIA - 4.52%
$ 2,500,000 Delaware Valley PA Regional Finance Authority 4.15 % 08/01/16 $ 2,500,000
2,500,000 Pennsylvania State Higher Education Assistance
Agency Student Loan Revenue V/R Series A 4.25 12/01/25 2,500,000
------------
$ 5,000,000
</TABLE>
32
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET
MASTER PORTFOLIO - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - CONTINUED
SOUTH CAROLINA - 4.07%
$ 4,500,000 South Carolina Educational Facility Authority
Series B 4.15 % 10/01/26 $ 4,500,000
TEXAS - 11.51%
$ 100,000 Brazos River Authority Texas PCR V/R Texas
Utilities Electric Co LOC - Bank of Switzerland 5.55 % 06/01/30 $ 100,000
5,000,000 Guadalupe-Blanco River Authority Texas PCR
Central Power & Light Co V/R LOC - ABN Amro of
North America 4.05 11/01/15 5,000,000
2,000,000 Houston TX Tax & Revenue Anticipation 4.50 06/30/98 2,012,480
3,600,000 San Antonio TX Gas & Electric Series A 3.65 07/01/97 3,600,000
2,000,000 Texas State Tax & Revenue Anticipation 4.75 08/29/97 2,003,024
------------
$ 12,715,504
UTAH - 1.63%
$ 1,400,000 Intermountain Power Agency UT Series 85-F 3.75 % 11/10/97 $ 1,400,000
400,000 Salt Lake City UT Airport Revenue Series A AMT
LOC - Credit Suisse 4.20 06/01/98 400,000
------------
$ 1,800,000
VIRGINIA - 0.45%
$ 500,000 Peninsula Ports Authority Revenue Port
Facilities Shell Coal & Terminal Co 4.05 % 12/01/05 $ 500,000
WASHINGTON - 0.63%
$ 200,000 Port Vancouver WA United Grain Corp LOC -
Sumitomo Bank 4.35 % 12/01/09 $ 200,000
500,000 Washington State MFHR Inglenook Court Project
LOC - Bank of America 4.55 07/01/25 500,000
------------
$ 700,000
WYOMING - 6.15%
$ 3,300,000 Kemmer WY PCR V/R Exxon Project 4.00 % 11/01/14 $ 3,300,000
</TABLE>
33
<PAGE>
MASTER INVESTMENT TRUST - TAX-FREE MONEY MARKET
MASTER PORTFOLIO - JUNE 30, 1997 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - CONTINUED
WYOMING - CONTINUED
$ 1,000,000 Platte County WY PCR V/R LOC - Societe Generale 4.20 % 07/01/14 $ 1,000,000
2,500,000 Sweetwater County, WY Pollution Control Revenue
-Pacific Corp 3.75 08/11/97 2,500,000
------------
$ 6,800,000
TOTAL SHORT-TERM INSTRUMENTS $107,210,504
(Cost $107,210,504)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $107,210,504)* (Notes 1 and 3) 97.02 % $107,210,504
Other Assets and Liabilities, Net 2.98 3,296,918
------- ------------
TOTAL NET ASSETS 100.00 % $110,507,422
------- ------------
------- ------------
..........................................................................................................
</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.
34
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) -
JUNE 30, 1997
<TABLE>
<CAPTION>
TAX-FREE
MONEY MARKET
MASTER
PORTFOLIO
<S> <C>
.........................................................
ASSETS
INVESTMENTS:
In securities, at market value and
identified cost $107,210,504
Cash 5,054,950
Receivables:
Interest 528,689
Due from co-administrator (Note 2) 18,797
Organizational expenses, net of
amortization 3,654
Prepaid expenses 11,312
TOTAL ASSETS 112,827,906
LIABILITIES
Payables:
Investment in securities purchased 2,012,480
Distribution to beneficial interest
holders 264,927
Due to advisor (Note 2) 32,654
Other 10,423
TOTAL LIABILITIES 2,320,484
TOTAL NET ASSETS $110,507,422
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) -
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
TAX-FREE
MONEY
MARKET
MASTER
PORTFOLIO
<S> <C>
.......................................................
