<PAGE>
- ---------------------
SEMI-ANNUAL
- ---------------------
REPORT
- ---------------------
EQUITY
- ---------------------
FUNDS
- ---------------------
Aggressive Growth Fund
Balanced Fund
Corporate Stock Fund
Diversified Income Fund
Equity Value Fund
Growth and Income Fund
Small Cap Fund
SEPTEMBER 30, 1997
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Aggressive Growth Fund 3
Balanced Fund 6
Corporate Stock Fund 8
Diversified Income Fund 11
Equity Value Fund 13
Growth and Income Fund 15
Small Cap Fund 18
PORTFOLIOS OF INVESTMENTS
Balanced Fund 20
Diversified Income Fund 27
Equity Value Fund 32
Growth and Income Fund 37
STAGECOACH FUNDS
Statement of Assets and Liabilities 44
Statement of Operations 46
Statements of Changes in Net Assets 48
Financial Highlights 54
Notes to Financial Statements 69
MASTER INVESTMENT TRUST PORTFOLIOS OF INVESTMENTS
Master Investment Trust Capital Appreciation Master Portfolio 83
Master Investment Trust Corporate Stock Master Portfolio 88
Master Investment Trust Small Cap Master Portfolio 103
MASTER INVESTMENT TRUST
Statement of Assets and Liabilities 110
Statement of Operations 111
Statements of Changes in Net Assets 112
Notes to Financial Statements 114
LIST OF ABBREVIATIONS 118
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>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
ii
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------
TO OUR SHAREHOLDERS:
We are pleased to present you with the Stagecoach Semi-Annual Report for the
six-month period ended September 30, 1997.
On October 27, shortly after the close of the reporting period for this
Semi-Annual Report, the stock market suffered its worst one-day drop since 1987.
As measured by the Dow Jones Industrial Average, the market lost 7.2% of its
value.
By November 5, however, the Dow had recovered, at least temporarily, all that it
had lost during the "crash."
What are the lessons shareholders can glean from these events? The only
certainty is that there are no certainties when it comes to investing. Dramatic
market movements can occur at any time for a variety of reasons -- and the
effects can last for years or be corrected in just a few days. Perhaps the most
significant lessons learned this October are the ones we have all heard before:
- - HAVE A SOLID, LONG-TERM STRATEGIC PLAN. What are your goals? How long before
you will need to spend the money you have invested? How much risk are you
willing to tolerate? Solid planning with the long-term in mind will help you
keep your focus during periods of short-term volatility.
- - IF LONG-TERM GROWTH IS YOUR GOAL, STOCKS ARE HISTORICALLY THE BEST INVESTMENT.
While bonds or cash may have a greater return than stocks during certain
periods, over the long term stocks have outperformed every other investment
class.
- - USE ASSET ALLOCATION TO LIMIT VOLATILITY. The extent to which you should
allocate your assets to less volatile classes depends on your individual
circumstances, including such factors as how close you are to your investment
horizon and to what extent you need to preserve capital. Seek the advice of an
investment professional to help you determine your asset allocation.
During the six-month reporting period ended September 30, 1997 covered by this
report, the equity market continued to post the type of strong gains we have
seen over the last few years, with the S&P 500 showing a 26.26% total return.
The bond market, as measured by the Lehman Brothers Long Government Bond Index,
did better than it has in the recent past with a strong 11.67% return. These
returns should help provide a context for the downturn of October 27; there is
no guarantee, of course, that such robust returns will continue.
The following pages contain discussions of the individual Funds, including
specific commentary on what affected the returns and how the portfolio managers
tried to capture value or prepare for the future.
---------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
There are expected to be some changes during the last quarter of 1997 for the
Stagecoach Funds. Shareholders in the Overland Express Family of Funds have been
asked to approve a merger with Stagecoach. Both Fund groups are advised by Wells
Fargo Bank. If approved by Overland Shareholders, the merger is expected to
occur on December 12, 1997. The merger will allow us to eliminate certain
administrative and management costs, and will result in a single Fund family
with over 30 Funds and approximately $20 billion in assets. In addition, several
Funds are changing their names. The name changes are detailed within the
discussion for the affected Funds.
Thank you for your continued investment with the Stagecoach Funds.
STAGECOACH FUNDS
NOVEMBER 1997
THE S&P 500 INDEX IS AN UNMANAGED INDEX OF 500 WIDELY HELD COMMON STOCKS
REPRESENTING, AMONG OTHERS, INDUSTRIAL, FINANCIAL, UTILITY AND TRANSPORTATION
COMPANIES LISTED OR TRADED ON NATIONAL EXCHANGES OR OVER-THE-COUNTER MARKETS.
THE LEHMAN BROTHERS LONG GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX COMPOSED OF
U.S. GOVERNMENT BONDS WITH 20-YEAR OR LONGER MATURITIES.
- ---------------------
2
<PAGE>
AGGRESSIVE GROWTH FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE TOTAL RETURNS FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
Class A shares of the Fund recorded a 45.48% total return for the period
exclusive of sales charge. The return for Class B shares for the same period,
also exclusive of sales charge, was 45.02%.
HIGH GROWTH STOCKS WERE PARTICULARLY VOLATILE DURING THE PERIOD (APRIL THROUGH
SEPTEMBER). WHAT CAUSED SOME OF THE UP AND DOWN SWINGS?
The volatility during the past six months was the result of swings in investor
sentiment concerning the future level and direction of interest rates and the
pace of earnings growth. Early in the year, investors were fearful of rising
rates and slower earnings growth and share prices fell dramatically. Many
investors responded to interest rate concerns by moving into large company
stocks. Large company stocks are generally viewed as being safer in an uncertain
environment than small company stocks. As these fears subsided, the share prices
for smaller and mid-cap companies recovered and climbed to new highs.
TO WHAT EXTENT WAS THE CONTINUED UNCERTAINTY ABOUT INTEREST RATES A FACTOR IN
THE MARKET'S VOLATILITY DURING THE PERIOD?
The fear of rising rates was a major factor in the market's volatility in March
and April. Investors moved away from growth stocks in fear that higher rates
might lead to a slower economy and lower earnings. Projected future earnings are
one of the key supports for stock prices; if investors expect or fear
disappointments, values may decline. After the Federal Reserve raised the
federal funds target rate in March, the market eventually absorbed the move and
grew confident that inflation would not become a major factor.
WHICH SECTORS SHOWED STRENGTH? WHICH WERE DISAPPOINTING?
The best performing sectors were oil service, most of the technology groups, and
the financial industry. Utilities, disc-drive companies, and retailing were
disappointing.
---------------------
3
<PAGE>
AGGRESSIVE GROWTH FUND
WHAT'S THE OUTLOOK FOR THE GROWTH SECTOR OVER THE NEXT SIX MONTHS? WHERE DO YOU
EXPECT TO FIND STRENGTH?
We feel the outlook for growth stocks remains very attractive and that the
economic backdrop is quite favorable. Forecasted earnings growth appears strong.
We believe the mid- and small-cap sectors have excellent prospects for further
upside moves in their respective share prices.
ARE THERE ANY SPECIAL CHANGES OF NOTE SHAREHOLDERS CAN EXPECT FOR THE FUND?
The Fund is changing its name contingent upon the approval of shareholders of
the Strategic Growth Fund of Overland Express Funds, Inc., also advised by Wells
Fargo Bank, to merge with and into the Fund. The Fund will be called "The
Strategic Growth Fund" as of December 15, 1997. The Fund will be more distinctly
positioned as a mid-cap growth fund. Please review the new prospectus that will
be issued on December 15. The fundamental investment objective of the Fund will
not change. In addition, the Fund is expected to withdraw its investment in the
Master Portfolio on or about December 12, 1997. See the Notes to the Financial
Statements for more information.
- ---------------------
4
<PAGE>
AGGRESSIVE GROWTH FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 1/20/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 11.72% 24.27% 22.64%
- --------------------------------------------------------------------------------------
Without Sales Charge 17.89% 26.53% 24.04%
- --------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/1/93
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 12.06% 25.02% 20.63%
- --------------------------------------------------------------------------------------
Without Sales Charge 17.06% 25.65% 20.89%
- --------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/97.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Aggressive Growth Fund is a feeder fund of the Capital Appreciation Master
Portfolio which in turn invests in individual securities. The Capital
Appreciation Master Portfolio was created by the reorganization of the existing
assets of the Overland Express Strategic Growth Fund (the "Predecessor Fund").
Performance figures for the Class A and Class B shares reflect the performance
of the Class A and Class D shares of the Predecessor Fund, respectively, for
periods prior to March 5, 1996 when the Aggressive Growth Fund commenced
operations. References to the investment policy of the Fund are understood to be
references to the investment policy of the Master Portfolio.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
---------------------
5
<PAGE>
BALANCED FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE TOTAL RETURNS FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
Class A shares of the Fund recorded a 15.88% total return for the period
exclusive of sales charge. The return for Class B shares for the same period,
also exclusive of sales charge, was 15.52%.
HOW DID THE ALLOCATION BETWEEN STOCKS AND BONDS SHIFT DURING THE PERIOD (APRIL
THROUGH SEPTEMBER)?
The stock allocation increased slightly over the period from 55% of the
portfolio at the beginning of April to 60% at the end of September. While we
continue to be concerned that many stock issues are overvalued by historical
measures and are dependent on very optimistic earnings growth assumptions, we
are confident that our value discipline will continue to yield results in this
market. Our current allocation is still slightly defensive, since we are
permitted to have up to 70% of the portfolio invested in equities.
THE FED RAISED INTEREST RATES AT THE END OF MARCH. HOW DID THE BOND MARKET REACT
OVER THE NEXT FEW MONTHS?
The bond market initially reacted negatively. However, as the market began
receiving positive news that inflation was not increasing as expected, interest
rates declined substantially from their late March and early April levels. The
bond market rallied, particularly in the second quarter.
WHAT ARE SOME OF THE CHARACTERISTICS YOU LOOK FOR IN SELECTING STOCKS FOR THE
FUND'S PORTFOLIO?
We pursue a value discipline in selecting stocks. This means we look for issues
selling for less than their intrinsic worth. We look for compelling valuations,
such as low price-to-earnings ratios. We also look for a positive catalyst,
something that we think is going to positively affect the outlook for the stock
or its sector. Then we look for focused and effective management teams with
proven ability to take advantage of economic opportunities.
WHAT IS THE ADVANTAGE TO A BALANCED STRATEGY, PARTICULARLY ONE THAT IS ACTIVELY
MANAGED AS OPPOSED TO COMPUTER MODEL-DRIVEN?
One of the principal advantages to an actively managed balanced strategy is that
active management can reduce the level of trading and turnover by allowing a
manager flexibility in changing the allocation. Computer-driven models, in which
instructions to buy or sell an asset class are based on strictly quantitative
measures, often force managers to sell or buy in response to big moves in the
market. In the balanced strategy approach, the Fund attempts to balance expected
returns for the asset classes with its expectations for the individual
securities held in the portfolio.
- ---------------------
6
<PAGE>
BALANCED FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 18.79% 13.42% 12.33% 11.76%
- -----------------------------------------------------------------------------------------
Without Sales Charge 25.32% 15.48% 13.55% 12.59%
- -----------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURN 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 19.57% 13.96% 12.54% 11.82%
- -----------------------------------------------------------------------------------------
Without Sales Charge 24.57% 14.73% 12.79% 11.82%
- -----------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/97.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Stagecoach Balanced Fund commenced operations on September 6, 1996 as the
successor to the Pacifica Balanced Fund (7/90 to 9/96). Historical performance
has been calculated using returns produced by this Predecessor Fund for the
applicable period. Class A performance reflects the Pacifica Balanced Fund
Investor Class performance. Class B performance also reflects such performance
but has been adjusted to reflect Class B Share expense levels in effect on
9/6/96.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
---------------------
7
<PAGE>
CORPORATE STOCK FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
The Fund's shares recorded a 25.54% total return for the period. This Fund has
no sales charge.
INCREASED CORPORATE EARNINGS AND LOW INFLATION HAVE FUELED THE GROWTH OF THE S&P
500 INDEX OVER RECENT YEARS. WAS THIS THE CASE DURING THE PERIOD (APRIL THROUGH
SEPTEMBER)?
Yes, this seems to have been the case. Aggregate second-quarter 1997 earnings
for the S&P 500 were 8.9% higher than for the same quarter of the previous year.
Third quarter earnings growth was strong, with an increase of 11% to 12% for the
companies that had reported earnings at the time of writing. Inflation also
continues to be low, reducing speculation about major interest rate hikes.
WHAT IS THE PRESENT ANALYSIS: CAN THE EQUITIES MARKET SUPPORT CURRENT
VALUATIONS?
Heavy insider sales reported for August indicate that many large-company
management teams are selling some of the stock in their own companies. This
indicates to us that management of these companies believes that the current
values will not be supported by earnings. We interpret this as a short-term
bearish signal for large-capitalization stocks. The level of this activity and
other factors suggest that this bearish effect is going to be short-term. Our
review of estimates suggests that fourth-quarter earnings will grow by 13.5% and
keep that pace next year. Nevertheless, the price-to-earnings ratio of S&P 500
Index stocks of 22.1 is high compared to the average of 12.4 since 1975.
DESCRIBE SOME OF THE ISSUES THAT HAVE AFFECTED THE FOLLOWING SECTORS WITHIN THE
INDEX DURING THE PERIOD: CAPITAL GOODS, TECHNOLOGY, FINANCIAL, UTILITIES AND
CONSUMER CYCLICAL AND STAPLES.
The total returns for the six-month period ended September 30, 1997 were as
follows:
<TABLE>
<CAPTION>
<S> <C>
S&P Capital Goods 25.7%
S&P Consumer Cyclical 26.4%
S&P Consumer Staples 13.9%
S&P Financials 38.2%
S&P Technology 41.2%
S&P Utilities 4.7%
</TABLE>
The utilities sector was the laggard for the period. While utilities tend to
underperform the rest of the market in the long term, poor earnings momentum and
the perception of future earnings risk from electric utility deregulation have
also contributed to this relatively poor performance. Financials and technology
have been the best performing sectors. Financial stocks' earnings have been
benefiting from the low and stable interest-rate environment, and stock prices
have been boosted by industry consolidations. Technology returns have also
ranked above average in terms of
- ---------------------
8
<PAGE>
CORPORATE STOCK FUND
earnings momentum, although there are demand questions going forward in the
computing industry due to perceptions of domestic saturation and international
weakness. Capital Goods and Consumer Goods are seeing middle- to below-average
earnings growth.
ARE THERE ANY SPECIAL CHANGES OF NOTE SHAREHOLDERS CAN EXPECT FOR THE FUND?
The Fund is changing its name as a result of the proposed merger between
Stagecoach and the Overland Express Family of Funds, both of which are advised
by Wells Fargo Bank. The Fund will be called "The Equity Index Fund" as of
December 15, 1997. Please review the new prospectus that will be issued on
December 15. The fundamental investment objective of the Fund will not change.
In addition, the Fund is expected to withdraw its investment in the Master
Portfolio on or about December 12, 1997. See the Notes to Financial Statements
for more information.
---------------------
9
<PAGE>
CORPORATE STOCK FUND
- ---------------------
PERFORMANCE AT A GLANCE
PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/25/84
1 YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Average Annual Total Returns 38.88% 28.49% 19.50% 13.54% 15.92%
- ----------------------------------------------------------------------------------------------
</TABLE>
This Fund has no sales charge. Past performance is not predictive of future
results. The investment return and net asset value of shares of the Fund will
fluctuate with market conditions so that shares of the Fund, when redeemed, may
have a greater or lesser net asset value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Corporate Stock Fund commenced operations on January 1, 1992 as successor to
the Corporate Stock Fund of the Wells Fargo Investment Trust for Retirement
Programs. The Predecessor Fund's date of inception was January 25, 1984. The
performance figures shown include the performance of the Predecessor Fund which
had the same investment objectives and strategies.
The Fund seeks to achieve its investment objective by investing all of its
assets in the Master Investment Trust Corporate Stock Master Portfolio, which
has an identical investment objective as the Fund. Prior to April 28, 1996, the
Fund invested directly in a portfolio of securities and not in the Master
Investment Trust Corporate Stock Master Portfolio. References to the investment
policies of the Fund are understood to be references to the investment policies
of the Master Portfolio.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
10
<PAGE>
DIVERSIFIED INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE TOTAL RETURNS FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
Class A shares of the Fund recorded a 22.68% total return for the period
exclusive of sales charge. The return for Class B shares for the same period,
also exclusive of sales charge, was 22.25%.
MOST OF THE FUND'S EQUITY INVESTMENT IS IN LARGE CAPITALIZATION STOCKS. WHAT
CHARACTERIZED THIS SECTOR DURING THE PERIOD (APRIL THROUGH SEPTEMBER)?
Returns for large-cap stocks were very strong during the second quarter when the
market rebounded after a brief correction in March and early April. The third
quarter was also a good quarter for large-cap stocks, though not as dramatic as
earlier in the year. The third quarter experienced a market downturn in August
led by large-cap consumer multinational companies. But many of these companies
had the type of high price-to-earnings (P/E) ratios the Fund's value discipline
seeks to avoid. We believe this is why the Fund suffered less of a setback in
August than did the market in general.
ARE THERE SEASONAL CONSIDERATIONS IN DECIDING ON INVESTMENTS? DO SOME STOCKS DO
BETTER DURING PART OF THE YEAR THAN IN OTHERS?
There are certainly some seasonal patterns in the market. One of the most
important is tax loss selling, which normally occurs between October and
December. Many investors will sell a security in order to take a loss this year
instead of next, particularly if they have had significant capital gains they
wish to offset. While individual investors may usually do this in December, many
mutual funds begin their tax loss selling in October. Because of this
phenomenon, opportunities may be created to purchase stocks that are selling for
below their intrinsic worth. But beyond the tax loss strategy, the Fund normally
does not attempt to employ other seasonal trading moves, as such moves would be
short term in nature and the Fund has a longer-term orientation.
IS THE FUND SEEKING OPPORTUNITIES IN THE CURRENT ENVIRONMENT, OR IS IT BEING
POSITIONED DEFENSIVELY?
Because this Fund has a yield emphasis, the Fund tends to be more defensive by
nature than many equity funds. In a more difficult market environment this Fund
should retain its value better than more aggressive funds. Although the Fund is
defensive, we continue to seek stocks that meet the Fund's value criteria. Even
though the market has been strong in recent years, there are plenty of stocks
that have yet to participate in a significant manner to the upside.
---------------------
11
<PAGE>
DIVERSIFIED INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/18/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 22.31% 20.24% 16.15%
- --------------------------------------------------------------------------------------
Without Sales Charge 29.12% 22.43% 17.43%
- --------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 1/1/95
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- -------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 23.26% 24.54%
- -------------------------------------------------------------------------------------
Without Sales Charge 28.26% 25.27%
- -------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/97.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
12
<PAGE>
EQUITY VALUE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE TOTAL RETURNS FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
Class A shares of the Fund recorded a 24.69% total return for the period
exclusive of sales charge. The return for Class B shares for the same period,
also exclusive of sales charge, was 24.36%.
WHAT IS YOUR CURRENT STOCK MARKET OUTLOOK?
We continue to be concerned that many stock issues are overvalued by historical
measures and are dependent on very optimistic earnings growth assumptions.
Despite these high values, we believe that there are stocks whose attractiveness
and strength have not yet been recognized by the market. The financial services,
capital goods and consumer cyclical sectors were sectors where we found value
during the period.
THE VALUE STRATEGY IS TO SEEK STOCKS WHOSE VALUE HAS NOT BEEN RECOGNIZED BY THE
MARKET. WHAT ARE SOME OF THE REASONS AN ISSUE'S VALUE GOES UNRECOGNIZED?
Two of the key reasons some equity issues are undervalued by the market are
previous earnings disappointments or poorer than expected sales. Also, industry
analysts may have focused their attention elsewhere and missed new developments
affecting the company's outlook. At times, the fault may be with the company's
management who for whatever reasons, may have done a poor job communicating the
company's improving fortunes.
THE PROSPECTUS STATES THAT YOU USE "QUALITATIVE" AND "QUANTITATIVE" METHODS IN
SELECTING STOCKS. PLEASE EXPLAIN THE DIFFERENCE.
By quantitative methods, we mean that we apply a systematic analysis based on
various types of financial data. For example, we look at an issues price-to-
earnings ratio, which measures the price of a stock against its historical or
expected future dividends. This is done to narrow the field of stocks we will
consider buying. Then we apply qualitative methods, which are essentially
judgements about things that cannot be quantified, such as the quality of the
management team or the product being offered. The goal is to discover solid
companies that have fallen out of favor with investors, for whatever reason,
before their value starts to rise.
---------------------
13
<PAGE>
EQUITY VALUE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 36.62% 22.28% 20.31% 15.82%
- -----------------------------------------------------------------------------------------
Without Sales Charge 44.17% 24.49% 21.60% 16.68%
- -----------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 38.40% 23.06% 20.63% 15.91%
- -----------------------------------------------------------------------------------------
Without Sales Charge 43.40% 23.72% 20.82% 15.91%
- -----------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/97.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
On September 6, 1996, the Fund was reorganized as the successor to the Pacifica
Equity Value Fund (7/90 to 9/96). Historical performance has been calculated
using returns produced by this Predecessor Fund for the applicable period. Class
A performance for the periods prior to September 6, 1996 reflects Pacifica
Equity Value Fund Investor Class shares. Class B performance for periods prior
to September 6, 1996, the date the Class B shares were first offered, also
reflects such performance but has been adjusted to reflect Class B Share expense
levels in effect on 9/6/96.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
14
<PAGE>
GROWTH AND INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE TOTAL RETURNS FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
Class A shares of the Fund recorded a 20.90% total return for the period
exclusive of sales load. The return for Class B shares for the same period, also
exclusive of sales charge, was 20.53%.
THE FUND INVESTS IN MID- AND LARGE-CAP GROWTH STOCKS. WERE THESE SECTORS AS
VOLATILE AS SMALL GROWTH STOCKS DURING THE PERIOD?
Volatility is often assumed to refer to the downside of risk, but there is an
upside to volatility as well. The question for individual investors to ask
themselves is how much volatility are they willing to tolerate? Typically, the
smaller the market capitalization for a company, the greater the volatility its
stock will demonstrate. The converse is that the larger the company, the more
stable its stock price. This pattern held true during the period with small and
mid-cap stocks significantly outperforming large caps.
HAVE COMPANIES IN THE TECHNOLOGY SECTOR BEEN SORTED OUT AMONG A FEW BIG
PERFORMERS LIKE MICROSOFT AND INTEL ON THE ONE HAND, AND "AVERAGE" PERFORMERS ON
THE OTHER?
Intel and Microsoft have significant weight within the technology sector. They
dominate their industries to a large extent. But there is earnings growth to be
found throughout the technology sector. Growth in the Internet and
telecommunications has created opportunities in networking, telecom, value-added
chip manufacturing and other related areas. These stocks tend to be smaller than
Intel and Microsoft and are generally more volatile.
DID THE FUND INVEST IN FINANCIAL AND BANK STOCKS?
We invested significantly in the financial sector, focusing primarily on stocks
of credit card issuers and insurance companies. Cost cutting has fueled good
earnings growth, as has companies buying back their own stock. Banks have had
less revenue growth, however, but performed well during the period thanks to a
stable interest rate environment and solid earnings.
---------------------
15
<PAGE>
GROWTH AND INCOME FUND
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF THE FUND'S FISCAL YEAR?
Earnings thus far in 1997 have exceeded early year expectations. Many analysts
will extrapolate further earnings increases based on such pleasant surprises. We
believe that such analysts are setting expectations too high. If one combines
these potentially unrealistic expectations with uncertainty about Far Eastern
currency and the potential for Fed action on interest rates, the theme that
emerges is volatility. We expect that the fourth quarter of 1997 will not have
dramatic growth overall, but we are optimistic about 1998 based on the whole
economic picture.
