<PAGE>
- ------------------
ANNUAL
- ------------------
REPORT
- ------------------
MONEY
- ------------------
MARKET
- ------------------
FUNDS
- ------------------
California Tax-Free
Money Market
Mutual Fund
Government
Money Market
Mutual Fund
Money Market
Mutual Fund
National Tax-Free
Money Market
Mutual Fund
Treasury
Money Market
Mutual Fund
SEPTEMBER 30, 1996
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS iii
INVESTMENT ADVISER COMMENTS
Money Market Mutual Fund -- Class A 1
Treasury Money Market Mutual Fund -- Class A 1
Government Money Market Mutual Fund -- Class A 1
California Tax-Free Money Market Mutual Fund 2
National Tax-Free Money Market Mutual Fund 3
PORTFOLIOS OF INVESTMENTS
California Tax-Free Money Market Mutual Fund 4
Government Money Market Mutual Fund 19
Money Market Mutual Fund 21
Master Investment Trust Tax-Free Money Market Master Portfolio 25
Treasury Money Market Mutual Fund 32
STAGECOACH FUNDS
Statement of Assets and Liabilities 34
Statements of Operations 36
Statements of Changes in Net Assets 38
Financial Highlights 42
Notes to Financial Statements 48
Independent Auditors' Report 59
Proxy Voting Results 60
MASTER INVESTMENT TRUST
Statement of Assets and Liabilities 61
Statement of Operations 62
Statement of Changes in Net Assets 63
Notes to Financial Statements 64
Independent Auditors' Report 66
LIST OF ABBREVIATIONS 67
STAGECOACH FUNDS:
--------------------------------------------------------------------------
- - ARE NOT FDIC INSURED
- - ARE NOT GUARANTEED BY WELLS FARGO BANK [NO FDIC]
- - ARE NOT DEPOSITS OR OBLIGATIONS OF WELLS FARGO
BANK
- - INVOLVE INVESTMENT RISK, INCLUDING POSSIBLE LOSS
OF PRINCIPAL
---------------------
i
<PAGE>
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- ---------------------
ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
The Annual Report is one of the most important documents you, as a shareholder,
will receive during the year, one that can deepen your understanding of your
investment. While the prospectus details the investment policies of a Fund, the
Annual Report shows the results of those policies for the most recent reporting
period. The Annual Report tells shareholders which securities were purchased,
what the overall returns for the Funds have been and provides the portfolio
managers' views on what shaped, and continues to shape, the investment
environment.
The Stagecoach Funds Annual Report has undergone a number of changes, some of
which are the result of the September 6, 1996 merger of Pacifica Funds Trust and
Stagecoach Funds, Inc. Perhaps the most noticeable change is that this Report is
dated September 30, 1996.
Previously, Stagecoach Annual Reports were dated December 31 each year and the
Semi-Annual Reports were dated June 30. We are changing the schedule, however,
so that Annual Reports will now be dated March 31 and Semi-Annual Reports will
be dated September 30. THIS CHANGE HAS BEEN MADE FOR OPERATIONAL AND
ADMINISTRATIVE REASONS. THERE HAS BEEN NO CHANGE TO THE INVESTMENT POLICIES OR
PRACTICES OF THE FUNDS RELATED TO THIS CHANGE IN THE FISCAL YEAR-END.
In order to accomplish this change, we are providing you with this Annual Report
containing audited Financial Statements now and will provide you with another
Annual Report for the six months ended March 31, 1997.
Another noticeable change in the Annual Report is that the Funds are now
separated into categories so that the Equity, Income, Tax-Free, Asset Allocation
and Money Market Mutual Funds are grouped together in their own Reports. This
change was made in part because of the introduction of several new Stagecoach
Funds, some of which were introduced as part of the Pacifica Funds merger. We
believe that by segregating Funds into their investment groups, we have produced
an easier-to-read report with fewer extraneous details not relevant to your
investment.
Special mention should be made of the fact that this is the first Stagecoach
Annual Report that most former Pacifica shareholders will receive. We want to
thank you for your patience through our many changes. We here at Stagecoach
Funds are excited about the opportunity to help you succeed in meeting your
investment goals.
STAGECOACH FUNDS
OCTOBER 1996
---------------------
iii
<PAGE>
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- ---------------------
iv
<PAGE>
STAGECOACH MONEY MARKET MUTUAL FUNDS
- -------------------------
INVESTMENT ADVISER COMMENTS
MONEY MARKET MUTUAL FUND -- CLASS A
TREASURY MONEY MARKET MUTUAL FUND -- CLASS A
GOVERNMENT MONEY MARKET MUTUAL FUND -- CLASS A
RETURNS:
The seven-day effective yields as of September 30, 1996, for the Class A shares
of the money market funds are as follows: 4.98% for the Money Market Mutual
Fund, 4.91% for the Treasury Money Market Mutual Fund and 5.45% for the
Government Money Market Mutual Fund.
ECONOMIC FACTORS:
The largest single factor to influence money market yields are changes in
short-term interest rates by the Federal Reserve. At the beginning of 1996, the
expectation was that the Fed would continue to reduce interest rates to help
spur the economy. This did not prove to be the case when several government
reports showed stronger than expected growth. Speculation quickly turned to the
possibility of the Fed raising rates instead.
The third quarter began with continued expectations that the economy would
strengthen due to strong employment gains and rising commodity prices. The
markets anticipated higher inflation and higher interest rates.
As the quarter ended, signs that the economy was slowing began to appear.
Initial jobless claims bottomed in late August and stayed in a slight upward
trend for the remainder of the quarter. Commodity prices ended the quarter
lower. The widely anticipated Federal Reserve meeting on September 24, however,
resulted in no change in policy and the equity and bond markets rallied sharply.
STRATEGIC COMMENT:
With signs of a slowing economy and the Fed's reluctance to raise interest
rates, floating rate securities, which use the Prime Rate as an index, appear
attractive. Also, six month commercial paper has been offering values yielding
33 basis points above that of comparable Treasury Bills. For Funds investing
exclusively in Treasury securities, the Treasury-bill curve shows that
six-months or longer securities offer the best value.
All holdings in the Funds are rated in the top four categories by national
credit rating agencies. These securities meet with the approval of the Wells
Fargo Credit Policy Committee. For Treasury or Government Money Market funds,
all securities are U.S. Treasury or Agency securities.
---------------------
1
<PAGE>
STAGECOACH MONEY MARKET MUTUAL FUNDS
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
RETURNS:
The seven day effective yield as of September 30, 1996, for the California
Tax-Free Money Market Mutual Fund was 3.01%.
ECONOMIC FACTORS:
The largest single factor to influence money market yields are changes in
short-term interest rates by the Federal Reserve. At the beginning of 1996, the
expectation was that the Fed would continue to reduce the federal funds target
rate to help spur the economy. This did not prove to be the case when several
government reports showed stronger than expected growth. Speculation quickly
turned to the possibility of the Fed raising rates instead.
In the third quarter, the short-term tax-exempt market reacted strongly to a
combination of corporate tax payments and the Fed's decision to leave interest
rate policy unchanged. The final two weeks of the quarter saw large money fund
outflows to meet corporate tax payments, resulting in daily and weekly rates
rising 60 basis points. Conversely, the Fed's decision to leave policy unchanged
acted to bring down the yields on notes 10-15 basis points during this same two
week period. This segmented market condition continued through quarter's end.
The third quarter brought to a close California's traditional "note season". The
largest of these new issues during the third quarter was issued by the State of
California ($3 billion) in the form of Revenue Anticipation Notes (RAN's). The
Fund participated in the RAN issuance, investing approximately 2.2% of the
Fund's assets at a yield-to-maturity (YTM) of 3.973%.
STRATEGIC COMMENT:
The Fund continues to participate in only large issues thought to be of high
quality and high liquidity. Our policy remains not to purchase any issues
associated with or impacted by the Orange County bankruptcy.
The Fund's average maturity during the quarter remained relatively stable,
ranging from 50-57 days, the high end of the range being explained by the Fund's
participation in the 1 year California RAN issue. Target average maturity in the
Fund will range from 50 to 60 days during the fourth quarter. Maintaining high
credit quality continues to be the primary objective of the Fund. All holdings
are rated in the top four categories by national credit rating agencies.
- ---------------------
2
<PAGE>
STAGECOACH MONEY MARKET MUTUAL FUNDS
NATIONAL TAX-FREE MONEY MARKET MUTUAL FUND
RETURNS:
The seven day effective yield as of September 30, 1996, for the National
Tax-Free Money Market Mutual Fund was 3.04%.
ECONOMIC FACTORS:
The largest single factor to influence money market yields are changes in
short-term interest rates by the Federal Reserve. At the beginning of 1996, the
expectation was that the Fed would continue to reduce interest rates to help
spur the economy. This did not prove to be the case when several government
reports showed stronger than expected growth. Speculation quickly turned to the
possibility of the Fed raising rates instead.
In September, the short-term tax-exempt market reacted strongly to a combination
of corporate tax payments and the Fed's decision to leave interest rate policy
unchanged. The final two weeks of the quarter saw large money fund outflows to
meet corporate tax payments, resulting in daily and weekly rates rising 60 basis
points. Conversely, the Fed's decision to leave policy unchanged acted to bring
down the yields on notes 10-15 basis points during this same two week period.
This segmented market condition continued through quarter's end.
The third quarter brought to a close the traditional "note season". The largest
new national issuance during the third quarter came from the State of Texas (Tax
& Revenue Anticipation Notes or TRAN's), and New York City (Revenue Anticipation
Notes or RAN's). The Fund did not participate in any note issuance during the
third quarter due to extreme cash flows. Volatility in daily cash flows has
required the Fund to carry a large degree of liquidity. As the Fund's assets
grow and stabilize, the Fund plans to extend the average maturity of its
portfolio and participate in large issues of high quality and liquidity. As of
quarter's end, the Fund's portfolio consisted of: 56.4% daily Variable Rate
Demand Notes, 14.6% weekly Variable Rate Demand Notes, and 29% tax-exempt
commercial paper. Our policy remains not to purchase any issues associated with
or impacted by the Orange County bankruptcy.
STRATEGIC COMMENT:
The Fund's average maturity during the quarter remained very short, ranging from
8-37 days, in order to meet the extremely volatile cash flows. Target average
maturity in the Fund will range from 20 to 30 days during the fourth quarter,
provided cash flows remain at a manageable level. Maintaining high credit
quality continues to be the primary objective of the Fund. All holdings are
rated in the top four categories by national credit rating agencies.
