<PAGE>
- ---------------------
ANNUAL
- ---------------------
REPORT
- ---------------------
Balanced Fund
Equity Value Fund
Growth and Income Fund
Small Cap Fund
INSTITUTIONAL CLASS
MARCH 31, 1997
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Balanced Fund 2
Equity Value Fund 6
Growth and Income Fund 10
Small Cap Fund 14
PORTFOLIOS OF INVESTMENTS
Balanced Fund 19
Equity Value Fund 25
Growth and Income Fund 29
STAGECOACH FUNDS
Statement of Assets and Liabilities 35
Statements of Operations 37
Statements of Changes in Net Assets 39
Financial Highlights 42
Notes to Financial Statements 51
Independent Auditors' Report 65
MASTER INVESTMENT TRUST PORTFOLIO OF INVESTMENTS
Master Investment Trust Small Cap Master Portfolio 67
MASTER INVESTMENT TRUST
Statement of Assets and Liabilities 73
Statements of Operations 74
Statements of Changes in Net Assets 75
Notes to Financial Statements 76
Independent Auditors' Report 79
LIST OF ABBREVIATIONS 81
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:
WELCOME TO THE 1997 STAGECOACH FUNDS ANNUAL REPORT.
This Report, dated March 31, 1997, comes to you six months after the previous
Annual Report dated September 30, 1996. As we explained in the Shareholder
Letter at that time, for administrative reasons, the Stagecoach Funds have
shifted their financial year-end to March 31. This change does not otherwise
affect the operation, nor does it affect the investment objectives, of the
Funds.
The recently completed reporting period saw market volatility and the long-
expected increase in the federal funds target rate. After months of debate on
the rate of economic growth and the potential for increased rates of inflation,
the Federal Reserve Board acted in March to raise rates by 0.25%. The Fed's
action capped a six month period which showed only modest total return for the
fixed-income market.
The equity market, as measured by the Standard & Poor's 500 Index, fell 7.20% in
March from its January high. While this environment offered some challenges, we
feel that much of the "bad news" has been greatly exaggerated. For example, the
S&P 500 Index still enjoyed a 1997 year-to-date return through March 31 of
2.69%. The positive return for the six-month period ended March 31, 1997 was
11.24%. The news is similar concerning the further market correction that
occurred after the reporting period. As of early May, the market had recouped
much of its March and April losses.
Of course, equity issues do not rise and fall in unison. Large company stocks
have fared well recently as investor dollars sought their greater security and
reduced volatility. Various sectors such as technology and finance stocks have
fluctuated acutely in recent months. Value stocks have outperformed growth
stocks, in contrast to recent years.
It is all too easy to be confused by such a variety of returns and apparently
conflicting information. That's why it is so important to truly understand the
investment philosophies and long-range goals that govern your Fund. We have
always felt that the more you understand your investment, the less likely you
are to be unduly concerned with short-term developments.
The following pages discuss what factors have affected the returns for the
Stagecoach Funds during the reporting period. These commentaries were written
for you -- our shareholders -- as part of the Stagecoach Funds commitment to
education, information and service as we help you meet your financial goals.
STAGECOACH FUNDS
MAY 1997
---------------------
1
<PAGE>
BALANCED FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Institutional Class shares for the six-month period ended
March 31, 1997 was 8.27%. The one-year total return for the same share class was
13.07%.
WHAT DROVE STOCK PERFORMANCE AND HOW DID IT AFFECT THE FUND?
Stock market performance in 1996 was primarily driven by large cap stocks. Two
sectors that performed well for the Fund were finance and technology. In
technology, the Fund benefited by selecting stocks with compelling valuations
after the 1996 mid-year technology correction. We looked for stocks with good
price-to-earnings ratios, a history of earnings growth and solid fundamentals.
As for the financial sector, bank stocks performed particularly well as the
consolidation in that industry continued.
HOW HAS THE RECENT VOLATILITY IN THE STOCK MARKET AFFECTED YOUR OUTLOOK AND YOUR
APPROACH?
We do not change our approach based on short-term market conditions. In fact,
the recent downturn allowed us additional opportunity to practice our discipline
and capture value by purchasing stocks we considered undervalued. In general, we
were concerned that price-to-earnings ratios, which measure expected earnings
against a stock's price, had reached unsustainable levels relative to underlying
earnings growth for some issues. The correction helped bring these ratios back
in line and has provided new market appreciation.
WHAT IS THE "VALUE" DISCIPLINE?
In broad terms, a value strategy is any one of several disciplined methods of
selecting stocks that are under-priced compared to some measure of intrinsic
value. One common method is to examine the price-to-earnings ratio. Another
method might include book-to-price ratios, which examines a company's assets
against liabilities. Whatever the method, the intention is to recognize
"bargain" stocks before the market does. Value strategies are often contrasted
with growth strategies which are based more on expectations of future earnings
growth.
WHAT STRATEGIES DO YOU USE TO MANAGE THE BOND PORTFOLIO?
The bond portion of the Fund's portfolio is actively managed utilizing a "top-
down" approach that attempts to take advantage of the business cycle. The top-
down approach identifies key trends in the general economy, and then selects
sectors or industries which are likely to benefit from those trends. The sector
selection is among government, corporate and mortgage-backed bonds. The
portfolio's sensitivity to interest rate changes as measured by its duration is
carefully managed.
- ---------------------
2
<PAGE>
BALANCED FUND
WHAT ARE THE POTENTIAL ADVANTAGES OF THE BALANCED APPROACH?
The balanced approach seeks to provide a shareholder with participation in the
equity market with a reduction in volatility, as well as the stability of income
an investor might expect from the fixed income portion.
HOW IS THE ALLOCATION DETERMINED?
The allocation is reviewed and set monthly by Wells Fargo Bank's Senior
Investment Strategy Committee in conjunction with the Fund's portfolio managers.
A detailed model which measures the expected returns and risks of stocks, bonds
and cash provides a base in setting the allocation within the Fund's risk
tolerance.
WILL THE ALLOCATION CHANGE IN REACTION TO THE RECENT DECLINE IN THE STOCK
MARKET?
Activity at the Federal Reserve is one of the many economic factors which may
effect an allocation change in the Fund's portfolio. Recent declines in the
stock market seem to be a reaction to the Fed's recent increase in interest
rates. Although the market is dynamic and economic factors can change rapidly,
we presently expect to stay with the current allocation of 55% stocks and 45%
bonds until we feel that the market has accounted for the Federal Reserve's
actions in raising, and possibly continuing to raise, the federal funds target
rate. Once we feel that the interest rate headwind from the Fed is over, we may
gradually increase our equity exposure.
---------------------
3
<PAGE>
BALANCED FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Average Annual Total Returns 13.07% 10.49% 11.07% 11.20%
- ---------------------------------------------------------------------------------------
</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
Balanced Fund (7/90 to 9/96). Historical performance has been calculated using
returns produced by this Predecessor Fund. Institutional Class performance for
periods prior to September 6, 1996 reflects Pacifica Balanced Fund Institutional
Class performance.
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.
- ---------------------
4
<PAGE>
BALANCED FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROS GOV'T/CORP BOND STAGECOACH BALANCED FUND INSTITUTIONAL CLASS
S&P 500 INDEX INDEX SHARES
<S> <C> <C> <C>
Inception $10,000 $10,000 $10,000
Jul-90 $9,968 $10,124 $10,040
Aug-90 $9,067 $9,977 $9,660
Sep-90 $8,626 $10,060 $9,500
Oct-90 $8,589 $10,193 $9,501
Nov-90 $9,144 $10,415 $9,916
Dec-90 $9,399 $10,572 $10,145
Jan-91 $9,808 $10,691 $10,382
Feb-91 $10,510 $10,783 $10,783
Mar-91 $10,764 $10,764 $10,969
Apr-91 $10,790 $10,790 $10,948
May-91 $11,255 $11,032 $11,177
Jun-91 $10,740 $11,020 $10,875
Jul-91 $11,240 $11,158 $11,201
Aug-91 $11,506 $11,415 $11,453
Sep-91 $11,314 $11,653 $11,474
Oct-91 $11,466 $11,757 $11,591
Nov-91 $11,004 $11,874 $11,230
Dec-91 $12,262 $12,275 $12,024
Jan-92 $12,034 $12,093 $12,079
Feb-92 $12,190 $12,157 $12,253
Mar-92 $11,953 $12,090 $12,111
Apr-92 $12,304 $12,163 $12,341
May-92 $12,364 $12,399 $12,308
Jun-92 $12,180 $12,580 $12,211
Jul-92 $12,678 $12,902 $12,555
Aug-92 $12,418 $13,017 $12,322
Sep-92 $12,564 $13,195 $12,511
Oct-92 $12,607 $12,993 $12,533
Nov-92 $13,037 $12,981 $12,847
Dec-92 $13,197 $13,205 $13,082
Jan-93 $13,307 $13,493 $13,461
Feb-93 $13,488 $13,773 $13,679
Mar-93 $13,773 $13,820 $14,036
Apr-93 $13,440 $13,926 $13,932
May-93 $13,800 $13,919 $14,187
Jun-93 $13,640 $14,235 $14,407
Jul-93 $13,784 $14,327 $14,524
Aug-93 $14,307 $14,656 $15,018
Sep-93 $14,198 $14,707 $14,992
Oct-93 $14,491 $14,768 $15,193
Nov-93 $14,353 $14,601 $15,110
Dec-93 $14,527 $14,665 $15,530
Jan-94 $15,021 $14,885 $16,002
Feb-94 $14,613 $14,560 $16,772
Mar-94 $13,976 $14,204 $15,178
Apr-94 $14,155 $14,088 $15,127
May-94 $14,387 $14,059 $15,191
Jun-94 $14,036 $14,027 $15,011
Jul-94 $14,496 $14,307 $15,297
Aug-94 $15,090 $14,313 $15,622
Sep-94 $14,721 $14,148 $15,336
Oct-94 $15,052 $14,133 $15,284
Nov-94 $14,504 $14,107 $14,903
Dec-94 $14,719 $14,201 $14,939
Jan-95 $15,100 $14,475 $14,884
Feb-95 $15,688 $14,609 $15,343
Mar-95 $16,160 $14,908 $15,565
Apr-95 $16,625 $15,115 $15,776
May-95 $17,289 $15,749 $16,240
Jun-95 $17,690 $15,875 $16,339
Jul-95 $18,276 $15,813 $16,652
Aug-95 $18,322 $16,015 $16,723
Sep-95 $19,095 $16,179 $16,965
Oct-95 $19,026 $16,416 $16,865
Nov-95 $19,861 $16,687 $17,367
Dec-95 $20,243 $16,933 $17,585
Jan-96 $20,932 $17,038 $17,818
Feb-96 $21,126 $16,676 $17,818
Mar-96 $21,329 $16,536 $18,109
Apr-96 $21,643 $16,422 $18,328
May-96 $22,199 $16,394 $18,606
Jun-96 $22,283 $16,614 $18,607
Jul-96 $21,298 $16,652 $19,062
Aug-96 $21,748 $16,611 $18,312
Sep-96 $22,970 $16,908 $18,911
Oct-96 $23,604 $17,300 $19,588
Nov-96 $25,386 $17,618 $20,563
Dec-96 $24,883 $17,423 $20,467
Jan-97 $26,436 $17,444 $20,856
Feb-97 $26,645 $17,480 $21,042
Mar-97 $25,553 $17,272 $20,475
</TABLE>
The accompanying chart compares the performance of the Stagecoach Balanced Fund
Institutional Class shares since the inception of the Predecessor Fund with the
S&P 500 Index and the Lehman Brothers Government/Corporate Bond Index. The chart
assumes a hypothetical $10,000 initial investment in Institutional Class Shares
and reflects all operating expenses. 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 Government/Corporate Bond Index is
an unmanaged index. Please note that the Fund is a professionally managed mutual
fund. The indexes presented here do not incur expenses and are not available
directly for investment. Had these indexes incurred operating expenses, their
performances would have been lower.
---------------------
5
<PAGE>
EQUITY VALUE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Institutional Class shares for the six-month period ended
March 31, 1997 was 15.73%. The one-year total return for the same share class
was 21.53%.
WHAT IS "VALUE" INVESTING? HOW DOES IT DIFFER FROM "GROWTH" STRATEGIES?
Value investing is a disciplined, opportunistic approach to buying stocks that
are perceived to be priced inexpensively relative to earnings, book value or
cash flow. Specifically, we look for stocks that are ranked in the lowest
quintile of the market by price-to-earnings ratio. Growth fund managers focus
primarily on the anticipated rate of earnings growth in companies and typically
are prepared to pay a higher price for stocks compared to a value strategy.
WHY HAS THE RECENT PERIOD BEEN SO FAVORABLE FOR VALUE STRATEGIES?
Value strategies benefited from investor concerns over the recent high
valuations on stocks in general. Many investors were, and remain, concerned that
underlying fundamentals do not justify the high prices many issues are enjoying.
Value strategies seek stocks selling for less than their intrinsic value. Many
investors who were nervous about high stock prices found value strategies to be
a relatively attractive way to participate in the equity markets.
WHAT MAKES LARGE COMPANY STOCKS ATTRACTIVE TO THE FUND?
The Fund is allowed to invest in a broad range of company, or "cap," sizes.
There is no strict mandate to favor large cap companies. That being said, there
are some advantages for the Fund in large cap investing. For one, larger cap
companies have a greater margin of safety by virtue of their sheer size. The
market may still over-react to bad news by pricing the stock too low, but the
problem is rarely fatal to the company. There is also a greater element of
visibility in larger companies where their missteps or corporate problems get
scrutiny from a wider audience. Hence, the urgency to fix problems is often
intensified for management.
ACCORDING TO THE FUND'S VALUE STRATEGY, WHEN DO YOU SELL A STOCK?
By definition, a value opportunity exists when a stock is priced cheaply
relative to its intrinsic value or some other measure of valuation. Therefore,
it is time to sell a stock when we believe it has reached its fair or intrinsic
valuation. As a practical matter, when we purchase a stock, we are expecting a
change to occur that will drive valuation up toward fair or intrinsic value.
When that change has occurred, we typically sell the stock. Of course, there is
always the possibility of a negative change occurring; if that happens, we
re-evaluate our original thinking.
- ---------------------
6
<PAGE>
EQUITY VALUE FUND
HOW DOES A VALUE STRATEGY FUNCTION DURING A MARKET DECLINE? DOES THE FUND ADOPT
A DEFENSIVE POSITION?
A value strategy may act as a buffer in a market decline. Historically, most
value strategies focus on companies with solid fundamentals to find stocks that
are undervalued. Since this approach is by nature somewhat defensive, we
generally do not adopt a defensive position during a market decline.
DESCRIBE SOME OF THE FACTORS THAT CAUSE YOU TO SELECT ONE STOCK OVER ANOTHER?
Once we have identified a pool of stocks that is trading at a low
price-to-earnings ratio, we look for several other factors that make the stock
compelling. These factors can be grouped into two categories: catalysts and
management issues. Stocks are evaluated based on potential for a catalyst to
create a positive event over the next 6-12 months. Events can be from the usual
areas like earnings or sales, or from unusual areas, like settlement of
regulatory or litigation issues. The management factor is critical to our
success: we look for management that can articulate a clear, concise business
strategy and has a plan to implement the strategy. We also want management to
have an ownership stake and an incentive to drive the share price higher.