ARE THERE ANY SPECIAL CHANGES SHAREHOLDERS SHOULD BE AWARE OF?
The Fund is changing its name contingent upon the approval of the proposed
merger between Overland Express Funds, Inc. and Stagecoach Funds, Inc. As of
December 15, 1997 it will be called the Growth Fund and will continue to focus
on large cap growth. The fundamental investment objective of the Fund is not
changing, however. Be sure to review the new prospectus, which will be sent to
you on December 15, for this and any other changes.
- ---------------------
16
<PAGE>
GROWTH AND INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 8/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 23.57% 21.29% 15.85% 15.57%
- ---------------------------------------------------------------------------------------
Without Sales Charge 30.40% 23.49% 17.11% 16.44%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 1/1/95
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- -------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 24.41% 24.58%
- -------------------------------------------------------------------------------------
Without Sales Charge 29.41% 25.32%
- -------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/97.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gains distributions at net asset value.
The Growth and Income Fund commenced operations on January 1, 1992 as successor
to the Select Stock Fund of the Wells Fargo Investment Trust for Retirement
Programs. The Predecessor Fund's date of inception was August 2, 1990. The
performance figures shown for Class A shares include the performance of the
Predecessor Fund which had the same investment objectives and strategies.
Certain of the investment restrictions of the Stagecoach Growth and Income Fund
differ somewhat from those of the Predecessor Fund.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without these reductions, the Fund's returns would have been lower.
---------------------
17
<PAGE>
SMALL CAP FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE TOTAL RETURNS FOR THE FUND DURING THE SIX-MONTH PERIOD ENDED
SEPTEMBER 30, 1997?
Class A shares of the Fund recorded a 48.21% total return for the period
exclusive of sales charge. The return for Class B shares for the same period,
also exclusive of sales charge, was 47.75%.
WAS THE PERIOD UNUSUALLY VOLATILE FOR SMALL STOCKS, OR WAS IT FAIRLY TYPICAL?
The early part of 1997 was especially volatile for smaller cap equities. In
April, investor nervousness about earnings growth, interest rates and inflation,
in particular, sparked a sell-off in small stocks and a migration to larger cap
equities. By May, optimism was restored and small caps had a sharp rebound.
While it is the nature of small stocks to experience greater price movements
than larger stocks, we do not typically see the degree of volatility experienced
during the last six months.
WAS THIS AN ACTIVE TRADING PERIOD AS A RESULT?
Yes, we were quite active in trading. We do employ a tactical/strategic method,
in which a portion of the portfolio, roughly 30% is actively traded in order to
capture short-term opportunities. That is the tactical component and is the more
active part of the portfolio. We tried to buy strong companies when the prices
were depressed. As prices rebounded, we sold off some issues to realize a
profit. The strategic component is held for long-term appreciation.
ARE SMALL CAP STOCKS AS DIVERSIFIED AS THE REST OF THE ECONOMY?
Small cap companies are really quite diversified among numerous industries.
However, when narrowing the focus to small cap growth stocks, we tend to find a
greater number of technology and health care companies.
WHAT ARE THE FACTORS LIKELY TO INFLUENCE THE SMALL CAP SECTOR OVER THE REMAINDER
OF THE FUND'S FISCAL YEAR?
The level and direction of interest rates and corporate earnings are, as usual,
key influences. Concerns regarding emerging market economies will come to the
fore over the next few months, particularly in regard to Asian currencies. The
technology sector tends to be the pacesetter for small caps, so its general
health and growth potential are to be watched. Finally, general investor
confidence is important. When investors get nervous, investor dollars tend to
migrate into large company stocks and small caps suffer.
ARE THERE ANY SPECIAL CHANGES OF NOTE SHAREHOLDERS CAN EXPECT FOR THE FUND?
The Fund is expected to withdraw its investment in the Master Portfolio on or
about December 12, 1997. See the Notes to the Financial Statements for more
information.
- ---------------------
18
<PAGE>
SMALL CAP FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/1/94
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- -------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 18.74% 38.80%
- -------------------------------------------------------------------------------------
Without Sales Charge 25.30% 41.37%
- -------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 9/30/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/1/94
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION
<S> <C> <C>
- -------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 19.53% 39.99%
- -------------------------------------------------------------------------------------
Without Sales Charge 24.53% 40.53%
- -------------------------------------------------------------------------------------
(1)Assumes redemption on 9/30/97.
</TABLE>
Past performance is not predictive of future results. The investment return and
net asset value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may have a greater or lesser net asset
value than when originally purchased.
Average annual total returns for the indicated periods represent the average
annual increase in the value of an investment over the periods assuming
reinvestment of dividends and capital gain distributions at net asset value.
The Stagecoach Small Cap Fund invests in a master portfolio which in turn
invests in individual securities. References to the investment policies of the
Fund are understood to be references to the investment policies of the Master
Portfolio.
The Small Cap Fund commenced operation on 9/16/96 as successor to the Small
Capitalization Growth Fund for Employee Retirement Plans, an unregistered bank
collective investment Fund (the "Predecessor Fund"). Inception date of the
Predecessor Fund was 11/1/94.
Performance figures shown for periods prior to 9/16/96 represent the performance
of the Predecessor Fund which had the same investment objective and strategies
as the Small Cap Fund. Performance figures also reflect expense differences
between the Predecessor Fund and those of the Class A and B shares in effect on
9/16/96.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without these reductions, the Fund's returns would have been lower.
---------------------
19
<PAGE>
BALANCED FUND (UNAUDITED)
- -----------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 59.98%
AEROSPACE - 1.61%
24,000 Rockwell International Corp $ 1,173,110 $ 1,510,500
AUTOMOBILE & RELATED - 3.02%
15,900 Chrysler Corp $ 525,743 $ 585,319
20,000 Dana Corp 611,600 987,500
28,000 Ford Motor Co 823,865 1,267,000
------------ --------------
$ 1,961,208 $ 2,839,819
BASIC INDUSTRIES - 1.41%
50,000 Crompton & Knowles Corp $ 671,750 $ 1,328,125
CAPITAL GOODS - 5.34%
26,000 Harris Corp $ 1,015,020 $ 1,189,500
20,386 Kennametal Inc 755,673 988,721
19,000 Lancaster Colony Corp 730,708 1,009,375
20,000 Maytag Corp 523,224 682,500
30,000 Willamette Industries Inc 892,141 1,147,497
------------ --------------
$ 3,916,766 $ 5,017,593
COMPUTER SYSTEMS - 1.58%
14,000 International Business Machines Corp $ 741,405 $ 1,483,125
ELECTRICAL EQUIPMENT - 2.45%
36,800 Lexmark International Group Inc Class A+ $ 739,535 $ 1,214,400
30,000 Seagate Technology Inc+ 662,310 1,083,750
------------ --------------
$ 1,401,845 $ 2,298,150
</TABLE>
- ------------------------
20
<PAGE>
BALANCED FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 7.94%
21,200 Atlantic Richfield Corp $ 1,252,174 $ 1,811,275
30,000 Cabot Corp 811,330 808,125
10,000 Mobil Corp 426,878 740,000
19,000 Royal Dutch Petroleum Co 527,523 1,054,500
30,000 Texaco Inc 1,135,095 1,843,125
36,700 Valero Energy Corp 717,372 1,204,219
------------ --------------
$ 4,870,372 $ 7,461,244
FINANCE & RELATED - 16.23%
10,000 Aegon N.V. ADR Class A $ 457,165 $ 796,875
16,000 Aetna Inc 1,012,401 1,303,000
50,000 American Bankers Insurance Group 578,875 1,825,000
24,600 BankAmerica Corp 589,668 1,803,488
10,400 Chase Manhattan Bank 358,200 1,227,200
5,500 CIGNA Corp 1,036,732 1,024,375
51,000 Fremont General Corp 959,354 2,435,250
242,000 Mercury Financial Co+ 573,495 347,875
10,000 NationsBank Corp 369,250 618,750
29,400 Providian Financial Corp 298,502 1,166,813
22,700 SAFECO Corp 1,047,038 1,203,100
22,000 Travelers Group Inc 363,350 1,501,500
------------ --------------
$ 7,644,030 $ 15,253,226
FOOD & RELATED - 2.29%
33,600 Philip Morris Co Inc $ 627,548 $ 1,396,500
22,000 RJR Nabisco Holdings Corp 782,392 756,250
------------ --------------
$ 1,409,940 $ 2,152,750
GENERAL BUSINESS & RELATED - 1.09%
15,000 General Electric Co $ 305,123 $ 1,020,938
</TABLE>
---------------------
21
<PAGE>
BALANCED FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE - 1.88%
17,000 Columbia HCA Healthcare Corp $ 612,831 $ 488,750
40,000 Foundation Health Systems Inc 1,038,824 1,280,000
------------ --------------
$ 1,651,655 $ 1,768,750
MANUFACTURING PROCESSING - 5.28%
19,500 Alumax Inc+ $ 743,565 $ 797,063
6,500 Aluminum Co of America 513,874 533,000
11,800 Goodrich (B F) Co 531,543 533,950
22,000 Hercules Inc 994,218 1,094,500
17,200 Owens-Illinois Inc+ 494,703 583,725
50,000 United Dominion Industries 1,203,285 1,415,625
------------ --------------
$ 4,481,188 $ 4,957,863
PHARMACEUTICALS - 1.29%
8,000 Bristol-Myers Squibb Co $ 247,357 $ 662,000
15,000 Pharmacia and Upjohn Inc 397,019 547,500
------------ --------------
$ 644,376 $ 1,209,500
RETAIL & RELATED - 3.53%
40,000 Costco Companies Inc+ $ 614,455 $ 1,505,000
32,700 Rite Aid Corp 967,864 1,812,806
------------ --------------
$ 1,582,319 $ 3,317,806
TELECOMMUNICATIONS - 1.21%
25,000 GTE Corp $ 827,406 $ 1,134,375
TRANSPORTATION - 1.85%
19,900 CSX Corp $ 1,035,006 $ 1,164,150
6,100 Delta Air Lines Inc 533,075 574,544
------------ --------------
$ 1,568,081 $ 1,738,694
</TABLE>
- ------------------------
22
<PAGE>
BALANCED FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES - 1.98%
35,000 Cinergy Corp $ 1,087,820 $ 1,170,313
14,000 Duke Power Co 658,476 692,125
------------ --------------
$ 1,746,296 $ 1,862,438
TOTAL COMMON STOCKS $ 36,596,870 $ 56,354,896
</TABLE>
---------------------
23
<PAGE>
BALANCED FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
INTERNATIONAL FOREIGN GOVERNMENTS - 3.11%
FOREIGN GOVERNMENTS - 3.11%
$ 1,300,000 Ontario, Province of 7.63 % 06/22/04 $ 1,378,000
1,500,000 Quebec, Province of 7.50 07/15/23 1,543,125
--------------
TOTAL INTERNATIONAL FOREIGN GOVERNMENTS $ 2,921,125
(Cost $2,837,902)
CORPORATE BONDS & NOTES - 12.53%
BANK & FINANCE - 5.38%
$ 1,000,000 Associates Corp of America 6.32 % 02/28/00 $ 1,002,500
2,000,000 General Motors Acceptance Corp 6.88 07/15/01 2,030,000
1,000,000 Norwest Corp 7.13 04/01/00 1,020,000
1,000,000 NYNEX Credit Co 6.25 06/13/02 1,002,450
--------------
$ 5,054,950
INDUSTRIALS - 2.80%
$ 1,500,000 BP America Inc 9.38 % 11/01/00 $ 1,631,250
1,000,000 Chrysler Corp 7.40 08/01/97 1,005,840
--------------
$ 2,637,090
MISCELLANEOUS BONDS - 4.35%
$ 1,000,000 CSX Corp 7.25 % 05/01/04 $ 1,026,250
1,000,000 Philip Morris Co Inc 7.50 04/01/04 1,028,750
1,000,000 Raytheon Co 7.20 08/15/27 1,002,500
1,000,000 RJR Nabisco Inc 8.25 07/01/04 1,028,750
--------------
$ 4,086,250
TOTAL CORPORATE BONDS & NOTES $ 11,778,290
(Cost $11,635,540)
</TABLE>
- ------------------------
24
<PAGE>
BALANCED FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 12.31%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.59%
$ 143,551 FHLMC # 546103 10.50 % 08/01/19 $ 156,909
67,865 FHLMC #22-0009 8.25 08/01/01 69,307
213,283 FHLMC #291786 8.50 01/01/09 221,742
106,120 FHLMC #303407 8.50 12/01/02 108,882
--------------
$ 556,840
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 7.49%
$ 501,852 FNMA #190526 6.00 % 01/01/01 $ 499,167
472,634 FNMA #190588 6.50 01/01/09 471,906
5,645,630 FNMA #351092 7.50 07/01/26 5,746,574
202,972 FNMA #57843 8.00 06/01/08 210,139
8,163 FNMA #75336 9.50 02/01/09 8,710
95,817 FNMA #83785 8.00 08/01/18 99,583
--------------
$ 7,036,079
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.23%
$ 1,458,956 GNMA #403934 9.00 % 08/15/24 $ 1,560,573
961,845 GNMA #423225 6.50 04/15/26 941,377
1,472,359 GNMA #426993 7.00 05/15/26 1,473,684
--------------
$ 3,975,634
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 11,568,553
(Cost $11,204,934)
U.S. TREASURY SECURITIES - 11.43%
U.S. TREASURY BONDS - 3.80%
$ 3,000,000 U.S. Treasury Bonds 8.13 % 08/15/19 $ 3,568,590
</TABLE>
---------------------
25
<PAGE>
BALANCED FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES (CONTINUED)
U.S. TREASURY NOTES - 7.63%
$ 3,500,000 U.S. Treasury Notes 6.25 % 02/15/03 $ 3,533,355
2,000,000 U.S. Treasury Notes 6.38 01/15/99 2,015,320
1,500,000 U.S. Treasury Notes 7.50 02/15/05 1,619,535
--------------
$ 7,168,210
TOTAL U.S. TREASURY SECURITIES $ 10,736,800
(Cost $10,457,302)
SHORT-TERM INSTRUMENTS - 0.75%
REPURCHASE AGREEMENTS - 0.75%
$ 707,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.15 10/01/97 $ 707,000
(Cost $707,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $73,439,548)* (Notes 1 and 3) 100.11% $ 94,066,664
Other Assets and Liabilities, Net (0.11) (103,345)
------ --------------
TOTAL NET ASSETS 100.00% $ 93,963,319
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 21,057,801
Gross Unrealized Depreciation (430,685)
------------
NET UNREALIZED APPRECIATION $ 20,627,116
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
26
<PAGE>
DIVERSIFIED INCOME FUND (UNAUDITED)
- -----------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.38%
AEROSPACE - 2.18%
50,000 Lockheed Martin Corp $ 4,286,472 $ 5,331,250
AUTOMOBILE & RELATED - 6.71%
110,000 Dana Corp $ 3,186,065 $ 5,431,250
130,000 Ford Motor Co 3,908,708 5,882,500
165,000 Genuine Parts Co 4,909,608 5,084,063
------------ --------------
$ 12,004,381 $ 16,397,813
BASIC INDUSTRIES - 2.05%
175,000 Allegheny Teledyne Inc $ 4,093,374 $ 5,009,375
CAPITAL GOODS - 5.04%
120,000 Harris Corp $ 4,696,325 $ 5,490,000
200,000 Maytag Corp 4,452,309 6,825,000
------------ --------------
$ 9,148,634 $ 12,315,000
CONGLOMERATES - 6.04%
70,000 General Electric Co $ 1,884,452 $ 4,764,375
165,000 ITT Industries Inc 4,076,205 5,475,938
40,000 Loews Corp 3,327,449 4,517,500
------------ --------------
$ 9,288,106 $ 14,757,813
ELECTRICAL EQUIPMENT - 3.46%
125,000 Lexmark International Group Inc Class A+ $ 2,417,188 $ 4,125,000
120,000 Seagate Technology Inc+ 4,607,648 4,335,000
------------ --------------
$ 7,024,836 $ 8,460,000
</TABLE>
---------------------
27
<PAGE>
DIVERSIFIED INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 10.88%
88,000 Atlantic Richfield Corp $ 5,303,167 $ 7,518,500
45,000 El Paso Natural Gas Co 1,518,182 2,725,313
46,000 Royal Dutch Petroleum Co 1,158,636 2,553,000
80,000 Texaco Inc 4,442,938 4,915,000
115,000 Ultramar Diamond Shamrock CP 3,137,693 3,715,938
110,000 Williams Co Inc 4,858,886 5,149,372
------------ --------------
$ 20,419,502 $ 26,577,123
FINANCE & RELATED - 19.67%
30,000 Aetna Inc $ 1,921,275 $ 2,443,125
40,000 Bankers Trust N Y Corp 2,836,928 4,900,000
55,000 Chase Manhattan Bank 5,463,675 6,490,000
30,000 CIGNA Corp 5,552,169 5,587,500
190,000 Fremont General Corp 5,675,799 9,072,500
90,000 Household International Inc 4,984,430 10,186,875
60,000 Kilroy Realty Corp 1,408,549 1,620,000
700,000 Mercury Financial Co+ 4,868,769 1,006,250
90,000 SAFECO Corp 4,238,750 4,770,000
85,000 Security Capital Industrial Trust 1,531,613 1,981,563
------------ --------------
$ 38,481,957 $ 48,057,813
FOOD & RELATED - 3.56%
114,000 Philip Morris Co Inc $ 2,835,475 $ 4,738,125
115,000 RJR Nabisco Holdings Corp 3,996,057 3,953,125
------------ --------------
$ 6,831,532 $ 8,691,250
HEALTHCARE - 0.82%
70,000 Columbia HCA Healthcare Corp $ 2,523,423 $ 2,012,500
MANUFACTURING PROCESSING - 12.07%
85,000 Eastman Kodak Co $ 5,863,956 $ 5,519,688
37,000 Eaton Corp 3,411,660 3,417,875
180,000 Goodrich (B F) Co 7,187,591 8,145,000
120,000 Hercules Inc 5,525,248 5,970,000
</TABLE>
- ------------------------
28
<PAGE>
DIVERSIFIED INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
100,000 Millenium Chemicals Inc $ 2,034,476 $ 2,200,000
150,000 United Dominion Industries 3,349,726 4,246,875
------------ --------------
$ 27,372,657 $ 29,499,438
MEDICAL EQUIPMENT & SUPPLIES - 2.14%
100,000 Baxter International Inc $ 3,946,720 $ 5,225,000
PHARMACEUTICALS - 3.28%
50,000 American Home Products Corp $ 1,991,874 $ 3,650,000
120,000 Pharmacia and Upjohn Inc 4,367,420 4,380,000
------------ --------------
$ 6,359,294 $ 8,030,000
REAL ESTATE INVESTMENT TRUSTS - 3.97%
50,000 American Health Properties Inc $ 1,061,212 $ 1,225,000
45,000 Highwoods Properties Inc 1,575,000 1,591,875
85,000 INMC Mortgage Holdings Inc 1,715,550 2,125,000
20,000 Post Properties Inc 626,600 795,000
45,000 Smith (Chars E) Residential Reality Inc 1,107,350 1,530,000
60,000 Spieker Properties Inc 1,626,088 2,433,750
------------ --------------
$ 7,711,800 $ 9,700,625
RETAIL & RELATED - 2.83%
124,850 Rite Aid Corp $ 3,950,559 $ 6,921,372
SEMICONDUCTORS - 1.12%
38,000 Motorola Inc $ 1,752,460 $ 2,731,250
TELECOMMUNICATIONS - 2.40%
170,000 Alltel Corp $ 4,808,057 $ 5,865,000
TRANSPORTATION - 3.95%
90,000 CSX Corp $ 4,600,156 $ 5,265,000
70,000 Union Pacific Corp 3,661,212 4,383,750
------------ --------------
$ 8,261,368 $ 9,648,750
</TABLE>
---------------------
29
<PAGE>
DIVERSIFIED INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES - 4.21%
135,000 Duke Power Co $ 6,185,963 $ 6,674,063
160,000 Southern Co 3,406,575 3,610,000
------------ --------------
$ 9,592,538 $ 10,284,063
TOTAL COMMON STOCKS $187,857,670 $ 235,515,435
PREFERRED STOCKS - 0.80%
CONVERTIBLES - 0.80%
55,000 Browning-Ferris Industries Inc $ 1,896,080 $ 1,938,750
WARRANTS - 0.01%
3,957 Security Capital Group expires 9/18/98+ $ 31,653
(Cost $31,159)
</TABLE>
- ------------------------
30
<PAGE>
DIVERSIFIED INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 3.81%
REPURCHASE AGREEMENTS - 3.81%
$ 5,710,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.15 10/01/97 $ 5,710,000
3,596,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.00 10/01/97 3,596,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 9,306,000
(Cost $9,306,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $199,090,909)* (Notes 1 and 3) 101.00% $ 246,791,838
Other Assets and Liabilities, Net (1.00) (2,434,377)
------ --------------
TOTAL NET ASSETS 100.00% $ 244,357,461
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 52,946,668
Gross Unrealized Depreciation (5,245,739)
------------
NET UNREALIZED APPRECIATION $ 47,700,929
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
31
<PAGE>
EQUITY VALUE FUND (UNAUDITED)
- -----------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 92.21%
AUTOMOBILE & RELATED - 4.42%
90,000 Chrysler Corp $ 2,975,904 $ 3,313,125
75,000 Dana Corp 2,227,625 3,703,125
121,000 Ford Motor Co 3,571,555 5,475,250
------------ --------------
$ 8,775,084 $ 12,491,500
BASIC INDUSTRIES - 0.94%
100,000 Crompton & Knowles Corp $ 1,407,500 $ 2,656,250
CAPITAL GOODS - 7.35%
66,000 Harris Corp $ 2,576,588 $ 3,019,500
81,737 Kennametal Inc 3,024,606 3,964,245
80,000 Lancaster Colony Corp 3,005,991 4,250,000
100,200 Maytag Corp 2,631,354 3,419,325
160,000 Willamette Industries Inc 4,660,419 6,119,995
------------ --------------
$ 15,898,958 $ 20,773,065
COMPUTER SYSTEMS - 1.88%
50,000 International Business Machines Corp $ 2,661,925 $ 5,296,875
ELECTRICAL EQUIPMENT - 5.80%
163,600 Lexmark International Group Inc Class A+ $ 3,180,801 $ 5,398,800
150,000 Seagate Technology Inc+ 2,401,265 5,418,750
140,000 Technitrol Inc 1,480,229 5,573,750
------------ --------------
$ 7,062,295 $ 16,391,300
ENERGY & RELATED - 11.63%
50,000 Atlantic Richfield Corp $ 2,953,240 $ 4,271,875
138,000 Cabot Corp 3,672,563 3,717,375
110,000 Exxon Corp 3,765,946 7,046,875
60,000 Mobil Corp 2,118,677 4,440,000
80,000 Royal Dutch Petroleum Co 2,191,829 4,440,000
</TABLE>
- ------------------------
32
<PAGE>
EQUITY VALUE FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
49,780 Texaco Inc $ 1,571,829 $ 3,058,359
179,000 Valero Energy Corp 3,500,926 5,873,438
------------ --------------
$ 19,775,010 $ 32,847,922
FINANCE & RELATED - 21.45%
29,540 Aegon N.V. ADR Class A $ 1,373,375 $ 2,353,969
71,000 Aetna Inc 4,612,608 5,782,063
180,600 American Bankers Insurance Group 2,146,794 6,591,900
90,000 BankAmerica Corp 2,000,610 6,598,125
27,040 Chase Manhattan Bank 930,320 3,190,720
27,200 CIGNA Corp 5,127,113 5,066,000
100,000 Edwards A G & Sons Inc 2,606,651 5,137,500
80,000 First Union Corp 1,969,173 4,005,000
1,075,000 Mercury Financial Co+ 2,547,547 1,545,313
50,000 NationsBank Corp 1,397,568 3,093,750
68,000 Providian Financial Corp 685,243 2,698,750
41,900 Republic New York Corp 1,744,592 4,760,888
111,500 SAFECO Corp 5,142,938 5,909,500
56,400 Travelers Group Inc 607,005 3,849,300
------------ --------------
$ 32,891,537 $ 60,582,778
FOOD & RELATED - 3.10%
116,100 Philip Morris Co Inc $ 2,113,537 $ 4,825,406
114,000 RJR Nabisco Holdings Corp 4,054,212 3,918,750
------------ --------------
$ 6,167,749 $ 8,744,156
GENERAL BUSINESS & RELATED - 8.01%
202,550 Fremont General Corp $ 4,586,181 $ 9,671,763
80,000 General Electric Co 1,689,118 5,445,000
62,500 Goodrich (B F) Co 2,815,375 2,828,125
94,000 Hercules Inc 4,248,021 4,676,500
------------ --------------
$ 13,338,695 $ 22,621,388
</TABLE>
---------------------
33
<PAGE>
EQUITY VALUE FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE - 2.69%
75,000 Columbia HCA Healthcare Corp $ 2,703,668 $ 2,156,250
170,000 Foundation Health Systems Inc 4,428,165 5,440,000
------------ --------------
$ 7,131,833 $ 7,596,250
MANUFACTURING PROCESSING - 7.61%
90,800 Alumax Inc+ $ 3,462,073 $ 3,711,450
31,800 Aluminum Co of America 2,514,032 2,607,600
80,000 Johnson Controls Inc 2,360,389 3,965,000
197,300 Owens-Illinois Inc+ 1,951,269 6,695,869
160,000 United Dominion Industries 3,560,866 4,530,000
------------ --------------
$ 13,848,629 $ 21,509,919
PHARMACEUTICALS - 1.65%
30,000 Bristol-Myers Squibb Co $ 919,765 $ 2,482,500
60,000 Pharmacia and Upjohn Inc 1,588,076 2,190,000
------------ --------------
$ 2,507,841 $ 4,672,500
RETAIL & RELATED - 8.44%
210,000 Costco Companies Inc+ $ 3,091,250 $ 7,901,250