INVESTMENT INCOME
Interest $1,563,315
TOTAL INVESTMENT INCOME 1,563,315
EXPENSES (NOTE 2)
Advisory fees 133,345
Custody fees 2,118
Portfolio accounting fees 11,141
Amortization of organization expenses 487
Legal and audit fees 8,530
Other 1,578
TOTAL EXPENSES 157,199
Less:
Waived fees and reimbursed expenses (64,102)
NET EXPENSES 93,097
NET INVESTMENT INCOME 1,470,218
REALIZED GAIN ON INVESTMENTS 0
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,470,218
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET MASTER
PORTFOLIO
............................
From April
2, 1996
(Unaudited) (commencement
For the Six of
Months Ended operations)
June 30, to Dec. 31,
1997 1996
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income $ 1,470,218 $ 1,594,532
Net realized gain (loss) on sale of
investments 0 (6,788)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 1,470,218 1,587,744
NET INCREASE IN NET ASSETS RESULTING
FROM BENEFICIAL INTEREST TRANSACTIONS 36,919,503 70,529,957
INCREASE IN NET ASSETS 38,389,721 72,117,701
NET ASSETS:
Beginning net assets 72,117,701 0
ENDING NET ASSETS $110,507,422 $72,117,701
</TABLE>
................................................................................
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
MASTER INVESTMENT TRUST
TAX-FREE MONEY MARKET MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
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 Declaration of
Trust permits the issuance of beneficial interests. The Trust currently issues
nine series of investment portfolios: the Asset Allocation, Capital
Appreciation, Cash Investment Trust, Corporate Stock, Tax-Free Money Market,
Short-Term Government-Corporate Income, Short-Term Municipal Income, Small Cap
and U.S. Government Allocation Master Portfolios. These financial statements
represent only the Tax-Free Money Market Master Portfolio.
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 ("GAAP") for investment
companies. The preparation of financial statements in conformity with GAAP for
investment companies requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, 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. These estimates
should not be considered an indication of actual or expected figures; actual
results may differ.
INVESTMENT POLICY AND SECURITY VALUATION
The Master Portfolio invests only in securities with remaining maturities not
exceeding 397 days (thirteen months). Certain floating- and variable-rate
instruments in the portfolio may have maturities in excess of 397 days, but
carry a demand feature that permits the holder to tender the instruments back to
the issuer at par value prior to maturity.
The Master Portfolio uses the amortized cost method to value its portfolio
securities. 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. The Master Portfolio seeks to
maintain a constant net asset value of $1.00 per share, although there is no
assurance that it will be able to do so.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are recorded no later than one business day after trade
date. Interest income is accrued daily. Realized gains and losses are reported
on the basis of identified cost of securities delivered. Bond discounts are
accreted and premiums are amortized as required by the Internal Revenue Code of
1986, as amended (the "Code").
FEDERAL INCOME TAXES
The Master Portfolio intends to qualify for federal income tax purposes as a
partnership. Management, therefore, believes that the Master Portfolio will not
be subject to any federal or state
38
<PAGE>
MASTER INVESTMENT TRUST
TAX-FREE MONEY MARKET MASTER PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 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 a 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 a Master Portfolio.
ORGANIZATION EXPENSES
The Master Portfolio has been charged for expenses incurred in connection with
the organization and initial registration of the Master Portfolio. These
expenses are being amortized on a straight-line basis over 60 months from the
date the Master Portfolio commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into an advisory contract on behalf of the Master
Portfolio with WFB. Pursuant to the contract, WFB has agreed to provide the
Master Portfolio with daily portfolio management. 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 of the Master Portfolio.
The Trust has entered into a contract with WFB on behalf of the Master
Portfolio, whereby WFB is responsible for providing custody and portfolio
accounting services to the Master Portfolio. Pursuant to the contract, WFB is
entitled to certain transaction charges plus a custody fee at the annual rate of
0.0167% of the average daily net assets of the Master Portfolio. For providing
portfolio accounting services, WFB is entitled to receive a monthly base fee of
$2,000 plus an annual fee of 0.07% of the first $50 million of the Master
Portfolio's average daily net assets, 0.045% of the next $50 million, and 0.02%
of the Master Portfolio's average daily net assets in excess of $100 million.