DO YOU LOOK AT PARTICULAR SECTORS? WHICH SECTORS HAVE DONE WELL? WHICH WERE
DISAPPOINTING?
We do not look at sectors, except to be sure that a portfolio does not have an
imprudently high weight in any single sector relative to the market. The
financial sector has performed very well over the past several years,
particularly in a strong economy with credit recovery and consolidation in the
industry. Basic Industrials have been disappointing as a broad sector, but
specific companies within the sector have performed very well.
HOW HAS THE CHANGE IN INVESTMENT ADVISER TO WELLS FARGO BANK AFFECTED THE FUND?
There has been no significant change to the investment objectives of the Fund.
The Fund is operated under the original value investment style that was used
when the Predecessor Fund was launched in 1990.
---------------------
7
<PAGE>
EQUITY VALUE FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Average Annual Total Returns 21.53% 16.84% 16.53% 14.28%
- -----------------------------------------------------------------------------------------
</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 periods.
Institutional Class performance reflects Pacifica Equity Value Fund
Institutional Class performance for periods prior to September 6, 1996.
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.
- ---------------------
8
<PAGE>
EQUITY VALUE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH EQUITY VALUE
FUND
S&P 500 INDEX INSTITUTIONAL CLASS SHARES
<S> <C> <C>
Inception $10,000 $10,000
Jul-90 $9,968 $9,950
Aug-90 $9,067 $8,870
Sep-90 $8,626 $8,480
Oct-90 $8,589 $8,390
Nov-90 $9,144 $8,994
Dec-90 $9,399 $9,306
Jan-91 $9,808 $9,581
Feb-91 $10,510 $10,190
Mar-91 $10,764 $10,485
Apr-91 $10,790 $10,373
May-91 $11,255 $10,699
Jun-91 $10,740 $10,188
Jul-91 $11,240 $10,630
Aug-91 $11,506 $10,886
Sep-91 $11,314 $10,773
Oct-91 $11,466 $10,846
Nov-91 $11,004 $10,186
Dec-91 $12,262 $11,241
Jan-92 $12,034 $11,400
Feb-92 $12,190 $11,611
Mar-92 $11,953 $11,463
Apr-92 $12,304 $11,739
May-92 $12,364 $11,601
Jun-92 $12,180 $11,379
Jul-92 $12,678 $11,720
Aug-92 $12,418 $11,325
Sep-92 $12,564 $11,507
Oct-92 $12,607 $11,647
Nov-92 $13,037 $12,151
Dec-92 $13,197 $12,426
Jan-93 $13,307 $12,890
Feb-93 $13,488 $13,100
Mar-93 $13,773 $13,609
Apr-93 $13,440 $13,387
May-93 $13,800 $13,831
Jun-93 $13,840 $13,997
Jul-93 $13,784 $14,153
Aug-93 $14,307 $14,811
Sep-93 $14,198 $14,755
Oct-93 $14,491 $15,002
Nov-93 $14,353 $14,957
Dec-93 $14,527 $15,634
Jan-94 $15,021 $16,305
Feb-94 $14,613 $16,141
Mar-94 $13,976 $15,438
Apr-94 $14,155 $15,501
May-94 $14,387 $15,654
Jun-94 $14,035 $15,330
Jul-94 $14,496 $15,662
Aug-94 $15,090 $16,160
Sep-94 $14,721 $15,860
Oct-94 $15,052 $15,771
Nov-94 $14,504 $15,206
Dec-94 $14,719 $15,367
Jan-95 $15,100 $15,202
Feb-95 $15,688 $15,792
Mar-95 $16,150 $16,204
Apr-95 $16,625 $16,646
May-95 $17,289 $17,157
Jun-95 $17,690 $17,268
Jul-95 $18,276 $17,976
Aug-95 $18,322 $18,045
Sep-95 $19,095 $18,490
Oct-95 $19,026 $18,100
Nov-95 $19,861 $18,908
Dec-95 $20,243 $19,112
Jan-96 $20,932 $19,476
Feb-96 $21,126 $19,724
Mar-96 $21,329 $20,264
Apr-96 $21,643 $20,689
May-96 $22,199 $21,011
Jun-96 $22,283 $20,836
Jul-96 $21,298 $19,895
Aug-96 $21,748 $20,380
Sep-96 $22,970 $21,280
Oct-96 $23,604 $22,339
Nov-96 $25,386 $24,122
Dec-96 $24,883 $24,213
Jan-97 $26,436 $25,166
Feb-97 $26,645 $25,540
Mar-97 $25,553 $24,627
</TABLE>
The accompanying chart compares the performance of the Stagecoach Equity Value
Fund Institutional Class shares since the inception of the Predecessor Fund with
the S&P 500 Index. The chart assumes a hypothetical $10,000 initial investment
in the Institutional Class Shares and reflects all operating expenses. 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, while the Fund is a
professionally managed mutual fund. The index presented here does not incur
expenses and is not available directly for investment. Had this index incurred
operating expenses, its performance would have been lower.
---------------------
9
<PAGE>
GROWTH AND INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Institutional Class shares for the six-month period ended
March 31, 1997 was 7.92%. The one-year total return for the same share class was
13.88%.
HOW HAS THE FUND CAPTURED RETURNS? DID CERTAIN SECTORS DO WELL FOR THE FUND?
The fund has benefited from its positions in both the financial and technology
sectors. In the financial sector there was consolidation among banks and
increased productivity due to investment in technology. The technology sector
also continued to do well despite some short-term setbacks, and we continue to
be optimistic about its long range growth potential.
THE MARKET DECLINED SUBSTANTIALLY IN MARCH AND APRIL 1997. WHAT CAUSED THIS? HOW
HAS THE FUND REACTED?
Much of the market decline in March and April can be attributed to the recent
Federal Reserve increase in the federal funds target rate. The perception that
the economy is growing too fast and that accelerated inflation is on the horizon
contributed to the Fed's decision to act now rather than later. The Fund has
reacted by, among other things, reducing its exposure to stocks in sectors such
as banking which typically underperform in a rising interest rate environment,
and which appear to us to be over-valued according to its price-to-earnings
ratios or other measures. Overall, we believe the recent market slide to be a
relatively short-term phenomenon. We believe the market will adjust to the new
interest rate environment and that high growth sectors will continue to emerge.
WHAT IS THE DIFFERENCE BETWEEN A "VALUE" AND "GROWTH" STRATEGY? IS THIS A PURELY
"GROWTH" FUND?
A growth strategy focuses on stocks that have, or are expected to have, strong
earnings gains. Such stocks tend to have relatively high valuations, as measured
by price-to-book ratios and price-to-earnings ratios. Growth stocks often pay
low or no dividends since growth companies tend to reinvest profits into
expansion and development. While growth stocks have historically outperformed
other categories over time, they present investors with potentially higher risks
and greater volatility. Value strategies, by contrast, try to find stocks that
are selling for less than their intrinsic worth. A commonly used measure of a
value stock is to contrast its price with its earnings performance. Value
strategies believe that a stock will eventually rise to a price appropriate to
its earnings potential. This Fund focuses on stocks with growth characteristics,
but investments in undervalued stocks are made where it has been determined that
expectations meet the Fund's growth and other criteria.
- ---------------------
10
<PAGE>
GROWTH AND INCOME FUND
HOW DO YOU DECIDE THAT THE TIME HAS COME TO SELL A HOLDING?
A stock may be sold based on any one or a combination of factors. These factors
include a negative change in a company's fundamentals; significant appreciation
in the stock price relative to that company's expected future growth rate, which
would suggest that the stock has become overvalued; a short-term price gain
significant enough to warrant profit taking; or a more compelling investment
opportunity in another company.
WHAT IS MEANT BY "BOTTOM-UP" INVESTING? WHAT DISTINGUISHES A MANAGEMENT TEAM?
"Bottom-up" investing refers to an investment style where stocks are bought and
sold based on company-specific information and outlook without particular regard
to general economic trends. While the Fund's investments are made almost
entirely using "bottom up" practices, attention is paid to "top down" practices
as prudence dictates. An example of a top down decision would be paring down
financial stocks during a rising interest rate environment. A bottom up decision
might be to buy a particular financial stock regardless of interest rates
because the company's fundamentals make it attractive.
We assess company's management primarily on incentive compensation and
management ownership. Compensation should be based on stock performance by, for
example, granting stock options. Management ownership is also a key factor in
ensuring that management's interests are aligned with shareholders.
WALL STREET TENDS TO VOTE REPUBLICAN, YET THE MARKET RALLIED AFTER PRESIDENT
CLINTON WAS RE-ELECTED. IS THE EFFECT OF PRESIDENTIAL ELECTIONS ON THE STOCK
MARKET OVERSTATED?
Presidential election results have economic and market impact, however, we
believe their direct effect on the economy is muted. The economy, from a policy
perspective, is driven more by Federal Reserve policy, tax policy, and spending
trends, among others, each of which are affected by all three branches of the
Federal government.
---------------------
11
<PAGE>
GROWTH AND INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 8/2/90
1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Average Annual Total Returns 13.88% 17.33% 14.02% 14.45%
- ---------------------------------------------------------------------------------------
</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 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
Institutional Class Shares commenced operations on September 6, 1996. The
performance figures shown for the Institutional Class shares for periods prior
to September 6, 1996, include the performance of the Predecessor Fund and
expenses of the Fund's Class A shares 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.
- ---------------------
12
<PAGE>
GROWTH AND INCOME FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH GROWTH & INCOME
S&P 500 INDEX INSTITUTIONAL CLASS SHARES
<S> <C> <C>
Inception $10,000 $10,000
Aug-90 $9,096 $10,060
Sep-90 $8,653 $10,080
Oct-90 $8,617 $10,130
Nov-90 $9,174 $10,170
Dec-90 $9,429 $10,290
Jan-91 $9,840 $10,680
Feb-91 $10,543 $11,080
Mar-91 $10,799 $11,210
Apr-91 $10,824 $11,250
May-91 $11,291 $11,710
Jun-91 $10,774 $11,140
Jul-91 $11,276 $11,710
Aug-91 $11,543 $12,000
Sep-91 $11,350 $11,880
Oct-91 $11,503 $12,090
Nov-91 $11,039 $11,570
Dec-91 $12,302 $12,840
Jan-92 $12,073 $12,780
Feb-92 $12,229 $13,020
Mar-92 $11,991 $12,764
Apr-92 $12,343 $13,106
May-92 $12,404 $13,277
Jun-92 $12,219 $12,960
Jul-92 $12,718 $13,577
Aug-92 $12,458 $13,314
Sep-92 $12,604 $13,512
Oct-92 $12,648 $13,766
Nov-92 $13,079 $14,284
Dec-92 $13,239 $14,566
Jan-93 $13,350 $14,934
Feb-93 $13,532 $14,619
Mar-93 $13,817 $14,909
Apr-93 $13,483 $14,551
May-93 $13,844 $14,888
Jun-93 $13,885 $14,609
Jul-93 $13,829 $14,504
Aug-93 $14,353 $15,245
Sep-93 $14,243 $15,241
Oct-93 $14,538 $15,761
Nov-93 $14,399 $15,389
Dec-93 $14,573 $15,796
Jan-94 $15,069 $16,407
Feb-94 $14,660 $16,150
Mar-94 $14,021 $15,225
Apr-94 $14,201 $15,408
May-94 $14,434 $15,397
Jun-94 $14,080 $15,048
Jul-94 $14,542 $15,512
Aug-94 $15,138 $16,008
Sep-94 $14,768 $15,807
Oct-94 $15,100 $15,937
Nov-94 $14,550 $15,450
Dec-94 $14,766 $15,750
Jan-95 $15,149 $15,828
Feb-95 $15,738 $16,588
Mar-95 $16,202 $16,941
Apr-95 $16,679 $17,188
May-95 $17,344 $17,983
Jun-95 $17,747 $18,416
Jul-95 $18,335 $18,956
Aug-95 $18,381 $19,249
Sep-95 $19,156 $19,909
Oct-95 $19,088 $19,289
Nov-95 $19,925 $20,056
Dec-95 $20,309 $20,302
Jan-96 $20,999 $20,749
Feb-96 $21,194 $21,549
Mar-96 $21,398 $21,597
Apr-96 $21,712 $22,362
May-96 $22,270 $22,951
Jun-96 $22,355 $22,452
Jul-96 $21,367 $21,061
Aug-96 $21,818 $21,714
Sep-96 $23,044 $22,790
Oct-96 $23,680 $23,517
Nov-96 $25,468 $25,057
Dec-96 $24,964 $24,664
Jan-97 $26,521 $26,211
Feb-97 $26,731 $25,492
Mar-97 $25,635 $24,594
</TABLE>
The accompanying chart compares the performance of the Stagecoach Growth and
Income Fund Institutional Class shares since the inception of the Predecessor
Fund with the S&P 500 Index. The chart assumes a hypothetical $10,000 initial
investment in the Fund and reflects all operating expenses. 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, while the Fund is a
professionally managed mutual fund. The index presented here does not incur
expenses and is not directly available for investment. Had this index incurred
operating expenses, its performance would have been lower.
---------------------
13
<PAGE>
SMALL CAP FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WERE THE FUND'S TOTAL RETURNS?
The total return for Institutional Class shares for the six-month period ended
March 31, 1997 was -15.32%. The one-year total return for the same share class
was -5.94%.
THE FUND HAS BEEN EXPERIENCING SOME SETBACKS RECENTLY. WHAT ARE SOME OF THE
FACTORS AFFECTING THE FUND'S PERFORMANCE?
The largest factor affecting the Fund's performance has been the flow of
investment dollars into large company stocks rather than the smaller
capitalization "growth" stocks the Fund invests in. This move to large company
stocks has been fueled, in part, by fears of higher inflation and slower
economic growth. One of the ways in which these concerns have manifested
themselves has been in investor anxiety over earnings reports. To some extent, a
company's earnings and potential future earnings are what justify its high stock
prices. If earnings disappointments occur, prices can drop substantially,
particularly if there has also been a recent high rate of economic growth. Also,
if investors are nervous about general trends, not enough "good news" can be
perceived as "bad news.".
HAS THE DECLINE IN THESE SECTORS CHANGED YOUR FUNDAMENTAL OUTLOOK?
No. We are still very optimistic in our outlook for small cap stocks. In our
opinion, the underlying foundation for the bull market -- low inflation and
solid earnings growth -- remains intact. In fact, in our view the earnings
growth prospects for many smaller companies are especially attractive given
their current reduced valuations. The predicted timing of a turnaround is
difficult, but a catalyst such as lower interest rates, a balanced budget
amendment or strong cash flows into small cap mutual funds could propel the
entire group higher.
WHAT ARE THE SPECIAL PROBLEMS FACED BY A SMALL CAP FUND DURING A GENERAL MARKET
DECLINE? IS THERE A POTENTIAL LIQUIDITY PROBLEM AS MONEY RETREATS TO "SAFER"
INVESTMENTS?