195,000 Rite Aid Corp 5,807,900 10,810,313
90,000 Sears Roebuck & Co 3,257,400 5,124,375
------------ --------------
$ 12,156,550 $ 23,835,938
TELECOMMUNICATIONS - 1.12%
70,000 GTE Corp $ 2,314,373 $ 3,176,250
TRANSPORTATION - 2.94%
92,200 CSX Corp $ 4,794,290 $ 5,393,700
31,000 Delta Air Lines Inc 2,709,073 2,919,813
------------ --------------
$ 7,503,363 $ 8,313,513
</TABLE>
- ------------------------
34
<PAGE>
EQUITY VALUE FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES - 3.18%
100,000 Cinergy Corp $ 2,838,307 $ 3,343,750
114,000 Duke Power Co 5,357,745 5,635,875
------------ --------------
$ 8,196,052 $ 8,979,625
TOTAL COMMON STOCKS $161,637,394 $ 260,489,229
</TABLE>
---------------------
35
<PAGE>
EQUITY VALUE FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 7.77%
REPURCHASE AGREEMENTS - 7.77%
$13,101,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.15 10/01/97 $ 13,101,000
8,836,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.00 10/01/97 8,836,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 21,937,000
(Cost $21,937,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $183,574,394)* (Notes 1 and 3) 99.98% $ 282,426,229
Other Assets and Liabilities, Net 0.02 56,212
------ --------------
TOTAL NET ASSETS 100.00% $ 282,482,441
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $100,603,781
Gross Unrealized Depreciation (1,751,946)
------------
NET UNREALIZED APPRECIATION $ 98,851,835
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
36
<PAGE>
GROWTH & INCOME FUND (UNAUDITED)
- -----------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 100.34%
AEROSPACE - 2.75%
125,600 Boeing Co $ 7,252,762 $ 6,837,350
36,569 Lockheed Martin Corp 4,081,832 3,899,170
------------ --------------
$ 11,334,594 $ 10,736,520
APPLIANCES AND FURNITURE - 2.60%
228,300 Sunbeam-Oster Co Inc $ 6,485,089 $ 10,130,813
AUTOMOBILE & RELATED - 1.66%
102,000 Danaher Corp $ 3,821,818 $ 5,916,000
1,400 General Motors Corp 78,576 93,713
6,800 General Motors Corp Class H 249,048 449,650
------------ --------------
$ 4,149,442 $ 6,459,363
BASIC INDUSTRIES - 5.47%
77,400 Aluminum Co of America $ 4,686,982 $ 6,346,800
97,400 Colgate-Palmolive Co 4,181,188 6,787,563
210,000 Monsanto Co 5,574,578 8,190,000
------------ --------------
$ 14,442,748 $ 21,324,363
BEVERAGE BREWING AND DISTRIBUTION - 2.45%
235,300 Pepsico Inc $ 9,180,415 $ 9,544,356
CAPITAL GOODS - 0.74%
104,000 Loewen Group Inc $ 3,432,000 $ 2,866,500
COMMERCIAL SERVICES - 1.90%
229,900 Service Corp International $ 5,921,699 $ 7,399,906
</TABLE>
---------------------
37
<PAGE>
GROWTH & INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE - 3.39%
217,400 First Data Corp $ 7,903,546 $ 8,166,088
38,000 Microsoft Corp+ 5,389,854 5,027,875
------------ --------------
$ 13,293,400 $ 13,193,963
COMPUTER SYSTEMS - 2.89%
72,500 Cisco Systems Inc+ $ 2,587,529 $ 5,297,031
1,620 Lucent Technologies Inc 72,062 131,828
301,208 Reynolds & Reynolds Co Class A 6,985,892 5,854,731
------------ --------------
$ 9,645,483 $ 11,283,590
ELECTRICAL EQUIPMENT - 2.52%
104,500 Nokia Corp ADR Class A $ 6,804,687 $ 9,803,406
ENERGY & RELATED - 10.79%
4,000 Amoco Corp $ 238,775 $ 385,500
94,800 Anadarko Petroleum Corp 4,678,800 6,807,825
102,100 Mobil Corp 5,928,420 7,555,400
76,582 Schlumberger Ltd 5,299,593 6,447,247
125,200 Texaco Inc 5,900,073 7,691,975
109,500 Tosco Corp 3,456,771 3,811,969
199,400 Williams Co Inc 8,784,585 9,334,404
------------ --------------
$ 34,287,017 $ 42,034,320
ENTERTAINMENT & LEISURE - 0.69%
132,139 Tele-Communication Inc Class A+ $ 2,548,103 $ 2,708,850
FINANCE & RELATED - 19.73%
101,050 American International Group Inc $ 7,115,521 $ 10,427,097
14,000 Bank of New York Inc 221,138 672,000
51,700 Chase Manhattan Bank 4,998,755 6,100,600
57,600 Citicorp 3,214,929 7,714,800
195,300 Conseco Inc 7,782,135 9,533,081
173,500 Federal Home Loan Mortgage Corp 3,627,666 6,115,875
5,600 Federal National Mortgage Association 107,503 263,200
</TABLE>
- ------------------------
38
<PAGE>
GROWTH & INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
74,000 First Union Corp $ 3,579,750 $ 3,704,625
82,700 Hartford Life Class A+ 2,664,269 3,178,781
96,400 Household International Inc 6,317,515 10,911,275
195,200 MBNA Corp 4,298,094 7,905,600
11,600 Mellon Bank Corp 201,183 635,100
183,200 Schwab (Charles) Corp 3,593,190 6,549,400
69,800 Security Capital Industrial Trust 1,418,464 1,627,213
75,561 Telecom-Communications TCI Ventures Group+ 970,584 1,558,445
------------ --------------
$ 50,110,696 $ 76,897,092
FOOD & RELATED - 3.47%
8,000 Albertson's Inc $ 244,280 $ 279,000
216,200 American Stores Co 5,054,819 5,269,875
6,000 CPC International Inc 410,885 555,750
7,500 McDonald's Corp 225,889 357,188
169,497 Philip Morris Co Inc 5,366,077 7,044,719
------------ --------------
$ 11,301,950 $ 13,506,532
GENERAL BUSINESS & RELATED - 5.81%
186,500 Corning Inc $ 6,859,480 $ 8,812,125
60,000 General Electric Co 4,018,914 4,083,750
170,900 Kimberly-Clark Corp 8,408,198 8,363,419
312 NCR Corp+ 8,621 10,901
14,000 Ralston Purina Corp 867,125 943,250
8,000 Tribune Co 243,338 426,500
------------ --------------
$ 20,405,676 $ 22,639,945
HEALTHCARE - 2.02%
108,000 American Home Products Corp $ 7,909,008 $ 7,884,000
</TABLE>
---------------------
39
<PAGE>
GROWTH & INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 7.32%
158,000 Allied Signal Inc $ 3,270,382 $ 6,715,000
94,900 Honeywell Inc 7,387,453 6,376,094
102,600 Potash Corp of Saskatchewan Inc 7,376,050 8,054,100
144,000 Praxair Inc 8,144,157 7,371,000
------------ --------------
$ 26,178,042 $ 28,516,194
MEDICAL EQUIPMENT & SUPPLIES - 2.34%
6,900 Abbott Laboratories $ 233,541 $ 441,169
165,800 Baxter International Inc 6,841,360 8,663,050
------------ --------------
$ 7,074,901 $ 9,104,219
PHARMACEUTICALS - 3.02%
42,500 Merck & Co Inc $ 3,658,426 $ 4,247,344
154,200 Smithkline Beecham Plc+ 3,980,499 7,536,525
------------ --------------
$ 7,638,925 $ 11,783,869
REAL ESTATE INVESTMENT TRUSTS - 2.44%
39,500 Boston Properties Inc+ $ 987,500 $ 1,296,094
11,300 Equity Office Properties 237,300 383,494
55,800 Equity Residential Properties Trust 2,301,750 3,044,588
53,436 Patriot American Hospitality Inc+ 1,162,900 1,703,273
76,100 Spieker Properties Inc 2,251,691 3,086,806
------------ --------------
$ 6,941,141 $ 9,514,255
RETAIL & RELATED - 5.39%
23,000 Costco Companies Inc+ $ 390,500 $ 865,375
72,000 Dayton-Hudson Corp 3,809,584 4,315,500
137,000 Gap Inc 5,925,332 6,858,563
81,000 Gillette Co 4,429,810 6,991,313
9,000 Home Depot Inc 264,475 469,125
7,000 May Department Stores Co 295,624 381,500
</TABLE>
- ------------------------
40
<PAGE>
GROWTH & INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
12,000 Medtronic Inc $ 316,741 $ 564,000
22,000 Walgreen Co 327,270 563,750
------------ --------------
$ 15,759,336 $ 21,009,126
SEMICONDUCTORS - 4.55%
99,500 Intel Corp $ 4,697,261 $ 9,185,094
119,000 Motorola Inc 8,059,889 8,553,125
------------ --------------
$ 12,757,150 $ 17,738,219
TELECOMMUNICATIONS - 6.28%
5,000 AT & T Corp $ 174,782 $ 221,563
54,000 Bell Atlantic Corp 4,171,746 4,343,625
270,000 Ericsson Telefonaktiebolaget L M Class B+ 5,961,274 12,943,125
70,500 GTE Corp 3,146,528 3,198,938
61,500 SBC Communication Inc 3,313,075 3,774,563
------------ --------------
$ 16,767,405 $ 24,481,814
UTILITIES - 0.12%
11,000 NIPSCO Industries Inc $ 333,508 $ 463,375
------------ --------------
TOTAL COMMON STOCKS $304,702,415 $ 391,024,590
WARRANTS - 0.01%
3,249 Security Capital Group expires 9/18/98+ $ 25,993
(Cost $25,587)
</TABLE>
---------------------
41
<PAGE>
GROWTH & INCOME FUND (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 0.05%
REPURCHASE AGREEMENTS - 0.05%
$ 55,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.15 10/01/97 $ 55,000
163,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.00 10/01/97 163,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 218,000
(Cost $218,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $304,946,002)* (Notes 1 and 3) 100.40% $ 391,268,583
Other Assets and Liabilities, Net (0.40) (1,560,036)
------ --------------
TOTAL NET ASSETS 100.00% $ 389,708,547
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 91,573,273
Gross Unrealized Depreciation (5,250,692)
------------
NET UNREALIZED APPRECIATION $ 86,322,581
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
42
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
43
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH BALANCED
FUND FUND
<S> <C> <C>
- ------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $69,457,909(3) $94,066,664
Cash 0 1,713
Receivables:
Dividends and Interest 0 573,882
Fund shares sold 63,157 145,313
Investment securities sold 0 13,255
Organization expenses, net of
amortization 61,810 35,657
Prepaid expenses 0 19,400
TOTAL ASSETS 69,582,876 94,855,884
LIABILITIES
Payables:
Investment securities purchased 0 0
Distribution to shareholders 0 706,854
Fund shares redeemed 3,776 49,053
Due to sponsor and distributor (Note
2) 29,003 64,369
Due to WFB (Note 2) 23,423 55,053
Other 235,730 17,236
TOTAL LIABILITIES 291,932 892,565
TOTAL NET ASSETS $69,290,944 $93,963,319
NET ASSETS CONSIST OF:
Paid-in capital $57,360,659 $65,298,068
Undistributed net investment income
(loss) (585,252) 0
Undistributed net realized gain (loss)
on investments (6,499,466) 8,038,135
Net unrealized appreciation
(depreciation) of investments 19,015,003 20,627,116
TOTAL NET ASSETS $69,290,944 $93,963,319
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A (1) $45,321,239 $35,359,750
Shares outstanding - Class A (1) 1,981,987 2,579,353
Net asset value per share - Class A (1) $ 22.87 $ 13.71
Maximum offering price per share - Class
A (1) $ 24.14(2) $ 14.47(2)
Net assets - Class B $23,969,705 $ 3,998,180
Shares outstanding - Class B 858,202 323,313
Net asset value and offering price per
share - Class B $ 27.93 $ 12.37
Net assets - Institutional Class N/A $54,605,389
Shares outstanding - Institutional Class N/A 3,991,197
Net asset value and offering price per
share - Institutional Class N/A $ 13.68
INVESTMENT AT COST (NOTE 3) N/A $73,439,548
- ------------------------------------------------------------------------
</TABLE>
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/94.75 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(3) INVESTMENT IN MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ------------------------
44
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
CORPORATE DIVERSIFIED EQUITY GROWTH AND
STOCK INCOME VALUE INCOME SMALL CAP
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $506,646,014(3) $246,791,838 $282,426,229 $391,268,583 $76,172,149(3)
Cash 0 1,210 1,960 1,620 0
Receivables:
Dividends and Interest 1,605,090 598,016 349,288 507,780 25,768
Fund shares sold 100,187 249,391 541,561 225,986 167,462
Investment securities sold 0 0 0 2,790,994 0
Organization expenses, net of
amortization 0 8,891 33,532 6,942 42,651
Prepaid expenses 3,310 3,204 42,658 0 11,330
TOTAL ASSETS 508,354,601 247,652,550 283,395,228 394,801,905 76,419,360
LIABILITIES
Payables:
Investment securities purchased 0 2,050,600 0 4,127,053 0
Distribution to shareholders 942,557 888,489 635,268 377,926 0
Fund shares redeemed 1,543 21,452 4,685 39,359 344
Due to sponsor and distributor (Note
2) 250,942 105,533 69,036 169,731 10,934
Due to WFB (Note 2) 177,348 192,447 193,290 294,912 1,826
Other 100,829 36,568 10,508 84,377 18,246
TOTAL LIABILITIES 1,473,219 3,295,089 912,787 5,093,358 31,350
TOTAL NET ASSETS $506,881,382 $244,357,461 $282,482,441 $389,708,547 $76,388,010
NET ASSETS CONSIST OF:
Paid-in capital $199,218,482 $183,094,661 $157,309,820 $258,829,583 $61,887,786
Undistributed net investment income
(loss) 0 0 137,418 (24,413) (51,474)
Undistributed net realized gain (loss)
on investments 12,842,469 13,561,871 26,183,368 44,580,796 2,210,984
Net unrealized appreciation
(depreciation) of investments 294,820,431 47,700,929 98,851,835 86,322,581 12,340,714
TOTAL NET ASSETS $506,881,382 $244,357,461 $282,482,441 $389,708,547 $76,388,010
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A (1) $506,881,382 $188,050,801 $ 35,420,289 $326,951,344 $ 9,102,182
Shares outstanding - Class A (1) 8,172,299 10,650,675 1,977,478 14,124,867 323,554
Net asset value per share - Class A (1) $ 62.02 $ 17.66 $ 17.91 $ 23.15 $ 28.13
Maximum offering price per share - Class
A (1) $ 62.02 $ 18.64(2) $ 18.90(2) $ 24.43(2) $ 29.69(2)
Net assets - Class B N/A $ 56,306,660 $ 26,099,107 $ 40,949,850 $ 7,648,913
Shares outstanding - Class B N/A 3,403,738 1,779,356 2,491,177 273,474
Net asset value and offering price per
share - Class B N/A $ 16.54 $ 14.67 $ 16.44 $ 27.97
Net assets - Institutional Class N/A N/A $220,963,045 $ 21,807,353 $59,636,915
Shares outstanding - Institutional Class N/A N/A 12,338,242 803,220 2,112,416
Net asset value and offering price per
share - Institutional Class N/A N/A $ 17.91 $ 27.15 $ 28.23
INVESTMENT AT COST (NOTE 3) N/A $199,090,909 $183,574,394 $304,946,002 N/A
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES FUNDS WITH A SINGLE CLASS.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/94.75 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(3) INVESTMENT IN MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
---------------------
45
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) - FOR THE SIX MONTHS ENDED SEPT. 30, 1997
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH BALANCED
FUND FUND
<S> <C> <C>
- ------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 34,250 $ 530,989
Interest 25,985(1) 1,391,766
Net expenses allocated from Master
Portfolio (164,929) N/A
TOTAL INVESTMENT INCOME (LOSS) (104,694) 1,922,755
EXPENSES (NOTE 2)
Advisory fees 0 281,918
Administration fees 16,751 28,192
Custody fees 0 7,847
Shareholder servicing fees 69,794 117,422
Portfolio accounting fees 0 49,974
Transfer agency fees 39,085 42,756
Distribution fees 88,591 24,676
Amortization of organization expenses 7,835 9,660
Legal and audit fees 13,220 12,683
Registration fees 12,330 12,005
Directors' fees 1,233 2,352
Shareholder reports 10,507 10,251
Other 2,010 22,068
TOTAL EXPENSES 261,356 621,804
Less:
Waived fees and reimbursed expenses (4,107) (150,406)
Net Expenses 257,249 471,398
NET INVESTMENT INCOME (LOSS) (361,943) 1,451,357
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments (1,167,659)(1) 3,424,719
Net change in unrealized appreciation
of investments 22,565,131(1) 8,793,530
NET GAIN ON INVESTMENTS 21,397,472 12,218,249
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $21,035,529 $13,669,606
- ------------------------------------------------------------------------
</TABLE>
(1) ALLOCATED FROM THE MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ------------------------
46
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)- FOR THE SIX MONTHS ENDED SEPT. 30, 1997
<TABLE>
<CAPTION>
CORPORATE DIVERSIFIED EQUITY GROWTH AND
STOCK INCOME VALUE INCOME SMALL CAP
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 4,189,153(1) $ 2,854,321 $ 2,281,828 $ 2,667,926 $ 20,034(1)
Interest 66,290(1) 318,621 297,167 463,638 132,081(1)
Net expenses allocated from Master
Portfolio (1,084,253) N/A N/A N/A (145,285)
TOTAL INVESTMENT INCOME (LOSS) 3,171,190 3,172,942 2,578,995 3,131,564 6,830
EXPENSES (NOTE 2)
Advisory fees 0 549,434 625,264 877,396 0
Administration fees 141,541 65,889 75,032 112,808 14,405
Custody fees 0 23,403 20,884 34,127 0
Shareholder servicing fees 707,707 329,445 312,632 558,507 60,062
Portfolio accounting fees 0 52,796 66,003 68,502 0
Transfer agency fees 330,263 153,741 90,771 254,366 18,176
Distribution fees 117,951 199,466 56,982 194,373 18,083
Amortization of organization expenses 0 8,278 9,084 29,990 5,391
Legal and audit fees 15,570 14,090 13,243 11,523 14,467
Registration fees 23,258 16,485 16,466 26,911 7,904
Directors' fees 2,085 2,507 2,384 2,507 2,507
Shareholder reports 32,767 33,355 11,948 56,685 6,099
Other 5,876 9,156 16,815 9,835 1,710
TOTAL EXPENSES 1,377,018 1,458,045 1,317,508 2,237,530 148,804
Less:
Waived fees and reimbursed expenses (144,975) (106,138) (70,948) (30,114) (86,614)
Net Expenses 1,232,043 1,351,907 1,246,560 2,207,416 62,190
NET INVESTMENT INCOME (LOSS) 1,939,147 1,821,035 1,332,435 924,148 (55,360)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 9,218,267(1) 9,973,409 12,899,915 35,698,639 3,606,590(1)
Net change in unrealized appreciation
of investments 92,681,161(1) 31,920,254 39,170,917 31,990,754 15,682,644(1)
NET GAIN ON INVESTMENTS 101,899,428 41,893,663 52,070,832 67,689,393 19,289,234
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $103,838,575 $43,714,698 $53,403,267 $68,613,541 $19,233,874
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) ALLOCATED FROM THE MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
---------------------
47
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
----------------------------------------------
(UNAUDITED) FROM
FOR THE SIX FOR THE SIX MARCH 5, 1996
MONTHS MONTHS (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
SEPT. 30, MARCH 31, TO
1997 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (361,943) $ (279,318) $ (131,231)
Net realized gain (loss) on sale of
investments (1,167,659) (2,330,009) (3,001,798)
Net change in unrealized appreciation
(depreciation) of investments 22,565,131 (7,301,392) 3,751,264
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 21,035,529 (9,910,719) 618,235
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
From net realized gain on sale of
investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 9,564,788 15,714,662 30,688,418
Reinvestment of dividends - Class A 0 0 0
Cost of shares redeemed - Class A (7,414,153) (6,971,041) (4,299,728)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 2,150,635 8,743,621 26,388,690
Proceeds from shares sold - Class B 6,092,709 6,379,072 15,306,682
Reinvestment of dividends - Class B 0 0 0
Cost of shares redeemed - Class B (3,619,205) (3,026,344) (867,961)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 2,473,504 3,352,728 14,438,721
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 CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS N/A N/A N/A
INCREASE (DECREASE) IN NET ASSETS 25,659,668 2,185,630 41,445,646
NET ASSETS:
Beginning net assets 43,631,276 41,445,646 0
ENDING NET ASSETS $69,290,944 $43,631,276 $ 41,445,646
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
48
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED FUND CORPORATE STOCK FUND
---------------------------------------------- -----------------------------
(UNAUDITED) (UNAUDITED)
FOR THE SIX FOR THE SIX FOR THE FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31,
1997 1997 1996 1997 1997
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,451,357 $ 1,585,315 $ 3,996,707 $ 1,939,147 $ 2,055,606
Net realized gain (loss) on sale of
investments 3,424,719 5,673,146 11,895,904 9,218,267 4,668,147
Net change in unrealized appreciation
(depreciation) of investments 8,793,530 957,295 3,445,959 92,681,161 32,614,123
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 13,669,606 8,215,756 19,338,570 103,838,575 39,337,876
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (523,279) (524,249) (1,030,389) (1,939,147) (2,055,606)
CLASS B (23,135) (785) 0 N/A N/A
INSTITUTIONAL CLASS (904,943) (1,028,637) (2,871,649) N/A N/A
In excess of net investment income
CLASS A 0 0 0 0 0
CLASS B 0 0 0 N/A N/A
INSTITUTIONAL CLASS 0 0 (23,043) N/A N/A
From net realized gain on sale of
investments
CLASS A 0 (505,037) (3,380,108) 0 (9,940,251)
CLASS B 0 (331) 0 N/A N/A
INSTITUTIONAL CLASS 0 (1,013,783) (8,265,228) N/A N/A
In excess of net realized gain on sale
of investments
CLASS A 0 0 0 0 0
CLASS B 0 0 0 N/A N/A
INSTITUTIONAL CLASS 0 0 0 N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 3,331,882 1,158,984 15,479,177 33,571,106 29,911,449
Reinvestment of dividends - Class A 501,537 812,743 4,242,084 1,900,741 12,250,397
Cost of shares redeemed - Class A (4,586,348) (4,580,742) (76,589,659) (37,228,509) (33,204,510)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (752,929) (2,609,015) (56,868,398) (1,756,662) 8,957,336
Proceeds from shares sold - Class B 3,610,015 304,255 1,549 N/A N/A
Reinvestment of dividends - Class B 7,461 452 0 N/A N/A
Cost of shares redeemed - Class B (138,972) (1,579) 0 N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 3,478,504 303,128 1,549 N/A N/A
Proceeds from shares sold -
Institutional Class 3,553,816 3,125,636 115,568,034 N/A N/A
Reinvestment of dividends -
Institutional Class 867,173 1,651,464 10,566,690 N/A N/A
Cost of shares redeemed -
Institutional Class (12,786,912) (25,197,171) (57,101,263) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (8,365,923) (20,420,071) 69,033,461 N/A N/A
INCREASE (DECREASE) IN NET ASSETS 6,577,901 (17,583,024) 15,934,765 100,142,766 36,299,355
NET ASSETS:
Beginning net assets 87,385,418 104,968,442 89,033,677 406,738,616 370,439,261
ENDING NET ASSETS $ 93,963,319 $ 87,385,418 $104,968,442 $506,881,382 $406,738,616
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPT. 30,
1996
<S> <C>
- -------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 3,383,203
Net realized gain (loss) on sale of
investments 7,781,779
Net change in unrealized appreciation
(depreciation) of investments 30,469,349
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 41,634,331
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (3,383,203)
CLASS B N/A
INSTITUTIONAL CLASS N/A
In excess of net investment income
CLASS A 0
CLASS B N/A
INSTITUTIONAL CLASS N/A
From net realized gain on sale of
investments
CLASS A 0
CLASS B N/A
INSTITUTIONAL CLASS N/A
In excess of net realized gain on sale
of investments
CLASS A 0
CLASS B N/A
INSTITUTIONAL CLASS N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 50,105,623
Reinvestment of dividends - Class A 3,297,986
Cost of shares redeemed - Class A (48,423,346)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 4,980,263
Proceeds from shares sold - Class B N/A
Reinvestment of dividends - Class B N/A
Cost of shares redeemed - Class B N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B N/A
Proceeds from shares sold -
Institutional Class N/A
Reinvestment of dividends -
Institutional Class N/A
Cost of shares redeemed -
Institutional Class N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS N/A
INCREASE (DECREASE) IN NET ASSETS 43,231,391
NET ASSETS:
Beginning net assets 327,207,870
ENDING NET ASSETS $370,439,261
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
49
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
DIVERSIFIED INCOME FUND
----------------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE SIX FOR THE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED
SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,821,035 $ 1,611,261 $ 2,107,805
Net realized gain (loss) on sale of
investments 9,973,409 3,721,967 7,772,450
Net change in unrealized appreciation
(depreciation) of investments 31,920,254 2,318,759 2,900,227
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 43,714,698 7,651,987 12,780,482
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,563,429) (1,444,267) (1,963,354)
CLASS B (257,606) (166,994) (144,451)
INSTITUTIONAL CLASS N/A N/A N/A
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
From net realized gain on sale of
investments
CLASS A 0 (8,166,226) 0
CLASS B 0 (1,285,280) 0
INSTITUTIONAL CLASS N/A N/A N/A
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 28,084,050 35,798,695 67,375,546
Reinvestment of dividends - Class A 1,373,875 9,310,171 1,611,353
Cost of shares redeemed - Class A (29,505,914) (22,697,752) (24,014,045)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (47,989) 22,411,114 44,972,854
Proceeds from shares sold - Class B 18,340,428 17,492,675 11,955,056
Reinvestment of dividends - Class B 202,526 1,383,252 90,711
Cost of shares redeemed - Class B (3,164,517) (2,435,546) (1,314,702)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 15,378,437 16,440,381 10,731,065
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 CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS N/A N/A N/A
INCREASE (DECREASE) IN NET ASSETS 57,224,111 35,440,715 66,376,596
NET ASSETS:
Beginning net assets 187,133,350 151,692,635 85,316,039
ENDING NET ASSETS $244,357,461 $187,133,350 $151,692,635
- -------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $628,555 FOR CLASS A AND $17,334,017
FOR THE INSTITUTIONAL CLASS AS A RESULT OF THE MERGER OF THE PACIFICA
GROWTH FUND. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
50
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY VALUE FUND GROWTH AND INCOME FUND
----------------------------------------------- -----------------------------
(UNAUDITED) (UNAUDITED)
FOR THE SIX FOR THE SIX FOR THE FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31,
1997 1997 1996 1997 1997
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,332,435 $ 1,380,130 $ 3,943,333 $ 924,148 $ 993,606
Net realized gain (loss) on sale of
investments 12,899,915 15,163,623 27,944,178 35,698,639 10,102,690
Net change in unrealized appreciation
(depreciation) of investments 39,170,917 15,837,356 17,614,459 31,990,754 11,068,414
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 53,403,267 32,381,109 49,501,970 68,613,541 22,164,710
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (141,561) (111,000) (271,396) (869,509) (921,552)
CLASS B (19,576) (1,028) 0 (856) 0
INSTITUTIONAL CLASS (1,171,298) (1,113,606) (3,536,140) (76,804) (77,222)
In excess of net investment income
CLASS A 0 0 0 0 0
CLASS B 0 0 0 0 0
INSTITUTIONAL CLASS 0 0 (152,875) 0 0
From net realized gain on sale of
investments
CLASS A 0 (165,769) (3,065,374) 0 (769,667)
CLASS B 0 (864) 0 0 (47,154)
INSTITUTIONAL CLASS 0 (1,716,939) (33,389,091) 0 (54,088)
In excess of net realized gain on sale
of investments
CLASS A 0 0 0 0 0
CLASS B 0 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 12,582,343 3,128,244 65,541,864 44,053,641 44,283,158
Reinvestment of dividends - Class A 114,089 222,206 3,103,800 806,505 1,571,703
Cost of shares redeemed - Class A (3,727,916) (3,807,382) (184,207,991) (59,527,534) (35,197,194)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 8,968,516 (456,932) (115,562,327) (14,667,388) 10,657,667
Proceeds from shares sold - Class B 22,199,991 2,636,307 26 15,023,182 11,003,396
Reinvestment of dividends - Class B 7,202 973 0 843 47,228
Cost of shares redeemed - Class B (500,207) (10,349) 0 (2,589,425) (1,557,385)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 21,706,986 2,626,931 26 12,434,600 9,493,239
Proceeds from shares sold -
Institutional Class 9,404,578 13,701,832 190,586,130 2,870,072 4,135,758
Reinvestment of dividends -
Institutional Class 538,466 1,877,441 32,111,369 50,333 66,661
Cost of shares redeemed -
Institutional Class (26,707,499) (55,593,181) (61,556,058) (4,842,222) (4,289,351)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (16,764,455) (40,013,908) 161,141,441 (1,921,817) (86,932)
INCREASE (DECREASE) IN NET ASSETS 65,981,879 (8,572,006) 54,666,234 63,511,767 40,359,001
NET ASSETS:
Beginning net assets 216,500,562 225,072,568 170,406,334 326,196,780 285,837,779
ENDING NET ASSETS $282,482,441 $216,500,562 $ 225,072,568 $389,708,547 $326,196,780
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPT. 30,
1996 (1)
<S> <C>
- ---------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 907,579
Net realized gain (loss) on sale of
investments 14,694,253
Net change in unrealized appreciation
(depreciation) of investments 10,252,699
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 25,854,531
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (902,578)
CLASS B 0
INSTITUTIONAL CLASS (11,005)
In excess of net investment income
CLASS A 0
CLASS B 0
INSTITUTIONAL CLASS 0
From net realized gain on sale of
investments
CLASS A (14,220,794)
CLASS B (490,320)
INSTITUTIONAL CLASS 0
In excess of net realized gain on sale
of investments
CLASS A (2,238,898)
CLASS B (358,700)
INSTITUTIONAL CLASS 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 92,986,116
Reinvestment of dividends - Class A 17,197,210
Cost of shares redeemed - Class A (40,873,885)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 69,309,441
Proceeds from shares sold - Class B 8,483,020
Reinvestment of dividends - Class B 848,356
Cost of shares redeemed - Class B (1,258,949)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 8,072,427
Proceeds from shares sold -
Institutional Class 17,995,025
Reinvestment of dividends -
Institutional Class 0
Cost of shares redeemed -
Institutional Class (341,372)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 17,653,653
INCREASE (DECREASE) IN NET ASSETS 102,667,757
NET ASSETS:
Beginning net assets 183,170,022
ENDING NET ASSETS $285,837,779
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $628,555 FOR CLASS A AND $17,334,017
FOR THE INSTITUTIONAL CLASS AS A RESULT OF THE MERGER OF THE PACIFICA
GROWTH FUND. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
---------------------
51
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP FUND
----------------------------------------------
(UNAUDITED) FROM
FOR THE SIX FOR THE SIX SEPT. 16, 1996
MONTHS MONTHS (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
SEPT. 30, MARCH 31, TO
1997 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (55,360) $ 16,522 $ (12,636)
Net realized gain (loss) on sale of
investments 3,606,590 (1,454,225) 58,619
Net change in unrealized appreciation
(depreciation) of investments 15,682,644 (3,802,835) 460,905
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 19,233,874 (5,240,538) 506,888
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
From net realized gain on sale of
investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 5,411,888 3,967,857 94,136
Reinvestment of dividends - Class A 0 0 0
Cost of shares redeemed - Class A (1,596,304) (556,553) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 3,815,584 3,411,304 94,136
Proceeds from shares sold - Class B 4,629,540 2,296,961 25
Reinvestment of dividends - Class B 0 0 0
Cost of shares redeemed - Class B (586,766) (163,976) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 4,042,774 2,132,985 25
Proceeds from shares sold -
Institutional Class 24,027,673 12,246,405 24,103,344
Reinvestment of dividends -
Institutional Class 0 0 0
Cost of shares redeemed -
Institutional Class (8,943,605) (2,987,916) (54,923)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 15,084,068 9,258,489 24,048,421
INCREASE (DECREASE) IN NET ASSETS 42,176,300 9,562,240 24,649,470
NET ASSETS:
Beginning net assets 34,211,710 24,649,470 0
ENDING NET ASSETS $76,388,010 $34,211,710 $ 24,649,470
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
52
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
53
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND (2)
--------------------------------------------
CLASS A
--------------------------------------------
(UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD
ENDED ENDED ENDED
SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (3) 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $15.72 $19.40 $17.75
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.09) (0.07) (0.05)
Net realized and unrealized gain (loss) on investments 7.24 (3.61) 1.70
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 7.15 (3.68) 1.65
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $22.87 $15.72 $19.40
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 45.48% (18.97)% 9.85%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $45,321 $29,122 $26,902
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.29%(5) 1.26%(5) 1.23%(5)
Ratio of net investment income (loss) to average net
assets (1.08)%(5) (0.97)%(5) (0.79)%(5)
Portfolio turnover N/A N/A N/A
Average commission rate paid(1) N/A N/A N/A
- ------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.30%(5) 1.38%(5) 1.60%(5)
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses (1.09)%(5) (1.09)%(5) (1.16)%(5)
- ------------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON MARCH 5, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(5) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ---------------------
54
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND (2) (CONT.) BALANCED FUND (4)
-------------------------------------------- ----------------------------------------------
CLASS B CLASS A
-------------------------------------------- ----------------------------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED YEAR ENDED YEAR ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30,
1997 1997 (3) 1996 1997 1997 (3) 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $19.26 $23.86 $21.90 $12.01 $11.46 $11.84 $11.67
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.16) (0.15) (0.10) 0.20 0.19 0.36 0.46*
Net realized and
unrealized gain (loss)
on investments 8.83 (4.45) 2.06 1.70 0.74 0.89 0.68*
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 8.67 (4.60) 1.96 1.90 0.93 1.25 1.14
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 (0.20) (0.19) (0.35) (0.47)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 (0.19) (1.28) (0.50)
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00 0.00 (0.20) (0.38) (1.63) (0.97)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $27.93 $19.26 $23.86 $13.71 $12.01 $11.46 $11.84
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 45.02% (19.28)% 9.50% 15.88% 8.15% 10.51% 10.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $23,970 $14,509 $14,544 $35,360 $31,632 $32,640 $89,034
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.93%(5) 1.94%(5) 1.91%(5) 1.05% 1.05% 1.31% 1.03%
Ratio of net investment
income (loss) to average
net assets (1.72)%(5) (1.65)%(5) (1.45)%(5) 3.03% 3.20% 2.98% 4.05%
Portfolio turnover N/A N/A N/A 27% 43% 131% 90%
Average commission rate
paid(1) N/A N/A N/A $0.0666 $0.0802 $0.0603 N/A
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.95%(5) 2.04%(5) 2.29%(5) 1.41% 1.30% 1.48% 1.05%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (1.74)%(5) (1.75)%(5) (1.83)%(5) 2.67% 2.95% 2.81% 4.03%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON MARCH 5, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(5) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
---------------------
55
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (4) (CONT.)
----------------------------------
CLASS A (CONT.)
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30,
1994 1993 1992
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.71 $11.18 $10.80
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.43* 0.44* 0.42*
Net realized and unrealized gain (loss) on investments (0.13)* 1.72* 0.53*
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.30 2.16 0.95
LESS DISTRIBUTIONS:
Dividends from net investment income (0.46) (0.43) (0.43)
Distributions from net realized gain (0.88) (0.20) (0.14)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.34) (0.63) (0.57)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $11.67 $12.71 $11.18
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 2.30% 19.83% 9.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $108,290 $104,434 $65,226
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.09% 1.01% 1.02%
Ratio of net investment income (loss) to average net
assets 3.55% 3.62% 3.76%
Portfolio turnover 35% 60% 49%
Average commission rate paid(1) N/A N/A N/A
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.11% 1.06% 1.10%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 3.53% 3.57% 3.68%
- --------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(5) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
56
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (4) (CONT.)
----------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
---------------------------------- ----------------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED YEAR ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (3) 1996 (5) 1997 1997 (3) 1996 (2)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.79 $10.24 $10.00 $12.00 $11.45 $11.84
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.09 0.08 0.00 0.22 0.21 0.40
Net realized and
unrealized gain (loss)
on investments 1.58 0.72 0.24 1.68 0.74 0.89
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.67 0.80 0.24 1.90 0.95 1.29
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.09) (0.08) 0.00 (0.22) (0.21) (0.40)
Distributions from net
realized gain 0.00 (0.17) 0.00 0.00 (0.19) (1.28)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.09) (0.25) 0.00 (0.22) (0.40) (1.68)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $12.37 $10.79 $10.24 $13.68 $12.00 $11.45
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 15.52% 7.84% 2.40% 15.86% 8.27% 10.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $3,998 $297 $2 $54,605 $55,456 $72,327
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.70% 1.70% 0.00% 0.95% 0.95% 0.94%
Ratio of net investment
income (loss) to average
net assets 2.29% 2.48% 3.09% 3.14% 3.30% 3.29%
Portfolio turnover 27% 43% 131% 27% 43% 131%
Average commission rate
paid(1) $0.0666 $0.0802 $0.0603 $0.0666 $0.0802 $0.0603
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.54% 7.85% 0.66% 1.23% 1.18% 1.11%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.45% (3.67)% 2.43% 2.86% 3.07% 3.12%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(5) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
The accompanying notes are an integral part of these financial statements.
---------------------
57
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CORPORATE STOCK FUND
----------------------------------
(UNAUDITED) NINE
SIX MONTHS SIX MONTHS MONTHS
ENDED ENDED ENDED
SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (3) 1996 (2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $49.60 $46.24 $41.45
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.24 0.25 0.42
Net realized and unrealized gain (loss) on investments 12.42 4.61 4.79
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 12.66 4.86 5.21
LESS DISTRIBUTIONS:
Dividends from net investment income (0.24) (0.25) (0.42)
Distributions from net realized gain 0.00 (1.25) 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.24) (1.50) (0.42)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $62.02 $49.60 $46.24
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 25.54% 10.63% 12.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $506,881 $406,739 $370,439
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.98%(4) 0.97%(4) 1.01%(4)
Ratio of net investment income (loss) to average net
assets 0.82%(4) 1.02%(4) 1.28%(4)
Portfolio turnover N/A N/A 1%(5)
Average commission rate paid(1) N/A N/A $0.0248(5)
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.04%(4) 1.07%(4) 1.08%(4)
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 0.76%(4) 0.92%(4) 1.21%(4)
- --------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
(5) PORTFOLIO ACTIVITY REFLECTS ACTIVITY FOR STAND-ALONE PERIOD ONLY. SEE
NOTE 5.
The accompanying notes are an integral part of these financial statements.
- ---------------------
58
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED INCOME FUND
----------------------------------------------
CLASS A
----------------------------------------------
CORPORATE STOCK FUND (CONT.) (UNAUDITED) NINE
---------------------------------------------- SIX MONTHS SIX MONTHS MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, SEPT. 30, MARCH 31, SEPT. 30, DEC. 31,
1995 1994 1993 1992 1997 1997 (3) 1996 (2) 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $31.42 $33.00 $31.40 $30.38 $14.52 $14.73 $13.34 $10.76
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.59 0.63 0.59 0.62 0.15 0.14 0.25 0.35
Net realized and
unrealized gain (loss)
on investments 10.65 (0.50) 2.19 1.35 3.14 0.64 1.39 2.86
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 11.24 0.13 2.78 1.97 3.29 0.78 1.64 3.21
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.59) (0.63) (0.59) (0.62) (0.15) (0.14) (0.25) (0.35)
Distributions from net
realized gain (0.62) (1.08) (0.59) (0.33) 0.00 (0.85) 0.00 (0.28)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.21) (1.71) (1.18) (0.95) (0.15) (0.99) (0.25) (0.63)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $41.45 $31.42 $33.00 $31.40 $17.66 $14.52 $14.73 $13.34
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 35.99% 0.42% 8.91% 6.59% 22.68% 5.25% 12.35% 30.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $327,208 $236,265 $258,327 $230,457 $188,051 $154,502 $134,648 $79,977
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.96% 0.97% 0.97% 0.93% 1.10% 1.10% 1.10% 1.10%
Ratio of net investment
income (loss) to average
net assets 1.59% 1.92% 1.81% 2.05% 1.78% 1.91% 2.57% 3.02%
Portfolio turnover 6% 7% 5% 4% 30% 33% 43% 70%
Average commission rate
paid(1) N/A N/A N/A N/A $0.0666 $0.0780 $0.0793 N/A
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.00% 1.00% 0.99% 1.00% 1.19% 1.17% 1.26% 1.31%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.55% 1.89% 1.79% 1.98% 1.69% 1.84% 2.41% 2.81%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
(5) PORTFOLIO ACTIVITY REFLECTS ACTIVITY FOR STAND-ALONE PERIOD ONLY. SEE
NOTE 5.
The accompanying notes are an integral part of these financial statements.
---------------------
59
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED INCOME FUND (CONT.)
----------------------------------
CLASS A (CONT.)
----------------------------------
PERIOD
YEAR ENDED YEAR ENDED ENDED
DEC. 31, DEC. 31, DEC. 31,
1994 1993 1992 (5)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.08 $10.29 $10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.33 0.30 0.02
Net realized and unrealized gain (loss) on investments (0.32) 0.96 0.29
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.01 1.26 0.31
LESS DISTRIBUTIONS:
Dividends from net investment income (0.33) (0.30) (0.02)
Distributions from net realized gain 0.00 (0.17) 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.33) (0.47) (0.02)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $10.76 $11.08 $10.29
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 0.08% 12.33% 3.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $45,178 $26,704 $1,379
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.06% 0.46% 0.00%
Ratio of net investment income (loss) to average net
assets 3.16% 3.51% 4.09%
Portfolio turnover 62% 46% 1%
Average commission rate paid(1) N/A N/A N/A
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.34% 1.66% 3.49%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 2.88% 2.31% 0.60%
- --------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(5) THE FUND COMMENCED OPERATIONS ON NOVEMBER 18, 1992.
(6) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
60
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED INCOME FUND (CONT.) EQUITY VALUE FUND (3)
---------------------------------------------- ----------------------------------------------
CLASS B CLASS A
---------------------------------------------- ----------------------------------------------
(UNAUDITED) NINE (UNAUDITED)
SIX MONTHS SIX MONTHS MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED
SEPT. 30, MARCH 31, SEPT. 30, DEC. 31, SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30,
1997 1997 (2) 1996 (4) 1995 (6) 1997 1997 (2) 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $13.60 $13.79 $12.49 $10.00 $14.43 $12.66 $13.27 $12.36
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.08 0.08 0.17 0.20 0.08 0.08 0.20 0.24*
Net realized and
unrealized gain (loss)
on investments 2.94 0.60 1.30 2.75 3.48 1.89 1.60 1.63*
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 3.02 0.68 1.47 2.95 3.56 1.97 1.80 1.87
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.08) (0.08) (0.17) (0.20) (0.08) (0.08) (0.19) (0.25)
Distributions from net
realized gain 0.00 (0.79) 0.00 (0.26) 0.00 (0.12) (2.22) (0.71)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.08) (0.87) (0.17) (0.46) (0.08) (0.20) (2.41) (0.96)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $16.54 $13.60 $13.79 $12.49 $17.91 $14.43 $12.66 $13.27
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 22.25% 4.91% 11.76% 29.64% 24.69% 15.63% 14.27% 16.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $56,307 $32,632 $17,045 $5,339 $35,420 $20,798 $18,453 $170,406
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.74% 1.74% 1.74% 1.73% 1.05% 1.05% 1.18% 0.96%
Ratio of net investment
income (loss) to average
net assets 1.15% 1.29% 2.01% 2.40% 1.01% 1.14% 1.73% 1.97%
Portfolio turnover 30% 33% 43% 70% 21% 45% 91% 75%
Average commission rate
paid(1) $0.0666 $0.0780 $0.0793 N/A $0.0656 $0.0800 $0.0558 N/A
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.84% 1.87% 2.08% 2.57% 1.20% 1.12% 1.22% 0.98%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.05% 1.16% 1.67% 1.56% 0.86% 1.07% 1.69% 1.95%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(5) THE FUND COMMENCED OPERATIONS ON NOVEMBER 18, 1992.
(6) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
The accompanying notes are an integral part of these financial statements.
---------------------
61
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (3) (CONT.)
----------------------------------
CLASS A (CONT.)