---------------------
3
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES - 98.85%
$ 1,500,000 ABAG Finance Authority for Nonprofit Corp CA
Lucile Salter Packard Project V/R AMBAC
Insured 3.25 % 08/01/23 $ 1,500,000
5,000,000 Anaheim CA Housing Revenue V/R LOC - Citibank 3.20 12/01/23 5,000,000
4,500,000 Barstow CA MFHR Desert Vista Apartments V/R LOC
- Federal Home Loan Bank 3.05 12/01/20 4,500,000
3,700,000 Big Bear Lake CA Industrial Revenue Southwest
Gas Corp V/R AMT Series A LOC - Union Bank of
Switzerland 3.30 12/01/28 3,700,000
5,000,000 California State GO CP Multiple Credit
Enhancements 3.55 10/07/96 5,000,000
14,400,000 California State PCR Pacific Gas & Electric
Series 1996E LOC - Morgan Guaranty Trust 3.55 11/05/96 14,400,000
5,000,000 California State PCR Pacific Gas & Electric
Series 1996E CP LOC - Morgan Guaranty Trust 3.60 01/15/97 5,000,000
3,000,000 California State PCR Pacific Gas & Electric
Series 1996E CP LOC - Morgan Guaranty Trust 3.60 01/16/97 3,000,000
3,000,000 California State GO Multiple Credit
Enhancements 3.45 11/08/96 3,000,000
10,500,000 California HFFA V/R Nonprofit Corp Catholic
Healthcare MBIA Insured 3.65 07/01/12 10,500,000
4,400,000 California State GO CP 3.40 10/08/96 4,400,000
5,200,000 California State GO CP 3.50 10/09/96 5,200,000
1,000,000 California State GO CP 3.55 10/18/96 1,000,000
14,900,000 California State GO TOB Multiple LOC's 3.39 11/01/24 14,900,000
5,000,000 California State GO V/R MBIA Insured 3.30 09/01/03 5,000,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
4
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 5,870,000 California State HFA Home Mortgage Revenue V/R 3.60 % 08/01/17 $ 5,870,000
2,000,000 California State HFA Home Mortgage Revenue V/R
MBIA Insured 3.40 08/01/10 2,000,000
2,500,000 California State HFA Revenue Home Mortgage
Series E V/R AMT 4.60 08/01/27 2,500,000
3,400,000 California State HFFA Catholic Healthcare
Series C V/R 3.00 07/01/20 3,400,000
2,600,000 California State HFFA Catholic West Hospital
Series B V/R MBIA Insured 3.00 07/01/05 2,600,000
5,100,000 California State HFFA Childrens Hospital V/R
MBIA Insured 3.00 11/01/21 5,100,000
15,600,000 California State HFFA Kaiser Permanente V/R 3.00 05/01/28 15,600,000
13,400,000 California State HFFA Memorial Health Services
V/R 3.00 10/01/24 13,400,000
4,400,000 California State HFFA NT Enloe Memorial
Hospital V/R LOC - Bank of America 3.15 01/01/16 4,400,000
4,000,000 California State HFFA Revenue Catholic
Healthcare West Series C V/R MBIA Insured 3.00 07/01/11 4,000,000
300,000 California State HFFA Revenue Catholic
Healthcare West V/R MBIA Insured 3.00 07/01/09 300,000
3,300,000 California State HFFA Revenue Catholic
Healthcare West V/R Series B MBIA Insured 3.00 07/01/16 3,300,000
1,100,000 California State HFFA Santa Barbara Cottage V/R
LOC - Credit Suisse 3.00 09/01/15 1,100,000
1,915,000 California State IDA Merrills Packing Inc V/R
LOC - Bank of Tokyo Ltd 3.40 12/01/18 1,915,000
2,000,000 California State PCFA 3.35 10/11/96 2,000,000
5,000,000 California State PCFA 3.35 11/15/96 5,000,000
2,000,000 California State PCFA 3.45 11/13/96 2,000,000
2,000,000 California State PCFA Chevron Project V/R 4.25 * 06/15/05 1,996,300
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
5
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 2,500,000 California State PCFA Pacific Gas & Electric
V/R Series A 3.45 % 12/01/16 $ 2,500,000
8,700,000 California State PCFA Pacific Gas & Electric
V/R Series F 3.40 11/01/26 8,700,000
1,900,000 California State PCFA Resources Recovery
Revenue V/R LOC - Banque Nationale de Paris 3.75 09/01/18 1,900,000
1,000,000 California State PCFA Sanger Project Series
90-A V/R LOC - Credit Suisse 3.30 09/01/20 1,000,000
100,000 California State PCFA Shell Oil Company Project
V/R Series C 4.40 10/01/00 100,000
1,600,000 California State PCFA Solid Waste Disposal
Revenue Colmac Energy Project Series B V/R
AMT LOC - Swiss Bank 3.30 12/01/16 1,600,000
8,000,000 California State PCFA Solid Waste Disposal
Revenue Colmac Energy Project V/R Series A
LOC - Swiss Bank 3.30 12/01/16 8,000,000
3,400,000 California State PCFA Solid Waste Disposal
Revenue Taormina Industries Project AMT
Multiple LOC's 3.65 08/01/14 3,400,000
1,000,000 California State PCFA Southern California
Edison 3.55 10/22/96 1,000,000
6,300,000 California State RAN 3.80 06/30/97 6,300,000
28,000,000 California State RAN 4.50 * 06/30/97 28,106,345
25,000,000 California State School Cash Reserve Program
Pool Series B MBIA Insured 4.50 * 12/20/96 25,038,018
38,000,000 California State School Cash Reserve Projects
Authority Series A 4.75 * 07/02/97 38,244,114
12,000,000 California Statewide CDA Apartment Development
Revenue V/R Series A-2 FNMA Collateralized 3.15 05/15/25 12,000,000
15,100,000 California Statewide CDA Apartment Development
Revenue V/R Series A-4 FNMA Collateralized 3.25 05/15/05 15,100,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
6
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 3,500,000 California Statewide CDA Barton Hospital V/R
LOC - Banque Nationale de Paris 3.55 % 12/01/09 $ 3,500,000
10,000,000 California Statewide CDA Revenue COP V/R Kaiser
Foundation Hospitals 3.80 12/01/15 10,000,000
1,000,000 California Statewide CDA Revenue DV Industries
V/R AMT Series A LOC - Bank of Tokyo Ltd 3.40 08/01/19 1,000,000
1,800,000 California Statewide CDA St Joseph Health
System Group 4.25 07/01/24 1,800,000
3,800,000 California Statewide CDA St Joseph Health
System V/R 3.00 07/01/08 3,800,000
5,500,000 California Statewide CDA Sutter Health Group
V/R AMBAC Insured 3.17 07/01/15 5,500,000
300,000 Chula Vista CA IDA Revenue Daily San Diego Gas
& Electric 3.80 07/01/21 300,000
9,700,000 Chula Vista CA IDR San Diego Gas & Electric V/R 3.35 12/01/27 9,700,000
3,240,000 Chula Vista CA MFHR V/R Series A 3.25 03/01/05 3,240,000
5,000,000 Chula Vista CA IDA San Diego Gas & Electric CP
Series C AMT 3.45 10/28/96 5,000,000
5,000,000 Chula Vista CA IDA San Diego Gas & Electric CP
Series C AMT 3.55 12/12/96 5,000,000
5,000,000 Chula Vista CA IDA San Diego Gas & Electric CP
Series C AMT 3.70 01/14/97 5,000,000
745,000 Contra Costa County CA MFHR El Cerrito Royale
V/R LOC - Bank of America 3.40 12/01/17 745,000
2,500,000 Contra Costa County CA MFHR Park Regency
Apartment V/R LOC - Bank of America 3.60 08/01/32 2,500,000
7,000,000 Contra Costa County CA TRAN 4.50 * 07/03/97 7,030,422
18,000,000 Eagle Trust V/R Series 94 MBIA Insured 3.39 09/01/03 18,000,000
2,500,000 East Bay CA MUD CP LOC - West Deutsche
Landesbank 3.55 10/31/96 2,500,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
7
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$23,285,000 Eastern Municipal Water District CA Revenue
Series B V/R FGIC Insured 3.00 % 07/01/20 $ 23,285,000
3,000,000 Emeryville CA PFA Revenue RDA 8.10 * 02/01/17 3,102,290
250,000 Farfield CA IDA Herman G Rowland Project V/R
LOC - Bank of America 3.40 04/01/05 250,000
8,300,000 Foothill / Eastern CA Transportation Corridor
Agency Toll Road Revenue Series B V/R LOC -
Morgan Guaranty Trust 3.00 01/02/35 8,300,000
17,900,000 Foothill / Eastern CA Transportation Corridor
Agency Toll Road Revenue Series C V/R LOC -
Credit Suisse 3.10 01/02/35 17,900,000
3,900,000 Foothill / Eastern CA Transportation Corridor
Toll Road Development Series D V/R LOC -
Industrial Bank of Japan Ltd 3.15 01/02/35 3,900,000
1,500,000 Fowler CA IDA Bee Sweet Citrus Inc V/R AMT LOC
- Bank of America 3.40 12/01/05 1,500,000
2,300,000 Fremont CA MFHR V/R Creekside Village
Apartments LOC - National Westminster Bank
Plc 3.70 09/01/07 2,300,000
6,800,000 Fullerton CA IDA Sunclipse Inc V/R LOC - Bank
of America 3.25 07/01/15 6,800,000
8,000,000 Hayward CA MFHR V/R FGIC Insured 3.00 08/01/14 8,000,000
500,000 Irvine CA Development Revenue V/R 3.30 09/02/21 500,000
4,900,000 Irvine CA Public Facilities & Infrastructure
Authority Lease Revenue V/R Capital
Improvement Project 3.60 11/01/10 4,900,000
1,700,000 Irvine Ranch CA Water District LOC - National
Westminster Bank Plc 3.30 08/01/16 1,700,000
1,400,000 Irvine Ranch CA Water District Series 85BV/R 3.00 10/01/09 1,400,000
700,000 Irvine Ranch CA Water District Series A 3.00 11/15/13 700,000
1,800,000 Irvine Ranch CA Water District V/R 3.40 11/15/13 1,800,000
600,000 Irvine Ranch CA Water District V/R 3.45 06/01/15 600,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
8
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 1,000,000 Irvine Ranch CA Water District V/R LOC -
Dai-Ichi Kangyo Bank Ltd 3.50 % 09/02/20 $ 1,000,000
5,000,000 Irvine Ranch CA Water District V/R LOC - Morgan
Guaranty Trust 3.50 08/01/16 5,000,000
700,000 Irvine Ranch CA Water District V/R LOC -
Sumitomo Bank Ltd 3.30 10/01/00 700,000
1,000,000 Irvine Ranch CA Water District V/R LOC -
Sumitomo Bank Ltd 3.30 10/01/05 1,000,000
900,000 Kern CO COP Public Facilities Project Series D
V/R 3.00 08/01/06 900,000
1,000,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.50 10/08/96 1,000,000
3,400,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.30 11/13/96 3,400,000
8,400,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.40 10/04/96 8,400,000
2,100,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.40 11/12/96 2,100,000
2,000,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.50 10/30/96 2,000,000
2,300,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.50 12/11/96 2,300,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
9
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 3,000,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.55 % 10/01/96 $ 3,000,000
3,000,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.60 11/12/96 3,000,000
3,000,000 Los Angeles County Wastewater System Revenue CP
LOC - Sumitomo Bank 3.55 10/25/96 3,000,000
200,000 Lancaster CA HFA MFHR Westwood Park Apartments
V/R LOC - Bank of America 2.90 12/01/07 200,000
4,000,000 Livermore MFHR V/R 3.10 07/15/18 4,000,000
5,000,000 Long Beach CA Harbor Department Revenue Series
A AMT CP LOC - Canadian Imperial Bank of
Commerce 3.70 01/16/97 5,000,000
5,900,000 Long Beach CA Harbor Department Revenue Series
A AMT CP LOC - Canadian Imperial Bank of
Commerce 3.75 01/09/97 5,900,000
22,600,000 Long Beach CA Health Facilities Memorial Health
Services 3.00 10/01/16 22,600,000
3,700,000 Los Angeles CA MFHA Malibu Meadows Project
Series A V/R LOC - Sumitomo Bank Ltd 3.20 12/01/15 3,700,000
2,515,000 Los Angeles CA MFHR Canyon Aparments Series C
V/R LOC - Swiss Bank 2.85 12/01/10 2,515,000
1,800,000 Los Angeles CA MFHR Masselin Manor V/R LOC -
Bank of America 3.05 07/01/15 1,800,000
1,000,000 Los Angeles CA MFHR Poinsettia Apartments
Series A V/R LOC - Dai-Ichi Kangyo Bank Ltd 3.20 07/01/19 1,000,000
500,000 Los Angeles CA MFHR V/R 3.10 07/01/14 500,000
2,200,000 Los Angeles CA MFHR V/R AMT LOC - Federal Home
Loan Bank of San Francisco 3.75 08/01/26 2,200,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
10
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 500,000 Los Angeles CA MFHR V/R Series K 3.10 % 07/01/10 $ 500,000
5,400,000 Los Angeles CA Pension Obligation V/R Series A
AMBAC Insured 3.47 06/30/07 5,400,000
3,600,000 Los Angeles CA Pension Obligation V/R Series B
AMBAC Insured 3.00 06/30/07 3,600,000
4,000,000 Los Angeles CA Pension Obligation V/R Series C
AMBAC Insured 3.25 06/30/07 4,000,000
42,570,000 Los Angeles CA TRAN Series A 4.50 * 06/30/97 42,761,096
1,500,000 Los Angeles County CA HFA MFHR Harbor Cove
Project V/R LOC - Citibank 3.20 10/01/06 1,500,000
9,800,000 Los Angeles County CA HFA MFHR Park Sierra V/R
AMT LOC - Citibank 3.15 12/01/08 9,800,000
4,100,000 Los Angeles County CA HFA MFHR Sand Canyon
Ranch Project V/R LOC - Citibank 3.00 11/01/06 4,100,000
500,000 Los Angeles County CA IDA Komax System Inc V/R
AMT LOC - Dai-Ichi Kangyo Bank Ltd 4.20 12/01/06 500,000
500,000 Los Angeles County CA IDA Walter & Howard V/R
AMT LOC - Dai-Ichi Kangyo Bank Ltd 4.20 12/01/06 500,000
6,600,000 Los Angeles County CA Metropolitan
Transportation Authority CP 3.60 10/24/96 6,600,000
10,000,000 Los Angeles County CA Metropolitan
Transportation Authority CP 4.00 * 02/27/97 10,024,304
4,500,000 Los Angeles County CA Metropolitan
Transportation Authority CP V/R Multiple
LOC's 3.40 12/01/06 4,500,000
15,000,000 Los Angeles County CA Transportation Commission
Sales Tax Revenue V/R FGIC Insured 3.10 07/01/12 15,000,000
10,000,000 Marin County CA TRAN AMT LOC - Sanwa Bank 4.50 * 10/29/96 10,005,023
9,800,000 Metropolitan Water District of Southern CA