A large part of the recent decline has been due to the lack of liquidity in
small cap stocks. However, small cap stocks are always less liquid than larger
cap issues, even when the market is going up. Due to the relatively small size
of this Fund, liquidity has not been a major problem in selling holdings or
establishing new positions.
- ---------------------
14
<PAGE>
SMALL CAP FUND
THE FUND IS REQUIRED TO SELL A COMPANY'S STOCK WHEN THE COMPANY REACHES TWO
BILLION DOLLARS IN CAPITALIZATION. SHORT OF REACHING THAT FIGURE, WHAT ARE SOME
OTHER FACTORS IN YOUR "SELL DISCIPLINE"?
We continually review our holdings and will sell for a variety of reasons. Some
of the key reasons might include a negative change in a company's fundamentals,
a stock price becomes significantly overvalued relative to its expected growth
rate, a concern about the management team or its effectiveness, or a more
compelling opportunity in another stock presents itself elsewhere.
WHAT ARE YOU LOOKING FOR IN A COMPANY'S MANAGEMENT TEAM?
Management is an important criterion we use when evaluating a company. Due to
the smaller size of the companies we buy, the ability of management is very
instrumental in our decision when buying a stock. We expect management to own a
substantial amount of stock and have their bonuses tied to the earnings of the
company and/or the performance of the stock.
---------------------
15
<PAGE>
SMALL CAP FUND
- ---------------------
PERFORMANCE AT A GLANCE
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/1/94
1 YEAR INCEPTION
<S> <C> <C>
- -------------------------------------------------------------------------------------
Average Annual Total Returns (5.94)% 30.45%
- -------------------------------------------------------------------------------------
</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.
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 September 16, 1996 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 Institutional Class 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.
- ---------------------
16
<PAGE>
SMALL CAP FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH SMALL CAP FUND
INSTITUTIONAL CLASS
S&P 500 INDEX SHARES
<S> <C> <C>
Inception $10,000 $10,000
Nov-94 $9,636 $10,120
Dec-94 $9,779 $10,560
Jan-95 $10,032 $10,590
Feb-95 $10,423 $11,170
Mar-95 $10,730 $11,770
Apr-95 $11,046 $12,100
May-95 $11,486 $12,370
Jun-95 $11,753 $13,670
Jul-95 $12,142 $15,170
Aug-95 $12,173 $15,200
Sep-95 $12,686 $16,150
Oct-95 $12,641 $15,650
Nov-95 $13,195 $17,150
Dec-95 $13,449 $17,910
Jan-96 $13,907 $18,260
Feb-96 $14,036 $19,320
Mar-96 $14,171 $20,210
Apr-96 $14,379 $22,910
May-96 $14,748 $24,680
Jun-96 $14,805 $22,830
Jul-96 $14,150 $19,490
Aug-96 $14,449 $21,580
Sep-96 $15,261 $22,450
Oct-96 $15,682 $20,930
Nov-96 $16,866 $21,430
Dec-96 $16,532 $22,110
Jan-97 $17,564 $22,440
Feb-97 $17,702 $20,430
Mar-97 $16,977 $19,010
</TABLE>
The accompanying chart compares the performance of the Stagecoach Small Cap Fund
Institutional Class shares since the inception of the Predecessor Fund with the
S&P 500 Index. The chart assumes a hypothetical $10,000 initial investment in
the Fund and reflects all operating expenses. 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. Please note that the Fund is a
professionally managed mutual fund. The index presented here does not incur
expenses and is not directly available for investment. Had this index incurred
operating expenses, its performance would have been lower.
---------------------
17
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
18
<PAGE>
BALANCED FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 55.88%
AEROSPACE - 2.23%
30,000 Rockwell International Corp $ 1,470,664 $ 1,946,250
AUTOMOBILE & RELATED - 2.55%
20,000 Dana Corp $ 611,600 $ 657,500
50,000 Ford Motor Co 1,488,375 1,568,750
------------ --------------
$ 2,099,975 $ 2,226,250
BASIC INDUSTRIES - 1.34%
60,000 Crompton & Knowles Corp $ 806,100 $ 1,170,000
BUILDING MATERIALS & SERVICES - 1.79%
25,000 Willamette Industries Inc $ 1,482,497 $ 1,562,501
CAPITAL GOODS - 3.57%
13,000 Harris Corp $ 1,015,020 $ 999,375
20,386 Kennametal Inc 755,673 738,993
30,000 Lancaster Colony Corp 1,153,749 1,380,000
------------ --------------
$ 2,924,442 $ 3,118,368
COMPUTER SYSTEMS - 1.10%
7,000 International Business Machines Corp $ 741,405 $ 961,625
ELECTRICAL EQUIPMENT - 3.62%
75,000 Lexmark International Group Inc Class A+ $ 1,540,482 $ 1,818,750
30,000 Seagate Technology Inc+ 662,310 1,346,250
------------ --------------
$ 2,202,792 $ 3,165,000
</TABLE>
---------------------
19
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 6.23%
12,000 Atlantic Richfield Corp $ 1,417,555 $ 1,620,000
20,000 Cabot Corp 539,980 480,000
5,000 Mobil Corp 426,878 653,125
6,000 Royal Dutch Petroleum Co ADR (Netherlands) 676,918 1,050,000
15,000 Texaco Inc 1,135,095 1,642,500
------------ --------------
$ 4,196,426 $ 5,445,625
FINANCE & RELATED - 12.57%
24,000 Aetna Inc $ 1,545,404 $ 2,061,000
35,800 American Bankers Insurance Group 831,325 1,745,250
15,000 BankAmerica Corp 696,817 1,511,250
10,400 Chase Manhattan Bank 358,200 973,700
155,975 Mercury Financial Corp 373,265 409,434
30,000 NationsBank 928,277 1,661,250
29,400 Providian Corp 896,770 1,572,900
22,000 Travelers Group Inc 363,350 1,053,250
------------ --------------
$ 5,993,408 $ 10,988,034
FOOD & RELATED - 3.02%
76,000 Archer-Daniels-Midland Co $ 1,401,076 $ 1,358,500
11,200 Philip Morris Co Inc 627,548 1,278,200
------------ --------------
$ 2,028,624 $ 2,636,700
GENERAL BUSINESS & RELATED - 3.87%
51,000 Fremont General Corp $ 959,354 $ 1,434,375
10,000 General Electric Co 490,585 992,500
22,000 Hercules Inc 994,218 929,500
812 NCR Corp 26,986 28,623
------------ --------------
$ 2,471,143 $ 3,384,998
HEALTHCARE - 1.29%
40,000 Health System International Class A+ $ 1,038,824 $ 1,125,000
</TABLE>
- ------------------------
20
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 2.61%
37,600 Unisource Worldwide Inc $ 737,909 $ 578,100
70,000 United Dominion Industries 1,684,599 1,706,250
------------ --------------
$ 2,422,508 $ 2,284,350
PHARMACEUTICALS - 2.38%
26,000 Bristol-Myers Squibb Co $ 766,374 $ 1,534,000
15,000 Pharmacia and Upjohn Inc 397,019 549,375
------------ --------------
$ 1,163,393 $ 2,083,375
RETAIL & RELATED - 3.00%
40,000 Costco Companies Inc+ $ 614,455 $ 1,105,000
36,000 Rite Aid Corp 1,065,539 1,512,000
------------ --------------
$ 1,679,994 $ 2,617,000
TELECOMMUNICATIONS - 1.93%
15,000 AT & T Corp $ 608,440 $ 521,250
25,000 GTE Corp 827,406 1,165,625
------------ --------------
$ 1,435,846 $ 1,686,875
UTILITIES - 2.78%
35,000 Cinergy Corp $ 1,087,820 $ 1,194,375
28,000 Duke Power Co 1,315,937 1,235,500
------------ --------------
$ 2,403,757 $ 2,429,875
TOTAL COMMON STOCKS $ 36,561,798 $ 48,831,826
</TABLE>
---------------------
21
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 11.89%
BANK & FINANCE - 5.66%
$ 1,000,000 Associates Corp of America 6.32 % 02/28/00 $ 983,750
2,000,000 General Motors Acceptance Corp 6.88 07/15/01 1,975,000
1,000,000 Norwest Corp 7.13 04/01/00 1,006,250
1,000,000 Societe Generale 7.40 06/01/06 981,250
--------------
$ 4,946,250
FOREIGN CORPORATE BONDS - 4.38%
$ 1,000,000 Bank of Austria 7.25 % 02/15/17 $ 957,500
1,500,000 Ontario, Province of 7.38 01/27/03 1,515,000
1,500,000 Quebec, Province of 7.13 02/09/24 1,359,375
--------------
$ 3,831,875
INDUSTRIALS - 1.85%
$ 1,500,000 BP America Inc 9.38 % 11/01/00 $ 1,612,500
--------------
TOTAL CORPORATE BONDS & NOTES $ 10,390,625
(Cost $10,532,385)
U.S. GOVERNMENT AGENCY SECURITIES - 14.84%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.75%
$ 157,669 FHLMC # 546103 10.50 % 08/01/19 $ 170,243
119,844 FHLMC #22-0009 8.25 08/01/01 121,790
231,359 FHLMC #291786 8.50 01/01/09 238,240
119,746 FHLMC #303407 8.50 12/01/02 122,076
--------------
$ 652,349
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 8.18%
$ 550,351 FNMA #190526 6.00 % 01/01/01 $ 536,641
513,518 FNMA #190588 6.50 01/01/09 497,609
5,863,960 FNMA #351092 7.50 07/01/26 5,757,177
239,717 FNMA #57843 8.00 06/01/08 244,504
</TABLE>
- ------------------------
22
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES (CONTINUED)
$ 8,421 FNMA #75336 9.50 % 02/01/09 $ 9,027
100,181 FNMA #83785 8.00 08/01/18 102,164
--------------
$ 7,147,122
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.91%
$ 1,151,052 GNMA #376200 9.00 % 06/15/25 $ 1,206,762
1,549,571 GNMA #403934 9.00 08/15/24 1,628,119
990,398 GNMA #423225 6.50 04/15/26 917,792
1,480,780 GNMA #426993 7.00 05/15/26 1,413,405
--------------
$ 5,166,078
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 12,965,549
(Cost $12,985,658)
U.S. TREASURY SECURITIES - 15.75%
U.S. TREASURY BONDS - 3.24%
$ 1,500,000 U.S. Treasury Bonds 6.25 % 08/15/23 $ 1,329,135
1,500,000 U.S. Treasury Bonds 7.25 05/15/16 1,506,795
--------------
$ 2,835,930
U.S. TREASURY NOTES - 12.51%
$ 4,500,000 U.S. Treasury Notes 6.25 % 02/15/03 $ 4,377,645
5,000,000 U.S. Treasury Notes 6.38 01/15/99 5,000,000
1,500,000 U.S. Treasury Notes 7.50 02/15/05 1,551,795
--------------
$ 10,929,440
TOTAL U.S. TREASURY SECURITIES $ 13,765,370
(Cost $14,039,943)
</TABLE>
---------------------
23
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 2.31%
REPURCHASE AGREEMENTS - 2.31%
$ 887,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50 04/01/97 $ 887,000
1,127,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.30 04/01/97 1,127,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 2,014,000
(Cost $2,014,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $76,133,784)* (Notes 1 and 3) 100.67% $ 87,967,370
Other Assets and Liabilities, Net (0.67) (581,952)
------ --------------
TOTAL NET ASSETS 100.00% $ 87,385,418
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 12,894,489
Gross Unrealized Depreciation (1,060,903)
------------
NET UNREALIZED APPRECIATION $ 11,833,586
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
24
<PAGE>
EQUITY VALUE FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.29%
AUTOMOBILE & RELATED - 4.04%
75,000 Dana Corp $ 2,227,625 $ 2,465,625
200,000 Ford Motor Co 5,957,750 6,275,000
------------ --------------
$ 8,185,375 $ 8,740,625
BASIC INDUSTRIES - 1.08%
120,000 Crompton & Knowles Corp $ 1,689,000 $ 2,340,000
BUILDING MATERIALS & SERVICES - 2.31%
80,000 Willamette Industries Inc $ 4,660,420 $ 4,999,998
CAPITAL GOODS - 5.73%
33,000 Harris Corp $ 2,576,588 $ 2,536,875
81,737 Kennametal Inc 3,024,606 2,962,966
150,000 Lancaster Colony Corp 5,636,866 6,900,000
------------ --------------
$ 11,238,060 $ 12,399,841
COMPUTER SYSTEMS - 2.22%
35,000 International Business Machines Corp $ 3,669,090 $ 4,808,125
ELECTRICAL EQUIPMENT - 7.52%
270,000 Lexmark International Group Inc Class A+ $ 5,411,711 $ 6,547,500
150,000 Seagate Technology Inc+ 2,401,265 6,731,250
160,000 Technitrol Inc 1,672,138 3,000,000
------------ --------------
$ 9,485,114 $ 16,278,750
ENERGY & RELATED - 10.58%
25,000 Atlantic Richfield Corp $ 2,953,240 $ 3,375,000
93,000 Cabot Corp 2,510,907 2,232,000
60,000 Exxon Corp 4,121,284 6,465,000
30,000 Mobil Corp 2,118,677 3,918,750
</TABLE>
---------------------
25
<PAGE>
EQUITY VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
24,000 Royal Dutch Petroleum Co ADR (Netherlands) $ 2,517,208 $ 4,200,000
24,890 Texaco Inc 1,571,829 2,725,455
------------ --------------
$ 15,793,145 $ 22,916,205
FINANCE & RELATED - 21.50%
90,000 Aetna Inc $ 6,017,961 $ 7,728,750
90,300 American Bankers Insurance Group 2,146,794 4,402,125
55,000 BankAmerica Corp 2,392,460 5,541,250
27,040 Chase Manhattan Bank 930,320 2,531,620
150,000 Edwards A G & Sons Inc 3,872,426 4,612,500
40,000 First Union Corp 1,969,173 3,245,000
692,861 Mercury Financial Corp 1,658,090 1,818,760
120,000 NationsBank 3,354,162 6,645,000
68,000 Providian Corp 2,058,634 3,638,000
41,900 Republic New York Corp 1,744,592 3,692,438
56,400 Travelers Group Inc 607,005 2,700,150
------------ --------------
$ 26,751,617 $ 46,555,593
FOOD & RELATED - 4.52%
300,000 Archer-Daniels-Midland Co $ 5,545,536 $ 5,362,500
38,700 Philip Morris Co Inc 2,113,537 4,416,638
------------ --------------
$ 7,659,073 $ 9,779,138
GENERAL BUSINESS & RELATED - 6.64%
202,550 Fremont General Corp $ 4,586,181 $ 5,696,719
45,000 General Electric Co 1,872,602 4,466,250
94,000 Hercules Inc 4,248,021 3,971,500
6,687 NCR Corp 216,644 235,717
------------ --------------
$ 10,923,448 $ 14,370,186
HEALTHCARE - 2.21%