WAIVED FEES AND REIMBURSED EXPENSES
Waived fees and reimbursed expenses disclosed in the Statement of Operations for
the six months ended June 30, 1997 were waived by WFB. Waived fees and
reimbursed expenses continue at the discretion of WFB and Stephens Inc.
39
<PAGE>
LIST OF ABBREVIATIONS
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
<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>
40
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED AUGUST 15, 1997
TO THE PROSPECTUSES DATED MAY 1, 1997
DESCRIBING THE FOLLOWING FUNDS
<TABLE>
<S> <C> <C>
CALIFORNIA TAX-FREE BOND SHORT-TERM GOVERNMENT-CORPORATE
CALIFORNIA TAX-FREE MONEY MARKET INCOME
INDEX ALLOCATION SHORT-TERM MUNICIPAL INCOME
MONEY MARKET SMALL CAP STRATEGY
MUNICIPAL INCOME STRATEGIC GROWTH
NATIONAL TAX-FREE INSTITUTIONAL U.S. TREASURY MONEY MARKET
MONEY MARKET U.S. GOVERNMENT INCOME
OVERLAND SWEEP VARIABLE RATE GOVERNMENT
</TABLE>
On July 23, 1997 the Board of Directors of Overland Express Funds, Inc.
("Overland") approved an Agreement and Plan of Consolidation with Stagecoach
Funds, Inc. ("Stagecoach"), another open-end management investment company
advised by Wells Fargo Bank, to consolidate each Overland Fund with and into
certain new or existing Stagecoach Funds which have (except as described below)
the same or similar investment objectives and policies (the "Consolidation"). If
the Consolidation is approved by shareholders of the Overland Funds, they will
become shareholders of a corresponding Stagecoach Fund, as indicated in the
chart below. At closing, they will receive shares of the designated class of the
corresponding Stagecoach Fund having a total value equal to the total value of
the shares of the Overland Fund held by the shareholder immediately before the
closing. The Consolidation is expected to close on or about December 15, 1997.
OVERLAND/STAGECOACH FUNDS CONSOLIDATION MAP
<TABLE>
<CAPTION>
Existing Stagecoach Funds -
Overland Express Funds - Classes Existing or New Classes
- -------------------------------------- --------------------------------------
<S> <C>
California Tax-Free Bond - A and D California Tax-Free Bond - A and C
California Tax-Free Money Market California Tax-Free Money Market
Mutual
Money Market - A and Institutional Prime Money Market Mutual - A and
Administrative
Municipal Income - A and D National Tax-Free Fund - A and C
National Tax-Free Institutional Money National Tax-Free Money Market Mutual
Market - Institutional
Small Cap Strategy - A and D Small Cap - A and C
Strategic Growth - A and D Aggressive (Strategic) Growth - A and
C
U.S. Government Income - A and D Ginnie Mae (U.S. Government Income) -
A and C
U.S. Treasury Money Market - A and Treasury Money Market Mutual - A and
Institutional Administrative
</TABLE>
i
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED AUGUST 15, 1997
TO THE PROSPECTUSES DATED MAY 1, 1997 -- (CONTINUED)
<TABLE>
<CAPTION>
Overland Express Funds - Classes New Stagecoach Funds Classes
- -------------------------------------- --------------------------------------
<S> <C>
Index Allocation - A and D Index Allocation - A and C
Overland Sweep Overland Sweep
Short-Term Municipal Income Short-Term Municipal Income
Short-Term Government-Corporate Income Short-Term Government-Corporate Income
Variable Rate Government - A and D Variable Rate Government - A and C
</TABLE>
If the Consolidation is approved, shareholders of Overland's Municipal
Income and U.S. Government Income Funds will become shareholders of the
Stagecoach National Tax-Free and Ginnie Mae Funds, respectively. Investors
should be aware of the following differences in these Funds. Although the
Municipal Income Fund and National Tax-Free Fund each invests a significant
portion of its assets in securities exempt from federal income taxes, the
Municipal Income Fund generally invests at least 80% of its assets in securities
that may be subject to the alternative minimum tax, and the National Tax-Free
Fund generally invests no more than 20% of its assets in such securities. The
Ginnie Mae Fund currently invests primarily in Ginnie Mae securities. If the
Consolidation is approved, the Ginnie Mae Fund will pursue an investment policy
of investing primarily in a broader array of mortgage pass-through securities
issued or guaranteed by the U.S. Government.