Waterworks Revenue CP 3.50 12/12/96 9,800,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
11
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 2,500,000 Metropolitan Water District of Southern CA
Waterworks Revenue CP 3.55 % 10/31/96 $ 2,500,000
5,400,000 Modesto CA MFHR Westdale Commons Apartments V/R
LOC - Federal Home Loan Bank of San Francisco 3.30 12/01/15 5,400,000
3,100,000 Monterey CA Peninsula Water Management District
Wastewater Reclamation Project V/R LOC -
Sumitomo Bank Ltd 3.55 07/01/22 3,100,000
5,300,000 Monterey CA Regional Waste Management Authority
Revenue Series A V/R LOC - Dai-Ichi Kangyo
Bank Ltd 3.35 04/01/15 5,300,000
8,500,000 Monterey County CA Financing Authority Water
Reclamation Projects V/R AMT LOC - Dai-Ichi
Bank Ltd 3.35 09/01/36 8,500,000
2,700,000 Moorpark CA MFHR Le Club Apartments V/R LOC -
Citibank 3.05 11/01/15 2,700,000
5,000,000 Northern California State Public Power Revenue
Geothermal Project 3A AMBAC Insured 3.15 07/01/05 5,000,000
2,800,000 Ontario CA MFHR Park Centre Apartments V/R LOC
- Bank of New York 2.90 08/01/07 2,800,000
1,360,000 Ontario CA MFHR Vineyard Village Apartments V/R
LOC - Industrial Bank of Japan Ltd 3.20 12/01/05 1,360,000
2,249,000 Orange County CA HFA Harbor Pointe Apartment
V/R Issue D LOC - Citibank 3.10 12/01/06 2,249,000
4,200,000 Orange County CA HFA Monarch Bay Apartments V/R
LOC - Mitsubishi Bank Ltd 3.35 10/01/07 4,200,000
700,000 Orange County CA HFA Niguel Summit Apartment
V/R LOC - Bank of America 3.20 11/01/09 700,000
13,300,000 Orange County CA HFA The Lakes Apartments V/R
LOC - Citibank 3.15 12/01/06 13,300,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
12
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 1,700,000 Orange County CA HFA Vintage Wood Apartments
V/R LOC - Mitsubishi Bank Ltd 3.00 % 11/01/08 $ 1,700,000
19,600,000 Orange County CA Sanitation District Multiple
Credit Enhancements 3.00 08/01/13 19,600,000
100,000 Orange County CA Sanitation District V/R FGIC
Insured 3.40 08/01/17 100,000
1,200,000 Orange County CA Sanitation District V/R LOC -
National Westminster Bank Plc 3.30 08/01/15 1,200,000
2,000,000 Orange County CA Water District CP LOC - Union
Bank of Switzerland 3.45 10/23/96 2,000,000
1,500,000 Orange County CA Water District CP LOC - Union
Bank of Switzerland 3.60 11/21/96 1,500,000
1,000,000 Pico Rivera CA Redevelopment Agency COP
Crossroads Plaza Project V/R 3.05 12/01/10 1,000,000
4,250,000 Riverside County CA Transportation Commission
Sales Tax Revenue CP LOC - Industrial Bank of
Japan Ltd 3.70 11/19/96 4,250,000
2,500,000 Sacramento CA MUD Series H CP Multiple Credit
Enhancements 3.35 12/13/96 2,500,000
5,000,000 Sacramento CA City USD TRAN 4.00 * 11/29/96 5,002,869
1,000,000 Sacramento CA MFHR River Oaks Apartments V/R
Series E 3.35 09/15/07 1,000,000
9,000,000 Sacramento CA MUD Electric Development Revenue
Series R 7.13 * 02/01/13 9,294,147
6,000,000 Sacramento CA MUD LOC - Bayerische Landesbank 3.45 10/29/96 6,000,000
17,100,000 Sacramento County CA Administration Center &
Courthouse Project V/R LOC - Union Bank of
Switzerland 3.10 06/01/20 17,100,000
5,900,000 Sacramento County CA Series C V/R LOC -
Dai-Ichi Kangyo Bank Ltd 3.35 04/15/07 5,900,000
9,900,000 Sacramento County CA TRAN 4.75 * 10/04/96 9,901,097
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
13
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 1,380,000 San Bernardino County CA IDA Transamerican
Plastics V/R LOC - National Westminster Bank
Plc 3.20 % 12/01/06 $ 1,380,000
4,925,000 San Bernardino County CA MFHR V/R Series A LOC
- Federal Home Loan Bank of San Francisco 3.20 05/01/17 4,925,000
400,000 San Bernardino County CA MFHR Western
Properties Project II V/R LOC - Bank of
America 3.10 05/01/05 400,000
700,000 San Bernardino County CA MFHR Western
Properties Project III V/R LOC - Bank of
America 3.10 08/01/05 700,000
100,000 San Bernardino County CA MFHR Western
Properties Project IV V/R LOC - Bank of
America 3.10 08/01/05 100,000
1,900,000 San Bernardino County CA MFHR Woodview
Apartments V/R LOC - Bank of America 3.10 04/01/07 1,900,000
14,000,000 San Bernardino County CA TRAN 4.50 * 06/30/97 14,062,769
4,900,000 San Bernardino County CA Transportation
Authority Sales Tax Revenue V/R Series A LOC
- Toronto Dominion Bank 2.95 03/01/10 4,900,000
3,900,000 San Diego County CA CP LOC - Industrial Bank of
Japan Ltd 3.50 10/17/96 3,900,000
7,700,000 San Diego County CA CP LOC - Industrial Bank of
Japan Ltd 3.50 11/12/96 7,700,000
3,400,000 San Diego County CA Transportation Sales Tax
Revenue Multiple Credit Enhancements 3.50 11/07/96 3,400,000
5,400,000 San Diego County CA Water Authority CP LOC -
Bayerische Landesbank 3.70 01/15/97 5,400,000
2,000,000 San Diego CA Local Government TRAN LOC -
Mitsubishi 4.75 * 10/18/96 2,001,294
2,635,000 San Diego CA MFHR Flora Apartments Series A V/R
AMT LOC - Swiss Bank 2.85 06/01/05 2,635,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
14
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 3,120,000 San Diego CA MFHR La Cima Apartments V/R LOC -
Citibank 3.05 % 12/01/08 $ 3,120,000
4,000,000 San Diego CA MFHR Los Serano V/R LOC - Citibank 2.90 02/01/09 4,000,000
200,000 San Diego CA MFHR Lusk Mira Mesa Apartments V/R
LOC - Bank of America 3.10 04/01/07 200,000
3,500,000 San Diego CA Multi Family Apartments V/R LOC -
Bank of America 3.20 10/01/15 3,500,000
8,300,000 San Diego CA Regional Sales Tax Revenue CP
Multiple LOC's 3.40 10/10/96 8,300,000
8,800,000 San Diego CA Regional Sales Tax Revenue CP
Multiple LOC's 3.45 10/07/96 8,800,000
9,400,000 San Francisco CA MFHR Bayside Village
Apartments V/R LOC - Industrial Bank of Japan
Ltd 3.40 12/01/05 9,400,000
14,700,000 San Francisco CA MFHR Fillmore Center
Apartments V/R LOC - Bank of Nova Scotia 3.05 12/01/17 14,700,000
3,000,000 San Francisco CA MFHR Fillmore Center
Apartments V/R LOC - Bank of Nova Scotia 3.15 12/01/17 3,000,000
12,000,000 San Francisco CA MFHR Fillmore Center
Apartments V/R LOC - Citibank 3.00 12/01/17 12,000,000
3,000,000 San Francisco CA MFHR Fillmore Center
Apartments V/R LOC - Citibank 3.15 12/01/17 3,000,000
8,050,000 San Francisco CA MFHR Winterland Project V/R
LOC - Citibank 3.00 06/01/06 8,050,000
11,690,000 San Francisco CA RDFA MFHR Rincon Center V/R
LOC - Citibank 3.00 12/01/06 11,690,000
1,000,000 San Joaquin County CA COP MBIA Insured 4.00 * 11/15/96 1,000,777
1,800,000 San Jose - Santa Clara CA Water Financing
Authority Sewer Revenue Series B V/R FGIC
Insured 3.15 11/15/20 1,800,000
2,200,000 San Leandro CA MFHR Haas Avenue Apartments V/R
LOC - Bank of America 2.90 10/01/07 2,200,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
15
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 5,200,000 Santa Clara CA Electric Revenue V/R Series 85A
LOC - National Westminster Bank Plc 3.20 % 07/01/10 $ 5,200,000
1,300,000 Santa Clara CA Electric Revenue V/R Series 85B
LOC - National Westminster Bank Plc 3.20 07/01/10 1,300,000
5,200,000 Santa Clara CA Electric Revenue V/R Series 85C
LOC - National Westminster Bank Plc 3.20 07/01/10 5,200,000
2,500,000 Santa Clara County CA HFA Lincoln Pajaro
Apartments Series 85A LOC - Sumitomo Bank 3.40 01/01/97 2,500,000
9,200,000 Santa Clara County CA MFHR Grove Garden
Apartments V/R LOC - Citibank 3.00 03/01/17 9,200,000
3,000,000 Santa Clara County CA Taso & Revenue
Anticipation Notes 4.50 * 08/01/97 3,013,631
4,875,000 Simi Valley CA MFHR Creekside Village
Apartments V/R LOC - Bank of America 2.90 07/01/23 4,875,000
2,500,000 Southern California Public Power Authority
Revenue Paloverde Project AMBAC Insured 3.50 07/01/17 2,500,000
7,000,000 Southern California State Public Power
Authority Hydroelectric Revenue Hoover
Updating Project Prerefunded 8.13 * 10/01/17 7,140,000
13,300,000 Southern California State Public Power
Authority Palo Verde Project Series B AMBAC
Insured 3.10 07/01/09 13,300,000
29,400,000 Southern California State Public Power
Authority Southern Transmission Project V/R
LOC - Swiss Bank 3.10 07/01/19 29,400,000
18,000,000 Southern California Waterworks Revenue Series A
AMBAC Insured 2.95 06/01/23 18,000,000
7,000,000 State of California GO CP Multiple Credit
Enhancements 3.45 12/02/96 7,000,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
16
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES (CONTINUED)
$ 1,800,000 State of California GO CP Multiple Credit
Enhancements 3.55 % 10/23/96 $ 1,800,000
4,200,000 Tracy CA MFHR Sycamore Village Apartments V/R
LOC - Bank of America 3.10 05/01/15 4,200,000
1,000,000 Turlock CA COP Irrigation Project V/R Series A 3.10 01/01/26 1,000,000
6,390,000 Union City CA Skylark V/R LOC - Sumitomo Bank
Ltd 3.20 11/01/07 6,390,000
4,400,000 Union City CA V/R LOC - Sumitomo Bank Ltd 3.20 10/01/07 4,400,000
4,600,000 University of California Housing Revenue
Prerefunded 7.60 * 11/01/18 4,708,670
1,000,000 University of California State Housing Systems
Revenue Series W AMBAC Insured 7.80 * 11/01/18 1,023,850
2,300,000 Upland CA HFA MFHR Upland Village Green Project
V/R LOC - Bank of Tokyo Ltd 3.50 09/01/10 2,300,000
4,200,000 Vacaville CA MFHR Western Properties Sycamores
Project V/R LOC - Bank of America 3.10 04/01/05 4,200,000
3,000,000 Visalia CA Convention Center Expansion Project
COP V/R LOC - Mitsubishi Bank Ltd 3.50 12/01/15 3,000,000
5,700,000 Walnut Creek CA MFHR Creekside Drive Apartments
V/R LOC - Bank of America 3.10 04/01/07 5,700,000
1,500,000 West Covina CA RDA COP V/R Barranca LOC -
Citibank 3.45 09/01/05 1,500,000
4,000,000 Whittier CA EDFA Revenue Whittier College
Series A Prerefunded 7.00 * 12/01/09 4,020,726
--------------
TOTAL SHORT-TERM CALIFORNIA MUNICIPAL SECURITIES $1,148,121,742
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
17
<PAGE>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $1,148,121,742)**(Note 1) 98.85% $1,148,121,742
Other Assets and Liabilities, Net 1.15 13,309,149
------ --------------
TOTAL NET ASSETS 100.00% $1,161,430,891
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A
DEMAND FEATURE WHICH REDUCES THE REMAINING MATURITY.
* 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.
- ------------------------
18
<PAGE>
GOVERNMENT MONEY MARKET MUTUAL FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM FEDERAL AGENCY DISCOUNT NOTES - 63.32%
$ 7,000,000 Federal Farm Credit Bank 5.20 %* 10/17/96 $ 6,983,822
4,320,000 Federal Home Loan Bank 5.17 * 10/04/96 4,318,139
4,000,000 Federal Home Loan Bank 5.10 * 12/09/96 3,960,900
4,000,000 Federal Home Loan Bank 5.28 * 01/08/97 3,941,920
4,000,000 Federal Home Loan Bank 5.22 * 01/13/97 3,939,680
5,240,000 Federal Home Loan Mortgage Corp 5.27 * 10/10/96 5,233,096
9,000,000 Federal Home Loan Mortgage Corp 5.29 * 10/11/96 8,986,775
4,000,000 Federal National Mortgage Corp 5.34 * 08/07/97 3,816,067
--------------
TOTAL SHORT-TERM FEDERAL AGENCY DISCOUNT NOTES $ 41,180,399
U.S. TREASURY BILLS - 7.52%
$ 5,000,000 U.S. Treasury Bills 5.13 %* 03/06/97 $ 4,888,958
VARIABLE- AND FLOATING-RATE NOTES - 26.13%
$ 5,000,000 Federal Farm Credit Bank 5.34 % 09/02/97 $ 4,999,591
7,000,000 Federal National Mortgage Assoc 5.53 08/01/97 6,997,766
5,000,000 Student Loan Marketing Assoc 5.59 11/27/96 5,001,127
--------------
TOTAL VARIABLE- AND FLOATING-RATE NOTES $ 16,998,484
REPURCHASE AGREEMENTS - 3.50%
$ 2,277,000 Goldman Sachs & Co Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.20 % 10/01/96 $ 2,277,000
</TABLE>
---------------------
19
<PAGE>
GOVERNMENT MONEY MARKET MUTUAL FUND
<TABLE>
TOTAL INVESTMENTS IN SECURITIES
<C> <S> <C> <C>
(Cost $65,344,841)** (Note 1) 100.47% $ 65,344,841
Other Assets and Liabilities (0.47) (308,879 )
------ --------------
TOTAL NET ASSETS 100.00% $ 65,035,962
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
- ------------------------
20
<PAGE>
MONEY MARKET MUTUAL FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER - 64.61%
$89,000,000 Abbott Laboratories 5.37 % 10/29/96 $ 88,628,277
50,000,000 American Express Corp 5.32 10/08/96 49,948,278
50,000,000 American Express Corp 5.32 10/10/96 49,933,500
50,000,000 American Express Corp 5.30 11/26/96 49,587,778
50,000,000 American Express Credit Corp 5.30 11/21/96 49,624,583
50,000,000 American General Finance Corp 5.28 11/21/96 49,626,000
34,400,000 Asset Securitization Cooperative Corp + 5.36 10/22/96 34,292,443
50,000,000 Asset Securitization Cooperative Corp + 5.42 10/24/96 49,828,081
60,000,000 Asset Securitization Cooperative Corp + 5.35 10/24/96 59,793,697
60,000,000 Associates Corp of North America 5.38 10/17/96 59,856,533
70,000,000 Associates Corp of North America 5.35 10/18/96 69,823,153