170,000 Health System International Class A+ $ 4,428,165 $ 4,781,250
</TABLE>
- ------------------------
26
<PAGE>
EQUITY VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 6.55%
40,000 Johnson Controls Inc $ 2,360,389 $ 3,220,000
197,300 Owens-Illinois Inc+ 1,951,269 4,858,513
144,000 Unisource Worldwide Inc 2,854,995 2,214,000
160,000 United Dominion Industries 3,560,866 3,900,000
------------ --------------
$ 10,727,519 $ 14,192,513
PHARMACEUTICALS - 3.19%
80,000 Bristol-Myers Squibb Co $ 2,389,411 $ 4,720,000
60,000 Pharmacia and Upjohn Inc 1,588,076 2,197,500
------------ --------------
$ 3,977,487 $ 6,917,500
RETAIL & RELATED - 9.55%
250,000 Costco Companies Inc+ $ 3,676,250 $ 6,906,250
220,000 Rite Aid Corp 6,553,900 9,240,000
90,000 Sears Roebuck & Co 3,257,400 4,522,500
------------ --------------
$ 13,487,550 $ 20,668,750
TELECOMMUNICATIONS - 2.47%
60,000 AT & T Corp $ 2,471,839 $ 2,085,000
70,000 GTE Corp 2,314,373 3,263,750
------------ --------------
$ 4,786,212 $ 5,348,750
TRANSPORTATION - 2.28%
43,694 Conrail Inc $ 3,128,228 $ 4,926,499
UTILITIES - 3.90%
100,000 Cinergy Corp $ 2,838,307 $ 3,412,500
114,000 Duke Power Co 5,357,745 5,030,250
------------ --------------
$ 8,196,052 $ 8,442,750
TOTAL COMMON STOCKS $148,785,555 $ 208,466,473
</TABLE>
---------------------
27
<PAGE>
EQUITY VALUE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 4.20%
REPURCHASE AGREEMENTS - 4.20%
$ 9,087,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50% 04/01/97 $ 9,087,000
(Cost $9,087,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $157,872,555)* (Notes 1 and 3) 100.49% $ 217,553,473
Other Assets and Liabilities, Net (0.49) (1,052,911)
------ --------------
TOTAL NET ASSETS 100.00% $ 216,500,562
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 62,103,108
Gross Unrealized Depreciation (2,422,190)
------------
NET UNREALIZED APPRECIATION $ 59,680,918
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
28
<PAGE>
GROWTH & INCOME FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.40%
ADVERTISING - 1.94%
126,600 Omnicom Group $ 3,398,779 $ 6,314,175
APPLIANCES AND FURNITURE - 3.09%
335,800 Sunbeam-Oster Co Inc $ 9,192,707 $ 10,074,000
AUTOMOBILE & RELATED - 2.99%
223,500 Danaher Corp $ 7,472,945 $ 9,303,188
1,400 General Motors Corp 78,576 77,525
6,800 General Motors Corp Class H 249,048 368,900
------------ --------------
$ 7,800,569 $ 9,749,613
BASIC INDUSTRIES - 8.49%
82,300 Aluminum Co of America $ 4,979,342 $ 5,596,400
51,800 Colgate-Palmolive Co 4,434,722 5,160,575
272,600 Monsanto Co 7,026,822 10,426,950
105,100 Nike Inc Class B 6,303,188 6,516,200
------------ --------------
$ 22,744,074 $ 27,700,125
COMMERCIAL SERVICES - 2.54%
278,400 Service Corp International $ 6,855,324 $ 8,282,400
COMPUTER SOFTWARE - 3.12%
200,400 First Data Corp $ 7,108,711 $ 6,788,550
88,100 Oracle Systems Corp+ 3,074,118 3,397,356
------------ --------------
$ 10,182,829 $ 10,185,906
</TABLE>
---------------------
29
<PAGE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SYSTEMS - 4.57%
77,100 Cisco Systems Inc+ $ 2,740,191 $ 3,710,438
45,000 Compaq Computer Corp+ 3,548,801 3,448,125
1,620 Lucent Technologies Inc 72,062 85,455
320,508 Reynolds & Reynolds Co Class A 7,362,715 7,652,129
------------ --------------
$ 13,723,769 $ 14,896,147
ELECTRICAL EQUIPMENT - 2.04%
114,400 Nokia Corp ADR Class A $ 7,053,686 $ 6,663,800
ENERGY & RELATED - 9.22%
4,000 Amoco Corp $ 238,775 $ 346,500
100,900 Anadarko Petroleum Corp 4,952,184 5,663,013
31,800 Mobil Corp 2,959,758 4,153,875
160,500 Reading & Bates Corp+ 3,222,520 3,631,313
5,600 Schlumberger Ltd 391,467 600,600
112,800 Sonat Inc 3,522,823 6,147,600
27,600 Texaco Inc 1,914,586 3,022,200
13,500 Tosco Corp 139,638 384,750
61,000 Transocean Offshore Inc 3,863,955 3,423,625
87,090 U.S. Filter Corp 2,760,059 2,688,904
------------ --------------
$ 23,965,765 $ 30,062,380
FINANCE & RELATED - 18.11%
99,100 Aetna Inc $ 6,900,742 $ 8,510,213
72,500 American International Group Inc 7,502,279 8,509,688
14,000 Bank of New York Inc 221,138 514,500
56,700 Cali Realty Corp 1,514,324 1,814,400
35,000 Chase Manhattan Bank 3,389,942 3,276,875
57,300 Citicorp 2,859,800 6,202,725
259,600 Federal Home Loan Mortgage Corp 5,520,651 7,074,100
5,600 Federal National Mortgage Assoc 107,503 202,300
95,600 Household International Inc 4,472,204 8,209,650
280,700 MBNA Corp 5,588,545 7,824,513
5,800 Mellon Bank Corp 201,183 421,950
</TABLE>
- ------------------------
30
<PAGE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
155,800 Schwab (Charles) Corp $ 3,587,770 $ 4,966,125
74,300 Security Capital Industrial Trust 1,515,312 1,551,013
------------ --------------
$ 43,381,393 $ 59,078,052
FOOD & RELATED - 1.85%
8,000 Albertson's Inc $ 244,280 $ 272,000
6,000 CPC International Inc 410,885 492,000
7,500 McDonald's Corp 225,889 354,375
43,099 Philip Morris Co Inc 3,378,447 4,918,673
------------ --------------
$ 4,259,501 $ 6,037,048
GENERAL BUSINESS & RELATED - 3.95%
198,400 Corning Inc $ 7,292,529 $ 8,804,000
154,100 Corrections Corp of America+ 4,910,883 3,736,925
312 NCR Corp 8,621 10,998
8,000 Tribune Co 243,338 324,000
------------ --------------
$ 12,455,371 $ 12,875,923
HEALTHCARE - 1.99%
37,500 Conseco Inc $ 1,477,856 $ 1,335,938
208,900 Tenet Healthcare Corp+ 4,398,678 5,144,163
------------ --------------
$ 5,876,534 $ 6,480,101
MANUFACTURING PROCESSING - 4.53%
84,100 Allied Signal Inc $ 3,446,740 $ 5,992,125
84,400 Harsco Corp 2,396,829 3,070,050
75,200 Potash Corp of Saskatchewan Inc 5,293,543 5,715,200
------------ --------------
$ 11,137,112 $ 14,777,375
MEDICAL EQUIPMENT & SUPPLIES - 2.31%
6,900 Abbott Laboratories $ 233,541 $ 387,263
165,800 Baxter International Inc 6,841,360 7,150,125
------------ --------------
$ 7,074,901 $ 7,537,388
</TABLE>
---------------------
31
<PAGE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS - 2.87%
6,500 Merck & Co Inc $ 247,132 $ 547,625
46,000 Rhone-Poulenc Rorer Inc 3,396,997 3,404,000
77,100 Smithkline Beecham Plc 3,980,499 5,397,000
------------ --------------
$ 7,624,628 $ 9,348,625
REAL ESTATE INVESTMENT TRUSTS - 4.75%
112,100 Amli Residential Properties $ 2,438,175 $ 2,578,300
59,400 Equity Residential Properties Trust 2,450,250 2,635,875
148,600 Patriot American Hospitality Inc 3,177,426 3,603,550
100,000 Spieker Properties Inc 2,929,145 3,900,000
71,400 Starwood Lodging Trust 3,213,000 2,784,600
------------ --------------
$ 14,207,996 $ 15,502,325
RETAIL & RELATED - 4.40%
584,200 Corporate Express Inc+ $ 9,994,560 $ 5,988,050
23,000 Costco Companies Inc+ 390,500 635,375
86,200 Gillette Co 4,699,326 6,260,275
6,000 Home Depot Inc 264,475 321,000
7,000 May Department Stores Co 295,624 318,500
6,000 Medtronic Inc 316,741 373,500
11,000 Walgreen Co 327,267 460,619
------------ --------------
$ 16,288,493 $ 14,357,319
SEMICONDUCTORS - 4.00%
46,800 Intel Corp $ 2,474,427 $ 6,511,050
87,000 Micron Technology Inc 3,411,895 3,523,500
50,000 Motorola Inc 3,109,932 3,018,750
------------ --------------
$ 8,996,254 $ 13,053,300
</TABLE>
- ------------------------
32
<PAGE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS - 9.51%
182,700 Alltel Corp $ 4,668,120 $ 5,937,750
5,000 AT & T Corp 174,782 173,750
490,500 Ericson Telefonaktiebolaget L M Class B ADR 10,341,438 16,585,031
170,000 NEXTEL Communications Class A+ 3,056,134 2,273,750
5,500 SBC Communication Inc 232,000 289,438
170,000 U.S. West Inc 5,087,740 5,780,000
------------ --------------
$ 23,560,214 $ 31,039,719
UTILITIES - 0.13%
11,000 NIPSCO Industries Inc $ 333,508 $ 431,750
------------ --------------
TOTAL COMMON STOCKS $260,113,407 $ 314,447,471
</TABLE>
---------------------
33
<PAGE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 0.55%
CONVERTIBLE CORPORATE BONDS - 0.55%
$ 1,790,000 U.S. Filter Corp 4.50% 12/15/01 $ 1,787,763
(Cost $1,790,000)
SHORT-TERM INSTRUMENTS - 3.37%
REPURCHASE AGREEMENTS - 3.37%
$ 3,206,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50% 04/01/97 $ 3,206,000
7,792,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.30 04/01/97 7,792,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 10,998,000
(Cost $10,998,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $272,901,407)* (Notes 1 and 3) 100.32% $ 327,233,234
Other Assets and Liabilities, Net (0.32) (1,036,454)
------ --------------
TOTAL NET ASSETS 100.00% $ 326,196,780
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 63,840,533
Gross Unrealized Depreciation (9,508,706)
------------
NET UNREALIZED APPRECIATION $ 54,331,827
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
34
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<TABLE>
<CAPTION>
EQUITY
BALANCED VALUE
FUND FUND
<S> <C> <C>
- -------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $87,967,370 $217,553,473
Cash 1,432 1,242
Receivables:
Dividends and Interest 518,912 221,538
Fund shares sold 0 162,684
Investment securities sold 26,479 0
Due from administrator (Note 2) 0 0
Organization expenses, net of
amortization 0 0
Prepaid expenses 29,123 32,996
TOTAL ASSETS 88,543,316 217,971,933
LIABILITIES
Payables:
Investment securities purchased 21,158 93,984
Distribution to shareholders 751,418 630,800
Fund shares redeemed 51,838 19,717
Due to sponsor and distributor (Note
2) 34,540 69,728
Due to WFB (Note 2) 260,304 613,503
Other 38,640 43,639
TOTAL LIABILITIES 1,157,898 1,471,371
TOTAL NET ASSETS
$87,385,418 $216,500,562
NET ASSETS CONSIST OF:
Paid-in capital $70,769,648 $143,398,773
Undistributed net investment income
(loss) 168,768 137,418
Undistributed net realized gain (loss)
on investments 4,613,416 13,283,453
Net unrealized appreciation
(depreciation) of investments 11,833,586 59,680,918
TOTAL NET ASSETS $87,385,418 $216,500,562
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $31,632,136 $ 20,798,101
Shares outstanding - Class A 2,633,218 1,441,712
Net asset value per share - Class A $ 12.01 $ 14.43
Maximum offering price per share - Class
A(1) $ 12.68 $ 15.23
Net assets - Class B $ 297,078 $ 2,541,657
Shares outstanding - Class B 27,524 215,124
Net asset value and offering price per
share - Class B $ 10.79 $ 11.81
Net assets - Institutional Class $55,456,204 $193,160,804
Shares outstanding - Institutional Class 4,622,245 13,387,315
Net asset value and offering price per
share - Institutional Class $ 12.00 $ 14.43
INVESTMENT AT COST (NOTE 3) $76,133,784 $157,872,555
- -------------------------------------------------------------------------
</TABLE>
(1) 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.
The accompanying notes are an integral part of these financial statements.
---------------------
35
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH AND
INCOME SMALL CAP
FUND FUND
<S> <C> <C>
- -------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $327,233,234 $34,149,838(2)
Cash 1,243 0
Receivables:
Dividends and Interest 584,629 18,938
Fund shares sold 237,962 35,767
Investment securities sold 0 0
Due from administrator (Note 2) 0 38,379
Organization expenses, net of
amortization 8,296 39,654
Prepaid expenses 0 16,614
TOTAL ASSETS 328,065,364 34,299,190
LIABILITIES
Payables:
Investment securities purchased 0 0
Distribution to shareholders 351,554 0
Fund shares redeemed 30,096 0
Due to sponsor and distributor (Note
2) 176,586 50,032
Due to WFB (Note 2) 1,192,047 0
Other 118,301 37,448
TOTAL LIABILITIES 1,868,584 87,480
TOTAL NET ASSETS
$326,196,780 $34,211,710
NET ASSETS CONSIST OF:
Paid-in capital $262,984,188 $38,945,360
Undistributed net investment income
(loss) (1,392) 3,886
Undistributed net realized gain (loss)
on investments 8,882,157 (1,395,606)
Net unrealized appreciation
(depreciation) of investments 54,331,827 (3,341,930)
TOTAL NET ASSETS $326,196,780 $34,211,710
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets - Class A $283,467,600 $ 3,106,767
Shares outstanding - Class A 14,763,678 163,685
Net asset value per share - Class A $ 19.20 $ 18.98
Maximum offering price per share - Class
A(1) $ 20.26 $ 20.03
Net assets - Class B $ 23,009,754 $ 1,904,921
Shares outstanding - Class B 1,686,380 100,620
Net asset value and offering price per
share - Class B $ 13.64 $ 18.93
Net assets - Institutional Class $ 19,719,426 $29,200,022
Shares outstanding - Institutional Class 875,571 1,535,669
Net asset value and offering price per
share - Institutional Class $ 22.52 $ 19.01
INVESTMENT AT COST (NOTE 3) $272,901,407 N/A
- -------------------------------------------------------------------------
</TABLE>
(1) 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.