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30, SEPT. 30,
1994 1993 1992
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $13.17 $10.73 $10.45
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.20* 0.21* 0.20*
Net realized and unrealized gain (loss) on investments 0.74* 2.75* 0.49*
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.94 2.96 0.69
LESS DISTRIBUTIONS:
Dividends from net investment income (0.21) (0.23) (0.22)
Distributions from net realized gain (1.54) (0.29) (0.19)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.75) (0.52) (0.41)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $12.36 $13.17 $10.73
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 7.49% 28.22% 6.81%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $168,852 $140,551 $92,915
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.99% 0.98% 1.02%
Ratio of net investment income (loss) to average net
assets 1.60% 1.73% 1.86%
Portfolio turnover 41% 82% 78%
Average commission rate paid(1) N/A N/A N/A
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.01% 0.99% N/A
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 1.58% 1.72% N/A
- --------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
62
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (3) (CONT.)
----------------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
---------------------------------- ----------------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED YEAR ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (2) 1996 (4) 1997 1997 (2) 1996 (5)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.81 $10.34 $10.00 $14.43 $12.65 $13.27
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.02 0.01 0.00 0.09 0.09 0.22
Net realized and
unrealized gain (loss)
on investments 2.86 1.57 0.34 3.48 1.89 1.61
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 2.88 1.58 0.34 3.57 1.98 1.83
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.02) (0.01) 0.00 (0.09) (0.08) (0.23)
Distributions from net
realized gain 0.00 (0.10) 0.00 0.00 (0.12) (2.22)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.02) (0.11) 0.00 (0.09) (0.20) (2.45)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $14.67 $11.81 $10.34 $17.91 $14.43 $12.65
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 24.36% 15.31% 3.40% 24.79% 15.73% 14.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $26,099 $2,542 $0 $220,963 $193,161 $206,620
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.70% 1.70% 0.00% 0.95% 0.95% 0.87%
Ratio of net investment
income (loss) to average
net assets 0.34% 0.34% 1.83% 1.11% 1.25% 1.69%
Portfolio turnover 21% 45% 91% 21% 45% 91%
Average commission rate
paid(1) $0.0656 $0.0800 $0.0558 $0.0656 $0.0800 $0.0558
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.88% 2.19% N/A 0.99% 0.99% 0.92%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 0.16% (0.15)% N/A 1.07% 1.21% 1.64%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) 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. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). 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.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
---------------------
63
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
----------------------------------
CLASS A
----------------------------------
(UNAUDITED) NINE
SIX MONTHS SIX MONTHS MONTHS
ENDED ENDED ENDED
SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (2) 1996 (3)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $19.20 $17.91 $17.26
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 0.06 0.07
Net realized and unrealized gain (loss) on investments 3.95 1.34 2.00
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.01 1.40 2.07
LESS DISTRIBUTIONS:
Dividends from net investment income (0.06) (0.06) (0.07)
Distributions from net realized gain 0.00 (0.05) (1.35)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.06) (0.11) (1.42)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $23.15 $19.20 $17.91
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 20.90% 7.86% 12.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $326,951 $283,468 $254,498
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.13% 1.14% 1.18%
Ratio of net investment income (loss) to average net
assets 0.54% 0.65% 0.56%
Portfolio turnover 51% 40% 83%
Average commission rate paid(1) $0.0633 $0.0799 $0.0702
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.14% N/A 1.19%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 0.53% N/A 0.55%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
64
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND (CONT.)
----------------------------------------------------------------------------------------------------
CLASS B
----------------------------------------------------
CLASS A (CONT.) (UNAUDITED) NINE
---------------------------------------------- SIX MONTHS SIX MONTHS MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, SEPT. 30, MARCH 31, SEPT. 30, DEC. 31,
1995 1994 1993 1992 1997 1997 (2) 1996 (3) 1995 (4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.10 $14.75 $13.88 $12.84 $13.64 $12.74 $12.29 $10.00
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.19 0.22 0.23 0.27 (0.01) 0.00 (0.01) 0.05
Net realized and
unrealized gain (loss)
on investments 3.87 (0.27) 0.93 1.44 2.81 0.94 1.42 2.79
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 4.06 (0.05) 1.16 1.71 2.80 0.94 1.41 2.84
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.19) (0.22) (0.23) (0.27) 0.00 0.00 0.00 (0.05)
Distributions from net
realized gain (0.71) (0.38) (0.06) (0.40) 0.00 (0.04) (0.96) (0.50)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.90) (0.60) (0.29) (0.67) 0.00 (0.04) (0.96) (0.55)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $17.26 $14.10 $14.75 $13.88 $16.44 $13.64 $12.74 $12.29
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 28.90% (0.29)% 8.44% 13.45% 20.53% 7.36% 11.89% 28.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $178,488 $113,525 $112,236 $44,883 $40,950 $23,010 $12,832 $4,682
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.18% 1.11% 0.93% 0.42% 1.80% 1.86% 1.93% 1.87%
Ratio of net investment
income (loss) to average
net assets 1.23% 1.51% 1.72% 2.31% (0.14)% (0.06)% (0.12)% 0.43%
Portfolio turnover 100% 71% 55% 80% 51% 40% 83% 100%
Average commission rate
paid(1) N/A N/A N/A N/A $0.0633 $0.0799 $0.0702 N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.21% 1.15% 1.11% 1.10% 1.82% 1.89% 2.03% 2.21%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.20% 1.47% 1.54% 1.63% (0.16)% (0.09)% (0.22)% 0.09%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
The accompanying notes are an integral part of these financial statements.
---------------------
65
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND (CONT.)
----------------------------------
INSTITUTIONAL CLASS
----------------------------------
(UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD
ENDED ENDED ENDED
SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (3) 1996 (5)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $22.52 $21.01 $20.03
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.09 0.09 0.02
Net realized and unrealized gain (loss) on investments 4.63 1.57 0.97
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.72 1.66 0.99
LESS DISTRIBUTIONS:
Dividends from net investment income (0.09) (0.09) (0.01)
Distributions from net realized gain 0.00 (0.06) 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.09) (0.15) (0.01)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $27.15 $22.52 $21.01
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 20.98% 7.92% 3.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $21,807 $19,719 $18,508
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.97% 1.01% 0.96%
Ratio of net investment income (loss) to average net
assets 0.69% 0.78% 1.27%
Portfolio turnover 51% 40% 83%
Average commission rate paid(1) $0.0633 $0.0799 $0.0702
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.97% N/A N/A
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 0.69% N/A N/A
- --------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
66
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (2)
-----------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------- --------------------------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD SIX MONTHS SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (3) 1996 1997 1997 (3) 1996
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $18.98 $22.45 $22.01 $18.93 $22.46 $22.02
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.03) (0.01) 0.00 (0.06) (0.04) 0.00
Net realized and
unrealized gain (loss)
on investments 9.18 (3.46) 0.44 9.10 (3.49) 0.44
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 9.15 (3.47) 0.44 9.04 (3.53) 0.44
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $28.13 $18.98 $22.45 $27.97 $18.93 $22.46
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 48.21% (15.46)% 2.00% 47.75% (15.72)% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $9,102 $3,107 $96 $7,649 $1,905 $0
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.10%(4) 1.10%(4) 1.03%(4) 1.75%(4) 1.75%(4) 0.00%
Ratio of net investment
income (loss) to average
net assets (0.47)%(4) (0.23)%(4) (0.59)%(4) (1.12)%(4) (0.85)%(4) 0.00%
Portfolio turnover N/A N/A N/A N/A N/A N/A
Average commission rate
paid(1) N/A N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.63%(4) 2.80%(4) 38.54%(4) 2.26%(4) 3.55%(4) 0.00%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (1.00)%(4) (1.93)%(4) (38.10)%(4) (1.63)%(4) (2.65)%(4) 0.00%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
---------------------
67
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (2) (CONT.)
------------------------------------------
INSTITUTIONAL CLASS
------------------------------------------
(UNAUDITED)
SIX MONTHS SIX MONTHS PERIOD
ENDED ENDED ENDED
SEPT. 30, MARCH 31, SEPT. 30,
1997 1997 (3) 1996
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $19.01 $22.45 $22.01
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01) 0.02 0.00
Net realized and unrealized gain (loss) on investments 9.23 (3.46) 0.44
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 9.22 (3.44) 0.44
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $28.23 $19.01 $22.45
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 48.50% (15.32)% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $59,637 $29,200 $24,553
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.75%(4) 0.75%(4) 1.60%(4)
Ratio of net investment income (loss) to average net
assets (0.10)%(4) 0.16%(4) (1.15)%(4)
Portfolio turnover N/A N/A N/A
Average commission rate paid(1) N/A N/A N/A
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.32%(4) 1.65%(4) 1.63%(4)
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses (0.67)%(4) (0.74)%(4) (1.18)%(4)
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES ALLOCATED FROM THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ---------------------
68
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and currently offers twenty-seven separate series. These financial
statements represent the Aggressive Growth, Balanced, Corporate Stock,
Diversified Income, Equity Value, Growth and Income, and Small Cap Funds (the
"Funds"), each a diversified series of the Company.
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 Balanced and Equity Value Funds were
established to acquire all of the assets and assume all of the liabilities of
the Pacifica Balanced and Equity Value Funds, respectively (collectively, the
"Predecessor Funds"). Additionally, the Stagecoach Growth and Income Fund
acquired all of the assets and assumed all of the liabilities of the Pacifica
Growth Fund. These acquisitions were accomplished in separate tax-free exchanges
for shares of the respective Fund. All performance and financial data for the
Balanced and Equity Value Funds for periods prior to September 6, 1996 refers to
the Predecessor Funds.
Each of the Funds, with the exception of the Aggressive Growth, Corporate Stock,
and Diversified Income Funds, offers Class A, Class B, and Institutional Class
shares. The Aggressive Growth and Diversified Income Funds offer Class A and
Class B shares, and the Corporate Stock Fund offers a single, unnamed class of
shares. The three classes of shares differ principally in the applicable sales
charges, distribution fees, shareholder servicing fees and transfer agency fees.
Shareholders of each class also bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of the Fund and earn
income from the portfolio pro rata based on the average daily net assets of each
class, without distinction between share classes. Dividends are 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, shareholder servicing and
transfer agency fees.
---------------------
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
On July 23, 1997 the Board of Directors of the Company approved a plan to
dissolve the master/feeder structure of its feeder funds in favor of a
stand-alone structure (the "Dissolution"). When the Dissolution occurs, the
Aggressive Growth, Corporate Stock and Small Cap Funds will withdraw their
investments in the corresponding Capital Appreciation, Corporate Stock and Small
Cap Master Portfolios (the "Master Portfolios"), respectively, of Master
Investment Trust (the "Trust") and instead will invest directly in a portfolio
of securities. The Aggressive Growth, Corporate Stock and Small Cap Funds will
retain Wells Fargo Bank, N.A. ("WFB"), the investment adviser to the
corresponding Master Portfolios, and the Corporate Stock Fund will retain
Barclays Global Fund Advisors ("BGFA"), the sub-adviser to the Corporate Stock
Master Portfolio, to manage their assets directly, in substantially the same
manner as WFB and BGFA currently manage such Master Portfolios' assets. The
Funds, except the Corporate Stock Fund, will compensate WFB at the same advisory
fee level. The Corporate Stock Fund will compensate WFB at a lower advisory fee
level and BGFA at a lower sub-advisory fee level. The Dissolution is expected to
take place on or about December 12, 1997. The Dissolution of the master/feeder
structure of the Aggressive Growth and Small Cap Funds is contingent upon the
approval of shareholders of Overland Express Funds, Inc. ("Overland"), another
investment company advised by WFB, to reorganize the Overland Strategic Growth
and Small Cap Strategy Funds into the Company's Aggressive Growth and Small Cap
Funds, respectively.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles ("GAAP") for investment
companies. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates and
assumptions should not be considered an indication of actual or expected
figures; actual results may differ.
INVESTMENT POLICY AND SECURITY VALUATION
Securities for which the primary market is a national securities exchange or the
National Association of Securities Dealers Automated Quotation ("NASDAQ") system
are valued at the last reported sales price on the day of valuation. U.S.
Government obligations are valued at the reported bid price. In the absence of
any sale of such securities on the valuation date and in the case of other
securities, excluding debt instruments maturing in 60 days or less, the
valuations are based on latest quoted bid prices. Debt securities maturing in 60
days or less are valued
- ---------------------
70
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
at amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value. Securities for which
quotations are not readily available are valued at fair value as determined by
policies set by the Company's Board of Directors, or, in the case of the Trust,
by the Trust's Board of Trustees.
The Aggressive Growth, Corporate Stock, and the Small Cap Funds invest only in
interests of their corresponding Master Portfolios. Each Master Portfolio has
the same investment objective as the Fund that invests in it. The value of each
Fund's investment in its corresponding Master Portfolio reflects that Fund's
interest in the net assets of that Master Portfolio: 27.52%, 99.99%, and 92.41%
for the Aggressive Growth, Corporate Stock and Small Cap Funds, respectively, at
September 30, 1997.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded no later than one business day after trade
date. Dividend income is recognized on the ex-dividend date and interest income
is accrued daily. Realized gains or losses are reported on the basis of
identified cost of securities delivered. Bond discounts are accreted and
premiums are amortized as required by the Internal Revenue Code of 1986, as
amended (the "Code").
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
securities ("repurchase agreements") are treated as collateralized financing
transactions and are recorded at their contracted resale amounts. These
repurchase agreements, if any, are detailed in each Fund's and Master
Portfolio's (in this paragraph, the "Funds") Portfolio of Investments. The Funds
may participate in pooled repurchase agreement transactions with other Funds
advised by WFB. The repurchase agreements must be fully collateralized based on
values that are marked to market daily. The collateral may be held by an agent
bank under a tri-party agreement. It is the custodian's responsibility to value
collateral daily and to take action to obtain additional collateral as necessary
to maintain market value equal to or greater than the resale price. The
repurchase agreements held in the Funds are collateralized by instruments such
as U.S. Treasury or federal agency obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income, if any, are declared and
distributed quarterly, with the exception of the Aggressive Growth and Small Cap
Funds. Dividends to shareholders from net investment income of the Aggressive
Growth and Small Cap Funds, if any, are declared and distributed annually. Any
distributions to shareholders from net realized capital gains are declared and
distributed annually.
---------------------
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. It is
the policy of each Fund of the Company to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined in the Code, and to make distributions of
substantially all of its investment company taxable income and any net realized
capital gains (after reduction for capital loss carryforwards) sufficient to
relieve it from all, or substantially all, federal income taxes. Accordingly, no
provision for federal income taxes was required at December 31, 1996.
The Aggressive Growth Fund had capital loss carryforwards at December 31, 1996
of $3,168,815 that will expire in the year 2004. The Small Cap Fund had capital
loss carryforwards at December 31, 1996 of $1,316,991 that will expire in the
year 2004. The Company's Board of Directors intends to offset net capital gains
with each capital loss carryforward, and no capital gain distribution shall be
made until each such carryforward has been fully utilized or expires.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by a
Fund. The differences between the income or gains distributed on a book versus
tax basis are shown as excess distributions of net investment income and net
realized gain on sales of investments in the accompanying Statements of Changes
in Net Assets. The amount of distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from GAAP. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassifications.
ORGANIZATION EXPENSES
The Funds have been charged for expenses incurred in connection with the
organization and initial registration of the Funds and/or classes of shares.
Certain of these expenses are being amortized by the Funds on a straight-line
basis over 60 months from the date each Fund and/or class commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the Funds
(other than the Aggressive Growth, Corporate Stock, and Small Cap Funds) with
WFB. Pursuant to the contracts, WFB has agreed to provide the Funds with daily
portfolio management. Under the contracts with the Diversified Income and Equity
Value Funds, WFB is entitled to be paid a monthly advisory fee
- ---------------------
72
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
at an annual rate of 0.50% of each such Fund's average daily net assets. Under
the contract with the Balanced Fund, WFB is entitled to be paid a monthly
advisory fee at an annual rate of 0.60% of the Fund's average daily net assets.
Under the contract with the Growth and Income Fund, WFB is entitled to be paid a
monthly advisory fee at an annual rate of 0.50% of the Fund's average daily net
assets up to $250 million, 0.40% of the next $250 million, and 0.30% of the
average daily net assets in excess of $500 million.
The Aggressive Growth, Corporate Stock, and Small Cap Funds do not directly
retain an investment adviser because each such Fund invests all of its assets in
a Master Portfolio of the Trust which, in turn, retains WFB as investment
adviser. BGFA currently acts as sub-adviser to the Master Portfolio in which the
Corporate Stock Fund invests. BGFA is a wholly-owned subsidiary of Barclays
Global Investors, N.A. ("BGI") and an indirect subsidiary of Barclays Bank PLC.
The Company has entered into contracts on behalf of each Fund with WFB (other
than the Corporate Stock Fund, for which BGI serves as custodian), whereby WFB
is responsible for providing custody and portfolio accounting services for the
Funds. Pursuant to the contracts, WFB is entitled to certain transaction charges
plus an annual fee for custody services 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 from each Fund of $2,000 plus an annual fee of
0.07% of the first $50 million of each Fund's average daily net assets, 0.045%
of the next $50 million, and 0.02% of each Fund's average daily net assets in
excess of $100 million. WFB will not be entitled to compensation for its
custodial services to the Aggressive Growth and Small Cap Funds so long as it is
entitled to compensation for providing advisory services to the Master
Portfolios.
BGI currently acts as custodian to the Corporate Stock Master Portfolio. BGI is
a wholly-owned subsidiary of Barclays Global Investors Holdings Inc. BGI will
not be entitled to receive compensation for its custodial services to the
Corporate Stock Fund so long as BGFA is entitled to receive compensation for
providing investment sub-advisory services to the Corporate Stock Master
Portfolio in which the Fund invests.
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB provides transfer agency services for the Funds. Under the transfer agency
contract, WFB is entitled to receive transfer agency fees at an annual rate of
0.14% of the average daily net assets of the Class A and Class B shares of the
Funds and 0.06% of the average daily net assets of the Institutional Class
shares of the Balanced, Equity Value, Growth and Income and Small Cap Funds.
---------------------
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
The transfer agency fees paid on behalf of the Funds for the six months ended
September 30, 1997 were as follows:
<TABLE>
<CAPTION>
TRANSFER TRANSFER TRANSFER
AGENCY FEES AGENCY FEES AGENCY FEES
FUND CLASS A CLASS B INSTITUTIONAL CLASS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund $ 26,011 $ 13,074 N/A
Balanced Fund 24,094 1,393 $ 17,269
Diversified Income Fund 122,605 31,136 N/A
Equity Value Fund 19,508 8,036 63,227
Growth and Income Fund 224,918 22,809 6,639
Small Cap Fund 3,719 2,880 11,577
</TABLE>
Transfer agency fees paid on behalf of the single class Corporate Stock Fund are
disclosed in the Statement of Operations.
The Company has entered into contracts on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services for the Funds. Pursuant to the
contracts, WFB is entitled to receive shareholder servicing fees at an annual
rate of 0.30% of the average daily net assets of the Corporate Stock Fund, 0.30%
of the average daily net assets of the Class A and Class B shares of the
Diversified Income and Growth and Income Funds, 0.25% of the average daily net
assets of the Class A and Class B shares of the Aggressive Growth, Balanced,
Equity Value, and Small Cap Funds, and 0.25% of the average daily net assets of
the Institutional Class shares of the Balanced, Equity Value, Growth and Income,
and Small Cap Funds.
The shareholder servicing fees paid on behalf of the Funds for the six months
ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
SERVICING FEES SERVICING FEES SERVICING FEES
FUND CLASS A CLASS B INSTITUTIONAL CLASS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund $ 46,448 $ 23,346 N/A
Balanced Fund 43,025 2,445 $ 71,952
Diversified Income Fund 262,602 66,843 N/A
Equity Value Fund 34,837 14,349 263,446
Growth and Income Fund 481,967 48,876 27,664
Small Cap Fund 6,640 5,142 48,280
</TABLE>
Shareholder servicing fees paid on behalf of the single class Corporate Stock
Fund are disclosed in the Statement of Operations.
The Company has entered into administration agreements on behalf of the Funds
whereby WFB as administrator and Stephens Inc. ("Stephens") as co-administrator
provide each Fund with administration services. For these
ser-
- ---------------------
74
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
vices, WFB and Stephens are entitled to receive monthly fees at the annual rates
of 0.04% and 0.02%, respectively, of each Fund's average daily net assets.
The Company has adopted separate Distribution Plans for the Corporate Stock Fund
and for Class A and Class B shares of the multi-class Funds pursuant to Rule
12b-1 under the 1940 Act (each, a "Plan"). The Plans for the shares of the
Corporate Stock Fund and the Class A shares of the Diversified Income and Growth
and Income Funds provide that each such Fund may defray all or part of the cost
of preparing, printing and distributing prospectuses and other promotional
materials by paying for costs incurred on an annual basis of up to 0.05% of the
average daily net assets attributable to such shares. The Plans for the Class A
shares of the remaining Funds provide as compensation for distribution-related
services or as reimbursement for distribution-related expenses, a monthly fee at
an annual rate of up to 0.10% of the average daily net assets
attributable to the Class A shares of the Aggressive Growth, Balanced, Equity
Value and Small Cap Funds.
Under the Plan for Class B shares of the multi-class Funds, each Fund may pay,
as compensation for distribution-related services or as reimbursement for
distribution-related expenses, a monthly fee at an annual rate of up to 0.70% of
the average daily net assets attributable to the Class B shares of the
Diversified Income and Growth and Income Funds, and up to 0.75% of the average
daily net assets attributable to the Class B shares of the Aggressive Growth,
Balanced, Equity Value and Small Cap Funds.
Each Fund may participate in joint distribution activities with other Funds, in
which event, expenses reimbursed out of the assets of one of the Funds may be
attributable, in part, to the distribution-related activities of another Fund.
Generally, the expenses of joint distribution activities are allocated among the
Funds in proportion to their relative net asset sizes.
Distribution fees paid on behalf of the Funds for the six months ended September
30, 1997 were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION FEES DISTRIBUTION FEES
FUND CLASS A CLASS B
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund $ 18,583 $ 70,008
Balanced Fund 17,210 7,466
Diversified Income Fund 43,788 155,678
Equity Value Fund 13,934 43,048
Growth and Income Fund 80,328 114,045
Small Cap Fund 2,656 15,427
</TABLE>
Distribution fees paid on behalf of the single class Corporate Stock Fund are
disclosed in the Statement of Operations.
---------------------
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statement of
Operations for the six months ended September 30, 1997 for the Funds, with the
exception of the Small Cap Fund, were waived by WFB. The amount shown as waived
fees and reimbursed expenses on the Statement of Operations for the six months
ended September 30, 1997 for the Small Cap Fund includes $5,808 in expenses
reimbursed by Stephens and $80,806 in fees waived by WFB.
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens. WFB and Stephens agreed to waive or reimburse all or a portion of
their respective fees charged to, or expenses paid by, certain Funds to ensure
that the total Fund operating expenses did not exceed, on an annual basis, 1.13%
of the average daily net assets of the Institutional Class shares of the Growth
and Income Fund, and 1.05%, 1.70%, and 0.95% of the average daily net assets of
the Class A, Class B, and Institutional Class shares, respectively, of the
Balanced and Equity Value Funds, through August 31, 1997.
Certain officers and one director of the Company are also officers of Stephens.
As of September 30, 1997, Stephens owned 5 shares of the Aggressive Growth, 7
shares of the Balanced, 12,507 shares of the Diversified Income, 7 shares of the
Equity Value, 115 shares of the Growth and Income and 3 shares of the Small Cap
Funds.