50,000,000 Bank of Nova Scotia 5.45 10/16/96 49,886,458
55,200,000 Beta Finance Inc + 5.31 11/19/96 54,801,042
50,000,000 Canadian Imperial Holdings Inc 5.46 10/09/96 49,939,278
50,000,000 Canadian Imperial Holdings Inc 5.33 11/01/96 49,770,514
85,000,000 Canadian Wheat Board 5.41 03/27/97 82,739,071
50,000,000 CIT Group Holdings Inc 5.35 10/09/96 49,940,556
50,000,000 CIT Group Holdings Inc 5.45 10/23/96 49,833,472
50,000,000 CIT Group Holdings Inc 5.30 12/05/96 49,521,528
50,400,000 Corporate Receivables Corp + 5.42 10/02/96 50,392,412
35,000,000 Corporate Receivables Corp + 5.47 10/10/96 34,952,138
90,000,000 Corporate Receivables Corp + 5.32 11/05/96 89,534,500
50,000,000 Daimler Benz North America Corp 5.42 10/16/96 49,887,083
50,000,000 Daimler Benz North America Corp 5.30 11/19/96 49,639,306
63,900,000 Falcon Asset Securitization Corp + 5.33 10/25/96 63,672,942
50,000,000 Ford Motor Corp 5.43 10/01/96 50,000,000
100,000,000 Ford Motor Corp 5.37 10/15/96 99,791,167
50,000,000 Ford Motor Credit Corp 5.43 10/22/96 49,841,625
50,300,000 Glaxo Holdings Plc 5.42 10/28/96 50,095,531
7,548,000 Greenwich Asset Funding Corp 5.42 10/11/96 7,536,636
21,000,000 Greenwich Asset Funding Corp 5.42 10/18/96 20,946,252
15,071,000 Greenwich Asset Funding Corp 5.42 10/21/96 15,025,620
30,000,000 Greenwich Asset Funding Corp 5.30 11/13/96 29,810,083
144,500,000 Hewlett Packard Co 5.40 10/16/96 144,174,875
</TABLE>
---------------------
21
<PAGE>
MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
$50,000,000 Household Finance Corp 5.45 % 05/28/97 $ 50,000,000
100,000,000 IBM Credit Corp 5.34 10/17/96 99,762,667
20,000,000 IBM Credit Corp 5.35 10/21/96 19,940,556
50,000,000 National Australia Bank 5.47 11/01/96 49,764,486
50,000,000 National Rural Utilities Cooperative Finance
Corp 5.30 11/14/96 49,676,111
50,000,000 New Center Asset Trust 5.46 11/07/96 49,719,417
9,500,000 PHH Corp 5.35 10/17/96 9,477,411
20,000,000 PHH Corp 5.35 10/18/96 19,949,472
32,000,000 PHH Corp 5.35 10/21/96 31,904,889
65,000,000 PHH Corp 5.32 10/31/96 64,711,833
23,075,000 Preferred Receivables Funding Corp + 5.40 10/23/96 22,998,853
50,000,000 Prudential Funding Corp 5.39 10/03/96 49,985,028
50,000,000 Prudential Funding Corp 5.29 11/20/96 49,632,639
50,000,000 Prudential Funding Corp 5.28 11/26/96 49,589,333
39,600,000 RTZ America Inc 5.35 10/23/96 39,470,530
28,000,000 Sheffield Receivables Corp + 5.35 10/16/96 27,937,583
24,340,000 Sheffield Receivables Corp + 5.37 10/21/96 24,267,386
30,000,000 Sony Capital Corp + 5.30 10/01/96 30,000,000
23,000,000 Sony Capital Corp + 5.35 10/18/96 22,941,893
43,000,000 Student Loan Corp 5.29 11/20/96 42,684,069
120,000,000 Sweden (Kingdom of) 5.58 03/10/97 117,024,000
50,000,000 Transamerica Finance Corp 5.46 10/17/96 49,878,667
50,000,000 Warner Lambert Co 5.30 10/03/96 49,985,274
45,000,000 WCP Funding Inc + 5.34 10/22/96 44,859,824
--------------
TOTAL COMMERCIAL PAPER $2,918,836,333
</TABLE>
- ------------------------
22
<PAGE>
MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE MEDIUM-TERM NOTES - 1.11%
$50,000,000 FCC National Bank 5.37 % 12/04/96 $ 50,000,000
SHORT-TERM FEDERAL AGENCIES - 4.59%
$ 3,995,000 Federal Home Loan Bank 5.30 %* 10/07/96 $ 3,991,471
50,905,000 Federal Home Loan Mortgage Corp 5.28 * 10/07/96 50,860,204
38,000,000 Federal Home Loan Mortgage Corp 5.46 * 10/10/96 37,949,650
50,000,000 Federal Home Loan Mortgage Corp 5.39 * 10/11/96 49,925,208
15,000,000 Federal National Mortgage Assoc 5.75 * 10/01/96 15,000,000
50,000,000 Federal National Mortgage Assoc 5.37 * 10/29/96 49,791,167
--------------
TOTAL SHORT-TERM FEDERAL AGENCIES $ 207,517,700
VARIABLE AND FLOATING RATE BONDS - 16.92%
$50,000,000 Abbey National North America 5.35 % 05/21/97 $ 49,967,631
50,000,000 Abbey National North America 5.55 07/17/97 49,965,650
50,000,000 Comerica Inc 5.39 10/30/96 49,970,920
100,000,000 Comerica Inc 5.84 11/08/96 99,941,840
135,000,000 FCC National Bank 5.24 10/31/96 134,934,903
47,000,000 Federal Home Loan Bank 5.37 08/08/97 46,968,298
100,000,000 International Business Machines Credit Corp 5.38 11/06/96 99,913,570
8,000,000 Merrill Lynch & Co Inc 6.06 10/25/96 8,000,000
125,000,000 PNC Funding Corp 5.32 05/15/97 124,907,600
100,000,000 Sony Capital Corp 5.51 09/04/97 100,000,000
--------------
TOTAL VARIABLE AND FLOATING RATE BONDS $ 764,570,412
U.S. TREASURY BILLS - 8.58%
$35,000,000 U.S. Treasury Bills 4.80 %* 11/14/96 $ 34,785,903
260,000,000 U.S. Treasury Bills 5.24 * 02/06/97 255,577,600
100,000,000 U.S. Treasury Bills 5.31 * 04/03/97 97,348,612
--------------
TOTAL U.S. TREASURY BILLS $ 387,712,115
</TABLE>
---------------------
23
<PAGE>
MONEY MARKET MUTUAL FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS - 4.49%
$202,778,000 Goldman Sachs & Co Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.20 10/01/96 $ 202,778,000
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $4,531,414,560)** (Note 1) 100.30% $4,531,414,560
Other Assets and Liabilities, Net (0.30) (13,683,631)
------ --------------
TOTAL NET ASSETS 100.00% $4,517,730,929
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* YIELD TO MATURITY.
+ THESE SECURITIES ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933.
RULE 144A UNDER THAT ACT PERMITS THESE SECURITIES TO BE RESOLD IN
TRANSACTIONS EXEMPT FROM REGISTRATION TO QUALIFIED INSTITUTIONAL
BUYERS. THESE SECURITIES WERE DEEMED LIQUID BY THE INVESTMENT ADVISER
IN ACCORDANCE WITH PROCEDURES APPROVED BY THE FUND'S BOARD OF
DIRECTORS.
** COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
The accompanying notes are an integral part of these financial statements.
- ------------------------
24
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
ALABAMA - 1.37%
$ 1,100,000 County of Decatur AL IDA Waste Disposal V/R
Amoco Chemical Co Project 3.90 % 05/01/25 $ 1,100,000
ARIZONA - 0.62%
$ 500,000 Maricopa AZ IDA Hospital Facilities Revenue V/R
MBIA Insured 3.55 % 12/01/08 $ 500,000
CALIFORNIA - 13.80%
$ 800,000 California State HFFA Kaiser Permanente V/R 5.90 % 11/01/19 $ 800,000
600,000 California State PCFA Southern California
Edison V/R Series A 3.45 02/28/08 600,000
800,000 California Statewide CDA COP 3.10 06/01/26 800,000
1,000,000 California Statewide CDA Sutter Health Group
V/R AMBAC Insured 3.17 07/01/15 1,000,000
2,000,000 Irvine Ranch CA Water District LOC - National
Westminster Bank Plc 3.30 08/01/16 2,000,000
2,500,000 Los Angeles County CA Metropolitan
Transportation Commission Sales Tax Revenue
CP Multiple Credit Enhancements 3.25 10/03/96 2,500,000
400,000 Orange County CA Sanitation District V/R
Multiple Credit Enhancements 5.90 08/01/16 400,000
3,000,000 Tustin CA Improvement Bond V/R 3.10 09/02/13 3,000,000
--------------
$ 11,100,000
COLORADO - 1.24%
$ 1,000,000 Colorado State HFFA Boulder County Hospital
Project V/R Series C 3.80 % 10/01/14 $ 1,000,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
25
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
FLORIDA - 3.23%
$ 2,000,000 Indian River FL County Hospital Series 1990 CP
LOC - Kredietbank 3.35 % 10/01/96 $ 2,000,000
600,000 Sarasota FL County Public Hospital District
Memorial Hospital Series 96A CP LOC -
SunTrust Bank 3.55 10/03/96 600,000
--------------
$ 2,600,000
GEORGIA - 4.74%
$ 2,910,000 Georgia State Municipal Electric Authority CP
Multiple LOC's 3.55 % 10/10/96 $ 2,910,000
900,000 Hapeville GA Development Authority IDA V/R
Hapeville Hotel Ltd LOC - Swiss Bank 4.00 11/01/15 900,000
--------------
$ 3,810,000
KANSAS - 1.49%
$ 1,200,000 Burlington KS PCR Kansas City Power & Light CP
LOC - Societe Generale 3.80 % 01/09/97 $ 1,200,000
KENTUCKY - 2.49%
$ 2,000,000 Kentucky State Development Authority V/R Pooled
Loan Program LOC - Credit Suisse 3.80 % 12/01/15 $ 2,000,000
LOUISIANA - 1.12%
$ 900,000 West Feliciana Parish LA PCR Gulf State Utility
Company Project V/R 3.60 % 04/01/16 $ 900,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
26
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MASSACHUSETTS - 7.09%
$ 2,000,000 Massachusetts State Health Facilities CP
Harvard University 3.55 % 10/29/96 $ 2,000,000
1,700,000 Massachusetts State HFFA Revenue V/R Asset
Program LOC - Credit Suiss 3.70 01/01/19 1,700,000
2,000,000 Massachusetts State IDA Resources Recovery V/R
Ogden Haver 3.80 12/01/11 2,000,000
--------------
$ 5,700,000
MICHIGAN - 6.59%
$ 2,000,000 Delta County MI EDA Mead Escanaba Paper Series
A CP LOC - Swiss Bank 3.35 % 10/09/96 $ 2,000,000
3,000,000 Grand Rapids MI Water Supply V/R LOC - Societe
Generale 3.70 01/01/20 3,000,000
300,000 Jackson County MI PCR V/R Chevron USA Inc
Project 3.70 12/01/16 300,000
--------------
$ 5,300,000
MINNESOTA - 4.97%
$ 1,500,000 Beltrami County MN Environmental Control
Revenue V/R LOC - Bank of Switzerland 4.00 % 12/01/21 $ 1,500,000
500,000 Beltrami County MN Environmental Control
Revenue V/R Northwood Panel Board Co Project
LOC - Bank of Switzerland 4.05 07/01/25 500,000
2,000,000 Southern Minnesota State Municipal Power CP LOC
- Credit Suisse 3.60 10/16/96 2,000,000
--------------
$ 4,000,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
27
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
MISSOURI - 0.87%
$ 200,000 Kansas City MO IDA Hospital Revenue V/R MBIA
Insured 3.65 % 10/15/14 $ 200,000
500,000 Missouri State Health & Educational Facilities
Revenue V/R St Francis Medical Center LOC -
Credit Local De France 4.00 06/01/26 500,000
--------------
$ 700,000
NEW MEXICO - 3.73%
$ 3,000,000 Farmington NM PCR V/R Arizona Public Services
Co. Series B 3.55 % 09/01/24 $ 3,000,000
NEW YORK - 5.84%
$ 3,500,000 New York NY MUD Water & Sewer System Revenue
V/R FGIC Insured 3.95 % 06/15/22 $ 3,500,000
1,000,000 New York NY Series B GO MBIA Insured 3.95 08/15/04 1,000,000
200,000 New York NY Series B GO MBIA Insured 3.95 08/15/23 200,000
--------------
$ 4,700,000
NORTH CAROLINA - 3.11%
$ 2,500,000 North Carolina State Medical Care Community
Hospital Revenue Pooled Financing LOC -
NationsBank 3.80 % 10/01/20 $ 2,500,000
NORTH DAKOTA - 2.49%
$ 2,000,000 Buffalo County ND Hospital Authority No 1 V/R
Sisters of Charity RH Young Memorial 3.70 % 05/01/18 $ 2,000,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
28
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
OHIO - 1.37%
$ 1,100,000 Ohio State Development Authority Cincinnati Gas
& Electric V/R Series A LOC - ABN Amro of
North America 3.50 % 09/01/30 $ 1,100,000
OREGON - 3.23%
$ 2,600,000 Port St Helens OR PCR Portland General Electric
Company V/R 3.55 % 04/01/10 $ 2,600,000
PENNSYLVANIA - 1.24%
$ 1,000,000 Delaware County PA PCR Philadelphia Electric Co
CP FGIC Insured 3.60 % 12/12/96 $ 1,000,000
TEXAS - 8.77%
$ 900,000 Austin TX Travis & Williamson Combined Utility
System Series A CP LOC - Swiss Bank 3.45 % 10/03/96 $ 900,000
600,000 Brazos River Authority Texas PCR V/R Texas
Utilities Electric Co LOC - Bank of
Switzerland 4.05 06/01/30 600,000
2,350,000 Brazos River TX Harbor Navigation District CP
Dow Chemical Project 3.55 10/08/96 2,350,000
3,200,000 North Central TX HFFA V/R Series B MBIA Insured 3.80 10/01/15 3,200,000
--------------
$ 7,050,000
</TABLE>
- -------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
---------------------------
29
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE+ VALUE
<C> <S> <C> <C> <C> <C>
UTAH - 3.61%
$ 1,500,000 Salt Lake City UT Pooled Hospital Revenue CP
LOC - West Deutsche Lenderbank 3.45 % 11/24/96 $ 1,500,000
1,400,000 Utah State Intermountain Power Agency CP LOC -
Swiss Bank 3.60 11/14/96 1,400,000
--------------
$ 2,900,000
VIRGINIA - 2.74%
$ 2,200,000 Peninsula Ports Authority Revenue Port
Facilities Shell Coal & Terminal Co 3.75 % 12/01/05 $ 2,200,000
WASHINGTON - 0.62%
$ 500,000 Washington State MFHR Inglenook Court Project
LOC - Bank of America 4.15 % 07/01/25 $ 500,000
WYOMING - 13.06%
$ 1,000,000 Lincoln County WY PCR Exxon Project 4.00 % 11/01/14 $ 1,000,000
2,000,000 Lincoln County WY PCR Exxon Project 4.10 07/01/17 2,000,000
2,700,000 Sweetwater County WY PCR V/R Pacific Corp
Project LOC - Canadian Imperial Bank 4.00 01/01/14 2,700,000
500,000 Platte County WY PCFA Revenue Tri-State G&T
Series B V/R LOC - Societe Generale 4.30 07/01/14 500,000
500,000 Platte County WY PCR V/R LOC - Societe Generale 4.05 07/01/14 500,000
3,800,000 Uinta County WY PCR Chevron USA Inc Project V/R 3.00 08/18/20 3,800,000
--------------
$ 10,500,000
</TABLE>
- ---------------------------------------------------------------------------
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE
REMAINING MATURITY.