(2) INVESTMENT IN MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ------------------------
36
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
BALANCED FUND EQUITY VALUE FUND
-------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 5)
Dividends $ 572,621 $ 1,695,289 $ 2,261,031 $ 5,487,475
Interest 1,493,191 3,615,714 185,093 555,570
Expenses allocated from Master
Portfolio N/A N/A N/A N/A
TOTAL INVESTMENT INCOME (LOSS) 2,065,812 5,311,003 2,446,124 6,043,045
EXPENSES (NOTE 2)
Advisory fees 291,534 754,931 557,096 1,378,145
Administration fees 25,743 182,083 59,479 334,341
Custody fees 8,115 25,343 18,607 48,252
Shareholder servicing fees 121,506 88,471 278,548 67,531
Portfolio accounting fees 40,088 38,371 52,974 38,482
Transfer agency fees 36,991 131,243 77,309 90,763
Distribution fees 16,862 82,632 12,053 58,241
Amortization of organization expenses 0 4,329 0 0
Legal and audit fees 16,800 27,484 16,801 38,837
Registration fees 10,823 19,213 22,134 24,182
Directors' fees 2,300 6,640 2,300 6,638
Shareholder reports 16,647 63,759 12,401 38,489
Other 8,738 99,377 10,498 78,096
TOTAL EXPENSES 596,147 1,523,876 1,120,200 2,201,997
Less:
Waived fees and reimbursed expenses (115,650) (209,580) (54,206) (102,285)
Net Expenses 480,497 1,314,296 1,065,994 2,099,712
NET INVESTMENT INCOME (LOSS) 1,585,315 3,996,707 1,380,130 3,943,333
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on sale of
investments 5,673,146 11,895,904 15,163,623 27,944,178
Net change in unrealized appreciation
(depreciation) of investments 957,295 3,445,959 15,837,356 17,614,459
NET GAIN (LOSS) ON INVESTMENTS 6,630,441 15,341,863 31,000,979 45,558,637
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $8,215,756 $19,338,570 $32,381,109 $49,501,970
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
37
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SMALL CAP FUND
------------------------
FROM
GROWTH AND INCOME FUND SEPT.
--------------------------- 16, 1996
(COMMENCE-
FOR THE FOR THE FOR THE MENT OF
SIX MONTHS NINE MONTHS SIX MONTHS OPERATIONS)
ENDED ENDED ENDED TO
MARCH 31, SEPT. 30, MARCH 31, SEPT.
1997 1996 1997 30, 1996
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 5)
Dividends $ 2,444,201 $ 2,354,260 $ 28,313 $ 374
Interest 423,928 571,670 107,875 4,319
Expenses allocated from Master
Portfolio N/A N/A (110,341) (9,948)
TOTAL INVESTMENT INCOME (LOSS) 2,868,129 2,925,930 25,847 (5,255)
EXPENSES (NOTE 2)
Advisory fees 782,529 799,899 0 0
Administration fees 64,992 51,193 8,027 492
Custody fees 31,291 33,248 0 0
Shareholder servicing fees 478,131 457,088 37,310 2,460
Portfolio accounting fees 62,871 76,649 0 0
Transfer agency fees 175,860 217,737 10,523 689
Distribution fees 134,535 116,855 4,168 2
Amortization of organization expenses 1,327 1,960 5,377 348
Legal and audit fees 13,100 19,966 26,893 2,664
Registration fees 26,146 36,888 17,455 1,230
Directors' fees 2,490 3,630 2,490 205
Shareholder reports 74,683 108,869 10,958 820
Other 28,983 110,106 5,024 286
TOTAL EXPENSES 1,876,938 2,034,088 128,225 9,196
Less:
Waived fees and reimbursed expenses (2,415) (15,737) (118,900) (1,815)
Net Expenses 1,874,523 2,018,351 9,325 7,381
NET INVESTMENT INCOME (LOSS) 993,606 907,579 16,522 (12,636)
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on sale of
investments 10,102,690 14,694,253 (1,454,225)(1) 58,619(1)
Net change in unrealized appreciation
(depreciation) of investments 11,068,414 10,252,699 (3,802,835)(1) 460,905(1)
NET GAIN (LOSS) ON INVESTMENTS 21,171,104 24,946,952 (5,257,060) 519,524
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $22,164,710 $25,854,531 $(5,240,538) $506,888
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) ALLOCATED FROM THE MASTER PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ---------------------
38
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED FUND
----------------------------------------------
FOR THE SIX FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,585,315 $ 3,996,707 $ 3,914,845
Net realized gain (loss) on sale of
investments 5,673,146 11,895,904 38,123
Net change in unrealized appreciation
(depreciation) of investments 957,295 3,445,959 5,217,447
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 8,215,756 19,338,570 9,170,415
NET EQUALIZATION CREDITS (DEBITS) 0 0 (110,805)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (524,249) (1,030,389) (3,890,856)
CLASS B (785) 0 0
INSTITUTIONAL CLASS (1,028,637) (2,871,649) 0
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 (23,043) 0
From net realized gain on sale of
investments
CLASS A (505,037) (3,380,108) (4,373,450)
CLASS B (331) 0 0
INSTITUTIONAL CLASS (1,013,783) (8,265,228) 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 1,158,984 15,479,177 12,865,491
Reinvestment of dividends - Class A 812,743 4,242,084 7,817,760
Cost of shares redeemed - Class A (4,580,742) (76,589,659) (40,734,756)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (2,609,015) (56,868,398) (20,051,505)
Proceeds from shares sold - Class B 304,255 1,549 0
Reinvestment of dividends - Class B 452 0 0
Cost of shares redeemed - Class B (1,579) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 303,128 1,549 0
Proceeds from shares sold -
Institutional Class 3,125,636 115,568,034 0
Reinvestment of dividends -
Institutional Class 1,651,464 10,566,690 0
Cost of shares redeemed -
Institutional Class (25,197,171) (57,101,263) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (20,420,071) 69,033,461 0
INCREASE (DECREASE) IN NET ASSETS (17,583,024) 15,934,765 (19,256,201)
NET ASSETS:
Beginning net assets 104,968,442 89,033,677 108,289,878
ENDING NET ASSETS $ 87,385,418 $104,968,442 $ 89,033,677
- -------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
39
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY VALUE FUND
------------------------------------------------
FOR THE SIX FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,380,130 $ 3,943,333 $ 3,267,649
Net realized gain (loss) on sale of
investments 15,163,623 27,944,178 8,515,659
Net change in unrealized appreciation
(depreciation) of investments 15,837,356 17,614,459 13,330,878
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 32,381,109 49,501,970 25,114,186
NET EQUALIZATION CREDITS (DEBITS) 0 0 (68,961)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (111,000) (271,396) 0
CLASS B (1,028) 0 0
INSTITUTIONAL CLASS (1,113,606) (3,536,140) (3,267,649)
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 (152,875) (118,088)
From net realized gain on sale of
investments
CLASS A (165,769) (3,065,374) 0
CLASS B (864) 0 0
INSTITUTIONAL CLASS (1,716,939) (33,389,091) (8,515,659)
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
INSTITUTIONAL CLASS 0 0 (1,098,738)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 3,128,244 65,541,864 0
Reinvestment of dividends - Class A 222,206 3,103,800 0
Cost of shares redeemed - Class A (3,807,382) (184,207,991) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (456,932) (115,562,327) 0
Proceeds from shares sold - Class B 2,636,307 26 0
Reinvestment of dividends - Class B 973 0 0
Cost of shares redeemed - Class B (10,349) 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 2,626,931 26 0
Proceeds from shares sold -
Institutional Class 13,701,832 190,586,130 98,056,766
Reinvestment of dividends -
Institutional Class 1,877,441 32,111,369 10,889,321
Cost of shares redeemed -
Institutional Class (55,593,181) (61,556,058) (119,436,631)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (40,013,908) 161,141,441 (10,490,544)
INCREASE (DECREASE) IN NET ASSETS (8,572,006) 54,666,234 1,554,547
NET ASSETS:
Beginning net assets 225,072,568 170,406,334 168,851,787
ENDING NET ASSETS $216,500,562 $ 225,072,568 $ 170,406,334
- ---------------------------------------------------------------------------------------------
</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.
- ---------------------
40
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP FUND
---------------------------
FROM SEPT.
GROWTH AND INCOME FUND 16, 1996
---------------------------------------------- (COMMENCEMENT
FOR THE SIX OF
FOR THE SIX FOR THE NINE FOR THE MONTHS OPERATIONS)
MONTHS ENDED MONTHS ENDED YEAR ENDED ENDED TO
MARCH 31, SEPT. 30, DEC. 31, MARCH 31, SEPT. 30,
1997 1996 (1) 1995 1997 1996
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 993,606 $ 907,579 $ 1,835,782 $ 16,522 $ (12,636)
Net realized gain (loss) on sale of
investments 10,102,690 14,694,253 9,354,459 (1,454,225) 58,619
Net change in unrealized appreciation
(depreciation) of investments 11,068,414 10,252,699 25,841,652 (3,802,835) 460,905
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 22,164,710 25,854,531 37,031,893 (5,240,538) 506,888
NET EQUALIZATION CREDITS (DEBITS) 0 0 0 0 0
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (921,552) (902,578) (1,827,656) 0 0
CLASS B 0 0 (8,126) 0 0
INSTITUTIONAL CLASS (77,222) (11,005) 0 0 0
In excess of net investment income
CLASS A 0 0 0 0 0
CLASS B 0 0 0 0 0
INSTITUTIONAL CLASS 0 0 0 0 0
From net realized gain on sale of
investments
CLASS A (769,667) (14,220,794) (6,952,008) 0 0
CLASS B (47,154) (490,320) (179,310) 0 0
INSTITUTIONAL CLASS (54,088) 0 0 0 0
In excess of net realized gain on sale
of investments
CLASS A 0 (2,238,898) 0 0 0
CLASS B 0 (358,700) 0 0 0
INSTITUTIONAL CLASS 0 0 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 44,283,158 92,986,116 61,077,854 3,967,857 94,136
Reinvestment of dividends - Class A 1,571,703 17,197,210 11,706,310 0 0
Cost of shares redeemed - Class A (35,197,194) (40,873,885) (35,699,783) (556,553) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 10,657,667 69,309,441 37,084,381 3,411,304 94,136
Proceeds from shares sold - Class B 11,003,396 8,483,020 4,557,982 2,296,961 25
Reinvestment of dividends - Class B 47,228 848,356 184,612 0 0
Cost of shares redeemed - Class B (1,557,385) (1,258,949) (246,518) (163,976) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 9,493,239 8,072,427 4,496,076 2,132,985 25
Proceeds from shares sold -
Institutional Class 4,135,758 17,995,025 0 12,246,405 24,103,344
Reinvestment of dividends -
Institutional Class 66,661 0 0 0 0
Cost of shares redeemed -
Institutional Class (4,289,351) (341,372) 0 (2,987,916) (54,923)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (86,932) 17,653,653 0 9,258,489 24,048,421
INCREASE (DECREASE) IN NET ASSETS 40,359,001 102,667,757 69,645,250 9,562,240 24,649,470
NET ASSETS:
Beginning net assets 285,837,779 183,170,022 113,524,772 24,649,470 0
ENDING NET ASSETS $326,196,780 $285,837,779 $183,170,022 $34,211,710 $24,649,470
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
41
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (2)
------------------------------------------
CLASS A
------------------------------------------
SIX
MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30, SEPT. 30,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.46 $11.84 $11.67 $12.71
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.19 0.36 0.46* 0.43*
Net realized and unrealized gain (loss) on
investments 0.74 0.89 0.68* (0.13)*
--------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.93 1.25 1.14 0.30
LESS DISTRIBUTIONS:
Dividends from net investment income (0.19) (0.35) (0.47) (0.46)
Distributions from net realized gain (0.19) (1.28) (0.50) (0.88)
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.38) (1.63) (0.97) (1.34)
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $12.01 $11.46 $11.84 $11.67
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 8.15% 10.51% 10.62% 2.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $31,632 $32,640 $89,034 $108,290
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.05% 1.31% 1.03% 1.09%
Ratio of net investment income (loss) to
average net assets 3.20% 2.98% 4.05% 3.55%
Portfolio turnover 43% 131% 90% 35%
Average commission rate paid(1) $0.0802 $0.0603 N/A N/A
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses 1.30% 1.48% 1.05% 1.11%
Ratio of net investment income (loss) to
average net assets prior to waived fees and
reimbursed expenses 2.95% 2.81% 4.03% 3.53%
- ------------------------------------------------------------------------------------------
</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 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. PRIOR TO APRIL 1, 1996, FIRST INTERSTATE CAPITAL
MANAGEMENT, INC. ("FICM") SERVED AS THE FUND'S ADVISER. IN CONNECTION
WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON
APRIL 1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT,
INC.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
42
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (2) (CONT.)
----------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) -------------------- --------------------
-------------------- SIX SIX
YEAR YEAR MONTHS PERIOD MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1993 1992 1997 1996 (3) 1997 1996 (4)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.18 $10.80 $10.24 $10.00 $11.45 $11.84
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.44* 0.42* 0.08 0.00 0.21 0.40
Net realized and
unrealized gain (loss)
on investments 1.72* 0.53* 0.72 0.24 0.74 0.89
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 2.16 0.95 0.80 0.24 0.95 1.29
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.43) (0.43) (0.08) 0.00 (0.21) (0.40)
Distributions from net
realized gain (0.20) (0.14) (0.17) 0.00 (0.19) (1.28)
--------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.63) (0.57) (0.25) 0.00 (0.40) (1.68)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $12.71 $11.18 $10.79 $10.24 $12.00 $11.45
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 19.83% 9.03% 7.84% 2.40% 8.27% 10.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $104,434 $65,226 $297 $2 $55,456 $72,327
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.01% 1.02% 1.70% 0.00% 0.95% 0.94%
Ratio of net investment
income (loss) to average
net assets 3.62% 3.76% 2.48% 3.09% 3.30% 3.29%
Portfolio turnover 60% 49% 43% 131% 43% 131%
Average commission rate
paid(1) N/A N/A $0.0802 $0.0603 $0.0802 $0.0603
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.06% 1.10% 7.85% 0.66% 1.18% 1.11%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 3.57% 3.68% (3.67)% 2.43% 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 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. PRIOR TO APRIL 1, 1996, FIRST INTERSTATE CAPITAL
MANAGEMENT, INC. ("FICM") SERVED AS THE FUND'S ADVISER. IN CONNECTION
WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON
APRIL 1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT,
INC.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
---------------------
43
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (2)
------------------------------------------
CLASS A
------------------------------------------
SIX
MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30, SEPT. 30,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.66 $13.27 $12.36 $13.17
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.08 0.20 0.24* 0.20*
Net realized and unrealized gain (loss) on
investments 1.89 1.60 1.63* 0.74*
--------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.97 1.80 1.87 0.94
LESS DISTRIBUTIONS:
Dividends from net investment income (0.08) (0.19) (0.25) (0.21)
Distributions from net realized gain (0.12) (2.22) (0.71) (1.54)
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.20) (2.41) (0.96) (1.75)
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $14.43 $12.66 $13.27 $12.36
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 15.63% 14.27% 16.58% 7.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $20,798 $18,453 $170,406 $168,852
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.05% 1.18% 0.96% 0.99%
Ratio of net investment income (loss) to
average net assets 1.14% 1.73% 1.97% 1.60%
Portfolio turnover 45% 91% 75% 41%
Average commission rate paid(1) $0.0800 $0.0558 N/A N/A
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses 1.12% 1.22% 0.98% 1.01%
Ratio of net investment income (loss) to
average net assets prior to waived fees and
reimbursed expenses 1.07% 1.69% 1.95% 1.58%
- ------------------------------------------------------------------------------------------
</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 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. PRIOR TO APRIL 1, 1996, FIRST INTERSTATE CAPITAL
MANAGEMENT, INC. ("FICM") SERVED AS THE FUND'S ADVISER. IN CONNECTION
WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON
APRIL 1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT,
INC.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
44
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (2) (CONT.)