Stephens has retained $2,566,666 as sales charges from the proceeds of Class A
shares sold and $419,434 from the proceeds of Class B shares redeemed by the
Company for the six months ended September 30, 1997. Wells Fargo Securities
Inc., a subsidiary of WFB, received $2,556,342 as sales charges from the
proceeds of Class A shares sold and $419,434 from the proceeds of Class B shares
redeemed by the Company for the six months ended September 30, 1997.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each Fund
for the six months ended September 30, 1997, were as follows:
<TABLE>
<CAPTION>
AGGREGATE PURCHASES DIVERSIFIED EQUITY GROWTH AND
AND SALES BALANCED FUND INCOME FUND VALUE FUND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total purchases at cost $ 24,474,582 $78,904,230 $50,281,990 $189,519,538
Total sales proceeds 29,284,039 63,084,518 50,327,389 182,393,582
</TABLE>
- ---------------------
76
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS
As of September 30, 1997, there were over 106 billion shares of $0.001 par value
capital stock authorized by the Company. As of September 30, 1997, each Fund
(with the exception of the Aggressive Growth Fund) was authorized to issue 100
million shares of $0.001 par value capital stock for each class of shares. The
Aggressive Growth Fund was authorized to issue 150 million shares of $0.001 par
value capital stock for each class of shares. Capital share transactions for the
Funds were as follows:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
--------------------------------------------------
(UNAUDITED) FROM
FOR THE SIX MARCH 5, 1996
MONTHS ENDED FOR THE SIX (COMMENCEMENT
SEPT. 30, MONTHS ENDED OF OPERATIONS) TO
1997 MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 523,690 843,540 1,615,653
Shares issued in reinvestment of dividends -- Class A 0 0 0
Shares redeemed -- Class A (394,658) (377,083) (229,155)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A 129,032 466,457 1,386,498
Shares sold -- Class B 264,778 278,394 648,214
Shares issued in reinvestment of dividends -- Class B 0 0 0
Shares redeemed -- Class B (159,932) (134,671) (38,581)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 104,846 143,723 609,633
</TABLE>
---------------------
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
BALANCED FUND
----------------------------------------------
(UNAUDITED)
FOR THE SIX
MONTHS ENDED FOR THE SIX FOR THE
SEPT. 30, MONTHS ENDED YEAR ENDED
1997 MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 254,291 94,369 1,412,249
Shares issued in reinvestment of dividends -- Class A 40,204 67,767 371,899
Shares redeemed -- Class A (348,360) (376,563) (6,456,262)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A (53,865) (214,427) (4,672,114)
Shares sold -- Class B 306,544 27,480 151
Shares issued in reinvestment of dividends -- Class B 642 42 0
Shares redeemed -- Class B (11,397) (149) 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 295,789 27,373 151
Shares sold -- Institutional Class 276,201 255,508 10,145,092
Shares issued in reinvestment of dividends -- Institutional Class 69,571 137,837 925,429
Shares redeemed -- Institutional Class (976,820) (2,085,655) (4,755,966)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- INSTITUTIONAL CLASS (631,048) (1,692,310) 6,314,555
</TABLE>
<TABLE>
<CAPTION>
CORPORATE STOCK FUND
--------------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE NINE
MONTHS ENDED FOR THE SIX MONTHS ENDED
SEPT. 30, MONTHS ENDED SEPT. 30,
1997 MARCH 31, 1997 1996
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold 592,088 595,967 1,149,288
Shares issued in reinvestment of dividends 35,426 256,416 76,212
Shares redeemed (655,455) (663,522) (1,107,285)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (27,941) 188,861 118,215
</TABLE>
- ---------------------
78
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
DIVERSIFIED INCOME FUND
----------------------------------------------
(UNAUDITED)
FOR THE SIX
MONTHS ENDED FOR THE SIX FOR THE NINE
SEPT. 30, MONTHS ENDED MONTHS ENDED
1997 MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,730,867 2,361,971 4,715,975
Shares issued in reinvestment of dividends -- Class A 88,679 632,053 115,316
Shares redeemed -- Class A (1,810,326) (1,492,299) (1,685,966)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A 9,220 1,501,725 3,145,325
Shares sold -- Class B 1,200,703 1,234,345 901,549
Shares issued in reinvestment of dividends -- Class B 13,846 100,491 6,895
Shares redeemed -- Class B (210,216) (171,202) (100,188)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 1,004,333 1,163,634 808,256
</TABLE>
<TABLE>
<CAPTION>
EQUITY VALUE FUND
---------------------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE SIX FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
SEPT. 30, 1997 MARCH 31, 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 750,765 239,630 2,375,877
Shares issued in reinvestment of dividends -- Class A 7,328 16,068 248,462
Shares redeemed -- Class A (222,327) (272,081) (14,009,327)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A 535,766 (16,383) (11,384,988)
Shares sold -- Class B 1,599,804 215,907 3
Shares issued in reinvestment of dividends -- Class B 540 85 0
Shares redeemed -- Class B (36,112) (871) 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 1,564,232 215,121 3
Shares sold -- Institutional Class 572,920 919,441 18,333,654
Shares issued in reinvestment of dividends -- Institutional Class 34,784 136,028 2,574,515
Shares redeemed -- Institutional Class (1,656,777) (3,998,514) (4,577,809)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- INSTITUTIONAL CLASS (1,049,073) (2,943,045) 16,330,360
</TABLE>
---------------------
79
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
---------------------------------------------------
(UNAUDITED) FOR THE NINE
FOR THE SIX FOR THE SIX MONTHS ENDED
MONTHS ENDED MONTHS ENDED SEPT. 30,
SEPT. 30, 1997 MARCH 31, 1997 1996 (1)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 2,031,330 2,263,021 5,108,374
Shares issued in reinvestment of dividends -- Class A 38,850 83,226 1,005,634
Shares redeemed -- Class A (2,708,991) (1,793,908) (2,246,108)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A (638,811) 552,339 3,867,900
Shares sold -- Class B 974,149 788,072 653,910
Shares issued in reinvestment of dividends -- Class B 54 3,523 69,929
Shares redeemed -- Class B (169,406) (112,577) (97,407)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 804,797 679,018 626,432
Shares sold -- Institutional Class 110,356 180,805 897,195
Shares issued in reinvestment of dividends --
Institutional Class 2,095 3,005 0
Shares redeemed -- Institutional Class (184,802) (189,127) (16,307)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
INSTITUTIONAL CLASS (72,351) (5,317) 880,888
</TABLE>
(1) "SHARE SOLD" INCLUDES 36,809 FOR CLASS A AND 865,446 FOR THE INSTITUTIONAL
CLASS, AS A RESULT OF THE MERGER OF THE PACIFICA GROWTH FUND.
- ---------------------
80
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
SMALL CAP FUND
------------------------------
(UNAUDITED)
FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED
SEPT. 30, 1997 MARCH 31, 1997
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 229,681 185,292
Shares issued in reinvestment of dividends -- Class A 0 0
Shares redeemed -- Class A (69,812) (25,880)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A 159,869 159,412
Shares sold -- Class B 197,365 108,204
Shares issued in reinvestment of dividends -- Class B 0 0
Shares redeemed -- Class B (24,511) (7,585)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 172,854 100,619
Shares sold -- Institutional Class 1,005,610 579,679
Shares issued in reinvestment of dividends -- Institutional Class 0 0
Shares redeemed -- Institutional Class (428,863) (137,779)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- INSTITUTIONAL CLASS 576,747 441,900
<CAPTION>
FROM
SEPT. 16, 1996
(COMMENCEMENT
OF OPERATIONS) TO
SEPT. 30, 1996
<S> <C>
- --------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 4,273
Shares issued in reinvestment of dividends -- Class A 0
Shares redeemed -- Class A 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS A 4,273
Shares sold -- Class B 1
Shares issued in reinvestment of dividends -- Class B 0
Shares redeemed -- Class B 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS B 1
Shares sold -- Institutional Class 1,096,256
Shares issued in reinvestment of dividends -- Institutional Class 0
Shares redeemed -- Institutional Class (2,487)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- INSTITUTIONAL CLASS 1,093,769
</TABLE>
---------------------
81
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. REORGANIZATION OF THE CORPORATE STOCK FUND INTO A MASTER/FEEDER STRUCTURE
At special meetings of shareholders held between December 5, 1995 and December
19, 1995, shareholders of the Corporate Stock Fund approved a reorganization of
the Fund into a "master/feeder" structure, pursuant to which the Fund invests
all of its assets in the Corporate Stock Master Portfolio of the Trust. On the
conversion date the Fund transferred its investments to the Master Portfolio in
exchange for interests in the Master Portfolio. The Fund then became a "feeder"
fund. This reorganization was effected on April 28, 1996. The master/feeder
structure will be dissolved on or about December 12, 1997.
6. REORGANIZATION OF SMALL CAP FUND
The Small Cap Master Portfolio is the successor to certain assets of the Small
Capitalization Growth Fund for Employee Retirement Plans, a collective
investment fund (the "Collective Investment Fund"). The Collective Investment
Fund was a private, non-registered investment fund previously managed by WFB.
Immediately prior to the commencement of the Small Cap Fund's operations, the
assets of the Collective Investment Fund were purchased by the Small Cap Master
Portfolio and the Collective Investment Fund redeemed all of its outstanding
interests and ceased operating as a trust. The Small Cap Master Portfolio
manages its investments in a manner identical in all material respects to the
operation of the Collective Investment Fund.
- ---------------------
82
<PAGE>
MASTER INVESTMENT TRUST CAPITAL APPRECIATION MASTER PORTFOLIO (UNAUDITED)
- ------------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.15%
ADVERTISING - 1.70%
150,000 HA-LO Industries Inc+ $ 2,354,876 $ 4,293,750
BIOTECHNOLOGY - 1.57%
5,900 Cardiovascular Dynamics Inc+ $ 50,150 $ 47,200
150,000 Serologicals Corp+ 3,134,396 3,412,500
85,000 Texas Biotechnology Corp+ 425,000 488,750
------------ --------------
$ 3,609,546 $ 3,948,450
CAPITAL GOODS - 3.13%
150,000 General Scanning Inc $ 2,921,768 $ 5,221,875
128,000 Radiant Systems Inc+ 2,928,650 2,688,000
------------ --------------
$ 5,850,418 $ 7,909,875
COMMERCIAL SERVICES - 2.93%
150,000 AccuStaff Inc+ $ 3,098,759 $ 4,725,000
35,000 Advanced Health Corp+ 805,001 770,000
82,100 Boron Lepore & Associates Inc+ 1,749,251 1,898,563
------------ --------------
$ 5,653,011 $ 7,393,563
COMPUTER SOFTWARE - 16.96%
70,000 America Online Inc+ $ 3,274,606 $ 5,280,625
170,000 American Software Inc+ 2,125,134 2,486,250
100,000 Aris Corp+ 2,258,667 2,125,000
125,000 Axent Technologies Inc+ 2,421,777 2,593,750
250,000 Checkfree Corp+ 4,454,707 5,281,250
80,000 Documentum Inc+ 2,008,125 2,660,000
29,500 Microsoft Corp+ 2,472,375 3,903,219
75,000 Netscape Communications Corp+ 2,977,850 2,700,000
100,000 Quadramed Corp+ 1,264,097 1,725,000
200,000 Rational Software Corp+ 4,839,294 3,200,000
104,000 Vantive Corp+ 2,818,961 2,496,000
</TABLE>
---------------------
83
<PAGE>
MASTER INVESTMENT TRUST CAPITAL APPRECIATION MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
100,000 Veritas Software Corp+ $ 2,674,883 $ 4,393,750
95,000 Visio Corp+ 3,246,875 3,966,250
------------ --------------
$ 36,837,351 $ 42,811,094
COMPUTER SYSTEMS - 4.11%
100,000 Adaptec Inc+ $ 3,780,743 $ 4,675,000
84,000 Box Hill Systems Corp+ 1,471,200 1,685,250
55,000 Cisco Systems Inc+ 3,693,592 4,018,438
------------ --------------
$ 8,945,535 $ 10,378,688
CONSUMER-DISCRETIONARY - 0.92%
50,000 Cellstar Corp+ $ 1,687,993 $ 2,325,000
ELECTRICAL EQUIPMENT - 1.28%
45,000 Interlink Electronics Inc+ $ 244,375 $ 410,625
30,000 Nokia Corp ADR Class A 2,076,759 2,814,375
------------ --------------
$ 2,321,134 $ 3,225,000
ENERGY & RELATED - 11.26%
110,000 Ensco International Inc $ 2,538,076 $ 4,338,125
75,000 Global Industries Ltd+ 1,097,600 2,990,625
75,000 Key Energy Group Inc+ 2,370,095 2,442,188
70,000 Nabors Industries Inc+ 1,681,149 2,725,625
90,500 Newpark Resources Inc+ 3,097,607 3,557,781
70,000 Noble Drilling Corp+ 1,969,363 2,257,500
100,000 Santa Fe International Corp 3,924,543 4,650,000
65,000 Semitool Inc+ 1,445,625 1,633,125
90,000 Veritas Digicon Inc+ 1,617,391 3,830,625
------------ --------------
$ 19,741,449 $ 28,425,594
</TABLE>
- ------------------------
84
<PAGE>
MASTER INVESTMENT TRUST CAPITAL APPRECIATION MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENTERTAINMENT & LEISURE - 4.43%
150,000 Family Golf Centers Inc+ $ 2,920,016 $ 3,975,000
50,000 HFS Inc+ 3,052,066 3,721,875
130,000 Regal Cinemas Inc+ 3,658,413 3,493,750
------------ --------------
$ 9,630,495 $ 11,190,625
FINANCE & RELATED - 5.52%
225,000 Envoy Corp (New)+ $ 7,539,887 $ 6,426,563
30,000 Firstplus Financial Group+ 1,188,533 1,683,750
185,000 Long Beach Financial Corp+ 1,948,438 2,509,063
116,500 Money Store Inc 2,779,559 3,320,250
------------ --------------
$ 13,456,417 $ 13,939,626
FOOD & RELATED - 2.86%
150,000 Northland Cranberries Inc $ 3,329,013 $ 2,812,500
128,000 NuCo2 Inc+ 2,088,836 2,080,000
45,000 Suiza Foods Corp+ 1,304,018 2,317,500
------------ --------------
$ 6,721,867 $ 7,210,000
GENERAL BUSINESS & RELATED - 6.34%
70,000 Applied Graphics Technologies+ $ 3,104,688 $ 3,937,500
60,000 Cinar Films Inc Class B+ 2,105,000 2,287,500
100,000 HBO & Co 2,618,348 3,775,000
155,000 P-Com Inc+ 3,229,220 3,710,313
60,000 Staffmark Inc+ 1,649,875 2,287,500
------------ --------------
$ 12,707,131 $ 15,997,813
HEALTHCARE - 8.80%
150,000 Genesis Health Ventures Inc+ $ 3,940,085 $ 5,840,625
200,000 Healthsouth Corp+ 3,790,730 5,337,500
100,000 Renal Treatment Centers+ 2,251,070 3,556,250
95,000 Vision Twenty-One Inc+ 981,876 1,282,500
165,000 Vivus Inc+ 4,548,299 6,187,497
------------ --------------
$ 15,512,060 $ 22,204,372
</TABLE>
---------------------
85
<PAGE>
MASTER INVESTMENT TRUST CAPITAL APPRECIATION MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 2.72%
180,000 Biochem Pharma Inc+ $ 4,418,238 $ 5,670,000
60,000 Tefron Ltd ADR+ 1,137,661 1,200,000
------------ --------------
$ 5,555,899 $ 6,870,000
MEDICAL EQUIPMENT & SUPPLIES - 3.45%
100,000 HPR Inc+ $ 1,734,983 $ 2,187,500
200,000 Ultrafem Inc+ 3,350,178 1,775,000
160,000 Urologix Inc+ 3,195,118 3,800,000
165,000 Uroquest Medical Corp+ 952,955 948,750
------------ --------------
$ 9,233,234 $ 8,711,250
PHARMACEUTICALS - 2.18%
160,000 Anesta Corp+ $ 2,406,479 $ 3,720,000
60,000 Guilford Pharmaceuticals Inc+ 1,652,157 1,770,000
------------ --------------
$ 4,058,636 $ 5,490,000
REAL ESTATE INVESTMENT TRUSTS - 0.82%
55,000 CCA Prison Realty Trust $ 1,589,220 $ 2,076,250
RETAIL & RELATED - 1.88%
225,000 Corporate Express Inc+ $ 4,340,811 $ 4,753,125
SEMICONDUCTORS - 3.41%
25,000 ASE Test Limited+ $ 1,279,147 $ 2,118,750
100,000 LSI Logic Corp+ 3,379,162 3,212,500
90,000 Triquint Semiconductor Inc+ 3,184,626 3,279,375
------------ --------------
$ 7,842,935 $ 8,610,625
SHELTER & RELATED - 1.52%
100,000 Brookdale Living Communities Inc+ $ 1,482,500 $ 1,900,000
146,500 Hospitality Worldwide Services+ 1,554,370 1,922,813
------------ --------------
$ 3,036,870 $ 3,822,813
</TABLE>
- ------------------------
86
<PAGE>
MASTER INVESTMENT TRUST CAPITAL APPRECIATION MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS - 6.12%
60,000 Ciena Corp+ $ 3,002,329 $ 2,971,875
130,000 Corsair Communications Inc+ 2,429,284 2,746,250
230,000 LCI International Inc+ 4,472,957 6,123,750
125,000 NEXTEL Communications Class A+ 2,389,463 3,609,375
------------ --------------
$ 12,294,033 $ 15,451,250
TRANSPORTATION - 2.24%
80,000 Travel Services International Inc $ 1,475,046 $ 1,660,000
115,000 Trico Marine Services Inc+ 2,270,571 3,996,250
------------ --------------
$ 3,745,617 $ 5,656,250
TOTAL COMMON STOCKS $196,726,538 $ 242,695,013
WARRANTS - 2.00%
70,000 Intel Corp expires 3/14/1998+ $ 5,044,375
(Cost $2,395,227)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $199,121,765)* (Notes 1 and 3) 98.15% $ 247,739,388
Other Assets and Liabilities, Net 1.85 4,667,043
------ --------------
TOTAL NET ASSETS 100.00% $ 252,406,431
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 56,380,628
Gross Unrealized Depreciation (7,763,005)
------------
NET UNREALIZED APPRECIATION $ 48,617,623
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
87
<PAGE>
MASTER INVESTMENT TRUST CORPORATE STOCK MASTER PORTFOLIO (UNAUDITED)
- -----------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 99.56%
23,675 3Com Corp+ $ 1,114,459 $ 1,213,344
52,858 Abbott Laboratories 1,008,937 3,379,608
5,014 Adobe Systems Inc 230,445 252,580
9,534 Advanced Micro Devices+ 197,756 310,451
1,974 Aeroquip-Vickers Inc 55,067 96,726
10,286 Aetna Inc 823,280 837,666
6,723 Ahmanson (H F) & Co 133,267 381,950
7,592 Air Products & Chemicals Inc 207,978 629,662
34,763 Airtouch Communications Inc+ 558,346 1,231,914
3,968 Alberto-Culver Co Class B 35,915 120,776
16,888 Albertson's Inc 211,642 588,969
15,630 Alcan Aluminium Ltd 299,474 543,143
12,198 Allegheny Teledyne Inc 214,932 349,168
4,550 Allergan Inc 120,600 164,653
38,856 Allied Signal Inc 468,873 1,651,380
29,856 Allstate Corp 665,748 2,399,676
12,990 Alltel Corp 401,380 448,155
11,994 Aluminum Co of America 349,431 983,508
5,903 ALZA Corp+ 161,760 171,187
6,353 Amerada Hess Corp 250,173 391,901
12,982 American Electric Power Inc 380,459 590,681
32,172 American Express Corp 875,575 2,634,083
16,754 American General Corp 342,501 869,114
5,250 American Greetings Corp Class A 98,004 193,594
44,482 American Home Products Corp+ 1,227,272 3,247,186
48,217 American International Group Inc 1,080,926 4,975,392
18,780 American Stores Co 167,195 457,763
37,752 Ameritech Corp 1,029,643 2,510,508
18,300 Amgen Inc+ 663,304 877,256
33,690 Amoco Corp 1,489,064 3,246,874
15,195 AMP Inc 418,557 813,882
6,299 AMR Corp+ 424,391 697,221
4,142 Anadarko Petroleum Corp 279,665 297,447
6,360 Andrew Corp+ 19,606 166,553
</TABLE>
- ------------------------
88
<PAGE>
MASTER INVESTMENT TRUST CORPORATE STOCK MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
33,772 Anheuser-Busch Inc $ 657,847 $ 1,523,962
11,316 Aon Corp 410,062 598,334
6,270 Apache Corp 225,851 268,826
8,670 Apple Computer Inc+ 330,483 188,031
12,552 Applied Materials Inc+ 349,608 1,195,578
38,673 Archer-Daniels-Midland Co 321,972 925,735
7,563 Armco Inc+ 67,028 45,378
2,777 Armstrong World Industries Inc 112,225 186,233
3,037 ASARCO Inc 76,480 97,184
5,150 Ashland Inc 193,378 280,031
111,628 AT & T Corp 2,827,074 4,946,516
22,040 Atlantic Richfield Corp 999,323 1,883,043
3,200 Autodesk Inc 64,362 145,200
20,208 Automatic Data Processing 330,418 1,010,400
10,543 AutoZone Inc+ 287,810 316,290
7,200 Avery Dennison Corp 77,991 288,000
9,108 Avon Products Inc 173,405 564,696
11,406 Baker Hughes Inc 265,537 499,013
2,191 Ball Corp 71,009 76,274
10,285 Baltimore Gas & Electric Co 217,179 285,409
40,054 Banc One Corp 1,348,768 2,235,514
26,074 Bank of New York Inc 460,935 1,251,552
48,012 BankAmerica Corp 888,699 3,519,880
10,025 BankBoston Corp 346,982 886,586
6,730 Bankers Trust N Y Corp 423,131 824,425
4,012 Bard (C R) Inc 90,804 136,157
13,733 Barnett Banks Inc 270,444 971,610
25,857 Barrick Gold Corp 764,171 639,961
15,708 Battle Mountain Gold Co 133,881 112,901
3,868 Bausch & Lomb Inc 115,883 156,654
19,250 Baxter International Inc 429,829 1,005,813
13,814 Bay Networks Inc+ 645,155 533,566
8,416 Becton Dickinson & Co 142,068 402,916
53,340 Bell Atlantic Corp 2,329,653 4,290,536
68,108 BellSouth Corp 1,551,153 3,149,995
3,644 Bemis Co Inc 46,385 163,069
3,706 Beneficial Corp 112,989 282,351
</TABLE>
---------------------
89
<PAGE>
MASTER INVESTMENT TRUST CORPORATE STOCK MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
7,921 Bethlehem Steel Corp+ $ 124,749 $ 81,685
7,019 Beverly Enterprises+ 87,648 121,955
7,650 Biomet Inc+ 73,410 183,600
6,576 Black & Decker Corp 146,228 244,956
7,194 Block (H & R) Inc 148,018 277,868
68,779 Boeing Co 1,051,690 3,744,157
3,754 Boise Cascade Corp 140,159 157,903
13,364 Boston Scientific Corp+ 371,525 737,526
1,752 Briggs & Stratton Corp 33,501 86,615
68,498 Bristol-Myers Squibb Co 1,754,776 5,668,210
4,758 Brown-Forman Corp Class B 102,856 236,413
14,658 Browning-Ferris Industries Inc 405,259 557,920
6,869 Brunswick Corp 126,150 242,132
10,636 Burlington Northern Santa Fe 399,067 1,027,704
8,548 Burlington Resources Inc 388,219 438,619
10,842 Cabletron Systems Inc+ 298,180 346,944
2,744 Caliber System Inc 111,791 148,862
31,628 Campbell Soup Co 387,654 1,549,772