- ---------------------------
30
<PAGE>
MASTER INVESTMENT TRUST TAX-FREE MONEY MARKET MASTER PORTFOLIO
<TABLE>
TOTAL INVESTMENTS IN SECURITIES
<C> <S> <C> <C>
(Cost $79,960,000)* (Note 1) 99.43% $ 79,960,000
Other Assets and Liabilities, Net 0.57 455,359
------ --------------
TOTAL NET ASSETS 100.00% $ 80,415,359
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ SECURITIES WITH MATURITIES IN EXCESS OF 397 DAYS ARE SUBJECT TO A
DEMAND FEATURE WHICH REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES.
The accompanying notes are an integral part of these financial statements.
---------------------
31
<PAGE>
TREASURY MONEY MARKET MUTUAL FUND
- ---------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY NOTES - 13.49%
$50,000,000 U.S. Treasury Notes 5.63 % 06/30/97 $ 49,932,442
85,000,000 U.S. Treasury Notes 6.50 05/15/97 85,381,508
65,000,000 U.S. Treasury Notes 6.63 03/31/97 65,318,438
60,000,000 U.S. Treasury Notes 6.75 02/28/97 60,290,876
--------------
TOTAL U.S. TREASURY NOTES $ 260,923,264
U.S. TREASURY BILLS - 39.62%
$275,000,000 U.S. Treasury Bills 5.18 %* 10/03/96 $ 274,927,194
300,000,000 U.S. Treasury Bills 4.78 * 10/10/96 299,616,750
100,000,000 U.S. Treasury Bills 5.04 * 11/14/96 99,384,000
50,000,000 U.S. Treasury Bills 4.98 * 03/06/97 48,889,583
45,000,000 U.S. Treasury Bills 5.17 * 04/03/97 43,773,525
--------------
TOTAL U.S. TREASURY BILLS $ 766,591,052
REPURCHASE AGREEMENTS - 47.08%
$225,975,000 Goldman Sachs & Co Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.20 10/01/96 $ 225,975,000
230,000,000 HSBC Securities Inc Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.70 10/01/96 230,000,000
225,000,000 JP Morgan Securities Inc Tri-Party Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.70 10/01/96 225,000,000
230,000,000 Morgan Stanley Tri-Party Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.65 10/01/96 230,000,000
--------------
TOTAL REPURCHASE AGREEMENTS $ 910,975,000
</TABLE>
- ------------------------
32
<PAGE>
TREASURY MONEY MARKET MUTUAL FUND
<TABLE>
TOTAL INVESTMENTS IN SECURITIES
<C> <S> <C> <C>
(Cost $1,938,489,316)**(Note 1) 100.19% $1,938,489,316
Other Assets and Liabilities (0.19) (3,769,466)
------ --------------
TOTAL NET ASSETS 100.00% $1,934,719,850
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
---------------------
33
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
CALIFORNIA GOVERNMENT
TAX-FREE MONEY
MONEY MARKET MARKET
MUTUAL FUND MUTUAL FUND
<S> <C> <C>
- ---------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities at market value (see
cost below)
(Treasury Money Market Mutual Fund
includes repurchase agreements of
$910,975,000) $1,148,121,742 $65,344,841
Cash 8,582,528 17,722
Receivables:
Interest 8,177,265 127,760
Due from administrator (Note 2) 0 0
Organizational expenses, net of
amortization 1,262 1,824
Prepaid expenses and other assets 34,877 19,557
TOTAL ASSETS 1,164,917,674 65,511,704
LIABILITIES
Cash overdraft due to custodian 0 0
Payables:
Distribution to shareholders 0 220,134
Due to sponsor and distributor 2,512,327 11,489
Due to advisor (Note 2) 389,055 199,946
Capital shares redeemed 510,382 0
Other 75,019 44,173
TOTAL LIABILITIES 3,486,783 475,742
TOTAL NET ASSETS
$1,161,430,891 $65,035,962
NET ASSETS CONSIST OF:
Paid-in capital - Class A $1,161,491,137 $65,037,107
Paid-in capital - Service Class N/A N/A
Paid-in capital - Institutional Class N/A N/A
Undistributed (overdistributed) net
investment income 0 (1,214)
Undistributed net realized gain (loss)
on investments (60,246) 69
TOTAL NET ASSETS $1,161,430,891 $65,035,962
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $1,161,430,891 $65,035,962
Shares outstanding - Class A 1,161,491,137 65,037,107
Net asset value and offering price per
share - Class A $ 1.00 $ 1.00
Net Assets - Service Class N/A N/A
Shares outstanding - Service Class N/A N/A
Net asset value and offering price per
share - Service Class N/A N/A
Net Assets - Institutional Class N/A N/A
Shares outstanding - Institutional Class N/A N/A
Net asset value and offering price per
share -
Institutional Class N/A N/A
INVESTMENT AT COST $1,148,121,742 $65,344,841
- ---------------------------------------------------------------------------
</TABLE>
(1) INVESTMENT IN MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ------------------------
34
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
MUTUAL FUND MUTUAL FUND MUTUAL FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities at market value (see
cost below)
(Treasury Money Market Mutual Fund
includes repurchase agreements of
$910,975,000) $4,531,414,560 $ 4,910,099(1) $1,938,489,316
Cash 0 0 326,756
Receivables:
Interest 6,205,121 11,286 3,300,542
Due from administrator (Note 2) 0 11,951 0
Organizational expenses, net of
amortization 30,704 36,160 100,861
Prepaid expenses and other assets 145,850 37,456 365,634
TOTAL ASSETS 4,537,796,235 5,006,952 1,942,583,109
LIABILITIES
Cash overdraft due to custodian 112,738 0 0
Payables:
Distribution to shareholders 15,889,186 9,995 6,295,662
Due to sponsor and distributor 1,327,462 916 238,016
Due to advisor (Note 2) 2,431,536 0 931,799
Capital shares redeemed 0 0 0
Other 304,384 20,879 397,782
TOTAL LIABILITIES 20,065,306 31,790 7,863,259
TOTAL NET ASSETS
$4,517,730,929 $ 4,975,162 $1,934,719,850
NET ASSETS CONSIST OF:
Paid-in capital - Class A $3,801,756,555 $ 4,975,599 $ 53,705,222
Paid-in capital - Service Class 699,303,315 N/A 1,340,314,198
Paid-in capital - Institutional Class 18,505,994 N/A 540,680,847
Undistributed (overdistributed) net
investment income (3,642) 0 (19,689)
Undistributed net realized gain (loss)
on investments (1,831,293) (437) 39,272
TOTAL NET ASSETS $4,517,730,929 $ 4,975,162 $1,934,719,850
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $3,799,908,212 $ 4,975,162 $ 53,705,675
Shares outstanding - Class A 3,800,365,566 4,975,133 53,726,206
Net asset value and offering price per
share - Class A $ 1.00 $ 1.00 $ 1.00
Net Assets - Service Class $ 699,230,511 N/A $1,340,325,184
Shares outstanding - Service Class 699,303,315 N/A 1,340,314,198
Net asset value and offering price per
share - Service Class $ 1.00 N/A $ 1.00
Net Assets - Institutional Class $ 18,592,206 N/A $ 540,688,991
Shares outstanding - Institutional Class 18,583,883 N/A 540,804,906
Net asset value and offering price per
share -
Institutional Class $ 1.00 N/A $ 1.00
INVESTMENT AT COST $4,531,414,560 N/A $1,938,489,316
- ------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
35
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY
MARKET MUTUAL FUND
----------------------------
FOR THE NINE FOR THE
MONTHS ENDED YEAR ENDED
SEPT. 30, DEC. 31,
1996 1995
<S> <C> <C>
- -------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 27,459,147 $37,329,982
Expenses allocated from Master
Portfolio N/A N/A
TOTAL INVESTMENT INCOME 27,459,147 37,329,982
EXPENSES (NOTE 2)
Advisory fees 4,099,437 4,867,523
Administration fees 245,966 292,095
Custody fees 142,536 170,221
Shareholder servicing fees 2,459,662 2,920,955
Portfolio accounting fees 210,019 256,736
Transfer agency fees 577,203 695,960
Distribution fees 260,016 322,069
Amortization of organizational
expenses 3,866 5,207
Legal and audit fees 85,001 87,625
Registration fees 39,452 33,999
Directors' fees 3,743 5,042
Shareholder reports 149,729 107,658
Other 98,014 84,948
TOTAL EXPENSES 8,374,644 9,850,038
Less:
Waived and reimbursed fees (Note 2) (3,045,388) (3,521,116)
Net expenses 5,329,256 6,328,922
NET INVESTMENT INCOME 22,129,891 31,001,060
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 39,647 (20,985)
NET GAIN (LOSS) ON INVESTMENTS 39,647 (20,985)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 22,169,538 $30,980,075
- -------------------------------------------------------------------------
</TABLE>
(1) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
36
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE
GOVERNMENT MONEY MARKET TREASURY
MONEY MARKET MUTUAL MONEY MARKET
MUTUAL FUND MONEY MARKET MUTUAL FUND FUND (1) MUTUAL FUND
------------- ----------------------------- ------------- -------------
FOR THE FOR THE NINE FOR THE FOR THE FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
SEPT. 30, SEPT. 30, DEC. 31, SEPT. 30, SEPT. 30,
1996 1996 1995 1996 1996
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 5,083,015 $157,416,270 $189,686,272 $ 49,902 $ 105,450,049
Expenses allocated from Master
Portfolio N/A N/A N/A (4,331) N/A
TOTAL INVESTMENT INCOME 5,083,015 157,416,270 189,686,272 45,571 105,450,049
EXPENSES (NOTE 2)
Advisory fees 274,640 11,593,678 12,729,506 0 4,516,348
Administration fees 147,235 872,577 954,713 731 1,745,759
Custody fees 19,745 489,652 537,886 0 252,183
Shareholder servicing fees 155,369 8,436,247 9,399,920 3,657 4,608,283
Portfolio accounting fees 31,849 625,939 698,002 0 0
Transfer agency fees 14,841 1,927,196 1,100,155 1,463 82,755
Distribution fees 29,161 4,067,866 2,898,662 731 13,064
Amortization of organizational
expenses 0 12,191 14,420 8,272 7,954
Legal and audit fees 28,746 388,102 283,256 8,702 47,635
Registration fees 14,681 242,858 257,244 16,283 218,636
Directors' fees 6,861 3,743 5,000 2,288 2,910
Shareholder reports 11,878 187,179 154,384 5,967 12,326
Other 7,405 50,607 58,909 673 63,074
TOTAL EXPENSES 742,411 28,897,835 29,092,057 48,767 11,570,927
Less:
Waived and reimbursed fees (Note 2) (28,486) (3,884,553) (3,193,347) (43,763) (4,051,564)
Net expenses 713,925 25,013,282 25,898,710 5,004 7,519,363
NET INVESTMENT INCOME 4,369,090 132,402,988 163,787,562 40,567 97,930,686
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 69 740,929 (1,181,926) (437) 39,272
NET GAIN (LOSS) ON INVESTMENTS 69 740,929 (1,181,926) (437) 39,272
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 4,369,159 $133,143,917 $162,605,636 $ 40,130 $ 97,969,958
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
The accompanying notes are an integral part of these financial statements.