----------------------------------------------------------------
CLASS B INSTITUTIONAL CLASS
CLASS A (CONT.) -------------------- --------------------
-------------------- SIX SIX
YEAR YEAR MONTHS PERIOD MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1993 1992 1997 1996 (3) 1997 1996 (4)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.73 $10.45 $10.34 $10.00 $12.65 $13.27
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.21* 0.20* 0.01 0.00 0.09 0.22
Net realized and
unrealized gain (loss)
on investments 2.75* 0.49* 1.57 0.34 1.89 1.61
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 2.96 0.69 1.58 0.34 1.98 1.83
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.23) (0.22) (0.01) 0.00 (0.08) (0.23)
Distributions from net
realized gain (0.29) (0.19) (0.10) 0.00 (0.12) (2.22)
--------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.52) (0.41) (0.11) 0.00 (0.20) (2.45)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $13.17 $10.73 $11.81 $10.34 $14.43 $12.65
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 28.22% 6.81% 15.31% 3.40% 15.73% 14.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $140,551 $92,915 $2,542 $0 $193,161 $206,620
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.98% 1.02% 1.70% 0.00% 0.95% 0.87%
Ratio of net investment
income (loss) to average
net assets 1.73% 1.86% 0.34% 1.83% 1.25% 1.69%
Portfolio turnover 82% 78% 45% 91% 45% 91%
Average commission rate
paid(1) N/A N/A $0.0800 $0.0558 $0.0800 $0.0558
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.99% N/A 2.19% N/A 0.99% 0.92%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.72% N/A (0.15)% N/A 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 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. PRIOR TO APRIL 1, 1996, FIRST INTERSTATE CAPITAL
MANAGEMENT, INC. ("FICM") SERVED AS THE FUND'S ADVISER. IN CONNECTION
WITH THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON
APRIL 1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT,
INC.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
The accompanying notes are an integral part of these financial statements.
---------------------
45
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
-------------------------------
CLASS A
-------------------------------
SIX NINE
MONTHS MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (2) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $17.91 $17.26 $14.10
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 0.07 0.19
Net realized and unrealized gain (loss) on investments 1.34 2.00 3.87
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.40 2.07 4.06
LESS DISTRIBUTIONS:
Dividends from net investment income (0.06) (0.07) (0.19)
Distributions from net realized gain (0.05) (1.35) (0.71)
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.11) (1.42) (0.90)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $19.20 $17.91 $17.26
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 7.86% 12.45% 28.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $283,468 $254,498 $178,488
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.14% 1.18% 1.18%
Ratio of net investment income (loss) to average net
assets 0.65% 0.56% 1.23%
Portfolio turnover 40% 83% 100%
Average commission rate paid(1) $0.0799 $0.0702 N/A
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses N/A 1.19% 1.21%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses N/A 0.55% 1.20%
- -----------------------------------------------------------------------------------------
</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 DECEMBER 31 TO SEPTEMBER 30.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
The accompanying notes are an integral part of these financial statements.
- ---------------------
46
<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.) -------------------------------
------------------------------- SIX NINE
YEAR YEAR YEAR MONTHS MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, MARCH 31, SEPT. 30, DEC. 31,
1994 1993 1992 1997 1996 (2) 1995 (3)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.75 $13.88 $12.84 $12.74 $12.29 $10.00
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.22 0.23 0.27 0.00 (0.01) 0.05
Net realized and
unrealized gain (loss)
on investments (0.27) 0.93 1.44 0.94 1.42 2.79
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (0.05) 1.16 1.71 0.94 1.41 2.84
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.22) (0.23) (0.27) 0.00 0.00 (0.05)
Distributions from net
realized gain (0.38) (0.06) (0.40) (0.04) (0.96) (0.50)
--------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.60) (0.29) (0.67) (0.04) (0.96) (0.55)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $14.10 $14.75 $13.88 $13.64 $12.74 $12.29
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) (0.29)% 8.44% 13.45% 7.36% 11.89% 28.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $113,525 $112,236 $44,883 $23,010 $12,832 $4,682
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.11% 0.93% 0.42% 1.86% 1.93% 1.87%
Ratio of net investment
income (loss) to average
net assets 1.51% 1.72% 2.31% (0.06)% (0.12)% 0.43%
Portfolio turnover 71% 55% 80% 40% 83% 100%
Average commission rate
paid(1) N/A N/A N/A $0.0799 $0.0702 N/A
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.15% 1.11% 1.10% 1.89% 2.03% 2.21%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.47% 1.54% 1.63% (0.09)% (0.22)% 0.09 %
- ----------------------------------------------------------------------------------------------
</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 DECEMBER 31 TO SEPTEMBER 30.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
The accompanying notes are an integral part of these financial statements.
---------------------
47
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH AND INCOME
FUND (CONT.)
--------------------
INSTITUTIONAL CLASS
--------------------
SIX
MONTHS PERIOD
ENDED ENDED
MARCH 31, SEPT. 30,
1997 1996 (2)
<S> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $21.01 $20.03
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.09 0.02
Net realized and unrealized gain (loss) on investments 1.57 0.97
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.66 0.99
LESS DISTRIBUTIONS:
Dividends from net investment income (0.09) (0.01)
Distributions from net realized gain (0.06) 0.00
--------- ---------
TOTAL FROM DISTRIBUTIONS (0.15) (0.01)
--------- ---------
NET ASSET VALUE, END OF PERIOD $22.52 $21.01
--------- ---------
--------- ---------
TOTAL RETURN (NOT ANNUALIZED) 7.92% 3.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $19,719 $18,508
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.01% 0.96%
Ratio of net investment income (loss) to average net assets 0.78% 1.27%
Portfolio turnover 40% 83%
Average commission rate paid(1) $0.0799 $0.0702
- ----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses N/A N/A
Ratio of net investment income (loss) to average net assets prior
to waived fees and reimbursed expenses 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 INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(3) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES CHARGED TO THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
- ---------------------
48
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (3)
------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS
------------------------ ------------------------ ------------------------
SIX SIX SIX
MONTHS PERIOD MONTHS PERIOD MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, SEPT. 30, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $22.45 $22.01 $22.46 $22.02 $22.45 $22.01
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.01) 0.00 (0.04) 0.00 0.02 0.00
Net realized and
unrealized gain (loss)
on investments (3.46) 0.44 (3.49) 0.44 (3.46) 0.44
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (3.47) 0.44 (3.53) 0.44 (3.44) 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 $18.98 $22.45 $18.93 $22.46 $19.01 $22.45
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) (15.46)% 2.00% (15.72)% 2.00% (15.32)% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $3,107 $96 $1,905 $0 $29,200 $24,553
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.10(4) 1.03(4) 1.75(4) 0.00% 0.75(4) 1.60(4)
Ratio of net investment
income (loss) to average
net assets (0.23)%(4) (0.59)%(4) (0.85)%(4) 0.00% 0.16(4) (1.15)%(4)
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 2.80(4) 38.54(4) 3.55(4) 0.00% 1.65(4) 1.63(4)
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (1.93)%(4) (38.10)%(4) (2.65)%(4) 0.00% (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 INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
(3) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(4) THIS RATIO INCLUDES INCOME AND EXPENSES CHARGED TO THE MASTER
PORTFOLIO.
The accompanying notes are an integral part of these financial statements.
---------------------
49
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, (the "1940 Act"), as an open-end series management
investment company. The Company commenced operations on January 1, 1992, and
currently offers the following nineteen separate diversified funds: the
Aggressive Growth, Asset Allocation, Balanced, Corporate Stock, Diversified
Income, Equity Value, Ginnie Mae, Growth and Income, Government Money Market
Mutual, Intermediate Bond, Money Market Mutual, Money Market Trust, National
Tax-Free, National Tax-Free Money Market Mutual, Prime Money Market Mutual,
Short-Intermediate U.S. Government Income, Small Cap, Treasury Money Market
Mutual, and U.S. Government Allocation Funds; and five non-diversified funds:
the Arizona Tax-Free, California Tax-Free Bond, California Tax-Free Income,
California Tax-Free Money Market Mutual, and Oregon Tax-Free Funds. These
financial statements represent the Balanced, Equity Value, Growth and Income,
and Small Cap Funds (the "Funds").
The Company changed its fiscal year-end from September 30 to March 31.
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. 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 presented in this annual report for the
Balanced and Equity Value Funds for periods prior to September 6, 1996, refers
to the Predecessor Funds.
Each of the Funds presented in this book offers Class A, Class B, and
Institutional Class shares. The three classes of shares differ principally in
the applicable sales charges, shareholder servicing fees, transfer agency fees
and distribution fees. Shareholders of each class also bear certain expenses
that pertain to that particular class. All shareholders bear the common expenses
of the Fund and earn income from the portfolio pro rata based on the average
daily net assets of each class, without distinction between share classes.
Dividends are determined separately for each class based on income and
---------------------
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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, service and
transfer agency fees.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT POLICY AND SECURITY VALUATION
The Funds invest in a range of securities, generally including money market
instruments, equities, and U.S. government securities.
Investments in securities for which the primary market is a national securities
exchange or the NASDAQ National Market System are valued at the last reported
sales price on the day of valuation. U.S. Government obligations are valued at
the reported bid prices. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding debt securities
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. Securities for which quotations are not readily available are valued at
fair value as determined by procedures approved by the Company's Board of
Directors.
The Small Cap Fund invests only in interests of the Small Cap Master Portfolio
(the "Master Portfolio"), of Master Investment Trust ("MIT"). The Master
Portfolio has the same investment objective as the Fund. The value of the Fund's
investment in its corresponding Master Portfolio reflects that Fund's interest
in the net assets of that Master Portfolio (89.26%) at March 31, 1997. The
Master Portfolio's investments include equities, fixed-, variable- and
floating-rate instruments. Investments in securities for which the primary
market is a national securities exchange or the NASDAQ National Market System
are valued at the last reported sales price on the day of valuation. U.S.
Government obligations are valued at the last reported bid prices. Securities
not listed on an exchange or national securities market, or securities in which
there were no transactions, excluding debt securities maturing in 60 days or
less, are valued at the most recent bid prices, or if such prices are not
- ---------------------
52
<PAGE>
NOTES TO FINANCIAL STATEMENTS
readily available, at fair value as determined in accordance with procedures
approved by the Board of Trustees. Debt securities maturing in 60 days or less
are valued at amortized cost, which approximates market value.
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.
The Balanced and Equity Value Funds had permanent book/tax differences primarily
attributable to equalization credits. To reflect reclassifications arising from
permanent book/tax differences for the year ended September 30, 1995,
accumulated undistributed net investment income was credited $152,314,
accumulated undistributed net realized gains was charged $41,509 and paid-in-
capital was charged $110,805 for the Balanced Fund. For the Equity Value Fund,
accumulated net investment income was credited $187,049, accumulated
undistributed net realized gains was charged $118,088 and paid-in-capital was
charged $68,961. Effective October 1, 1996, the Funds no longer use equalization
accounting.
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 Wells Fargo Bank, N.A. ("WFB"). The repurchase agreements must be
fully collateralized based on values that are marked to market daily. The
collateral may be held by an agent bank under a tri-party agreement. It is the
custodian's responsibility to value collateral daily and to take action to
obtain additional collateral as necessary to maintain market value equal to or
greater than the resale price. The repurchase agreements entered into and held
in the Funds at March 31, 1997, are collateralized by U.S. Government
obligations.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Funds, with the
exception of the Small Cap Fund, are declared and distributed quarterly.
Dividends to shareholders from net investment income of the Small Cap Fund are
declared and distributed annually. Any distributions to shareholders from net
realized capital gains are declared and distributed annually.
---------------------
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAXES
Each Fund of the Company 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 Internal Revenue 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 Small Cap Fund had capital loss carryforwards at December 31, 1996 of
$1,316,991 that will expire in the year 2004. The Board of Directors intends to
offset net capital gains with each capital loss carryforward until each
carryforward has been fully utilized or expires. No capital gain distribution
shall be made until the capital loss carryforward has been fully utilized or has
expired.
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
the Fund. The differences between the income and gains distributed on a book
versus tax basis are shown as excess distributions of net investment income and
net realized gain on the sale 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 generally accepted accounting principles.
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.
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 Small Cap Fund) with WFB. Pursuant to the contracts, WFB
furnishes to the Funds investment guidance and policy direction in connection
with daily portfolio management. Under the contracts with the Balanced and
Equity Value Funds, WFB is entitled to be paid by each Fund a monthly advisory
fee at an annual rate of 0.60% and 0.50%,
- ---------------------
54
<PAGE>
NOTES TO FINANCIAL STATEMENTS
respectively, of such Fund's average daily net assets. Under the contract with
the Growth and Income Fund, WFB is entitled to be paid by the Fund a monthly
advisory fee at an annual rate of 0.50% of such 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.
For the period from October 1, 1995 to March 31, 1996, the Balanced and Equity
Value Funds were advised by First Interstate Capital Management, Inc. ("FICM").
Pursuant to the advisory contracts, the Funds paid an advisory fee at an annual
rate of 0.60% of average daily net assets. On April 1, 1996, First Interstate
Bancorp ("FIB") was merged with and into Wells Fargo & Company ("Wells Fargo");
and FICM and First Interstate Bank of California ("FICAL") became indirect,
wholly-owned subsidiaries of Wells Fargo. In connection with this merger, FICM
changed its name to Wells Fargo Investment Management, Inc. ("WFIM"). For the
period from April 1, 1996 to September 5, 1996, such advisory fees were paid to
WFIM.
The Small Cap Fund does not directly retain an investment adviser because the
Fund invests all of its assets in a Master Portfolio of MIT which, in turn,
retains WFB as investment adviser.
The Company has entered into contracts with WFB on behalf of the Funds whereby
WFB is responsible for providing custody and portfolio accounting services for
the Funds. 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 average daily net assets, 0.045% of the next $50 million, and 0.02%
of the average daily net assets in excess of $100 million. WFB will not be
entitled to compensation for its custodial services to the Small Cap Fund so
long as it is entitled to compensation for providing advisory services to the
Master Portfolio.
For the period from October 1, 1995 to March 31, 1996, FICAL served as the
custodian for the Balanced and Equity Value Funds. Pursuant to the contracts,
the Funds paid a custodian fee based on net assets and certain transaction
charges. For the period from April 1, 1996 to September 5, 1996, such custodian
fees were paid to WFB.
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB has agreed to act as transfer agent 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 Funds. Prior to February 1, 1997, under the contracts with the
Growth and Income and Small Cap Funds, WFB was entitled to be paid a per account
fee plus other related costs with a minimum monthly fee of $3,000
---------------------
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS
per Fund, unless net assets of the respective Fund were under $20 million. For
as long as the net assets remained under $20 million, a Fund would not be
charged any transfer agency fees by WFB. Prior to February 1, 1997, under the
contracts with the Balanced and Equity Value Funds, WFB was entitled to be paid
a fee at the annual rate of 0.07% of the average daily net assets of each Fund.