At the July 23, 1997 meeting, the Overland Board of Directors, subject to
the approval of Class D shareholders of the Overland California Tax-Free Bond,
Municipal Income and U.S. Government Income Funds, approved an increase in the
Rule 12b-1 distribution fee payable under the Class C Rule 12b-1 Plan of the
corresponding Stagecoach Funds, from 0.50% to 0.75% of the average daily net
assets of the Class C shares of such Stagecoach Funds. The increase is intended
to encourage the Funds' selling agents to devote sufficient resources to
marketing the Funds' Class C shares. Although the Rule 12b-1 fee payable by the
Class C shares of the corresponding Stagecoach Funds will increase, Wells Fargo
Bank and Stephens Inc. have agreed to waive or reimburse certain other fees so
that the total operating expenses payable by the Class C shares will remain at
the current level paid by Class D shares of the corresponding Overland Funds
through December 31, 1998.
Overland shareholders on the record date (currently expected to be September
30, 1997) are eligible to vote on issues relating to the Consolidation and will
be sent additional information. Shareholders who make an initial investment
after the record date will not be eligible to vote, but may obtain additional
information by calling 1-800-572-7797.
In addition, if the Consolidation is completed as anticipated, any Fund that
currently is part of a master-feeder structure will be reorganized into a
stand-alone Fund. This means that each such Fund will withdraw its investment in
the corresponding Master Portfolio and instead will invest directly in a
portfolio of securities. Each such Fund will retain Wells Fargo Bank, the
investment adviser to the Master Portfolios, to manage its assets directly, in
substantially the same manner as Wells Fargo Bank currently manages each Master
Portfolio's assets and for the same advisory fee level.
ii
<PAGE>
OVERLAND EXPRESS FUNDS, INC.
SUPPLEMENT DATED AUGUST 15, 1997
TO THE PROSPECTUSES DATED MAY 1, 1997 -- (CONTINUED)
New Portfolio Managers
Mr. Kenneth Lee became a portfolio co-manager to the SMALL CAP MASTER
PORTFOLIO as of June 18, 1997 and is responsible for providing fundamental
security analysis and portfolio management. Mr. Lee joined Wells Fargo Bank in
1993 and went from Investment Operations to the Portfolio Management group in
1995. Prior to 1993 he worked as an associate at Wells Fargo Nikko Investment
Advisors and at Dean Witter Reynolds (Morgan Stanley Dean Witter Discover) and
has over 8 years experience in the industry. He holds bachelor degrees both in
economics and in organizational studies from the University of California at
Davis and is working toward his chartered financial analyst designation.
Mr. Chris Greene joined Wells Fargo Bank on April 1, 1997, to work as
portfolio co-manager of the CAPITAL APPRECIATION MASTER PORTFOLIO. Immediately
prior to joining Wells Fargo Bank, Mr. Greene worked for three years in the
Mergers & Acquisitions group for Hambrecht & Quist, an investment banking firm
focusing on growth companies. Before that he worked for two years at GB Capital
Management and prior to that worked at Wood Island Associates, firms focusing on
equity and fixed-income securities. He has over five years experience in the
industry. Mr. Greene received his B.A. in Economics from Claremont McKenna
College.
OEX P (SUPP 8/97)
iii
<PAGE>
[OVERLAND EXPRESS LOGO]
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 SEMI-ANNUAL REPORT AND A
PROSPECTUS SUPPLEMENT. THE PROSPECTUS SUPPLEMENT
APPEARS ON THREE PAGES FOLLOWING THE REPORT.
OEXSARI8/97
DATED MATERIAL - PLEASE EXPEDITE