---------------------
37
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY MARKET MUTUAL FUND
-----------------------------------------------------
FOR THE NINE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
SEPT. 30, 1996 DEC. 31, 1995 DEC. 31, 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 22,129,891 $ 31,001,060 $ 18,657,132
Net realized gain (loss) on sale of
investments 39,647 (20,985) (73,261)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 22,169,538 30,980,075 18,583,871
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (22,129,891) (31,001,060) (18,657,132)
SERVICE CLASS N/A N/A N/A
INSTITUTIONAL CLASS N/A N/A N/A
In excess of net investment income
CLASS A 0 0 0
SERVICE CLASS N/A N/A N/A
INSTITUTIONAL CLASS N/A N/A N/A
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 856,726,858 743,403,372 1,062,139,556
Reinvestment of dividends - Class A 22,241,153 29,943,332 16,445,769
Cost of shares redeemed - Class A (748,580,464) (612,067,361) (1,002,187,039)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- CLASS A 130,387,547 161,279,343 76,398,286
Proceeds from shares sold - Service
Class N/A N/A N/A
Reinvestment of dividends - Service
Class N/A N/A N/A
Cost of shares redeemed - Service
Class N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- SERVICE CLASS N/A N/A N/A
Proceeds from shares sold -
Institutional Class N/A N/A N/A
Reinvestment of dividends -
Institutional Class N/A N/A N/A
Cost of shares redeemed -
Institutional Class N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- INSTITUTIONAL CLASS N/A N/A N/A
INCREASE (DECREASE) IN NET ASSETS 130,427,194 161,258,358 76,325,025
NET ASSETS:
Beginning net assets 1,031,003,697 869,745,339 793,420,314
ENDING NET ASSETS $1,161,430,891 $1,031,003,697 $ 869,745,339
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $194,880,059 FOR CLASS A AND AND
$19,474,700 FOR THE INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA MONEY
MARKET FUND AND PACIFICA ASSET PRESERVATION FUND MERGERS. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
38
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET MUTUAL FUND
-----------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPT. 30, 1996 SEPT. 30, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 4,369,090 $ 6,495,283
Net realized gain (loss) on sale of
investments 69 454,418
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 4,369,159 6,949,701
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (4,369,090) (6,949,701)
SERVICE CLASS N/A N/A
INSTITUTIONAL CLASS N/A N/A
In excess of net investment income
CLASS A (1,214) 0
SERVICE CLASS N/A N/A
INSTITUTIONAL CLASS N/A N/A
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 1,617,283,570 4,140,356,138
Reinvestment of dividends - Class A 1,166,154 1,587,592
Cost of shares redeemed - Class A (1,662,781,053) (4,226,851,391)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- CLASS A (44,331,329) (84,907,661)
Proceeds from shares sold - Service
Class N/A N/A
Reinvestment of dividends - Service
Class N/A N/A
Cost of shares redeemed - Service
Class N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- SERVICE CLASS N/A N/A
Proceeds from shares sold -
Institutional Class N/A N/A
Reinvestment of dividends -
Institutional Class N/A N/A
Cost of shares redeemed -
Institutional Class N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- INSTITUTIONAL CLASS N/A N/A
INCREASE (DECREASE) IN NET ASSETS (44,332,474) (84,907,661)
NET ASSETS:
Beginning net assets 109,368,436 194,276,097
ENDING NET ASSETS $ 65,035,962 $ 109,368,436
- --------------------------------------------------------------------------------
<CAPTION>
MONEY MARKET MUTUAL FUND
------------------------------------------------------
FOR THE NINE
MONTHS ENDED FOR THE FOR THE
SEPT. 30, YEAR ENDED YEAR ENDED
1996 (1) DEC. 31, 1995 DEC. 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 132,402,988 $ 163,787,562 $ 42,335,237
Net realized gain (loss) on sale of
investments 740,929 (1,181,926) (85,382)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 133,143,917 162,605,636 42,249,855
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (113,221,991) (150,704,682) (42,335,237)
SERVICE CLASS (19,122,485) (13,082,880) 0
INSTITUTIONAL CLASS (62,154) 0 0
In excess of net investment income
CLASS A 0 0 0
SERVICE CLASS 0 0 0
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 2,061,107,506 2,284,498,553 2,694,494,544
Reinvestment of dividends - Class A 111,610,934 146,963,258 32,541,176
Cost of shares redeemed - Class A (1,266,041,632) (1,881,800,747) (700,482,027)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- CLASS A 906,676,808 549,661,064 2,026,553,693
Proceeds from shares sold - Service
Class 1,063,771,625 1,211,993,101 0
Reinvestment of dividends - Service
Class 19,240,628 10,735,965 0
Cost of shares redeemed - Service
Class (1,002,807,161) (603,630,843) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- SERVICE CLASS 80,205,092 619,098,223 0
Proceeds from shares sold -
Institutional Class 19,474,700 0 0
Reinvestment of dividends -
Institutional Class 0 0 0
Cost of shares redeemed -
Institutional Class (882,494) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- INSTITUTIONAL CLASS 18,592,206 0 0
INCREASE (DECREASE) IN NET ASSETS 1,006,211,393 1,167,577,361 2,026,468,311
NET ASSETS:
Beginning net assets 3,511,519,536 2,343,942,175 317,473,864
ENDING NET ASSETS $ 4,517,730,929 $ 3,511,519,536 $2,343,942,175
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
39
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE
MONEY
MARKET
MUTUAL FUND
-----------
FROM APRIL TREASURY MONEY MARKET MUTUAL FUND
2, 1996
(COMMENCEMENT ------------------------------------
OF
OPERATIONS) FOR THE FOR THE
TO SEPT. YEAR ENDED YEAR ENDED
30, 1996 SEPT. 30, 1996 SEPT. 30, 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 40,567 $ 97,930,686 $ 49,027,757
Net realized gain (loss) on sale of
investments (437) 39,272 0
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 40,130 97,969,958 49,027,757
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (40,567) (2,763,079) 0
SERVICE CLASS N/A (33,164,442) (48,762,724)
INSTITUTIONAL CLASS N/A (62,003,165) (265,033)
In excess of net investment income
CLASS A 0 (293) 0
SERVICE CLASS N/A (4,695) 0
INSTITUTIONAL CLASS N/A (14,701) 0
CAPITAL SHARES TRANSACTIONS:
Proceeds from shares sold - Class A 14,242,313 265,329,368 0
Reinvestment of dividends - Class A 30,552 303,969 0
Cost of shares redeemed - Class A (9,297,266) (211,928,115) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- CLASS A 4,975,599 53,705,222 0
Proceeds from shares sold - Service
Class N/A 3,893,787,080 20,388,947,721
Reinvestment of dividends - Service
Class N/A 227,942 0
Cost of shares redeemed - Service
Class N/A (3,555,407,931) (20,077,871,000)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- SERVICE CLASS N/A 338,607,091 311,076,721
Proceeds from shares sold -
Institutional Class N/A 4,920,884,222 120,817,000
Reinvestment of dividends -
Institutional Class N/A 1,018,863 0
Cost of shares redeemed -
Institutional Class N/A (4,417,665,197) (84,374,000)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FROM SHARE TRANSACTIONS
- INSTITUTIONAL CLASS N/A 504,237,888 36,443,000
INCREASE (DECREASE) IN NET ASSETS 4,975,162 896,569,784 347,519,721
NET ASSETS:
Beginning net assets 0 1,038,150,066 690,630,345
ENDING NET ASSETS $ 4,975,162 $ 1,934,719,850 $ 1,038,150,066
- -------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
40
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
41
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY
MARKET MUTUAL FUND
-------------------------------
PERIOD YEAR YEAR
ENDED ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (2) 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.03 0.02
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.02 0.03 0.02
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.03) (0.02)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.02) (0.03) (0.02)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 2.04% 3.23% 2.28%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $1,161,431 $1,031,004 $869,745
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.65% 0.65% 0.62%
Ratio of net investment income to average net assets 2.69% 3.18% 2.26%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.02% 1.01% 1.08%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 2.32% 2.82% 1.80%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. PRIOR TO APRIL 1, 1996,
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM") SERVED AS THE
FUND'S ADVISER. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
- ---------------------
42
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
MONEY MARKET MUTUAL GOVERNMENT MONEY MARKET
FUND (CONT.) MUTUAL FUND (1)
-------------------- ----------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
1993 1992 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.02 0.03 0.05 0.05 0.03 0.03 0.04 0.06
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.02 0.03 0.05 0.05 0.03 0.03 0.04 0.06
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02) (0.03) (0.05) (0.05) (0.03) (0.03) (0.04) (0.06)
Distributions from net
realized gain 0.00 0.00 0.00 (0.00) 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.02) (0.03) (0.05) (0.05) (0.03) (0.03) (0.04) (0.06)
--------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 1.89% 2.81% 4.75% 5.22% 3.16% 2.77% 3.99% 6.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $793,420 $572,906 $65,036 $109,368 $194,276 $188,934 $184,705 $171,375
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.55% 0.28% 0.77% 0.79% 0.77% 0.83% 0.82% 0.85%
Ratio of net investment
income to average net
assets 1.88% 2.41% 4.74% 5.08% 3.07% 2.73% 3.85% 6.13%
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.06% 1.03% 0.80% 0.81% 0.79% 0.84% 0.82% 0.88%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 1.37% 1.66% 4.71% 5.06% 3.05% 2.72% 3.85% 6.10%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. PRIOR TO APRIL 1, 1996,
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM") SERVED AS THE
FUND'S ADVISER. IN CONNECTION WITH THE MERGER OF FIRST INTERSTATE
BANCORP INTO WELLS FARGO & CO. ON APRIL 1, 1996, FICM WAS RENAMED
WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
---------------------
43
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET MUTUAL FUND
-------------------------------
CLASS A
-------------------------------
PERIOD YEAR YEAR
ENDED ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (1) 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.05 0.04
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.03 0.05 0.04
LESS DISTRIBUTIONS:
Dividends from net investment income (0.03) (0.05) (0.04)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.03) (0.05) (0.04)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 3.55% 5.34% 3.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $3,799,908 $2,892,621 $2,343,942
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.75% 0.75% 0.69%
Ratio of net investment income to average net assets 4.66% 5.13% 4.12%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.88% 0.83% 0.89%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.53% 5.05% 3.92%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE FUND COMMENCED OPERATIONS ON JULY 1, 1992.
(3) THE CLASS S SHARES COMMENCED OPERATIONS ON MAY 25, 1995.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(5) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
(6) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
- ---------------------
44
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
MONEY MARKET MUTUAL FUND (CONT.) NATIONAL
----------------------------------------------------- TAX-FREE MONEY
INST. MARKET MUTUAL
CLASS A (CONT.) CLASS S CLASS FUND
-------------------- -------------------- --------- ---------------
YEAR PERIOD PERIOD PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, SEPT. 30, DEC. 31, SEPT. 30, SEPT. 30,
1993 1992 (2) 1996 1995 (3) 1996 (4) 1996 (5)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- --------- ---------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.03 0.02 0.03 0.03 0.00 0.01
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- ---------------
TOTAL FROM INVESTMENT
OPERATIONS 0.03 0.02 0.03 0.03 0.00 0.01
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.02) (0.03) (0.03) (0.00) (0.01)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- ---------------
TOTAL FROM DISTRIBUTIONS (0.03) (0.02) (0.03) (0.03) (0.00) (0.01)
--------- --------- --------- --------- --------- ---------------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- --------- ---------------
--------- --------- --------- --------- --------- ---------------
TOTAL RETURN (NOT
ANNUALIZED) 2.70% 1.50% 3.03% 2.73% 0.29% 1.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $317,474 $236,269 $699,231 $618,899 $18,592 $4,975
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.58% 0.20% 1.42% 1.43% 0.74% 0.62%(6)
Ratio of net investment
income to average net
assets 2.67% 2.98% 3.98% 4.40% 5.03% 2.71%(6)
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.00% 0.94% 1.55% 1.53% 0.77% 3.56%(6)
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 2.25% 2.24% 3.85% 4.30% 5.00% (0.23)%(6)
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) THE FUND CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO SEPTEMBER 30.
(2) THE FUND COMMENCED OPERATIONS ON JULY 1, 1992.
(3) THE CLASS S SHARES COMMENCED OPERATIONS ON MAY 25, 1995.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(5) THE FUND COMMENCED OPERATIONS ON APRIL 2, 1996.
(6) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
---------------------
45
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
TREASURY MONEY MARKET MUTUAL
FUND (1)
-------------------------------
CLASS A SERVICE CLASS
--------- --------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30,
1996 1996 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.05 0.05 0.05
Net realized and unrealized gain (loss) on investments 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.05 0.05 0.05
LESS DISTRIBUTIONS:
Dividends from net investment income (0.05) (0.05) (0.05)
Distributions from net realized gain 0.00 0.00 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.05) (0.05) (0.05)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 4.95% 5.03% 5.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $53,706 $1,340,325 $1,001,707
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.55% 0.45% 0.42%
Ratio of net investment income to average net assets 4.96% 4.98% 5.32%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.67% 0.60% 0.66%
Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses 4.84% 4.83% 5.08%
- -----------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS PORTFOLIO OF PACIFIC AMERICAN FUNDS THROUGH
OCTOBER 1, 1994 WHEN IT WAS REORGANIZED AS THE PACIFIC AMERICAN U.S.
TREASURY PORTFOLIO, A PORTFOLIO OF PACIFICA FUNDS TRUST. IN JULY 1995,
THE FUND WAS RENAMED THE PACIFICA TREASURY MONEY MARKET FUND, AND ON
SEPTEMBER 6, 1996, THE FUND WAS REORGANIZED AS A FUND OF STAGECOACH
FUNDS, INC. PRIOR TO APRIL 1, 1996, FIRST INTERSTATE CAPITAL
MANAGEMENT, INC. ("FICM") SERVED AS THE FUND'S ADVISER. IN CONNECTION
WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON
APRIL 1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT,
INC.
(2) THE INSTITUTIONAL CLASS COMMENCED OPERATIONS ON AUGUST 11, 1995.
(3) THE FUND CHANGED ITS FISCAL YEAR FROM MARCH 31 TO SEPTEMBER 30.
- ---------------------
46
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
TREASURY MONEY MARKET MUTUAL FUND (1) (CONT.)
---------------------------------------------------------------------------
SERVICE CLASS (CONT.) INSTITUTIONAL CLASS
----------------------------------------------------- --------------------
PERIOD YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
SEPT. 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, SEPT. 30, SEPT. 30,
1994 (3) 1994 1993 1992 1991 1996 1995 (2)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.02 0.03 0.03 0.05 0.07 0.05 0.01
Net realized and
unrealized gain (loss)
on investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.02 0.03 0.03 0.05 0.07 0.05 0.01
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02) (0.03) (0.03) (0.05) (0.07) (0.05) (0.01)
Distributions from net
realized gain (0.00) 0.00 0.00 (0.00) (0.00) 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.02) (0.03) (0.03) (0.05) (0.07) (0.05) (0.01)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 3.75%** 2.81% 3.13% 5.03% 7.42% 5.26% 5.51%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $690,630 $654,950 $614,237 $281,343 $118,623 $540,689 $36,443
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.43% 0.43% 0.43% 0.45% 0.48% 0.25% 0.26%
Ratio of net investment
income to average net
assets 3.72% 2.77% 3.04% 4.73% 7.10% 5.21% 5.42%
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.90% 0.90% 0.91% 0.93% 0.94% 0.59% 0.69%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 3.25% 2.30% 2.56% 4.25% 6.64% 4.87% 4.99%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
** ANNUALIZED
(1) THE FUND OPERATED AS PORTFOLIO OF PACIFIC AMERICAN FUNDS THROUGH
OCTOBER 1, 1994 WHEN IT WAS REORGANIZED AS THE PACIFIC AMERICAN U.S.
TREASURY PORTFOLIO, A PORTFOLIO OF PACIFICA FUNDS TRUST. IN JULY 1995,
THE FUND WAS RENAMED THE PACIFICA TREASURY MONEY MARKET FUND, AND ON
SEPTEMBER 6, 1996, THE FUND WAS REORGANIZED AS A FUND OF STAGECOACH
FUNDS, INC. PRIOR TO APRIL 1, 1996, FIRST INTERSTATE CAPITAL
MANAGEMENT, INC. ("FICM") SERVED AS THE FUND'S ADVISER. IN CONNECTION
WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON
APRIL 1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT,
INC.
(2) THE INSTITUTIONAL CLASS COMMENCED OPERATIONS ON AUGUST 11, 1995.
(3) THE FUND CHANGED ITS FISCAL YEAR FROM MARCH 31 TO SEPTEMBER 30.
---------------------
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940 (the "1940 Act"), as an open-end series investment company.
The Company commenced operations on January 1, 1992, and currently offers the
following nineteen separate diversified Funds: the Aggressive Growth, Asset
Allocation, Balanced, Corporate Stock, Diversified Income, Equity Value, Ginnie
Mae, Growth and Income, Government Money Market Mutual, Intermediate Bond, Money
Market Mutual, Money Market Trust, National Tax-Free, National Tax-Free Money
Market Mutual, Prime Money Market Mutual, Short-Intermediate U.S. Government
Income, Small Cap, Treasury Money Market Mutual, and U.S. Government Allocation
Funds; and five non-diversified funds: the Arizona Tax-Free, California Tax-Free
Bond, California Tax-Free Income, California Tax-Free Money Market Mutual, and
Oregon Tax-Free Funds. These financial statements represent the California
Tax-Free Money Market Mutual, Government Money Market Mutual, Money Market
Mutual, National Tax-Free Money Market Mutual, and Treasury Money Market Mutual
Funds (the "Funds").