For the period from October 1, 1995 to September 5, 1996, the Balanced and
Equity Value Funds retained Furman Selz LLC ("Furman Selz") to provide personnel
and facilities to perform shareholder servicing, transfer agency related
services and portfolio accounting.
The transfer agency fees of the Funds for the six months ended March 31, 1997
were as follows:
<TABLE>
<CAPTION>
TRANSFER
TRANSFER TRANSFER AGENCY FEES
AGENCY FEES AGENCY FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Balanced Fund $ 15,434 $ 42 $21,515
Equity Value Fund 9,208 376 67,725
Growth and Income Fund 157,259 10,322 8,279
Small Cap Fund 944 489 9,090
</TABLE>
The Company has entered into a contract on behalf of the Funds with WFB, whereby
WFB has agreed to provide shareholder services to the Funds. Pursuant to the
contract, WFB is entitled to an annual fee for providing shareholder servicing
of 0.30% of the average daily net assets attributable to the Class A and Class B
shares of the Growth and Income Fund, 0.25% of the average daily net assets
attributable to the Class A and Class B shares of the Small Cap Fund, 0.25% of
the average daily net assets attributable to the Institutional Class shares of
Growth and Income Fund, and 0.25% of the average daily net assets of each class
of the Balanced and Equity Value Funds.
For the period from October 1, 1995 to September 5, 1996, various banks, trust
companies, broker-dealers or other financial organizations (collectively,
"Service Organizations") also provided administrative services for the Balanced
and Equity Value Funds, such as maintaining shareholder accounts and records.
The Funds paid fees to Service Organizations in amounts up to an annual rate of
0.25% of the average daily net assets of the Fund's shares owned by shareholders
with whom the Service Organization had a servicing relationship. During that
period, FIB was the only service organization to receive payments.
- ---------------------
56
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The shareholder servicing fees of the Funds for the six months ended March 31,
1997 were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Balanced Fund $ 41,580 $ 79 $ 79,847
Equity Value Fund 24,608 736 253,204
Growth and Income Fund 426,074 27,329 24,728
Small Cap Fund 2,182 1,088 34,040
</TABLE>
The shareholder servicing fees of the Funds for the periods ended September 30,
1996 were as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SHAREHOLDER SHAREHOLDER
SERVICING SERVICING SERVICING FEES
FEES FEES INSTITUTIONAL
FUND CLASS A CLASS B CLASS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Balanced Fund* $ 76,743 $ 0 $11,728
Equity Value Fund* 36,350 0 31,181
Growth and Income Fund** 436,443 19,150 1,495
Small Cap Fund*** 0 0 2,460
</TABLE>
* INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
*** INFORMATION PRESENTED IS FOR THE PERIOD FROM SEPTEMBER 16, 1996
(COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1996.
Subject to the overall supervision of the Company's Board of Directors, WFB as
administrator and Stephens Inc. ("Stephens") as co-administrator provide each
Fund with supervisory, administrative and distribution services. For these
administrative services, WFB and Stephens are entitled to receive monthly fees
at the annual rates of 0.04% and 0.02%, respectively, of each Fund's average
daily net assets. Prior to February 1, 1997, Stephens provided substantially the
same services as sole administrator to the Funds. Under the previous agreements,
Stephens was entitled to receive a monthly fee at the annual rate of 0.03% of
the average daily net assets of the Growth and Income Fund, and 0.05% of the
average daily net assets of the Balanced, Equity Value, and Small Cap Funds.
For the period from October 1, 1995 to September 5, 1996, Furman Selz provided
administrative services for the operation of the Balanced and Equity Value
Funds. As compensation for such services, each Fund paid Furman Selz an annual
fee, payable monthly, of up to 0.15% of the average daily net assets of each
Fund.
The Company has adopted separate Distribution Plans, pursuant to Rule 12b-1, for
Class A and Class B shares of the Funds.
---------------------
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distribution Plans for the Class A shares of the Funds provide that each
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 up to 0.05% of the average daily net assets attributable to the
Class A shares of the Growth and Income Fund and up to 0.10% of the average
daily net assets attributable to the Class A shares of the Balanced, Equity
Value and Small Cap Funds. Each of these Funds 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
attributable to joint distribution activities will be allocated among the Funds
in proportion to their relative net asset sizes.
For the period from October 1, 1995 to September 5, 1996, the Balanced and
Equity Value Funds had adopted a non-compensatory Distribution Plan and
Agreement (the "Plan") for the Class A shares. The Plan provided for payments by
each Fund for actual expenses incurred, not to exceed 0.50% of the average daily
net assets of the Class A shares of each Fund. Pacifica Funds Distributor Inc.,
an affiliate of Furman Selz, acted as Distributor during such period.
The Class B Distribution Plans provide that the Funds pay for distribution
related services, 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 Growth and Income
Fund, and up to 0.75% of the average daily net assets attributable to Class B
shares of the Balanced, Equity Value, and Small Cap Funds.
The Distribution Plan expenses for Class A and Class B shares of the Funds for
the six months ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION
FEES FEES
FUND CLASS A CLASS B
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Balanced Fund $ 16,633 $ 229
Equity Value Fund 9,842 2,211
Growth and Income Fund 70,768 63,767
Small Cap Fund 883 3,285
</TABLE>
- ---------------------
58
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distribution Plan expenses for Class A and Class B shares of the Funds for
the periods ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION
FEES FEES
FUND CLASS A CLASS B
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Balanced Fund* $ 82,632 $ 0
Equity Value Fund* 58,241 0
Growth and Income Fund** 73,360 43,495
Small Cap Fund*** 2 0
</TABLE>
* INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
*** INFORMATION PRESENTED IS FOR THE PERIOD FROM SEPTEMBER 16, 1996
(COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1996.
FEES WAIVED AND REIMBURSED EXPENSES
The following amounts of fees and expenses were waived or reimbursed for the six
months ended March 31, 1997:
<TABLE>
<CAPTION>
EXPENSES
REIMBURSED FEES WAIVED
FUND BY STEPHENS BY WFB
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Balanced Fund $ 0 $115,650
Equity Value Fund 0 54,206
Growth and Income Fund 0 2,415
Small Cap Fund 33,001 85,899
</TABLE>
The following amounts of fees were waived for the periods ended September 30,
1996:
<TABLE>
<CAPTION>
FEES WAIVED FEES WAIVED FEES WAIVED
BY BY BY
FUND FURMAN SELZ FICM WFB
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Balanced Fund* $ 51,374 $ 4,608 $ 153,598
Equity Value Fund* 94,068 0 8,217
Growth and Income Fund** N/A N/A 15,737
Small Cap Fund*** N/A N/A 1,815
</TABLE>
* INFORMATION PRESENTED IS FOR THE YEAR ENDED SEPTEMBER 30, 1996.
** INFORMATION PRESENTED IS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
*** INFORMATION PRESENTED IS FOR THE PERIOD FROM SEPTEMBER 16, 1996
(COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1996.
Waived fees and reimbursed expenses continue at the discretion of WFB and
Stephens. WFB and Stephens have agreed to waive or reimburse all or a portion of
their respective fees charged to, or expenses paid by, each Fund to ensure that
the total fund operating expenses do not exceed, on an annual basis, 1.13% of
the average net assets of the Institutional Class shares of the
---------------------
59
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 directors of the Company are also officers of Stephens. As
of March 31, 1997, Stephens owned 7 shares each of the Balanced and Equity Value
Funds, 114 shares of the Growth and Income Fund and 3 shares of the Small Cap
Fund.
Stephens has retained $1,960,806 as sales charges from the proceeds of Class A
shares sold and $335,437 from the proceeds of Class B shares redeemed by the
Company for the six months ended March 31, 1997. Wells Fargo Securities Inc., a
subsidiary of WFB, received $1,938,506 as sales charges from the proceeds of
Class A shares sold and $335,437 from the proceeds of Class B shares redeemed by
the Company for the six months ended March 31, 1997.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for each
Fund for the six months ended March 31, 1997, were as follows:
<TABLE>
<CAPTION>
GROWTH AND
AGGREGATE PURCHASES BALANCED EQUITY INCOME
AND SALES FUND VALUE FUND FUND
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Total purchases at cost $ 102,354,983 $ 202,493,616 $ 133,724,795
Total sales proceeds 40,134,721 95,723,425 121,731,930
</TABLE>
- ---------------------
60
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. CAPITAL SHARE TRANSACTIONS
As of March 31, 1997, there were 91 billion shares of $0.001 par value capital
stock authorized by the Company. At March 31, 1997, each Fund was authorized to
issue 100 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>
BALANCED FUND
--------------------------------------
FOR THE SIX FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 94,369 1,412,249 1,142,667
Shares issued in reinvestment of
dividends -- Class A 67,767 371,899 717,293
Shares redeemed -- Class A (376,563) (6,456,262) (3,620,385)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (214,427) (4,672,114) (1,760,425)
Shares sold -- Class B 27,480 151 N/A
Shares issued in reinvestment of
dividends -- Class B 42 0 N/A
Shares redeemed -- Class B (149) 0 N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 27,373 151 N/A
Shares sold -- Institutional Class 255,508 10,145,092 N/A
Shares issued in reinvestment of
dividends -- Institutional Class 137,837 925,429 N/A
Shares redeemed -- Institutional Class (2,085,655) (4,755,966) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (1,692,310) 6,314,555 N/A
</TABLE>
---------------------
61
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
EQUITY VALUE FUND
----------------------------------------
FOR THE SIX FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 1996 1995
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 239,630 2,375,877 N/A
Shares issued in reinvestment of
dividends -- Class A 16,068 248,462 N/A
Shares redeemed -- Class A (272,081) (14,009,327) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (16,383) (11,384,988) N/A
Shares sold -- Class B 215,907 3 N/A
Shares issued in reinvestment of
dividends -- Class B 85 0 N/A
Shares redeemed -- Class B (871) 0 N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 215,121 3 N/A
Shares sold -- Institutional Class 919,441 18,333,654 8,141,771
Shares issued in reinvestment of
dividends -- Institutional Class 136,028 2,574,515 969,487
Shares redeemed -- Institutional Class (3,998,514) (4,577,809) (9,924,924)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (2,943,045) 16,330,360 (813,666)
</TABLE>
- ---------------------
62
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
-----------------------------------------
FOR THE SIX FOR THE NINE FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
MARCH 31, SEPT. 30, DEC. 31,
1997 1996 (1) 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 2,263,021 5,108,374 3,775,466
Shares issued in reinvestment of
dividends -- Class A 83,226 1,005,634 726,595
Shares redeemed -- Class A (1,793,908) (2,246,108) (2,208,631)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 552,339 3,867,900 2,293,430
Shares sold -- Class B 788,072 653,910 386,746
Shares issued in reinvestment of
dividends -- Class B 3,523 69,929 14,982
Shares redeemed -- Class B (112,577) (97,407) (20,798)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 679,018 626,432 380,930
Shares sold -- Institutional Class 180,805 897,195 N/A
Shares issued in reinvestment of
dividends -- Institutional Class 3,005 0 N/A
Shares redeemed -- Institutional Class (189,127) (16,307) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (5,317) 880,888 N/A
</TABLE>
(1) "SHARES 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.
---------------------
63
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SMALL CAP FUND
------------------------------
FROM SEPT. 16,
FOR THE SIX 1996
MONTHS ENDED (COMMENCEMENT OF
MARCH 31, OPERATIONS) TO
1997 SEPT. 30, 1996
<S> <C> <C>
- ------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 185,292 4,273
Shares issued in reinvestment of
dividends -- Class A 0 0
Shares redeemed -- Class A (25,880) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 159,412 4,273
Shares sold -- Class B 108,204 1
Shares issued in reinvestment of
dividends -- Class B 0 0
Shares redeemed -- Class B (7,585) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 100,619 1
Shares sold -- Institutional Class 579,679 1,096,256
Shares issued in reinvestment of
dividends -- Institutional Class 0 0
Shares redeemed -- Institutional Class (137,779) (2,487)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 441,900 1,093,769
</TABLE>
5. 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.