7,466 Cardinal Health Inc 432,943 530,086
10,500 Carolina Power & Light Co 246,261 377,344
5,054 Case Corp 223,805 336,723
25,912 Caterpillar Inc 349,893 1,397,629
1,954 Centex Corp 37,882 114,065
14,742 Central & South West Corp 292,833 327,088
5,596 Ceridian Corp+ 166,856 207,052
6,598 Champion International Corp 220,928 402,066
7,406 Charming Shoppes Inc+ 93,828 45,593
29,080 Chase Manhattan Bank 1,009,608 3,431,440
44,946 Chevron Corp 1,402,315 3,738,945
46,391 Chrysler Corp 754,049 1,707,769
11,848 Chubb Corp 296,587 841,949
5,049 CIGNA Corp 324,353 940,376
2,792 Cincinnati Milacron Inc 62,425 75,035
10,971 Cinergy Corp 235,254 366,843
6,800 Circuit City Stores Inc 102,079 274,125
45,842 Cisco Systems Inc+ 1,148,316 3,349,331
31,432 Citicorp 1,184,727 4,209,924
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
6,741 Clear Channel Communications Inc+ $ 455,306 $ 437,322
7,172 Clorox Co 130,548 531,625
7,282 Coastal Corp 178,956 446,023
170,452 Coca-Cola Co 1,821,652 10,386,919
11,332 Cognizant Corp 334,579 461,779
20,346 Colgate-Palmolive Co 373,885 1,417,862
3,798 Columbia Gas System Inc 158,163 265,860
45,000 Columbia HCA Healthcare Corp 1,130,898 1,293,750
23,963 Comcast Corp Class A 500,167 617,047
7,255 Comerica Inc 274,271 572,692
51,996 Compaq Computer Corp 520,918 3,886,701
25,013 Computer Associates International Inc 215,049 1,796,246
5,286 Computer Sciences Corp+ 189,180 373,985
16,245 ConAgra Inc 358,423 1,072,170
12,881 Conseco Inc 471,769 628,754
16,264 Consolidated Edison Co 400,490 552,976
6,599 Consolidated Natural Gas Co 262,932 383,979
8,244 Cooper Industries Inc 310,790 445,691
5,550 Cooper Tire & Rubber Co 70,472 147,422
2,659 Coors (Adolph) Co Class B 54,512 100,710
13,948 CoreStates Financial Corp 428,952 923,183
15,872 Corning Inc 320,348 749,952
14,484 Costco Companies Inc+ 287,396 544,961
7,265 Countrywide Credit Industries Inc 242,589 264,718
9,928 CPC International Inc 309,383 919,581
3,216 Crane Co 38,873 132,258
8,851 Crown Cork & Seal Co 247,383 408,252
15,010 CSX Corp 333,954 878,085
28,292 CUC International Inc+ 567,176 877,052
2,684 Cummins Engine Co Inc 91,715 209,520
11,604 CVS Corp 449,723 659,978
6,493 Cyprus Amax Minerals 170,409 155,832
7,100 Dana Corp 147,622 350,563
10,602 Darden Restaurants Inc 69,369 122,586
2,740 Data General Corp+ 65,481 72,953
15,042 Dayton-Hudson Corp 279,587 901,580
17,291 Deere & Co 279,341 929,391
</TABLE>
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91
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
22,764 Dell Computer Corp+ $ 385,035 $ 2,205,263
5,084 Delta Air Lines Inc 351,374 478,849
5,796 Deluxe Corp 205,906 194,528
10,565 Digital Equipment Corp+ 1,035,786 457,597
7,718 Dillards Inc Class A 176,721 338,145
46,394 Disney (Walt) Co 1,542,114 3,740,516
12,540 Dominion Resources Inc 400,906 474,953
10,154 Donnelley (R R) & Sons Co 225,260 362,371
7,604 Dover Corp 133,201 516,122
15,705 Dow Chemical Co 846,253 1,424,247
6,695 Dow Jones & Co Inc 260,862 312,991
12,039 Dresser Industries Inc 212,697 517,677
8,182 DSC Communications Corp+ 87,435 220,403
10,152 DTE Energy Co 226,778 309,002
24,824 Duke Power Co 616,733 1,227,237
11,832 Dun & Bradstreet Corp 239,544 335,733
77,722 DuPont (E I) de Nemours 1,669,538 4,784,761
1,464 Eastern Enterprises 40,702 54,626
5,406 Eastman Chemical Co 221,839 335,172
22,375 Eastman Kodak Co 888,730 1,452,977
5,288 Eaton Corp 181,588 488,479
4,371 Echlin Inc 83,323 153,258
9,700 Echo Bay Mines Ltd 132,550 55,169
4,500 Ecolab Inc 65,639 218,531
27,312 Edison International 486,320 689,628
3,326 EG & G Inc 62,929 68,807
16,983 EMC Corp+ 385,165 991,383
30,464 Emerson Electric Co 659,247 1,755,488
10,072 Engelhard Corp 85,878 217,178
21,094 Enron Corp 436,896 812,119
15,984 Entergy Corp 363,558 416,583
10,504 Equifax Inc 333,477 330,220
170,072 Exxon Corp 4,087,050 10,895,238
7,956 Federal Express Corp+ 237,823 636,480
47,800 Federal Home Loan Mortgage Corp 565,853 1,684,950
72,892 Federal National Mortgage Association 719,646 3,425,924
14,353 Federated Department Stores Inc+ 391,217 618,973
</TABLE>
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92
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,630 Fifth Third Bancorp $ 413,016 $ 694,936
20,313 First Chicago NBD Corp 460,976 1,528,553
30,526 First Data Corp 878,991 1,146,633
38,532 First Union Corp 675,371 1,929,008
17,204 Fleet Financial Group Inc 495,854 1,127,937
2,446 Fleetwood Enterprises Inc 40,942 82,094
2,650 Fleming Co Inc 79,714 48,528
5,826 Fluor Corp 157,863 312,419
2,567 FMC Corp+ 92,149 227,821
82,036 Ford Motor Co 1,905,691 3,712,129
13,026 Fort James Corp 487,074 596,754
11,858 Fortune Brands Inc 264,979 399,466
2,832 Foster Wheeler Corp 65,292 124,431
12,537 FPL Group Inc 416,393 642,521
13,419 Freeport McMoRan Copper & Gold Inc Class B 367,805 386,635
11,494 Frontier Corp 260,316 264,362
5,019 Fruit of the Loom Inc Class A+ 137,067 141,159
9,749 Gannett Co Inc 439,090 1,052,283
18,384 Gap Inc 192,333 920,349
4,328 General Dynamics Corp 99,402 377,077
224,956 General Electric Co 3,588,401 15,311,068
11,002 General Mills Inc 356,086 758,450
50,141 General Motors Corp 2,089,950 3,356,313
5,463 General Re Corp 421,161 1,084,406
3,468 General Signal Corp 95,658 149,991
12,480 Genuine Parts Co 224,183 384,540
6,335 Georgia-Pacific Corp 312,292 661,216
4,200 Giant Food Inc Class A 95,526 136,763
38,493 Gillette Co 1,091,627 3,322,427
3,950 Golden West Financial 106,388 354,513
3,732 Goodrich (B F) Co 90,611 168,873
10,776 Goodyear Tire & Rubber Co 304,509 740,850
8,427 GPU Inc 254,245 302,319
4,997 Grace W.R. & Co 264,076 367,904
3,392 Grainger (W W) Inc 119,350 301,888
2,643 Great Atlantic & Pacific Tea Co 94,974 83,915
4,200 Great Lakes Chemical Corp 234,130 207,113
</TABLE>
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93
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
9,401 Green Tree Financial Corp $ 318,614 $ 441,847
65,731 GTE Corp 1,836,509 2,982,544
10,226 Guidant Corp 288,312 572,656
17,332 Halliburton Co 301,146 901,264
4,926 Harcourt General Inc 117,890 244,145
2,200 Harland (John H) Co 53,487 50,738
3,466 Harnischfeger Industries Inc 85,982 148,172
6,912 Harrah's Entertainment Inc+ 49,568 155,088
5,316 Harris Corp 94,399 243,207
8,169 Hartford Financial Services Group 208,599 703,045
8,882 Hasbro Inc 109,436 249,806
23,662 Healthsouth Corp+ 490,048 631,480
25,389 Heinz (H J) Co 484,963 1,172,654
1,700 Helmerich & Payne Inc 41,748 136,000
6,906 Hercules Inc 135,305 343,574
9,822 Hershey Foods Corp 163,403 554,943
71,948 Hewlett Packard Co 1,214,711 5,004,883
10,914 HFS Inc+ 705,065 812,411
17,093 Hilton Hotels Corp 212,417 575,820
50,210 Home Depot Inc 673,825 2,617,196
10,290 Homestake Mining Co 160,863 157,566
8,804 Honeywell Inc 201,124 591,519
7,288 Household International Inc 252,681 824,911
19,561 Houston Industries Inc 364,570 425,452
11,328 Humana Inc+ 316,680 269,748
11,034 Huntington Bancshares Inc 378,236 397,914
9,160 IKON Office Solutions 182,543 234,153
17,128 Illinois Tool Works Inc 238,338 856,400
11,538 Inco Ltd 286,271 289,171
11,301 Ingersoll-Rand Co 161,789 486,649
3,400 Inland Steel Industries Inc 93,798 74,375
112,220 Intel Corp 755,224 10,359,309
67,943 International Business Machines Corp 4,211,381 7,197,712
7,563 International Flavors & Fragrances 160,554 370,587
20,731 International Paper Co 571,391 1,141,501
8,400 Interpublic Group Cos Inc 192,237 431,025
8,069 ITT Corp+ 219,623 546,675
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
8,269 ITT Industries Inc $ 95,017 $ 274,427
4,903 Jefferson-Pilot Corp 93,760 387,337
91,498 Johnson & Johnson 1,505,153 5,272,572
5,834 Johnson Controls Inc 99,990 289,148
2,700 Jostens Inc 69,906 73,238
33,760 K Mart Corp 641,385 472,640
2,727 Kaufman & Broad Home Corp 35,122 59,142
28,370 Kellogg Co 525,104 1,195,086
3,283 Kerr-McGee Corp 129,242 225,911
14,972 KeyCorp 479,569 952,594
38,288 Kimberly-Clark Corp 606,520 1,873,719
2,600 King World Productions+ 59,722 112,450
5,781 KLA Instruments Corp+ 433,805 390,579
5,976 Knight-Ridder Inc 160,616 326,439
17,540 Kroger Co+ 138,507 529,489
21,964 Laidlaw Inc 197,717 328,087
38,174 Lilly (Eli) & Co 1,129,967 4,597,581
18,785 Limited Inc 396,129 459,058
6,980 Lincoln National Corp 224,767 485,983
4,892 Liz Claiborne Inc 146,811 268,754
13,330 Lockheed Martin Corp 472,217 1,421,311
7,926 Loews Corp 442,886 895,143
2,790 Longs Drug Stores Corp 49,059 74,458
2,353 Louisiana Land & Exploration Co 89,374 184,269
7,612 Louisiana-Pacific Corp 113,437 190,300
12,010 Lowe's Co Inc 158,861 466,889
9,802 LSI Logic Corp+ 355,051 314,889
44,133 Lucent Technologies Inc 1,538,392 3,591,323
5,154 Mallinckrodt Inc 105,656 185,544
4,401 Manor Care Inc 45,653 146,333
8,704 Marriott International 225,354 618,528
11,632 Marsh & McLennan Companies Inc 473,810 891,302
11,186 Masco Corp 333,496 512,459
19,982 Mattel Inc 224,546 661,904
16,010 May Department Stores Co 357,478 872,545
6,768 Maytag Corp 146,257 230,958
3,032 MBIA Inc 313,496 380,327
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
22,962 MBNA Corp $ 141,480 $ 929,961
3,834 McDermott International Inc 91,348 139,941
47,266 McDonald's Corp 787,887 2,251,043
6,816 McGraw-Hill Inc 223,638 461,358
47,442 MCI Communications 689,812 1,393,609
3,659 Mead Corp 123,154 264,363
32,108 Medtronic Inc 218,352 1,509,076
17,308 Mellon Bank Corp 301,008 947,613
2,562 Mercantile Stores Co Inc 106,216 161,246
82,955 Merck & Co Inc 2,336,280 8,290,315
3,792 Meredith Corp 32,768 125,610
22,826 Merrill Lynch & Co Inc 268,163 1,693,404
7,828 MGIC Investment Corp 245,111 448,642
14,594 Micron Technology Inc+ 279,629 506,229
82,337 Microsoft Corp+ 2,428,539 10,894,214
3,000 Millipore Corp 56,557 147,375
28,513 Minnesota Mining & Manufacturing Co 1,042,370 2,637,453
12,242 Mirage Resorts Inc 333,759 368,790
53,980 Mobil Corp 1,470,650 3,994,520
40,490 Monsanto Co 381,407 1,579,110
6,100 Moore Corp Ltd 147,132 115,900
12,328 Morgan (J P) & Co Inc 609,856 1,400,769
40,601 Morgan St Dean Witter Discover 960,474 2,194,992
9,656 Mortan International Inc 117,895 342,788
40,872 Motorola Inc 897,658 2,937,675
595 NACCO Industries Inc Class A 22,972 69,950
4,650 Nalco Chemical Co 129,151 186,291
14,820 National City Corp 462,721 912,356
9,701 National Semiconductor+ 131,158 397,741
3,127 National Service Industries Inc 79,698 137,393
49,245 NationsBank Corp 1,069,266 3,047,034
5,197 Navistar International Corp+ 164,224 143,567
6,653 New York Times Co Class A 205,095 349,283
11,000 Newell Co 177,521 440,000
10,830 Newmont Mining Corp 338,343 486,673
9,589 Nextlevel Systems Inc 177,235 160,616
10,067 Niagara Mohawk Power Corp+ 175,094 96,266
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,400 NICOR Inc $ 70,399 $ 127,500
19,800 Nike Inc Class B 163,589 1,049,400
5,350 Nordstrom Inc 168,385 341,063
8,655 Norfolk Southern Corp 356,708 893,629
4,833 Northern States Power Co 174,170 240,442
17,887 Northern Telecom Ltd 472,383 1,859,130
4,619 Northrop Grumman Corp 237,258 560,631
25,627 Norwest Corp 469,791 1,569,654
23,968 Novell Inc+ 575,907 214,963
6,126 Nucor Corp 111,250 322,764
22,776 Occidental Petroleum Corp 633,975 590,753
10,660 Ohio Edison Co 219,492 249,844
1,860 ONEOK Inc 31,161 60,683
67,374 Oracle Systems Corp+ 307,059 2,454,940
7,272 Oryx Energy Co+ 192,170 184,982
3,593 Owens Corning Fiberglass Corp 91,088 131,145
9,556 Owens-Illinois Inc+ 347,921 324,307
5,370 PACCAR Inc 89,448 300,720
5,793 Pacific Enterprises 234,772 196,238
20,450 PacifiCorp 392,291 457,569
8,750 Pall Corp 110,409 188,672
8,814 Parametric Technology Corp+ 361,654 388,918
7,704 Parker Hannifin Corp 111,486 346,680
15,518 PECO Energy Co 345,540 363,703
17,105 Penney (J C) Co Inc 525,246 996,366
3,267 Pennzoil Co 217,724 260,339
2,494 Peoples Energy Corp 58,826 93,993
4,200 Pep Boys-Manny Moe & Jack 72,071 114,450
105,128 Pepsico Inc 1,114,181 4,264,255
3,071 Perkin-Elmer Corp 106,721 224,375
88,820 Pfizer Inc 1,084,510 5,334,751
30,153 PG&E Corp 744,593 699,173
34,867 Pharmacia and Upjohn Inc 1,092,753 1,272,646
4,120 Phelps Dodge Corp 123,748 319,815
166,464 Philip Morris Co Inc 2,205,405 6,918,660
18,219 Phillips Petroleum Co 363,701 940,556
5,628 Pioneer Hi Bred International Inc 213,063 512,148
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
9,876 Pitney Bowes Inc $ 245,023 $ 821,560
16,763 Placer Dome Inc 261,346 320,592
21,057 PNC Bank Corp 569,448 1,027,845
3,109 Polaroid Corp 108,316 159,142
1,971 Potlatch Corp 70,259 99,166
11,376 PP & L Resources Inc 293,735 248,850
12,370 PPG Industries Inc 307,174 775,444
10,894 Praxair Inc 192,506 557,637
92,812 Procter & Gamble Co 1,520,897 6,409,829
4,956 Progressive Corp Ohio 541,783 530,912
6,540 Providian Financial Corp 52,423 259,556
16,071 Public Services Enterprise Group 433,746 413,828
1,438 Pulte Corp 24,105 55,004
9,480 Quaker Oats Co 227,455 477,555
7,370 Ralston-Purina Group 283,381 652,245
3,000 Raychem Corp 128,951 253,500
16,276 Raytheon Co 340,891 962,319
3,904 Reebok International Ltd 87,829 190,076
3,736 Republic New York Corp 219,377 424,503
5,020 Reynolds Metals Co 243,944 355,479
8,482 Rite Aid Corp 216,387 470,221
14,374 Rockwell International Corp 367,267 904,664
4,209 Rohm & Haas Co 177,097 403,801
5,939 Rowan Co Inc+ 49,274 211,577
147,384 Royal Dutch Petroleum Co 2,510,226 8,179,812
10,404 Rubbermaid Inc 202,112 265,952
2,570 Russell Corp 54,614 75,654
5,256 Ryder System Inc 139,681 188,888
8,766 SAFECO Corp 159,669 464,598
4,100 Safety-Kleen Corp 106,229 98,144
7,468 Salomon Inc 273,448 561,500
32,976 Sara Lee Corp 521,538 1,698,264
62,839 SBC Communication Inc 1,627,936 3,856,745
50,372 Schering-Plough Corp 473,435 2,594,158
34,062 Schlumberger Ltd 820,122 2,867,595
18,265 Schwab (Charles) Corp 488,005 652,974
5,396 Scientific-Atlanta Inc 33,627 122,085
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
16,946 Seagate Technology Inc+ $ 483,876 $ 612,174
25,624 Seagram Co Ltd 533,494 903,246
26,891 Sears Roebuck & Co 557,360 1,531,106
17,302 Service Corp International 218,573 556,908
1,662 Shared Medical System Corp 47,469 87,878
11,972 Sherwin Williams Co 113,394 352,426
7,024 Sigma-Aldrich Corp 134,320 231,353
12,246 Silicon Graphics Inc+ 399,726 321,458
4,259 Snap-On Inc 96,690 196,180
5,910 Sonat Inc 115,125 300,671
46,682 Southern Co 666,933 1,053,263
10,174 Southwest Airlines Co 290,550 324,932
1,365 Springs Industries Inc Class A 46,634 71,663
29,600 Sprint Corp 911,429 1,480,000
6,353 St Jude Medical Inc+ 153,490 222,752
5,706 St Paul Co Inc 161,991 465,396
6,210 Stanley Works 108,263 267,030
11,056 State Street Corp 559,868 673,725
6,941 Stone Container Corp 152,501 108,019
3,550 Stride Rite Corp 56,185 48,147
5,107 Sun Co Inc 163,803 223,750
25,400 Sun Microsystems Inc+ 183,707 1,189,038
13,391 Sunamerica Inc 503,219 524,760
14,700 SunTrust Banks Inc 204,236 998,681
4,152 Supervalu Inc 110,848 162,966
12,042 Sysco Corp 174,295 444,801
7,318 Tandy Corp 152,044 246,068
2,257 Tektronix Inc 70,229 152,206
34,202 Tele-Communication Inc Class A+ 446,044 701,150
12,428 Tellabs Inc+ 297,217 640,042
3,796 Temple-Inland Inc 128,151 242,944
20,934 Tenet Healthcare Corp+ 387,338 609,703
11,814 Tenneco Inc+ 470,979 565,595
36,384 Texaco Inc 875,821 2,235,342
13,160 Texas Instruments Inc 371,463 1,778,245
16,598 Texas Utilities Co 607,636 597,528
11,392 Textron Inc 202,251 740,480
</TABLE>
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<PAGE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,382 Thermo Electron Corp+ $ 425,234 $ 415,280
3,743 Thomas & Betts Corp 121,189 204,461
38,502 Time Warner Inc 1,174,177 2,086,327
6,452 Times Mirror Co Class A 166,896 354,457
4,376 Timken Co 65,019 175,314
10,720 TJX Companies Inc 115,931 327,630
9,600 Torchmark Corp 151,723 376,800
19,750 Toys R Us Inc+ 444,793 701,125
4,365 Transamerica Corp 182,221 434,318
44,048 Travelers Group Inc 708,160 3,006,276
8,522 Tribune Co 179,377 454,329
8,436 TRW Inc 221,638 462,926
4,300 Tupperware Corp 67,425 120,938
18,330 Tyco International Ltd+ 1,355,625 1,504,206
16,836 U.S. Bancorp 744,268 1,624,674
32,932 U.S. West Inc+ 653,786 1,267,882
41,858 U.S. West Media Group+ 620,769 933,957
15,094 Unicom Corp 512,984 352,822
10,965 Unilever NV 776,325 2,331,433
4,782 Union Camp Corp 197,603 294,990
8,629 Union Carbide Corp 118,118 420,124
7,100 Union Electric Co 241,852 272,906
16,910 Union Pacific Corp 517,127 1,058,989
17,395 Union Pacific Resources Group Inc 336,814 455,532
12,273 Unisys Corp+ 312,986 187,930
12,765 United Healthcare Corp 597,169 638,250
5,050 United States Surgical 422,415 147,397
16,156 United Technologies Corp 432,262 1,308,636
16,960 Unocal Corp 362,487 733,520
9,654 UNUM Corp 273,729 440,464
5,410 USAir Group Inc+ 173,494 223,839
7,625 USF & G Corp 220,994 174,898
12,740 UST Inc 192,556 389,366
19,922 USX - Marathon Group 475,755 740,849
5,890 USX - US Steel Group 160,959 204,678
4,366 VF Corp 172,052 404,401
24,411 Viacom Inc Class B+ 846,183 771,998
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,993 Wachovia Corp $ 434,168 $ 791,496
155,614 Wal Mart Stores Inc 2,152,226 5,699,325
33,960 Walgreen Co 205,772 870,225
18,636 Warner Lambert Co 447,539 2,514,695
17,244 Washington Mutual Inc 734,547 1,202,769
31,322 Waste Management Inc 836,675 1,094,312
6,011 Wells Fargo & Co 522,652 1,653,025
9,059 Wendy's International Inc 119,752 192,504
3,701 Western Atlas Inc+ 111,422 325,688
43,896 Westinghouse Electric Corp 1,022,829 1,187,936
7,089 Westvaco Corp 141,701 255,647
13,662 Weyerhaeuser Co 444,568 811,181
5,154 Whirlpool Corp 205,898 341,775
7,038 Whitman Corp 85,047 191,786
7,672 Willamette Industries Inc 262,635 293,454
10,892 Williams Co Inc 147,985 509,882
10,336 Winn-Dixie Stores Inc 168,877 366,282
9,298 Woolworth Corp+ 236,625 205,718
61,692 WorldCom Inc+ 1,532,583 2,182,355
6,675 Worthington Industries Inc 80,418 135,169
8,010 Wrigley (Wm) Jr Co 128,888 603,253
22,332 Xerox Corp 554,662 1,880,075
------------ --------------
TOTAL COMMON STOCKS $209,573,741 $ 504,394,647
</TABLE>
---------------------
101
<PAGE>
MASTER INVESTMENT TRUST CORPORATE STOCK MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 0.66%
$ 139,000 U.S. Treasury Bills 4.24 %(F) 10/09/97 $ 138,828
73,000 U.S. Treasury Bills 4.44 (F) 10/16/97 72,831
36,000 U.S. Treasury Bills 4.49 (F) 10/23/97 35,881
45,000 U.S. Treasury Bills 4.72 (F) 11/20/97 44,683
2,517,000 U.S. Treasury Bills 4.73 (F) 12/18/97 2,491,125
72,000 U.S. Treasury Bills 4.80 (F) 11/06/97 71,623
91,000 U.S. Treasury Bills 4.85 (F) 11/13/97 90,440
59,000 U.S. Treasury Bills 4.85 (F) 12/11/97 58,421
23,000 U.S. Treasury Bills 4.87 (F) 12/04/97 22,796
321,000 U.S. Treasury Bills 4.89 (F) 12/26/97 317,180
--------------
TOTAL U.S. TREASURY SECURITIES $ 3,343,808
(Cost $3,343,515)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $212,917,256)* (Notes 1 and 3) 100.22% $ 507,738,455
Other Assets and Liabilities, Net (0.22) (1,091,629)
------ --------------
TOTAL NET ASSETS 100.00% $ 506,646,826
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $298,981,914
Gross Unrealized Depreciation (4,160,715)
------------
NET UNREALIZED APPRECIATION $294,821,199
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
102
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO (UNAUDITED)
- -----------------------------------------------------
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 89.41%
ADVERTISING - 3.08%
59,625 HA-LO Industries Inc+ $ 1,324,479 $ 1,706,766
34,500 TMP Worldwide Incorporated+ 808,155 832,313
------------ --------------
$ 2,132,634 $ 2,539,079
BIOTECHNOLOGY - 0.46%
16,500 Serologicals Corp+ $ 309,938 $ 375,375
CAPITAL GOODS - 8.27%
20,500 Advanced Lighting Technologies Inc+ $ 518,117 $ 553,500
17,000 Flextronics International Ltd+ 790,556 809,625
35,500 General Scanning Inc 960,575 1,235,844
26,000 Kulicke & Soffa Industries Inc+ 1,168,903 1,204,125
52,000 Layne Christensen Company+ 990,043 1,092,000
25,071 Lernout & Hauspie Speech Products+ 1,035,563 1,096,856
32,500 PMC - Sierra Inc 945,969 828,750
------------ --------------
$ 6,409,726 $ 6,820,700
COMMERCIAL SERVICES - 1.77%
18,391 Billing Information Concepts+ $ 510,250 $ 643,685
22,000 NCO Group+ 427,500 814,000
------------ --------------
$ 937,750 $ 1,457,685
COMPUTER SOFTWARE - 8.14%
16,500 Aris Corp+ $ 303,722 $ 350,625
21,500 Aspen Technologies Inc+ 700,563 755,188
34,000 Axent Technologies Inc+ 663,580 705,500
33,000 Checkfree Corp+ 621,648 697,125
26,500 Creative Technology Ltd+ 410,750 677,406
10,000 Harbinger Corp+ 339,034 363,750
37,000 Infinium Software Inc+ 476,157 548,063
17,000 JDA Software Group Inc+ 524,962 620,500
</TABLE>
---------------------
103
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
31,520 Rational Software Corp+ $ 706,195 $ 504,320
29,000 Rogue Wave Software+ 351,700 398,750
45,500 Vantive Corp+ 1,289,076 1,092,000
------------ --------------
$ 6,387,387 $ 6,713,227
COMPUTER SYSTEMS - 0.41%
17,000 Box Hill Systems Corp+ $ 288,670 $ 341,063
ELECTRICAL EQUIPMENT - 2.15%
48,000 Integrated Process Equipment Corp+ $ 1,369,007 $ 1,770,000
ENERGY & RELATED - 4.96%