At a special shareholders meeting on July 16, 1996, the Shareholders of Pacifica
Funds Trust ("Pacifica") approved a plan of reorganization providing for the
transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach Fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Treasury Money Market Mutual and
Government Money Market Mutual Funds were established to acquire all of the
assets and assume all of the liabilities of the Pacifica Treasury Money Market
and Government Money Market Funds, respectively (collectively, the "Predecessor
Funds"). Additionally, the Stagecoach Money Market Mutual Fund acquired all of
the assets and assumed all of the liabilities of the Pacifica Money Market and
Asset Preservation Funds. These acquisitions were accomplished in separate
exchanges for shares of the respective Fund. Pursuant to the reorganization, the
Company changed its fiscal year-end from December 31 to September 30. All
performance and financial data for the Government Money Market Mutual and
Treasury Money Market Mutual Funds prior to September 6, 1996 refers to the
Predecessor Funds.
The Money Market Mutual Fund offers Class A, Institutional, and Class S shares
and the Treasury Money Market Mutual Fund offer Class A, Institutional, and
Service Class shares. The California Tax-Free Money Market Mutual, Government
Money Market Mutual, and National Tax-Free Money Market Mutual Funds offer only
one class of shares. The three classes of shares differ principally in the
- ---------------------
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
applicable shareholder servicing fees and distribution fees. Shareholders of
each class also bear certain expenses that pertain to that particular class. All
shareholders bear the common expenses of the Fund and earn income from the
portfolio pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are determined separately for each
class based on income and expenses allocable to each class. Gains are allocated
to each class pro rata based upon net assets of each class on the date of
distribution. No class has preferential dividend rights. Differences in per
share dividend rates generally result from the relative weightings of pro rata
income and gain allocations and from differences in separate class expenses,
including distribution and service fees.
The following significant accounting policies are consistently followed by the
Funds in the preparation of their 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 National Tax-Free Money Market Mutual Fund invests only in interests of the
Tax-Free Money Market Master Portfolio (the "Master Portfolio") of Master
Investment Trust (the "Trust"), an open-end, series investment company. The
Master Portfolio has the same investment objective as the Fund. The value of the
Fund's investment in its corresponding Master Portfolio reflects the Fund's
interest in the net assets of the corresponding Master Portfolio (6.11%) at
September 30, 1996.
Each Fund, or related Master Portfolio, invests 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.
Each Fund, or related Master Portfolio, uses the amortized cost method to value
its portfolio securities and seeks to maintain a constant net asset value of
$1.00 per share; however, there can be no assurance that the Funds will meet
this goal. The amortized cost method involves valuing a security at its cost
plus accretion of discount or minus amortized premium over the period until
maturity, which approximates market value.
---------------------
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Interest income is accrued daily. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are accreted or amortized as required by the
Internal Revenue 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 paragraphs, the "Funds") Portfolio of Investments. The
Funds' adviser pools the Funds' cash and invests in repurchase agreements
entered into by the Funds. The repurchase agreement 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 collateral daily and to obtain additional collateral as necessary to
maintain market value equal to or greater than the resale price. The repurchase
agreements held in the Funds at September 30, 1996, were collateralized by U.S.
government obligations. The repurchase agreements were entered into on September
30, 1996.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income of the Funds 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's policy is to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies and to distribute
substantially all a Fund's net investment income and any net realized capital
gains to its shareholders. Therefore, no federal or state income tax provision
is required. The California Tax-Free Money Market Mutual Fund currently has
capital loss carryforwards of $73,409 that will expire in the year 2002 and
$20,985 that will expire in the year 2003. The Money Market Mutual Fund has
capital loss carryforwards of $85,382 that will expire in the year 2002 and
$1,882,926 that will expire in the year 2003. Any loss carryforwards from
Pacifica are included in the corresponding Stagecoach Fund's carryforwards as
shown above. The Board intends to offset net capital gains with each capital
loss carryforward until each carryforward has been fully utilized or expires. No
capital gain distribution shall be made until the capital loss carryforward has
been fully utilized or has expired.
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of
- ---------------------
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS
the Fund and/or Class. Such expenses are being amortized by each Fund on a
straight-line basis over 60 months from the date the Fund and/or Class commenced
operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of each Fund
(other than the National Tax-Free Money Market Mutual Fund) with Wells Fargo
Bank, N.A. ("WFB"). Pursuant to the contracts, WFB has agreed to furnish to the
Funds investment guidance and policy direction in connection with daily
portfolio management. Under such contracts, WFB is entitled to be paid monthly
advisory fees at the annual percentage rate of average daily net assets as
indicated below:
<TABLE>
<CAPTION>
FUND
<S> <C>
- ---------------------------------------------------------------------------------------------------
California Tax-Free Money Market Mutual Fund 0.50%
Government Money Market Mutual Fund 0.30%
Money Market Mutual Fund 0.40%
Treasury Money Market Mutual Fund 0.25%
</TABLE>
For the period from October 1, 1995 to March 31, 1996, the Government Money
Market Mutual and Treasury Money Market Mutual Funds were advised by First
Interstate Capital Management, Inc. ("FICM"). Pursuant to the advisory
contracts, the Funds paid an advisory fee at an annual rate of 0.30% of the
first $500 million, 0.25% of the next $500 million, and 0.20% in excess of $1
billion of each Fund's average daily net assets. On April 1, 1996, First
Interstate Bancorp ("FIB") was merged with and into Wells Fargo & Company
("Wells Fargo") and FICM and First Interstate Bank of California ("FICAL")
became indirect wholly-owned subsidiaries of Wells Fargo. In connection with
this merger, FICM changed its name to Wells Fargo Investment Management, Inc.
For the period from April 1, 1996 to September 5, 1996, such advisory fees were
paid to Wells Fargo Investment Management, Inc.
The National Tax-Free Money Market Mutual Fund does not directly retain an
investment adviser because the Fund invests all of its assets in a Master
Portfolio of the Trust which, in turn, retains WFB as investment adviser.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB is responsible for providing custody and fund accounting services for the
Funds. For providing custody services, WFB is entitled to be compensated at an
annual rate of 0.0167% of the average daily net assets of each Fund. For
portfolio accounting services, WFB is entitled to a monthly base fee of $2,000
plus 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 the net assets over $100 million.
---------------------
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the period from October 1, 1995 to March 31, 1996, FICAL served as the
custodian for the Government Money Market Mutual and Treasury Money Market
Mutual Funds. Pursuant to the contracts, the Funds paid a custodian fee based on
net assets and certain transaction charges. For the period from April 1, 1996 to
September 5, 1996, such custodian fees were paid to WFB.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide transfer agency services for the Funds. Under the
transfer agency agreement with the California Tax-Free Money Market Mutual,
Money Market Mutual, and National Tax-Free Money Market Mutual Funds, WFB is
entitled to be paid a per account fee plus other related costs with a minimum
monthly fee of $3,000 per Fund unless net assets of the Fund are under $20
million. For as long as the net assets remain under $20 million, a Fund will not
be charged any transfer agency fees by WFB. Under the agreement with the
Government Money Market Mutual Fund, WFB is entitled to be paid transfer agency
fees at an annual rate of 0.07% of average daily net assets. For the Treasury
Money Market Mutual Fund, WFB is entitled to be paid transfer agency fees at an
annual rate of 0.07% of average daily net assets attributable to the class A
shares, 0.04% of average daily net assets attributable to Service class shares,
and 0.02% of average daily net assets attributable to Institutional class
shares.
For the period from October 1, 1995 to September 5, 1996, the Government Money
Market Mutual and Treasury Money Market Mutual Funds retained Furman Selz LLC
("Furman Selz") to perform transfer agency related services.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services for the Funds. WFB is entitled to
be compensated for these services based on an annual rate of average daily net
assets not to exceed 0.30% for the California Tax-Free Money Market Mutual Fund
and Class A shares of the Money Market Mutual Fund, 0.25% for the Government
Money Market Mutual Fund, National Tax-Free Money Market Mutual Fund, Class A
shares of the Treasury Money Market Mutual Fund, and Institutional and Class S
shares of the Money Market Mutual Fund, and 0.20% for the Service class shares
of the Treasury Money Market Mutual Fund.
- ---------------------
52
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The servicing expenses for the Funds for the period ended September 30, 1996
were as follows:
<TABLE>
<CAPTION>
SERVICING
SERVICING FEES SERVICING FEES
FEES CLASS INSTITUTIONAL
CLASS A S/SERVICE CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Money Market Mutual Fund* $7,257,001 $ 1,176,803 $ 2,443
Treasury Money Market Mutual Fund** 153,899 3,022,260 1,432,124
</TABLE>
* FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
** FOR THE YEAR ENDED SEPTEMBER 30, 1996.
For the period from October 1, 1995 to September 5, 1996, various banks, trust
companies, broker-dealers or other financial organizations (collectively,
"Service Organizations") also provided administrative services for the
Government Money Market Mutual and Treasury Money Market Mutual Funds, such as
maintaining shareholder accounts and records. The Funds paid fees to Service
Organizations in amounts up to an annual rate of 0.25% of the daily net assets
of the Fund's shares owned by shareholders with whom the Service Organization
had a servicing relationship.
The Company has entered into administration and distribution agreements on
behalf of the Funds with Stephens. Under the agreements, Stephens has agreed to
provide supervisory, administrative and distribution services to the Funds. For
receiving supervisory and administrative services, the California Tax-Free Money
Market Mutual and Money Market Mutual Funds have agreed to pay Stephens a
monthly fee at the annual rate of 0.03% of each Fund's average daily net assets
and the Government Money Market Mutual, National Tax-Free Money Market Mutual,
and Treasury Money Market Mutual Funds have agreed to pay Stephens a monthly fee
at the annual rate of 0.05% of each Fund's average daily net assets.
For the period from October 1, 1995 to September 5, 1996 for the Government
Money Market Mutual Fund and for the period from April 15, 1996 to September 5,
1996 for the Treasury Money Market Mutual Fund, Furman Selz provided
administrative services for the operation of the Funds. As compensation for such
services, each Fund paid Furman Selz an annual fee payable monthly equal to
0.15% of the average daily net assets of the Fund. For the period from October
1, 1995 to April 15, 1996, The Dreyfus Corporation ("Dreyfus") provided
administrative services for the operation of the Treasury Money Market Mutual
Fund. As compensation for such services, the Fund paid Dreyfus an annual fee
payable monthly equal to 0.10% of the average daily net assets of the Fund.
---------------------
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEES WAIVED
Payment of the following fees were waived for the period ended September 30,
1996.
<TABLE>
<CAPTION>
FEES WAIVED
BY FURMAN FEES WAIVED FEES WAIVED
FUND SELZ BY FIB BY WFB
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
California Tax-Free Money Market Mutual Fund* N/A N/A $ 3,045,388
Government Money Market Mutual Fund** $ 27,056 $ 0 1,430
Money Market Mutual Fund* N/A N/A 3,884,553
National Tax-Free Money Market Mutual Fund*** N/A N/A 5,594
Treasury Money Market Mutual Fund** 0 2,173,591 1,877,973
</TABLE>
* INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
*** INFORMATION PRESENTED IS FOR THE PERIOD FROM APRIL 2, 1996 (COMMENCEMENT OF
OPERATIONS) TO SEPTEMBER 30, 1996.
For the period from April 2, 1996 (commencement of operations) to September 30,
1996, Stephens has reimbursed $38,169 for expenses in the National Tax-Free
Money Market Mutual Fund. Fee waivers and reimbursements continue at the
discretion of WFB and Stephens, respectively. All amounts shown as waived and
reimbursed fees for the California Tax-Free Money Market Mutual and Money Market
Mutual Funds in the Statements of Operations for the year ended December 31,
1995 were waived by WFB.
WFB and Stephens have agreed to reimburse all or a portion of their respective
fees charged to, or expenses paid by, each such Fund to ensure that the total
Fund operating expenses do not exceed, on an annual basis, 0.75% of the
Government Money Market Mutual Fund's average daily net assets, 0.73% of the
Institutional Class shares of the Money Market Mutual Fund's average daily net
assets, and 0.55%, 0.45%, and 0.25% of the Class A, Service Class, and
Institutional Class shares, respectively, of the Treasury Money Market Mutual
Fund's average daily net assets through August 31, 1997.
The Company has adopted separate Plans pursuant to Rule 12b-1 under the 1940 Act
(the "Plans"), whereby each Fund may defray all or part of the cost of
preparing, printing and distributing prospectuses and other promotional
materials by paying on an annual basis up to 0.05% of the California Tax-Free
Money Market Mutual, Government Money Market Mutual, and National Tax-Free Money
Market Mutual Funds' average daily net assets and up to 0.05% of the average
daily net assets attributable to the Class A shares of the Money Market Mutual
and Treasury Money Market Mutual Funds. Each Fund may participate in joint
- ---------------------
54
<PAGE>
NOTES TO FINANCIAL STATEMENTS
distribution activities with any of the other funds, in which event, expenses
reimbursed out of the assets of one Fund may be attributable, in part, to the
distribution-related activities of another fund. Generally, the expenses
attributable to joint distribution activities are allocated among all of the
funds in proportion to their relative net asset sizes.
The separate Class S Distribution Plan for the Money Market Mutual Fund provides
that the Fund may pay, as compensation for distribution-related services, a
monthly fee at an annual rate of up to 0.75% of the Fund's average daily net
assets attributable to Class S shares. Total distribution expenses related to
the Class S shares of the Fund were $3,587,118 for the nine months ended
September 30, 1996.
For the period from October 1, 1995 to September 5, 1996, the Government Money
Market Mutual and Treasury Money Market Mutual Funds had adopted Distribution
Plans pursuant to Rule 12b-1 under the 1940 Act. For the Treasury Money Market
Mutual Fund, the Plan was for the Class A shares only. The Plans provided for
payments by each Fund not to exceed 0.25% of the average net assets of the
Government Money Market Mutual Fund, and equal to 0.05% of the average daily net
assets of the Class A shares of the Treasury Money Market Mutual Fund.
Certain officers and directors of the Company are also officers of Stephens. At
September 30, 1996, Stephens owned 55,934 shares of the California Tax-Free
Money Market Mutual and 11,166 shares of the Money Market Mutual and one share
each of the Government Money Market Mutual, National Tax-Free Money Market
Mutual and Treasury Money Market Mutual Funds.