- ---------------------
64
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
STAGECOACH FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Balanced Fund, Equity Value Fund, and
Growth and Income Fund, and the statement of assets and liabilities of the Small
Cap Fund (four of the funds comprising Stagecoach Funds, Inc.) as of March 31,
1997, and the related statements of operations of the Balanced Fund and Equity
Value Fund for the six months ended March 31, 1997, and the year ended September
30, 1996, the Growth and Income Fund for the six months ended March 31, 1997,
and the nine months ended September 30, 1996, and the Small Cap Fund for the six
months ended March 31, 1997, and the period from September 16, 1996
(commencement of operations) to September 30, 1996, the statements of changes in
net assets of the Balanced Fund and Equity Value Fund for the six months ended
March 31, 1997, and the year ended September 30, 1996, the Growth and Income
Fund for the six months ended March 31, 1997, the nine months ended September
30, 1996, and the year ended December 31, 1995, and the Small Cap Fund for the
six months ended March 31, 1997, and the period from September 16, 1996
(commencement of operations) to September 30, 1996, and financial highlights for
the periods indicated herein. These financial statements and financial
highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. For the Balanced Fund and Equity Value
Fund, all years or periods indicated in the accompanying financial statements
and financial highlights ending prior to October 1, 1995, were audited by other
auditors whose reports dated November 15, 1995, and November 22, 1994, expressed
unqualified opinions on this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997, by correspondence with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds of Stagecoach Funds, Inc. as of March 31, 1997, the
results of their operations, the changes in their net assets and their financial
highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 9, 1997
---------------------
65
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
66
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1997
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 83.95%
ADVERTISING - 2.86%
54,125 HA-LO Industries Inc+ $ 1,154,104 $ 825,406
9,000 Outdoor Systems Inc+ 250,500 268,875
------------ --------------
$ 1,404,604 $ 1,094,281
BIOTECHNOLOGY - 1.61%
52,000 Neurex Corp+ $ 852,750 $ 617,500
CAPITAL GOODS - 9.15%
6,000 Advanced Digital Information Corp+ $ 102,000 $ 76,500
20,000 Bitstream Inc+ 115,420 87,500
7,000 Checkfree Corp+ 103,250 84,875
20,000 Crystal Systems Solutions+ 150,000 240,000
5,000 ESS Technology Inc+ 161,656 121,250
27,000 ILOG SA-Sponsored ADR+ 304,200 195,750
20,000 Integrated Circuit Systems+ 270,626 285,000
37,000 Integrated Process Equipment Corp+ 904,695 619,750
30,000 Inter-Tel Inc+ 594,375 341,250
14,000 Neomagic Corp+ 169,250 176,750
20,000 Planning Sciences Int-SP ADR+ 285,938 180,000
34,000 Siebel Systems Inc+ 603,750 569,500
25,000 Talx Corp+ 233,750 193,750
20,000 Xcellenet Inc+ 354,371 330,000
------------ --------------
$ 4,353,281 $ 3,501,875
COMMERCIAL SERVICES - 0.42%
20,000 Stericycle Inc+ $ 187,500 $ 160,000
</TABLE>
---------------------
67
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE - 1.17%
14,000 Integrated Systems Inc+ $ 361,875 $ 189,000
10,023 Pure Atria Corp+ 324,795 171,017
3,000 Veritas Software Corp+ 132,500 88,875
------------ --------------
$ 819,170 $ 448,892
COMPUTER SYSTEMS - 1.99%
31,500 Clarify Inc+ $ 917,869 $ 759,938
CONSUMER - BASIC - 9.82%
10,000 Algos Pharmaceuticals Corp+ $ 197,080 $ 167,500
20,500 Enterprises Systems Inc+ 504,479 461,250
13,500 Medicis Pharmaceutical Corp+ 416,875 401,625
32,500 Orthodontic Centers of America Inc+ 685,314 438,750
17,391 Pathogenesis Corp+ 365,859 434,775
29,000 Renal Treatment Centers+ 843,399 652,500
30,000 Selfcare Inc+ 300,000 262,500
35,000 Suiza Foods Corp+ 770,000 936,250
------------ --------------
$ 4,083,006 $ 3,755,150
CONSUMER-DISCRETIONARY - 6.11%
38,000 Equity Corp International+ $ 771,750 $ 798,000
40,000 North Cranberries Inc 931,550 725,000
20,000 Prime Hospitality Corp+ 351,015 312,500
55,556 Quadrax Corp+ 81,598 38,195
14,000 UOL Publishing Inc+ 182,000 168,000
18,900 V-One Corp+ 94,500 108,675
20,000 Viisage Technology+ 217,813 187,500
------------ --------------
$ 2,630,226 $ 2,337,870
ELECTRICAL EQUIPMENT - 0.47%
31,500 Interlink Electronics Inc+ $ 216,563 $ 181,125
</TABLE>
- ------------------------
68
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 5.83%
24,000 American Exploration Co+ $ 311,320 $ 270,000
32,000 American Oilfield Divers Inc+ 396,906 360,000
20,000 Marine Drilling Co Inc+ 332,500 355,000
20,000 Pride Petroleum Services Inc+ 447,500 415,000
8,000 Production Operators Corp+ 389,000 453,000
16,000 Smedvig ASA - Sponsored ADR Class B+ 352,918 378,000
------------ --------------
$ 2,230,144 $ 2,231,000
ENTERTAINMENT & LEISURE - 3.12%
32,000 Family Golf Centers Inc+ $ 920,875 $ 626,000
21,000 Regal Cinemas Inc+ 537,200 567,000
------------ --------------
$ 1,458,075 $ 1,193,000
FINANCE & RELATED - 7.69%
35,000 Applied Graphics Technologies+ $ 940,000 $ 1,238,125
7,000 Criimi Mae Inc 118,642 103,250
25,000 Envoy Corp (New)+ 838,125 584,375
22,000 IMC Mortgage Co+ 404,313 324,500
15,000 Redwood Trust Inc 477,500 693,750
------------ --------------
$ 2,778,580 $ 2,944,000
FOOD & RELATED - 0.48%
15,000 NuCo2 Inc+ $ 326,250 $ 183,750
GENERAL BUSINESS & RELATED - 12.37%
15,000 American Residential Services+ $ 250,635 $ 286,875
14,391 Billing Information Concepts+ 446,221 345,384
20,000 Education Management Corp+ 300,000 455,000
40,000 Intelligroup Inc+ 434,941 405,000
16,400 NCO Group+ 251,325 358,750
25,000 NHP Inc+ 475,000 581,250
32,000 Renter's Choice Inc+ 561,688 460,000
24,000 Romac International Inc+ 581,317 424,500
16,000 Staffmark Inc+ 222,264 210,000
</TABLE>
---------------------
69
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
36,000 Superior Telecom Inc+ $ 863,193 $ 747,000
67,000 VDI Media Corp+ 468,045 460,625
------------ --------------
$ 4,854,629 $ 4,734,384
HEALTHCARE - 1.63%
20,000 Genesis Health Ventures Inc+ $ 632,800 $ 625,000
MANUFACTURING PROCESSING - 8.11%
30,000 Cima Labs Inc+ $ 213,750 $ 180,000
30,000 Costilla Energy Inc+ 376,250 435,000
11,000 Eagle Hardware & Garden+ 211,750 198,000
6,680 Fresenius Medical Care - ADR+ 151,682 203,740
35,000 Imperial Credit Industries+ 637,403 704,375
13,000 KOS Pharmaceuticals Inc+ 195,000 260,000
47,000 Philip Environmental Inc+ 601,188 710,875
42,000 Sunquest Information Systems+ 678,500 409,500
------------ --------------
$ 3,065,523 $ 3,101,490
MEDICAL EQUIPMENT & SUPPLIES - 1.49%
25,000 Endosonics Corp+ $ 346,275 $ 237,500
23,000 Ultrafem Inc+ 370,702 330,625
------------ --------------
$ 716,977 $ 568,125
MISCELLANEOUS STOCKS - 4.11%
28,000 JDA Software Group Inc+ $ 717,417 $ 570,500
48,169 Mail Boxes Etc+ 967,555 1,002,517
------------ --------------
$ 1,684,972 $ 1,573,017
PHARMACEUTICALS - 0.60%
10,000 Anesta Corp+ $ 135,000 $ 172,500
10,000 Aronex Pharmaceuticals Inc+ 103,750 57,500
------------ --------------
$ 238,750 $ 230,000
</TABLE>
- ------------------------
70
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
SHELTER & RELATED - 1.19%
18,750 American Homestar Corp+ $ 343,750 $ 328,125
17,000 Colonial Downs Holdings Class A+ 162,375 125,375
------------ --------------
$ 506,125 $ 453,500
TELECOMMUNICATIONS - 1.63%
20,000 Intermedia Communications Inc+ $ 614,653 $ 332,500
25,000 Winstar Communications Inc+ 471,250 290,625
------------ --------------
$ 1,085,903 $ 623,125
TRANSPORTATION - 1.24%
18,000 Atlas Air Inc+ $ 636,643 $ 472,500
UTILITIES - 0.86%
10,000 KCS Energy $ 335,000 $ 328,750
------------ --------------
TOTAL COMMON STOCKS $ 36,015,340 $ 32,118,272
</TABLE>
---------------------
71
<PAGE>
MASTER INVESTMENT TRUST SMALL CAP MASTER PORTFOLIO
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 15.38%
REPURCHASE AGREEMENTS - 15.38%
$ 1,465,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.50 % 04/01/97 $ 1,465,000
1,700,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.38 04/01/97 1,700,000
1,638,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 6.30 04/01/97 1,638,000
1,082,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 6.20 04/01/97 1,082,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 5,885,000
(Cost $5,885,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $41,900,340)* (Notes 1 and 3) 99.33% $ 38,003,272
Other Assets and Liabilities, Net 0.67 256,543
------ --------------
TOTAL NET ASSETS 100.00% $ 38,259,815
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 2,026,978
Gross Unrealized Depreciation (5,924,046)
------------
NET UNREALIZED DEPRECIATION $ (3,897,068)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
72
<PAGE>
STATEMENT OF ASSETS & LIABILITIES - MARCH 31, 1997
<TABLE>
<CAPTION>
SMALL CAP
MASTER
PORTFOLIO
<S> <C>
- --------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $38,003,272
Cash 218,696
Receivables:
Dividends and Interest 10,039
Investment securities sold 244,255
TOTAL ASSETS 38,476,262
LIABILITIES
Payables:
Investment securities purchased 130,980
Distribution to beneficial interest
holders 21,268
Due to adviser (Note 2) 30,440
Other 33,759
TOTAL LIABILITIES 216,447
TOTAL NET ASSETS $38,259,815
INVESTMENT AT COST (NOTE 3) $41,900,340
- --------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
73
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SMALL CAP MASTER PORTFOLIO
----------------------------------
FROM SEPT. 16,
1996
FOR THE SIX (COMMENCEMENT
MONTHS ENDED OF OPERATIONS) TO
MARCH 31, 1997 SEPTEMBER 30, 1996
<S> <C> <C>
- ----------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 32,148 $ 390
Interest 122,485 4,504
TOTAL INVESTMENT INCOME 154,633 4,894
EXPENSES (NOTE 2)
Advisory fees 101,857 6,129
Custody fees 5,325 375
Portfolio accounting fees 14,506 797
Legal and audit fees 27,811 2,664
Other 7,514 410
TOTAL EXPENSES 157,013 10,375
Less:
Waived fees and expenses reimbursed (31,728) 0
NET EXPENSES 125,285 10,375
NET INVESTMENT INCOME (LOSS) 29,348 (5,481)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments (1,545,385) 60,298
Net change in unrealized appreciation
(depreciation) of investments (4,389,698) 492,630
NET GAIN (LOSS) ON INVESTMENTS (5,935,083) 552,928
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (5,905,735) $ 547,447
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ---------------------
74
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP MASTER PORTFOLIO
---------------------------
FROM SEPT.
16, 1996
(COMMENCEMENT
FOR THE SIX OF
MONTHS OPERATIONS)
ENDED TO
MARCH 31, SEPTEMBER
1997 30, 1996
<S> <C> <C>
- ------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 29,348 $ (5,481)
Net realized gain (loss) on sale of
investments (1,545,385) 60,298
Net change in unrealized appreciation
(depreciation) of investments (4,389,698) 492,630
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (5,905,735) 547,447
NET INCREASE IN NET ASSETS RESULTING
FROM BENEFICIAL INTEREST TRANSACTIONS 17,869,288 25,748,815
INCREASE IN NET ASSETS 11,963,553 26,296,262
NET ASSETS:
Beginning net assets 26,296,262 0
ENDING NET ASSETS $38,259,815 $26,296,262
- ------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Small Cap Master Portfolio (the "Master Portfolio") is a series of Master
Investment Trust (the "Trust"), a business trust organized under the laws of
Delaware on August 14, 1991. The Trust is registered as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Declaration of Trust permits the issuance of beneficial interests ("interests").
The Trust currently issues nine series of investment portfolios: the Asset
Allocation, Capital Appreciation, Cash Investment Trust, Corporate Stock,
Tax-Free Money Market, Short-Term Government-Corporate Income, Short-Term
Municipal Income, Small Cap and U.S. Government Allocation Master Portfolios.
These financial statements represent only the Small Cap Master Portfolio.
The following significant accounting policies are consistently followed by the
Trust in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT POLICY AND SECURITY VALUATION
The Master Portfolio's investments include equities, fixed-, variable- and
floating-rate instruments. Investments in securities for which the primary
market is a national securities exchange or the NASDAQ National Market System
are valued at the last reported sales price on the day of valuation. U.S.
Government obligations are valued at the last reported bid prices. Securities
not listed on an exchange or national securities market, or securities in which
there were no transactions, excluding debt securities maturing in 60 days or
less, are valued at the most recent bid prices, or if such prices are not
readily available, at fair value as determined in accordance with procedures
adopted by the Board of Trustees. Debt securities maturing in 60 days or less
are valued at amortized cost, which approximates market value.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are recorded no later than one business day after trade
date. Dividend income is recognized on the ex-dividend date, interest income is
accrued daily. Realized gains and losses are reported on the basis of identified
cost of securities delivered. Bond discounts are accreted and premiums are
amortized as required by the Internal Revenue Code.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
- ---------------------
76
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 the Portfolio of Investments of
the Master Portfolio. The Master Portfolios may participate in pooled repurchase
agreement transactions with other funds advised by Wells Fargo Bank, N.A.
("WFB"). The repurchase agreements must be fully collateralized based on values
that are marked to market daily. The collateral may be held by an agent bank
under a tri-party agreement. It is the custodian's responsibility to value
collateral daily and to take action to obtain additional collateral as necessary
to maintain market value equal to or greater than the resale price. The
repurchase agreements held in the Funds at March 31, 1997 are collateralized by
U.S. Government obligations.
FEDERAL INCOME TAXES
The Master Portfolio intends to qualify for federal income tax purposes as a
partnership. Management of the Master Portfolio therefore believes that it will
not be subject to any federal or state income tax on its income and net capital
gains (if any). However, each investor in the Master Portfolio will be taxed on
its distributive share of the partnership's income for purposes of determining
its federal and state income tax liabilities. The determination of such share
will be made in accordance with the Internal Revenue Code of 1986, as amended
("Code"), and the regulations promulgated thereunder.
It is intended that the Master Portfolio's assets, income, gain/loss and
allocations will be managed in such a way that a regulated investment company
investing in the Master Portfolio will be able to satisfy the requirements of
Subchapter M of the Code, assuming that the investment company invests all of
its assets in the Master Portfolio.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into an advisory contract with WFB on behalf of the Master
Portfolio. Pursuant to the contract, WFB furnishes investment guidance and
policy direction in connection with the daily portfolio management of the Master
Portfolio. Under the contract WFB is entitled to receive a monthly advisory fee
at an annual rate of 0.60% of the Master Portfolio's average daily net assets.
The Trust has also entered into a contract with WFB whereby WFB has agreed to
provide custody and portfolio accounting services for the Master Portfolio. For
providing custody services, WFB is entitled to certain transaction charges plus
an annual fee at a rate of 0.0167% of the Master Portfolio's average daily net
assets. For portfolio accounting services, WFB is entitled to a monthly base fee
of $2,000 plus an annual fee of 0.07% of the first $50 million of the Master
Portfolio's average daily net assets, 0.045% of the next $50 million, and 0.02%
of the Master Portfolio's average daily net assets in excess of $100 million.
---------------------
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for the
Small Cap Master Portfolio for the six months ended March 31, 1997, were as
follows:
<TABLE>
<CAPTION>
AGGREGATE PURCHASES
AND SALES
<S> <C>
- ---------------------------------------------------
Total purchases at cost $34,911,838
Total sales proceeds 20,158,383
</TABLE>
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, exclusive of short-term securities, and average
commission rate paid for the Small Cap Master Portfolio for the stated periods
were as follows:
<TABLE>
<CAPTION>
SMALL CAP MASTER PORTFOLIO
---------------------------------------
FOR THE SIX FROM SEPTEMBER 16, 1996
MONTHS ENDED (COMMENCEMENT OF
MARCH 31, OPERATIONS)
1997 TO SEPTEMBER 30, 1996
<S> <C> <C>
- ---------------------------------------------------------------------------------
Portfolio Turnover 69% 10%
Average Commission Rate Paid $0.0764 $0.0800
</TABLE>
- ---------------------
78
<PAGE>
TO THE UNITHOLDERS AND BOARD OF TRUSTEES
MASTER INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Small Cap Master Portfolio (one of the
master portfolios comprising Master Investment Trust) as of March 31, 1997, and
the related statements of operations and changes in net assets, and financial
highlights for the six months ended March 31, 1997, and for the period from
September 16, 1996 (commencement of operations) to September 30, 1996. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997, by correspondence with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Small Cap Master Portfolio of Master Investment Trust as of March 31, 1997, the
results of its operations, the changes in its net assets and its financial
highlights for the periods indicated herein in conformity with generally
accepted accounting principles.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 9, 1997
---------------------
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<PAGE>
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80
<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>
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82
<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-260-5969. Read the
prospectus carefully before you invest or send money.
SCF 077 (5/97)
<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