10,000 Friede Goldman International Inc+ $ 170,000 $ 600,000
54,000 Marine Drilling Co Inc+ 1,113,697 1,687,500
26,000 Pride International Inc+ 654,573 884,000
39,500 Tetra Technologies Inc+ 890,206 913,438
------------ --------------
$ 2,828,476 $ 4,084,938
ENTERTAINMENT & LEISURE - 1.63%
31,579 Family Golf Centers Inc+ $ 748,520 $ 836,844
19,000 Regal Cinemas Inc+ 486,533 510,625
------------ --------------
$ 1,235,053 $ 1,347,469
FINANCE & RELATED - 6.32%
23,000 Amresco Inc+ $ 327,750 $ 853,875
25,000 Envoy Corp (New)+ 838,125 714,063
22,000 IMC Mortgage Co+ 404,313 338,250
45,000 Imperial Credit Industries+ 878,028 1,192,500
67,000 Long Beach Financial Corp+ 503,625 908,688
35,000 Medallion Financial Corp 631,823 761,250
19,000 Ocwen Asset Investment Corp 315,900 437,000
------------ --------------
$ 3,899,564 $ 5,205,626
</TABLE>
- ------------------------
104
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD & RELATED - 3.54%
15,000 Dave & Buster's Inc $ 375,960 $ 373,125
43,000 Northland Cranberries Inc 942,550 806,250
15,000 NuCo2 Inc+ 326,250 243,750
29,000 Suiza Foods Corp+ 783,860 1,493,500
------------ --------------
$ 2,428,620 $ 2,916,625
GENERAL BUSINESS & RELATED - 20.30%
18,750 American Homestar Corp+ $ 343,750 $ 450,000
38,400 Applied Graphics Technologies+ 1,178,433 2,160,000
20,500 Avis Rent A Car Inc+ 348,500 489,438
15,000 Cinar Films Inc Class B+ 506,250 571,875
20,000 CSG Systems International Inc+ 683,328 756,250
47,000 Dimon Inc+ 1,142,541 1,175,000
35,000 Equity Corp International+ 789,005 815,938
38,500 Hagler Bailly Inc+ 751,623 976,938
25,000 Industrial Distribution Group Inc+ 478,094 525,000
15,000 Network Solutions Inc Class A+ 270,000 326,250
84,500 Philip Services Corp+ 1,179,092 1,542,125
30,500 Renter's Choice Inc+ 533,938 692,922
28,000 Romac International Inc+ 647,817 1,221,500
37,000 Scopus Technology Inc+ 1,021,344 587,375
33,000 Staffmark Inc+ 678,608 1,258,125
32,000 Sunquest Information Systems+ 384,591 484,000
30,000 UOL Publishing Inc+ 366,000 738,750
48,500 VDI Media Corp+ 338,545 630,500
17,500 Wackenhut Corrections Corp+ 480,887 542,500
30,500 Zale Corp+ 721,122 791,094
------------ --------------
$ 12,843,468 $ 16,735,580
HEALTHCARE - 10.21%
26,000 Covance Inc+ $ 483,954 $ 562,250
46,500 Genesis Health Ventures Inc+ 1,557,633 1,810,594
42,500 Healthcare Recoveries Inc+ 595,000 956,250
40,500 Jones Medical Industries Inc 1,268,994 1,275,750
</TABLE>
---------------------
105
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
29,500 Orthodontic Centers of America Inc+ $ 621,064 $ 590,000
16,891 Pathogenesis Corp+ 386,555 599,631
29,000 Renal Treatment Centers+ 843,399 1,031,313
35,892 Vision Twenty-One Inc+ 415,251 484,542
29,500 Vivus Inc+ 809,306 1,106,250
------------ --------------
$ 6,981,156 $ 8,416,580
MEDICAL EQUIPMENT & SUPPLIES - 2.30%
38,000 Kaynar Technologies Inc+ $ 753,188 $ 1,135,250
32,000 Ultrafem Inc+ 489,389 284,000
20,000 Urologix Inc+ 400,115 475,000
------------ --------------
$ 1,642,692 $ 1,894,250
PHARMACEUTICALS - 2.89%
20,000 Anesta Corp+ $ 323,750 $ 465,000
17,000 KOS Pharmaceuticals Inc+ 284,500 607,750
28,500 Medicis Pharmaceutical Corp+ 1,108,702 1,307,438
------------ --------------
$ 1,716,952 $ 2,380,188
RETAIL & RELATED - 3.48%
19,500 Galoob (Lewis) Toys Inc+ $ 402,084 $ 287,625
49,000 Nautica Enterprises+ 1,221,995 1,378,125
47,500 Regis Corp 1,111,481 1,199,375
------------ --------------
$ 2,735,560 $ 2,865,125
SEMICONDUCTORS - 1.50%
3,587 ASE Test Limited+ $ 284,270 $ 303,998
25,630 Triquint Semiconductor Inc+ 889,834 933,893
------------ --------------
$ 1,174,104 $ 1,237,891
</TABLE>
- ------------------------
106
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS - 5.69%
13,500 IXC Communications+ $ 387,331 $ 428,625
14,000 MRV Communications+ 500,500 511,000
38,000 Nice Systems Limited 1,444,602 2,137,500
41,000 Superior Telecom Inc+ 1,054,991 1,614,367
------------ --------------
$ 3,387,424 $ 4,691,492
TRANSPORTATION - 2.31%
15,000 Atlas Air Inc+ $ 511,393 $ 420,938
42,700 Trico Marine Services Inc+ 983,850 1,483,825
------------ --------------
$ 1,495,243 $ 1,904,763
TOTAL COMMON STOCKS $ 60,203,424 $ 73,697,656
</TABLE>
---------------------
107
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO (UNAUDITED)
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 10.49%
REPURCHASE AGREEMENTS - 10.49%
$ 4,053,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.15 10/01/97 $ 4,053,000
914,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.00 10/01/97 914,000
678,500 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.00 10/01/97 678,500
3,000,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.00 10/01/97 3,000,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 8,645,500
(Cost $8,645,500)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $68,848,924)* (Notes 1 and 3) 99.90% $ 82,343,156
Other Assets and Liabilities, Net 0.10 82,883
------ --------------
TOTAL NET ASSETS 100.00% $ 82,426,039
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 15,509,021
Gross Unrealized Depreciation (2,014,789)
------------
NET UNREALIZED APPRECIATION $ 13,494,232
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
108
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
109
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) - SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
CAPITAL CORPORATE
APPRECIATION STOCK SMALL CAP
MASTER MASTER MASTER
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value
(see cost below)
(includes repurchase agreements of
$8,645,500 for the Small Cap Master
Portfolio) $247,739,388 $507,738,455 $82,343,156
Cash 0 6,450 1,906
Receivables:
Dividends and Interest 24,280 710,884 2,470
Investment securities sold 7,801,945 2,079 868,271
Prepaid expenses and other assets 607,851 0 0
TOTAL ASSETS 256,173,464 508,457,868 83,215,803
LIABILITIES
Cash overdraft due to custodian (Note 2) 1,427,008 0 0
Payables:
Investment securities purchased 2,230,584 0 695,868
Distribution to beneficial interest
holders 0 1,605,090 28,940
Due to WFB (Note 2) 105,043 184,666 36,464
Other 4,398 21,286 28,492
TOTAL LIABILITIES 3,767,033 1,811,042 789,764
TOTAL NET ASSETS
$252,406,431 $506,646,826 $82,426,039
INVESTMENT AT COST (NOTE 3) $199,121,765 $212,917,256 $68,848,924
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
110
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED) - FOR THE SIX MONTHS ENDED SEPT. 30, 1997
<TABLE>
<CAPTION>
CAPITAL CORPORATE
APPRECIATION STOCK SMALL CAP
MASTER MASTER MASTER
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 139,136 $ 4,189,153 $ 22,501
Interest 105,559 66,290 148,345
TOTAL INVESTMENT INCOME 244,695 4,255,443 170,846
EXPENSES (NOTE 2)
Advisory fees 568,732 1,067,653 158,666
Custody fees 34,536 0 6,924
Portfolio accounting fees 53,580 0 33,706
Legal and audit fees 7,710 7,181 13,293
Other 4,818 9,419 4,394
TOTAL EXPENSES 669,376 1,084,253 216,983
Less:
Waived fees and reimbursed expenses 0 0 (53,808)
Net Expenses 669,376 1,084,253 163,175
NET INVESTMENT INCOME (LOSS) (424,681) 3,171,190 7,671
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on sale of
investments 15,631,667 9,218,266 3,890,805
Net change in unrealized appreciation
of investments 71,487,561 92,681,734 17,391,300
NET GAIN ON INVESTMENTS 87,119,228 101,900,000 21,282,105
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $86,694,547 $105,071,190 $21,289,776
- -----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
111
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAPITAL APPRECIATION MASTER PORTFOLIO
------------------------------------------------
FROM FEB. 20,
(UNAUDITED) 1996
FOR THE SIX FOR THE SIX (COMMENCEMENT
MONTHS ENDED MONTHS ENDED OF OPERATIONS)
SEPT. 30, MARCH 31, TO
1997 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (424,681) $ (322,645) $ (112,200)
Net realized gain (loss) on sale of
investments 15,631,667 6,562,326 750,785
Net change in unrealized appreciation
(depreciation) of investments 71,487,561 (50,304,202) 12,970,872
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 86,694,547 (44,064,521) 13,609,457
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM BENEFICIAL INTEREST
TRANSACTIONS (30,420,993) 12,885,241 213,702,700
INCREASE (DECREASE) IN NET ASSETS 56,273,554 (31,179,280) 227,312,157
NET ASSETS:
Beginning net assets 196,132,877 227,312,157 0
ENDING NET ASSETS $252,406,431 $196,132,877 $ 227,312,157
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) "NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST
TRANSACTIONS" INCLUDES $197,709,375 AS A RESULT OF THE CONVERSION FROM
STAND-ALONE TO "MASTER-FEEDER" STRUCTURE.
The accompanying notes are an integral part of these financial statements.
- ---------------------
112
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CORPORATE STOCK MASTER PORTFOLIO SMALL CAP MASTER PORTFOLIO
---------------------------------------------- -----------------------------
FROM APRIL
28, 1996
(COMMENCEMENT
(UNAUDITED) OF (UNAUDITED)
FOR THE SIX FOR THE SIX OPERATIONS) FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED TO MONTHS ENDED MONTHS ENDED
SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31,
1997 1997 1996 (1) 1997 1997
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 3,171,190 $ 3,073,815 $ 3,019,376 $ 7,671 $ 29,348
Net realized gain (loss) on sale of
investments 9,218,266 4,668,147 3,905,323 3,890,805 (1,545,385)
Net change in unrealized appreciation
(depreciation) of investments 92,681,734 32,613,766 14,221,384 17,391,300 (4,389,698)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 105,071,190 40,355,728 21,146,083 21,289,776 (5,905,735)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM BENEFICIAL INTEREST
TRANSACTIONS (5,427,787) (3,626,103) 349,127,715 22,876,448 17,869,288
INCREASE (DECREASE) IN NET ASSETS 99,643,403 36,729,625 370,273,798 44,166,224 11,963,553
NET ASSETS:
Beginning net assets 407,003,423 370,273,798 0 38,259,815 26,296,262
ENDING NET ASSETS $506,646,826 $407,003,423 $370,273,798 $ 82,426,039 $ 38,259,815
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FROM SEPT.
16, 1996
(COMMENCEMENT
OF
OPERATIONS)
TO
SEPT. 30,
1996
<S> <C>
- --------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (5,481)
Net realized gain (loss) on sale of
investments 60,298
Net change in unrealized appreciation
(depreciation) of investments 492,630
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 547,447
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM BENEFICIAL INTEREST
TRANSACTIONS 25,748,815
INCREASE (DECREASE) IN NET ASSETS 26,296,262
NET ASSETS:
Beginning net assets 0
ENDING NET ASSETS $ 26,296,262
- ---------------------------------------------------------------------------------
</TABLE>
(1) "NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST
TRANSACTIONS" INCLUDES $197,709,375 AS A RESULT OF THE CONVERSION FROM
STAND-ALONE TO "MASTER-FEEDER" STRUCTURE.
The accompanying notes are an integral part of these financial statements.
---------------------
113
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Master Investment Trust (the "Trust") is a business trust organized under
the laws of Delaware on August 14, 1991. The Trust is registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust's Declaration of Trust permits the issuance of beneficial
interests ("interests"). The Trust currently issues nine series of investment
portfolios. These financial statements represent three of these series, the
Capital Appreciation, Corporate Stock and Small Cap Master Portfolios (the
"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 ("GAAP") for investment
companies. The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates and
assumptions should not be considered an indication of actual or expected
figures; actual results may differ.
INVESTMENT POLICY AND SECURITY VALUATION
Securities for which the primary market is a national securities exchange or the
National Association of Securities Dealers Automated Quotation ("NASDAQ") system
are valued at the last reported sales price on the day of valuation. U.S.
Government obligations are valued at the reported bid price. In the absence of
any sale of such securities on the valuation date and in the case of other
securities, excluding debt instruments maturing in 60 days or less, the
valuations are based on latest quoted bid prices. Debt securities maturing in 60
days or less are valued at amortized cost. The amortized cost method involves
valuing a security at its cost, plus accretion of discount or minus amortization
of premium over the period until maturity, which approximates market value.
Securities for which quotations are not readily available are valued at fair
value as determined by policies set by the Trust's Board of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded no later than one business day after trade
date. Dividend income is recognized on the ex-dividend date and interest income
is accrued daily. Realized gains or losses are reported on the basis of
identified cost of securities delivered. Bond discounts are accreted and
premiums are
- ---------------------
114
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
amortized as required by the Internal Revenue Code of 1986, as amended (the
"Code").
FEDERAL INCOME TAXES
Each Master Portfolio intends to qualify for federal income tax purposes as a
partnership. Management of each 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 a Master Portfolio will be
taxed on its distributive share of the partnership's income for purposes of
determining its federal and state income tax liabilities. The determination of
such share will be made in accordance with the Code and the regulations
promulgated thereunder.
It is intended that the Master Portfolios' 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.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into separate advisory contracts on behalf of the Master
Portfolios with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contracts, WFB
has agreed to provide the Master Portfolios with daily portfolio management.
Under the contracts with the Capital Appreciation and Small Cap Master
Portfolios, WFB is entitled to be paid a monthly advisory fee at an annual rate
of 0.50% and 0.60%, respectively, of the average daily net assets of such Master
Portfolios. Under the contract with the Corporate Stock Master Portfolio, WFB is
entitled to be paid a monthly advisory fee at an annual rate of 0.50% of the
first $250 million of such Master Portfolio's average daily net assets, 0.40% of
the next $250 million, and 0.30% of such Master Portfolio's average daily net
assets in excess of $500 million.
Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of Barclays
Global Investors, N.A. ("BGI"), currently acts as sub-adviser to the Corporate
Stock Master Portfolio. BGFA is entitled to receive from WFB, as compensation
for its sub-advisory services, an annual fee of $40,000 and a monthly fee at the
annual rate of 0.08% of the Corporate Stock Master Portfolio's average daily net
assets. BGFA is an indirect subsidiary of Barclays Bank PLC.
The Trust has entered into administration and co-administration agreements on
behalf of the Master Portfolios with WFB and Stephens, respectively. Pursuant to
the agreements, neither WFB nor Stephens is entitled to receive fees for
administration services provided to the Master Portfolios so long as they
receive fees for providing such services to the Funds which invest in the Master
Portfolios (under separate agreements).
The Trust has entered into contracts on behalf of each Master Portfolio (other
than the Corporate Stock Master Portfolio, for which BGI serves as custodian)
---------------------
115
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
with WFB, whereby WFB is responsible for providing custody and portfolio
accounting services for the Master Portfolios. Pursuant to the contracts, WFB is
entitled to certain transaction charges plus an annual fee for custody services
at an annual rate of 0.0167% of the average daily net assets of each Master
Portfolio. For portfolio accounting services, WFB is entitled to a monthly base
fee from each Master Portfolio of $2,000 plus an annual fee of 0.07% of the
first $50 million of each Master Portfolio's average daily net assets, 0.045% of
the next $50 million, and 0.02% of each Master Portfolio's average daily net
assets in excess of $100 million.
BGI currently acts as custodian to the Corporate Stock Master Portfolio. BGI is
a wholly-owned subsidiary of Barclays Global Investors Holdings Inc. BGI will
not be entitled to receive compensation for its custodial services so long as
BGFA is entitled to receive compensation for providing investment sub-advisory
services to the Corporate Stock Master Portfolio.
WAIVED FEES AND REIMBURSED EXPENSES
The amounts shown as waived fees and reimbursed expenses on the Master
Portfolios' Statement of Operations for the six months ended September 30, 1997,
were waived by WFB. Waived fees and reimbursed expenses continue at the
discretion of WFB and Stephens Inc.
DISSOLUTION OF THE MASTER PORTFOLIOS
On July 23, 1997 the Board of Directors of Stagecoach Funds, Inc. (the
"Company") approved a plan to reorganize the master/feeder structure of its
feeder funds into a stand-alone structure (the "Reorganization"). When the
Reorganization occurs, the Aggressive Growth, Corporate Stock and Small Cap
Funds will withdraw their investments in the corresponding Master Portfolios and
instead will invest directly in a portfolio of securities (the "Dissolution").
The Aggressive Growth, Corporate Stock and Small Cap Funds will retain WFB, the
investment adviser to their corresponding Master Portfolios, and the Corporate
Stock Fund will retain BGFA, the sub-adviser to the Corporate Stock Master
Portfolio, to manage their assets directly, in substantially the same manner as
WFB and BGFA currently manage such Master Portfolios' assets. The Funds, except
the Corporate Stock Fund, will compensate WFB at the same advisory fee level.
The Corporate Stock Fund will compensate WFB at a lower advisory fee level and
BGFA at a lower sub-advisory fee level. The Reorganization and the Dissolution
are expected to take place on or about December 12, 1997. The Dissolution of the
master/feeder structure of the Capital Appreciation and Small Cap Master
Portfolios is contingent upon the approval of shareholders of Overland Express
Funds, Inc. ("Overland"), another investment company advised by WFB, to
reorganize the Overland Strategic Growth and Small Cap Strategy Funds into the
Company's Aggressive Growth and Small Cap Funds, respectively.
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<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Each Master Portfolio will distribute all of its assets and liabilities in-kind
(the "In-Kind Distribution") to its interest holders. The In-Kind Distribution
will occur as of the close of business on the Dissolution date. The existing
Master Portfolios will no longer hold any assets or have any liabilities and
will wind up their affairs.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each
Master Portfolio for the six months ended September 30, 1997, were as follows:
<TABLE>
<CAPTION>
CAPITAL CORPORATE
APPRECIATION STOCK SMALL CAP
AGGREGATE PURCHASES MASTER MASTER MASTER
AND SALES PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total purchases at cost $290,445,201 $12,209,714 $77,883,877
Total sales proceeds 317,694,747 15,500,789 57,586,351
</TABLE>
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, exclusive of short-term securities, and average
commission rate paid for each Master Portfolio for the stated periods were as
follows:
<TABLE>
<CAPTION>
AVERAGE
COMMISSION
PORTFOLIO RATE
PERIOD TURNOVER PAID
- --------------------------------------------------------------
<S> <C> <C>
CAPITAL APPRECIATION MASTER PORTFOLIO
Six Months Ended Sept. 30, 1997 132% $ 0.0615
Six Months Ended Mar. 31, 1997 104% $ 0.0743
Period Ended Sept. 30, 1996 (1) 75% $ 0.0785
CORPORATE STOCK MASTER PORTFOLIO
Six Months Ended Sept. 30, 1997 3% $ 0.0280
Six Months Ended Mar. 31, 1997 2% $ 0.0266
Period Ended Sept. 30, 1996 (2) 3% $ 0.0265
SMALL CAP MASTER PORTFOLIO
Six Months Ended Sept. 30, 1997 120% $ 0.0597
Six Months Ended Mar. 31, 1997 69% $ 0.0764
Period Ended Sept. 30, 1996 (3) 10% $ 0.0800
</TABLE>
(1) THE MASTER PORTFOLIO COMMENCED OPERATIONS ON FEBRUARY 20, 1996.
(2) THE MASTER PORTFOLIO COMMENCED OPERATIONS ON APRIL 28, 1996.
(3) THE MASTER PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
---------------------
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<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>
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<PAGE>
Wells Fargo Bank 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 Bank 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 1-800-260-5969. Read the
prospectus carefully before you invest or send money.
SC EQR AR (11/97)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1997 Stagecoach Funds
<PAGE>