---------------------
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. CAPITAL SHARES TRANSACTIONS
As of September 30, 1996, there were 49 billion shares of $.001 par value
capital stock authorized by the Company. At September 30, 1996, the California
Tax-Free Money Market Mutual, Government Money Market Mutual, and National
Tax-Free Money Market Funds were authorized to issue 3 billion shares and the
Money Market Mutual and Treasury Money Market Mutual Funds were authorized to
issue 13 billion and 9 billion shares respectively, of $.001 par value capital
stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY MARKET
MUTUAL FUND
------------------------------------
FOR THE
NINE
MONTHS FOR THE FOR THE
ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 1995 1994
<S> <C> <C> <C>
- --------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 856,726,858 743,403,372 1,062,139,556
Shares issued in reinvestment of
dividends -- Class A 22,241,153 29,943,332 16,445,769
Shares redeemed -- Class A (748,580,464) (612,067,361) (1,002,187,039)
NET INCREASE IN SHARES OUTSTANDING
-- CLASS A 130,387,547 161,279,343 76,398,286
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MONEY
MARKET MUTUAL FUND
------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30,
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,617,283,570 4,140,356,138
Shares issued in reinvestment of dividends --
Class A 1,166,154 1,587,592
Shares redeemed -- Class A (1,662,781,053) (4,226,851,391)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A (44,331,329) (84,907,661)
</TABLE>
- ---------------------
56
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MONEY MARKET MUTUAL FUND
-------------------------------------
FOR THE
NINE
MONTHS FOR THE FOR THE
ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1996 (1) 1995 1994
<S> <C> <C> <C>
- --------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 2,061,102,906 2,284,460,229 2,694,494,544
Shares issued in reinvestment of
dividends -- Class A 111,610,934 146,963,258 32,541,176
Shares redeemed -- Class A (1,266,036,895) (1,881,762,423) (700,482,027)
NET INCREASE IN SHARES OUTSTANDING
-- CLASS A 906,676,945 549,661,064 2,026,553,693
Shares sold -- Service Class 1,063,771,625 0 0
Shares issued in reinvestment of
dividends -- Service Class 19,240,628 0 0
Shares redeemed -- Service Class (1,002,807,161) 0 0
NET INCREASE IN SHARES OUTSTANDING
-- SERVICE CLASS 80,205,092 0 0
Shares sold -- Institutional
Class 19,474,700 1,211,984,821 0
Shares issued in reinvestment of
dividends -- Institutional
Class 0 10,735,964 0
Shares redeemed -- Institutional
Class (890,817) (603,622,562) 0
NET INCREASE IN SHARES OUTSTANDING
-- INSTITUTIONAL CLASS 18,583,883 619,098,223 0
</TABLE>
(1) "SHARES SOLD" INCLUDES 194,882,553 FOR CLASS A AND 19,474,700 FOR THE
INSTITUTIONAL CLASS, AS A RESULT OF THE PACIFICA MONEY MARKET FUND AND
PACIFICA ASSET PRESERVATION FUND MERGERS.
---------------------
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NATIONAL
TAX-FREE
MONEY MARKET TREASURY MONEY MARKET MUTUAL
MUTUAL FUND FUND
------------- -----------------------------
FROM APRIL 2,
1996
(COMMENCEMENT
OF
OPERATIONS) FOR THE
TO YEAR ENDED FOR THE
SEPT. 30, SEPT. 30, YEAR ENDED
1996 1996 SEPT. 30, 1995
<S> <C> <C> <C>
--------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 14,242,847 265,329,368 0
Shares issued in reinvestment of
dividends -- Class A 30,552 303,969 0
Shares redeemed -- Class A (9,298,266) (211,928,115) 0
NET INCREASE IN SHARES OUTSTANDING --
CLASS A 4,975,133 53,705,222 0
Shares sold -- Service Class N/A 3,893,787,080 20,388,947,721
Shares issued in reinvestment of
dividends -- Service Class N/A 227,942 0
Shares redeemed -- Service Class N/A (3,555,407,931) (20,077,871,000)
NET INCREASE IN SHARES OUTSTANDING --
SERVICE CLASS N/A 338,607,091 311,076,721
Shares sold -- Institutional Class N/A 4,920,884,222 120,817,000
Shares issued in reinvestment of
dividends -- Institutional Class N/A 1,018,863 0
Shares redeemed -- Institutional
Class N/A (4,417,665,197) (84,374,000)
NET INCREASE IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS N/A 504,237,888 36,443,000
</TABLE>
- ---------------------
58
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
STAGECOACH FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the California Tax-Free Money Market Mutual
Fund, Government Money Market Mutual Fund, Money Market Mutual Fund and Treasury
Money Market Mutual Fund, and the statement of assets and liabilities of the
National Tax-Free Money Market Mutual Fund (five of the funds comprising
Stagecoach Funds, Inc.) as of September 30, 1996, and the related statements of
operations of the Government Money Market Mutual Fund and Treasury Money Market
Mutual Fund for the year ended September 30, 1996, the California Tax-Free Money
Market Mutual Fund and Money Market Mutual Fund for the nine months ended
September 30, 1996, and the year ended December 31, 1995, and the National
Tax-Free Money Market Mutual Fund for the period from April 2, 1996,
(commencement of operations) to September 30, 1996, the statements of changes in
net assets of the Government Money Market Mutual Fund and Treasury Money Market
Mutual Fund for the year ended September 30, 1996, the California Tax-Free Money
Market Mutual Fund and Money Market Mutual Fund for the nine months ended
September 30, 1996, and each of the years in the two year period ended December
31, 1995, and the National Tax-Free Money Market Mutual Fund for the period from
April 2, 1996, (commencement of operations) to September 30, 1996, 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. For the Government Money Market Mutual
Fund and Treasury Money Market Mutual Fund, all years or periods indicated in
the accompanying financial statements and financial highlights ending prior to
October 1, 1995, were audited by other auditors whose reports dated November 15,
1995, November 22, 1994 and May 4, 1994 expressed unqualified opinions on this
information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
September 30, 1996, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds of Stagecoach Funds, Inc. as of September 30, 1996,
the results of their operations, the changes in their net assets and their
financial highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
NOVEMBER 15, 1996
---------------------
59
<PAGE>
- -----------------
PROXY VOTING RESULTS
PROPOSAL 1
To ratify and approve an interim investment advisory agreement on behalf of the
Pacifica Funds, between Pacifica and Wells Fargo Investment Management, Inc.
(formerly known as First Interstate Capital Management, Inc. ("FICM"), the terms
of which were substantially identical to the previous advisory agreement between
Pacifica and FICM (the fee rates were unchanged), and the receipt of investment
advisory fees by WFIM for the period from April 1, 1996 forward.
PACIFICA GOVERNMENT MONEY MARKET FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
52,962,347 494,744 2,014,826
</TABLE>
PACIFICA TREASURY MONEY MARKET FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
1,292,542,000 6,398,033 3,315,460
</TABLE>
PACIFICA ASSET PRESERVATION FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
2,167,154 33,428 325,576
</TABLE>
PACIFICA MONEY MARKET FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
104,414,911 412,947 6,165,441
</TABLE>
PROPOSAL 2
To approve the Agreement and Plan of Reorganization attached to the combined
proxy statement/prospectus for the meeting providing for the transfer of the
assets and liabilities of the specified Pacifica Funds to corresponding funds of
Stagecoach Funds, Inc., in exchange for shares of the designated classes of
Stagecoach Funds.
PACIFICA GOVERNMENT MONEY MARKET FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
51,166,209 496,357 3,809,351
</TABLE>
PACIFICA TREASURY MONEY MARKET FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
1,287,849,248 11,199,119 3,207,125
</TABLE>
PACIFICA ASSET PRESERVATION FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
2,156,840 38,758 330,549
</TABLE>
PACIFICA MONEY MARKET FUND
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -------------------------------------
103,499,585 755,134 6,738,581
</TABLE>
- ---------------------
60
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
MASTER
INVESTMENT
TRUST
-----------
TAX-FREE
MONEY
MARKET
MASTER
PORTFOLIO
<S> <C>
- --------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $79,960,000
Cash 323,567
Receivables:
Interest 330,541
Organization expenses, net of
amortization 1,685
TOTAL ASSETS $80,615,793
LIABILITIES
Payables:
Distribution to beneficial interest
holders 172,372
Due to sponsor and distributor (Note
2) 3,000
Due to Advisor (Note 2) 20,827
Other 4,235
TOTAL LIABILITIES 200,434
TOTAL NET ASSETS $80,415,359
INVESTMENTS AT COST $79,960,000
- --------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
61
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM APRIL 2, 1996
(COMMENCEMENT OF OPERATIONS)
<TABLE>
<CAPTION>
TO SEPTEMBER 30, 1996
MASTER INVESTMENT
TRUST
--------------------
TAX-FREE
MONEY MARKET
MASTER PORTFOLIO
<S> <C>
- --------------------------------------------------------------
INVESTMENT INCOME
Interest $ 1,012,391
TOTAL INVESTMENT INCOME 1,012,391
EXPENSES (NOTE 2)
Advisory fees 87,691
Amortization of organization expenses 1,266
Legal and Audit fees 9,119
Other 494
TOTAL EXPENSES 98,570
Less:
Waived fees and reimbursed expenses
(Note 2) (10,704)
Net Expenses 87,866
NET INVESTMENT INCOME 924,525
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments (6,788)
NET GAIN (LOSS) ON INVESTMENTS (6,788)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 917,737
- --------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
62
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM APRIL 2, 1996
(COMMENCEMENT OF OPERATIONS)
<TABLE>
<CAPTION>
TO SEPTEMBER 30, 1996
MASTER
INVESTMENT
TRUST
----
TAX-FREE
MONEY
MARKET
MASTER
PORTFOLIO
<S> <C>
- -------------------------------------------------
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income $924,525
Net realized (loss) on sale of
investments (6,788)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 917,737
NET INCREASE IN NET ASSETS RESULTING
FROM BENEFICIAL INTERESTS TRANSACTIONS 79,497,622
INCREASE (DECREASE) IN NET ASSETS 80,415,359
NET ASSETS:
ENDING NET ASSETS $80,415,359
- -------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
63
<PAGE>
MASTER INVESTMENT TRUST -- SEPTEMBER 30, 1996
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Tax-Free Money Market Master Portfolio (the "Master Portfolio") is one
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 (the "1940 Act").
The Declaration of Trust permits the issuance of beneficial interests
("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.
The following significant accounting policies are consistently followed by the
Trust in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies. These financial statements represent only the Tax-Free Money Market
Master Portfolio.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those
estimates.
INVESTMENT POLICY AND SECURITY VALUATION
The Master Portfolio invests in securities with remaining maturities not
exceeding 397 days (thirteen months), including floating- and variable-rate
instruments. Certain of these floating- and variable-rate instruments may carry
a demand feature that would permit the holder to tender them back to the issuer
at par value prior to maturity.
The Master Portfolio uses the amortized cost method to value its portfolio
securities and seeks to maintain a constant net asset value of $1.00 per share;
however, there can be no assurance that the Master Portfolio will meet this
goal. The amortized cost method involves valuing a security at its cost plus
accretion of discount or minus amortized premium over the period until maturity,
which approximates market value.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Interest income is accrued daily. Realized gains and
losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized as required by the Internal Revenue
Code.
- ---------------------
64
<PAGE>
MASTER INVESTMENT TRUST -- SEPTEMBER 30, 1996
FEDERAL INCOME TAXES
The Master Portfolio intends to qualify for federal income tax purposes as a
partnership. Management of the Master Portfolio therefore believes that it will
not be subject to any federal or state income tax on its income and net capital
gains (if any). However, each investor in the Master Portfolio will be taxed on
its distributive share of the partnership's income for purposes of determining
its federal and state income tax liabilities. The determination of such share
will be made in accordance with the Internal Revenue Code of 1986, as amended
("Code"), and the regulations promulgated thereunder.
It is intended that the Master Portfolio's assets, income, gain/loss and
allocations will be managed in such a way that a regulated investment company
investing in the Master Portfolio will be able to satisfy the requirements of
Subchapter M of the Code, assuming that the investment company invests all of
its assets in the Master Portfolio.
ORGANIZATION EXPENSES
Costs incurred in connection with organization and initial registration as an
investment company under the 1940 Act were advanced by Stephens Inc.
("Stephens"). Organization expenses of each series are being amortized on a
straight line basis over 60 months from the date the series of the Trust
commenced operation.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into an advisory contract with WFB on behalf of the Master
Portfolio. Pursuant to the contract, WFB furnishes investment guidance and
policy direction in connection with daily portfolio management of the Master
Portfolio. Under the contract with the Master Portfolio, WFB is entitled to
receive a monthly advisory fee at an annual rate of 0.30% of the Master
Portfolio's average daily net assets.
The Trust has also entered into a contract with WFB whereby WFB has agreed to
provide custody services for the Master Portfolio. For providing these services,
WFB is entitled to be compensated for custody services based on a rate of
0.0167% of the average daily net assets of the Master Portfolio.
WFB waived fees in the amount of $10,704 for the period from April 2, 1996
(commencement of operations) to September 30, 1996. Fee waivers continue at the
discretion of WFB.
---------------------
65
<PAGE>
INDEPENDENT AUDITORS' REPORT
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 Tax-Free Money Market Master Portfolio (one
of the master portfolios comprising Master Investment Trust) as of September 30,
1996, and the related statements of operations and changes in net assets for the
period from April 2, 1996, (commencement of operations) to September 30, 1996.
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 audit.
We conducted our audit 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
verification of securities owned as of September 30, 1996, by examination and
other appropriate audit procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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 Tax-Free Money Market
Master Portfolio of Master Investment Trust as of September 30, 1996, the
results of its operations and the changes in its net assets for the period from
April 2, 1996 (commencement of operations) to September 30, 1996 in conformity
with generally accepted accounting principles.
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
NOVEMBER 15, 1996
- ---------------------
66
<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, Inc
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
LIBOR -- London Interbank Offered Rate
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing 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>
---------------------
67
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
68
<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach 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 1-800-222-8222. Read the
prospectus carefully before you invest or send money.
SC 0559 (11/96)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1996 Stagecoach Funds
